- Bookmark
- Share
- CaseIQ
Abinash Chandra Kar ... v. Bhuban Chandra Maiti...
Structured Summary of the Opinion
Factual and Procedural Background
The Appellants are representatives of a mortgagee who had taken a mortgage from two of five brothers belonging to a Hindu family governed by the Dayabhaga law. The mortgagee obtained a decree for Rs. 7,195. The mortgaged property was sold in execution and purchased by the mortgagee on 19 November 1917 for Rs. 6,000. The mortgagors applied under r. 90 of Order XXI, C.P.C., to set aside the sale; those proceedings were terminated on 14 May 1918 by a compromise conditionally setting aside the sale if the mortgagors executed a conveyance of 39 bighas of chur land to the mortgagee within a limited time. The condition was not fulfilled, and the sale was confirmed on 1 October 1918, with the Rs. 6,000 set off against the mortgage debt.
After possession was taken by the mortgagee, the brothers of the mortgagors made claims under r. 100 of Order XXI, C.P.C., to portions of the property; those claims were partly successful by summary determination. The mortgagee did not file a regular suit to contest those claims but applied under section 47, C.P.C., to the Court of Execution seeking compensation for having been deprived of part of the property, asking that only Rs. 2,940 be set off against the debt instead of Rs. 6,000. The mortgagee died; the Appellants, as his representatives, pursued the application. The appeal is from the judgment of the Court below dated 21 August 1919, which decided against the Appellants.
Legal Issues Presented
- Whether a mortgagee (or his representatives) who purchases the mortgaged property at a court execution sale and is later deprived of portions of that property by successful third-party claims can obtain compensation or an adjustment of the account against the mortgagors.
- Whether the Code of Civil Procedure (including the rules governing sales in execution) or equity provides a remedy in the form of compensation to such a purchaser when the purchaser has been deprived of part of the property.
- Whether a mortgagee who purchases under his decree stands in any better or worse position than a third-party auction purchaser with respect to claims for compensation arising from defects or reductions in the property sold.
- Whether the purchaser's remedy under the Code (formerly s. 313, now r. 91 of Or. XXI) applies where the judgment-debtor had some saleable interest but not the whole interest sold.
- Whether a personal decree against the mortgagors for the balance of the mortgage debt (after setting off sale proceeds) may be made in the absence of a succession certificate.
Arguments of the Parties
Appellants' Arguments
- Dr. Mitter, on behalf of the Appellants, contended that the decision below was erroneous and that the Appellants were entitled either under the Code or at least in equity to compensation or to an adjustment of accounts between mortgagors and mortgagee because the mortgagee (or his representatives) had been deprived of part of the property after purchase at execution sale.
- The Appellants relied on authorities (including a Registrar's sale case) where compensation was allowed to purchasers, arguing those cases provided a basis for a general equitable principle of compensation applicable to their circumstances between mortgagee and mortgagors.
Respondent / Trial Court's Position
- The Subordinate Judge rejected the application on the grounds that there is no warranty of title in court sales and that the Code of Civil Procedure provides no basis for compensation in such cases.
- It was conceded by Appellants that the authorities chiefly involved third-party purchasers seeking relief against decree-holders and did not provide direct authority supporting a claim by a mortgagee against mortgagors for compensation while upholding the sale.
- The Appellants did not seek rescission of the sale under the rule corresponding to r. 91 (formerly s. 313); instead they sought to uphold the sale but obtain compensation.
