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Gunturu Seeta Ramanj... v. Vishnubhotla Ramayya...
Factual and Procedural Background
In 1934 the first respondent obtained a money decree in the Court of the District Munsif of Masulipatam against the third respondent and his son, the appellant (a minor). As to the appellant, the decree was limited to his share in the family property and to assets of his deceased grandfather in his hands. On 15 May 1937, 1,926 acres of land were sold by the Court in execution of that decree; the land had been attached by the decree-holder on the ground that it represented joint family property. The second respondent became purchaser on 14 April 1937.
The appellant applied in the execution proceedings to set aside the sale, asserting (i) the property was his self-acquired property, (ii) no notice had been issued to him as required by Order 21, Rule 22 of the Code of Civil Procedure (CPC), and (iii) there had been material irregularity in the publication of the sale which caused the property to be sold for considerably less than its real value. The application invoked Sections 47 and 151 and Order 21, Rule 90 CPC.
After an initial defect the petition was re-presented on 21 June 1937. On 26 June 1937 the Court ordered the appellant to give a security bond for Rs. 1,450 (the sale amount) to be filed by 6 July 1937, acting under Order 21, Rule 90 CPC; the appellant had an opportunity of being heard before this order. When the security was found unsatisfactory, on 19 August 1937 the Court ordered the appellant to deposit the amount in Court in cash if he wished to proceed. The appellant failed to deposit the amount within the extended time (to 23 September 1937), and the District Munsif dismissed his application.
The appellant appealed to the District Judge of Kistna. The District Judge agreed with dismissal for default insofar as the application related to O.21, R.90, but held the Court should nevertheless have proceeded with the portion of the application under Section 47; instead of directing the District Munsif to hear that part, the District Judge indicated the appellant should file a separate application under Section 47 limited to his allegations that the land was self-acquired and that no notice was given under O.21, R.22.
The appellant appealed to the High Court (this Court) on two grounds: (a) the dismissal of his application for default in making the required deposit; and (b) the District Judge's direction that he should file a separate application under Section 47.
Legal Issues Presented
- Whether the District Judge was correct in directing the appellant to file a fresh application under Section 47 instead of requiring the District Munsif to hear the Section 47 aspects of the existing petition.
- Whether a second appeal lies from the dismissal of the appellant's application for default in failing to furnish security or deposit under Order 21, Rule 90 CPC.
- Whether Order 21, Rule 90 (as it stood in 1937) — permitting the Court to call upon an applicant, before admitting an application, to furnish security or deposit an amount equal to the sale warrant or sale realization — was ultra vires the powers conferred on this Court by Section 122 CPC; and, relatedly, whether a Court may, in any circumstances, require security to be furnished.
Arguments of the Parties
Appellant's Arguments
- The appellant contended that Order 21, Rule 90 (as then framed) was ultra vires the powers conferred on the High Court by Section 122 of the Code, because it permitted the Court to call upon an applicant to furnish security before the application could be heard.
- The appellant relied on the decision of the Rangoon High Court in In re O.N.R.M.M. Chettiar Firm v. The Central Bank of India Ltd., where a Full Bench held that the Rangoon formulation of O.21, R.90 was ultra vires.
- The appellant's counsel also argued more broadly that the Court has no power in any circumstances to require security to be furnished, even if the filing of an application is unwarranted.
Second Respondent's Arguments
- The learned Advocate for the second respondent conceded that the District Judge should not have directed the appellant to file a fresh application under Section 47, and agreed that to that extent the appeal should be allowed.
- He contended, however, that no second appeal lies from the part of the decree which related to the dismissal of the application for failure to find security under Order 21, Rule 90; i.e., that the High Court did not have jurisdiction to entertain a second appeal on that point.
Table of Precedents Cited
| Precedent | Rule or Principle Cited For | Application by the Court |
|---|---|---|
| In re, O.N.R.M.M. Chettiar Firm v. The Central Bank of India Ltd. (Rangoon Full Bench) | Held that the Rangoon High Court's formulation of Order 21, Rule 90 (which required deposit of the sale-warrant amount or sale realization on filing the application) was ultra vires. | The Court distinguished this precedent: it noted the Rangoon rule was materially different because it barred admission of any application unless the amount was deposited on filing. The Court held the Rangoon decision did not invalidate the High Court's own rule as it stood in 1937, because that rule did not go so far as the Rangoon formulation and, importantly, applicants were entitled to be heard before any order requiring security was made. |
Court's Reasoning and Analysis
The Court proceeded in distinct analytical steps:
- Concession and jurisdictional point: The Court accepted the second respondent's concession that the District Judge should not have directed the appellant to file a fresh application under Section 47; the Court therefore allowed the appeal so far as that direction was concerned.
- Second appeal versus revision: The Court accepted that no second appeal lay against the District Munsif's dismissal for default in not furnishing security under Order 21, Rule 90. Nevertheless, the Court treated the part of the appeal concerning O.21, R.90 as an application in revision because, if the District Munsif had no power to require security, his insistence would constitute a wrongful exercise of jurisdiction.
