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Sri Rajendra Mills Ltd., by Its Managing Director, Chockalingam Chettiar Vs. Pandian Bank Ltd., Represented by their Attorney, Canara Bank Ltd., Acting Through Salem Gugai Branch Manager and Attorney Agent, K.V. Ramadoss and ors. - Court Judgment

LegalCrystal Citation
SubjectProperty;Civil
CourtChennai High Court
Decided On
Reported in(1983)2MLJ139
AppellantSri Rajendra Mills Ltd., by Its Managing Director, Chockalingam Chettiar
RespondentPandian Bank Ltd., Represented by their Attorney, Canara Bank Ltd., Acting Through Salem Gugai Bran
Cases ReferredAchanta Venkata Purna Sivaramayya and Ors. v. Manne Venkayamma and Ors.
Excerpt:
subject: civil - - , which had subsequently merged with the canara bank (gugai branch) by deposit of title deeds on 10th june, 1959. since the mortgagors failed to repay the mortgage amount, the bank filed a suit in o. but they added that even if such permission could be asked they were not satisfied that it was a proper case in which the permission should be given. it is well settled that a person who is not a party to the suit may prefer an appeal with the leave of the appellate court and such leave should be granted if he would be prejudicially affected by the judgment......chettiar. so far as item 4 is concerned on an application to set aside the court-auction sale filed by the civil revision petitioner, it was set aside. in respect of other items the sale was confirmed and the 10th respondent herein had purchased the other items from the said kandaswami chettiar. the 10th respondent also filed e.a. no. 1518 of 1975 to implead her as a party respondent to the execution petition and the same was initially dismissed by the subordinate judge and on revision to the high court the high court directed to implead the 10th respondent herein as a party respondent in the execution petition. exhibit b-1 is the sale deed in favour of the 10th respondent for rs. 1,30,000, and in the sale deed it is stated that the purchaser is bound to pay whatever amount.....
Judgment:
ORDER

R. Sengottuvelan, J.

1. This civil revision petition is filed against the order of the Subordinate Judge of Salem in R.E.P. No. 1 of 1967 in O.S. No. 185 of 1964, directing the sale of items 1 and 4 mentioned in the schedule to the petition to be sold in the first instance. The civil revision petitioner was not a party to the execution proceedings. Hence he filed the above civil revision petition after obtaining the leave of this Court as per the order of Padmanabhan, J. in C.M.P. 8680 of 1980, dated 2nd September, 1980.

2. The facts of the case are briefly as follows: The respondents 1 to 9 in the execution petition, who are the respondents 2 to 10 herein, mortgaged 5 items of properties to Messrs. Pandian Bank Ltd., which had subsequently merged with the Canara Bank (Gugai branch) by deposit of title deeds on 10th June, 1959. Since the mortgagors failed to repay the mortgage amount, the Bank filed a suit in O.S. 185 of 1964 on the file of the Subordinate Judge of Salem for realising the amount due under the mortgage. On 11th November, 1964, the mortgagors, the respondents 2 to 10 herein, seem to have executed an agreement of sale in respect of item 4 of the properties mentioned in the execution petition, in favour of the civil revision petitioner. On 1st March, 1965 a preliminary decree was passed by the Subordinate Judge of Salem in favour of the abovesaid Bank, the first respondent herein, for the amount due under the mortgage. On 27th March, 1965, the mortgagors, the respondents 2 to 10 herein, executed a sale deed in respect of item 4 in favour of the civil revision petitioner herein. In that sale deed the civil revision petitioner, the purchaser, was directed to pay a sum of Rs. 85,000 towards the above mortgage debt. On 31st July, 1966 final decree for sale of the properties in favour of the above said bank was passed in O.S. No. 165 of 1964. The respondents 2 to 10 herein who executed the sale deed on 27th March, 1965 did not register the same and hence the sale deed was compulsorily registered under Section 64 of the Registration Act on 6th February, 1967.

3. The respondents 2 to 10 herein, earlier to the abovesaid proceedings, had also other simple money creditors and one of them filed O.S. No. 16 of 1961 and obtained a simple money decree against them and filed E.P. No. 143 of 1964 for sale of the properties of the respondents 2 to 10 herein, in Court auction. On 25th July, 1976, the properties of the respondents 2 to 10 herein, were sold to one Kandasami Chettiar in Court auction. The civil revision petitioner on the strength of the sale in its favour filed an application in R.E.A. No. 443 of 1967 in R.E.P. No. 143 of 1964 to set aside the Court-auction sale in respect of the properties purchased by it, viz., item 4 in the execution petition. The Subordinate Judge set aside the sale in respect of item 4 on 28th April, 1973, and confirmed the sale in respect of other items.

