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Rajammal Vs. A.T. Krishnaswami Mudaliar (Died) and ors. - Court Judgment

LegalCrystal Citation
SubjectCommercial
CourtChennai High Court
Decided On
Case NumberA.A.O. No. 337 of 1966
Judge
Reported inAIR1972Mad359
ActsCode of Civil Procedure (CPC), 1908 - Sections 47 and 105(1) - Order 21, Rules 22, 52, 66 and 90 - Order 40, Rule 1
AppellantRajammal
RespondentA.T. Krishnaswami Mudaliar (Died) and ors.
Cases ReferredA. Vittal v. Ramakistiah
Excerpt:
.....munsif court - whether application to set aside sale could be maintained under section 47 - sale in execution without obtaining leave of court not void but only voidable at discretion of court - concerned sale only voidable under order 21 rule 90 - held, section 47 not attracted. - - since security was found to be insufficient, the appellant was asked to produce additional security by an order dated 8-11-1961. since the appellant failed to produce additional security, her petition to receive the security was dismissed on 17-9-1966. on the same day since no security was furnished as ordered, the petition for setting aside the sale was also dismissed. it was not contended before the lower court that the properties brought to sale were sufficient security by themselves and that..........a.s. no. 537 of 1948 to this court claiming the balance amount of the suit claim. the defendants filed an application for stay of execution of the decree on 16-12-1947. the interim stay of execution of the decree was made absolute on condition of the defendants-appellants depositing the decree amount on or before 20-1-1948. the plaintiff were permitted to withdraw the amount deposited on furnishing security. one ramaswami gounder, the husband of the appellant herein, and his first wife janaki ammal furnished security for the amount and the plaintiffs were permitted to withdraw a sum of rs. 1,05,715-5-0 and another sum of rs. 2624-5-0 which were deposited by the defendants towards the decree and costs of the suit. on 31-10-1952. the appeal filed by the defendants was allowed and the.....
Judgment:

V. Ramaswami, J.

1. One Ammasiappa Gounder and three others filed the suit O.S. No. 226 of 1946 on the file of the Subordinate Judge, Coimbatore, against the first respondent Krishnaswami Mudaliar and others, claiming a sum of Rs. 1,92,109-10-3 ps. being the value of jaggery supplied to the defendants. The suit was decreed for a sum of Rupees 98,507-13-0 with interest at six per cent, per annum from the date of suit. The defendants preferred A.S. No. 713 of 1947 against the decaree and the plaintiffs filed A.S. No. 537 of 1948 to this court claiming the balance amount of the suit claim. The defendants filed an application for stay of execution of the decree on 16-12-1947. The interim stay of execution of the decree was made absolute on condition of the defendants-appellants depositing the decree amount on or before 20-1-1948. The plaintiff were permitted to withdraw the amount deposited on furnishing security. One Ramaswami Gounder, the husband of the appellant herein, and his first wife janaki Ammal furnished security for the amount and the plaintiffs were permitted to withdraw a sum of Rs. 1,05,715-5-0 and another sum of Rs. 2624-5-0 which were deposited by the defendants towards the decree and costs of the suit. On 31-10-1952. the appeal filed by the defendants was allowed and the decree in O.S. No. 226 of 1946 was set aside and the appeal 537 of 1948 filed by the plaintiffs was dismissed. Defendants A. T. Krishnaswami Mudaliar and A. T. Devaraja Mudaliar applied for restitution against the plaintiffs. Being unable to recover the amount from the plaintiffs. on 7-1-1957 Krishnaswami Mudaliar and Devaraja Mudaliar filed E.P.R. No. 134 of 1957 in O.S. 226 of 1946 for sale for the properties covered by the security bond executed by Ramaswami Gounder and his first wife janaki Ammal pending this application, Krishnaswami Mudaliar and Devaraja Mudaliar died and their legal representatives were brought on record. Ramaswami Gounder and his first wife Janaki Ammal also dies and Rajammal the appellant herein, was brought on record as their legal representative. In the E.P. for sale of these properties in the hands of appellant, notice was issued on 22-3-1957. ON 29-8-1957 the appellant entered her appearance through counsel. Though the learned counsel who appeared for the appellant took time for counter, ultimately he did not file a counter; the petition was adjourned for filing sale papers and the sale papers were filed on 5-1-1959 ultimately. On 17-3-1959 notice of sale was ordered; counsel was served and he took time for filing counter, but he did not file any counter. Therefore, the petition was posted for settlement of the proclamation of sale. The proclamation was settled on 3-12-1959 and the court ordered proclamation and sale of the properties on 27-1-1960. The upset price for lots V. VI and VII was fixed at Rupees 15000, 5000 and 12000 respectively. These lots V. to VII are the properties now involved in these execution proceedings. Since there were no bidders. the upset price was reduced by 25 per cent, and again reduced by another 20 per cent. On both occasions the appellant herein was given notice. Ultimately lots V and VII were sold to Kangayappa Gounder, the 4th respondent herein for Rs. 9010 and Rs. 7210 respectively and lot VI was sold to one Kaliappa Gounder, whose legal representatives are respondents 6 to 10 in this appeal. for Rs. 3010 on 16-11-1960, The execution proceedings were adjourned to 22-12-1960 for confirmation of sale of lots V to VII. In the meanwhile on 14-12-1960, the appellants filed an application to set aside the sale and order resale of lots V, VI and VII. The grounds on which she wanted the sale to be set aside were that the price fetched was very low, that there was no due proclamation or advertisement, that the properties were not correctly and properly described, that the valuation given by the decree-holder and mentioned in the proclamation was too low, that one Nataraja Gounder, out of enmity dissuaded the bidders from bidding and the purchasers were benamidars for the said Nataraja Gounder and that in execution of a decree in O.S. 1394 of 1955 on the file of the District Munsif, Coimbatore, a Receiver was appointed in respect of these properties and the sale was held without impleading the Receiver and without obtaining the permission of the District Munsif Court. When this application was filed, the appellant was directed to furnish the necessary security as contemplated under Order 21, Rule 90. Civil P.C. The appellant filed an application with the necessary title deeds and encumbrance certificate for accepting the security offered. Notice was issued to the decree-holder and the purchasers. Since security was found to be insufficient, the appellant was asked to produce additional security by an order dated 8-11-1961. Since the appellant failed to produce additional security, her petition to receive the security was dismissed on 17-9-1966. On the same day since no security was furnished as ordered, the petition for setting aside the sale was also dismissed. The appellant has now preferred this appeal against the order dismissing her application to set aside the held on 16-11-1960.

