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Jamini Mohan Banerji v. Messrs Ram Kissen Das Bagree
Structured Summary of the Judgment delivered by Das, J.
Factual and Procedural Background
This appeal challenges an order dated 23 June 1948 of the learned Subordinate Judge, Fifth Court, Alipore, which dismissed an application under Order XXI, Rule 90, Code of Civil Procedure by Jamini Mohan Banerji (the appellant) seeking to set aside an execution sale.
Material facts as stated in the opinion:
- Parindra Krishna Deb and Pranayendra Krishna Deb borrowed money secured by mortgage from Ram Kissen Das Bagri and Shew Chand Bagri. The decree-holder obtained a preliminary decree for sale on 7 June 1941 and a final decree for sale on 27 August 1945.
- On 27 November 1943 Parindra Krishna Deb sold his interest to Jamini Mohan Banerji (appellant) for Rs. 2,000 (Ex. 1). Neither the mortgage suit nor the execution proceedings made the appellant a party; Pranayendra and Parindra were the judgment-debtors in the decree and notices under O. XXI, r. 66 were served on them.
- On 29 June 1946 the decree-holder and judgment-debtor Pranayendra filed a joint petition specifying the sequence and manner in which lots should be sold and agreed that the respective values stated by parties would be shown in the sale-proclamation. The sale was held; on 14 September 1946 the decree-holder's bids for the lots were accepted.
- On 27 May 1947 the appellant filed an application under O. XXI, r. 90 (dating knowledge to 24 May 1947 via Gouri Shankar Banerji) to set aside the execution sale. The Subordinate Judge dismissed the application on contest for several reasons including proper service of notices, absence of inadequacy of price, that non-compliance with s.35 of the Bengal Money-lenders Act was a material irregularity but not sufficient to set aside the sale because there was no substantial injury, and that the application was time-barred in the absence of fraud.
- This appeal was heard before Das, J. (with concurrence by Guha, J.) and dismissed with costs (hearing-fee 5 gold mohars).
Legal Issues Presented
- What is the legal effect of non-compliance with section 35 of the Bengal Money-lenders Act on an execution sale in a decree obtained for a loan — is such non-compliance mandatory (rendering the sale a nullity) or directory (rendering the sale voidable)?
- Whether the appellant proved (a) non-service or suppression of the sale-proclamation, (b) inadequacy of price/undervalue of the sale, or (c) fraud sufficient to make the application under O. XXI, r. 90 maintainable and not barred by limitation.
- Whether the non-compliance with s.35, if held to be a defect, requires setting aside the sale irrespective of limitation or the absence of substantial injury.
Arguments of the Parties
Appellant's Arguments (as advanced by Mr. Apurbadhan Mukherji)
- There was an irregularity in stating both the values given by the decree-holder and by the judgment-debtor in the sale-proclamation.
- The sale-proclamation was not served on interested parties but was suppressed.
- The value stated in the sale-proclamation (and/or the value fetched at the sale) was shockingly low and therefore the sale was at an undervalue.
- The application under O. XXI, r. 90 was not barred by limitation.
- Non-compliance with section 35 of the Bengal Money-lenders Act rendered the sale a nullity.
Respondent and Trial Court's Position (as recorded in the opinion)
- The notices under O. XXI, r. 66 and the sale-proclamation were duly served; the evidence adduced did not establish suppression or non-service.
- There was no proved inadequacy of price: the appellant failed to show the property was sold at an undervalue.
- Although non-compliance with s.35 was a material irregularity, it did not, in the view of the trial court, justify setting the sale aside because there was no substantial injury.
- The application was barred by limitation in the absence of fraud keeping the appellant from knowledge of the sale.
- Where a sale is set aside, the proper limit for such relief is governed by the relevant articles of the Limitation Act (Art. 166 was invoked by the appellate court as the period governing setting aside a voidable sale).