4. When the abovesaid Bank filed an application to execute the final decree in their favour in R.E.P. No. 1 of 1967 in O.S. No. 185 of 1964, the civil revision petitioner filed an application in R.E.A. No. 487 of 1976 for impleading the civil revision petitioner as a party in the execution proceedings. By order, dated, 6th September, 1976, the Subordinate Judge dismissed the application in R.E.A. No. 487 of 1976, holding that the civil revision petitioner cannot be impleaded as a party to the execution proceedings.

5. In the meanwhile, the auction-purchaser in R.E.P. No. 143 of 1964 sold the properties by means of a sale deed, dated 1st December, 1973, marked as Exhibit B-l, to the 10th respondent herein. The 10th respondent herein on the strength of the sale deed in her favour filed an application in R.E.A. No. 1518 of 1978 to implead her as a party respondent. The said application was also dismissed. But, the 10th respondent herein filed a revision to the High Court which was allowed and subsequently she was impleaded as a party respondent in the execution proceedings. The tenth respondent herein filed a counter claiming for marshalling and for a direction that the properties purchased by her may be sold last.

6. In the course of the execution-proceedings in R.E.P. No. 1 of 1967 by means of an order dated, 4th August, 1980, the Subordinate Judge directed that items 1 and 4 of the properties mentioned in the execution petition should be sold first and items 2, 3 and 5 should be sold last. The civil revision petitioner who is a purchaser of item 4 of the petition-mentioned properties is challenging the said order by means of the above Civil revision petition. Before filing the above civil revision he had filed the C.M.P. No. 8680 of 1980 for permission to file the civil revision petition. Though he was not a party to the execution proceeding since his rights are prejudicially affected he obtained the leave of the Court to file the civil revision petition as per the order of Padmanabhan, J., passed in the above C.M.P. No. 8680 of 1980 on 2nd September, 1980. Subsequently, the decree-holder filed C.M.P. No. 8862 of 1982 and the second respondent herein, who is one of the judgment-debtors filed C.M.P. No. 7868 of 1982 for revoking the leave granted in C.M.P. No. 8680 of 1980. All the above three matters are taken up together for disposal.

7. The points for consideration in this civil revision petition are as follows--

2. Whether the leave granted by Padmanabhan, J., in C.M.P. No. 8680 of 1980 to file the above civil revision petition against the order of the Subordinate Judge in R.E.P. No. 1 of 1967 is liable to be revoked?

2. Whether the order of the Subordinate Judge passed in R.E.P. No. 1 of 1967 directing the properties described as items 1 and 4 to be sold first is sustainable?

8. On the first question the learned advocate for the respondent-2 herein, who are the judgment-debtors, contends that the revision itself is not maintainable and that the leave granted without notice to them and without hearing their objections is contrary to the principles of natural justice and that the civil revision petitioner has no locus standi to file the above revision petition. It is his further contention that the leave can be granted by the Court only to persons who are affected and who could not be made a party to the suit. In this case there is already a finding of the Court in application in R.E.A. No. 487 of 1976 that the civil revision petitioner is not a necessary party to the execution proceedings which order has become final. The civil revision petitioner did not file any revision against the order passed in R.E.A. No. 487 of 1976. When a remedy is available to the party and when the party has not taken advantage of it he cannot approach the Court for the same relief in a subsequent proceeding. The civil revision petitioner has filed C.M.P. No. 8680 of 1980 suppressing the fact that there was already a prior order by the Subordinate Judge which had become final. On behalf of the civil revision petitioner several authorities were cited in support of the proposition that the civil revision petitioner is a party affected by the order passed by the Subordinate Judge and as such hi has got every right to file the above civil revision petition with the leave of the Court.

