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Manmatha Nath Chakravarty and anr. Vs. Sachindra Kumar Chakravarty and anr. - Court Judgment

LegalCrystal Citation
SubjectCivil
CourtKolkata High Court
Decided On
Case NumberCivil Rule No. 3456 of 1953
Judge
Reported inAIR1956Cal59,59CWN1082
ActsCode of Civil Procedure (CPC) , 1908 - Order 21, Rule 90
AppellantManmatha Nath Chakravarty and anr.
RespondentSachindra Kumar Chakravarty and anr.
Appellant AdvocateNalini Kumar Mukherjee, Adv.
Respondent AdvocateSyama Charan Mitter and ;Birendra Nath Banerjee, Advs.
Cases ReferredCoal Co. Ltd. v. Surendra Nath Laik
Excerpt:
- .....put to sale appears to have been divided into four lots and the total price mentioned in the sale proclamation was rs. 850/-. the price 'fetched at the sale was rs. 929-0-6 the purchasers being the execution-creditors themselves. both the courts have found that such price was very 'inadequate'.3. the petitioners did not leave the sale unchallenged and made the usual application under order 21, rule 90, civil p. c. the application contained the usual allegations of a wholesale character charging the opposite parties with fraud and irregularity of every possible kind.it was alleged that the relevant notices had all been suppressed in collusion with the process servers and that the sale proclamation itself had been caused to be drawn up in violation of the requirements of order 21,.....
Judgment:

Chakravartti, C.J.

1. This is a Rule calling upon the opposite parties to show cause why orders passed in their favour by the Courts below, dismissing an application made by the petitioners under Order 21, Rule 90, Civil P. C., should not be set aside. The Rule involves a point of some interest.

2. The parties are co-sharers. It appears that the opposite parties made a payment of revenue, a portion of! which was payable by the petitioners. Thereafter, as was to be expected, they brought a suit for re-imbursement in order to recover from the petitioners the amount of revenue which it was their duty to pay but which the opposite parties had been compelled to pay on their behalf.

The suit was decreed in due course and execution was taken out against the undivided one-third share of the petitioners in the common homestead of the parties. The property put to sale appears to have been divided into four lots and the total price mentioned in the sale proclamation was Rs. 850/-. The price 'fetched at the sale was Rs. 929-0-6 the purchasers being the execution-creditors themselves. Both the Courts have found that such price was very 'inadequate'.

3. The petitioners did not leave the sale unchallenged and made the usual application under Order 21, Rule 90, Civil P. C. The application contained the usual allegations of a wholesale character charging the opposite parties with fraud and irregularity of every possible kind.

It was alleged that the relevant notices had all been suppressed in collusion with the process servers and that the sale proclamation itself had been caused to be drawn up in violation of the requirements of Order 21, Rule 66, Civil P. C. with a view to conveying to the intending bidders a misleading impression about the property offered for sale. It was also alleged that the price actually fetched at the sale was so low that it itself constituted evidence of fraud in publishing and conducting the sale.

4. Both the Courts below have found that the allegations made with regard to the suppression of notices were irresponsible and not true in fact. They have also found in express terms that notice of the drawing up of the sale proclamation was served on the petitioners, but in spite of receiving that notice, they did not attend at the drawing up of the proclamation.

Chiefly on that ground the Courts below have held that it was not open to the petitioners to ask the Court to set aside the sale on the ground that the proclamation on which the sale had taken place was defective and that the valuation of the property entered in it at the instance of the execution creditor was fraudulently low. Although the Courts did not refer expressly to the second proviso added by this Court to Order 21, Rule 90, Civil P. C., there can be no doubt that it was that provision which they had in mind their decision was in accordancewith what they considered to be its true meaning.

The reason upon which the Courts below proceeded appears from one sentence which I might quote from the judgment of the learned District Judge

'Hence there cannot be any escape' observed the learned Judge, 'from the conclusion that the appellants not having preferred any objection to the drawing up of the sale proclamation after receipt of notices under Order 21, Rule 66, Civil P. C. are precluded from challenging the sale on the ground of any defect in the sale proclamation, including the valuation.'