Table of Precedents Cited
| Precedent | Rule or Principle Cited For | Application by the Court |
|---|---|---|
| Saadatmand Khan v. Phul Kuar | Referenced in relation to valuation principles and the appellant's contention about undervalue. | The court stated that the principle underlying this case had no application to the present facts. |
| Ashutosh Sikdar v. Behari Lal Kirtania | Test for whether a statutory provision is mandatory or directory (look to nature, effect, object; whether benefit can be waived). | The court applied the test from this case to determine that s.35 is directory where it benefits debtors and thus can be waived; used to frame the mandatory vs directory analysis. |
| Liverpool Borough Bank v. Turner (Lord Campbell L.C.) | Principle that courts should seek the real intention of the legislature by attending to the whole scope of statute. | Quotational support for statutory construction approach applied to s.35. |
| Manindra Chandra Roy Chaudhury v. Jagadish Chandra Majumder | Objection regarding non-compliance with s.35 construed as defect in sale-proclamation specifying property to be sold. | The court noted Chakravarti, J.'s view and cited it as supportive of treating non-compliance as a defect in proclamation (i.e., not necessarily a nullity). |
| Sheo Dayal Narain v. Musammat Moti Kuer | Under analogous Bihar Money-lenders Act (s.13), failure to value property sold does not go to root of jurisdiction; renders sale voidable. | Used as authority for the proposition that analogous statutory non-compliance makes a sale voidable, not void. |
| Raghunath Das v. Sundar Das Khetri | Held that non-compliance with O. XXI, r. 22 rendered a sale a nullity where service under the rule was necessary to vest jurisdiction. | The court distinguished that case: there, service was jurisdictional; the present case concerned s.35 and did not similarly divest jurisdiction. |
| Shyamakant Lal v. Rambhajan Singh | Observations about substantive rights of judgment-debtors under money-lenders legislation (right to insist only so much property be sold and not at less than price fixed by court). | The court observed those remarks do not necessarily mean a sale held in contravention is void; they are consistent with the sale being voidable. |
| Jatindra Mohan Sarkar v. Mahipal Nayak | Discussed ss.16,17 Bihar Money-lenders Act as in pari materia with s.35 Bengal Act; observations about s.47 of the Civil Procedure Code applicable to sales without compliance. | The court held the observed remarks in that case were obiter so far as contrary, and did not decide that the sale was a nullity; used to support view that such sales fall within s.47 and are voidable. |
| Haripado Haidar v. Baradaprasad Roy Chowdhury | Referenced in support of treating statutory non-compliance as giving rise to a voidable sale. | Cited by the court as further support for the conclusion that the sale is voidable where s.35 is not complied with. |
Court's Reasoning and Analysis
The court's analysis was structured and principled. The key steps of reasoning as recorded in the opinion are summarized below, remaining strictly faithful to the text of the judgment:
- Preliminary factual findings: the court evaluated the evidence on (a) service of sale-proclamation, (b) adequacy of sale-price, and (c) alleged fraud. The court concluded the appellant failed to prove suppression or non-service of the sale-proclamation and failed to show the property was sold at an undervalue; there was no evidence of fraud by decree-holders or auction-purchasers.
- Characterisation of s.35 of the Bengal Money-lenders Act: the court examined s.35, which (first part) requires the court, in execution of a decree in respect of a loan, to specify only so much property as is sufficient to satisfy the decree and forbids sale at less than that price; the proviso permits sale at a lower price if the decree-holder consents to write off the balance.
- Legal test applied: relying on the principle in Ashutosh Sikdar v. Behari Lal Kirtania, the court applied the test of whether a statutory provision is mandatory or directory by considering the nature, effect and object of the provision and whether it is based on public policy or intended for the benefit of a particular class (debtors). The court noted the safest rule is to see if the benefit can be waived.
- Application to s.35: the court concluded that although s.35 is couched in imperative language, it is intended for the benefit of debtors (not an absolute public-policy constraint) and therefore is directory and can be waived. The court contrasted s.35 with provisions which are jurisdictional (for example, rules whose compliance is necessary to vest jurisdiction under O. XXI, r. 22 as in Raghunath Das).
- Consequence of non-compliance: accordingly, failure to comply with the first part of s.35 does not render an execution sale a nullity. Instead, the defect makes the sale voidable; it must be set aside by appropriate proceedings and within the period of limitation applicable (the court identifies Art. 166 of the Indian Limitation Act as the relevant period).
