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Factual and Procedural Background

This is an appeal from an order of a Judge on the Original Side refusing to set aside a sale conducted by the Official Referee under orders of the Court in a partnership suit for the purpose of realising partnership assets. The principal ground on which the defendant/appellant sought to set aside the sale was that the proclamation of sale omitted to mention the place of sale. The sale had been conducted by the Official Referee using a printed form of proclamation that omitted the place of sale rather than following the prescribed Form No. 28 of the Original Side Rules. The learned Judge below found that the omission was a formal defect that had misled no one and refused to set aside the sale. The present appeal challenges that refusal. Additional objections raised included alleged defects in the manner of advertisement, an alleged refusal by the Official Referee to adjourn the sale at about 5:30 p.m., and the contention that the appellant could set aside the sale on deposit under O.21, R.89 (old S.310A) of the Code of Civil Procedure. The appeal was dismissed by the Chief Justice; Krishnan, J. agreed; and the order records the appeal as dismissed with costs.

Legal Issues Presented

  1. Whether the omission of the place of sale in the sale proclamation is a material irregularity that justifies setting aside the sale under O.21, R.90 (or the principles embodied in that rule).
  2. Whether the appellant can raise for the first time on appeal the objection to the proclamation's omission of the place of sale when no such objection was taken before the Judge in Chambers at the time the proclamation was approved.
  3. Whether the Official Referee's alleged refusal to adjourn the sale at about 5:30 p.m. on the ground it was getting dark made the sale vitiated or was otherwise a ground for setting aside the sale.
  4. Whether O.21, R.89 (old S.310A) — permitting setting aside a sale on deposit of part of the purchase money — applied to this sale for the realisation of partnership assets.

Arguments of the Parties

Appellant's Arguments

  • The sale proclamation failed to state the place of sale, which the appellant contended was a material defect sufficient to set aside the sale.
  • The Official Referee improperly refused to adjourn the sale at about 5:30 p.m. on the ground that it was getting dark.
  • The appellant asserted an entitlement under O.21, R.89 (old S.310A) to come in and set aside the sale upon depositing the purchase money plus 5 per cent.

Respondent's / Plaintiff's Arguments

  • The printed proclamation's omission of the place of sale was a formal slip and, given the practice governing sales by the Official Referee, everybody would infer the sale was to be at the premises described; consequently the omission misled nobody.
  • The sale was well attended and there was no evidence that possible bidders were deterred; when inquiry was made during the sale as to the absence of the place, the vakil checked the only other possible venue (the Official Referee's room) and the nearby press and found nobody to bid.
  • O.21, R.89 (old S.310A) was inapplicable because that rule is directed to sales in execution of decrees against judgment-debtors, not to a sale ordered for realisation of partnership assets in a partnership suit.

Table of Precedents Cited

Precedent Rule or Principle Cited For Application by the Court
Arunachellam v. Arunachellam (Privy Council) The principle that failure to take an objection at the proper time (before the Judge in Chambers) prevents relying on it later to set aside a sale; permitting a judgment-debtor to allow a sale to proceed and later complain would frustrate execution proceedings. The court relied on the principle that objections should be taken at the proper stage. While the present defect differed (omission of place rather than insufficient description), the case supported the view that belated objections are generally not permissible. Nonetheless the court found the omission here to be a non-prejudicial irregularity.
Full Bench, 40 M.L.J. 497 Interprets O.21, R.89 (old S.310A) as a mode of relief for judgment-debtors against court-sales in execution of decrees at undervalue. The court cited this authority to show the purpose and scope of R.89 and to conclude that R.89 is inapplicable to the present sale for realisation of partnership assets.