5. It was contended on behalf of the petitioners that irrespective of what their own conduct might have been the Court had a duty to check the correctness of the information inserted by the opposite parties in the sale proclamation and that the opposite parties themselves had a duty to be honest. That argument was obviously based on the provisions of Sub-rule (3) of Order 21, Rule 66, Civil P. C. which imposes upon an applicant for an order for sale the duty of supplying and authenticating the matters to be specified in the proclamation and Sub-rule (4) which empowers the Court to call witnesses for the purpose of ascertaining the matters to be specified in the proclamation and therefore im-pliedly requires the Court to make a correct as-' certainment of such matter.

The answer of the opposite parties to the contention of the petitioners is, as might be expected, based upon the second proviso to Order 21, Rule 90, Civil P. C. added by this Court. They would read the proviso as an absolute provision debarring a judgment-debtor from raising any question as regards any irregularity in the sale proclamation, if he had had an opportunity of appearing at the drawing up of the proclamation and taking an objection as to the matters of which he subsequently complained.

6. The language of the second proviso of Order 21, Rule 90 is as follows:

'That no sale shall be set aside on the ground of any defect in the proclamation of sale at the instance of any person who after notice did not attend at the drawing up of the proclamation or of any person in whose presence the proclamation was drawn up, unless objection was made by him at the time in respect of the defect relied upon.'

The proviso was added in 1933. What considerations influenced this Court in enacting this proviso can only be guessed, but it was suggested by Mr. Mitter on behalf of the opposite parties that probably the reason for the enactment of the proviso was to be sought in certain observations made by the Judicial Committee in the case of--'Arunachallam Chetti v. Arunachallam Chatti' 15 Ind App 171 at p. 174 (PC) (A).

'It would be very difficult indeed', observed their Lordships in that case, 'to conduct proceedings in execution of decrees by attachment and sale of property if the judgment-debtor could lie by and afterwards take advantage of any misdescription of the property attached, and about to be sold, which he knew well, but of which the execution creditor or decree-holdermight be perfectly ignorant that they should take no notice of that, allow the sale to proceed, and then come forward and say the whole proceedings were vitiated.'

These observations were made as long ago as in 1888 and had long passed into the web of the relevant case law before this High Court enacted the second proviso to Rule 90 of Order 21, Civil P. C. I doubt whether the origin of the proviso lay in the observations to which Mr. Mitter referred and my doubt is increased by the fact that the observations contemplate a case where certain facts are known to the judgment-debtors but unknown to the execution creditor or decree holder.

They do not cover a case where the execution creditor or the decree-holder, being awareof the real facts, omits to set them out fully or correctly in the sale proclamation and the judgment-debtor, being equally aware of the same facts, fails to take an objection at the drawing up of the proclamation but starts an attack only after the sale has been held.

7. We need not. however, speculate as to what the reasons might have been for enacting the proviso to Rule 90 of Order 21. It is there and full effect must undoubtely be given to its terms. The real question is what the proviso means.

8. It is impossible now to decide any question under Order 21, Rule 90, Civil P. C., so far as it turns upon alleged irregularities in a sale proclamation, without reference to the decision of the Judicial Committee in the case of -- 'Maru-danayagam Pillai v. Manickavasakam Chettier' . The petitioners did not cite the decision but we ourselves invited a discussion as to its effect.

The case went up from Madras and the irregularity in the sale proclamation was that it overstated the amount due under a decree on a prior mortgage, a substantial part of the debt having in fact been paid off since the passing of the decree. The judgment-debtor had obtained several adjournments in order, apparently, to raise a question as to the extent of the encumbrance but ultimately failed to formulate any objection.

So far as their Lordships of the Judicial Committee were concerned they thought that there were reasons for suspecting that the judgment-debtor might have known more about the dealings with his property in the prior mortgage suit than he was prepared to admit and that there were reasons, at least equally cogent, for suspecting that the execution creditor was also in like case.

