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M.R.M. Murugappa Chettiar and ors. Vs. S.M. Chengalvaraya Chettiar and ors. - Court Judgment

LegalCrystal Citation
Subjectmunicipal tax
CourtChennai
Decided On
Reported inAIR1944Mad465
AppellantM.R.M. Murugappa Chettiar and ors.
RespondentS.M. Chengalvaraya Chettiar and ors.
Cases ReferredKishorilal v. Piarelal I.L.R.
Excerpt:
.....filed in the proceedings must have shown this mortgage, and when they entered into an arrangement like the one in question they must have known that it would be prejudicial to the plaintiff..........was ultra vires as the execution court had no jurisdiction to go behind the decree and direct the sale of door no. 24 contrary to the terms of the decree. it is further contended that this is a case in which fraud and collusion were sought to be inferred from certain facts and that it is only in respect of the truth of those facts the finding will be final that the inference to be drawn from such facts would be a question of law and therefore it would be open to the, appellants to show that on the facts found the inference that there was no fraud and collusion was incorrect and that it will be open to the appellants to raise that plea.4. the first point for consideration is whether the sale was ultra vires of the powers of the execution court and hence invalid. the decree specifically.....
Judgment:

Kuppuswami Ayyar, J.

1. The appellants before this Court are the legal representatives of the plaintiff in O.S. No. 115 of 1940 on the file of the District Munsif's Court of Trichinopoly, and the appeal arises out of a suit for recovery of money due in respect of the liability under the security bond executed by defendant 1 in the suit by respondent 2 herein. Defendants 2 to 5-respondents 3 to 6 herein are' the sons of defendant 1. Defendant 6, respondent 1 in this appeal, was impleaded as the subsequent alienee of the hypotheca, being the purchaser of the house at the court auction held in O.S. No. 36 of 1928 on the file of the District Munsif's Court of Trichinopoly which was a suit filed by the Trichinopoly Municipality for recovery of arrears of municipal taxes due on the property. The plaintiff's contention was that the purchase in court. auction was as a result of fraud committed by defendant 6 in collusion with the other defendants. The main contest in appeal is as between the plaintiffs and defendant 6. In the sale held in O.S. No. 36 of 1928 defendant 6, respondent 1 in this appeal, purchased door No. 24. That suit was filed on 18th January 1928 for recovery of Rs. 60-80-0 due as tax in respect of houses Nos. 24,25,26 and 26-A which belonged to Subramanian Chetty and Rajagopala Chetti. House No. 24 belonged in common to the two brothers. On 13th February 1928 there was a partition between them. On 24th February 1928 Rajagopala Chetti and his son defendant 1 executed a security bond in favour of the plaintiff giving their half interest in house No. 24 as security. Rupees 625 was advanced. On 28th March 1928 a preliminary decree was passed in favour of the municipality and the decree directed house No. 24 to be sold last. On 16th April 1930 defendant 6 in this suit purchased houses Nos. 25, 26 and 26-A in the sale held in execution of a small cause decree against Subramanian Chetti. The final decree in O.S. No. 36 of 1928 was passed on 12th August 1931. On 18th January 1937 the municipality filed E.P. No. 251 of 1937 for executing the decree in O.S. No. 36 of 1928 and when that execution petition was pending defendant 6 filed a petition praying that house No. 24 may be sold first and that the other houses purchased by him, viz., Nos. 25, 26 and 26-A should not be sold. Notices were issued to Subramanian Chetti and Manickam Chetti defendant 1 herein. Subramanian Chetti was absent, but Manickam opposed the prayer. On 27th September 1937 defendants 1 and 6 entered into an agreement that door No. 24 should be sold first, and the Court, in pursuance of the agreement, directed that door No. 24 should be sold first, and that in spite of the specific directions in the decree itself that that item should be sold last. Defendant 6 became the purchaser of door No. 24 for Rs. 251 out of which only Rs. 122-2-0 was due to the decree-holder. Defendant 6 contended that inasmuch as the mortgage deed on which the suit was filed was executed during the pendency of O.S. No. 36 of 1928 and as he was a purchaser in a sale held in execution of the decree in that suit, the mortgage would not be binding on him, and it would be affected by the doctrine of lis pendens under Section 52, T. P. Act. The plaintiff's answer to that was that the execution proceeding in which the property was brought to sale and purchased by defendant 6 was a collusive proceeding and hence the security bond is enforceable as against the hypotheca.

2. The first Court found in favour of the plaintiff, overruled defendant 6's objections and granted a preliminary decree. The learned Subordinate Judge of Trichinopoly on appeal held that there was no fraud or collusion affecting the rights of defendant 6 and that consequently plaintiff cannot have preference as against defendant 6 and he set aside the decree so far as defendant 6 was concerned. Hence this second appeal.

