Citation Codes

Equivalent Citations

citation codes

Case Number

Civil Rule No. 1653 of 1935

Judges

R.C Mitter, J.

Acts

provisions of Order 21, Rule 90, of the Code, or Section 174, Tenancy Act,
Order 21, Rule 90 of the Code, or Section 174, Tenancy Act.
Article 11, Schedule 1, Lim. Act, and Sec. 64 of the Code,
provisions of Sub-section 1, Section 174, Tenancy Act.
Order 21, Rule 90, of the Code,
Section 174 (1), Tenancy Act.

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Smart Summary

Case Summary — Jurisdiction to Set Aside Rent Sale under Section 174(1), Tenancy Act

Factual and Procedural Background

The Secretary of State for India in Council (opposite party 2) obtained a decree for rent against opposite parties 3 and 4 (Hatu Dutta and Sudhangsu Bhusan Dutt). In execution of that decree the defaulting holding was sold and purchased by the petitioner, Bulanda Bashini Dasi, on 27 May 1935. Opposite party 1, Pran Gobinda Dhar, sought to set aside that sale by making a deposit under Sub‑section 1, Section 174, Tenancy Act. His application to set aside the sale was refused by the 1st Court but was allowed by the lower appellate Court, which set the sale aside.

The principal legal question presented was whether the Court had jurisdiction to entertain opposite party 1's application under Section 174(1) — a question that turned on whether opposite party 1 was a person "whose interest has been affected by the rent sale."

Agreed and material facts (not disputed by the parties): opposite party 1 had obtained a money decree against the judgment-debtors (opposite parties 3 and 4) and applied for execution of his decree. An order for attachment of the relevant holding was passed on 23 May 1935 (four days before the rent sale), but the physical/actual attachment was effected later, on 21 June 1935. Opposite party 1 made the Section 174(1) application and deposited the requisite sum on 22 June 1935.

Legal Issues Presented

Whether the Court had jurisdiction to entertain an application under Section 174(1), Tenancy Act, to set aside a rent sale where a third party (an attaching creditor) claims his "interest" was affected.
Whether an attaching creditor acquires the necessary interest to apply to set aside such a sale by virtue solely of having obtained an order for attachment (but where the actual attachment occurs only after the challenged sale).

Arguments of the Parties

Petitioner's Arguments (summarised)

The learned advocate for the petitioner contended that the mere fact of attachment in execution of a decree gives the attaching creditor the locus standi to apply for setting aside the sale under Order 21, Rule 90 of the Code or Section 174 of the Tenancy Act, depending on which enactment governs the sale.

The opinion does not contain a detailed account of the opposing party's (opposite party 1's) separate submissions beyond the factual steps he took (decree, application for execution, order for attachment, deposit and application under Section 174(1)).

Table of Precedents Cited

Precedent	Rule or Principle Cited For	Application by the Court
Sankaralinga v. Kandaswami (1907) 30 Mad 413	That an attaching creditor can sue if a third party's wrongful acts destroy or diminish the property value because such acts affect the price the property would fetch at sale (affecting satisfaction of the decree).	The Court relied on the reasoning to support the view that an attaching creditor has a pecuniary interest in a property sold in execution of another's decree because wrongful diminution affects the sale price and hence the creditor's share.
Venkatesha Kamathi v. Villa Bhakta 1933 Mad 455	Supports the proposition that an attaching creditor's right to apply to set aside a sale is based on the creditor's pecuniary interest being affected by the sale.	The Court treated this decision as establishing the principle that the attaching creditor's right rests on pecuniary interest; it adopted that principle as the basis for allowing the application here.
Dhirendra Nath Roy v. Kamini Kumar Pal 1924 Cal 786	Interpreted on the same principle: the attaching creditor's right is grounded in a pecuniary interest arising from looking to the property for decree satisfaction.	The Court observed that Page, J. and Suhrawardy, J. in that case placed the attaching creditor's right on the pecuniary-interest principle, and relied on that alignment.
Lakhan Choudhury v. Bacha Lal Singh 1930 Pat 451	Illustrates that a mortgagee of a non-transferable occupancy holding (even without attachment) can apply to set aside a rent sale because his pecuniary interest is affected.	The Court used this example to show that attachment is only one mode of acquiring the pecuniary interest that entitles an applicant to challenge a sale.
Jogendra Nath Chatterjee v. Monmatha Nath Ghosh (1913) 17 C W N 80	Distinguishes attachment before judgment from attachment in execution; contains language on the nature of attachment after decree (made for immediate purpose of execution).	The Court quoted and relied upon Mookherjee, J.'s passage to support the proposition that an attaching decree-holder acquires a pecuniary interest once he has taken a formal, specific court act indicating intent to realize the decree from that property.
Sulemanji v. Pragji Kala 1917 Sind 33	Example of a case where the applicant had attached before judgment or had not taken the necessary steps and thus was not entitled to set aside the sale.	The Court placed this case among those where the applicant did not have the requisite pecuniary interest (because the necessary formal steps had not been taken) and therefore was not entitled.
Rustomji v. Perozshaw 1925 Sind 101	Similar to Sulemanji — falls within the type where the applicant had not taken the necessary steps and so lacked the right to challenge the sale.	The Court cited it as another instance where the necessary pre-sale acts were absent and therefore the applicant was not entitled.
Muttiah Chetti v. Palaniappa Chetti 1928 P C 139	Part of a line of cases that distinguish between an order for attachment and the actual attachment; where statute uses the word "attachment" it may mean physical attachment and not merely the antecedent order.	The Court held that these cases do not affect the point it had to decide: they concern statutory provisions where "attachment" unambiguously meant the actual physical attachment and not the antecedent court order.
Sinnappan v. Arunachalam Pillai 1920 Mad 804	Another case emphasizing the distinction between an attachment order and actual attachment for statutes that specifically refer to "attachment".	The Court found this line inapplicable to the present decision because it addresses a different legal question (meaning of "attachment" where statute expressly uses that term).
Nabadwip Chandra Das v. Lake Nath Roy 1933 Cal 212	Also deals with the distinction between attachment order and actual attachment.	Like the other cases of that group, the Court held it had no bearing on the present issue as framed and decided here.

