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  • provision of Order 21, Rule 103, Civil P. C.,
  • Order 21, Rule 103, Civil P. C.
  • Order 21, Rule 99, Civil P. C.,
  • Article 166, Limitation Act,
  • provision in Rule 103.
  • Order 21, Rule 103,
  • Rule 98, 99
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Citation Codes
Equivalent Citations
citation codes
Case Number
Attorney(S)
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  • provision of Order 21, Rule 103, Civil P. C.,
  • Order 21, Rule 103, Civil P. C.
  • Order 21, Rule 99, Civil P. C.,
  • Article 166, Limitation Act,
  • provision in Rule 103.
  • Order 21, Rule 103,
  • Rule 98, 99
Smart Summary

Structured Summary of the Provided Opinion

Factual and Procedural Background

This is a second appeal arising from a suit for recovery of money alleged to have been paid as consideration for a transfer of a mortgage right to the plaintiffs' father. The defendant is the transferor who conveyed the mortgage right to the plaintiffs' father (Baliah).

Relevant facts as stated in the opinion:

  • In 1929 Karnam Appiah effected a simple mortgage in favour of Ranga Reddi after acquiring the properties from Sitaveerayya.
  • Ranga Reddi later transferred the mortgage right to the defendant, who subsequently transferred it to Baliah (the plaintiffs' father).
  • After Baliah's death the plaintiffs obtained a decree against the original mortgagor (Appiah) and, in execution, purchased the hypotheca themselves; the sale was confirmed and full satisfaction of the decree was recorded by the execution Court.
  • When the plaintiffs sought delivery, they were obstructed by a third party (Reddi Narayana Reddi). A petition for removal of obstruction was dismissed, and the plaintiffs then instituted the present suit for recovery of money on the ground of failure of consideration.
  • The defendant's answer (as relevant here) pleaded: (1) the plaintiffs had not pursued a remedy by instituting a suit under Order 21, Rule 103, Civil P.C.; and (2) the plaintiffs had not got the order confirming the sale set aside nor the order recording full satisfaction vacated.
  • The trial Courts ruled in favour of the plaintiffs; the defendant appealed. Two points were argued before the High Court by the defendant's counsel (Mr. Chenchiah).

Legal Issues Presented

  1. Whether the plaintiffs were obliged to institute a suit under Order 21, Rule 103, Civil Procedure Code before maintaining the present action based on alleged failure of consideration for the transfer of the mortgage right.
  2. Whether, as long as the auction sale in execution of the mortgage decree stands (and has not been set aside), the plaintiffs can maintain an action against the defendant for recovery of the consideration paid to him — particularly where setting aside the sale would now be time-barred under Article 166 of the Limitation Act.

Arguments of the Parties

Appellant's Arguments (Defendant / Mr. Chenchiah)

  • Contended that the plaintiffs had failed to pursue the statutory remedy under Order 21, Rule 103 and therefore face a procedural hurdle fatal to their action.
  • Argued that the plaintiffs had not got the order confirming the execution sale set aside or the order recording satisfaction vacated; until they do so the auction sale stands and the plaintiffs cannot maintain the present suit against the defendant for recovery of the consideration.
  • Relied on authorities (including Muthukumaraswami Pillai v. Muthuswami Thevan; Keshavan v. Bipathumma; Amarnath v. Chhotelal Durgaprasad) to support the submission that confirmation of the auction sale becomes absolute between parties and is res judicata, and that the plaintiffs would be bound unless they had first set the sale aside (and may be time-barred under Article 166).
  • Attacked the Full Bench ruling in Macha Koundan v. Kottara Koundan and urged reconsideration (or urged reliance on contrary Full Bench authority from Allahabad in Amarnath).

Respondents' Arguments (Plaintiffs / Mr. Srinivasa Rao)

  • Argued that the provision of Order 21, Rule 103 is permissive (use of "may") and not mandatory, so the plaintiffs were not obliged to institute the statutory suit before proceeding in the present action.
  • Contended that the order under Rule 99 was sufficiently efficacious to prove conclusively the absence of title in the defendant and that the summary order in the execution proceedings demonstrated that a suit under Rule 103 would have been futile because of "very conclusive documentary evidence" relied upon by the execution Court.

