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Badvel Chinna Asethu v. Vattipalli Kesavayya
Structured Summary of the Opinion (Second Appeal)
Factual and Procedural Background
The dispute concerns title to a property standing in the names of the plaintiff and one Narasayya. The plaintiff's case was that Narasayya had no title because he had not paid his share of the consideration money. It is recorded (as found in a previous judgment in the same litigation) that Narasayya in fact had no title despite his name appearing in the title deeds.
The High Court, in an earlier order of remand, returned two issues for trial: (1) whether defendants 2 and 3 had notice of the plaintiff's claim to the entire suit property prior to the transfer in their favour; and (2) whether those defendants acted in good faith and took reasonable care to ascertain whether the transferor had power to make the transfer within the meaning of Section 41 of the Transfer of Property Act. Both the Lower Court and the Court below answered the first issue in the negative. The present Second Appeal focuses primarily on the second issue and on a procedural contention about the finality of an order rejecting an application under Order IX, Rule 13 (Section 108 of the Old Code).
Legal Issues Presented
- Whether defendants 2 and 3, who took the transfer, acted in good faith and took reasonable care to ascertain whether the transferor (Narasayya) had the power to make the transfer within the meaning of Section 41 of the Transfer of Property Act.
- Whether defendants 2 and 3 had notice of the plaintiff's claim to the entire suit property prior to the transfer (this issue was answered in the negative by the courts below).
- Whether, where a defendant has applied to set aside an ex parte decree under the special procedure (Order IX, Rule 13 / Section 108 of the Old Code) and that application has been rejected and not appealed, the defendant can in an appeal against the decree re-agitate the same question (i.e., whether he was prevented by sufficient cause from appearing and properly conducting the defence).
Arguments of the Parties
Plaintiff's Case
- The plaintiff contended that Narasayya had no title because he had not paid his share of the consideration money; the plaintiff had claimed and received rent for the entire property for several years, including from the defendants themselves.
- The fact of the plaintiff claiming and receiving rent for the whole property was relied on to show the plaintiff's claim of ownership.
Appellants' (Defendants 2 and 3) Arguments
- The appellants challenged the Lower Court's conclusion that they had failed to make bona fide enquiries about the plaintiff's claim. Their pleader did not, according to the opinion, satisfy the court that there was no evidence to justify the Lower Court's conclusion.
- On the procedural point, Mr. T. V. Venkatarama Aiyar (learned Vakil for the appellants) argued that Section 105 of the Civil Procedure Code (new Code) is sufficiently wide to permit a defendant who has applied under the special procedure to set aside an ex parte decree (and whose application was rejected and not appealed) to still raise that question in an appeal against the decree. He relied on the language of Section 105 and argued that its scope should include such orders.
- The appellants also relied on general observations in Privy Council authority (as quoted in a recent decision of the Court) to the effect that a party is not necessarily precluded from impeaching interlocutory orders in a later appeal if he did not appeal from them; this point was invoked to support their contention, though the Court distinguished that authority in the present statutory context.
Table of Precedents Cited
| Precedent | Rule or Principle Cited For | Application by the Court |
|---|---|---|
| Perumbra Nayar v. Subramania Pattar | Raised on the question whether, where an application to set aside an ex parte decree was refused and no appeal preferred against that order, the defendant could nevertheless raise the same question in an appeal against the decree. | The Court notes that in Perumbra Nayar the learned judges expressly refused to decide that precise question. Consequently, it is not treated as a direct decision on the present point. |
| Krishna Ayyar v. Kuppan Ayyangar | Principle that where no application under the special procedure for setting aside an ex parte decree had been made, it is open to the defendant in the appeal to take objection to the decree on that ground; and it concerns the power of the Court to order a remand. | The Court distinguishes this authority: it applies where no special-procedure application was made; it does not decide the point where such an application was made and rejected and not appealed. The Court relies on Krishna Ayyar for the proposition about remand powers but holds it does not support the appellants' contention in the present procedural context. |
| Maharajah Moheshur Sing v. The Bengal Government (Privy Council) | Observation that general law does not contemplate that a party must appeal every interlocutory order and will be precluded from impeaching it later if he does not. | The Court treats this as discussing general law (not referencing the present statutory provision) and distinguishes it from the present case where the Civil Procedure Code contains express provisions bearing on the point. The Privy Council observation is therefore not determinative here. |
| Thimma Nayanim v. Venkata Charlu | This Court quoted the Privy Council observation regarding interlocutory orders. | The opinion records that Thimma Nayanim quoted the Privy Council observation but says that the observation was not made with reference to the express Code provision now in issue; thus it is distinguished and not treated as decisive for the present point. |
| Gadi Neelaveni v. Marappareddigari Narayana Reddi | Referred to by Oldfield, J. in correction of a prior descriptive statement concerning Caussanal v. Soures. | Oldfield, J. explains that his earlier description of Caussanal as overruled by Krishna Ayyar (in Gadi Neelaveni) was mistaken as to scope; he clarifies that Caussanal is overruled by Krishna Ayyar only on a point not material to the present appeal. |
| Caussanal v. Soures | Discussed in relation to whether it had been overruled by Krishna Ayyar. | The Court records that Caussanal v. Soures is overruled by Krishna Ayyar on a particular point, but that point is not the one relevant to the present appeal; this nuance is highlighted by Oldfield, J. |
Court's Reasoning and Analysis
The Court's reasoning proceeds in two main strands: (A) the merits question about the defendants' good faith and reasonable care in ascertaining title; and (B) the procedural question concerning the finality of an order rejecting an application under Order IX, Rule 13 (Section 108 of the Old Code).
