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1966 SCC OnLine SC 63 : (1967) 2 SCR 77 : AIR 1967 SC 608 :
(1968) 1 SCJ 222
In the Supreme Court of India
(BEFORE K.N. WANCHOO AND G.K. MITTER, JJ.)
JANAK RAJ … Appellant;
Versus
GURDIAL SINGH AND ANOTHER … Respondent.
Civil Appeal No. 1322(N) of 1966*, decided on November 8, 1966
Advocates who appeared in this case:
The appellant appeared in person;
D.D. Sharma and M.C. Bhatia, for Respondent 1.
The Judgment of the Court was delivered by
G.K. MITTER, J.— This is an appeal from a judgment and order of
the Punjab High Court dated December 24, 1965 on a certificate
granted by the said Court.
2. The question involved in this appeal is, whether a sale of
immovable property in execution of a money decree ought to be
confirmed when it is found that the ex parte decree which was put into
execution has been set aside subsequently.
3. The facts are simple. One Swaran Singh obtained an ex parte
decree on February 27, 1961 against Gurdial Singh for Rs 519. On an
application to execute the decree, a warrant for the attachment of a
house belonging to the judgment-debtor was issued on May 10, 1961.
At the sale which took place, the appellant before us became the
highest bidder for Rs 5100 on December 16, 1961. On the 2nd of
January 1962, the judgment-debtor made an application to have the ex
parte decree set aside. On January 20, 1962 he filed an objection
petition against the sale of the house on the ground that the house
which was valued at Rs 25,000 had been auctioned for Rs 5000 only
and that the sale had not been conducted in a proper manner inasmuch
as there was no due publication of it and the sale too was not held at
the proper hour. By an order dated April 19, 1962, the executing court
stayed the execution of the decree till the disposal of the application for
setting aside the ex parte decree. On October 26, 1962 the ex parte
decree against the defendant-judgment-debtor was set aside. On
November 3, 1962 the auction-purchaser made an application for
revival of the execution proceedings and for confirmation of the sale
under Order 21 of the Rule 92 of the Code of Civil Procedure. On
November 7, 1962 the judgment-debtor filed an objection thereto
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contending that the application for revival of execution proceedings was
not maintainable after setting aside the ex parte decree and that the
auction-purchaser was in conspiracy and collusion with the decree-
holder and as such not entitled to have the sale confirmed. It is to be
noted here that the case of collusion was not substantiated. On August
31, 1963 the executing court overruled the objection of the judgment-
debtor and made an order under Order 21 Rule 92 confirming the sale.
This was affirmed by the first appellate court. On second appeal to a
Single Judge of the Punjab High Court, the auction-purchaser lost the
day. An appeal under clause 10 of the Letters Patent in the Punjab High
Court met the same fate. Hence this appeal.
4. Before referring to the various decisions cited at the Bar and
noted in the judgment appealed from, it may be useful to take into
consideration the relevant provisions of the Code of Civil Procedure. So
far as sales of immovable property are concerned, there are some
special provisions in Order 21 beginning with Rule 82 and ending with
Rule 103. If a sale had been validly held, an application for setting the
same aside can only be made under the provisions of Rules 89 to 91 of
Order 21. As is well known, Rule 89 gives a judgment-debtor the right
to have the sale set aside on his depositing in court a sum equal to five
per cent of the purchase money fetched at the sale besides the amount
specified in the proclamation of sale as that for the recovery of which
the sale was ordered, less any amount which may, since the date of
sale, have been received by the decree-holder. Under sub-rule (2) of
Rule 92 the court is obliged to make an order setting aside the sale if a
proper application under Rule 89 is made accompanied by a deposit
within 30 days from the date of sale. Apart from the provision of Rule
89, the judgment-debtor has the right to apply to the court to set aside
the sale on the ground of a material irregularity or fraud in publishing
or conducting it provided he can satisfy the court that he has sustained
substantial injury by reason of such irregularity or fraud. Under Rule 91
it is open to the purchaser to apply to the court to set aside the sale on
the ground that the judgment-debtor had no saleable interest in the
property sold. Rule 92 provides that where no application is made
under any of the Rules just now mentioned or where such application is
made and disallowed the court shall make an order confirming the sale
and thereupon the sale shall become absolute. Rule 94 provides that
where the sale of immovable property has become absolute, the court
must grant a certificate specifying the property sold and the name of
the person who at the time of sale was declared to be the purchaser.
