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Kutti Enuri Nethiar v. Union Timber Traders
Structured Summary of the Opinion (C.R.P. concerning confirmation of commissioners' sale)
Factual and Procedural Background
This revision concerns defendants 110 and 115 in O.S. 402/1938 (District Munsiff's Court, Alathur), who challenge the District Munsiff's order dated 27-5-1959 overruling their objections to the commissioners' report and confirming a public auction sale of forest land. The underlying litigation is a partition suit instituted in 1938. Commissioners were appointed and, after negotiations and published invitations for offers, recommended a public auction (subject to the District Collector's permission under the M.P.P.F. Act). The trial court authorised a public sale; a sale proclamation was approved by the court on 26-3-1959 and published on 21-4-1959. A public auction was held on 20-5-1959, at which Union Timber Traders, Pollachi (the first respondent) was the highest bidder for Rs. 4,06,000 and deposited one-quarter of the price as per the sale proclamation. The commissioners reported the sale on 21-5-1959 and sought the court's approval. The plaintiff and the present petitioners filed objections. The petitioners produced an offer of Rs. 5,00,000 from the second respondent to demonstrate inadequacy of the auction price. The District Munsiff overruled the objections and confirmed the sale. The present revision challenges that order.
Legal Issues Presented
- Whether the District Munsiff erred in overruling the objections to the commissioners' sale and in declining to consider those objections at the stage of approving the auction sale.
- Whether, when a sale conducted by court officers (commissioners/receivers) is submitted for court approval and the sale proclamation reserves court approval, the court has a duty or jurisdiction to consider objections including claims of inadequacy of price (and possible irregularity), or whether the court must limit itself to confirming the sale absent allegations of fraud/irregularity.
- Whether the fact that a higher offer is made before the court after the auction (but which was not bid at the auction) can provide a ground for withholding confirmation of the auction sale when the sale proclamation expressly reserves court approval.
Arguments of the Parties
Petitioners' (Appellants') Arguments (as advanced by Mr. Sundara Ayyar)
- The District Munsiff failed to exercise the jurisdiction vested in him to consider the objections to confirmation of the sale and wrongly referred parties to file a separate application to set aside the sale.
- The objections included challenges to publication and conduct of the sale and, crucially, to the gross inadequacy of the sale price obtained at auction.
- To demonstrate inadequacy, petitioners produced an offer of Rs. 5,00,000 from A.S. Munammadkutty Sahib (the second respondent) and argued the court may consider such an offer when deciding whether to confirm the sale, particularly because clause 3 of the sale proclamation made confirmation by the court a condition.
Respondents' Arguments (as advanced by the learned Advocate-General for the first respondent / and by or for the auction-purchaser)
- The court has no jurisdiction to go into the objections at the confirmation stage because it had authorised the commissioners to conduct the sale and the commissioners had provisionally accepted the highest bid; absent allegations of fraud or material irregularity in the sale's conduct, the court should not withhold approval.
- The draft proclamation and method of sale had been agreed to by the parties; the court had delegated powers to commissioners who conducted the sale and accepted the highest bid.
- The second respondent's later higher offer was made to spite the auction purchaser — the second respondent had not participated in the auction and did not bid then — and therefore should not be accepted as a basis to set aside or refuse confirmation of the sale.
Table of Precedents Cited
| Precedent | Rule or Principle Cited For | Application by the Court in This Opinion |
|---|---|---|
| Ratnasami Pillai v. Sabapathy Pillai, AIR 1925 Mad 318 | Even where an officer of the court (receiver/commissioner) accepts the highest bid, the court has inherent power to decline acceptance and to direct resale; the receiver's powers are delegated and cannot bind the court unless the court has expressly delegated power to enter into a completed contract. | Used to support the proposition that even absent an express clause reserving court approval, the court retains inherent jurisdiction to approve or not approve sales conducted by its officers; the court cited this decision to show its inherent supervisory power. |
| Soundararajan v. Mohamed Ismail, AIR 1940 Mad 42 | It is proper that sales by court officers be subject to court confirmation; such a condition is a safeguard against irregularity, fraud, and sale at inadequate price. | Relied upon to emphasise that a clause reserving court approval is a safeguard and that court should consider inadequacy of price when confirmation is sought; court read this decision in context and distinguished facts relied upon by respondents. |
| Sub-baraya v. Sundararajan, AIR 1951 Mad 986 | Where a plaintiff made a higher offer before the court after an auction, and there was a complaint of inadequacy of price, the court can accept the higher in-court offer and refuse to confirm the auction sale even absent irregularity or fraud. | Applied directly: this decision was held to support the duty of the court to consider objections about inadequacy of price and to accept a higher offer made in court where it represents the adequate price; the opinion cites and follows its reasoning. |