2. The learned counsel for the appellant contended that, since the execution petition was filed for sale of secured properties, the proviso to O. 21, R. 90. Civil P.C. was not applicable and that, therefore, the appellant could not be required to furnish any security as demanded by the lower court. He further contended that even assuming that the proviso to Rule 90 of Order 21 was applicable unless the lower court has come to a definite conclusion that the value of the properties would not be sufficient to cover the liability on the properties, the executing court could not order furnishing of security under the proviso. It was further contended that the orders demanding security and additional security were interlocutory orders which could be questioned by the appellant in the present appeal which has been preferred against the order of dismissal of her application to set aside the sale. The learned counsel for the appellant relied on the decision of this court in Saradambal v. Arunachalam, : AIR1969Mad324 . In that case the appellant who was judgment-debtor filed an application under O. 21, R. 90 for setting aside the sale of the property and also filed an application for dispensing with the furnishing of security contemplated by the proviso to Order 21, Rule 90. the learned Subordinate Judge who disposed of that application, dismissed the application for dispensing with the furnishing of security and called upon the applicant to furnish security. The judgment debtor furnished an extent of 72 cents as security and that was dismissed as insufficient thereafter the application to set aside the sale was dismissed on the ground that that the security had not been furnished. On appeal by the judgment-debtor, it was held that the proviso to Rule 90 of Order 21 applied to every case where an immoveable property was sold, whether it was in execution of a mortgage decree or any other decree and the language of the rule did not warrant any distinction being made not warrant any distinction being made between the sale of an immoveable property made in execution of a mortgage decree and that in execution of any other decree. The learned Judge also held:--

'In the case of a mortgage decree a proper exercise of discretion on the part of the executing court will be to direct the furnishing of security only if it comes to the definite conclusion that the value of the property will not be sufficient to cover the liability on the property including the amount for which the property was sold. So long as the learned Subordinate Judge has not come to the positive conclusion on this aspect, he will not be exercising his discretion property or legally if he directs the applicant to furnish security.

We are of opinion this is the correct statement of the law. But in the present case no application for dispensing with the security was filed. It was not contended before the lower court that the properties brought to sale were sufficient security by themselves and that therefore she need not furnish any security under the proviso to Rule 90 of Order 21. Since the appellant did not file any application for dispensing with the furnishing of security and did not contend at any stage that the properties brought to sale were sufficient security by themselves, she could not now be permitted to state that the lower court failed and neglected to come to a definite conclusion that in the circumstances of the case, the appellant was not required to furnish any security under the proviso to R. 90. It is not disputed that before ordering the security to be furnished under R. 90 the appellant had an opportunity of being heard. In these circumstances, it is not open to the appellant now to content that the order of the lower court requiring her to furnish security was not valid.