9. In the case reported in Smt. K. Ponnalugu Ammal v. The State of Madras, represented by the Secretary to the Revenue Department, Madras and Ors. (1955) 1 M.L.J. 410 : I.L.R. (1953) Mad. 809 : A.I.R. 1958 Mad. 485 the Bench observed as follows:

On the immediate question, namely, whether a person who is not a party to a suit or other proceeding is under no circumstances entitled to prefer an appeal against the decision in that suit or proceedings, there is very little authority in India. In Indian Bank Ltd., Madras v. Bansiram Jashamai : AIR1934Mad360 Mad. 360. Madhavan Nair and Jackson, JJ., held that neither under the general principles of law nor under the Civil Procedure Code, can a person who was not a party to a suit prefer an appeal against the decree therein. In that case, the Official Receiver representing the general body of creditors was a defendant in a suit brought by two plaintiffs to declare their title to two items of property. The suit went against the Official Receiver. But, he did not file an appeal. One of the creditors thereupon filed an appeal against the decree in the suit and along with it filed an application praying that in the circumstances this Court may be pleas d to permit the applicant to appeal against the decree. The learned Judges held that under the Civil Procedure Code, 'no person who is not a party to the suit can prefer an appeal under Section 96, because the right of appeal is a special creature of statute and it can be exercised only by those in whom the power is vested expressly or impliedly by the statute'. Two decisions of the Chancery Court in England were relied on by the appellant in which leave to a person interested in, but not a party to an action, was given to appeal from an order by which the person was aggrieved. But the learned Judges did not act on those decisions as in their opinion they related to powers of the appellate Court to grant leave to appeal and such power was vested under the practice prevailing in the English Courts. No provisions of law or rule of practice, they said, has been shown to them entitling the appellant to claim such leave. But they added that even if such permission could be asked they were not satisfied that it was a proper case in which the permission should be given. This ruling was followed by a single Judge (Abdur Rahman, J.), in Kasi Chettiar v. Secretary of State (1940) I M.L.J. 531 : 53 L.W. 479 : A.I.R. 1941 Mad. 5 7 .

10. In the case reported in Dimmita Pullayya and Ors. v. Abdebolu Nagbhushanam and Ors. (1961)2 An. W.R. 204 : A.I.R. 1962 A.P. 140 a Full Bench of the Andhra Pradesh High Court observed as follows--

If a person is deemed to be a party under Order 1, Rule 8, Civil Procedure Code, and for purposes of Section 11, Explanation 6, Civil Procedure Code, leave to appeal could be granted to him by the appellate Court in an appropriate case, if the decision rendered in these proceedings would adversely affect him. It is not in every case where a person may be remotely or indirectly affected that leave should be granted but it should be granted to persons who though not economine parties would be bound by the decree or judgment in the proceedings and who could not by reason of Explanation 6 to Section 11, Civil Procedure Code, against the same question in separate representative capacity.

11. In the case reported in the Province of Bombay v. Western India Automobile Association : AIR1949Bom141 a Division Bench of the Bombay High Court observed as follows--'The Civil Procedure Code does not in terms lay down as to who can be a party to an appeal. But it is clear, and this fact arises from the very basis of appeals, that only a party against whom a decision is given has a right to prefer an appeal. But it is recognised that a person who is not a party to the suit may prefer an appeal if he is affected by the order of the trial Court, provided he obtains leave from the Court of appeal.'

12. In the case reported in Heersingh and Ors. v. Venka and Anr. a Division Bench of the Rajasthan High Court observed as follows--

As a rule, it is only a party to the proceeding in the primary Court or tribunal who has the right to prefer an appeal against the order of that Tribunal provided of course, he is aggrieved by it, and if any other person happens to feel aggrieved by that order, and his interests are affected thereby, he can file an appeal against it only by leave of the Court of appeal but not otherwise. Whether such leave should be granted or not is a matter which lies in the discretion of the Court of appeal. No hard and fast rule can be laid down to crystallise the exercise of such discretion, and the decision in each case is bound to depend upon its own facts and circumstances.

13. In the case reported in Executive Officer, Sri Padmanabhaswami Temple v. Raghavan Pillai and Anr. : [1971]3SCR247 a Division Bench of the Kerala High Court observed as follows--

while a party to a suit against whom the judgment is given can appeal against it as of tight, a person who is not on the party array but who is bound by the decree or whose interests are prejudicially affected by it may appeal with the leave of the appellate Court.

14. In the case reported in Smt. Jatan Kumar Golcha v. Golcha Properties Ltd. A.I.R. 1961 Ker.141 the Supreme Court observed as follows:

It is well settled that a person who is not a party to the suit may prefer an appeal with the leave of the appellate Court and such leave should be granted if he would be prejudicially affected by the judgment.

15. Relying on these decisions it is contended on behalf of the civil revision petitioner that the civil revision petitioner is a party affected by the order of the executing Court and as such he had got every right to file the civil revision petition after obtaining the leave of the Court. The civil revision petitioner as a subsequent purchaser of item 4 of the suit properties is a person affected by the order of the Court directing the sale of items 1 and 4 of the properties to be sold first and as such the argument of the civil revision petitioner that he is a person prejudicially affected by the order of the executing Court will have to be accepted.

