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Sri Raja Bommadevara... v. Sri Raja Bommadevara...
Concise Analytical Summary of the Opinion (Sir Madhavan Nair)
Factual and Procedural Background
The appellant, a judgment-debtor and proprietor of the North West Vallur estate (about 34 villages, paying an annual peshkash of Rs. 42,000), sought to set aside a court sale of six items of his property sold in execution of the decree in Original Suit No. 38 of 1919 obtained by respondent 1 (his brother). This appeal concerns three of those items (items 4, 5 and 6 in the sale proclamation). At the execution sale the decree-holder (respondent 1) himself purchased the properties.
The appellant applied under Order 21, Rule 90, Civil Procedure Code, to set aside the sale on grounds of material irregularity and alleged fraud in the publication and conduct of the sale. The Subordinate Judge of Ellore set aside the sale on two stated grounds: (1) the sale proclamation failed to specify the revenue assessed on the properties as required by O.21, R.66(2)(b); and (2) the proclamation was not published in the Collector's office as required by O.21, R.54 read with R.67. The Subordinate Judge also found the sale prices to be unreasonably low and treated that as evidence of substantial injury.
The High Court of Madras reversed the Subordinate Judge by order dated 23 January 1940, holding that (i) omission to mention Government revenue in the circumstances was not a material irregularity, and (ii) failure to affix the proclamation in the Collector's office, though an irregularity, caused no substantial injury to the appellant. Both Indian courts found no fraud had been committed. The present appeal challenges the High Court's decision.
Legal Issues Presented
- Whether the appellant is entitled to set aside the court sale under O.21, R.90, Civil P.C., by reason of alleged material irregularity(s) or fraud in publishing or conducting the sale.
- Whether omission to state the Government revenue (peshkash) in the sale proclamation, when the parcels are parts of estates without separate revenue fixation, constitutes a material irregularity under O.21, R.66(2)(b).
- Whether failure to affix the sale proclamation in the Collector's office as prescribed by O.21, R.54 read with R.67 constitutes a material irregularity and, if so, whether it caused the appellant substantial injury (i.e., depressed the sale price).
- What form of proof is required to establish that the applicant sustained substantial injury by reason of an irregularity or fraud — whether direct evidence is necessary, or whether circumstantial evidence from which a reasonable inference may be drawn suffices.
Arguments of the Parties
Appellant's Arguments
- The sale should be set aside under O.21, R.90 because there were material irregularities in publication and conduct of the sale and alleged fraud.
- The sale proclamation failed to specify the revenue (peshkash) payable on the properties, in breach of O.21, R.66(2)(b).
- The sale proclamation was not published/affixed in the Collector's office as required by O.21, R.54 read with R.67.
- As a result of these irregularities (and alleged fraud), the sale prices were unreasonably low and the appellant sustained substantial injury.
Respondent's Arguments
- Where the properties sold are parts of an estate for which no separate revenue has been fixed, it was impossible in the circumstances to specify the revenue payable on each parcel; therefore the requirement in O.21, R.66(2)(b) could not reasonably be complied with.
- The sale proclamation had been affixed in the District Judge's Court and the Collector's office is in the same compound; further, the sale was widely advertised in daily papers — hence the omission to affix in the Collector's office did not cause lack of publicity or substantial injury.
- There was no fraud; and there was no sufficient evidence (direct or circumstantial) connecting any alleged irregularity with the low price fetched at the sale.