Table of Precedents Cited

Precedent Rule or Principle Cited For Application by the Court
Macha Koundan v. Kottara Koundan, 59 Mad. 202; (A.I.R. (23) (1936) Mad. 50) (Full Bench) Full Bench held that a stranger auction-purchaser who loses possession because of a paramount title of a third party is entitled to recover the price paid from the decree-holder on the ground of failure of consideration due to absence of title in the judgment-debtor. The Court observed it is bound by the Full Bench decision but found that the Full Bench ruling did not afford a conclusive or logically applicable analogy to the facts in the present case; the Court declined to rely on it as dispositive here.
Muthukumaraswami Pillai v. Muthuswami Thevan, 50 Mad. 639; (A.I.R. (14) 1927 Mad. 394) Relied upon for the principle that confirmation of an auction sale becomes absolute and matters decided in the sale proceedings may be res judicata as between parties to the sale. The Court acknowledged the principle but held it did not assist the appellant in relation to a defendant who was not a party to the auction sale or to the subsequent execution order; thus the rulings did not bar the present action against a non-party.
Keshavan v. Bipathumma, 41 M.L.W. 422; (A.I.R. (22) 1935 Mad. 340) Again cited for the proposition that confirmation of sale and related matters are final between parties to the auction purchase and operate as res judicata. The Court held that while such decisions show finality between parties, they do not bind or permit a non-party (such as the defendant) to take advantage of or be bound by those proceedings in a suit brought against him.
Amarnath v. Chhotelal Durgaprasad, I.L.R. (1938) ALL. 922; (A.I.R. (25) 1938 ALL. 593) (Full Bench, Allahabad) Described in the opinion as a Full Bench decision which disapproved the Madras Full Bench view and held that the doctrine of caveat emptor must operate fully in sales in execution (i.e., less warranty of title in judicial sales). The Court noted this Allahabad Full Bench disapproval of Macha Koundan but declined to follow it; the Madras Full Bench decision remained binding on the present Court. The Court nevertheless found that even the Madras Full Bench decision did not logically dictate the result sought by the plaintiffs in the present facts.

Court's Reasoning and Analysis

The Court conducted a step-by-step analysis addressing the two principal contentions raised by the appellant (defendant) and the opposing submissions made by the respondents (plaintiffs).

  1. Order 21, Rule 103 and Rule 99: The Court rejected the respondents' submission that Rule 103 is merely permissive such that they could ignore it. Instead, the Court clarified the legal effect of the order under Rule 99 and the scope of Rule 103:
    • The Court held that the summary order under Rule 99 becomes conclusive only between the parties to that order, and it may be displaced if the party against whom it is made institutes the suit under Rule 103 and succeeds in it.
    • Such a summary order does not determine title generally: it is a summary determination limited to the execution proceedings (the execution Court is satisfied on a limited question — e.g., that the obstruction was by a person other than the judgment-debtor claiming possession in good faith).
    • Therefore, as against persons who were not parties to the execution order, the party against whom the order was made cannot treat that summary order as conclusively proving absence of title and base a separate cause of action on that supposed conclusiveness without first having the statutory suit available under Rule 103 (if he elects to pursue it).
    • Given this, the Court concluded that the plaintiffs should prima facie have instituted the suit under Order 21, Rule 103 before advancing the present claim of failure of consideration.
  2. Respondents' reliance on documentary evidence and summary order: The Court rejected the respondents' argument that documentary evidence (relied upon by the execution Court) made a Rule 103 suit futile:
    • The Court noted those documents were not before it in the present litigation; mere reference to them or to facts decided in prior orders that were not inter partes cannot substitute for admissible evidence.
    • The execution Court itself observed that the proceedings evidenced by those documents were subsequent to the mortgage in favour of Ranga Reddi and would not be binding on the plaintiffs, whose title came through consequent links; such matters would be open to attack in a regular suit under Order 21, Rule 103.
    • Consequently, the Court accepted the appellant's first contention (i.e., that the plaintiffs had not pursued the statutory remedy and that the summary order could not be invoked by them as conclusively establishing lack of title against a non-party defendant).
  3. Precedents and applicability (second contention): The appellant relied on decisions (Muthukumaraswami Pillai; Keshavan; Amarnath) to contend that until the auction sale is set aside the plaintiffs cannot maintain the present action and that any application to set the sale aside would now be barred by limitation (Article 166).
    • The Court acknowledged that, between parties to an auction purchase, confirmation of the sale becomes absolute and matters decided in the sale proceedings (including satisfaction of the decree) are res judicata.
    • However, the Court held that those authorities do not support the conclusion that a person who was not a party to the auction sale or to the subsequent execution order would be bound by, or permitted to take advantage of, those proceedings so as to defeat a separate action against him. The gist of the plaintiffs' action against the defendant was that the execution sale had become futile because a third party asserted a paramount title.
    • The Court explained that bringing an action against the defendant on that basis did not entail reopening matters decided in the auction proceedings nor did it necessarily require the plaintiffs to set aside the sale held regularly in execution (even if, in retrospect, the judgment-debtor lacked sufficient title).
    • There were no provisions in the Civil Procedure Code, the Court observed, that either justified or required the plaintiffs to set aside the sale as a precondition to suing the transferor for recovery of the consideration.
    • On this basis the Court rejected the appellant's second contention (i.e., that the existence and non-settlement of the auction.sale barred the present suit against the defendant).
  4. Relation to Full Bench authority: The Court considered the Full Bench decision in Macha Koundan v. Kottara Koundan (Madras Full Bench) and a Full Bench decision of the Allahabad High Court (Amarnath) that disagreed with the Madras Full Bench. The Court stated:
    • Although the Madras Full Bench decision embodied an equitable view and the Court was bound by it, the Court found that the Full Bench principle did not logically support the specific analogical deduction made by the lower Courts in the present matter.
    • Therefore, even while noting the precedential hierarchy, the Court declined to allow the Full Bench reasoning to be dispositive for the facts at hand where different considerations obtained.