| Mahmooda Bibi v. Nainoo Bibi, AIR 1937 Cal 384 | Where the court by consent leaves the whole matter to the commissioner (i.e., grants full power), the commissioner's contract may be treated as binding and court interference may be limited. | Distinguished: the present case did not leave the whole matter to commissioners; here clause 3 reserved court approval, so Mahmooda Bibi did not govern this case. |
| Nagamma v. Nadarajan, AIR 1952 Trav-Co 393 | Consideration of whether sale conducted under statutory scheme should be set aside; contains observations that a sale held under such circumstances may not have fetched a proper price. | Relied upon by respondent but the court held it did not go so far as to bar enquiry into adequacy of price; the opinion cites an observation from Sankaran J. to show that a sale may be set aside for not fetching a proper price. |
| Lakshmi Animal v. Thangaraju, AIR 1958 Mad 396 | Reviewed whether a lower court's review of its earlier order (confirming highest bid) when a pending higher offer exists was within jurisdiction. | Found not directly applicable: the decision concerned procedural review and did not alter the principle that courts have jurisdiction to consider higher offers and adequacy issues at confirmation stage in appropriate circumstances. |
| Keshardeo v. Radhakissen, AIR 1953 SC 23 | Authority relied upon to discourage interference under Section 115 CPC with subordinate courts' orders. | Distinguished: the court held that Keshardeo did not bar interference under Section 115 CPC where a subordinate court has failed to exercise jurisdiction vested in it or has acted with material irregularity; thus the revision court considered itself able to intervene. |
Court's Reasoning and Analysis
The court proceeded in a stepwise legal analysis strictly based on the record and cited authorities:
- Examination of the sale proclamation: the court identified clauses 1–4 as relevant. Clause 2 made commissioners' acceptance provisional; clause 3 expressly reserved to the court the power to approve the auction on the commissioners' report; clause 4 involved court approval of the sale-deed after full payment. The court emphasised clause 3 as a clear pointer that final authority was not delegated away from the court.
- Authority on inherent jurisdiction: the court observed that even absent an express reservation, prior Madras authorities (Ratnasami Pillai) establish that the court retains inherent jurisdiction to approve or refuse approval of sales conducted by its officers. That principle supported the proposition that clause 3 further confirms the court's supervisory role here.
- Evaluation of earlier Madras decisions: the court analysed Soundararajan (AIR 1940 Mad 42) and Sub-baraya (AIR 1951 Mad 986), highlighting that reserving court confirmation is a safeguard against irregularity, fraud and inadequate price. Sub-baraya was treated as directly supporting a court's duty to consider inadequacy of price when confirmation is sought; Soundararajan's cited passages were read in context and held not to preclude consideration of a later higher offer when an adequacy objection is made.
- Distinction of conflicting authorities relied upon by respondents: Mahmooda Bibi (Calcutta) was distinguished because that case had left the whole matter by consent to the commissioner; Nagamma (Trav-Co) and Lakshmi Animal (Mad 1958) were considered not to negate the court's duty to examine adequacy in appropriate cases. Keshardeo (Supreme Court) was held not to bar interference under Section 115 CPC where a subordinate court failed to exercise vested jurisdiction or acted with material irregularity.
- Assessment of the District Munsiff's order: the District Munsiff had stated that this was not the proper forum to attack the sale and that only allegations of malpractice/irregularity would permit withholding approval. The revising court found this reasoning inconsistent and inadequate in two ways: (a) it undervalued clause 3 of the proclamation which reserved court approval, and (b) it incorrectly treated inadequacy of price (supported by the second respondent's offer) as outside the scope of the court's duty at confirmation stage. The revising court noted specific factual allegations in the objections (for example, non-publication in a specified newspaper) but did not finally decide merits, because the matter was remitted for fresh enquiry.
- Conclusion from analysis: the District Munsiff failed to exercise jurisdiction vested in him; it was his duty to consider the objections, including claims of inadequacy of price. Accordingly, the revising court set aside the District Munsiff's order and directed a fresh enquiry into the objections in the light of the opinion's remarks.
- Practical and procedural directions: the court recorded that the second respondent had deposited Rs. 5,00,000 in the lower court. It directed the District Munsiff to dispose of objections afresh, to hear all parties, and allowed parties to file further statements within 10 days. The deposit was to remain in court pending further enquiry. If the District Munsiff concludes the auction should not be confirmed, he was directed to conduct an auction only between the first and second respondents starting at Rs. 5,00,000 and accept the highest bid between them on usual conditions; this direction was based on a suggestion by the Advocate-General agreed to by counsel.
