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Mrs. Levenia Ashton Vs. Madhabmonia Dasi - Court Judgment

LegalCrystal Citation
Decided On
Reported in5Ind.Cas.390
AppellantMrs. Levenia Ashton
RespondentMadhabmonia Dasi
Cases ReferredAshutosh v. Behari Lal
receiver, property in land of - exempt from sale except with permission of court--sale without such permission invalid--civil procedure code (act xiv of 1882), sections 244, 248, 311--execution sale without notice under section 248 irregular, not nullity--application to set aside such sale must succeed--sale may be set aside after confirmation even though purchaser is strange)--statute, provision in, absolute or directory--test. - .....decree might be attached and sold. as more than one year had elapsed from the date of the decree, notice was directed to be served upon the judgment-debtors under section 248 of the code of 1882. the judgment-debtors mentioned as such in the application for execution were, of course, amrita nath and madhabmoni. the court was not apprised that a receiver had been appointed by the high court, and had taken possession of the estate of dwarka nath, although there is evidence to show that as early as february or march 1908, the daughters of the mortgagor were aware of the appointment of the receiver. the notices directed, for the two judgment-debtors were served on the 15th may 1908 at the residence of amrita nath mitter, but the evidence shows conclusively that madhabmoni at that.....

1. We are invited in this appeal to discharge an order made by the Court below, the effect of which is to reverse a sale of a mortgage-decree in execution of a money-decree against the decree-holders. The circumstances which render necessary a decision upon the question of the legality of this sale, are all matters of record, and do not admit of serious controversy. On various dates between the 20th March 1893 and 30th March 1895, Pamelu Lambet, the widow of one William Makeon, borrowed large sums of money from Dwarka Nath Mitter of this city and hypothecated the interest she had obtained in the estate of her deceased husband under the Will of the latter. After the death of Dwarka Nath, his brother Amrita Nath as administrator and his widow, Madhabmoney as administratrix of the estate left by him, commenced an action on the 30th September 1901 to enforce the mortgage securities. They joined as parties defendants, the mortgagor, one Sarat Kumari, the purchaser of the equity of redemption, and two daughters of the mortgagor Mary and Rachel, who, subject to the life-interest of their mother, had apparently a right to maintenance out of the estate of their father. On the 30th March 1904, the suit was decreed against the first two defendants, the mortgagor and her assignee, and the usual directions for foreclosure of the life-interest of the mortgagor in the mortgaged premises were given. The suit was, however, dismissed against the third and fourth defendants, the daughters of the mortgagor, and a decree was made in their favour for costs of the litigation. The result was that there was a decree for foreclosure of the life-interest of the mortgagor in favour of the representatives of the mortgagee, and there was also a decree for costs against the latter in favour of the daughters of the mortgagor. An appeal was preferred against this decree by Amrita Nath alone to this Court but on the 5th March 1907, the appellant obtained leave to withdraw the appeal. This conduct on the part of Amrita Nath is explained by events which had happened in the meanwhile. Shortly after the mortgage decree had been made on the 80th March 1904, disputes broke out between Amrita Nath and his sister-in-law Madhabmoni, and the latter commenced an action against the former in the original side of this Court for administration of the estate of her husband, for possession thereof as beneficiary, for appointment of a Receiver pendente lite and for incidental reliefs. On the 21st August, this Court appointed the Receiver of the Court to be Receiver of the movable properties and of the rents, issues and profits of the immovable properties comprised in the estate of Dwarka Nath Mitter. The Receiver took possession accordingly, and continued to act till on the 30th July 1908, he was directed by an order of the Court to deliver possession of the immovable properties to Madhabmoni. This he did towards the end of August 1908 and continued as Receiver thereafter in respect of the movable properties only. While the Receiver was thus in possession of the entire estate, the daughters of the mortgagor on the 6th May, 1903, applied for execution of the decree for costs in their favour and they prayed that the foreclosure decree might be attached and sold. As more than one year had elapsed from the date of the decree, notice was directed to be served upon the judgment-debtors under Section 248 of the Code of 1882. The judgment-debtors mentioned as such in the application for execution were, of course, Amrita Nath and Madhabmoni. The Court was not apprised that a Receiver had been appointed by the High Court, and had taken possession of the estate of Dwarka Nath, although there is evidence to show that as early as February or March 1908, the daughters of the