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Judgment Summary

Factual and Procedural Background

(Narrative drawn exclusively from the provided opinion.)

Respondent 1, Gajrabi, was the wife of respondent 2, Sk. Imam. Respondent 3, Laxman, obtained a preliminary decree for sale on 12-8-1931 against Sk. Imam and others in Civil Suit No. 99 of 1931. On 17-2-1933 Sk. Imam executed a gift deed in respect of the house (later purchased by the appellant Madholal) in favour of his wife Gajrabi and son Piran. On 7-9-1933 a personal decree was passed against Sk. Imam for Rs. 597-14.0. Laxman applied for execution of the personal decree by attachment and sale of the house; the court ordered attachment (house attached on 21-12-1933) and fixed a date for sale.

Gajrabi and Sk. Piran applied for release of the house from attachment on the basis of the 17-2-1933 gift deed; the executing Court dismissed that objection on 7-4-1934, finding the gift deed did not appear bona fide, and directed sale. The house was sold on 12-6-1934 and purchased by Madholal for Rs. 1,700.

The objectors filed a suit under Order 21, Rule 63 on 5-5-1934 seeking to set aside the executing Court's decision. Stays were issued and the executing Court kept proceedings pending. The objectors' suit was dismissed on 24-1-1935; they appealed to the District Judge. The appellate Court (District Judge) on 17-7-1935 allowed the appeal and passed a compromise decree to the effect that the house was not liable to attachment and sale in execution of the decree in Civil Suit No. 99 of 1931, and allowed withdrawal of the deposit made by the appellants.

There followed multiple execution proceedings and appeals: an application by the decree-holder to withdraw deposit (29-6-1935); an application by Madholal on 28-9-1935 for confirmation of sale; the sale was set aside on 25-1-1936 by the executing Court on lis pendens grounds; Madholal appealed, and various appellate decisions ensued. Niyogi, J. set aside an executing Court order and remanded to enquire whether the compromise decree was obtained by fraud or collusion; that decision was affirmed on Letters Patent Appeal.

On 25-3-1943 the executing Court held that the compromise decree was obtained by fraud and collusion and confirmed the 12-6-1934 sale. On 29-1-1944 the First Additional District Judge disagreed with the executing Court, concluded the compromise decree was not obtained by fraud or collusion, and set aside the order confirming the sale. The present Misc. (Second) Appeal by Madholal challenges that decision.

Legal Issues Presented

  1. Whether the compromise decree passed by the District Judge (Civil Appeal No. 9-A of 1935) was obtained by fraud or collusion such that it should not affect the auction-purchaser's rights.
  2. Whether, independent of fraud or collusion, the auction sale in favour of the appellant (Madholal) was effective and not affected by the compromise decree or by the pendency of the O.21, R.63 suit (i.e., whether the doctrine of lis pendens applies to auction/Court sales in execution).

Arguments of the Parties

Appellant's Arguments

  • The compromise decree was palpably fraudulent and the deed of gift (17-2-1933) was a fraudulent transaction designed to defeat the appellant's rights as auction-purchaser.
  • The object of the compromise was to deprive the appellant of the house he had purchased at the auction; the objectors failed to establish that the gift deed was made in good faith and conferred valid title.
  • Additional ground permitted by the Court: apart from collusion/fraud, the auction sale in appellant's favour was not affected by the District Judge's decision because (i) the auction-purchaser was a bona fide stranger to the suit, (ii) statutory steps required to set aside a sale (deposit under O.21 R.89(1) or timing under limitation) were not complied with, (iii) the purchaser was not a party to the suit/appeal/compromise, and (iv) O.21 R.92(1) obliges the executing Court to confirm the sale and a mere intimation that the decree is satisfied does not relieve the executing Court of that duty.

Respondents' Arguments

  • On behalf of Gajrabi it was contended that the additional ground raised by the appellant was not tenable in view of Niyogi, J.'s decision which had been confirmed on Letters Patent Appeal.