Holding and Implications
Holding: The revising court set aside the District Munsiff's order dated 27-5-1959 overruling objections and confirming the sale; it directed the District Munsiff to enquire afresh into the objections and decide the question of approval of the commissioners' sale in accordance with the court's observations.
Implications (direct effects):
- The order of the District Munsiff of 27-5-1959 is set aside and the matter remitted for fresh enquiry into the objections filed against confirmation of the auction sale.
- The second respondent's deposit of Rs. 5,00,000 in the lower court is to remain on deposit pending the enquiry.
- If on fresh enquiry the learned District Munsiff decides not to confirm the public auction sale, he is directed to hold an auction between the first and second respondents only, starting at Rs. 5,00,000 and to accept the highest bid between them on usual conditions (direction agreed by counsel and suggested by the Advocate-General).
- The revising petition (C.R.P.) is disposed of; the related C.M.P. 2419/59 is dismissed; no order as to costs in either C.R.P. or C.M.P.
- No broader precedent was purportedly created by this opinion beyond applying and following existing authorities; the court framed the ruling as an exercise of established supervisory and statutory jurisdiction (i.e., it did not purport to announce a novel legal principle beyond the authorities cited).
Administrative note: parties were given liberty to file additional statements within 10 days; the court expressly disclaimed expressing any view on the merits of the objections and left ultimate factual and legal determinations to the District Munsiff's fresh inquiry.
1. The defendants 110 and 115 in O.S 402/1938 on the file of the District Munsiff's Court, Alathur are the petitioners before me. The revision is against the order dated 27-5-59 overruling the objections of the petitioners, on commissioners' report in respect of a public auction held of a forest. The short facts leading upto this C.R.P are as follows: In the course of working out the rights of the parties in what appears to be a long drawn out partition litigation instituted in 1938, there was originally an idea to dispose of the properties, which are now the subject-matter of this revision, by a private sale.
2. The commissioners appointed in the suit filed a report dated 11th May 1958 in which they have stated that according to the orders of the learned District Munsiff, they negotiated the likely purchasers besides the Government. They also stated that they invited offers for purchase of the forest by publication of notices in certain Malayalam Dailies and also “The Hindu”.
3. In paragraph 3 of that report, they have also mentioned the offers received from certain persons. After mentioning all these facts, in paragraph 5, the commissioners suggested to the court that it would be in the interests of the Edom estate to hold an auction sale in respect of the forest, subject to the District Collector's permission under the M.P.P.F Act. The attention of the court was also drawn to the fact that the Collector of Cannanore, Chairman of the Government Negotiating Committee, has also asked for information regarding the court's decision with respect to the offer made by the committee for purchase of the properties in the sum of Rs. 1,85,000. The learned District Munsiff, by order dated 24-7-58, directed the commissioners to apply to the Collector of Palghat for permission to sell the forest showing all available particulars. The commissioners were also directed to inform the Collector of Cannanore about the offer made by other private parties mentioned in paragraph 3 of the commissioners' report. Ultimately, the court, by order dated 12-1-1958, gave permission to the commissioners to sell the forest by public sale. In accordance with the directions of the court, the commissioners took steps to have a public auction.
4. It also appears that a draft proclamation prepared by the commissioners was discussed as between the parties before court and ultimately, on 26-3-59, the sale proclamation was approved by the court after hearing the representations of all parties. On 21-4-59, the necessary publications were made by the commissioners in the newspapers announcing their intention to hold a public auction for the sale of the forest on 20th May 1959. Accordingly, a public auction was held on 20th May 1959 and the Union Timber Traders, Pollachi was the highest bidder for Rs. 4,06,000. In accordance with the terms and conditions of the sale proclamation, the said firm deposited ¼ of the price with the commissioners. The commissioners filed a report on 21-5-59 before the court requesting the court to approve the sale conducted by them. It is at that stage that objections were filed by the plaintiff and also the present petitioners before me.
5. The main grounds on which the present petitioners requested the court not to approve the sale held by the commissioners are contained in their objection petition. It has been stated in paragraph 3 of the order that some of the objections of the petitioners were to the effect that the sale was illegal under the Partition Act and that the price fetched were inadequate. This objection was also supported by the plaintiff. To prove inadequacy of price in the auction the petitioners produced an offer by the 2nd respondent to purchase for Rs. 5,00,000.
6. On behalf of some of the parties and also on behalf of the highest bidder namely, the Union limber Traders, Pollachi which is the first respondent before me, it was contended that the court has no jurisdiction to go into the matters raised in the objections. The court having authorised the commissioners to conduct the sale and the commissioners having accepted the highest bid namely, that of the first respondent before me, the court has no jurisdiction to withhold its approval to the sale especially when there was no allegation of fraud or irregularity in the conduct of the sale.