They were, however, not prepared to disregard the findings of fact by the Courts below which were in a contrary sense and proceeded to dispose of the appeal on the basis that neither the judgment-debtor nor the execution creditor knew at the material date the position under the prior mortgage. Fraud was definitely excluded. The sale, however, was nevertheless set aside on the ground that the execution creditor, if he did not know the position in the prior mortgage suit could easily have ascertained it and, secondly, that the executing Court also could not be acquitted of a measure of careless-ness in not having checked the figure entered in the sale proclamation as still due on the prior mortgage. Although the decision of the Judicial Committee rests on the two grounds I have just stated, their Lordships nevertheless made the following observation:

'If the respondent (that is the execution creditor) knew the facts; if he purchased at what he knew was too low a figure based on an upset price accepted by the Court owing to his own initial misrepresentation and subsequent suppression of material facts, his conduct would amount to fraud on the Court, as the learned Subordinate Judge points out. The Court could not have allowed the respondent purchasing at a Court sale to take advantage of his own fraud, whatever the conduct of the appellant might have been.'

It will appear from the above passage that according to the Privy Council suppression by the execution creditor of a relevant fact of which he was aware would be fraud and that such fraud would vitiate the sale, irrespective of whether the judgment-debtor, having had ample opportunities for taking an objection, had failed to do so. I must recall, however, what I have already said namely, that the case before the Judicial Committee had gone from Madras where there was no provision in force corresponding to the second proviso to Order 21 Rule 90 added by this Court.

The question which, therefore, arises is this. Does the decision of the Judicial Committee give any reason for holding that despite the second proviso to Order 21, Rule 90, a judgment-debtor who has failed to attend at the drawing up of a proclamation of sale and raising the objection on which he relies for his attack on the sale, is not altogether precluded from relying on an irregularity in the sale proclamation for urging that the sale should be set aside? The answer it appears to me must Be in the affirmative.

9. It is perhaps not without significance that the language used in the second proviso to Rule 90 of Order 21 is 'any defect in the proclamation of sale'. 'Defect' is a weak word and could according to its ordinary connotation, cover only omissions, irregularities or deficiencies but not also a fraudulent suppression of distortion of facts.

It is reasonable to suppose that this Court by enacting the second proviso, did not intend to lay down that even if the execution creditor might be guilty of fraud in stating the particulars required to be specified in the sale proclamation or actually specified, failure of the judgment-debtor, who had been properly notified to raise his objection at the drawing up of the proclamation would preclude him from questioning the sale even on the ground ef such fraud.

I cannot imagine this Court intending to rule that even prejudice caused by fraud could be waived or that a judgment-debtor would be fixed with constructive waiver even against deliberate fraud of the execution creditor. The proper construction of the second, proviso, to my mind, is that it is limited to cases where thesale proclamation is defective in that some of the particulars required to be entered have not been entered or that there has been an insufficient entry in respect of other particulars without any wilful suppression on the part ot the execution creditor or that certain entries have been defective in form.

The rule, in my view, is not intended to cover wilful suppression or fraud of other types and to extend immunity to the execution creditor even in respect of such fraud, if the judgment-debtor has not been sufficiently 'alert in raising his objection or has been negligent in doing so. It ought not to be read as meaning that once a fradulent sale proclamation has passed through the stage provided for its scrutiny without being questioned, although the judgment-debtor had an opportunity for questioning it, the execution creditor acquires a vested right in his fraud which can no longer be disturbed.

The correct reading appears to me to be that it is limited to defects other than those caused by the fraud of the execution creditor. If the second proviso be read in that sense, as in my view it ought to be, it can stand along side the decision of the Judicial Committee without excluding the operation of the latter for all purposes, but on the other hand leaving room for the application of the very salutary principle which that decision has laid down.

To put it briefly the rule will cover omissions deficiencies or formal defects in sale proclamation, but not fraud in the causing of its drawing up or in the furnishing of particulars for its contents. Where there is such fraud, the principles laid down by the Judicial Committee will apply and in spite of the failure of the judgment-debtor to take his objection betimes, the sale must be set aside on the ground that an execution creditor purchasing at a Court sale cannot be allowed to take advantage of his own fraud and on the further ground that a sale, held upon a proclamation vitiated by fraud on the part of the execution creditor who was under a duty to be honest and to cause to be set forth correctly the particulars required by Order 21, Rule 66, Civil P. C., cannot be upheld.