Table of Precedents Cited

Precedent Rule or Principle Cited For Application by the Court
Abdul Hussein v. Turner, 11 Bom 620 : (14 I.A 111 P.C) When fraud is charged, particulars of the fraud must be set out in the pleadings; one kind of fraud cannot be substituted by another on failure of proof. The court relied on this rule to confine itself to the specific fraud alleged in the appellant's application dated 28-9-1935 and refused to entertain a different attack (e.g., on the gift deed) not pleaded as such.
Bharat Ramanuj Das v. Srinath Chandra, 49 Cal. 320 at p.229 : (A.I.R (9) 1922 Cal. 358) Observation that unless a compromise is collusive, the existence of a compromise indicates that the suit was contentious and not collusive. The court cited this authority to support the conclusion that the existence of a compromise tends to show the suit was genuinely contentious and not collusive.
Phul Kumari v. Ghanshyam Misra, 35 Cal. 203 : (35 I.A 22 P.C) Explains the effect of a suit under the provision corresponding to O.21, R.63: such a suit aims to set aside a summary decision; if claimant succeeds, the executing Court's power to sell must cease and any sale in execution may be a nullity. The court invoked this principle to explain that success in a suit under O.21, R.63 ousts jurisdiction of the executing Court and that the sale may be nullity and not capable of confirmation.
Jamahar Kumari Bibi v. Asharan Boid, 22 C.L.J 27 : (A.I.R (3) 1916 Cal. 666 S.B) Characterises a plaint in a suit under O.21, R.63 as a plaint for review of a summary decision (i.e., a continuation of claim proceedings). Used by the court to support the proposition that suits under O.21, R.63 are essentially a continuation of claim proceedings and operate to supersede the earlier summary order.
Krishnappa Chetty v. Abdul Khader, 38 Mad. 535 : (A.I.R (2) 1915 Mad. 496) Holds that suits of this class are not original actions but forms of appeal in guise of original suits; alienations during the pendency are affected by the doctrine of lis pendens (Section 52 of Transfer of Property Act). The court relied on this authority to adopt the view that alienations during the continuance of proceedings originating from the claim petition are affected by lis pendens and that the principle applies to auction sales.
Khairulla v. Seth Dhanrupmal, A.I.R (12) 1925 Nag. 82 : (22 N.L.R 67) States that a suit under R.63 is a continuation of claim proceedings, and a regular suit supersedes and renders the earlier order inconclusive; applies lis pendens. Cited to support the application of lis pendens where a regular suit under O.21, R.63 supersedes the earlier summary order and affects subsequent alienations.
Ma Ma Hnyo v. Maung Nyo Lone, A.I.R (24) 1937 Rang. 473 : (173 I.C 926) Authority cited among cases supporting that the principle of lis pendens applies to involuntary alienations (supporting the broader doctrinal position). Included as part of the body of authority the court relied upon to conclude that the principle of lis pendens applies to court/auction sales.
Mt. Anandei v. Lala Ram, 14 Luck. 543 : (A.I.R (26) 1939 Oudh 178) Another decision cited supporting the application of lis pendens principles to transfers during pendency of proceedings of the relevant class. Relied upon as part of the aggregate authority for applying the lis pendens principle to alienations during pendency, including auction sales.

Court's Reasoning and Analysis

(Step-by-step account limited strictly to the court's expressed reasoning in the opinion.)