16. The second contention on behalf of the contesting repondents is that, even if the civil revision petitioner is a party whose rights are prejudicially affected, he having already filed an application in E.A. No. 487 of 1976 for impleading and the same having been dismissed and the said order having become final he cannot once again file an application for the same relief. But, it has to be noted that at the time of the previous application there was no order by which he was prejudicially affected. Hence, the Subordinate Judge dismissed the application for impleading the civil revision petitioner as a party respondent since he was only a purchaser pendente lite and the decree is binding on him. But, now in view of the orders passed in execution by which the civil revision petitioner is prejudicially affected he has got every right to take appropriate steps to protect his interest. The order of the Subordinate Judge refusing to implead the civil revision petitioner as a party respondent in the execution proceedings cannot be a bar to the civil revision petitioner to file the above civil revision petition against the order prejudicially affecting him, after obtaining the leave of the Court. The civil revision petitioner is not praying for the same relief as in the previous application. But he is trying to question the order of the Subordinate Judge in revision as a person prejudicially affected and the previous order will not come in the way of the civil revision petitioner to agitate his rights. Hence this contention of the contesting respondents also will have to be negatived. It is contended on behalf of the contesting respondents that in any event the Court ought to have granted leave only after notice to the respondents and after hearing them. In support of this contention reliance is placed on a decision of a single Judge of the Lahore High Court in Sant Ram and Ors. v. Mutual Bank of India Ltd. and Anr. A.I.R. 1933 Lah. 266 where it has been observed that in granting leave the opposite party is entitled to notice. But, no doubt in this case, the leave was granted without issuing notice to the respondents. But, the contesting respondents ire not in anyway prejudicially affected since the matter has been gone into fully in the abovesaid two civil miscellaneous petitions filed by them to revoke the leave granted and their contentions are fully considered.

17. In view of the authorities cited above and the fact that the civil revision petitioner is a person prejudicially affected by the order of the executing Court this is a fit case where leave should be granted to the civil revision petitioner to file the above civil revision petition and hence the leave already granted is not liable to be revoked. Hence C.M. P. No. 7868 and 8862 of 1982 are liable to be dismissed.

18. The second question relates to the subject-matter of the civil revision petition itself, viz., whether, the order of the Subordinate Judge directing the properties described as items 1 to 4 to be sold in the first instance and unless the sale amount fetched is not sufficient to satisfy the decree, then to conduct the sale of the remaining items 2, 3 and 5 on the same day, is sustainable. This order was passed at the instance of the 10th respondent. As already stated, in a simple money decree in O.S. No. 16 of 1961 items 1 to 5 were sold in A.P. No. 143 of 1964 and the same was purchased in Court auction by one Kandaswami Chettiar. So far as item 4 is concerned on an application to set aside the Court-auction sale filed by the civil revision petitioner, it was set aside. In respect of other items the sale was confirmed and the 10th respondent herein had purchased the other items from the said Kandaswami Chettiar. The 10th respondent also filed E.A. No. 1518 of 1975 to implead her as a party respondent to the execution petition and the same was initially dismissed by the Subordinate Judge and on revision to the High Court the High Court directed to implead the 10th respondent herein as a party respondent in the execution petition. Exhibit B-1 is the sale deed in favour of the 10th respondent for Rs. 1,30,000, and in the sale deed it is stated that the purchaser is bound to pay whatever amount found due to Pandyan Bank in O.S. No. 185 of 1964, the suit in respect of which the present execution is levied.

19. The contention of the civil revision petitioner is that the lower Court is not justified in passing the abovesaid order importing the principle of marshalling laid down in Section 56 of the Transfer of Property Act, for the following reasons--

1. A purchaser in Court-auction or person claiming under him is not entitled to the relief of marshalling;

2. The recitals in the sale deed, Exhibit B-l that the purchaser is bound to pay the debt due to the decree-holder amounts to a contract to the contrary and as such no relief of marshalling can be given.

3. There are no equitable grounds apart from Section 56 of the Transfer of Property Act which justifies the order of the lower Court.