Court's Reasoning and Analysis

The Court began by identifying the relevant Original Side Rules governing sales by the Official Referee and the procedure for proclamation and approval:

  • O.24(a) provides that, unless otherwise ordered, sales by the Official Referee shall be by public auction and, in cases of immoveable property, shall be held at the premises. When moveables and immoveables are sold as one lot the sale must be held at the premises.
  • R.203 requires the order for sale to direct the applicant to bring into court a proclamation of sale for approval by the Registrar and to adjourn the case to come on before the judge in chambers on a fixed day.
  • R.205 requires the applicant to bring two copies of the proclamation in Form No. 27 or No. 28, which contain the name of the place of sale.
  • The Registrar (R.200) determines the manner of advertising and fixes the date and place of sale; under R.208 copies of the proclamation approved by the Registrar are to be signed and the case posted before the Judge in Chambers on the adjourned date, when parties may raise objections (R.206).

The Court noted that a printed form used in this case omitted the place of sale, a departure from Form No. 28. It acknowledged that the procedural rules place the duty of bringing in the sale proclamation on the party conducting the sale and that objections to proclamations must be raised before the Judge in Chambers when the approved proclamation is considered. Although no objection to the omission of the place was taken before the Judge in Chambers in this case (numerous other objections were raised but not this one), the Court did not need to decide whether the appellant was estopped from later raising the objection.

Applying the principle from Arunachellam v. Arunachellam, the Court observed that failure to take timely objections typically precludes raising them later. However, the Court distinguished the present fact pattern: the omission was a formal slip and, on the evidence, it had misled no one. The Registrar, the sale practice for Official Referee sales, the content of handbills, attendance at the sale, and the plaintiff's counter-affidavit (which recounted inquiries finding no bidders in alternate locations) all supported a finding that the omission did not prejudice potential bidders. The Court contrasted this situation with more serious errors where sales were held at a different place or time than ordered — errors that would likely mislead bidders.

On the claimed refusal to adjourn at about 5:30 p.m., the Court found the complaint frivolous. The Chief Justice observed that it was not reasonably dark at that hour on 26 February, and that the complaint that the location was “very dark” would have applied earlier in the day as well; the learned Judge rightly rejected that objection.

Regarding O.21, R.89 (old S.310A) and R.214 of the Original Side Rules (which prescribes procedure for applications under S.310A), the Court held that R.89 is directed to sales in execution of decrees to relieve judgment-debtors from hardships of undervalue sales and is inapplicable to a sale ordered for the realisation of partnership assets in a partnership suit. Consequently, the deposit remedy sought by the appellant under R.89 did not apply.

On the whole, the Court concluded that the omission of the place of sale was an irregularity that did not cause prejudice, that the other objections lacked merit, and that the statutory deposit remedy was inapplicable. Therefore there was no ground to set aside the sale under R.90 or the principles embodied in that rule.

Holding and Implications

Holding: The appeal is DISMISSED and the dismissal is with costs.

Implications:

  • The sale conducted by the Official Referee is not set aside; the lower court's refusal to set aside the sale is affirmed.
  • The omission of the place of sale in the proclamation was treated as a formal defect that, on the facts, did not prejudice the parties and was insufficient to vitiate the sale under O.21, R.90 or the principles embodied therein.
  • Objections to sale proclamations are to be raised at the proper stage (before the Judge in Chambers when the proclamation is approved); failure to do so generally precludes raising such objections later, though the Court did not rest the decision solely on estoppel here since no prejudice was found.
  • O.21, R.89 (old S.310A) — the deposit mechanism to set aside a sale — does not apply to sales for the realisation of partnership assets in a partnership suit; it is aimed at sales in execution of decrees against judgment-debtors.
  • The opinion does not identify or announce any novel or broader legal principle beyond applying established procedural rules and authorities to the facts; its effect is limited to affirming the sale and dismissing the appeal with costs.

    T.V. Tuljaram Rao v. T.A. Ramachendra Rao

    The Chief Justice. — This is an appeal from an order of the learned Judge on the Original Side refusing to set aside a sale by the Official Referee under the orders of the Court made in a partnership suit for the purpose of realising the partnership assets, and main ground of objection taken is that there was no place of sale mentioned in the proclamation of sale.