3. It was urged for respondent 1 that the finding of the learned Subordinate Judge that there was no collusion or fraud was a finding on a question of fact, that it is not open to this Court to go behind it, and that consequently the second appeal should be dismissed. For the appellants, it is stated that two substantial questions of law are involved in this case, viz., that the Court sale itself was ultra vires as the execution Court had no jurisdiction to go behind the decree and direct the sale of door No. 24 contrary to the terms of the decree. It is further contended that this is a case in which fraud and collusion were sought to be inferred from certain facts and that it is only in respect of the truth of those facts the finding will be final that the inference to be drawn from such facts would be a question of law and therefore it would be open to the, appellants to show that on the facts found the inference that there was no fraud and collusion was incorrect and that it will be open to the appellants to raise that plea.

4. The first point for consideration is whether the sale was ultra vires of the powers of the execution Court and hence invalid. The decree specifically states that door No. 24 should be sold last. The properties by the sale of which the municipality sought to recover the tax consisted of four houses which belonged to two different individuals, viz., Subramanian Chetti and Rajagopala Chetti who had become divided before the date of the decree. The rights as between the two owners were sought to be adjusted by directing the sale of the properties of Subramanian Chetti in the first instance and by directing door No. 24 to be sold last. Subsequent to the date of the decree, defendant 6 herein purchased houses Nos. 25, 26 and 26-A in execution of the decree obtained against Subramanian Chetti in S. C. S. No. 4843 of 1927 on the file of the Court of Small Causes at Trichinopoly. He had already a hypothecation right over that item under a document of 1921. He thus became the absolute owner of doors Nos. 25, 26. and 26-A. So, when in execution of the decree in O.S. No. 36 of 1928 the properties purchased by him were brought for sale (vide Ex. 0.) he filed a petition Ex. D for an order for declaring that houses 25, 26 and 26-A were not liable to be sold in execution of the decree and that at any event door No. 24 should be sold in the first instance. Prom the order on the petition dated 24th August 1937, it is seen that defendant 6 herein had already deposited the amount into Court and his counsel stated that that amount may be appropriated towards the amount of the decree in the event of the petition being decided against him and that on the strength of that understanding the sale was stayed and notice was given to the judgment-debtors. Subramanian Chetti was absent, but respondent 2 Manickam Chetti, defendant 1 in this suit, contested the matter. He opposed the application. On 27th September 1937 the Court passed the following order:

Though as per the decree D. No. 24, T. S. No. 105 has to be sold last the defendants and present petitioner, as a result of some understanding between them, file a memo, now, stating that door No. 24 may be sold first instead of as the last item. The decree-holder, however, has no objection to this course. Door No. 24, T. S. No. 105 will be sold as the first item in the sale.

In that sale defendant 6 purchased the property. It is urged for the appellants that the order directing the sale of door No. 24 last and to direct the sale of the other items which belonged to only one of the two joint mortgagors first was an order by way of marshalling, that the Court executing the decree had no right to go behind the decree and that such an order will be ultra vires. In Subba Iyer v. Pichumani : AIR1926Mad1144 , it was pointed out by this Court that where marshalling had been ordered in a decree that order cannot be interfered with or altered by the Court executing the decree. In this case, in spite of the consent of the parties the Court had no jurisdiction to interfere with the terms of the decree directing the order in which the properties were to be sold. In K. Venkatasubbamma v. V. Venkataramarao (1901) 24 Mad. 1, it was pointed out by the Privy Council that an order directing an amendment of a decree even with the consent of the parties could not be made except under the provisions of either Section 206 or Section 623, Civil P.C., (O. 20, Rule 6 or Section 114 of the new Code). It was pointed out by this Court in Venkatagiri v. Sadagopachariar : (1904)14MLJ359 that such variations of decrees must be treated as made ultra vires in determining the question whether the execution of the decree was or was not barred by the law of limitation. In Lodd Govindoss v. Ramadoss A.I.R. 1916 Mad. 604 it was pointed by this Court that a transaction by which the parties agree to vary the mode in which the reliefs granted by the decree are to be realised in execution in the suit is a transaction which attempts to vary the terms of the decree and to allow such a variation was clearly against the policy of the Civil Procedure Code, and reference is made to the decision of the Privy Council in K. Venkatasubbamma v. V. Venkataramarao (1901) 24 Mad. 1. In the light of these rulings it has to be held that the order passed in E.A. No. 1411 of 1937 on the petition of defendant 6 herein directing door No. 24 to be sold as the first item in the sale was ultra vires. It is urged for the respondents that the sale cannot be said to be ultra vires though it could be said that the order was incorrect; that a Court has got a right to pass a wrong as well as a right order, and the fact that the Court order is incorrect would not make it ultra vires. But then in this case the execution Court had no jurisdiction to vary the terms of the decree and pass an order on the basis of which variation the order so passed must be considered to be one without jurisdiction and can have no legal effect. I therefore find that the sale of door No. 24 was ultra vires and is not binding on the plaintiff and has to be ignored.