3. In the decision in Saradambal v. Arunachalam, 1928 2 MLJ 266 it was also held that the order directing furnishing of security under the proviso to Rule 90 could be questioned in an appeal filed against the ultimate order dismissing the application to set aside the sale. It was so held on the ground that sub-section (1) of S. 105. Civil P.C. applied not only to non-appealable orders but also to appealable orders which were not appealed against. But in another decision in Trivandrum Permanent Fund Nagarcoil v. K. M. A. Mohamed Mohideen Sahib : (1968)2MLJ377 , the same learned Judge has held that the order dispensing with the furnishing of security affects the rights of parties and that order would come within the phrase 'in relation to the execution, discharge or satisfaction of the decree' within the meaning of Section 47 and an appeal was competent under Section 47 against that order. In effect, though this decision related to the maintainability of an appeal under Section 47 against an order dispensing with the furnishing of security, the reasonings and the ratio of this decision will apply to an order directing the furnishing of security under the proviso to Rule 90 of Order 21, If such an order would come within the phrase 'in relation to the execution, discharge or satisfaction of the decree', then if that order had not been appealed against, it would operate as res judicata in an appeal preferred against the order dismissing the application to set aside the sale. In our opinion, the more reasonable and correct view is that expressed by the MLJ 266 = AIR 1966 Mad 324 and we are therefore, of the view that an order directing the furnishing of security or dispensing with the furnishing of security under the proviso to Rule 90 will not come within the scope of the phrase 'in relation to the execution discharge or satisfaction of the decree' in S. 47. In that view, the appellant herein is entitled to call in question the order of the learned Subordinate Judge calling upon her to furnish security in this appeal preferred by her against the dismissal of her application to set aside the sale. But as we have already stated, since the appellant did not apply for dispensing with the furnishing of security, it could not be said that the lower court was wrong in calling upon her to furnish security.

4. Alternatively, the learned counsel for the appellant contended that some of the grounds on which the appellant filed her application to set aside the sale would come under Section 47. Civil P.C. and that, therefore, the petition was maintainable even without furnishing any security so far as those grounds were concerned. It was held in Seetharamanjaneyulu v. Ramayya, : AIR1941Mad28 that in a case where no notice was issued to the judgment debtor under order 21 Rule 22, Civil P.C. he could file an application to set aside the sale under section 47 and that therefore, a petition to set aside the sale so far as it concerns the allegations which do not relate to Order 21 Rule 90 could be gone into without the security being furnished.

5. In Krishanlal v. Har Prasad : AIR1963All319 , a similar view was taken. The appellant is therefore entitled to claim that her application to set aside was maintainable without furnishing of the security in regard to the grounds which will come under Sec. 47, Civil P.C.

In an unreported decision in L. P. A. 92 of 1965 it was held that misdescription of the property in the sale proclamation if it had resulted in fetching inadequate or low price would come under section 47 Civil P.C. and for setting aside a sale on that ground, therefore, there is no need to furnish security. But in this case, notices were served on the appellant under Rules 22 and 66 of Order 21; the appellant filed a counter-affidavit, but no objection was taken that the properties were not correctly described or that the valuation given was too low. There is no evidence of any misdescription in the sale proclamation, which the appellant is complaining of. Even in the grounds of appeal. It has not been stated what is the misdescription in the sale proclamation which the appellant takes exception to. Even the learned counsel for the appellant was not able to say what was the misdescription in the sale proclamation which had resulted in fetching an inadequate or low price in the sale. Therefore, there is no substance in this contention of the appellant that the sale was liable to be set aside on the ground of misdescription of the properties. It may also be mentioned that the upset price was twice reduced and the appellant did not challenge the reduction of the upset price.

6. The next ground, which the appellant alleged in the application to set aside the sale. was that one Nataraja Gounder dissuaded the bidders not to bid and the auction purchasers were benamidars for the said Nataraja Gounder. Nataraja Gounder is neither the decree-holder nor a party to any of these proceedings. In order to set aside a sale on the ground of material irregularity or fraud in publishing or conducting the sale, it must be proved that the material irregularity or fraud was antecedent to the sale. It is not likely in majority of the cases that the intending auction purchaser would have played fraud in publishing or conducting the sale, for at that stage he would be nowhere in the picture: vide the decision in Karuppana Gounden v. Ponnuthayee, : (1956)1MLJ190 . The fraud alleged in this case is neither by the decree-holder nor by any party to the proceedings. In any case, this is a ground which is available to her under Rule 90 of Order 21 and as the application was not maintainable for failure to furnish security this ground also was not available to the appellant.