- Textual analysis of O.21, R.90 (as it stood in 1937): The Court quoted the then-existing proviso to O.21, R.90 which allowed the Court "before admitting the application" to call upon the applicant to furnish security or deposit the amount equal to sale warrant or sale-realisation (whichever less), subject to safeguards about liability and satisfaction of substantial injury on proof of irregularity or fraud. The Court observed that this rule had since been amended to make explicit that the Court may "after giving notice to the applicant" call upon him to furnish security before admitting the application.
- Distinction from Rangoon decision: The Rangoon Full Bench decision was distinguished on the ground that the Rangoon rule required an applicant to deposit the amount on filing the application (thus preventing any hearing unless cash accompanied the application). By contrast, the High Court's rule did not go so far. The High Court emphasized that a Court must not pass an order requiring security without hearing the applicant; the subsequent amendment (making explicit the requirement of notice) clarified that the applicant must be given an opportunity to show cause before an order for security is made.
- Right to be heard and power to impose terms: The Court held that while an applicant has the right to be heard, once heard the Court may place conditions on further prosecution of the application (for example, requiring security). Thus even if an application is unwarranted, the Court may, after hearing the applicant, require security as a term for further proceedings. The Court therefore rejected the appellant's submission that a Court has no power in any circumstances to require security.
- Conclusion on intra vires question: The Court held that O.21, R.90 as it stood in 1937 was intra vires the Court's powers; accordingly the District Munsif had power to require security and to make the orders of 26 June and 19 August 1937.
Holding and Implications
Holding:
Appeal allowed in part; appeal dismissed in all other respects.
Direct consequences and implications for the parties (as stated in the opinion):
- The direction of the District Judge requiring the appellant to file a fresh application under Section 47 is set aside — to that extent the appeal succeeds.
- In all other respects (notably the District Munsif's orders under Order 21, Rule 90 requiring security and dismissing the application for default in failing to deposit the amount), the appeal is dismissed; the High Court held that the District Munsif had jurisdiction to require security and that the rule was intra vires.
- The District Munsif is directed to proceed with the hearing of the petition so far as it concerns allegations that do not relate to Order 21, Rule 90; security will not be required in respect of those parts to be heard.
- The second petition filed by the appellant in pursuance of the District Judge's order (i.e., the separate Section 47 petition) is unnecessary and the appellant is to withdraw it.
- The second respondent, having succeeded on the principal question concerning the validity of the first proviso to O.21, R.90, is awarded his costs.
Note: The opinion distinguished an earlier Rangoon Full Bench decision and interpreted the then-existing Order 21, Rule 90 as intra vires; the opinion did not purport to announce broader legal principles beyond the resolution of the disputes between the parties in this matter.
(Delivered by The Chief Justice).
On the 9th May 1934, the first respondent obtained a money decree in the Court of the District Munsif of Masulipatam against the third respondent and his son, the appellant, who is a minor. So far as the appellant was concerned the decree was limited to his share in the family property and the assets of the estate of his deceased grandfather in his hands. On the 15th of March 1937, 1926 acres of land were sold by the Court in execution of this decree. This land had been attached by the decree-holder on the ground that it represented joint family property. The second respondent became the purchaser on the 14th April 1937. The appellant then filed an application in execution proceedings asking that the sale be set aside. He asserted that the property sold was his self-acquired property, that no notice had been issued to him as required by O. 21, R. 22 of the Code of Civil Procedure and that there had been material irregularity in the publication of the sale, the result of which was that the property had been sold at considerably less than its real value. This application purported to be made under the provisions of Ss. 47 and 151 and O. 21, R. 90 of the Code of Civil Procedure. The Court has not been informed of the reason for invoking S. 151, but it is said that S. 47 was invoked because under that Section the appellant was entitled to an inquiry into his allegations that the property belonged to him and that the sale was bad by reason of notice not having been issued under O. 21, R. 22. O. 21, R. 90 applied in so far as the appellant sought to obtain the setting aside of the sale on the ground of material irregularity in its publication. The petition was not in order and it was returned to the appellant to remedy the defect. This was done and the petition was re-presented on the 21st June 1937. On the 26th June 1937 the Court ordered the appellant to enter into a security bond in the amount for which the property had been sold, namely Rs. 1,450, and directed that the security bond should be filed by the 6th July 1937. In requiring security to be furnished the Court acted under the provisions of O. 21, R. 90. It is not disputed that before this order was passed the appellant had an opportunity of being heard. The security was found to be unsatisfactory, and on the 19th August 1937 the Court ordered the appellant to deposit in Court the amount in cash if he wished to proceed with his application. The appellant failed to deposit the amount within the time allowed by the Court—the time had been extended to the 23rd September 1937—and in consequence the District Munsif dismissed his application. The appellant then appealed to the District Judge of Kistna. The District Judge, while agreeing with the dismissal of the application for default so far as the application related to O. 21, R. 90, pointed out that the Court should nevertheless have proceeded with the application so far as it came under the provisions of S. 47 but instead of directing the District Munsif to hear and decide that part of the application, the District Judge indicated that the proper course would be for the appellant to file a separate application under S. 47 and limit it to his allegations that the property was self-acquired and that the sale was bad because of the failure to give notice under O. 21, R. 22. The appellant has now appealed to this Court with regard to (a) the dismissal of his application for default in making the required deposit and (b) the requirement of the District Judge that he should file a separate application in so far as he claims under S. 47.