7. The learned District Munsiff considered the objections of the present petitioners and also the contentions raised by the various parties including those of the first petitioner before me and by its order dated 27th May 1959 overruled the objections of the present petitioners and confirmed the sale.
8. The reasons given by the learned District Munsiff for overruling the objections of the petitioners is to be seen in the reasoning made by him in paragraph 6 of the judgment. The learned District Munsiff was of the view:
“This is not the proper forum to attack the sale held by the commissioners. — The sale at this stage can be set aside or the court can withhold the approval of the sale if the parties make out a case of any malpractice or irregularity in the actual conduct of the sale of the commissioners………. If any of the parties are aggrieved by the same for any of the reasons either for inadequacy of price or any irregularity they can move this court with appropriate application for setting aside the sale”.
9. Therefore, in brief, the learned District Munsiff was of the opinion that at the time when the sale comes up to him for confirmation, he has no other duty but to confirm the sale and to require the parties who have got any objections, to raise them in an application to set aside the sale.
10. It is against this order of the learned District Munsiff that this revision has been filed.
11. One other circumstance also may be mentioned (viz.) that during the hearing of that application, the parties who objected to the confirmation of the sale, produced the second respondent before me, with an offer of Rs. 5,00,000 to purchase the suit properties.
12. The learned District Munsiff, regarding this observes:
“Simply because a local man now comes forward and says that he is prepared to pay a higher price for the forest cannot be accepted as a ground to set aside the sale”.
13. The order of the learned District Munsiff is very strenuously attacked by Mr. Sundara Ayyar, learned counsel for the petitioners. According to the learned counsel, the learned District Munsiff has failed to exercise a jurisdiction vested in him in law namely, of considering the objections raised by the petitioners and praying that the court should not approve the sale conducted by the commissioners. The learned counsel also contended that the objections filed by his clients included objections not only to the publication and conduct of the sale but also to the grossly inadequate price fetched in the public auction.
14. To substantiate his contention that the price obtained in the public auction is grossly inadequate, the learned counsel very strongly relied upon the offer of Rs. 5,00,000 from one A.S Munammadkutty Sahib who is the second respondent in these proceedings. The learned counsel criticised the reasoning of the learned District Munsiff that is not the stage at which these matters are to be gone into. The learned counsel also particularly drew my attention to clause 3 of the terms of the sale proclamation to the effect that the sale to be held by the commissioners is subject to the approval of the court. This clause, according to the learned counsel, gives ample jurisdiction to the court to consider whether to confirm the auction held by the commissioners in the light of the objections made to the sale.
15. On the other hand, the learned Advocate-General appearing for the first respondent namely, the party whose bid was the highest in the public auction, has supported the reasoning of the learned District Munsiff. According to the learned Advocate General, the draft proclamation and the method of sale were all agreed to by the parties. The court has practically delegated its powers to the commissioners and the commissioners have, in the discharge of their duties, conducted the sale and have accepted the offer made by the first respondent who was the highest bidder for the properties.
16. The learned Advocate General also contended that the reasoning of the learned District Munsiff that the proper forum is to file an application for setting aside the sale, is also correct. The learned Advocate General further contended that in the absence of any fraud or any allegations, or material irregularity in the conduct of the sale, the sale cannot be set aside. On the facts, the learned Advocate General contended that the present second respondent has been brought in by the parties more to spite the auction-purchaser namely, the first respondent. He was nowhere in the scene and did not care to attend the auction or to make any bid at that time.
17. Before considering the various contentions of Mr. Sundara Ayyar and the learned Advocate General, it is desirable at this stage to advert to some of the conditions mentioned in the sale proclamation. The sale proclamation which as has been rightly contended by the learned Advocate General approved by the court after ascertaining the views of all parties, contains several clauses of which, in my opinion, clauses 1 to 4 only have a baring regarding the subject of controversy in this C.R.P
18. Clause 1 of the sale proclamation is to the effect that parties who are intending to bid in the public auction should make a deposit of Rs. 5,000/- as security and as soon as the auction is over, the security will be refunded to those parties whose bids have not been accepted.
19. Clause 2 of the sale proclamation specifically is to the effect that the commissioners will provisionally accept the highest bid made at the auction and the party whose Highest bid is so accepted, must immediately arrange to deposit of the bid amount inclusive of the security already deposited, and in default, the security amount will be forfeited to the State.