Table of Precedents Cited
| Precedent | Rule or Principle Cited For | Application by the Court |
|---|---|---|
| Kissori Mohun Roy v. Kali Charan Ghose | Registrar's sale case where compensation was allowed to purchaser as against decree-holder out of sale proceeds. | The Court distinguished Registrar's sales from sales in execution under the Code and held this authority inapplicable because the present sale was an execution sale under the C.P.C., not a Registrar's sale. |
| Ram Narain v. Dwarkanath Khettri | Distinction between Registrar's sale and sale in execution by Sheriff or Court under the Civil Procedure Code. | Used to support that sales in execution are governed exclusively by the C.P.C. and that rules allowing compensation in Registrar's sales do not apply to execution sales under the Code. |
| Sonaram Das v. Mohiram Das | Where the judgment-debtor had a saleable interest, purchaser at execution sale purchases at his own risk and there is no warranty that property will answer to description. | Adopted to support the proposition that a purchaser at an execution sale must abide by his bargain and that the Court does not guarantee title; therefore no compensation as sought here. |
| Sundaram Gopalam v. Venkata Vasvdev Ayyangar | Authority adopted in Sonaram Das for the principle that purchasers at execution sales take risk of title/description. | Referenced as antecedent reasoning underlying Sonaram Das and relied upon for the no-warranty principle. |
| Mahahir Pershad v. Macnaghten | Principle that a decree-holder purchaser is generally in the same position as any other auction-purchaser. | Applied to show that a mortgagee purchasing at his own sale is not in a more advantageous position to claim compensation than a third-party purchaser. |
| Dayal Krishna Naskar v. Amrita Lal Das | Third-party purchaser's claim for refund/compensation for deficiency in area rejected; observations as to differences between private sale and execution sale; some observations obiter. | Court held this case not helpful to Appellants; cited Banerjee, J.'s observations that price at an execution sale is determined by competition and that a purchaser must prove actual loss from misdescription — reinforcing argument against equitable compensation while upholding the sale. |
| Mahomed Kala Meah v. Harperink (Privy Council) | Where a court officer misrepresented the nature of the title sold to bidders, purchaser misled by that conduct could have the sale set aside (remedy is rescission, not mere compensation). | Court distinguished that case as involving clear misrepresentation by a court officer; it supported the proposition that misrepresentation by court officers may permit setting aside the sale but did not support a claim for compensation against mortgagors in the present facts. |
| Rustomji Ardesher Irani v. Vinayek Gangadhar Bhat | Referenced precedent (specific principle not elaborated in opinion). | The Court stated that the question debated in that case had no bearing on the present question and thus it was not relied upon to support the Appellants' claim. |
| Juranu Mahomed v. Jathi Mahomed | Referenced precedent (specific principle not elaborated in opinion). | The Court observed that issues in that case were irrelevant to the present dispute and therefore it did not assist the Appellants. |
Court's Reasoning and Analysis
The Court proceeded by applying the specific statutory and precedential framework governing sales in execution under the Civil Procedure Code and by distinguishing other authorities that arose in different procedural settings.
- Statutory scope of rescission rule: The Court noted that the rule formerly in s. 313 of the 1882 Code (now r. 91 of Order XXI) allows a purchaser at a sale in execution to apply to set aside the sale only where the judgment-debtor had no saleable interest in the property sold. The remedy under that provision is rescission (setting aside) of the sale, not compensation while keeping the sale intact. The Appellants expressly did not seek rescission under that rule.
- Distinction between types of sales: The Court emphasized the distinction between Registrar's sales (where rules permitted conditions for compensation for errors/misstatements) and sales in execution under the Code (governed exclusively by the C.P.C.). Authorities permitting compensation in Registrar's sales were therefore inapplicable to execution sales under the Code.
- Principle of caveat emptor and purchaser's risk: Relying on Sonaram Das (and antecedent Madras decisions), the Court reiterated that a purchaser at an execution sale buys the judgment-debtor's right, title and interest and does so at his own risk. Apart from r. 91 and fraud, the purchaser must abide by his bargain; the Court does not guarantee title. The maxim caveat emptor was applied.
- Position of mortgagee versus third-party purchaser: The Court found no authority or principle to treat a mortgagee who purchases under his decree as in a better position to claim compensation than any other auction-purchaser. Indeed, the mortgagee's position was not more favourable; he presumably provided the particulars used in the sale proclamation.