  1. The court first addressed procedural propriety of adducing new grounds of fraud at the appeal stage. Relying on Abdul Hussein v. Turner, the court held that where a specific fraud is alleged in pleadings, the party must stick to those particulars; one kind of fraud may not be substituted for another at the appellate stage. Consequently, the court confined its enquiry to the fraud particulars set out in the appellant's application dated 28-9-1935 (which alleged collusion between decree-holder and judgment-debtor to obtain withdrawal of the deposit and effect a compromise to defeat the auction-purchaser).
  2. The court set out the appellant's pleaded particulars of fraud: (a) appellant was a bona fide purchaser and a stranger to proceedings; (b) statutory deposits or procedural steps to set aside sale had not been complied with; (c) auction-purchaser was never party to suit/appeal/compromise; (d) under O.21 R.92(1) the executing Court was obliged to confirm sale and could not be relieved by an intimation that the decree had been satisfied.
  3. After reviewing evidence (expressed in the opinion as a discussion of conduct and timing), the court found Madholal ought to have opposed the compromise in the District Judge's Court, and his claim of ignorance was unacceptable because he was "bound to know" that the sale had not been confirmed due to orders by trial and appellate Courts. The court inferred the decree-holder had no reason to collude and that the decree-holder's compromise with the objectors was motivated by satisfaction with their claim and desire to protect his own interest rather than fraudulent collusion.
  4. The court examined whether the suit under O.21, R.63 had the legal effect of ousting the executing Court's jurisdiction and thereby rendering the sale a nullity. It reviewed precedent (including Phul Kumari and related authorities) to explain that a suit under O.21, R.63 is effectively a continuation/review of the claim petition and, upon success of the claimant, the executing Court's power to sell ceases and alienations during the pendency are affected by the doctrine of lis pendens.
  5. The court expressly considered whether the doctrine of lis pendens (embodied in Section 52 of the Transfer of Property Act) applies to court/auction sales. Noting authorities and textbook commentary (Mulla), the court concluded that while Section 52 strictly may be limited in its literal application to court sales, the principle of lis pendens does apply to such sales; the Divisional Bench in the Letters Patent Appeal had observed the principle applies to court sales.
  6. Having confined the enquiry to the pleaded particulars and having found no satisfactory proof of fraud or collusion, and having accepted the view that suits under O.21, R.63 can, when successful, render the executing Court's sale incapable of confirmation, the court concluded that the compromise decree was not obtained by fraud or collusion and that the lower appellate Court's decision to that effect was correct.

Holding and Implications

Holding: The appeal is dismissed. The court affirmed the decision of the lower appellate Court that the compromise decree was not obtained by fraud or collusion.

Implications:

  • Direct effect on the parties: the appellant's challenge to the compromise decree and to the concluding orders failed; the lower appellate Court's finding (that the compromise was not fraudulent or collusive) stands. The appeal is dismissed with costs.
  • On legal principle the court endorsed the application of the doctrine of lis pendens (as formulated in Section 52 of the Transfer of Property Act and related case law) to court/auction sales in execution: although Section 52 may not literally apply to involuntary alienations, the court accepted the prevailing authority and commentary that the principle operates to affect such sales when proceedings under O.21, R.63 are pending and succeed.
  • No broader new precedent was innovated beyond applying and reiterating existing authorities: the court applied established rules regarding (a) limitation on raising unpleaded fraud, and (b) the effect of suits under O.21, R.63 and the doctrine of lis pendens on execution sales.

End of summary. This document is based exclusively on the contents of the provided opinion and does not add information beyond that text.

    Madholal Damlal v. Gajrabi

    JUDGMENT

    1. The material facts in this case are these. Respondent 1, Gajrabi, is the wife of Sk. Imam, respondent 2. Laxman, respondents 3, obtained a preliminary decree for sale on 12-8-1931 against Sk. Imam and others in civil Suit No. 99 of 1931. On 17-2-1933 Sk. Imam executed a gift deed in respect of the house, later purchased by the appellant Madholal, in favour of his wife Gajrabi and son Piran. On 7-9-1933 a personal decree in the above suit was passed against Sk. Imam for Rs. 597-14.0. On 13-11-1933 the plaintiff Laxman applied for execution of the personal decree by attachment and sale of the house in dispute. The application was registered on 17-11-1933 and the Court ordered issue of warrant for attachment of the house. The house was duly attached on 21-12-1933 and notice of sale was ordered to be issued. On 13-1-1934 Gajrabi and Sk. Piran applied for the release of the house from attachment on the ground that it belonged to them and was in their possession by virtue of the gift deed dated 17-2-1933. They asserted that Sk. Imam had no right or interest in the attached house. On 7-4-1934 in Misc. Case no. 5 of 1934 the executing Court dismissed the objection summarily on the ground that the gift deed did not appear to be a bona fide transaction and directed the Nazir to fix a date for sale. On 14-4-1934, the Court directed the sale of the house, fixed on 12-6-1934 as the date of sale and ordered issue of a sale proclamation. The house was sold for Rs. 1700 on 12-6-1934 and was purchased by the appellant Madholal.