20. Clause 3 says that as soon as the auction is over, the commissioners, in order to get the approval of the court to the auction, will file the necessary report and as soon as the auction is approved by the court, the party whose bid has been accepted, must pay the balance amount within 15 days of approval by the court. If for any reasons the balance is not paid, there is a condition both in clause 2 and in clause 3 that the amount mentioned therein will be forfeited to the State.
21. Clause 4 further states that as soon as the full sale amount is paid, the purchasers must take the necessary steps to have a draft sale-deed, approved by the court, duly executed by the commissioners at the expense of the purchasers. The other clauses are not, in my opinion, material for this purpose.
22. It will be seen from the reference to the clauses above that clause 2 in particular, specifically says that the acceptance of the highest bid by the commissioners in the public auction will be only, provisional basis. Even the report is only to this effect.
23. Clause 3 again reserves a power in the court to approve the auction on the report filed before it by the commissioners. The Court comes into the picture again in clause 4 when the purchasers have to take the necessary steps to have a sale-deed, approved by the court, properly executed by the commissioners.
24. Even in the absence of any such recital as clause 3, reserving a power in the court there are decisions to the effect that the court has always an inherent jurisdiction to give its approval or not, to a sale conducted by an officer of court. The earliest decision bearing on this matter is a decision of the Division Bench of the Madras High Court of Krishnan and Odgers, JJ. reported in Ratnasami Pillai v. Sabapathy Pillai, AIR 1925 Mad. 318. In that case notwithstanding the fact that the highest bid was accepted by an officer appointed to conduct an auction, the court declined to accept the highest bid and directed re-sale of the properties. The person who succeeded in making the highest bid, challenged this order of the court. It was contended before the learned Judges, as it is contended before me by the learned Advocate General, that a completed contract has been entered into with the purchaser by the court-officer namely, receiver in that case and the court should therefore have directed the receiver to complete the transaction in his favour. The learned Judges negatived this objection in the following words:
“The Receiver is an Officer of Court and whatever powers he exercises are delegated powers of the court which the court expressly gives him. He has no powers except what the court grants him. Unless the party can show that in this case the court has delegated its power of entering into a completed contract with third parties to the Receiver, any action taken by the Receiver cannot be binding upon the court or upon the properties. All that the appellant is able to show is that he made the highest bid and that the published conditions of sale did not expressly state that the sale was subject to the confirmation of the court. The absence of such a statement cannot, in our opinion, be treated as implying that the court had abandoned its power of confirming the sale before it would take effect. No doubt the ordinary rule regarding private auction is, that where an auction is held without any reservation there is an implied condition that the highest bid will be accepted……. The appellant has not been able to refer us to any evidence to show that such a power had been granted by the Court in this case.”
25. Therefore, it is clear from the decision referred to above that even in the absence of a condition like clause 3 in the conditions of sale, the courts have always an inherent power to approve or not to approve a sale conducted by its officers. No doubt, as pointed out by the learned Judges, it is open to a party to establish that the court has given complete powers to the receiver or commissioners to enter into contracts without reference to the courts.
26. But in this case clause 3 in particular which reserves the ultimate power of approval in the courts, is, in my opinion, a pointer that the court has not at all given that complete authority to the commissioners in this case. There is no material placed before me to show that the court in this case has given unlimited and complete powers to the commissioners.
27. The effect of a clause like the one before me namely, of reserving a power to approve in the court, has again been the subject of two Division Bench decisions in the Madras High Court. The earlier decision is the one reported in Soundararajan v. Mohamed Ismail AIR 1940 Mad. 42 a decision of the learned Chief Justice and Mr. Justice Kunhi Hainan. The learned Chief Justice who delivered the leading Judgment in that case, observes as follows at page 43:
“It is only right and proper that the sale should be subject to the confirmation of the court. The condition is a safeguard against irregularity or fraud in connection with the sale and against property being sold at an inadequate price.”
28. It must be stated at this stage that the learned Advocate General appearing for the first respondent, very strongly relied upon this decision as being in his favour. The learned Advocate-General's contention based upon this decision is that there was a reserve price fixed in the sale proclamation and the learned Judges declined to interfere with the highest bid in the public auction so held, notwithstanding the fact that at a later stage, a party came up and offered a higher amount.
29. But if the facts of that judgment are carefully looked into, in my opinion, this decision cannot support the contention of the learned Advocate-General. No doubt, in that case there was a reserve price of Rs. 1,10,000/- fixed, and the properties were sold for Rs. 1,12,500/-. When the matter came before the court for confirmation, there was an offer by a party in the sum of Rs. 1,15,000/- that is, about Rs. 2,500/- over the highest bid in the auction.