A. Merits — Good Faith and Reasonable Care
- The Court accepts the prior finding that Narasayya had no title though his name appeared in the title deeds and that the plaintiff asserted ownership and had received rent for the entire property for several years.
- The District Judge found that defendants 2 and 3 had not made any enquiries, despite the fact that the plaintiff had for several years before the transfer claimed and received rent for the entire property (including from the defendants). The District Judge characterized the defendants' conduct as showing they "wanted to annoy plaintiff" in a related dispute about a house, and concluded they made no bona fide enquiries.
- On appeal, the Court (Sir Abdur Rahim, J.) states it is difficult to hold that the Lower Court lacked sufficient material for this conclusion. The appellants' counsel did not satisfy the Court that there was a lack of evidence to justify the District Judge's findings. Accordingly, the Court upholds the finding that the defendants failed to make bona fide enquiries and thus were not bona fide purchasers who took without notice.
B. Procedural — Finality of Order under O. 9, R. 13 / Section 108 Old Code
- The specific procedural question is whether an order rejecting an application made under Order IX, Rule 13 (Section 108 Old Code) is final for the purposes of precluding the defendant from raising the same question in an appeal against the decree when the order itself was not appealed from.
- The Court examines prior authorities. It observes that Perumbra Nayar did not decide the point. Krishna Ayyar v. Kuppan Ayyangar holds that where no special-procedure application was made a defendant may raise the objection in an appeal, but the decision does not cover the situation where a special-procedure application was in fact made and rejected and that rejection was not appealed.
- The appellants relied on Section 105 of the Civil Procedure Code (new Code), whose language permits objections based on "any error, defect or irregularity in any order, affecting the decision of the case" to be set forth in a memorandum of appeal. The Court notes differences in wording between the old and new Code (old Section 591 included the word "such") but is inclined that the omission should not materially change construction. Despite the wide language of Section 105, the Court holds that it does not entitle a defendant who has availed himself of the special procedure and failed to re-open the same question in an appeal against the decree.
- The Court's policy concern is that allowing re-litigation of a question already finally decided under the special procedure (where the party availed that procedure) would open the door to speculative litigation. The Court therefore concludes that a defendant who has applied under Order IX, Rule 13 and had his application finally rejected (and did not appeal that rejection) cannot re-agitate the matter in the subsequent appeal against the decree.
- The opinion distinguishes Privy Council authority (Maharajah Moheshur Sing) and decisions quoting it, on the basis that those authorities addressed the general law on interlocutory orders and not a situation governed by an express Code provision like Section 105. Thus the Privy Council observation does not control this case.
- Oldfield, J. supplements this analysis by emphasizing the principles of finality and res judicata: an adjudication on the section 108 application should be conclusive against the applicant for the purpose of any subsequent appeal, and allowing both remedies in succession would be incompatible with established procedural rules. He notes that the District Munsif's order rejecting the application, not having been appealed from, became final, and that acquiescence in that order or failure to pursue an appeal does not change its finality.