7. The only question therefore that remains for consideration is whether the application to set aside the sale could be maintained under Section 47 Civil P.C. on the ground that the sanction of the District Munsif Court Coimbatore, which appointed a Receiver in O.S. 1394 of 1955 in respect of the properties sold, was not obtained and that, therefore, the sale was void. If the sale is void for want of sanction of the District Munsif's Court. or for non-impleading the Receiver in the execution proceedings, then the application would be maintainable under Section 47. But if on the other, had, the sale held without impleading the receiver is voidable the application would fall under order 21, Rule 90. At this stage, it is necessary to know some more facts. In execution of the decree in O.S. 1394 of 1955 in E.P. No. 876 of 1958 one Thiru Balakrishnan Advocate, was appointed as receiver in respect of the suit properties on 9-3-1959 but it does not appear that he took possession of the properties, he was relieved from receivership and one Thiru R. S. Gopal Advocate, was appointed as receiver on 16-1-1960, It is seen from the report submitted by this receiver that he took possession of the estate on 3-4-1960. As already stated, the sale proclamation was settled on 3-12-1959 and the properties were proclaimed to be sold on 27-1-1960, but on that day the sale did not take place. In the meanwhile the appellant herein filed E.A. 1212 of 1960. praying for dismissal of the execution petition on the ground that the receiver appointed by the District Munsif Coimbatore, had taken possession of the properties and that, therefore the execution proceedings could not be continued. But this petition was dismissed by the lower court on 14-11-1960 and the sale was actually held on 16-11-1960. The question for consideration is whether the leave of the District Munsif Court is necessary for bringing the properties to sale and whether the sale is void for want of sanction of the District Munsif's Court which appointed the receiver. The learned author Mullah on the Civil P.C. Vol. II 13th Edn page 1532, paragraph 6(1) states as follows-

'Property in the hands of a receiver cannot be attached without the leave of the Court first obtained. Thus if a receiver is appointed of certain property in a suit between A and B and C obtains a decree against A or B, C cannot in execution of his decree attach the property in the hands of the receiver without the leave of the court; such an attachment is an interference with the court's possession through its officer, the receiver. If, however, a sale follows the attachment, it is not void but voidable and so leave can be given with retrospective effect'.

In this case no order of attachment was necessary as the properties that were sold were secure properties. In Kanhaiyalal v. Dr. B. R. Banaji : [1959]1SCR333 it was held-

'Rule 52 Order 21, Civil P.C. requires that where the property is in the custody of any court or public officer attachment shall be made by a notice to such court or officer. But the absence of such a notice would not render the sale void ab initio, because the jurisdiction of the court or the authority ordering the sale, does not depend upon the issue of the notice of attachment. It is also settled law that proceedings taken in respect of a property which is in the possession and management of a receiver appointed by court under order 40. Rule 1, Civil P.C. without the leave of that party proceeding against the property without the leave of the court concerned, is liable to be committed for contempt of court, and that the proceedings so held do not affect the interest in the hands of the receiver who holds the property for the benefit of the party who ultimately may be adjudged by the court to be entitled to the same. The learned counsel for the respondent was not able to bring to our notice any ruling of any court in India, holding that a sale held without notice to the receiver or without the leave of the court appointing the receiver in respect of the property. is void ab initio'.

In V. N. Rayanimgar V. N. Bahadur 1944 1 MLJ 129 : AIR 194 Mad 372 it was held that where a property in the possession of a receiver was sole in execution without obtaining the leave of the court, the sale is not void but is only voidable at the discretion of the court. This decision was followed in Foulkes v. Suppan Chettiar. : AIR1945Mad13 ; Venkatalinga v. Venkataranganayakalu 1954-2 mad LJ 86, and Veerappa v. Mana Pillai, : AIR1963Mad33 . A similar view was taken by the Andhra Pradesh High Court in A. Vittal v. Ramakistiah, 1969 1 AWR 100 : AIR 1969 AP167. It follows, case was only voidable and therefore, Rule 90 of Order 21 alone will be applicable and Section 47, Civil P.C, is not attracted.

For the foregoing reasons, we confirm the order of the lower court and dismiss the appeal with costs (one set). C. M. P. No. 4421 of 1967 is ordered.

8. Appeal dismissed.


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