30. The learned Judge on the Original Side, before whom the matter came up declined to accept this higher offer and confirmed the highest bid in the public auction though the latter was a smaller amount than the one offered before the court. The party who offered this higher amount, took up the matter in appeal and it was in disposing of that appeal that the learned Judges made the observations referred to earlier. The learned Advocate-General in particular, referred to the following passage in this judgment:
“The fact that the sale is subject to the confirmation of the court does not mean that the court shall refuse to accept the highest bid because at a later stage some one on second thought says that he is willing to pay more.”
31. According to the learned Advocate General, this reasoning extracted above will show that the fact that the highest offer is made at a later stage should not influence the court to withhold the confirmation of a sale properly held by its officers. The passage extracted above has to be read in the context in which it has been made.
32. No doubt, it will not ordinarily give an absolute right to a party to keep quiet at the time of the public auction and then come up to the court and make a higher offer than the one fetched in the highest bid. But when the matter comes before the court for approval, it is open to the party it make a representation to the court that the price fetched in public auction is not an adequate price. This is the aspect, if I may say so with respect to the learned Judges, which has been emphasised in the paragraph cited by me earlier namely, that the condition regarding reserving a power in the court is a Safeguard against irregularity or fraud and ‘against property being sold at an inadequate price’ (underlining (here into) is mine).
33. After these, the learned Judges observed that no such considerations applied to the facts of the case before them. In fact, this aspect is again made clear by the learned Judges, when they observe that it is not suggested that the respondent's final bid in the auction was inadequate. Therefore, the fact that an upset price has been fixed will not debar the party, if he has got any grievance otherwise, to come and make representations to the court and satisfy the court that the price fetched in the auction is not an adequate price. After all, the fixing of a reserve price is only an indication that the parties expect at least that much for the property.
34. The matter has been again considered by a later Division Bench of the Madras High Court in the decision of the learned Chief Justice and Mr. Justice Venkatarama Ayyar reported in Sub-baraya v. Sundararajan, AIR 1951 Mad 986. In that case, an auction was directed to be held by the learned Judge sitting on the Original Side. The Advocate-Receivers, who had been appointed for this purpose, conducted an auction and in the auction there was a bid for Rs. 31,200/- and the receivers conducting the auction provisionally accepted the bid, subject to the approval of the court.
35. In accordance with the terms of the sale proclamation, the receivers also received the 25 per cent, of the sale price and made a report to the court praying that the court may be pleased to confirm the sale conducted by them in favour of the highest bidder. It was at that time that the plaintiff made a complaint to the learned Judge that the highest bid fetched at the auction was not an adequate price and that she herself is prepared to offer a sum of Rs. 35,0007/- which was much more than the amount fetched in the public auction. The learned Judge, after considering this matter ultimately was able to get a still higher offer from the plaintiff in the sum of Rs. 42,000.
36. It was contended before the learned Judge on behalf of the auction-purchaser that inasmuch as no irregularity or fraud in the conduct of the sale were alleged as against the advocate-receivers, it was not open to the learned Judge to ignore the highest bid and accept an offer which is made before the court though the latter is for a higher amount. The learned Judge did not accept this contention of the auction-purchaser and ultimately accepted the offer of the plaintiff made in court in the sum of Rs. 42,000/- and gave certain consequential directions. That is, the learned Judge declined to give his approval for the public auction held by the commissioners.
37. The order of the learned Judge was taken up in appeal and Rajamannar C.J, who delivered the leading judgment, observes at page 987 as follows:
“It is true that there is no suggestion of irregularity or fraud, but there was certainly a complaint of inadequacy of price. As the plaintiff eventually was willing to purchase the property for Rs. 42,000/-, it must be taken that amount re-presents fairly accurately the adequate price of the property. If that be so, then certainly, the highest bid which was only Rs. 32,100/- cannot be said to be adequate.”
38. and the learned judges confirmed the order of the learned trial Judge accepting the offer made before court.
39. The decision in AIR 1940 Mad 42 was also relied upon before the learned Judges as laying down a different proposition. The learned Chief Justice considered the said decision also and came to the conclusion that the facts in that case were totally different from the facts before them. But the learned Chief Justice observes that the decision in AIR 1940 Mad 42 does not at all lay down a different proposition because even that decision has held that it is only right and proper that the sale should be subject to confirmation of the court and that such condition is a safeguard against irregularity or fraud and also against the property being sold for an inadequate price.
40. The learned Chief Justice also specially adverted to the circumstance before the learned Judges who decided the earlier decision namely, that no such consideration was present before the learned Judges. In fact, it is stated in the decision in AIR 1940 Mad 42 that the parties did not even make a complaint that the price fetched in the public auction is inadequate. It may also be mentioned at this stage that the decision of the Division Bench in AIR 1925 Mad 318 and already referred to by me is also referred with approval by the learned Judges in this later Madras decision.