Holding and Implications

Holding: The Court accepted the appellant's first contention and rejected the second. In consequence, the Court allowed the appeal and dismissed the plaintiffs' suit with costs throughout. The order concludes with "No leave."

Implications and direct effects:

  • The immediate effect is that the plaintiffs' suit for recovery of money (based on alleged failure of consideration for the transfer to their father) is dismissed and the defendant succeeds on appeal.
  • The Court's reasoning requires that a party seeking to rely on the conclusiveness of an execution summary order (as to absence of title) must be mindful of the limited, inter partes effect of such orders; absent being a party to those execution proceedings, the party cannot treat that summary order as conclusively establishing title-related facts against non-parties without pursuing the statutory remedy where appropriate.
  • The Court did not purport to overrule or disturb the earlier Full Bench decisions; it stated it was bound by the Madras Full Bench but found that the Full Bench decision did not provide a conclusive analogical basis for the result asserted by the plaintiffs in this case.
  • No new general precedent was formulated beyond the application of existing principles to the facts of this case; the decision disposes of this dispute between the parties without announcing a novel rule of law.

Note: This summary is prepared exclusively from the text of the provided opinion. No facts, arguments, precedents, or conclusions beyond those expressly contained in the opinion have been added or inferred.

    Kotrike Venkata Ramiah Chetty v. Chinna Pulliah And Another.

    1. This second appeal arises out of a suit for recovery of money on foot of failure of consideration for a transfer in favour of the father of the plaintiffs of a certain mortgage right. The defendant against whom the Courts below have decreed the suit is the transferor of the mortgage right.

    2. The facts relevant to the determination, of the two questions of law which have been, argued before me lie in a short and narrow compass. One Karnam Appiah effected a simple mortgage of certain properties in favour of one Ranga Reddi in 1929, having become the owner thereof by a sale-deed from the original owner Sitaveerayya. In 1934 Ranga Reddi transferred the mortgage right to the defendant who in his turn transferred it later to the plaintiff's father, one Baliah. After Baliah's death the plaintiffs obtained a decree against the original mortgagor, Appiah, and in execution purchased the hypotheca themselves. The sale was duly confirmed and full satisfaction of the decree recorded by the execution Court. When, thereafter, the plaintiffs sought to obtain delivery, they found themselves obstructed by a third party, one Reddi Narayana Reddi, against whom they consequently filed a petition for removal of obstruction, which was, however dismissed. Thereupon they instituted the present suit to which the answer made so far as is material to this appeal was that they had a double hurdle in their way fatal to the action. Firstly, they had not pursued their remedy of suit under Order 21, Rule 103, Civil P. C. Secondly, they had not got the order confirming the sale set aside or the order recording full satisfaction vacated. The answer did not find favour with the Courts below. The defendant therefore appeals to this Court. Mr. Chenchiah, his learned counsel, has raised the two points again here before me.