mortgagor were aware of the appointment of the Receiver. The notices directed, for the two judgment-debtors were served on the 15th May 1908 at the residence of Amrita Nath Mitter, but the evidence shows conclusively that Madhabmoni at that time resided at a different place in the suburbs, on account of the dispute which had broken out between herself and her brother-in-law. On the 27th May 1908, notices of attachment under Section 273 of the Code of 1882 were similarly served in Calcutta at the residence of Amrita Nath. On the 8th July 1908, the sale appears to have been proclaimed on the mortgaged house, and on the day following, the sale proclamation was fixed up in the Court house under Section 283. In the sale proclamation it was stated that the property to be sold was the life-interest of the widow of Make on and that she was an old lady of 73. The sale was held on the 11th August 1908. There were two bidders only, of whom one Mrs. Ashton, the aunt of the daughters of the mortgagor, purchased the mortgage decree for Rs. 450. It is worthy of note that the decree was for a sum of over Rs. 45,000, while the costs recoverable by the daughters of the mortgagor did not exceed Rs. 1,0.00. On the 4th November 1908, the sale was con-, firmed. In the interval, Madhabmoni having obtained delivery of possession of the immovable properties from the Receiver, applied to the Court for an order absolute, on the basis of the foreclosure decree. On the 19th December 1908, Mrs. Ashton preferred an objection on the ground that she had purchased the decree at the execution sale and was consequently the only person, entitled to ask for an order absolute. Madhabmoni, thus apprised of the execution sale, applied on the 23rd December 1908 for reversal of the sale on the grounds that no notice under Section 248 had ever been, served upon her and that the sale of the foreclosure-decree, while the entire estate was in the hands of a duly appointed Receiver, was illegal. On the 27th March 1909, the Receiver with the leave of the High Court applied for permission to join Madhabmoni in her application to set aside the sale and the Subordinate Judge made a provisional order to enable him to prosecute the; application jointly. On the 7th July 1909, the Court below held that the Receiver had no locus standi but directed the sale to be set aside at the instance of Madhabmoni, on the ground that notice under Section 243 had not been served upon her. The validity of this order is the subject of controversy in this appeal preferred by the auction purchaser. In support of the appeal, it has been contended that the omission to serve a notice under Section 248 does not necessarily invalidate a sale, specially when the purchaser is a stranger to the proceedings that, in any event the sale cannot be set aside without strict proof that the judgment-debtor has been in some way prejudiced by the irregularity, that the mere fact that a Receiver had been appointed does not affect the validity of the sale; and finally, that in any view, the judgment-debtor cannot urge any objection on this ground. All these points have been strenuously contested on behalf of the respondents and it has further been suggested that the proceedings were throughout fraudulent, and the purchase was really for the benefit of the daughters of the mortgagor.

2. The first point which requires consideration is the effect of the execution proceedings taken at a time when the Receiver appointed by this Court was in possession of the estate of Dwarka Nath Mitter. On behalf of the appellant, it has been contended that although execution against property in the custody of a Receiver may amount to a contempt of the authority of the Court by which the Receiver had been appointed, it does not necessarily invalidate the sale and that the judgment-debtor has in the present case no legitimate ground for complaint. In our opinion, this contention is not well founded and cannot be allowed to prevail. The general rule is well settled that property in the hands of a Receiver is exempt from judicial process, except of course to the extent permitted by the appointing Court; Trye v. Trye 13 Beav. 422 : 20 L.J. 368 : 15 Jur. 809, De Winton v. Brecon 28 Beav. 200 : 6 Jur. (N.S.) 1046 : 8 W.R. 385, Lane v. Sterne 3 Giff. 629 : 9 Jur. (N.S.) 320 : 10 W.R. 555. It has even been affirmed that though an attachment was levied on property before the appointment of the Receiver, it is within the sound discretion of the appointing Court to refuse to permit a sale of the property there under. On this principle, it has been held that property in the hands of a Receiver, though subject to a paramount judgment, cannot be sold under execution without leave of Court. A purchaser of such property at an execution sale buys at his peril, and the sale may be cancelled upon an appropriate application to the execution Court. The question was elaborately examined by the Supreme Court of the United States in Wiswall v. Sampson (1852) 14 Howard 52 : 14 Law. Ed. 322 and it was ruled that where real estate is in the custody of a Receiver appointed by a Court of Chancery, a sale of the property under an execution issued by virtue of a judgment-at-law is illegal, and may on this ground be