The second proviso to Order 21, Rule 90 will apply and have full effect in cases where defects of form have occurred in drawing up the sale pro-clamation or there has been some omission of particulars without any fraud on the part of anybody. To take the instant case, all columns in the sale proclamation except the first and the second were left absolutely blank. These omissions, to my mind, are covered by the second proviso to Rule 90 of Order 21, but not deliberate under-statement of value, if there was any such under-statement in the figures set out against the different lots.

10. Mr. Mitter who appears for the opposite parties drew our attention to the decision of this Court in the case of the -- 'New Bir-bhum Coal Co. Ltd. v. Surendra Nath Laik' : AIR1934Cal205 , which would seem to be on all fours with the present case.

The decision, however, was given before the decision of the Judicial Committee and in view of the opinion expressed by their Lordships thatomission by the execution creditor to mention in the sale proclamation relevant facts of which he is aware amounts to fraud, I consider it reasonable to hold that so far as the decision of this Court was a pronouncement on understatement of value in tha sale proclamation, its persuasive power is now greatly reduced and it must now be read, as modified by and subject to the later decision of the Judicial Committee.

The learned Judges of this Court seem to have adverted to the very considerations which weighed with the Judicial Committee in arriving at their decision, namely the duty of the Court to check the valuation and the duty of the execution creditor to be honest, but they felt pressed by the earlier decision of the Judicial Committee in the case of 15 Ind App 171 (PC). In my view, the later decision of the Privy Council removes the difficulty by specifying the matters with regard to which the judgment-debtor will not be affected by his default, and therefore the second proviso to Order 21, Rule 90 must now be read in the. way I have ventured to suggest.

11. To turn now to the facts of the present case, the Courts below have found that the price at which the property was sold was 'very inadequate'. They have also found that the inadequacy of the price was not so shocking as to warrant an inference of fraud. They were obviously looking at the matter from the post sale angle of vision when the question is not whether the statement of the value in the sale proclamation constituted fraud, but whether the price fetched at the sale was so shockingly low as to suggest by itself that the transaction had been a fraudulent one.

Mr. Mitter conceded that so lay as the position at the earlier point of time was concerned, the Courts below had not applied their mind to the matter and had arrived at no finding. I have already explained that they considered the matter to be covered by the second proviso to Order 21, Rule 90 and necessarily considered it unnecessary to investigate whether the statement of the value in the sale proclamation was or was not fraudulent. That investigation must now take place.

12. I have already pointed out that so far as the price fetched at the sale is concerned, the Courts below have found it to be very inadequate. If it be found that the execution creditors knew of the real value or had means of ascertaining it and yet stated the value as Rs. 850/- it would according to the principles laid down by the Judicial Committee may be sufficient evidence of fraud so as to vitiate the sale.

If on the other hand, it be found that although the valuation was stated at too low a figure the execution creditors so stated it without any knowledge of the real value or that they had no means of ascertaining what that value was and that no fraud was involved in the under statement, there would be nothing in the value stated which would furnish a ground for challenging or setting aside the sale.

13. It will appear from what I have stat-ed above that a vital point in the case remains to be decided. The case must accordingly go back to the trial Court for the purpose. In view of the finding that the price of Rs. 929-0-6 was inadequate it must be taken that the valuation of Rs. 850/- as given in the sale proclama-tiqn was an under-valuation.

The learned Judge will find whether such under-valuation was given by the execution creditor with knowledge of the true value and whether the statement of the value was otherwise affected by fraud or whether it was a mere under-statement without any fraud being involved in it. In deciding the issue of fraud, he will bear in mind the principles laid down by the Judicial Committee in the case of -- .

14. In the result, this Rule is made absolute. The orders passed by the Courts below are set aside and the case is sent back to the trial Court for decision in the light of the observations contained in this judgment and in accordance with law. If the trial Court finds that no element of fraud was involved in the understatement of the valuation in the sale proclamation, the application for setting aside the sale will be dismissed, but if fraud be found, it will have to be allowed.

15. Costs of this Rule will abide the result -- the hearing fee in this Rule being assessed 'at two gold mohurs.

Lahiri, J.

16. I agree.


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