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Arokiasamy and anr. Vs. Martial Margaret - Court Judgment

LegalCrystal Citation
SubjectCommercial
CourtChennai High Court
Decided On
Case NumberS.A. 2567 of 1977
Judge
Reported inAIR1982Mad93
ActsCode of Civil Procedure (CPC), 1908 - Sections 47 - Order 21, Rule 93; Constitution of India - Article 133
AppellantArokiasamy and anr.
RespondentMartial Margaret
Appellant AdvocateR.S. Venkatachari, Adv.
Respondent AdvocateV. Sridevan, Adv.
Cases ReferredMacha Koundan v. Kottara Koundan
Excerpt:
commercial - refund - section 47 and order 21 rule 93 of code of civil procedure, 1908 and article 133 of constitution of india - appeal against order of refund - appellant contended that under rule 93 court auction purchaser would not be entitled to get refund of even purchase money paid by him on setting aside sale - rule 92 provides where application made under rule 89, rule 90 or rule 91 and that application is allowed then court can make order setting aside sale and granting refund of money deposited with or without interest - sale set aside due to irregularities in conduct of sale - appellant was responsible for irregularities - held, purchaser entitled to interest also. - - better the sale could be confirmed, the judgment debtors filed k a. ' as may be seen from this.....1. the defendants are the appellants. the suit was filed by the plaintiff-respondent for the recovery of a sum of rs. 3,3n. the facts leading to the filing at the suit are as follows.: -the defendants as decree-holders brought certain , properties of one dhanalakshmi ammal, wife of govindachari and others, who were the judgment-debtors, -to sale in e. p 172 of 1972 on the file of the - learned additional subordinate judge, pondichary .the plaintiff was the successful auction purchaser and on 1-11-197 the date education, he deposited one-fourth at the sale proceeds of ra 35,100. he had also remitted the balance of consideration and also non-judicial stamp papers for the issue of a sale certificate. better the sale could be confirmed, the judgment debtors filed k a. no. 492 4 19m under o......
Judgment:

1. The defendants are the appellants. The suit was filed by the plaintiff-respondent for the recovery of a sum of Rs. 3,3N. The facts leading to the filing at the suit are as follows.: -

The defendants as decree-holders brought certain , properties of one Dhanalakshmi Ammal, wife of Govindachari and others, who were the Judgment-debtors, -to sale in E. P 172 of 1972 on the file of the - learned additional Subordinate Judge, Pondichary .The plaintiff was the successful auction purchaser and on 1-11-197 the date education, he deposited one-fourth at the sale proceeds of Ra 35,100. He had also remitted the balance of consideration and also non-judicial stamp papers for the issue of a sale certificate. Better the sale could be confirmed, the judgment debtors filed K A. No. 492 4 19M under O. 21, R 90, C. P. C. to set aside the sale on the ground of material irregularities and fraud, in publishing the proclamation, of sale and in the conduct of the sale, By an order dated 3-8-1974, the learned Additional Subordinate Judge, Pondicherry, held that there was no mention of the place of auction sale In the proclamation, that though there was no encumbrance on the property a discharged mortgage was shown as an encumbrance, that there was only one bidder, who was the plaintiff in this case and he Is also a relative of the decree-holder and that the sale is vitiated by material irregularities in the proclamation of the sale and in the conduct of the sale, and in that view, the learned Subordinate judge set as if the sale held on 1-11-1973, but on condition, that the judgment-debtor deposited an amount equal to the amount of sale proceeds in court on or- before 7-8-1974. The judgment-debtor accordingly deposited the money and the sale was set aside. While refunding the sale proceeds deposited in court, a sum of Rupees 1,083, was , deducted towards poundage and only the balance of Rupees 34,017 was paid back to the auction purchaser an 27-11-1974. In this stilt, the plaintiff claimed that be is entitled to recover this poundage of Rupees 1,083. He has also claimed that he is entitled to interest at 6 per cent per annum on Rs. 35,100 from 1-11-1973 the date of deposit to 27-11-1974, he was paid the sum of Rs. 34,017. This interest come to be. 2,256, and the interest added to the pound1age came to Rs. 3,339/- for which this present suit has been filed. The plaintiffs case was that the sale was set as the due to irregularities and fraud committed by the decree-holder, that for no fault of his, he has been made to pay the poundage and also to suffer the loss by way of loss of interest and that therefore, he is entitled to recover the money claimed in the suit. The defendants contended that the sale was set aside because the proclamation was not In accordance with law and that there was also a misstatement of an encumbrance in the proclamation and that the decree-holder was responsible for all the irregularities. in fact, that was the view taken by the executing court while setting aside the sale. The courts below also held that the plaintiff is entitled to recover the poundage as also the interest and the suit is -maintainable. Accordingly the suit was decreed and the appeal filed there against was also dismissed.

