1. This second appeal arises out of a suit to set aside the order on a claim petition. The plaintiff is the decree-holder in a money suit (O.S. No. 356 of 1919) against one Murugappa Mudali. Murugappa sold the property sought to be attached to the present defendant by Ex. B dated 31st May 1926. Both the Courts have concurrently found that this was a bona fide transfer for valuable consideration and was not a nominal transaction nor one intended to defeat the creditors of the judgment-debtor. The plaintiff attempted to bring this property to sale in execution of his money decree in 1927 and this defendant then filed C.M.P. No. 190 of 1927 on 4th March 1927, just a few days before the date fixed for sale. On 7th March 1927 the executing Court passed the following order:
The petition is filed late. Claim will be notified. Subject to that the petition is recorded.
2. It is much to be regretted that notwithstanding frequent expressions of disapproval by the High Court of this method of dealing with claim petitions, executing Courts still persist in that manner of disposal. As long as this practice continues, any Court which has got to deal with the matter when a plea of limitation under Article 11 is raised cannot shut its eyes to the obvious in justice that must result from an unnecessarily strict interpretation of Order 21, Rule 63 of the Code. As has often been pointed out, there is no provision for or legal significance in the direction that the claim is to be notified to intending bidders and what is worse the direction that the petition is recorded is calculated to lull the claimant into the belief that his petition has not really been decided against him. I might have had some, difficulty in making up my mind as to the rights of the parties if immediately after this order the property had been brought to sale and no suit had been filed by the claimant within a year after this order. For some reasons not quite apparent on the present state of the record the execution sale did not take place. There was thus ample time for the claimant to approach the executing Court again and say : 'Now that there is plenty of time, investigate my claim.' He accordingly filed C.M.P. No. 1043 of 1930 and on that petition the executing Court investigated the merits of the claim and upheld it. This is therefore not a case in which property has been brought to sale on the strength of an order dismissing the claim and I have not got to deal with the rights of an auction-purchaser. The question is whether there is anything in the course of events above stated which compels the Court to bring to sale property which on investigation has been found not to belong to the judgment-debtor.
3. The learned District Judge has decreed the suit on the strength of the Full Bench decision in Venkataratnam v. Ranganayakamma 1919 Mad. 738. In view of the reasoning of the Full Bench in the case I have to emphasise the fact that in the present suit we are not directly concerned with the scope of Article 11, Lim. Act. The claimant is not the plaintiff who is seeking to set aside an order on a claim petition and the suit does not relate to a claim order passed more than one year before the date of the suit. The point for determination is whether when the executing Court passed on the first occasion the order above extracted, at a time when the sale was imminent, it precluded itself from dealing with the matter again and investigating the claim though the sale did not take place as originally notified. A suit under Article 11 will not fall within the language of Section 28, Lim. Act, so that the omission to bring a suit of the kind contemplated by Article 11 will not operate to extinguish the rights of the claimant or the judgment-debtor. The only consequence of the non institution of a suit within the time allowed by Article 11 is that under Order 21, Rule 63 the order passed on the claim petition becomes conclusive.
4. But when the order is in the terms; quoted above, what is it that is concluded between the parties There has been no adjudication on the merits; the petition was not even formally dismissed it was merely recorded; and in the face of the numerous cases which lay down that the rule of constructive res judicata ought to be applied with, great caution to execution orders, it seems to me unjust to hold that the first order dated 7th March 1927 passed in those terms because the sale was imminent ever afterwards prevented the executing Court from investigating the claim more fully when duly moved by, the claimant before the sale actually takes place. It does not carry one very far to say that a claim order is conclusive against a party whether he is attacking it as a plaintiff or as a defendant. The real difficulty in the case of many of these irregular orders is what exactly is the decision which is to be held conclusive. In the Full Bench case in Venkataratnam v. Ranganayakamma 1919 Mad. 738, it may be noticed; that there were two orders in the execution department, one dated 23rd December 1910 and the other dated 16tb October 1911. The reference to the Full Bench was made only with reference to the effect of the order dated 16th October 1911. Sadasiva Ayyar, J., was of opinion that the order of December 1910 was not really a final order. That order was in these terms:
As this petition was filed late, this claim is ordered to be notified to the intending bidders.
5. When the matter was before the Full Bench, the learned Judges did not intimate that in view of this order it was no longer open to the executing. Court to deal further with the claim. The learned Chief Justice adverts to this opinion of Sadasiva Ayyar, J., and merely goes on to say that the order of October 1911 was a final order so as to start limitation under Article 11. It musts be remembered that the claimant was the plaintiff in that case and the judgment of the learned Chief Justice points on that in view of the wider language adopted in 1908 both in. Order 21, Rule 63, Civil P.C., and Article 11, Lim. Act, limitation under Article 11 may commence to run even in cases in which there has been no investigation on the merits. But neither the learned Chief Justice nor any of the other Judges of the Full Bench suggested how a mere rule of conclusiveness as against a successful claimant is to be evolved or implied from a previous order which merely refused to investigate the claim. It seems reasonable to conclude that the conclusiveness even as against a defendant can arise only it an order on the merits had been passed under Rules 60, 61 and 62. Even assuming that a dismissal may be interpreted as an implied adjudication against a claim, it will be unreasonable to regard an order like that passed on the first occasion in the present case merely recording the petition as an implied, adjudication on the merits against the claim, so as to preclude the executing Court on a later occasion from investigating the claim on the merits.
6. The trend of authority in this Court after Venkataratnam v. Ranganayakamma 1919 Mad. 738 has on the whole been against extending the principle of that decision : cf. Lakshmi Ammal v. Kadiresan Chettiar 1921 Mad. 488, Parambil Saharabi v. Ali 1923 Mad. 295 and Ayya Pattar v. Manakkal 1920 Mad. 822. The remarks of Jackson, J., in Muthuraman Chettiar v. Seetharamayya 1926 Mad. 216 seem appropriately to describe the situation in the present case. The order passed on 7th March 1927 can at best be described only as an interim decision (in the words of the learned Judge) or an order refusing to stop the sale which was imminent. When for some reason the sale did not take place, the learned Judge pointed out that the so-called interim order is not really a disposal of the claim petition and that it was the duty of the Court to investigate the case on the merits and pass a final order. For these reasons I am unable to agree with the learned District Judge that the order on C.M.P. 1043 of 1930 is unsustainable or that it should be set aside. The second appeal is allowed, the decree of the lower appellate Court set aside and the decree of the District, Munsif restored with costs here and in the lower appellate Court.