- Application of principle to the present appeal: having held s.35 to be directory and the non-compliance to make the sale voidable, the court evaluated whether the appellant's application succeeded on the facts. Because the appellant failed to prove non-service, suppression, undervalue or fraud, and the trial court had also found no substantial injury, the court upheld the Subordinate Judge's dismissal of the application.
- On limitation and the need for fraud: the court agreed with the trial court's view that, in the absence of fraud keeping the appellant from knowledge of the sale, the application was time-barred; hence the appellant's limitation argument failed on the evidence.
Holding and Implications
APPEAL DISMISSED
Direct effect on the parties:
- The appeal is dismissed and the order of the Subordinate Judge of 23 June 1948 (dismissing the application under O. XXI, r. 90) is affirmed.
- The appellant's contentions — that the sale-proclamation was suppressed or that the sale was at an undervalue or that non-compliance with s.35 rendered the sale a nullity — were rejected on the evidence and legal analysis in the judgment.
- The appellant must bear costs; the dismissal was ordered with costs quantified as a hearing-fee of 5 gold mohars.
Legal implication stated by the court:
The court held that non-compliance with s.35 of the Bengal Money-lenders Act renders an execution sale voidable and not ipso facto a nullity; such a sale must be set aside by appropriate proceedings within the period prescribed by law (the court identified Article 166 of the Indian Limitation Act as governing the period for setting aside such a sale). The court contrasted this with situations in which procedural non-compliance is jurisdictional (and therefore can render a sale void), citing Raghunath Das as an example of the latter kind of case.
The opinion did not state that a new general precedent was being laid down beyond the court's application of established tests and cited authorities; rather, it applied established principles to conclude that s.35 is directory in nature and that non-compliance makes a sale voidable, subject to limitation.
The Judgment of the Court was delivered by
Das, J.:— This appeal is directed against an order dated June 23, 1948, passed by Mr. G.S Chatterji, learned Subordinate Judge, Fifth Court, Alipore, dismissing an application filed by Jamini Mohan Banerji under O. XXI, r. 90, Code of Civil Procedure, for setting aside an execution sale.
The facts are as follows:—
Parindra Krishna Deb and Pranayendra Krishna Deb borrowed money on a mortgage from Ram Kissen Das Bagri and Shew Chand Bagri. The latter instituted a suit to enforce the mortgage and obtained a preliminary decree for sale on June 7, 1941. On November 27, 1943, Parindra sold his interest to Jamini Mohan Banerji (the appellant) for a sum of Rs. 2,000. The deed of sale is Ex. 1. On August 27, 1945, a final decree for sale was passed. The decree was put into execution on September 23, 1945, for a sum of Rs. 20,834 as. 6 pies 3 only.
Neither in the mortgage suit nor in the execution proceedings, was the appellant made a party. Pranayendra and Parindra were made the sole judgment-debtors. Notices under O. XXI, r. 66, of the Code were served on them. On April 4, 1946, only Pranayendra filed an application to the effect that the sale-proclamation should be drawn up in accordance with s. 35 of the Bengal Money-lenders Act. On June 29, 1946, the decree-holder and the judgment-debtor Pranayendra filed a joint petition and agreed that in the sale-proclamation both the values put by the decree-holder and the judgment-debtor Pranayendra should be mentioned; that lot No. 1 (16 as of khatiyân No. 189) will be sold first and, if the entire dues of the decree-holder are not satisfied thereby, lot No. 2 (⅔rd share of khatiyân No. 313) will be sold next and, if the dues of the decree-holder are still unsatisfied, the remaining property of lot No. 3 (⅔rd share) will be sold.
In the sale-proclamation, the respective values given by the decree-holder and the judgment-debtor Pranayendra were stated. The properties were put up to sale on September 13, 1946, and the highest bid was Rs. 10,000 in respect of all the lots. The court was of opinion that the bid was insufficient and the lots were directed to be put up for sale again on the following date. On that date (September 14, 1946) the highest bid of the decree-holder, viz., Rs. 7,400 for lot 1, Rs. 4,000 for lot 2 (⅔rd), Rs. 9,863-4-9p. for lot 3 (⅔rd) was accepted.