2. In this second appeal, the learned counsel for the appellant contended that the suit for recovery of the poundage or for recovery of any interest is not maintainable. The first ground on which the learned counsel submitted that the suit is not maintainable was that under O. 21, R. 93, C. P. C., only the executing court can direct refund of the money with or without interest, subject to the limitations as to the liability of the person to pay interest as provided in that rule itself. In fact, according to the learned counsel, but for the provision in R. 93, a court auction purchaser would- not have been entitled to get refund of even the purchase money paid by him on setting aside the sale.

Rule 93 of O. 21, C. P. C. reads as follows -

'Where a sale of immovable property is set aside under R. 92, the purchaser shall be entitled to an order for repayment of his purchase money, with or without interest as the court may direct, against any person to whom it has been paid.'

Rule 92 provides that where an application is made under R. 89 R. 90 or R. 91and that application is allowed, the court 'I make an order setting aside the sate. Rule 89 enables a judgment-debtor or any person holding an interest in the property to apply to the executing court to have the sale set aside on his depositing in court for payment to the purchaser a sum equal to 5 percent of the purchase money and for payment to the decree-holder, the amount specified in the proclamation of sale as that for recovery of which the sale was ordered, less any amount which may, since the date of the proclamation G1 sale, have been received by the decree-holder. Rule 90 enables a 'decree-holder or any person entitled to sham in a rate able distribution of assets or whose interests are affected by the sale to apply to the court to set aside the sale on the ground of any material irregularity or fraud in publishing or conducting it. Rule 91 enables the purchaser himself to apply to the court to set aside the sate on the ground that the Judgment-debtor had no saleable interest in the property sold. The amendment of the code by Central Act 104 of 1976. had not affected the provisions so for as the question with which we are concerned. The earliest of the decision relevant for our purpose, which considered the question is the one reported in Parvathiammal Govindasami Pillai, ILR(1916) Mad 803 , AIR 1916 Mad 290 (2)). In that case, a court sale was set aside on account of irregularities in its conduct, perpetrated by the decree-holder. The purchaser having received only the balance of the purchase price deducting the poundage filed a suit for the return of the poundage fee not returned to him and interest on the purchase money paid by him, It was contended that the suit wag not maintainable. Over ruling the objection that only an execut6n lies, a Division Bench of' this Court held that the suit was maintainable for the recovery of both poundage as also interest on the purchase money. Seshagiri Ayyar, J. speaking for the court, observed that in cases where the sale had to be set aside by reason of the fraud or carelessness at any particular party that party who was negligent, renders himself liable to compensate the injurned for the loss the latter has sustained. This right, according to the learned Judge, is not created for the first time by the statute The Code only recognised what had existed all along. As stated by Sir James Become (Vice-Chancellor) in Powell v. Powell, (1875) 19 Eq 422, the purchaser is entitled under these circumstances to be discharged from his; contract by reason of the invalidity of the proceedings which led up to the sale and is entitled to be placed in status quo ante. in support of this view, the learned Judge has also cited 24 Cyclopedia of Law and Procedure and certain other decisions.When the decree-holder, the defendant in the suit, relied on certain cases relating to set aside the sale for want -of saleable interest in -the judgment-debtor, the learn ' ed Judge has distinguished those sales as not applicable 'on the ground that 'the right of auction to obtain a refund consequent on the want of saleable interest in the judgment debtor is not a right inhering in a purchaser, but is the creature of a statute,and the right thus conferred can only be exercised within the limitations prescribed. Consequently, without getting the sale set aside through court, the purchaser has no right of action. The general principle of caveat emptor would affect the purchaser unless he chooses to adopt the remedy given to him by the statute.' This decision is, therefore, clear authority for the position that R. 93 of O 21, does not in anyway affect or debar or restrict the right of the, auction purchaser to seek his remedy in a suit for return ' of pound age fee and interest on purchase money paid 'by him. There was certain doubt as to whether a suit is maintainable or the proceedings will have to be taken in execution in cases where there was no application for setting aside the sale either under Rr. 89, 90 or 91 and the sale was confirmed, but subsequently in a different proceeding it was held that the judgment-debtor has no saleable 'interest in the property sold and on that basis the court auction purchaser was deprived of his possession. Sections 310-A, 311, 312, 313, 314 and 315, C. P. C. 1882 corresponding to Rr. 89, 90, 91 and 92 contain slightly different wordings. In some of the decisions it was held that in cases where in different proceedings it was held that the Judgment-debtor has no saleable interest in the property, a suit for return of the purchase money was held not maintainable and the reasoning given in various judgments differed, though in conclusion they agreed. So far as this court is ' concerned after the C. P. C., 1908 came into force, a Full Bench considered the question in Macha Koundan V. Kottara Koundan, AIR 1936 Mad 50. After referring to the conflict of opinions and of the difference in, language employed -in the earlier Code and that in, 1908, this court observed that 'the remedy by way of suit exists as a corollary to the recognition of the right to obtain a refund'. Therefore, it makes no difference whether the right to- obtain refund arose on account of setting aside the sale on the ground of material irregularity or on the ground that the sale turns out to be futile by a finding in another suit by reason of the judgment-debtor having no saleable interest in the property. The Full Bench also held that the object of the Code is to provide a speedier remedy in execution under certain special circumstances. The right of suit under other circumstances remains under the general law and is not affected by the provisions in the Code. Since the right to obtain a refund was recognised by the Code, the remedy by way of suit was held to exist not because the Code gave it, but because every right can be enforced by a, suit.