Such certificate is to bear date of the day on which the sale becomes
absolute. Section 65 of the Code of Civil Procedure lays down that
where immovable property is sold in execution of a decree and such
sale has become absolute, the property shall be deemed to have vested
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in the purchaser from the time when it is sold and not from the time
when the sale becomes absolute. The result is that the purchaser's title
relates back to the date of sale and not the confirmation of sale. There
is no provision in the Code of Civil Procedure of 1908 either under Order
21 or elsewhere which provides that the sale is not to be confirmed if it
be found that the decree under which the sale was ordered has been
reversed before the confirmation of sale. It does not seem ever to have
been doubted that once the sale is con-firmed the judgment-debtor is
not entitled to get back the property even if he succeeds thereafter in
having the decree against him reversed. The question is, whether the
same result ought to follow when the reversal of the decree takes place
before the confirmation of sale.
5. There does not seem to be any valid reason for making a
distinction between the two cases. It is certainly hard on the defendant
-judgment-debtor to have to lose his property on the basis of a sale
held in execution of a decree which is not ultimately upheld. Once
however it is held that he cannot complain after confirmation of sale,
there seems to be no reason why he should be allowed to do so
because the decree was reversed before such confirmation. The Code of
Civil Procedure of 1908 contains eleborate provisions which have to be
followed in cases of sales of property in execution of a decree. It also
lays down how and in what manner such sales may be set aside.
Ordinarily, if no application for setting aside a sale is made under any of
the provisions of Rules 89 to 91 of Order 21, or when any application
under any of these Rules is made and disallowed, the court has no
choice in the matter of confirming the sale and the sale must be made
absolute. If it was the intention of the legislature that the sale was not
to be made absolute because the decree had ceased to exist, we should
have expected a provision to that effect either in Order 21 or in Part II
of the Code of Civil Procedure of 1908 which contains Sections 36 of 74
(inclusive).
6. It is to be noted however that there may be cases in which, apart
from the provisions of Rules 89 to 91, the court may refuse to confirm a
sale, as, for instance, where a sale is held without giving notice to the
judgment-debtor, or where the court is misled in fixing the reserve
price or when there was no decree in existence at the time when the
sale was held. Leaving aside cases like these, a sale can only be set
aside when an application under Rule 89 or Rule 90 or Rule 91 of Order
21 has been successfully made.
7. Provisions in the Code of Civil Procedure over the years have not
been unanimous in this respect. In Sorimuthu v. Muthukrishna1
Madhavan Nair, J. traced the course of these provisions from the Code
of 1859 up to the Code of 1908. The relevant sections in the Code of
1859 were Sections 256, 259 and 260. The net effect of these
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provisions was that no sale of immovable property would become
absolute until the sale had been confirmed by the court and after the
sale had become absolute, the court was to grant a certificate to the
purchaser stating that he had purchased the right, title and interest of
the defendant in the property sold. Section 314 and Section 316 of the
Act of 1877 correspond in part with Section 256 and Section 259 of the
Act of 1859. Section 316 was amended in 1879. The proviso to this
section as amended was to the effect that the purchaser was to have
title to the property sold from the date of the confirmation of the sale
only if the decree under which the sale took place was subsisting at
that date. Section 316 with the proviso was re-enacted in the Code of
1882. In the Code of 1908 Section 316 was split up into Section 65 and
Order 21 Rule 94 but the proviso was not included either in Section 65
or in Rule 94 of Order 21.
8. Elaborate arguments were put forward in the Madras case just
now cited as to the cause and effect of the deletion of the proviso to
Section 316 of the Code of 1908. Madhavan Nair, J. referred to the
report of the Select Committee which considered the Bill to amend the
Civil Procedure Code of 1877 as showing that the alteration was
effected in order to preclude the doubt which had arisen in Bombay
where a certificate had been granted to an auction-purchaser in
ignorance of the fact that the decree under which the sale took place
had been previously reversed in appeal. Probably the decision which the
Select Committee had in mind was the case of Basappa v. Dundayya2
before the said decision in the High Court of Bombay. In that case, the
Court had observed that it was the duty of the purchaser to satisfy
himself before he applied for confirmation of the sale that the decree
was still in existence. The learned Judge Madhavan Nair, J. pointed out
that neither in the Act of 1859 nor in the Act of 1877 was there any
specific statement of law regarding the time when the title to the
property vested in the auction-purchaser as is to be found in Section
316 of the Act of 1877 after the amendment in 1879, which was
repeated as Section 316 of the Act of 1882, and in the present Act of
1908. Further, according to the learned Judge:
“By Section 49, Amending Act of 1879, it was enacted that the
title of the auction-purchaser to the property would start from the
date of the certificate and in order that it may be so formal
recognition was given to the principle that there must be a decree in
existence at the time of the certificate; and that the proviso came to
be enacted as a necessary condition upon which would depend the
commencement of the title of the auction-purchaser; and when the
law on the latter point was altered, there was no need for the
existence of the proviso and so it was dropped out from the new
Code.”