avoided. The decision was based on the ground that the property is in the custody of the Court through its Receiver as a fund abiding the result of the pending suit; and all proceedings affecting such fund should be under the control of the Court having its custody; hence a sale of such property under execution or otherwise without leave of such Court is illegal and may be set aside. The same view was emphasised in the cases of Heidritter v. Elizabeth Oilcloth Coy. (1881) 112 U.S. 294 (303) : 21 Law. Ed. 729 and In re Tyler (1892) 149 U.S. 163 (181) : 37 Law. Ed. 689, in which the doctrine was laid down that if the contrary view were maintained, the very object of the appointment of a Receiver might be defeated, the whole fund may pass out of the hands of the Court before the final decree and the litigation thus become fruitless. This doctrine has been recognised, and applied in numerous cases which will be found collected in Rose's Notes, Volume V, page 228. In two of these Walling v. Miller (1888) 2 Am. St. Rept. 400 : 108 N.Y. 173, and Texas Trunk Railway Co. v. Lewis (1891) 26 Am. St. Rept. 776 : 81 Texas 1, it was pointed out that while a levy upon property in the possession of a Receiver may be punished by an appropriate procedure for contempt of Court, that is not the only remedy open to the party aggrieved, but as the levy upon and sale of the property upon such circumstances, is absolutely illegal because unauthorized by law, the sale may be avoided and possession recovered in any appropriate action commenced against the purchaser at the execution sale or against any other person to whom possession of such property has come. To the same effect is the opinion of leading text writers on the subject, amongst whom reference may be made to Freeman (Executions Volume I, Section 129, and Volume II, Section 287 and Kleber (Void Judicial Sales, Section 309). On the principles explained above, we must hold that the sale held on the 11th August 1906, after the Receiver had been appointed and before he had relinquished charge of the property ought to be set aside. We may add that it was faintly suggested at one stage of the argument on behalf of the appellant that the Receiver had not been, appointed in respect of the foreclosure decree and there was some discussion upon the question, whether a foreclosure decree should be deemed to be movable or immovable property. It is needless to examine this matter in detail, because we are satisfied that the Receiver was appointed in respect of the whole estate of Dwarka Nath Mitter in controversy in the administration action. It is well settled under the English law that a Receiver of lands does not take actual possession but he only receives the rents and he does so, not by virtue of the estate vested in him, but merely as an officer of the Court authorized to collect the rents upon the title of persons who are parties to the action. Exparte Evans 13 Ch. Div. 252, Vine v. Raleigh 24 Ch. Div. 238 at p. 243 : 49 L.T. 440 : 31 W.R. 855. The direction, therefore, to the Receiver to take possession of the movable property and of the rents and profits of the immovable properties does not justify the conclusion that the Receiver was not appointed in respect of the foreclosure decree. Besides, as he was expressly authorized to get in and collect all debts and claims due to the estate, he had ample authority to apply for an order absolute on the decree nisi for foreclosure. Upon the first question, therefore, we must hold in favour of the respondents.

3. The second question which requires consideration is the effect of the omission to issue a notice under Section 248, Civil Procedure Code, upon one of the judgment-debtors, Madhabmoni. On behalf of the appellant it has been contended, on the authority of the decision of their Lord ships of the Judicial Committee in Malkarjun v. Narhari 25 B. 337 : 27 I.A. 216, that such omission is a mere irregularity and does not necessarily invalidate the sale. On the other hand on behalf of the respondents, reliance has been placed upon the cases of Rajbullub v. Gossain Dass 13 W.R. 40013 W.R. 400; Ramessuri Dassee v. Doorgadas Chatterjea 6 C. 103; Imamunnissa v. Lilak Husain 3 A. 424; Gopal Chunder v. Gunamoni Dasi 20 C. 370; Sahdeo Pandey v. Gyasiram Gywal 21 C. 19, to show that a sale held in execution of a; decree without issue of a requisite notice under; Section 248 is, on that ground alone, invalidated. We have carefully examined the cases relied upon on both sides, as also the decision of the Bombay High Court in Parashram Hanmanta v. Balmakund Lachiram 32 B. 572. It may be conceded that there are expressions in some of these judgments which are not easy to reconcile with the decision of the Judicial Committee in Malkarjun v. Narhari 25 B. 337 : 27 I.A. 216. This case is an authority for the proposition that a sale held without issue of a notice under Section 248, is not a nullity and cannot be ignored by the party whose property has been sold as if the sale had never taken place; but such omission is a serious irregularity. In one passage in their judgment, their Lordships observe that omission to serve notice on the legal representative is a serious irregularity: sufficient by itself to entitle the