- Limitations of precedents relied on by Appellants: The Court reviewed cases cited by Appellants (including Dayal Krishna and Mahomed Kala Meah) and concluded that those decisions either were obiter, applicable only to different sale types, or involved factual situations (such as misrepresentation by court officers) not present here. The Privy Council case (Mahomed Kala Meah) supported rescission where the Court's officer misled bidders, but that was not the present factual matrix and, even if it were, it would not sustain a claim for compensation against mortgagors.
- Practical and policy considerations: The Court observed that allowing the Appellants' equitable relief while maintaining the sale would require re-opening the sale to consider value and price, which would be contrary to the scheme and policy of the Code, since execution sales determine price by auction competition and not by contractual fixed-value bargains.
- On the request for a personal decree: The Subordinate Judge refused to make a personal decree against the mortgagors for the balance of the mortgage-debt after deducting Rs. 6,000 because the Appellants had not produced a succession certificate in respect of the mortgage-debt. The appellate court declined to interfere with that order and understood it not to preclude renewal of the application once the required certificate is obtained.
Holding and Implications
Holding: The appeal is DISMISSED. The judgment of the Court below (dated 21 August 1919) is confirmed.
Implications and consequences:
- The Appellants are not entitled to compensation or an adjustment of the account against the mortgagors for deprivation of parts of the property after purchase at an execution sale, on the facts and law before the Court.
- The Court reiterated that, apart from the specific rescission remedy under r. 91 (where the judgment-debtor had no saleable interest) or in cases of fraud or misrepresentation by Court officers, purchasers at execution sales take the property at their own risk and there is no warranty by the Court that the property will answer the description in the sale proclamation.
- Costs were awarded to the Respondents: hearing-fee, five gold mohurs.
- The Subordinate Judge's refusal to make a personal decree for the balance of the debt (due to absence of a succession certificate) will not be interfered with; the Appellants may renew the application after producing the required certificate.
- No broader or novel principle of law was established by this decision beyond applying and reaffirming existing statutory rule and precedents governing execution sales; the decision confirms that execution-sale purchasers cannot claim compensation against judgment-debtors/mortgagors in the circumstances presented.
Judge notes: Richardson, J. delivered the principal judgment and Cuming, J. concurred. The appeal was dismissed with costs.
The Judgment of the Court was as follows:—
Richardson, J.:— The Appellants before us are the present representatives of a mortgagee who took a mortgage from two out of five brothers—members of a Hindu family governed by the Dayabhaga law. The mortgagee brought a suit on the mortgage and obtained a decree for the sum of Rs. 7,195. The mortgaged property was put up to sale in execution and was purchased by the mortgagee himself on the 19th November 1917 for Rs. 6,000. The mortgagors then, applied under r. 90 of Or. XXI of the Code of Civil Procedure a to have the sale set aside. The proceeding, was terminated on the 14th May 1918 by a compromise under which the sale was set aside conditionally on the mortgagors executing in favour of the mortgagee within a time limited a conveyance of 39 bighas of chur land. If the mortgagors failed to satisfy the condition, the sale was to stand. Well the condition was not fulfilled and at the instance of the mortgagee the sale was confirmed on the 1st October 1918. The sale price, Rs. 6,000, was then, set off against the mortgage debt.
Thereafter, however, the mortgagee having taken possession, the Brothers of the mortgagors preferred claims under r. 100 of Or. XXI, C.P.C, to certain portions of the property. Those claims were, to some extent successful. The decisions were of a summary character but the mortgagee took no steps, as he might have done, to contest them by regular suit. The course which he adopted was to present an application under sec. 47, C.P.C, to the Court of Execution to the effect that compensation should be allowed to him in consideration of the fact that he had beer deprived of part of the property as the result of the claim cases. His prayer was that instead of Rs. 6,000 only a sum of Rs. 2,940 should be set off against the debt.
At that stage of these protracted proceedings, the mortgagee died. The Appellants came on the record in his place and went on with his application. The appeal is from the judgment of the Court below, dated the 21st August 1919, deciding against them.
The learned Subordinate Judge has rejected the application on the grounds in effect that there is no warranty of title in Court sales and that the Code of Civil Procedure makes no provision for compensation in cases of this kind.