3. Learned counsel for the appellant argued on the basis of a Full Bench of five Judges of Andhra Pradesh High Court, reported in Suryakantharnma v.Dorayya, : AIR1965AP239 , that this view of the Full Bench requires reconsideration . Apart from the fact that I am not convinced of the point raised by the learned counsel for re consideration and I am bound by the decision of Full Bench of this court rather than

the decision of Andhra Pradesh High Court and which was partly decided in the Full Bench of this court relating to the right of the auction purchaser to file a suit for recovery of the purchase money when in a different proceeding it was held that the judgment-debtor has no saleable interest does not arise for consideration in this suit. The decision in Parvathiammal v.Govindasami Pillai, ILR (1916) Mad 803 : AIR 1916 Mad 290 (2)) is the decision directly on the point. This judgment in Parvathiammal v.Govindasami Pillai (1916) 39 Mal 803 was also quoted with approval in the decision of the Full Bench in Macha Koundanv. Kottara Koundan, AIR 1936 Mad 50, in respect of that aspect of the case relating to right to file a suit for recovery of poundage and interest, No decision of reconsideration this court, or any other court has taken

any different view on this question ' -Therefore, there are no grounds for referring the matter to a fuller Bench.

4. Learned counsel for the appellants then relied on the decision of this court in Gangaraju v. Venkatrayulu Naidu : AIR1943Mad235 and contended that the suit is not maintainable. In that case the auction purchaser at a court sale deposited the money required including poundage and that money remained in court for four years. In the meanwhile on an application filed by the judgment-debtor, the sale was set aside. The court auction purchaser thereupon applied for return of his purchase money as also for the return of the poundage. The court ordered the return of the money with interest, but the petitioner was informed that he should apply to the Government if he wished to obtain refund of the poundage. The decree-holder subsequently applied for review on the ground that he should not have been called upon to pay interest. The court granted the review and passed an order refusing to call upon the decree-holder to pay any interest to the auction purchaser. The Court further reviewed that part of its previous order, which dealt with the question of poundage and held that one half of the poundage should be paid by the decree-holder to the auction purchaser and that in respect of the other half he should apply to the Government. The decree-holder preferred a revision petition against the order in review and contended that the modification as regards poundage was not justified. While dealing with the power of review, this court held that since 0. 21, R. 93 under which the original order to pay interest on the purchase money was made, enables the court only to direct that person to whom the purchase money was paid to pay interest and not against anybody else, there was an error in the earlier order on the face of the record, which enabled the court to review that order. While holding, so, Justice King observed -

'In my opinion R. 93 of 0. 21 deals with the whole question of what is to happen to the money which has been deposited by the auction purchaser when a sale has been set aside and the fact that R. 93 permits the court to make a particular order against a party only if that party has received the money is to my mind exhaustive, and means that no order can be passed against him in any other circumstances'.