Holding and Implications
APPEAL DISMISSED WITH COSTS
Holding (core ruling): The Court dismissed the Second Appeal and awarded costs against the appellants. The substantive findings below — that defendants 2 and 3 did not act with sufficient bona fides or reasonable care in ascertaining the transferor's title (in light of the plaintiff's longstanding claim and receipt of rent) — are sustained.
Implications: - The immediate consequence for the parties is that the decree against the appellants is upheld and the appeal is dismissed with costs. The District Judge's factual findings and conclusions are maintained. - On the procedural point, the Court holds that where a party has availed itself of the special procedure under Order IX, Rule 13 (Section 108 Old Code) to seek setting aside an ex parte decree, and that application has been finally rejected and not appealed, the party cannot re-open the same question in an appeal against the substantive decree. The adjudication on the application is treated as final for the purposes of subsequent appeal and permitting re-litigation would risk speculative repeated remedies. - The opinion does not announce any broad new legal doctrine beyond the case-specific application of finality principles to the special-procedure context, and the Court expressly distinguishes controlling precedents that might otherwise be thought to support the appellants' position.
Disposition recorded in the opinion: "Appeal dismissed."
Sir Abdur Rahim, J. — It is not necessary in dealing with the second appeal to state the history of this litigation, as it has been set out in the previous judgment of the learned judge against whose decree this appeal has been preferred. Two questions have been argued before us. The first which relates to the merits is this: whether the finding of the Lower Court that the defendants 2 and 3, the appellants before us, had any notice as to Narasayya's title to the property. It appears that the property stood in the name of the plaintiff and Narasayya. The case of the plaintiff is that Narasayya had no title inasmuch as as he had not paid his share of the consideration money which he was to have paid. We must take it as found in a previous judgment in the course of this litigation that Narasayya had in fact no title although his name stood in the title deeds. The High Court in its previous order of remand had remitted two issues for trial. One was “Had the defendants 2 and 3 notice of plaintiff's claim to the entire suit property prior to the transfer in their favour? (2) Did they act in good faith and take reasonable care to ascertain whether defendants had power to make the transfer within the meaning of Sect. 41 of the Transfer of Property Act?” The first question has been answered by both the Courts in the negative and there can be no doubt rightly so.
The answer to the second question is what we are now asked to consider in this Second Appeal. The learned District Judge says that although the defendants 2 and 3 had no express notice of the plaintiff's claim to the entire property, yet the fact that for several years before the transfer the plaintiff claimed and received rent for the entire property from the defendants themselves was sufficient to call upon the defendants to enquire as to how the plaintiff claimed the entire rent. The learned Judge states his conclusion in these words. “The defendants 2 and 3 made no enquiries at all and there seems to be considerable ground for the theory that defendants 2 and 3 wanted to annoy plaintiff in connection with the dispute about a house.” Thus the appellants failed to make any bona fide enquiry into the matter and in Second Appeal it is difficult to hold that the lower Court had not sufficient material on which to come to this conclusion. In fact no attempt has been made by the learned pleader for the appellant to satisfy us that there was really no evidence to Justify the conclusion.
The next point for consideration is whether the District Judge is right in holding that the order rejecting the application made under O. 9, R. 13 (Sect. 108 of the Old Code) was final and that it was open to him to deal with that question in the appeal against the decree of the District Munsif. So far as I can see, there is no direct decision on the question. Our attention has been drawn to the decision in Perumbra Nayar v. Subramania Pattar. But there the learned judges expressly refused to decide the question whether where an application to set aside an ex parte decree had been made under the special procedure provided in this connection and refused and no appeal was preferred against the order of refusal it was still open to the defendant in an appeal against the decree to raise the same question and have the decree set aside on the ground that the defendant was prevented by sufficient cause from appearing and properly conducting the defence. It was also suggested that the Full Bench decision in Krishna Ayyar v. Kuppan Ayyangar supports the appellant's contention. But no application had been made to set aside the ex parte decree under Sect. 108 of the Civil Procedure Code, which governed that case and that decision therefore cannot be taken as a ruling on the point in dispute before us. Krishna Ayyar v. Kuppan Ayyangar proceeds on the basis that in a case where no application under the special procedure provided by the Code for setting aside the ex parte decree has been made, it is open to the defendant in appealing against the decree to take the objection in the appeal. But that does hot cover a case where an application was made and rejected and the order rejecting the application was not contested by way of appeal from that order. Assuming that it is