    In O. 24 (a) of the Original Side Rules which provides for proceedings before the Official Referee, under the head of sales by the Official Referee it is provided that, unless otherwise ordered, all sales by the Official Referee shall be by public auction, and, in cases of immoveable property, shall be held at the premises. Under that Rule, even though the property to be sold includes moveables as well as immoveables the sale must be held at the premises when the properties are sold as one lot. Even in such cases the duty of bringing in the sale proclamation falls upon the party who has the conduct ‘of the sale. Unfortunately in this case, a printed form of sale proclamation for a sale in execution of a decree was used which for some reason or other does not strictly follow the form given in Form No. 28 in the Original Side Rules, but omits the place of sale. Possibly this printed form comes from the office of the Official Referee by whom a great number of sales are conducted, and having regard to the rule, I have just referred to, the name of the place of sale is not mentioned because everybody is assumed to know it. If that is so, it is a distinct defect and the sooner this form of sale proclamation is altered so as to state the place at which the sale is to be held the better. But the question in this case is whether it is open to the defendant at this state to object to the sale on this ground and whether a material irregularity has been shown by which he was prejudiced so as to justify the Court in setting aside the sale under O. 21, R. 90, or at any rate in accordance with the principles prescribed by that rule.

    Under R. 203 of the Original Side Rules the order for sale is to direct the applicant to bring into court a proclamation of sale for the approval of the Registrar and he is to adjourn the case to come on before the judge in chambers on a fixed day. Then under R. 205, the applicant is to bring in two copies of the proclamation of sale in Form No. 27 or No. 28. Both these forms do contain the name of the place of sale. The Registrar, under R. 200, is to determine the manner of advertising, and to fix the date and place of the sale. Under R. 208 copies of the proclamation approvedly the Registrar are to be signed by him and the case is to be posted on the adjuorned date before the Judge in Chambers who may then order the sale to proceed or make any such order as he thinks fit. That is the time when it is open to the parties to take any objection whatever to the proclamation of sale. Under R. 206, it is only then that they can take any objection to the lots, the market value or the reserved price mentioned in the affidavit of the applicant; but they can also before the Judge in Chambers equally take objection to such a manifest slip as the omission of the place of sale. No such objection was taken in this case although numerous other objections were urged including objections as to the manner in which the sale has been advertised. The reason stated as to why no such objections were raised is because every one understood that, following the practice prescribed by the Rules for the Original Side the sale being by the Official Referee, it should be at the premises which were described for sale in the sale proclamation. It is not necessary for the purpose of the present case to consider whether the appellant should be held absolutely barred from taking this objection to the absence of the mention of the place of sale in the proclamation because he did not take it before the Judge in Chambers as he ought.

    The decision of the Privy Council in Arunachellam v. Arunachellam relates to an alleged insufficiency in the description of the property to be sold as distinguished from the present objection to the absence of any place of sale in the proclamation. In that case, the Privy Council held that the failure to take the objection at the proper time prevented its being taken later as aground for setting aside the sale. “It would be very difficult indeed,” their Lordships say, “to conduct proceedings in execution of decrees by attachment and sale of property if the judgment-debtor could lie by and afterwards take advantage of any misdescription of the property attached and about to be sold which he knew well but of which the execution-creditor or the decree-holder might be perfectly ignorant that they should take no notice of that, allow the sale to proceed, and then come forward and say the whole proceedings were vitiated. That in their Lordships' opinion cannot be allowed, and on that ground the High Court ought not to have given effect to this objection”. In the present case we think all that happened merely amounted to an irregularity by which the appellant was not prejudiced. It appears from the affidavit, and is found by the learned Judge that this formal defect mislead nobody.