Table of Precedents Cited
| Precedent | Rule or Principle Cited For | Application by the Court |
|---|---|---|
| '94) 21 Cal 66 : 20 IA 176 : 6 Sar 324 — Tassaduck Rasul Khan v. Ahmad Husain (Privy Council) | Earlier statement (in the Board's judgment) implying that substantial injury must be established by direct evidence connecting the irregularity with the injury. | The court considered that the present wording of the proviso permits proof of substantial injury by circumstantial evidence as well; thus the Board's apparent requirement of direct evidence was not taken as an absolute rule in the present view. |
| '35) 22 AIR 1935 Mad 459 : 157 IC 251 — Ramasesha Iyer v. Ramanujachariar | Authority recognizing that the burden may be discharged by circumstantial evidence — evidence from which a reasonable inference can be drawn that the substantial injury resulted from the irregularity. | The court relied on this decision as supportive of accepting circumstantial evidence to establish substantial injury and treated it as consistent with the present interpretation of the proviso. |
| '33) 20 AIR 1933 All 747 : 55 All 182 : 147 IC 844 — Rajendrn Behari Lal v. Gulzari Lal | Report of the Allahabad High Court adopting the newer rule (i.e., moving away from a rigid requirement of direct evidence). | Cited to show that the previously rigid construction (requiring direct evidence) had been abandoned in favour of the rule permitting circumstantial proof; the court noted the convergence of High Courts on this approach. |
Court's Reasoning and Analysis
The court began by identifying the two statutory requisites under O.21, R.90 for setting aside a sale: (1) proof of material irregularity or fraud in publishing or conducting the sale; and (2) proof that the applicant sustained substantial injury by reason of such irregularity or fraud. The court emphasized that mere irregularity is not enough — the proviso requires that "upon the facts proved the Court is satisfied" that substantial injury resulted.
The court examined the significance of the changed language of the proviso (as compared with the earlier Code) and addressed whether substantial injury must be proved only by direct evidence. Reviewing relevant authorities, the court concluded that the burden may be discharged either by direct evidence or by circumstantial evidence from which a reasonable inference can be drawn that the irregularity caused the substantial injury. This approach aligned with the Madras and Calcutta High Courts and had been adopted by the Allahabad High Court.
Applying these principles to the facts, the court considered the two primary alleged irregularities:
- Failure to specify the revenue (peshkash) in the sale proclamation (O.21, R.66(2)(b)). The court accepted that omission to state revenue is a material irregularity when it is possible to state the amount accurately or approximately. However, in this case the properties were portions of larger estates for which no separate revenue had been fixed and no separate registration procedure had been undertaken. Evidence showed that even rough estimates of proportionate peshkash varied widely. Therefore the court agreed with the High Court that the rule requiring specification of revenue could not reasonably apply in the present circumstances and thus the omission was not a material irregularity here. Because the omission was not treated as material, the question whether substantial injury flowed from it did not arise.
- Failure to affix the sale proclamation in the Collector's office as required by O.21, R.54 read with R.67. Ordinarily such an omission would be a material irregularity. However, the court accepted the High Court's factual findings that the Collector's office and the District Judge's Court were situated in the same compound and that a copy of the proclamation had been affixed in the District Judge's Court. There was also evidence of wide newspaper advertisement of the sale. The object of the rule is publicity; where adequate publicity had been given despite the omission, the omission could not be treated as a material irregularity in the practical circumstances. Even assuming arguendo that this omission were material, the court found no direct or circumstantial evidence connecting that omission to the inadequate price fetched at the sale. The court reviewed the evidence offered on price and was not satisfied that the defect in price could be attributed to the omission to affix in the Collector's office.
On the question of fraud, both the Subordinate Judge and the High Court had found no fraud, and the present court accepted that finding.
For these reasons — no material irregularity in respect of omitted revenue, and no proven causal link between any procedural omission and substantial injury — the court concluded that the appellant had not discharged the burden required by O.21, R.90.
Holding and Implications
Holding: The appeal is dismissed. The court advised that the High Court's order reversing the Subordinate Judge should be upheld, and ordered that the appellant pay the costs of respondent 1. The court explicitly concluded that the appellant was not entitled to have the sale set aside on the grounds advanced.
Implications:
- The immediate and direct consequence is that the execution sale stands and is not set aside; respondent 1's purchase of the properties remains effective.
- The court clarified the evidentiary approach under the proviso to O.21, R.90: proof of substantial injury may be established not only by direct evidence but also by circumstantial evidence from which a reasonable inference of causation can be drawn. This aligns with the approach of the Madras and Calcutta High Courts and the later position in the Allahabad High Court as discussed in the opinion.
- The court applied these principles to the specific factual matrix and found no material irregularity or causal link to price; beyond that factual application the opinion does not purport to create a broader new rule beyond endorsing the acceptability of circumstantial evidence where appropriate.