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9. Nothing has been urged before us which would lead us to take a
contrary view. Under the present Code of Civil Procedure, the court is
bound to confirm the sale and direct the grant of a certificate vesting
the title in the purchaser as from the date of sale when no application
as is referred to in Rule 92 is made or when such application is made
and disallowed.
10. We may now proceed to take note of a few decisions before the
3
Code of 1908 came into force. In Subbayya v. Yellamma which was
decided in the year 1885 the suit having been instituted in 1876, the
facts were as follows. The plaintiff obtained a decree against the
defendant for Rs 5617/12/0. On the death of the defendant, his son
was made a party to the suit as a representative of his father and when
the son died, the grandson was made a party to the suit as
representative of his grandfather. In 1883 the decree-holder attached
certain lands and the grandson, the petitioner before the High Court,
filed an objection to the attachment claiming the property as his own.
The objection and the claim were disallowed by the District Judge by
order dated August 20, 1883. On December 5, 1883, the petitioner filed
an appeal in the High Court against that order and the High Court on
February 22, 1884 — reversed the order of the District Judge. In the
meantime the lands attached were put up for sale and were purchased
on February 22, 1884 the same day as the High Court allowed the order
disallowing the petitioner's claim. The District Judge was not aware of
the order of the High Court nor did it appear which order was made first
in point of time on February 22. The highest bidder was a stranger to
the suit who had paid the purchase money and was a bona fide
purchaser. On August 16, 1884, the petitioner filed a petition in the
District Court praying that the attached lands might be given to and
put in his possession. This was dismissed by the District Judge. The
petitioner applied to the High Court in revision under Section 622 of the
Code of Civil Procedure on the ground that the District Judge had
refused to exercise the authority vested in him to restore the petitioner
to possession under the order of the High Court and on the ground that
the confirmation was made without jurisdiction. He also presented an
appeal against the order as a question between the decree-holder and
petitioner, parties to the suit, relating to execution. The High Court
observed that the petitioner might have applied to the District Court to
stay the execution pending the sale, but did not do so, and he might,
by diligence, after the appeal order was made have prevented the sale
certificate and the possession from being given to the purchaser, but he
did not do so. In these circumstances, the Court felt that even if it had
the power to order the District Judge to deliver possession to the
appellant, it would be inclined to refuse to do so.
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11. In Rewa Mahton v. Ram Kishen Singh4 the Judicial Committee
observed that notwithstanding anything in Section 246 of the Code of
Civil Procedure of 1877, the auction-purchaser was not bound to inquire
whether the judgment-debtor held a cross decree of higher amount
against the decree-holder any more than he was to inquire, in an
ordinary case, whether the decree, under which execution had issued,
had been satisfied or not.
12. In Zain-ul-Abdin Khan v. Muhammad Asghar Ali Khan5 certain
sales had been held in execution of an ex parte decree and some of the
properties were bought by bona fide purchasers. The decree was
modified afterwards as a result of an appeal to Her Majesty in Council
and it was found that as the decree finally stood, it would have been
satisfied without the sales in question having taken place. The
judgment-debtor sued the purchasers of some of the sales including
holders of the decree and bonafide purchasers. It was held by the
Judicial Committee that as against the bonafide purchasers who were
strangers, the suit must be dismissed.
13. In Doyamoyi Dasi v. Mojumdar6 which was decided under the
Code of 1882 both the learned Judges held in favour of the judgment-
debtor. Maclean, C.J. remarked that when the ex parte decree was
discharged, no decree in the suit remanded and that being the position
no sale could be confirmed when the decree under which was made had
ceased to exist. Both the learned Judges referred to Section 316 of the
Code which included the proviso.
7
14. In Chitambar Shrinivasbhat v. Krishnappa there was an ex
parte decree which was found to have been fraudulently obtained by
the first defendant against the plaintiff and in execution thereof certain
lands belonging to the plaintiff had been sold by auction and purchased
by the second defendant. The plaintiff sued to set aside the sale and to
recover possession of the land. It was found that although the decree
was obtained by fraud, the property was sold at a considerable
undervalue and the purchaser had no knowledge of the fraud. It was
held by the Bombay High Court that a purchaser for valuable
consideration without notice of the fraud was not liable to have the sale
in his favour set aside. It will thus be seen that even before 1908 the
different High Courts were always disposed to uphold the auction
purchase in favour of a stranger to the suit when he was no party to a
fraud against the judgment-debtor and where the case did not clearly
fall within the proviso to Section 316 of the Code of 1882.