open to a defendant in the appeal against the ex parte decree to object to the decree on the ground that he had not sufficient opportunity to adduce evidence in a case, where he did not choose to avail himself of the special procedure, it does not by any means follow that where he did actually avail himself of the special procedure and failed, still it would be open to him to have the same question re-agitated by appealing against the decree. Mr. T. V. Venkatarama Aiyar the learned Vakil for the appellants argued that the language of Sect. 105 Civil Procedure Code is wide enough to cover a case like this. It says:—” Save as otherwise expressly provided, no appeal shall lie from any order made by a Court in the exercise of its original or appellate jurisdiction; but where a decree is appealed from, any error, defect or irregularity in any order, affecting the decision of the case, may be set forth as a ground of objection in the memorandum of appeal.” That prima facie refers to an order from which no appeal is provided. But it is argued that the corresponding section of the old Code has been notified in order to extend the provision to cases of orders other than those from which no appeal is provided. In Sect. 591 of the old Code the words were: “Where a decree is apsealed from any error, defect or irregularity in any such order affecting the decision of the case etc’ The word ‘such’ does not find a place in Sect. 105 of the new Code. I am however inclined to think that this should not make any difference in the construction of Sect. 105 of the new Code, so far as this point is concerned. The word ‘such’ might have been intended as pointed out in Woodroffe and Amir Ali's commentary on the Civil Procedure Code to limit the application of the section to orders passed under the Civil Procedure Code. In any case the language of Sect. 105 does not seem to me to give the defendants the right to re-open the question whether he had sufficient opportunity given to him to adduce his evidence in cases where he has availed himself of the special procedure provided by the Code and his application to set aside the ex parte decree has been finally rejected. To hold otherwise would be opening the door to speculative litigation. Much emphasis was also laid by Mr. Venkatarama Aiyar on the observation of the Privy Council in Maharajah Moheshur Sing v. The Bengal Government which has been quoted in a recent decision of this Court in Thimma Nayanim v. Venkata Charlu. That observation was not made with reference to any such express provision of the Civil Procedure Code, as we have now. It only laid down that the general law does not contemplate that wherever an interlocutory order is passed unfavourably against a party that party must appeal against it and if he does not do so, he will be precluded from impeaching it in the appeal against the decree. That however is very different from what we are asked to hold in the present case. It may well be doubted whether an order rejecting the application made under O. 9, R. 13 comes within the sense of an ordinary interlocutory order, such as was under consideration before the Privy Council. I therefore hold that this contention also fails.
In the result, the appeal must be dismissed with costs.
Oldfield, J.—I entirely agree with the judgment just now delivered by my learned brother and I supplement it on the second point dealt with, only because I recently had occasion in another case to refer to two of the cases relied on and my reference to them now appears liable to misconstruction. In Gadi Neelaveni v. Marappareddigari Narayana Reddi, I said that Caussanal v. Soures(4) had been overruled in Krishna Ayyar v. Kuppan Ayyangar(5) On a closer consideration of the cases that seems to me to be mistaken. In fact Caussanal v. Soures is overruled by Krishna Ayyar v. Kuppan Aiyangar on the point only a point with which we are not concerned in the present appeal and with which the Full Bench was not concerned. I will only add that the misdescription of the case in my judgment in Gadi Neelaveni v. Marappareddigari Narayana Reddi did not affect the opinion expressed therein.
The point which Krishna Aiyar v. Kuppan Aiyangar really decides relates to the power of the Court to order a remand. No case has been cited before us in which the question now under consideration, whether a party against whom a decree has been passed ex parte can proceed in succession under O. 9, R. 13 as well as by taking objection to the order placing him ex parte in his appeal against the substantive decree has been dealt with. On principle it would appear that he could only do so at the expense of the rules as to res judicata; and there can be no reason why the adjudication on his application under O. 9, R. 13, if there were one, should not be conclusive against him for the purpose of any subsequent appeal. In the present case it is suggested that the facts that his application under O. 9, R. 13 was not carried further than the District Munsif's Court and that he acquiesced in the District Munsif's unfavourable order would make a difference to his right to appeal against the decree on this ground. The answer to this is that the District Munsif's order, not having been appealed “against has become final. It seems to me that it would be a, matter for great regret, if a party could pursue both of two alternative remedies in succession and that the recognition of a right to do so would be a unique incident in our procedure. I am accordingly relieved to find that such a right has not been recognised by authority. I agree with my learned brother in the order proposed by him.
C.KAppeal dismissed.
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