41. I am in respectful agreement with the principles laid down in the three decisions referred to earlier and from this it follows that at the time when the matter comes up before the court for confirmation and especially in this case, by virtue of clause 3 of the sale proclamation, the court should and in fact, it has got a duty to decide the several objections raised by the parties, including the objection raised based on inadequacy of price. In fact, in the decision in AIR 1951 Mad 986, the learned Judges specifically say that there is no case of fraud or material irregularity in the conduct of the sale by the commissioners and the main objection was only about the adequacy of consideration.
42. The learned Advocate-General relied upon a decision of Ameer Ali J. of the Calcutta High Court reported in Mahmooda Bibi v. Nainoo Bibi, AIR 1937 Cal 384. In my opinion, this decision need not at all detain me very much, because from the facts it is clear that the whole matter of entering into a contract was left by the court to the commissioner as is clear from the observation of the learned Judge at page 386 to the effect:
“The whole matter was therefore left by consent to the commissioner.”
43. It is on this basis that the learned Judge considers as to whether he should interfere in a matter where the commissioners had already entered into a contract with a particular party. It was after the commissioner entered into such a contract that there was an offer by a third party to pay a higher amount and this was, if I may say so with respect, rightly rejected by the learned Judge.
44. The learned Advocate-General relied upon a decision of the Travancore-Cochin High Court reported in Nagamma v. Nadarajan, AIR 1952 Trav-Co 393. That was a case of a sale held under the Travancore Debt Relief Act. The question before the learned Judges was whether the sale conducted in that case had to be set aside. This decision has been relied upon by the learned Advocate General for the proposition that only if material irregularity or fraud is made out, the party has got a right to have a sale conducted by the court set aside.
45. I do not think that this decision goes to that extent. The learned Judges (Sankaran and Gangadhara Menon JJ.) had only to consider whether in that case, a sale has to be set aside. In my opinion, the learned Judges even contemplate a sale, conducted by a court, being set aside on the ground that it has not fetched a proper price as will be seen from the observation of Sankaran J. at page 394:
“It cannot also be held that the property has fetched a proper price as per the sale held under such circumstances by the officer of a court.”
46. The last decision relied upon by the learned Advocate General is that of Mr. Justice Ganapatia Pillai, of the Madras High Court, reported in Lakshmi Animal v. Thangaraju, AIR 1958 Mad 396. After a bid has been provisionally accepted in an auction by the commissioner, a party had made a higher offer before the Court and the court had entertained the offer for consideration. But in the meanwhile, without hearing the party who had made the highest offer in court, the Court confirmed the highest bid obtained in the auction.
47. That order was sought to be reviewed by the party who made a higher offer in court and whose offer was also pending before the court. The only question that the learned Judge had to consider was whether the order of the lower court reviewing its previous order confirming its bid at the instance of a party who made a higher offer later, is legal or not. Mr. Justice Ganapatia Pillai came to the conclusion that the order of the lower court reviewing its previous order was without jurisdiction. This decision, in my opinion, does not at all carry the matter any further so far as the point for decision in this case is concerned.
48. From the principles laid down by the Bench decisions of the Madras High Court referred to by me with approval earlier, it follows that when a sale held by a receiver or a commissioner under orders of court, comes before the court for its approval, it has got not only ample jurisdiction but also a duty to consider the various objections raised by the parties and decide whether to give or not its approval to the sale conducted by the commissioner or receiver.
49. The learned Advocate General contended that the decision of the Supreme Court reported in Keshardeo v. Radhakissen, AIR 1953 SC 23 will stand in the way of this court interfering under Section 115 of the CPC with the order of the lower court. I do not think that the said decision, in any way, bars interference by this court in the exercise of its powers under Section 115 of the CPC when a subordinate court, as in this case, has obviously failed to exercise a jurisdiction vested in it by law or acted with material irregularity in the exercise of its jurisdiction.
50. In this case, the report of the commissioners was a very brief one. In the said report, the commissioners stated that the highest bid was by the Union Timber Traders for Rs. 4,06,000/-. It is also stated that the commissioners have provisionally concluded the sale in favour of the Union Timber Traders and collected from them the necessary 25 per cent, of the sale price. It is further stated that before the auction was commenced there was an application made to them by the 112th defendant and some others requesting an adjournment of the same. Ultimately, the commissioners-prayed the court to approve the sale conducted by them.
51. As stated earlier, the objections of the-parties to the confirmation of the sale is to the effect that there has been some irregularity in the conduct of the auction and also that there has not been due publicity given for the auction. More than all these circumstances, the main point that has been urged in the objections and also before the learned District Munsiff is the one regarding the inadequacy of the price fetched at the public auction. To substantiate their case of inadequacy of price the petitioners before me has produced an, offer of Rs. 500,000 from the second respondent in these proceedings.