    2. In the meantime, the objectors (Gajrabi and Piran) filed a suit under O. 21, R. 63 on 5-5-1934. On 23-6-1934, the executing Court fixed the case for confirmation of sale for 28-7-1934. The trial Court issued a stay order on 3-7-1934 in the objectors' suit which was received by the executing Court on 6-7-1934. On 28-7-1934 the executing Court stayed confirmation of sale and kept the proceedings pending till the decision of the objectors' suit. The suit was dismissed on 24-1-1935. On 25-1-1935 the objectors applied to the Court for stay of further execution proceedings to enable them to obtain a stay order from the appellate Court. On 7-2-1935 the objectors filed an appeal in the Court of the District Judge, Nagpur against the dismissal of their suit. On 22-2-1935 an application for stay was made by Gajrabi. On 9-3-1935, the appellate Court ordered stay of confirmation of sale subject to the condition that the applicant should deposit Rs. 835 in Court within 7 days. The deposit accordingly was made by Gajrabi on 11-3-1935.

    3. An application was made by the parties to the appeal on 15-7-1935. The relief claimed was in the following terms:

    “In view of the above facts the appeal of the appellant be allowed and their claim be decreed and the creditor Laxman be allowed to withdraw the amount. Parties may be allowed to bear their own coats.”

    4. On 17-7-1935 the appellate Court allowed the appeal and the following decree was passed:

    “It is ordered that the appeal is allowed and the decree of the lower Court is hereby set aside and in its place a fresh decree be passed in terms of the compromise arrived at between the parties and sanctioned by the Court that the property in suit, viz., the house situated in Hansapuri on Bhandara Road in Circle No. 18/24 at Nagpur is not liable to attachment and sale in execution of the decree of respondent-defendant 1 against the respondent-defendant 2 in Civil Suit No. 99 of 1931 decided by the Additional 1st Sub-Judge 2nd Class., Nagpur on 12-8-1931. The respondent defendant 1 will be allowed to withdraw the amount deposited in the Court by the appellant plaintiffs.”

    5. The decree-holder applied on 29-6-1935 for permission to withdraw the amount of Rs. 835 deposited on 11-3-1935 and asked for the striking off the proceedings. The Court, however, did not strike off the proceedings as it took the view that this could not be done during the pendency of a stay order.

    6. On 28-9-1935, the appellant applied for confirmation of sale. His stand was that he was a bona fide purchaser and that the sale was not affected by the compromise. The application was opposed by the judgment-debtor Sk. Imam. The sale held on 12-6-1934 was set aside on 25-1-1936 on the ground that the proceedings were lis pendens and the auction-purchaser though not a party was bound by the decision. The auction-purchaser was permitted to withdraw the sum deposited by him. The execution application was struck off as wholly satisfied.

    7. Madholal appealed and Misc. Appeal no. 8 of 1936 was dismissed by the First Additional District Judge, Nagpur on 3-10-1936. He filed Misc. App. (No. 11 of 1937) in this Court. Niyogi, J. set aside the order of the executing Court and sent the case back to the executing Court for making an enquiry into the question whether the compromise decree passed by the District Judge was obtained by fraud or collusion. He also observed that if on enquiry the executing Court was of the opinion that the auction purchaser's contention was unfounded it must follow that the sale was a nullity and was not capable of being confirmed. Against this decision, a Letters Patent Appeal (No. 21 of 1988) was filed by Gajrabi and Sk. Piran which was dismissed on 9-4-1942.

    8. The executing Court by its order dated 25-3-1943 held that the compromise decree passed in civil Appeal No. 9-A of 1935 by the District Judge was obtained by fraud and collusion and that the decree did not affect the rights of the auction-purchaser, Madholal. It accordingly confirmed the sale of 12-6-1934.

    9. Gajrabi and Sk. Imam filed an appeal (Misc. App. No. 8 of 1943) which was decided by the First Additional District Judge Nagpur, on 29-1-1944. The learned Judge disagreed with the conclusion of the executing Court and held that the compromise decree was not obtained by fraud or collusion. He accordingly set aside the order of the executing Court confirming the auction sale. Madholal has filed this Misc. (Second) Appeal against the decision of Shri Antarkar, 1st Additional District Judge.

    10. The learned counsel for the appellant contended that the compromise decree was palpably fraudulent. The deed of gift was a fraudulent transaction. The object of the compromise was to defeat the rights of the appellant. The objectors had failed to establish that the deed of gift was made in good faith and conferred a valid title on them.

    11. I permitted the counsel for the appellant to urge the following ground which was not put forward at the time of the filing of appeal:

    “Apart from the question of collusion and fraud, the Motion sale in appellant's favour was not affected by the decision of the District Judge in Civil Appeal No. 9-A of 1935 which the lower appellate Court failed to see.”