5. On the basis of this observation, the learned counsel for the appellants contended that this is an authority for the position that refund will have to be applied for in execution proceedings and also against that person to whom it was originally paid and no separate suit was maintainable. I am unable to agree with this contention for more than one reason. Firstly, the learned Judge was not concerned with the question as to whether a suit was maintainable or not. The learned Judge was only concerned with the question as to whether the decree-holder was liable to pay interest or poundage. The application itself was made under O. 21, R. 93, C. P.C. and the review application was filed under O. 47, R. 8. The question of maintainability of the suit could not have and did not arise for consideration. Even on the question of the liability of the decree-holder to pay poundage or the interest, the position cannot be held to be correct in view of the decision in Parvathi Ammal v. Govindasami Pillai, ILR(1916) Mad 803 : AIR 1916 Mad 290 (2)) and the Full Bench in Macha Koundan v. Kottara Koundan, AIR 1936 Mad 50, and certain other provisions in the Code which I will deal with when I deal with the question on merits. Suffice it to say that the Division Bench judgment and the Full Bench judgment have not been referred to in this judgment and the decision shall be held to be an authority only for the position that an order could have been made under R. 93 and if it was incorrect it could have been reviewed under O. 47.

6. Learned counsel for the appellants then contended that the right for repayment of the purchase money on setting aside the sale itself is a right for the first time recognised under the provisions of the Code, and that, therefore, the specific remedy provided in the Code alone could be resorted to and no suit is maintainable. in this connection, he referred to a passage from AIR Commentaries on the Civil P. C., 9th,Edn. Volume 3, page 1238, and that Passage reads as follows-

'Rule 91 creates a right in the auction purchaser which was not available to him on the general principle of caveat emptor and provides for a specific remedy therefore in Rr. 91 and 93. As seen in Note 62 to S. 9 of the Code, where a right is created by statute and a method of enforcing that right or of redressing the grievance caused in the exercise or enforcement of the right is pointed out by the statute creating such right then the general remedy of suit will be barred.'

As may be seen from this passage extracted, it related to a case of a claim for refund arising out of the sale being proceeding on judgment-debtor in the property. In my view, when a sale is set aside and the purchase money deposited in court has not been paid to the decree-holder or the judgment-debtor, the right for the return or repayment of that money arises under the common law and there can be no doubt that the auction purchaser is the person entitled for the money. Even dehors R. 93, the auction purchaser would be entitled for the repayment of his purchase money. R. 93 ' only enables an executing court to direct repayment of the money with or without interest in a case where the money deposited in court has been withdrawn by any other person. In case where the amount is not withdrawn and which is available in court the auction purchaser is entitled to repayment of the same and the question of liability to pay interest by the judgment-debtor or the decree-holder would have to be decided with reference to the facts and circumstances in each case and on finding as to who was responsible for the irregularity or fraud in conducting the sale or for setting aside the sale itself. Neither such a right to claim repayment of the purchase money nor the interest thereon is a creature of the statute nor the statute has provided any specific remedy for the same in order to bar a civil suit.

7. Learned counsel for the appellants then contended that S. 47 is a bar for filing of the suit. According to the learned counsel in view of the explanation in S. 47, a purchaser of property at a sale in execution of a decree shall be deemed to be a party to the suit in which the decree is passed, and, that, therefore, the dispute, if any, relating to the repayment of the purchase money or the interest thereon or on the question as to the person who is liable to pay the poundage will have to be determined by the court executing the decree and not by a separate suit. Cl. (1) of S. 47 reads as follows -

'All questions arising between the parties to the suit in which the decree was passed, or their representatives, and relating to the execution, discharge or satisfaction of the decree, shall be determined by the court executing the decree and not by a separate suit.'