15. Let us now examine a few decisions given under the Code of
8
1908. In Shankar v. Jawaharlal a Full Bench of the Judicial
Commissioner's Court at Nagpur went elaborately into the question and
came to the conclusion that:
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“a private satisfaction of a decree certified in court after the sale
of immovable property has been held and before the confirmation of
the sale is ordered, does extinguish the decree and prevent the court
from confirming the sale in favour of the auction-purchaser, if he be
the decree-holder himself, but it does not extinguish the decree and
prevent the court from confirming the sale where a third person has
purchased the property bonafide at the auction-sale.”
16. In Kabiruddin v. Krishna Rao9 an application to set aside the
decree under Order 21 Rule 89 was made by the judgment-debtor after
the expiry of 30 days from the date of sale. The decree had been
satisfied before the date of the application. It was held by the Judicial
Commissioner's Court, by a majority, that the lower court was bound to
reject the application made under Order 21 of the Rule 89 and therefore
to confirm the sale.
10
17. In Nanhelal v. Umrao Singh the decree-holder and judgment
debtor had agreed to adjust the decree before confirmation of an
execution sale. Allowing the appeal from Nagpur, the Judicial
Committee held that when once a sale had been effected and third
party's interest intervened, there was nothing in Order 21 Rule 2 to
suggest that the sale could be disregarded and the court could refuse
to confirm the sale on that ground. The Board pointed out:
“The only means by which the judgment-debtor can get rid of a
sale, which has been duly carried out, are those embodied in Rule 89
viz. by depositing in court the amount for the recovery of which the
property was sold, together with 5 per cent on the purchase money
which goes to the purchaser as statutory compensation, and this
remedy can only be pursued within 30 days of the sale…. That this is
so is, in Their Lordships' opinion, clear under the wording of Rule 92,
which provides that in such a case (i.e. where the sale has been duly
carried out), if no application is made under Rule 99:
“the court shall make an order confirming the sale and thereupon
the sale shall become absolute”.”
18. This aspect was stressed in the judgment of Madhavan Nair, J.
who also referred to certain instances where sales had been refused to
be confirmed on grounds other than those contained in Order 21 Rules
89 and 90. The learned Judge pointed out that these were instances
where the court held that in law there was no sale at all. In Sorimuthu
case1 Madhavan Nair, J. refused to set aside the execution sale of
property in favour of a stranger auction-purchaser on the ground that
the decree leading to the sale had been upset in appeal before the
confirmation of the sale.
19. In Birdichand v. Ganpatsao11 it was held that it did not matter
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that the sale had not been confirmed at the date of the reversal of the
decree unless there was a successful application under Rules 89, 90 or
91 of Order 21.
20. In Ambujammal v. Thangavelu Chettiar12 it was observed:
“There is no provision in the Code for the cancellation of a sale
merely because of the cancellation of the decree and though it is in
accordance with justice that a person who has succeeded in appeal
should get from the opposite party such restitution as is possible,
there is no principle of justice whereby an innocent third party who
has purchased in a valid auction held by the Court should be
deprived of his property, merely because the decree under which the
sale was held has been cancelled in appeal. On general principles the
judgment-debtor can look to the decree-holder to give restitution
when the decree has been set aside in appeal, but there is no
general principle which would give him a similar right to look to a
third party who has for good consideration purchased the property
sold through the Court.”
21. In S. Chokalingam v. N.S. Krishna13 there was a letters patent
appeal out of restitution proceedings in the Sub-Court at Madurai. The
first respondent was the judgment-debtor, the second respondent was
the decree-holder-purchaser and the appellant was a purchaser from
the decree-holder-purchaser. A Division Bench of the Madras High Court
observed:
“If the purchaser were to lose the benefit of his purchase on the
contingency of the subsequent reversal of the decree, there will be
no inducement to the intending purchasers to buy at execution sale
and consequently the property would not fetch its proper price at
such sales, and the net result would be that the judgment-debtor
would be the ultimate sufferer. This wise policy of protecting the title
of the stranger purchaser, even though in any individual case it may
work some hardship, is clearly conceived in the interests of the
general body of judgment-debtors so that purchasers will freely bid
at the auction without any fear of later objection. But in the case of a
decree-holder-purchaser the Rule is different and in that case the
purchase is subject to the final result of the litigation between the
decree-holder and the judgment-debtor.”