    12. On behalf of Gajrabi, respondent 1, Shri D.T Mangalmurti, contended that the additional ground was not tenable in view of the decision of Niyogi, J. which was confirmed in the Letters Patent Appeal.

    13. It is not open to the appellant to attack the gift deed on the ground of fraud at this stage. In the application dated 28-9-1935 the only fraud alleged by the appellant (Madholal) was in respect of the compromise decree. Where fraud is charged against the defendant, it is an ackowledged rule of pleading that the plaintiff must set forth the particulars of the fraud which he alleges. A charge of fraud must be substantially proved as laid, and when one kind of fraud is charged, another kind of fraud cannot, upon failure of proof, be substituted for it: See Abdul Hussein v. Turner, 11 Bom 620 : (14 I.A 111 P.C). It is not open to an appellate Court to entertain a case of fraud other than the one specifically alleged in the pleadings. I will, therefore, confine myself to the particulars of fraud set forth in the application dated 28-9-1935 together with grounds, which are as follows:

    “Before this appellate order, however, the decree-holder in collusion with the judgment-debtor and with a view to defraud the innocent auction-purchaser, moved this Court on 29-6-1935 for withdrawing the deposit amount and striking off the execution proceedings. The Court rejected that application.

    The auction-purchaser is a perfect stranger and has bona fide purchased this property. On his rejecting the behests of both the decree-holder and the judgment-debtor to accede to their request for getting the execution case struck off, both these persons have deliberately brought about this fraudulent compromise with a vain hops of thus depriving him of the house in question. This fraudulent action if allowed will put the auction-purchaser to a serious loss. The sale in his favour under law, shall and must remain unaffected by any such compromise to which he was never a party for the following reasons:

    (a) The auction purchaser is a perfect stranger who bona fide purchased the property in question.

    (b) There was neither the requisite deposit of money under O. 21, R. 89(1) of the CPC nor even an application to set aside the sale either by the judgment-debtor or any person holding an interest in that property was made without 30 days from the date of the sale as required under Article 166, Limitation Act.

    (c) This auction-purchaser was never a party either to the regular suit or to the appeal arising out of this or to the so-called compromise.

    (d) Under O. 21, R. 92(1) of the CPC, it is obligatory on the part of the executing Court to confirm the sale in favour of this purchaser and mere intimation from the appellate Court at the instance of the decree-holder as well as the judgment debtor that the decree whose execution is pending, has been satisfied, does not relieve this Court of its obligatory duty.”

    14. (After discussion of the evidence the judgment proceeds): One would expect Madholal to oppose the move for compromise in the Court of the District Judge. His explanation that he did not know whether any appeal was pending when Sk. Imam and Laxman approached him cannot be accepted. He was bound to know that the sale had not been confirmed on account of the orders passed by the trial and appellate Courts. The decree-holder had no reason to act fraudulently or to collude with the judgment debtor to defeat the rights of the auction-purchaser. It appears he was satisfied about the genuineness of the claim of the objectors and was anxious to safeguard his own interest by entering into a compromise. The decree-holder and the judgment debtor by entering into a compromise did nothing which they were not legally entitled to do. The fact that a suit results in a consent decree is no bar to the application of the doctrine of lis pendens. The suit was not collusive but was real. The divisional Bench in the Letters Patent Appeal observed that the suit was undoubtedly not collusive.

    15. In Bharat Ramanuj Das v. Srinath Chandra, 49 Cal. 320 at p. 229 : (A.I.R (9) 1922 Cal. 358), the learned Judges observed that

    “unless a compromise is collusive the very feet that there is a compromise shows that the suit was in its origin and nature contentious, otherwise there would be nothing to compromise.”