Dr. Mitter, for the Appellants, contends that the decision is erroneous and that his clients are entitled, if not under the Code at any rate in equity, to compensation or an adjustment of the account as between mortgagors and mortgagee.
In my opinion, this contention cannot be supported.
Dr. Mitter relied on the decision of Mr. Justice Sale on the Original Side of this Court in Kissori Mohun Roy v. Kali Charan Ghose , where compensation was allowed to the purchaser as against the decree-holder out of the sale proceeds in the hands of the Court. The sale there, however, was a Registrar's sale. In another case on the Original Side, Ram Narain v. Dwarkanath Khettri , where the sale was by the Sheriff in the execution of a decree. Mr. Justice Sale himself distinguished a Registrar's sale from a sale in execution of a decree under the Civil Procedure Code by the Sheriff in Calcutta or by a Court of Execution in the mofussil. “Sales in execution of decrees,” he said, “are governed exclusively by the Civil Procedure Code; whereas sales by the Registrar not being provided for by the Code are regulated by Rules framed by this Court which were passed to supplement the procedure introduced by Act VIII of 1859.” He pointed out that under the Rules so framed one of the usual conditions of a Registrar sale provided for company sat ion being allowed for errors and misstatements, while no such condition governed sales under the Code. Then the same learned Judge was a party to the decision in Sonaram Das v. Mohiram Das , a case which came from the mofussil. It was held there, adopting the reasoning of the learned Judges of the Madras High. Court in Sundaram Gopalam v. Venkata Vasvdev Ayyangar , that when the judgment-debt or had a sale able interest, however small, in the property sold, the purchaser at the execution sale purchased at his own risk and that there was no warranty that the property would answer to the description given of it in the sale notification.
That decision turned on sec. 313 of the Code of 1882 now replaced by r. 91 of Or. XXI, which says that the purchaser at a sale in execution of a decree may apply to the Court to set aside the sale on the ground that the judgment-debtor had no saleable interest in the property sold. It is well settle that the Rule only applies where the judgment-debtor has no saleable interest at all. The remedy given in such case is to have the sale set aside Dr. Mitter concedes that in the present case his clients would not be entitled to come in under the Rule. Nor does it appear that they desire to have the sale rescinded. What they want is to uphold the sale with compensation.
It was also conceded that the cases cited Contained nothing of direct authority in the Appellant's favour, because in each of them relief was sought by a third party auction-purchaser, not against the judgment-debtor but against the decree-holder. It was argued, however, that they afforded some basis for a general principle of equitable compensation and that even if a third party auction-purchaser had no claim to relief either against the decree-holder or against the judgment-debtor, different considerations would apply in such circumstances as those of the present case where the question arises between a mortgagee and his mortgagors.
The argument is not easy to follow. As 1 apprehend, when a decree-holder has obtained leave to bid and has purchased the property of the judgment-debtor, he is, generally speaking, in the same position as any other auction-purchaser [Mahahir Pershad v. Macnaghten ] and-for the present purpose his position seems to me not more favourable but Jess favourable than that of a third party because the sale was held at his instance and presumably it was he who supplied to the Court the particulars of the property published in the sale proclamation. The principle, as I understand is that apart from the case provided for by r. 91 and apart, of course, from fraud, a purchaser at an auction-sale must abide by his bargain. What is sold and bought is the right, title and interest of the judgment-debtor in the property. The Court which sells the property does not guarantee the title and the maxim caveat emptor applies.
So far as the judgment-debtor is concerned, the sale is in invitum and he can come under no contractual liability to the purchaser. I can find no authority in any of the cases cited to us for holding that a mortgagee purchasing under his decree is in any better or worse position than any other purchaser. It is a matter of indifference whether a mortgagee or a third party purchase's. A third party would no doubt stand in the shoes of the mortgagee and the fact that no case can be found where a claim to compensation from the judgment-debtor was even advanced goes strongly against the Appellants.