Court's Reasoning and Analysis

The Court approached the question by distinguishing between proprietary/possessory interest on the one hand and a pecuniary interest on the other:

It began with the straightforward principle that a person who has a proprietary or possessory interest in the property at the date of the challenged sale — an interest that would be affected by the sale — plainly has the right to apply to set the sale aside under Order 21, Rule 90 of the Code or Section 174 of the Tenancy Act.
An attaching creditor in execution of a money decree, however, does not have proprietary or possessory title but does have a pecuniary interest because the property is the source for satisfaction of his decree. The Court explained that wrongful acts or irregularities that reduce the sale price will affect the decree-holder's share and therefore give him a sufficient interest to challenge the sale (drawing on Sankaralinga and related authorities).
The Court identified the correct, dispositive principle: the right of an attaching creditor to apply to set aside a sale is founded on the fact that his pecuniary interests are affected. The Court cited Venkatesha Kamathi v. Villa Bhakta and Dhirendra Nath Roy v. Kamini Kumar Pal as authorities placing the right on that footing.
The Court noted that attachment is only one mode by which a person may acquire the requisite pecuniary interest; other modes exist (for example, a mortgagee of a non-transferable occupancy holding may have a pecuniary interest without any attachment — see Lakhan Choudhury v. Bacha Lal Singh).
The Court then considered the temporal and formal requirements for acquiring the pecuniary interest: a decree-holder acquires the necessary interest once he has performed a formal act in court that unequivocally indicates his intention to realize the decree from that particular property. That act must be specific to the property and proximate (not remote) in its connection to the intended realization of the decree.
Applying those principles to the present facts, the Court found that opposite party 1 had taken “effective and definite steps” — he had obtained an order for attachment in respect of the holding before the rent sale, thereby manifesting unequivocally his intention to look to that holding for satisfaction of his decree. Even though the actual physical attachment was effected after the sale, the prior order for attachment was a court act which, in the ordinary course, would place the property in custodia legis and operate as the necessary preliminary to execution.
The Court therefore concluded that opposite party 1 had the required locus standi under Section 174(1) because his pecuniary interest had been acquired by the formal in‑court act (the order for attachment) prior to the rent sale.
The Court expressly distinguished and rejected reliance on the line of authority (including Muttiah Chetti, Sinnappan, and Nabadwip Chandra Das) that emphasize a distinction between an order for attachment and actual attachment in contexts where the statute uses the word "attachment" — because those cases addressed statutory provisions where "attachment" plainly meant the physical act of attachment, a point not determinative of the present question as framed.

Holding and Implications

Holding: The Court held that opposite party 1 had locus standi to apply under Section 174(1), Tenancy Act, and that the Court of Appeal had correctly allowed the application. Consequently, the present rule (challenging the appellate order) was DISCHARGED. Costs were awarded to opposite party 1, including a hearing-fee of one gold mohur.