plaintiff' to vacate the sale and then they add that there; may be defences to such a proceeding and justice cannot be done unless those defences are examined by legal methods. In the case then before their Lordships, no proceedings had been taken to impugn the sale within one year thereof, and with reference to this, circumstance, the following observation is made: 'If the sale is a reality at all, it is a reality defeasible only in the way pointed out by law; and it seems to their Lordships that the case must fall, either within Section 311 of the Code or within Article 12(a) of the Limitation Act of 1877 or within both; any way there exists a bar by one year's delay'. In other words, a sale impeached for such irregularity must be set aside either by a suit Gopal Chunder v. Gunnamoni Dasi 20 C. 370 or by an appropriate application in the execution proceedings Sahdeo v. Ghasi Ram 21 C. 19. It may be observed, however, that Section 311 of the Code of 1882 would hardly be applicable, as the irregularities mentioned in that, section refer to the publication or conduct of the sale, that is, to the proclamation of the; sale under Section 287 and to the action of the officer by whom the sale is held. In this view, the proceeding would be one under Section 244, Parash Ram v. Bal Mukund 32 B. 572 and the matter could not be made the subject of Controversy in a regular suit. In the present proceedings, therefore, the judgment-debtor is entitled to impeach the validity of the sale. What defence, then, in the language of the Judicial Committee, is open to the auction purchaser in such a proceeding? It was faintly suggested on behalf of the appellant that the judgment-debtor has not been prejudiced by the omission to serve notice under Section 248, Civil Procedure Code. We are unable to accept this contention as pound. As observed by Earran, C.J. in Erava v. Sidramappa 21 B. 424 at p. 482, the object of a notice under Section 248 is not merely to give the judgment-debtor opportunity to show cause why the decree should not be executed, because, for instance, it is time-barred or has been adjusted, but also to give him an opportunity to satisfy it before execution issues. In the case before us, the wisdom of such a provision in the law is very forcibly illustrated. The estate of Dwarka Nath was in the hands of two administrators, one of whom the widow was the ultimate beneficiary; Disputes had broken out between them and the estate had passed into the hands of a Receiver. Execution was taken out for a small sum and the only notice attempted to be served, was upon the one administrator who, in the events which had happened, had no interest in the preservation of the property. Neither the beneficiary nor the Receiver was apprised of the execution. The result was that a foreclosure decree for over Rs. 45,093 was purchased by a near relation of the decree-holders for the insignificant sum of Rs. 450. It was suggested, indeed, that the property was not undersold. This suggestion proves to be obviously groundless when we remember that the rent of the house was Rs. 150 a month and a sale of the life-interest for three months' purchase, could hardly be seriously defended as adequate. Besides, in the sale proclamation, it had been stated that the age of the lady whose life-interest was to be sold was 73, a recital which, upon the evidence: that she was about 60 years old, was grossly inaccurate and would effectually frighten away intending bidders. Under these circumstances, the conclusion appears to us to be irresistible that an application made to set aside the sale on the ground of want of the requisite notice under Section 248 must succeed. We may add that the view we take, namely, that the omission to serve a notice under Section 248 is a serious irregularity which makes the sale voidable, in an appropriate proceeding, has been recognised as sound in cases of the highest authority. As explained by the Court in the case of Jogendra Chandra Roy v. Shyam Das 1 Ind. Gas. 168 : 9 C.L.J. 271 : 36 C. 543, the provisions of Section 248 have been borrowed from the English procedure for a writ of scire facias. In England, it is well settled, that if execution is issued on a judgment without issue of a notice where such notice is essential, the execution is not necessarily a nullity, though it would be set aside as: wholly irregular if proceedings had duly be taken in that behalf. Blanchenay v. Burt (1843) 4 Q.B. 737 : 3 G. and D. 613 : 12 L.J.Q.B. 291 : 7 Jur. 575; Good Title v. Bad Title 9 Dowling 1009. The same rule; has been adopted in the. American Courts, as is shown by the cases of Eddy v. Coldwell (1892) 37 Am. St. Rep. 672 : 23 Oregan 163; De Loach v. Bobbins (1893) 48 Am. St. Rep. 46 : 102 Alabama 288 and Gardner v. Mobile &c.; R.R. Roy (1893) 48 Am. St. Rep. 84 : 102 Alabama 635, in which it was ruled that if a writ of scire facias has not been served out, the sale is nevertheless valid till it is avoided; in other words, it is an irregularity which is waived by failure to move to quash the writ. In the present case, on the principle explained above, the judgment-debtor was amply justified in her application to set aside the sale and as No. valid defence has been suggested, the sale must be reversed.