On May 27, 1947, the appellant filed an application under O. XXI, r. 90 of the Code, dating his knowledge on May 24, 1947, from Gouri Shankar Banerji.
The application was dismissed by the learned Subordinate Judge on contest on the finding that the notice under O. XXI, r. 66 of the Code and the sale proclamation were duly served, that there was no inadequacy of price, that the non-compliance with s. 35 of the Bengal Money-lenders Act was a material irregularity, but this was not sufficient to set aside the sale, as there was no substantial injury and that the application was barred by limitation, as there was no fraud to keep the petitioner out of the knowledge of the sale.
Mr. Apurbadhan Mukherji appearing for the appellant (applicant) has pressed the following points:—
(i) There was an irregularity in stating both the values as given by the decree-holder and the judgment-debtor in the sale proclamation.
(ii) The sale-proclamation was not served, but was suppressed.
(iii) The value, as given in the sale-proclamation, was shockingly low.
(iv) The application under O. XXI, r. 90 of the Code was not barred by limitation.
(v) Non-compliance with s. 35 of the Bengal Money-lenders Act made the sale a nullity.
The first contention is not of any substance.
Notification No. 8575G, dated July 26, 1938, states that it is not necessary for the court itself to give its own estimate of the value of the property, but the proclamation shall include the estimate, if any, given by either or both the parties.
The second contention relates to the service of the sale-proclamation.
[After discussing the evidence on the point, it was held:—] The above evidence is hardly sufficient to prove non-service, much less suppression of sale-proclamation. This contention also fails.
The third contention relates to the valuation of the property sold.
Both the valuations as suggested by the judgment-debtor No. 1 and by the decree-holder were stated in the sale-proclamation, as provided for by the rules framed by this Court, as already mentioned. The principle underlying the case of Saadatmand Khan v. Phul Kuar(1) has no application. As regards the value fetched at the sale, the appellant has failed to prove that the same was low.
[After discussing the evidence on the point, it was held:—] The evidence led by the appellant does not show that the property was sold at an undervalue. The third contention also fails.
The fourth contention is not supported by any reliable evidence.
There is no evidence worth the name about fraud of the decree-holders auction-purchasers. The fourth contention also fails.
The fifth and last contention has now to be considered. This relates to the effect of non-compliance with s. 35 of the Bengal Money-lenders Act.
The first part of the section imposes a duty upon the court, in case of execution of a decree in respect of a loan as defined in s. 2(12) of the Act, to specify in the sale-proclamation only so much of the property of the judgment-debtor as is sufficient to satisfy the decree and forbids a sale of the property so specified at less than that price.
The proviso contains an exception to the first part and enables the court to sell the property at a lower price, only if the decree-holder consents to write off the balance of his decretal dues.
The question is what is the effect of non-compliance with this provision.
It is not disputed that the decree in the present case was in respect of a loan.
The provision is, no doubt, couched in imperative language. But a breach of imperative provisions does not necessarily render the transaction a nullity—whether the provision is mandatory or directory depends on the nature, effect and object of the particular provision violated: Ashutosh Sikdar v. Behari Lal Kirtania. The safest rule to determine if the provision is directory or mandatory is to see if the benefit of the provision can be waived. The question of waiver depends on the further test, viz., whether the particular provision or statute is based on grounds of public policy or intended only for the benefit of a particular class of persons. In the former case, it is obligatory, and the contravention must be a nullity, in the latter case it is only directory and a contravention amounts to an irregularity (ibid). As Lord Campbell L.C observed in Liverpool Borough Bank v. Turner(2):—
It is the duty of Courts of Justice to try to get at the real intention of the legislature by carefully attending to the whole scope of the statute to be construed.
Section 35 merely limits the extent of the property to be sold and is a qualification on O. XXI, r. 66(1)(a), which requires the proclamation of sale to specify the property to be sold.