I have still to notice the case of Dayal Krishna Naskar v. Amrita Lal Das to which Dr. Mitter also referred. That again was a case (not more relevant than the other cases cited) in which a third party auction-purchaser, in a suit brought against the decree-holder, sought a refund of part of the purchase money on account of a deficiency in the actual area of the land purchased as compared with the area stated in the sale proclamation. Sir Francis Maclean, C.J, and Banerjee, J., concurred in rejecting the claim for compensation and the observations on which the learned Vakil relies were entirely hypothetical and obiter. I will only read a passage from the judgment of Banerjee, J., at p. 377. The passage runs: “After considering the arguments on both sides, I am of opinion that the Plaintiff has failed to make out his claim for compensation in this case. The considerations upon which the right of a purchaser at a private, talc rests to recover from the vendor compensation for deficiency in the area of the property sold are evidently very different from those upon which a purchaser at a sale in execution of the decree can claim such compensation. Conceding that a purchaser at an execution sale is entitled to claim compensation from the decree-holder for any innocent misdescription, it is clear that he must prove that he has sustained loss by reason of such misdescription. It is not enough for him to say, as a purchaser at a private sale can say, that he paid the price for an area stated and as that is found to be less, he is entitled to proportionate compensation, for the price paid by him is determined not by contract but by competition the object of which is to secure fair price and, notwithstanding the over-statement of the area, the highest bid may not go beyond the fair value of the property.”
For reasons already given the case is not, in my view, of any assistance to the Appellants. On the contrary, the observations of Banerjre, J., suggest an additional argument against the claim. The learned Judge touches upon a point to which the Subordinate Judge also adverts in the judgment appealed from. At a Court sale the price obtained may not represent the true value of the property. If the Appellants title to equitable relief were well founded the question of price could not be left out of account. The sale would have to be re-opened in a manner contrary to the, scheme and policy of the Code.
As regards the decision of their Lordships of the Privy Council in Mahomed Kala Meah v. Harperink , that was a case of a very different nature. There the sale in execution was being conducted by officers of the Court one of whom went entirely out of his way to misrepresent or misstate to the public present on the occasion the nature of the title which was being sold. He stated, contrary to the clear terms of the sale proclamation which being in English was not understood by all the intending bidders and were therefore explained by the officer in the vernacular, that the land was being sold at the instance of the mortgagee whereas, in fact, all that, was being sold was the equity of redemption of the mortgagor. Their Lordships say: “The Appellant was then led to believe that the invitation was an invitation to bid for a substantial property freed and discharged from all incumbrances. In the result, he found himself the purchaser of a shadowy equity of redemption not worth one farthing.” Their Lordships declared, applying a well-known principle, that a purchaser misled by a misrepresentation of that character on the part of the Court or its ministers could not be held to his bargain and was entitled not to compensation but to have the sale set aside. The case did not turn on any contractual relation between the parties and nothing occurred in the present case remotely resembling what occurred in that case. It is not suggested here that anything occurred for which the Court or its officers could be held responsible. And even if anything of the kind had occurred, how could it support a claim for compensation against the mortgagors as judgment-debtors?
Similarly, as to the cases of Rustomji Ardesher Irani v. Vinayek Gangadhar Bhat (8) and Juranu Mahomed v. Jathi Mahomed (9), the question which was debated in those cases has no bearing on the question which arises in the present case.
In my opinion the authorities cited do not in any way countenance the Appellants' claim to compensation. The judgment of the Court below was right and should be confirmed.
There is one other point. The learned Subordinate Judge refused to make a personal decree against the mortgagors in respect of the balance of the mortgage-debt after deducting the sum of Rs. 6,000. His ground for so refusing was that the Appellants had not produced a succession certificate in respect of the mortgage-debt. We do not propose to interfere with they order—as we understand its terms, it does not preclude the Appellants from repeating the application when the required certificate has been obtained.
The result is that the appeal is dismissed. The Respondents are entitled to their costs; hearing-fee, five gold mohurs.
Cuming, J.:— I agree.
J.N.R
Appeal dismissed with costs.
Alert