With regard to the first and second reasonings the civil revision petitioner also relied upon the case reported in V.A. Sarangapani Pillai v. The Kumbakonam Bank Limited and Ors. I.L.R. (1965) Mad. 160 : 78 L.W. 35 where it has been held that Section 56 of the Transfer of Property Act covers only the case of voluntary sale and that it cannot apply to persons who purchase the mortgaged property in execution of a money decree. But the provisions of the section are not exhaustive. The purchaser for value without notice of the mortgaged property ought not to suffer any detriment due to any mistake or lack of bona fides on the part of the mortgagor. It is a question of adjustment of equities upon the particular facts of each case. Reliance is also placed upon the case reported in Jagannathan v. Amrutham and Ors. (1980) T.L.N.J. 402 where Nainar Sundaram, J. expressed the same view that the Court-auction-purchaser in respect of one item of a mortgaged property cannot invoke the provisions of Section 56 of the Transfer of Property Act. In the case reported in Achanta Venkata Purna Sivaramayya and Ors. v. Manne Venkayamma and Ors. : (1945)2MLJ412 it has been held that where one of the mortgaged properties was sold for the purpose of freeing the other properties from the mortgage it could be presumed there was a contract to the contrary within the meaning of Section 56 of the Transfer of Property Act, and the purchaser was not entitled to marshalling. In view of the above decisions and in view of the fact, that there is a recital in Exhibit B-l which amounts to a contract to the contrary, the argument of the civil revision petitioner that the 10th respondent is not entitled to the relief of marshalling will have to be accepted.

20. On the third question that even otherwise there are no equitable grounds that can justify the order of the lower Court, Mr. O.V. Balaswami, learned Counsel appearing for the 11th respondent, contends that apart from Section 56 of the Transfer of Property Act the lower Court can pass an order on equitable grounds and the order of the lower Court cannot be challenged by the civil revision petitioners in the execution proceedings before the lower Court since the first respondent in the execution petition, namely, the second respondent herein, has filed a counter statement praying that the Court any order the sale of item 1 last and that items 2, 3, 4 and 5 may be sold earlier and the 10th respondent claimed that items 2, 3 and 5 may be sold last If the lower Court is to pass an order on equitable considerations it should be equity to all concerned. The lower Court did not consider the plea of the second respondent that item I may be sold as the last item. Even when allowing that items 2, 3 and 5 may be sold last, the Court has not set out the reasons for coming to such a conclusion. The 10th respondent had not paid the proportionate decree amount in discharge of the suit mortgage claim. When he has not paid any amount it is not known how the 10th respondent is entitled to equitable considerations in the matter of the sale of the properties. Further the civil revision petitioner will be entitled to the same consideration to which the 10th respondent will also be entitled. No doubt, the civil revision petitioner did not file any revision against R.E.A. No. 487 of 1976 which he filed for impleading him as a party in the execution proceedings. Since this Court had allowed the civil revision petitioner to file the above revision and in view of the fact he has deposited Rs. 1,00,000 (one lakh) towards the mortgage claim there is a change of circumstance and hence on equitable considerations he will have to be permitted to protect his interest in the execution proceedings. The earlier dismissal of the application in R.E.A. No. 487 of 1976 will not stand in the way. As per Order 22, Rule 10, Civil Procedure Code, in case of an assignment, creation or devolution of any interest during the pendency of a suit, the suit may, by leave of the Court, be continued by or against the person to or upon whom such interest has devolved. The civil revision petitioner relies on this provision and contends that he is entitled to continue the proceedings. The argument on behalf of the contesting respondent is that Order 22, Rule 10, Civil Procedure Code, can apply only in case of persons who have acquired an interest prior to the final decree for sale, and persons who have acquired an interest subsequent to the final decree for sale cannot take advantage of the same and step in during the execution proceedings. But in this case the sale in favour of the civil revision petitioner is dated 27th March, 1965, and the final decree was passed an 31st August, 1966 and the sale deed was registered on 6th February, 1977. Hence it dated back to the date of execution, viz., 27th March, 1965, and as such the civil revision petitioner can only be considered as a person who become entitled to the interest of the property prior to the passing of the final decree. In this view also the civil revision petitioner is entitled to take part in the execution proceedings. Considering the entire circumstances, I am of the view that the lower Court's order that items 1 and 4 should be sold first and items 2, 3 and 5 to be sold later is not supported by valid reasoning and the same will have to be set aside. Hence the above civil revision petition will have to be allowed and the matter remitted back to the lower Court for fresh disposal in the light of the observations made above. The lower Court will take into consideration the pleas of the subsequent purchasers and come to a conclusion bearing in mind the principles stated above.

21. In the result C.R.P. No. 2337 of 1980 is allowed and the C.M.P. Nos. 7868 and 8862 of 1982 are dismissed. C.R.P. No. 2337 of 1980 is remitted to the lower Court for fresh disposal in the light of the observations made above. There will be no order as to costs in all the three matters.


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