It has been accepted by the learned Advocate for the second respondent, who alone is concerned with this appeal, that the District Judge should not have directed the appellant to file a fresh application under S. 47, and to that extent he agrees that the appeal should be allowed. But he says that no second appeal lies from that part of the decree which relates to the dismissal of the application for failure to find security under O. 21, R. 90. That contention must be accepted. A second appeal will not lie on that question, although we think that the present appeal so far as it relates to the provisions of O. 21, R. 90 may be treated as an application in revision, because, if the District Munsif had no power to require security to be given, his insistence on it would amount to a wrongful exercise of jurisdiction. Therefore we will proceed to treat the rest of the appeal as an application for revision.
At the time when the District Munsif required the appellant to furnish security, O. 21, R. 90 as amended by this Court read as follows:
“Where any immoveable property has been sold in execution of a decree, the decree-holder, or any person entitle to share in a rateable distribution of assets, or whose interests are affected by the sale, may apply to the Court to set aside the sale on the ground of a material irregularity or fraud in publishing or conducting it;
Provided that the Court may, before admitting the application, call upon the applicant either to furnish security to the satisfaction of the Court for an amount equal to that mentioned in the sale warrant or that realised by the sale, whichever is less, or to deposit such amount in Court:
Provided also that the security furnished or the deposit made as aforesaid, shall be liable to be proceeded against only to the extent of the deficit on a resale of the property already brought to sale:
Provided further that no sale shall be set aside on the ground of irregularity or fraud unless upon the facts proved the Court is satisfied that the applicant has sustained substantial injury by reason of such irregularity or fraud.”
This rule has been amended since then and the nature of the amendment will be indicated presently.
The appellant contends that this rule is ultra vires of the powers conferred on this Court by S. 122 of the Code in that it says that the Court hearing the application may, before admitting it, call upon the applicant to furnish security. He would have it held that the decision of the Rangoon High Court in In re, O.N.R.M.M Chettiar Firm v. The Central Bank of India Ltd. (1) has application here. In that case a Full Bench of the Rangoon High Court of which I was a member, held that O. 21, R. 90, as framed by the Rangoon High Court, was ultra vires. But that rule differed very materially from the corresponding rule of this Court. Under the Rangoon rule no application could be heard unless the applicant, on filing his application, deposited the amount mentioned in the sale warrant or an amount equal to the sum realised by the sale whichever was less. If this rule were to be enforced it meant that no one aggrieved by a sale held in execution proceedings could cross the threshold of the Court with an application for an order setting it aside as unlawful for non-compliance with the provisions of the Code, unless he brought with him in cash the amount mentioned in the sale warrant or the amount for which the property had been sold. This Court's rule as it stood even at the time of the sale did not go so far as that. The Court has full power to regulate its procedure, but that does not mean that a man may not be heard at all until security is furnished by him. Under O. 21, R. 90, as originally framed by this Court, security could be required before the application was admitted. That did not mean, however, that an order requiring security might be passed without hearing the person affected by the order. In fact it would be wrong of a Court to pass any such order without hearing the applicant. In order to prevent any misunderstanding as to the effect of the first proviso to O. 21, R. 90 this Court has re-framed it and the proviso now reads as follows:—
“Provided that the Court may, after giving notice to the applicant call upon him before admitting the application either to furnish security to the satisfaction of the Court for an amount equal to that mentioned in the sale warrant or to that realised by the sale whichever is less, or to deposit such amount in Court.”
This puts it beyond all controversy that an opportunity must be given to an applicant of showing cause before an order requiring security is passed against him. Although this amendment was made subsequent to the District Munsif's order in this case, the proviso, as it then stood, should be read as giving a right to the applicant to be heard on the matter of security. That opportunity was given to the appellant and consequently he has no grievance.
His learned Advocate has, however, argued that the Court has no power in any circumstances to require security to be furnished. He says that although the filing of an application may be entirely unwarranted, the Court cannot insist on security being furnished. That is an argument which we are not prepared to accept. A person has the right of being heard, but once he has been heard, the Court can put him on terms before allowing him to proceed further with such a matter. We hold that the rule as it stood in 1937 was intra vires the Court's powers and that therefore the District Munsif had power to pass the orders which he did on the 26th June and on the 19th August 1937.
The result is that the appeal, succeeds so far as it concerns the decree of the District Court requiring the appellant to file a fresh application under S. 47, but it stands dismissed in all other respects. Inasmuch as the second respondent has succeeded on the main question, that relating to the validity of the first proviso to O. 21, R. 90, we consider that he is entitled to his costs.
The District Munsif will now be directed to proceed with the hearing of the petition so far as it concerns the allegations which do not relate to O. 21, R. 90, and security will not be required.
The second petition filed in pursuance of the order of the District Judge is unnecessary and will be withdrawn by the appellant.
Appeal allowed in part.
N.R.R
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