    3. Mr. Srinivasa Rao for the respondents has tried to meet the first of the points by urging that the provision of Order 21, Rule 103, Civil P. C., with reference to the institution of a suit for setting aside an order made under Rule 98, 99 or 101 is only a permissive and not a mandatory provision, as the use of the word "may" therein suggests, and that the order under Rule 99 in the present case is sufficiently efficacious to prove conclusively the absence in the defendant of the title which the latter had purported to convey to the plaintiffs' father, nonetheless and in fact the more so because of plaintiffs' failure to follow up the summary order by the statutory suit. This argument in my opinion misses the real spirit and purpose of the provision in Rule 103. The order does, no doubt, become conclusive, but only as between the parties to it, unless displaced by the result of the suit to be instituted by the party against whom the order is made. Of course, he may or may not institute the suit; but if he does not, the order becomes conclusive in favour of his adversary. That does not mean that as against persons who are not parties to the order it can be held up by the party against whom it is made, as in this case is being done by the plaintiffs, as conclusively proving the absence of any title in himself in the property in question and as affording him a cause of action on the basis of such want of title. The order relied upon by the plaintiffs is after all a summary order which the execution Court made because it was satisfied--and that was all that it had to be satisfied about--that the obstruction was occasioned by a person other than the judgment-debtor claiming in good faith to be in possession of the property on his own account. No question of title could be gone into at that juncture nor was any such question decided by the order. In these circumstances, I should have thought it incumbent on the plaintiffs prima facie to institute the suit under Order 21, Rule 103, Civil P. C., before they could claim that the consideration paid by their father for the defendant's transfer of the mortgage right to him had failed and failed finally. But says Mr. Srinivasa Rao :

    "If you looked into the summary order in the present case, you would find how futile it should have been for my clients to resort to a suit which was bound to fail in view of the very conclusive documentary evidence relied upon by the learned District Munsif in his order."

    The reference is to certain documents said to evidence an attachment of the suit properties effected as long ago as 1929 by a certain decree-holder against the original owner Sitavirayya, a claim made by Karnam Appiah in connection with that attachment, the rejection of that claim by the execution Court, and the institution by Appayya of a regular suit to have the order of rejection set aside which was eventually dismissed. It is contended by Mr. Srinivasa Rao that these documents would have created an insurmountable obstacle in his clients' way, had they filed a suit under Order 21, Rule 103, Civil P. C., and that I must accordingly hold them relieved of the obligation which they might ordinarily be under to file such a suit and hold the failure of consideration for the transfer of the mortgage right in favour of the plaintiffs' father completely established. The argument is unsound for two reasons. In the first place, the documents are not before the Court in the present litigation, and a mere reference to them or a statement of facts supposed to be proved by them in a prior judicial order, not inter partes cannot be evidence of such facts. Moreover, as the learned District Munsif who made the summary order, EX. D. 2, himself observes, therein, the proceedings evidenced by those documents are all subsequent to the mortgage by Appayya in favour of Ranga Reddi, the rights in respect of which became the plaintiffs' eventually by progress of title through successive links and would not be binding on them. They would therefore have been open to attack by the plaintiffs in a regular suit under Order 21, Rule 103, had they filed one. They have not filed such a suit, nor have they proved conclusively enough in the present suit that Appiah had no right to effect the mortgage which they became entitled to in due course. In these circumstances I accept the first contention of Mr. Chenchiah as well founded.