Disposition: APPEAL DISMISSED (costs to respondent 1).
Sir Madhavan Nair.-
This appeal arises out of an application by the appellant who is a judgment-debtor to set aside a court sale of six items of property belonging to him which were sold in execution of the decree in Original Suit No. 38 of 1919 in the Court of the Subordinate Judge of Ellore, obtained against him by respondent 1, the decree-holder. This appeal relates only to three items of the properties; these being items 4, 5 and 6, specified in the sale proclamation. At the sale the properties were purchased by the decree-holder himself. The application to set aside the sale was made under O. 21, R.90, Civil P.C., which empowers the Court to set aside a sale "on the ground of material irregularity or fraud in publishing or conducting it." This power of the Court is subject to the proviso "that no such sale be set aside on the ground of irregularity or fraud unless upon the facts proved the Court is satisfied that the appellant has sustained substantial injury by reason of such irregularity or fraud."
The subordinate Judge of Ellore to whom the application had been made, set aside the sale on the grounds that the sale proclamation did not mention the revenue assessed on the properties as required by O.21, R.66 (2) (b), and that the sale proclamation was not published in the Collector's office as required by O.21, R.54, read with R.67, Civil P.C.; and that as a result of these irregularities the appellant had suffered substantial injury in that the sale prices were unreasonably low. The High Court of Madras reversed this decision by its order dated 23rd January 1940, holding that in the circumstances of the case the omission to mention the Government revenue was not a material irregularity; and that the failure to affix the sale proclamation in the Collector's office, though it was an irregularity, caused no substantial injury to the appellant. This appeal has been brought against the above decision of the High Court. Besides the irregularities referred to, the appellant had alleged also fraud in his petition, but both the Courts in India have found that no fraud had been committed.
The question for determination in this appeal is whether or not the appellant is entitled to set aside the court sale by reason of the above mentioned irregularities.
In order to set aside a sale under O.21, R.90, it should be proved (1) that there was material irregularity or fraud in publishing or conducting the sale, and (2) that the applicant had sustained substantial injury by reason of such irregularity or fraud. Mere irregularity or fraud in publishing or conducting the sale will not entitle the Court to set it aside, unless upon the facts proved the Court is satisfied that the applicant has sustained substantial injury by reason of such irregularity or fraud. The words in the proviso "unless upon the facts proved, the Court is satisfied" have been substituted in the present Code for the words "unless the applicant proves to the satisfaction of the Court" in the proviso to S. 311 of the Code of 1882. In the course of the arguments the question was raised in connexion with the High Court's observation "Nor is there any evidence to connect this irregularity (failure to affix the notice in the Collector's office) with any defect in price," as to whether the substantial injury sustained by the applicant by reason of the material irregularity or fraud complained of could be proved only by "direct evidence" as stated in the judgment of the Board in ('94) 21 Cal 66 : 20 IA 176 : 6 Sar 324 (PC) Tassaduck Rasul Khan v. Ahmad Husain or if it could be proved also by evidence from which it might be reasonably inferred that the substantial injury was the result of the material irregularity or fraud. It appears to their Lordships that upon the language of the proviso as it now stands, what is required is that the Court should be satisfied that the applicant has suffered substantial injury by reason of material irregularity or fraud, and if the Court is so satisfied from the facts proved then the applicant may, be said to have discharged his burden. Their Lordships think that this burden may be discharged not only by direct evidence connecting the material irregularity or fraud with the substantial injury, but also by circumstantial evidence, that is evidence from which a reasonable inference may be drawn that the substantial injury was the result of the material irregularity or fraud, as pointed out in ('35) 22 AIR 1935 Mad 459 : 157 IC 251, Ramasesha Iyer v. Ramanujachariar where all the relevant decisions have been considered. The Madras and Calcutta High Courts have always been of this opinion. Sir Dinshaw Mullah says in his commentary on the rule that the amendment of the language of the proviso was made to give effect to the Madras and Calcutta decisions. The High Court of Allahabad which followed the rigid construction has now adopted the new rule: ('33) 20 AIR 1933 All 747 : 55 All 182 : 147 IC 844, Rajendrn Behari Lal v. Gulzari Lal.