4. Two arguments were addressed to us on behalf of the appellant which require some notice. It was contended in the first place that as the application to set aside the sale had been made after its confirmation, the sale could not be attached on the ground of any irregularity. In the second place it was contended that as the auction purchaser; was a stranger to the execution proceedings, the sale could not be impeached at all. The first of these positions was sought to be supported by a reference to the decisions in Balkrishna v. Masuma Bibi 5 A. 142 at p. 157 (P.C) : 13 C.L.R. 232 : 9 I.A. 182 and Rajah Mohesh Narain Singh v. Kishanund 9 M.I.A. 324 at p. 342 : 5 W.R. 7 (P.C.). The cases referred to, however, are clearly distinguishable. Even if it is assumed that the grant of the sale certificate cures all irregularities in the proceedings antecedent to the sale, the principle cannot be applied where the person affected has no notice of the proceedings, and is thug prevented from attacking the legality of the proceedings before the sale is actually held. In fact there are numerous cases in the books in which; the validity of sales has been allowed to be impeached after confirmation. Bhubon Mohun v. Nunda Lal 26 C. 324; Durga Charan v. Kali Prasnna 26 C. 727 : 3 C.W.N. 586 and Thathu Naick v. Kondu Reddy 32 M. 242 : 5 M.L.T. 248 : 1 Ind. Gas. 221. The principle was also expressly recognised by this Court in the Full Bench decision in Ashutosh Sikdar v. Behari Lal Kirtania 35 C. 61 : 11 C.W.N. 1011 : 6 C.L.J. 320. The contention of the appellant to the contrary must consequently be negatived. In support of the second contention, namely, that the sale cannot be impeached as the purchaser is a stranger to the execution proceedings, reference has been made to the cases of Rewa Mahton v. Ram Kishen Singh 14 C. 18; Calvert v. Godfrey (1843) 6 Beav. 97 at p. 104 : 12 L.J. Ch. 305 and Bennett v. Hamill 2 Sch. and Lef. 581. These cases, however, are clearly distinguishable and are not authorities for the broad proposition that a purchase at an execution sale by a stranger can under no circumstances be set aside. The authorities on the subject are reviewed in the judgment of this Court in Janakdhari Lal v. Gossain Lal 1 Ind. Cas. 871 : 13 C.W.N. 710. No doubt if at an execution sale the property has passed into the hands of a stranger, and the decree is ultimately set aside because made ex parte or is reversed on appeal, the validity of the sale is not affected there by; nor is his title affected if the sale has taken place on the basis of a decree, the claim under which ought to have been set off against another judgment-debt. But it cannot be maintained that if there are good grounds for reversal of the sale under Section 244 or 311, Civil Procedure Code, the sale cannot be set aside because the purchaser happens to be a stranger to the proceedings. The second contention of the appellant must, therefore, be overruled.

5. We may add that on behalf of the respondents, it was suggested that as the language of Section 248, Civil Procedure Code is mandatory, a sale; held without issue of the requisite notice is in contravention of an express provision of the law and is consequently, a nullity. This argument, in our opinion, is not well founded. As was pointed out by this Court in Ashutosh v. Behari Lal 35 C. 61 : 11 C.W.N. 1011 : 6 C.L.J. 320, no general rule can be, laid down to determine whether a provision in a statute is absolute or directory; and. although the language used may be mandatory it is by no means conclusive. One test which may usefully be applied is, whether a party, may waive the benefit of the particular provision. If it can be-waived, a sale held in contravention of such a provision, is not a nullity; it stands good till it has been avoided by an appropriate proceeding. From this point of view, the conclusion appears to be irresistible that the sale held in this case is open to successful attack; both on the ground; that notice under Section 248, Civil Procedure Code was not served upon one of the judgment-debtors and that the execution proceedings culminating in the sale were taken when the estate was in the hands of a Receiver.

6. The result, therefore, is that the order of the. Court below must be affirmed and this appeal dismissed with costs. We asses the hearing fee at five gold mohurs.

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