If the court complies with the first part of s. 35, but the highest bid falls below the decretal dues and the decree-holder does not consent to forego the balance, the sale does not materialise and a fresh sale has to be ordered. The execution sale is staved off for the time-being and the judgment-debtor gets a respite and a further chance of a resale of his property.
If the court does not comply with the first part, the proceedings go on and the sale takes place. Can it be said that the execution court, which had an initial jurisdiction to hold the sale, loses it by reason of non-compliance with a provision which may affect the extent of the property to be sold?
The Bengal Money-lenders Act gives protection and relief to borrowers and aims at control of money-lender and money-lending. Some of its provisions are no doubt based on public policy, but other provisions are solely intended for the benefit of debtors. Section 35 of the Act is intended for the benefit of the debtor and is merely directory and can be waived.
Judged by the above principles, in my opinion, a breach of the first part of s. 35 does not render the sale a nullity, but makes it voidable and requires the sale to be set aside by appropriate proceedings within the time allowed by law.
In Manindra Chandra Roy Chaudhury v. Jagadish Chandra Majumder, Chakravarti, J. was of the opinion that an objection regarding non-compliance with s. 35 was a defect in the sale-proclamation as regards specifying the property to be sold. The view taken by me is also supported by the decision in Sheo Dayal Narain v. Musammat Moti Kuer*, where, under the analogous provisions (s. 13) of the Bihar Money-lenders Act, it was held that failure to value the property sold does not go to the root of the court's jurisdiction to hold the sale, so as to make it a complete nullity, but makes the sale voidable.
Mr. Apurbadhan Mukherji relied on the case of Raghunath Das v. Sundar Das Khetri(3) which held that non-compliaince with O. XXI, r. 22 of the Civil Procedure Code rendered the sale a nullity. But, in that case, service of notice under the rule was necessary to vest the court with jurisdiction to sell the property of the judgment-debtor by giving time of the intended execution.
Reliance was also placed on the decision in Shyamakant Lal v. Rambhajan Singh. In that case, the present question did not arise, the question concerned the retrospective operation of the Bihar Money-lenders Act. Reliance is placed on the following observations at p. 200:—
The sections confer on the judgment-debtor a valuable substantive right, viz., the right to insist not only that so much alone of the attached or mortgaged property as the court considers sufficient to satisfy the decree should be brought to sale but also that the property should not be allowed to be sold for less than the price fixed by the court.
Their Lordships go on to state that this is different from fixing the upset price and from what is available to a debtor under O. XXI, r. 90 of the Civil Procedure Code.
The observations do not mean that the sale held in contravention of those sections is void, they are consistent with the view that such a sale is voidable. In Jatindra Mohan Sarkar v. Mahipal Nayak, it was observed that ss. 16, 17 of the Bihar Money-lenders Act are in pari materia with s. 35 of the Bengal Money-lenders Act. After referring to Shyamakanta's case already referred to, their Lordships observed that a sale held without compliance with s. 35 brings the case within s. 47 of the Civil Procedure Code.
Their Lordships do not say that the sale is a nullity, as the learned advocate for the appellant suggested. It may be pointed out that, where the sale is brought about by fraud, other than fraud in publishing or conducting the sale, or is held without compliance with O. XXI, r. 72 of the Civil Procedure Code or s. 173 of the Bengal Tenancy Act, the case comes within s. 47 of the Code of Civil Procedure, but such sales are voidable and have to be set aside within the period of limitation. As already stated, in my opinion, the sale held without-compliance with s. 35 of the Bengal Money-lenders Act renders the sale voidable. The period of limitation for setting aside such a sale is prescribed by Art. 166 of the Indian Limitation Act.
The observations to the contrary in Jatindra Mohan's case (supra) are obiter. The view taken by me is supported by the plain words of the Article and by the decisions in Sheo Dayal Narain v. Musammat Moti Kuer* (supra) and Haripado Haidar v. Baradaprasad Roy Chowdhury.
This contention also fails.
The result, therefore, is that this appeal fails and must be dismissed with costs—hearing-fee 5 gold mohars.
Guha, J.:— I agree.
Appeal dismissed.
K.B
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