    I may further say here that the handbills which have been exhibited do not contain the place of sale and the only inference which any one with ordinary common sense would cc me to is that the sale was to be at the premises because no other premises were stated where the sale was to be. As the learned Judge has pointed out the sale was well attended and there is no reason to suppose that any possible bidder was kept away. It was not a sale likely to draw a very large number of bidders because although no doubt properties to be sold included desirable premises near the Popham's Broadway, yet the sale proclamation showed that they were subject to incumbrances of an unusual kind, and of such a nature as would possibly require litigation in order to ascertain their amount. Further the plaintiff's counter-affidavit states that, when objection was taken during the sale by Mr. Ramachandrier to the fact that the place of sale was not mentioned in the proclamation, the vakil on the other side ran over to the official Referee's room which is the only other place where the sale could possibly take place and also to the press close by the High Court premises and found nobody to bid. Therefore there is no reason to differ from the learned judge when he says that what happened was an irregularity which did not prejudice the parties It is quite different from some of those cases which have been cited and where the sale was ordered to be held at one place and was actually held at another place, or where the sale was ordered to be held at one hour and was actually held at another hour. Those errors were calculated to seriously mislead possible bidders. In the present case the actual place no doubt was not mentioned as it ought to have been by a slip, but that non-mention in our opinion is not calculated to mislead anybody. There was the well-known practice in regard to sales by the Official Referee and in the absence of any mention as to the place of sale, the natural inference would be that the sale was to take place at the premises, and if anyone had felt any doubt about it and enquired he would at once have been told so. There is also evidence that people came to the Official Referee's room and enquired whether there were any copies of the proclamation of sale to be obtained at ‘Popham's House’ Anna Pillai Street the main premises for sale, which goes to show that they knew perfectly well that the sale was going to take place there.

    We hold therefore agreeing with the Lower Court that in this case there was no material irregularity which would justify us in setting aside the sale under R. 90 or the principles embodied in that rule.

    Another objection has been taken that the Official Referee refused to adjourn the sale at about 5-30 p.m, when called upon to do so on the ground that it was getting dark. In the first place we do not think that it was getting dark at about 5-30 p.m, on the 26th February. When I pointed out that according to our ordinary experience, it does net get dark at 5-30 p.m, on the 26th February it was alleged that that was a very dark place but that is an objection which would apply equally to earlier portions of the day. This objection appears to us to be of a very frivolous character and to have been rightly rejected by the learned judge.

    Another objection was taken that the appellant was entitled under the express terms of O. 21, R. 89 of the Code of Civil Procedure to come in to set aside the sale on a deposit of the purchase money plus 5 per cent. This rule appears to have no application to the circumstances of the present sale which is for the realisation of partnership assets in a partnership suit. R. 89, which is old Sect. 310 A, provides, as has been recently held by the Full Bench 40 M.L.J 497 modes of relieving judgment debtors from the hardships to which they are exposed by court-sales in execution of decrees against them at great under-values. The rule says, “where immoveable property has been sold in execution of a decree, any person owning such property or holding an interest therein by virture of a title acquired before such sale may apply to have the sale set aside on his depositing in Court a sum equal to 5 per cent of the purchase money and for payment to the decree-holder the amount specified in the proclamation of sale as that for the recovery of which the sale was ordered.” The rule is obviously inapplicable to a case of sale on behalf of all parties to the suit for the purpose of realisation.

    Then, we are referred to R. 214 of the Original Side Rules which provides that an application under Sect. 310 (A) which corresponds to the present O. 21, R. 89 shall be made on judge's summons supported by affidavit which shall set forth the objections to the sale or the confirmation thereof. That rule applies of course only to cases to which R. 89 of O. 21 is applicable; and we are clearly of opinion that R. 89 is not applicable to the circumstances of the present case.

    The result is that the appeal fails and is dismissed with costs.

    Krishnan, J.—I agree.

    C. K.Appeal dismissed.

    .

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    T.V. Tuljaram Rao v. T.A. Ramachendra Rao
    (May 9, 1921)