Implications:

Direct effect: The appellate Court's order setting aside the rent sale (on the basis that opposite party 1's interests were affected) is upheld and the rule challenging that order is discharged; costs are awarded to opposite party 1.
Legal implication drawn by the Court: A decree-holder acquires the pecuniary interest necessary to apply to set aside a sale once he has taken a formal, specific, in‑court step indicating an unequivocal intention to realize his decree from that particular property (for example, obtaining an order for attachment even if the physical attachment is effected subsequently). The Court distinguished cases addressing statutory usage of the word "attachment" where the legislature meant the physical attachment itself.
The opinion does not announce that it is laying down a broader novel rule beyond the application of the stated principles to the present facts; its rulings are tied to the principles and authorities discussed in the opinion.

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Bulanda Bashini Dasi Auction-Purchaser v. Pran Govinda Dhar And Others Judgment-Debtors Opposite Parties.

1. The Secretary of State for India in Council, who is opposite party 2 in this rule, obtained a decree for rent against opposite parties 3 and 4, Hatu Dutta and Sudhangsu Bhusan Dutt. In execution of his decree the defaulting holding was sold and purchased by the petitioner, Bulanda Bashini Dasi, on 27th May 1935. It is this sale that the opposite party 1, Pran Gobinda Dhar, wanted to set aside by making a deposit under the provisions of Sub-section 1, Section 174, Tenancy Act. His application for setting aside the said sale was refused by the 1st Court but has been allowed by the lower appellate Court, and the said sale has been set aside. The question raised in this rule is whether the Court had jurisdiction to entertain the said application of opposite party 1. This question depends upon the question as to whether he is a person whose interest has been affected by the rent sale.

2. The answer to this question depends upon the following facts which are not disputed by any of the parties to this rule: Opposite party 1 had obtained a money decree against opposite parties 3 and 4. He applied for execution of his decree. An order for attachment of the holding in question was passed in the proceedings for execution of his decree on 23rd May 1935, that is four days before the rent sale, but the property was actually attached after it, that is on 21st June 1935. He made the application under Section 174 (1) and made the deposit as required by that section on 22nd June 1935. It is now settled law, so far as this Court is concerned, that an attaching creditor, who has attached in execution of his decree, has the right to apply to set aside a sale under Order 21, Rule 90, of the Code, which contains the same words namely "whose interests are affected by the sale" as occur in Section 174 (1), Tenancy Act. But it is said by the learned advocate appearing for the petitioner that the fact of attachment alone in execution of a decree gives him the locus standi to apply for setting aside the sale under the provisions of Order 21, Rule 90, of the Code, or Section 174, Tenancy Act, according as the sale is under the Code or the Tenancy Act. It is necessary to examine in this case the said contention and the precise principle.

3. In my judgment a person who has a proprietary or possessory interest existing at the date of the challenged sale, which would be affected by it, has the right to apply to set aside the sale under Order 21, Rule 90 of the Code, or Section 174, Tenancy Act. That is the simplest case. But a creditor who has attached the property in execution of his decree for money is a person who has got no proprietary or possessory interest therein. But he has a pecuniary interest therein, because it is the property to which he looked for the satisfaction of his decree. He has the right to its preservation in the same state and can sue if a third party by wrongful acts destroys it or diminishes its value, Sankaralinga v. Kandaswami (1907) 30 Mad 413; for such wrongful acts would ultimately affect the price that the property would fetch at the Court sale, the price which would have been the means of satisfaction of his decree. If it is sold in execution of another's decree, he, having the right of rateable distribution is entitled to see that it has been sold not at an inadequate price by an irregular or fraudulent sale, for, more the price fetched the more would be his share in the rateable distribution. If he has not the right to claim rateable distribution, the surplus sale proceeds, after satisfying the claim of the decree-holder at whose instance the property was sold, would be available to him, and the more the price fetched the more would be the surplus. He has therefore a pecuniary interest affected by an irregular or fraudulent sale which had fetched an inadequate price by reason of the irregularity or fraud. It is on this principle and this principle only, namely, that his pecuniary interests are affected, that his right to apply for setting aside the sale, is in my judgment, based on Venkatesha Kamathi v. Villa Bhakta 1933 Mad 455, and I consider that this is the only principle on which his right so to apply has been supported in Dhirendra Nath Roy v. Kamini Kumar Pal 1924 Cal 786. Page, J. expressly puts the case on the said principle alone. Suhrawardy, J. also states the principle in that way at p. 498 of the report. When he says that an attaching creditor has an interest in the sale of the property or in the property itself, he means that he has a pecuniary interest therein, because he looked to the property for the satisfaction of his money decree, which was sold at the instance of another creditor of the same judgment-debtor. That is also the basic principle underlying the decision in Sankaralinga v. Kandaswami (1907) 30 Mad 413 as I have indicated above, on which Suhrawardy, J. relies for his support.