5. The next contention raised is that the lower Court was not justified in finding that there was no fraud or collusion. There is no dispute about the facts from which the fraud and collusion is sought to be inferred. Those facts are the facts stated in the order in B. A. No. 1411 of 1937 (Ex. 1C), which I have already extracted above. Defendant 6, having become the purchaser of those properties which were directed to be sold first in a sale held in execution of a small cause decree obtained against Subramanian Chetti, was interested in saving that property. That is why he filed B. A.. No. 1411 of 1937 for an order directing that those properties should not be sold. Subramanian Chetti having lost all rights to the property was ex parte. But Manickam Chetti defendant 1 herein who was the mortgagor in respect of door No. 24 opposed the application and contended that door NO. 24 should be sold last. The plaintiff in this suit was not a party to those proceedings, and the person through whom he claimed opposed the application. In the face of the directions in the decree, the executing Court would not have directed the sale of door No. 24 first but for the consent given by Manickam Chetti. The decree-holder was indifferent because he will be able to get its money whether door No. 24 is sold first or the other items are sold. The amount due to the decree-holder was only us. 122-2-0 and door No. 24 itself had been sold for Rs. 251. So the municipality was indifferent. Defendant 2 in that suit, viz., Manickam Chetti defendant 1 herein first opposed the application. But as a result of an understanding between him and the petitioner defendant 6 herein they filed a memo stating that door No. 24 may be sold first instead of as the last item. It is thus clear that there was collusion between defendant 6 and defendant 1 in this suit as a result of which such an order was passed prejudicial to the plaintiff herein who had obtained a mortgage right over the properties and behind his back. So from the very statement of facts in the order Ex. 1C the only inference that could be drawn is that there was collusion between defendant 1 and defendant 6, the order was as a result of collusion and that consequently the sale in favour of defendant 6 was the result of collusion and fraud. The learned Subordinate Judge does not seem to have been aware of the fact that the decree itself directed door No. 24 to be sold last. If he had been aware of it he would certainly have mentioned it and dealt with the question as to whether it could be said that there could be no fraud when the arrangement was directly in contravention of the terms of the decree.' The question as to whether inference drawn from certain admitted facts is a question of law or a question of fact had to be considered by the Calcutta High Court in Radha Madhab v. Kalpataru Roy (1913) 17 Cri.L.J. 209 and Mukerji J. at p. 213 makes the following observation:

It has been urged before us, that, that finding is binding upon this Court in second appeal. But, as was observed by Baron Parke in Murray v. Mann (1848) 2 Ex. 538, although it is the duty of the jury to determine the facts upon which the allegation of fraud is based whether the facts so found justify the inference of fraud is a question of law for the Court to determine. We have thus to consider whether the facts found by the Courts below justify the inference which has been drawn from them.

And in that case the Court found that the facts, even if they were assumed to be established, did not justify the inference that there was fraud vitiating the decree. In Beliram v. Kundanlal (1999) 21 All 496, in dealing with the question of acquiescence, their Lordships of the Privy Council held that acquiescence was not a question of fact, but one of legal inference from the facts found, and that upon it the judgments of the appellate Courts were not final. In Periamurugappa v. Manicka Chetti A.I.R. 1926 Mad. 50 it is pointed out by Venkatasubba Rao J. that in that ease it was proved that the plaintiffs and defendant 1 entered into an agreement for the purpose of defeating the rights of the auction-purchasers and that in pursuance of the agreement a decree was allowed to be passed in favour of the plaintiffs and that those facts would be sufficient to establish collusion which rendered the rule of lis pendens inapplicable. In this case, but for the agreement between Manickam Chetti and defendant 6 herein the executing Court would not have passed an order directly at variance to the term of the decree sought to be executed. The plaintiff was indifferent and the two con-testing defendants whose interests were adverse subsequently entered into an arrangement and consented to the prayer of defendant 6 being granted. They must have known by then about the mortgage in favour of the plaintiff herein, for the encumbrance certificate filed in the proceedings must have shown this mortgage, and when they entered into an arrangement like the one in question they must have known that it would be prejudicial to the plaintiff herein-mortgagee.

6. On the facts admitted, it will have to be found that there was collusion. The decision in Kishorilal v. Piarelal I.L.R. 1940 Lah. 60 has no application to the facts of this case. All that was held was that the question as to whether a certain proceeding was collusive or not was a question of fact which the High Court is not entitled to go behind. But then it does not appear that in any of the cases referred to therein the question was whether the fraud was sought to be inferred from some proved or admitted facts as in this case. I therefore find that the learned Subordinate Judge was not right in finding that there was no collusion. Inasmuch I have found that the order for sale itself is ultra vires, Section 52, T. P. Act, cannot apply. In the result the second appeal is allowed, the decree of the lower appellate Court is set aside so far as defendant 6 is concerned and the decree of the first Court restored with costs in all the three Courts. (Leave refused).


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