22. In Lalji Sah v. Sat Narain14 the Patna High Court held that
auction-sale of property belonging to a minor for grossly inadequate
price due to gross negligence of the guardian would not affect the
auction-purchaser for value who was not a creature of the decree-holder
and a suit to set aside such sale did not lie.
23. In Mani Lal v. Ganga Prasad15 it was held that the mere fact that
the auction-purchaser knew that the judgment-debtor had filed an
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appeal against the decree in which the sale was held would not affect
the bona fide nature of his purchase even if the decree was ultimately
reversed.
24. In Abdul Rahim v. Abdul Haq16 which was a decision of a Single
Judge of the Lahore High Court, it was held that the sale in execution of
a decree could not be set aside merely on the ground that after the
date of the sale but before its confirmation, the judgment-debtor was
declared to be a member of an agricultural tribe entitled to protection
under the provisions of the Punjab Alienation of Land Act.
25. All the judgments so far noticed are against the contention of
the respondent. Our attention was however drawn to a judgment of the
17
Calcutta High Court in Baburam Lal v. Debdas Lala . There is an
observation to the effect that where the lower court's decree has been
reversed in appeal, the execution proceedings cannot go on. In that
case, there was no sale in execution and the question before the court
was, whether the plaintiff should be allowed to proceed with the
execution of a decree for Rs 1493-1-6 when as the result of the final
decree it was found that the defendant was entitled to Rs 1589-0-8 as
owelty money from the decree-holder.
18
26. The decision in Ariatullah v. Seshi Bhusan cited by the
respondent is really of no help. There a sale was held in execution of a
decree for an amount in respect of which there was no decree existing
at the time. It was observed that the fact that subsequently to the sale
the decree-holder obtained a decree entitling him to the amount for
which the sale was held would not validate the sale.
27. For the reasons already given and the decisions noticed, it must
be held that the appellant-auction-purchaser was entitled to a
confirmation of the sale notwithstanding the fact that after the holding
of the sale the decree had been set aside. The policy of the legislature
seems to be that unless a stranger auction-purchaser is protected
against the vicissitudes of the fortunes of the suit, sales in execution
would not attract customers and it would be to the detriment of the
interest of the borrower and the creditor alike if sales were allowed to
be impugned merely because the decree was ultimately set aside or
modified. The Code of Civil Procedure of 1908 makes ample provision
for the protection of the interest of the judgment-debtor who feels that
the decree ought not to have been passed against him. On the facts of
this case, it is difficult to see why the judgment-debtor did not take
resort to the provisions of Order 21 Rule 89. The decree was for a small
amount and he could have easily deposited the decretal amount
besides 5 per cent of the purchase money and thus have the sale set
aside. For reasons which are not known to us he did not do so.
28. Lastly, it was contended that the amendment of Section 47 of
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the Code of Civil Procedure altered the whole situation inasmuch as by
the Amending Act of 1956 auction-purchasers are to be treated as
parties to the suit. We are not here concerned with the question as to
whether restitution can be asked for against a stranger auction-
purchaser at a sale in execution of a decree under Section 144 of the
Code of Civil Procedure and express no opinion thereon. In our opinion,
on the facts of this case, the sale must be confirmed.
29. Although we have noticed some decisions where the right of the
auction-purchaser decree-holder in circumstances similar to the case
before us was discussed or the right of a purchaser in regard to a sale
held after the setting aside of the decree was touched upon, our
judgment must not be taken as adjudication upon any of these points.
30. In the result, the appeal is allowed. The order of the High Court
is set aside and that of the executing court affirmed. The appellant is
entitled to the costs of this appeal.
———
*
Appeal from the judgment and order dated December 24, 1965, of the Punjab High Court in
LP Appeal No. 20 of 1965
1
AIR 1933 Madras 598
2
ILR 2 Bombay 540
3
ILR 9 Madras 130
4
ILR 14 Calcutta 18
5
ILR 10 Allahabad 166
6
ILR 25 Calcutta 175
7
ILR 26 Bombay 543
8
AIR 1928 Nagpur 265
9
AIR 1928 Nagpur 136
10
AIR 1931 PC 33
11
AIR 1938 Nagpur 525
12
AIR 1941 Madras 399
13
AIR 1964 Madras 404
14
AIR 1962 Patna 182
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15
AIR 1951 Allahabad 832
16
AIR 1936 Lahore 191
17
AIR 1959 Calcutta 73
18
AIR 1920 Calcutta 99
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