As may be seen from this provision, two conditions will have to be satisfied in order to bar a separate suit (i) the question should arise between the parties to the suit, and (ii) the question shall relate to the execution, discharge or satisfaction of the decree. Both conditions have to be satisfied cumulatively. There could be no doubt that by reason of the explanation to S. 47, as is substituted by Central Act 66 of 1956, and later amended by Central Act 104 of 1976, the auction purchaser shall be deemed to be a party to the suit and, therefore, the first condition is satisfied. But, I am unable to agree with the learned counsel for the appellants that the question either relating to repayment of the purchase money on the sale or the liability to pay interest or the person who is liable to pay interest or the expenses of poundage, relates to the execution, discharge or satisfaction of the decree. The repayment of the purchase money as such on setting aside the sale has no effect on the execution, discharge or satisfaction of the decree itself as the money belongs to the auction purchaser and he is entitled to have a return made to him by reason of the setting aside of the sale. On the question of liability to pay interest or the person who is pay interest to the auction purchaser also, no question of execution, discharge or satisfaction of decree is involved. The liability would depend on common law and also on the facts and circumstances in each case and the finding of the courts as to who was responsible for the irregularity or fraud resulting in setting aside the sale itself. In one sense, it may be argued that if there was a remedy in the sale it was with reference to an execution of a decree. But the remedy is not decided for the purpose of fixing the liability of the person to pay interest. In the circumstances, therefore, I am unable to agree that this question of payment of interest also has any bearing on the execution, discharge or satisfaction. Even on the question of the person who is to bear the poundage, I am unable to agree that it related to execution discharge or satisfaction. Poundage is an amount payable to the officers of court for the labour involved in conducting the sale. The liability to pay would have to be decided with reference to the relevant rules on the subject, but it cannot be stated that it relates to the execution, discharge or part satisfaction in the sense mentioned in S. 47, though I have my own reservation that if this question had arisen as between the judgment-debtor and the decree-holder, it could not be considered as one falling under S. 47. But on the facts and circumstances of this case, I am unable to hold that the question relating to payment of poundage has any relevance to the execution, discharge or satisfaction. For the foregoing reasons, I am of the view that the suit for recovery of the amount of poundage paid by the plaintiff and interest claimed is maintainable.

8. On the merits, learned counsel for the appellant contended that the poundage was payable by the auction purchaser or the judgment-debtor and he was not liable to pay and that, therefore, no decree can be granted. On this aspect, the following passage from the judgment in Parvathiammal v. Govindasami Pillai~ ILR (1916) Mad 803 : AIR 1961 Mad 29 (2)), may be usefully quoted as that answers the question conclusively -

'Another contention of the appellant was that as poundage is taken by the court, the decree-holder is not bound to pay it to the purchaser. This argument proceeds on a misconception of the nature of the poundage fees. As was Pointed out by Mr. Ramachandra Aiyar in his able argument, what the purchaser claims is really a portion of the purchase money. It is from the payment made by him the court makes a deduction for poundage and pays the balance to the decree-holder. Poundage is the fee which is levied in England by the Sheriff as remuneration for his service. In this country, as the officers of the court conducting the sales are paid a fixed salary, a certain percentage of the purchase money is taken for purchasing stamps. In effect the fee is a charge paid by the decree-holder for the services he obtains from the court. In England, as well as in this country, this fee is taken out of the sale proceeds ......... There is, therefore, no warrant for the suggestion that in claiming the money retained as poundage fee, the purchaser does not ask for the return of the purchase money. Nor do we see any reason to assent to the argument that the claim for recovery of such fees should be disposed of in execution.'

8-A. It may be seen from this passage that the poundage deducted and the claim in respect of the claim in the present suit is really a claim for return of the part of the purchase money itself. That the plaintiff is entitled for a return of the same, there could be no doubt. An argument on the basis of the omission of the word 'poundage' in the then R. 157 (2) of the Civil Rules of Practice corresponding to the present R. 203 (2) that a poundage was not the liability of the decree-holder was also noticed by the Division Bench and it was held that this omission of the word 'poundage' in R. 157 (2) cannot affect the substantive right of suit which the purchaser has. The Court further observed -

'It was held in Rawstorne v. Wilkinson (1815) 4 M & S 256, that the Sheriff has a right of action to recover poundage fees where the sale proves abortive. The auction purchaser whose money has been paid by way of pound age to the Sheriff will stand in his shoes to recover it against the execution creditor. The fact that it is retained by the court can make no difference in principle'.