    4. The second contention of Mr. Chenchiah is sought to be supported by the authority of the rulings in Muthukumaraswami Pillai v. Muthuswami Thevan, 50 Mad. 639 : (A.I.R. (14) 1927 Mad. 394), Keshavan v. Bipathumma, 41 M. L. W. 422 : (A. I. R. (22) 1935 Mad. 340) and Amarnath v. Chhotelal Durgaprasad, I. L. R. (1938) ALL. 922 : (A.I.R. (25) 1938 ALL. 593 F.B.). Before I deal with the argument founded on these decisions, it may be as well to deal with a point of view founded on the Full Bench ruling of this High Court in Macha Koundan v. Kottara Koundan, 59 Mad. 202 : (A.I.R. (23) (1936) Mad. 50 F.B) which met with acceptance by the Courts below as conclusive of the present case, but which in my opinion is not, strictly speaking, so. That point of view is that because, as held by the Full Bench, a stranger auction-purchaser who loses possession of the property purchased by him on account of the paramount title of a third party is entitled to recover by suit against the decree-holder the price paid at the auction on the ground of failure of consideration owing to the utter absence of any title in the judgment-debtor to the property sold in execution, it follows that the plaintiffs, the decree-holders-auction-purchasers-in the present case, are entitled to recover from the defendant in enforcement of the covenant for title in favour of their father the amount of consideration paid by their father for the defendant's transfer of the mortgage right to him which ultimately resulted in the mortgage decree and the execution sale thereunder which has become ineffective or account of obstruction to delivery of possession to them occasioned by a third party. In my opinion, there is no adequate parity of facts between the case decided by the Full Bench and the situation which fell to be dealt with by the Courts below in this case such as would attract the Full Bench decision to this case. In fact, different considerations so arise here which did not complicate the case before the Full Bench. Mr. Chenchiah has attempted to attack the Full Bench ruling as requiring re-consideration and has drawn my attention to the case reported in Amarnath v. Chhotelal Durgaprasad, I. L. R. (1938) ALL. 922 : (A.I.R. (25) 1938 ALL. 593) in which a Full Bench of five Judges of the Allahabad High Court disapproved of this High Court's Full Bench ruling in Macha Koundan v. Kottara Koundan, 59 Mad. 202 : (A. I. R. (28) 1936 Mad. 50 F. B.) after a very exhaustive discussion of the entire case-law on the point and of the juristic principle pertinent to the point. The warranty of title in a judicial sale even to the limited extent recognised in our Full Bench ruling is not accepted by the Allahabad Full Bench according to which the doctrine caveat emptor qui ignorare non debuit quod jus alienum emit--let a purchaser, who ought not to be ignorant of the amount and nature of the interest which he is about to buy, exercise proper caution -- must have unqualified operation in all cases of sales in execution held under the present Code of Civil Procedure which contains no such provision as that of section 315 of the earlier code. I do not propose to assess the merits of this argument of Mr. Chenchiah, firstly, because I am bound by the Full Bench decision of this Court which, I may observe, embodies undoubtedly a more equitable view than that of the fuller Bench of the Allahabad High Court, and secondly, because in my opinion the decision of the Full Bench affords on the facts here no conclusive, logical ground for the kind of analogical deduction which the Courts below have made from it.

    5. Putting aside the Full Bench ruling in this view, I have to consider next the rulings in Muthukumaraswami Pillai v. Muthuswami Thevan, 50 Mad. 639 : (A. I. R. (14) 1927 Mad.

    394), Keshavan v. Bipathumma, 41 M. L. W. 422 : (A.I.R. (22) 1935 Mad. 340) and Amarnath v. Chhotelal Durgaprasad, I. L. R. 1938 ALL. 922 : (A. I. R. (25) 1938 ALL. 593 F. B.) which Mr. Chenchiah craves in aid of his submission that so long as the auction sale in execution of the mortgage decree stands and until it is set aside by an appropriate application made for that purpose to the execution Court, which so far has not been made, and which if made hereafter, will be beyond time under Article 166, Limitation Act, the plaintiffs cannot maintain the present action against the defendant for recovery of money which their father had paid him by way of consideration which subsequently failed, as they would have it, on account of the obstruction from a third party in the matter of delivery of possession to them pursuant to the auction-purchase. It is true that, as pointed out in the rulings relied upon by the learned counsel, as between parties to the auction purchase the sale by virtue of its confirmation becomes absolute and all matters decided in the proceedings concluded by the sale certificate, such as satisfaction of the decree are res judicata. But, does it follow that a person like the defendant who was not a party to those proceedings or even to the subsequent order under Order 21, Rule 99, Civil P. C., would either be bound by or entitled to take advantage of the result of such proceedings or of such order? In my opinion, the answer is No. The gist of the action against the defendant, which is no more and no less than that the execution sale in favour of the plaintiffs has become futile and fruitless by the effective assertion of a title paramount by a third party, entails no reopening of anything decided in the presence of the defendant by the court auction sale or the proceedings prior thereto; nor does it put the plaintiffs under the necessity to have the sale set aside which was held quite regularly, although as now transpires, without sufficient title in the judgment-debtor. There are, further, no provisions in the Civil Procedure Code which either justify or warrant any attempt on the part of the plaintiffs to have the sale set aside, of which, it may be said, they have not availed themselves.

    6. In the result, accepting the first and rejecting the second of the contentions raised by the appellant, I allow the appeal and dismiss the suit with costs throughout. No leave.

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    Kotrike Venkata Ramiah Chetty v. Chinna Pulliah And Another.
    (Jul 11, 1949)