4. Most of the cases where the question has come up are cases where the person who had applied for setting aside the sale had actually attached in execution the property before the sale and consequently in these cases the observations are to the effect that the attachment gave a pecuniary interest in the property to the person seeking to set aside the sale. The question in this case is whether the fact of attachment in execution of a decree only, gives him a pecuniary interest. In my judgment the fact of attachment is one of the modes by which pecuniary interest is acquired in the property, but only one of many modes in which such an interest can be acquired. A mortgagee of a nontransferable occupancy holding who has recovered a decree, or even one who has not recovered a decree, can apply to set aside a rent sale held under Ch. 14, Tenancy Act. It may be said that the holding being non-transferable, he had not acquired any proprietary interest in the same against the landlord who has obtained the rent decree, but surely his pecuniary interest is affected by the rent sale. It is on this principle that the Patna High Court has supported his right to apply for setting aside a rent sale: Lakhan Choudhury v. Bacha Lal Singh 1930 Pat 451. In such cases there is no attachment at all. In my judgment the correct principle for determining whether the applicant for setting aside the sale had acquired before the challenged sale, a pecuniary interest in the property is to be gathered from the following underlined passage in the judgment of Mookherjee, J. in Jogendra Nath Chatterjee v. Monmatha Nath Ghosh (1913) 17 C W N 80 where he was considering the difference between an attachment before judgment and attachment in execution of a decree:

An attachment after decree on the other hand is an attachment made for the immediate purpose of carrying the decree in execution, and it presupposes an application on the part of the decree-holder to have his decree executed.

5. In that case the question was whether a person who had attached the property before judgment, but had not got a decree, could apply to set aside a sale, and it was answered in the negative. For drawing a contrast the case of an attachment in execution of a decree was spoken of, but in my judgment a decree-holder acquires a pecuniary interest in the property, the sale of which at the instance of another decree-holder he challenges, as soon as he has done a formal act, an act in Court, which indicates unequivocably that he wants that property for the satisfaction of his decree. The act must be specific, in relation to that particular property and must not remotely but proximately or immediately connect his intention to realize his dues out of that particular property. On this principle a person who has attached before judgment, but who has at the date of the challenged sale, got no decree, would not be entitled to apply for setting aside the sale. A person who has obtained a decree for money, but has not applied for execution, would also have not the right to apply on this principle, as he has not taken any action in Court to indicate that he looked to that particular property sold for satisfaction. The cases cited by the petitioner, namely, Sulemanji v. Pragji Kala 1917 Sind 33 and Rustomji v. Perozshaw 1925 Sind 101, fall within this type. A person who has obtained a decree for money and has only applied for execution but has not applied for and obtained an order for attachment of the particular property may possibly be excluded, but when a person has gone further and has taken effective and definite steps for proceeding against the particular property, which steps in normal course would lead to the sale of the property in question for satisfaction of his decree, I think he would have the right to apply for setting aside the sale. Here such definite steps had been taken by opposite party 1; he asked for and obtained an order for attachment of the holding sold at the rent sale brought about at the instance of the landlord, the Secretary of State for India in Council, before the rent sale. He had unequivocably manifested his intention to look to the said holding as a means of satisfying his decree and had done an act which cannot be said to connect remotely his intention to realize his decretal dues with the said holding. He had obtained an order from the Court which in its normal course, in the course of ministerial acts and proceedings only and without a further judicial order, would, have placed the suit property in custodia legis as a preliminary, necessary and immediate step for enabling the satisfaction of his decree out of the same.

6. If on this principle I hold that opposite party 1 had locus standi to apply under Section 174 (1), Tenancy Act, though the actual attachment was effected after the rent sale, I do not consider that the case in Muttiah Chetti v. Palaniappa Chetti 1928 P C 139 or the cases in Sinnappan v. Arunachalam Pillai 1920 Mad 804 and Nabadwip Chandra Das v. Lake Nath Roy 1933 Cal 212 have any bearing upon the point that I have to decide. Those cases lay down that there is a distinction between an order for attachment and the actual attachment, and where the legislature has used the word attachment, as for instance in Article 11, Schedule 1, Lim. Act, and Sec. 64 of the Code, it means attachment and not the order in consequence of which the attachment is afterwards made, with the necessary corollary that the result of attachment indicated by the legislature would follow only when there is the attachment and not before. I accordingly hold that the right order has been passed by the Court of appeal below, and this rule must be discharged with costs to opposite party 1, hearing-fee 1 gold mohur.

Bulanda Bashini Dasi... v. Pran Govinda Dhar An...