    16. I am of opinion that it is not established that the compromise decree was obtained by fraud or collusion.

    17. I will now deal with the effect of the compromise decree on the sale. The argument was that even if collusion and fraud were not established the impugned sale was effective and should have been confirmed. It was urged that no order had been passed in the suit of the objectors staying proceedings for the holding of the sale by the executing Court. As there was no legal bar to the sale, it was valid in law and principle of lis pendens was not applicable. The argument advanced before me is concluded by the following pronouncement of Niyogi, J.:

    “The terms of O. 21, R. 63 are imperative and they declare that any order passed by the executing Court is subject to the result of such a suit. In Phul Kumari v. Ghanshyam Misra, 35 Cal. 203 : (35 I.A 22 P.C), their Lordships of the Privy Council pointed out that the object of a suit under Section 283 of the CPC of 1882 which corresponds to O. 21, R. 63 of the present Code is in effect to set aside a summary decision. When the claimant succeeds in getting a decree in his favour declaring his title to the property attached and that the property is not liable for attachment and sale in execution of a particular decree the executing Court's power to sell the property in that execution proceeding must cease. The claimant's success in a suit under O. 21, R. 63 ousts the jurisdiction of the executing Court. If that is the result, the sale must be pronounced to be a nudity and consequently not capable of being confirmed under O. 21, R. 92 of the CPC”

    18. He remanded the case to the executing Court for deciding the sole question whether the compromise decree passed by the District Judge was obtained by fraud or collusion. He added—

    “if on enquiry that Court is of opinion that the auction-purchaser's contention is unfounded it must follow that the sale was a nullity and is not capable of being confirmed.”

    19. The order of Niyogi, J. was affirmed in the Letters Patent Appeal. A suit brought under O. 21, R. 63 of the Code is a mere continuation of the proceedings in a claim petition. A plaint in a Suit under O. 21, R. 63 is a plaint for review of a summary decision: See Phul Kumari v. Ghanshyam Misra, 35 Cal. 203 : (35 I.A 22 P.C) and Jamahar Kumari Bibi v. Asharan Boid, 22 C.L.J 27 : (A.I.R (3) 1916 Cal. 666 S.B).

    20. I agree with the view stated in Krishnappa Chetty v. Abdul Khader, 38 Mad. 535 : (A.I.R (2) 1915 Mad. 496), that the suits of this class though called original suits, are not in their essence original actions but merely forms of appeal allowed by the Code of Civil Procedure to be brought in the guise of original suits, and all alienations during the continuance of the proceedings originated by the claim petition till the disposal of the suit brought to set aside the order passed on the claim petition are affected by the doctrine of lis pendens formulated in Section 52 of the Transfer of Property Act. This view was followed in Khairulla v. Seth Dhanrupmal, A.I.R (12) 1925 Nag. 82 : (22 N.L.R 67). Ma Ma Hnyo v. Maung Nyo Lone, A.I.R (24) 1937 Rang. 473 : (173 I.C 926) and Mt. Anandei v. Lala Ram, 14 Luck. 543 : (A.I.R (26) 1939 Oudh 178). In Khairulla v. Seth Dhanrupmal, A.I.R (12) 1925 Nag 82 : (22 N.L.R 67), Kinkhede A.J.C observed:

    “A suit under R. 63 is a continuation of claim proceedings as the suit is filed to set aside the order passed in the claim proceedings and is merely in the form of appeal in the guise of an original suit.

    The effect of the regular suit is to supersede the order passed in the claim proceedings and to render the order inconclusive.”

    21. He applied the rule of lis pendens.

    22. In these cases the transfers were private transfers and the question was not whether the rule of lis pendens could be applied to auction sales. I am of the view that the principle enunciated in Section 52 of the Transfer of Property Act applies to auction sales. The Divisional Bench in the Letters Patent Appeal observed:

    “It is, we think, settled that S. 52 does not apply to a Court sale in execution, but that the principle contained in it does apply to such sales.”

    23. Application of S. 52 is stated in the following passage at p. 253 of Mulla's Transfer of Property Act, Edn. 3:

    “Section 52 is limited by S. 2(d), and strictly speaking, does not apply to Court salts. Some old cases do so limit the application of the rule. But it is now settled law that though the section itself may not apply to involuntary alienations the principle of lis pendens applies to such alienation. This is the effect of three Privy Council cases and of an overwhelming mass of authority both before and after the pronouncements of the Privy Council.”

    24. The cases relied on by the learned counsel for the appellant have no application. The decision of the lower appellate Court that the compromise decree was not a result of fraud or collusion is correct. The appeal fails and is dismissed with costs.

    25. Appeal dismissed.

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    Madholal Damlal v. Gajrabi
    (Mar 8, 1950)