52. It is a bit difficult for me to follow some of the reasoning of the learned District Munsiff in-paragraph 6 of his judgment. After stating that this is not the proper forum to attack a sale held by the commissioners, the learned District Munsiff observes that? the commissioners themselves could have concluded the same and need not have shifted the-responsibility to the court. This is rather, in my opinion, an unfortunate statement made by the court especially when a specific power has been reserved by virtue of clause 3 of the sale proclamation. No doubt, after making the observation, referred to earlier, the learned Munsiff relies upon clause 3. The sanctity and importance of a provision like clause 3 has not been correctly and properly appreciated by the learned District Munsiff. Further, the learned District Munsiff says:
“The sale can be set aside or the court can withhold the approval of the sale if the parties make out a case of any malpractice or irregularity in the actual conduct of the sale by the commissioners. The parties have no grievance against the-manner in which the sale was conducted.”
53. This reasoning of the learned Judge is attacked by Mr. Sundara Ayyar that there are statements in) the objection petition to the effect that there has been irregularity in the conduct of the sale. As one instance, Mr. Sundara Ayyar pointed out that though there was a direction to publish the sale in “Mathru Bhumi”, “Deshabhimani”, “Indian Express” and “Malayala Manorama”, no publication was made in “Malayala Manorama” as directed by the court. As I am not now disposing of the case on the merits, I do not propose to go into the various points of objection made in the objection-petition.
54. After having stated that the court can atr that stage withhold the approval if there is a case of malpractice or irregularity, the learned District Munsiff is not prepared to concede the same jurisdiction in him to decide the matter at that stage if the grievance of the parties is “for any of the irregularities”. I find it somewhat difficult to appreciate this reasoning of the learned District Munsiff. Either he has got jurisdiction to decide the points-raised in the objection at this stage or he has no jurisdiction whatsoever to decide any of the objections at any stage. I have already indicated that he had not only jurisdiction, but it was his duty to have considered the various objections raised by the parties to the confirmation of the sale.
55. No doubt, it is not ordinarily open to, parties, after a proper auction has been held and proper once has been obtained, to come up at the last minute and say that they are prepared to offer a higher price than the one fetched at the auction. But an important point to be considered at the time when the court's permission is asked for to confirm the sale is, apart from the question of irregularity or fraud or any such circumstance, as to whether the properties have been sold for an adequate price. In the case before me, the question assumes great importance in view of the firm offer of the 2nd respondent of Rs. 5,00,000 as against the highest bid in the auction of Rs. 4,06,000/-.
56. In my opinion, the learned District Munsiff has failed to exercise a jurisdiction vested in him in law and erred in referring the parties to a separate application for setting aside the sale. The order dated 27-5-1959 of the learned District Munsiff overruling the objections of 110th defendant and the plaintiff and approving the sale of the forest conducted by the commissioners on 20-5-1959, are set aside and that court is directed to enquire into the various objections raised by the petitioners in their objection petition.
57. By virtue of an order of my learned brother, Raman Nayar J., I am informed by learned counsel on all sides that the second respondent herein has deposited in the lower court the entire sum of Rs. 5,00,000/- representing the offer that he has made before the court. The learned District Munsiff is directed to dispose of the objections, afresh after hearing all parties in the light of the remarks contained in this judgment.
58. Nothing that I have said herein incidentally about the merits of the contentions of the parties as to whether approval is to be given or not will be taken by the court, as, in any way, an expression of my views on those points. All parties are at liberty to file any further statements that they would like in respect of this matter either for approving the sale or against approving the sale by the commissioners. Such statements must be filed within 10 days from today.
59. The amount deposited by the second respondent in the court will continue to remain in deposit pending further enquiry, to be made by the trial court in this matter. If on fresh enquiry, the learned District Munsiff is of the opinion that the sale in public auction in this case should not be confirmed by him, he shall conduct an auction only as between the first and second respondents before me in the C.R.P starting with a bid of Rs. 5,00,000/- and accept the highest bid as between those two parties on usual conditions which will be fixed by that court.
60. This direction is given on the basis of a suggestion made by the learned Advocate-General and agreed to by all the other counsel.
61. As the amount of the first respondent in respect of the highest bid and of the second respondent in respect of his fresh offer are in court, the lower court will give a very expeditious disposal to this matter. In view of the fact that the C.R.P itself has been disposed of today C.M.P 2419/59 a dismissed. No order as to costs in the C.R.P and in the C.M.P
HC/D.R.R
62. Order accordingly.
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