Turning now to the essential facts of the case, the appellant is the proprietor of the North West Vallur estate consisting of about 34 villages in Kistna and West Godavari districts paying an annual peshkash (revenue) of Rs. 42,000. Respondent 1 is his brother. In the partition of the main estate between himself and his brother, the appellant got 20 villages as his share and he has since purchased 14 villages in the two districts for which he had borrowed considerable sums of money. As he had failed to discharge those debts his creditors brought suits against him and obtained decrees. In enforcement of the decree obtained by respondent 1 in the partition suit (original Suit No. 38 of 1919) for about Rs. 46,000 he brought the properties in dispute for sale and, as mentioned before, purchased them himself. The first irregularity alleged is the failure to mention in the sale proclamation the revenue assessed on the properties as required by O. 21, R. 66 (2) (b). This rule lays down that the proclamation for sale shall specify
"as fairly and accurately as possible" "the revenue assessed upon the estate or part of the estate where the property to be sold is an interest in an estate or part of an estate paying revenue to the Government."
The allegation that the revenue due on each of the properties has not been specified is not denied by respondent 1 his case being that in those cases where the proclamations do not specify the revenue payable it was impossible in the circumstances of the case to specify the revenue as the revenue due on the properties had not been separately fixed. The learned Judges of the High Court state in their judgment:
" So far as we can ascertain in all these sales wherever the proclamations do not specify the revenue payable, the property to be sold consists of either a village or part of a village with reference to which no one can say with any certainty what would have been the proportionate peshkash payable if and when the procedure laid down for the separate registry of those portions is carried out."
It is not disputed that no steps had been taken to effect separate registration of the properties and their separate assessment by resorting to the procedure prescribed by law. The learned Judges point out that even in the case of whole villages put up for sale (as in the connected C.M.A. 378 before them) where a rough approximation of the revenue might possibly have been made they found three different estimates of the proportionate peshkush in the evidence varying to a very considerable extent. It would seem that the appellant himself who stated that the peshkush for a group of villages in another connected C.M.A. was a certain amount was unable to say how much was due on each village. Their Lordships have no doubt that omission to state the revenue on as estate or part of an estate paying revenue to the Government, where it is possible to state the amount accurately or even approximately, is a material irregularity within the meaning of the rule, but in their view the rule can have no application to a case like the present, in which the property sold is a portion of an estate upon which no separate revenue has been fixed. They agree with the High Court in holding that in the circumstances of the present case the failure of the decree-holder to state the revenue payable on the lands cannot be treated as a material irregularity. The question whether it has been proved that the appellant has sustained any substantial injury by reason of the irregularity does not therefore arise for consideration.
The next irregularity alleged is the omission to affix the sale proclamation in the Collector's office as prescribed in O. 21, R. 54 read with R. 67, Civil P.C. Ordinarily, the omission to affix the proclamation in 'the Collector's office would indeed be a material irregularity as it is a non-compliance with the procedure prescribed by law, but in the circumstances of the present case the breach of the rule can hardly be called a material irregularity. It is stated in the judgment of the High Court that the Collector's office and the District Judge's Court are situated in the same compound and it is not denied that a copy of the proclamation was duly affixed in the District Judge's Court. Further, evidence shows that the sale was widely advertised in various daily papers. The object of the rule requiring affixture of the sale proclamation in the Collector's office is to give sufficient publicity to the sale, where such publicity has been given to the sale as in the present case the irregularity complained of can hardly amount to a material irregularity. Assuming however that the omission amounts to a material irregularity, it has not been proved by evidence direct or circumstantial that the inadequate price which the properties fetched at the sale as found by the Subordinate Judge, was by reason of this irregularity. Their Lordships have been taken through the material portions of the evidence bearing on the point but are not satisfied that the defect in price could be attributed to this irregularity. For the above reasons their Lordships would humbly advise His Majesty that the appeal fails and should be dismissed with the costs of respondent 1.
Appeal dismissed.
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