9. Natesan, J. in the decision reported in Unnamalai Animal v. Sayyadu Mohideen, : AIR1967Mad231 , considered the various circumstances under which the claim for refund of poundage will have to be considered. The ratio of the judgment has been clearly brought out in the head note and that may be usefully extracted -

'The poundage paid under the provisions of 0. 21, Rr. 89 to 91, C. P. C., in applications for setting aside an execution sale is in reality part of the purchase money. It is a fee or charge paid by the decree-holder for services he obtained from the court and it is taken out of the sale proceeds. In cases where a sale is set aside under O. 21, R. 89, there could be no difficulty. But in cases where a sale is set aside under O. 21, R. 90, the court has to give a definite finding as to the party who is responsible for the sale being set aside.

In cases where the fault is on the decree-holder who had put the court in motion and an auction purchaser is aggrieved by the sale in his favour being set aside due to irregularities, the decree-holder will be liable to the auction purchaser for return of the poundage deducted i The auction purchaser is entitled to file a suit against the decree-holder for the poundage fees not returned to him and for interest on the purchase money, if it is found that the sale was set aside because of the fault on the part of the decree-holder.

In case where a sale, is set aside for the reason that there was no final decree in existence and the fault was not of the decree-holder nor of the judgment debtor, it may be that in the interests of justice the court may recommend a refund of the poundage deducted for consideration of the revenue authorities. But this could only be a recommendation and nothing more.

But where in pursuance of a valid decree a sale is gone through and the sale is only voidable and not void and such sale is set aside under 0. 21, R. 90, there is no provision in law for a certificate of refund of the poundage.

10. As may be seen from this judgment, if the sale was set aside due to the irregularities in the conduct of the sale, the decree-holder will be liable, to the auction purchaser for return of the poundage deducted. In this case, as already stated, in the execution proceedings when an application under 0. 21, R. 90 was filed, the learned Subordinate Judge found that the decree-holder was responsible for all the irregularities and that therefore,, the sale was liable to be set aside. The decree-holder was, therefore, liable to pay the poundage and since the amount was deducted from the purchase money paid by the auction purchaser, the auction purchaser is entitled for return of the same from the decree-holder, the defendant herein. Even on the question of interest, the decision in Parvathi Animal v. Govindasami Pillai, ILR (1916) Mad 803 : 1916 Mad 290 (2)), which is binding on me, has held that the purchaser was entitled to the interest on the purchase money from the decree-holder. Even the decision of King, J. in Gangaraju v. Venkatarayulu Naidu : AIR1943Mad235 which was counsel for the that the auction (AIR 1943 Mad 235), relied on by the learned appellant, did not hold Purchaser is not entitled for interest on the purchase application was filed under R. 93 of 0. 21, it was held that the- interest could be directed to be paid by the court only against the person who has received the money and not against any other party. But the general remedy available for return of the money by reason of the sale being set aside due to the negligence or fraud committed by the decree-holder on the principle that auction purchaser is entitled to be restored or placed in status quo ante, he will be entitled to the interest from the person who was responsible for depriving him of the benefit of the money during the period when the amount was in court deposit. The defendant is, therefore, liable to pay interest as well.

11. For the foregoing reasons, I am of the view that the judgment and decree of the courts below are right and do not call for any interference. The second appeal, accordingly, fails and it is dismissed. But there will be no order as to costs. Learned counsel for the appellants asked for leave to appeal to Supreme Court. I have followed a Division Bench judgment in Parvathi Animal v. Govindasami Pillai, ILR (1916) Mad 803 : AIR 1916 Mad 290 (2)) mainly and that had also the approval of the Full Bench in Macha Koundan v. Kottara Koundan, AIR 1936 Mad 50. On the point now under issue no other decision has been cited at the Bar. The value of the suit itself is of Rs. 32339. In the circumstances, therefore, I am unable to state that the case involves a substantial question of law of general importance and that question needs to be decided by the Supreme Court. Therefore, this request for leave to appeal is rejected

12. Appeal dismissed.


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