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Shankar v. Jawaharlal
Full Bench Opinion — Summary
Factual and Procedural Background
This matter arose as a reference to a Full Bench to resolve conflicting decisions in the Court about the effect of a private satisfaction of a decree, certified in Court, when that satisfaction occurs after a sale of immovable property has been held but before the sale is confirmed. The question became pressing because earlier rulings (notably Nilkanth v. Yeshwant by Kotval, A.J.C.) were thought by other judges to have been too widely expressed.
The two principal factual patterns that gave rise to the reference, as summarized in the opinion, were similar in key respects: the decree-holder and the judgment-debtor effected a private satisfaction or adjustment behind the auction-purchaser; no compliance had been made with the deposit and procedural requirements of R. 89 or R. 90, O. 21 of the Code of Civil Procedure (CPC) (specifically, the 5% deposit within 30 days); and the sale in favour of third persons was set aside by a first court without the statutory requirements being met, while a District Judge in appeal ordered confirmation in at least one instance.
Revisions were preferred to the Full Bench arising from appellate and revision proceedings in those matters. Prideaux, A.J.C., referred the question for Full Bench consideration because of the conflict between judges and the importance of settling the law consistently.
Legal Issues Presented
- Does the private satisfaction of a decree, certified in Court after a sale of immovable property has been held and before confirmation of the sale is ordered, extinguish the decree and prevent the Court from confirming the sale?
- Does it make any difference to that result whether the auction-purchaser is the decree-holder or is a third person / not the decree-holder?
Arguments of the Parties
The opinion does not contain a detailed account of the parties' legal arguments.
Table of Precedents Cited
| Precedent | Rule or Principle Cited For | Application by the Court |
|---|---|---|
| Nilkanth v. Yeshwant (Kotval, A.J.C.) | Held (as reported) that where a decree is admitted to be satisfied it ceases to be a decree capable of execution and the Court's power to execute (including confirmation of sale) ends. | The Bench concluded Kotval's statement was too widely expressed for cases where a third person has purchased at auction; Nilkanth was distinguished and its principle limited to situations where the auction-purchaser is the decree-holder. |
| Maroti v. Vithoba | Earlier Bench refrained from considering whether Nilkanth was too widely expressed; held that if decree-holder and decree-holder settle before sale confirmation, no decree remained capable of execution and the executing Court was functus officio. | Noted as one of the conflicting decisions which necessitated Full Bench resolution; Kinkhede, A.J.C, observed that where statutory rules are express there is little scope for inherent jurisdiction relied on in Maroti. |
| Kabiruddin v. Krishnarao | Hallifax and Kotval, A.J.C., disagreed on issues of power to confirm or set aside sale after satisfaction; Macnair, A.J.C., supported Hallifax. | Cited as part of the conflicting authorities; Macnair's view (that Court still has power to confirm or set aside sale) was approved where appropriate distinctions apply. |
| Ramchandra v. Lakshman (Hallifax, A.J.C.) | Held that a sale in execution to a person not a party to the decree cannot be set aside only because the decree is afterwards set aside in appeal, and still less only because it is satisfied; but if purchaser is decree-holder, sale may be set aside for those reasons. | Adopted and cited with approval by the Full Bench as an authority supporting limitation of Nilkanth's proposition to decree-holder purchasers. |
| Seth Nanhelal v. Umrao Singh (Mitchell, A.J.C.) | Referred the question to a Bench; Kotval, A.J.C., held that the Bench decision in Maroti v. Vithoba was against appellants and dismissed the application. | Mitchell's reference and Kotval's view were discussed; Kinkhede, A.J.C. expressed concurrence with Mitchell's approach and findings limiting Nilkanth. |
| Ramchandra v. Sadashiv (Baker, J.C.) | In facts where decree-holder intimated satisfaction after 30 days and judgment-debtor deposited 5% and asked sale set aside, lower appellate court entertained auction-purchaser's claim for confirmation relying on R. 89 and R. 92 and Article 166 Limitation Act; Baker, J.C. sided with Nilkanth. | Kinkhede, A.J.C. analysed these facts and concluded that Baker, J.C.'s view was not persuasive on the statutory construction point; the Full Bench ultimately expressed dissent from Baker, J.C.'s conclusion in that case. |
| Khushalchand Premraj v. Nandram Sahebram | Cited by Kotval as supporting the proposition that satisfaction extinguishes decree and execution power ends; stated in some reports as authority for that proposition. | Kinkhede, A.J.C. observed that this case was not an authority for that proposition in context — the relevant statement was obiter and concerned different proceedings (Collector's execution) and therefore has no bearing on the present issue. |
| Mul Chand v. Mukta Prasad | Involved a decree-holder who purchased at auction; cited for the proposition that when the decree is satisfied the power to confirm sale ceases. | Accepted as correct in cases where the decree-holder is the auction-purchaser; Full Bench held its scope must be limited to decree-holder purchasers and cannot be extended to prejudice third-party purchasers. |
| Rameshwar Misser … Judgment-Debtor v. Sureshwar Misser … | Referred to for the proposition that the Court has no power to extend the 30 day period for deposit under Section 48 CPC. | Cited to support the strict 30-day rule for deposit/applications under the rules discussed. |
| Raoji v. Bansilal Naraijan | Held that mere depositing of money into Court within time was not enough; an application to set aside the sale must be made within the prescribed time. | Used to support the proposition that deposit alone does not suffice; a timely application is required under the procedural rules. |
| Chandi Charan v. Banke Behary Lal; Tirumal Rao v. Dastaghiri Miyah | Establish that the 5% deposit required by R. 89(1)(a) is payable to the purchaser as solatium/compensation for trouble and disappointment and cannot be dispensed with. | Cited to emphasize the mandatory nature of the 5% deposit and its compensatory character for the auction-purchaser. |
| Sitaram v. Kaniram (Findlay, J.C.) | Observed that sub-R. (1), R. 92, O. 21 of the CPC is peremptory and casts duty on executing Court to confirm sale unless specified conditions in Rr. 89–91 are fulfilled. | Relied on for the peremptory nature of R. 92 and the limited grounds on which a sale may be set aside. |
| Shiam Lal v. Nanhe Lal | Cited in relation to Section 65 CPC showing purchaser's title dating back to date of sale when sale is made absolute under R. 92. | Used to support the proposition that the legislature intended to protect purchaser's title from being made dependent merely on confirmation date. |
| Ram Prasad v. Mahesh Kant | Referenced as an example where disappearance of decree prior to sale prevented sale from being valid because the decree was not subsisting at date of sale. | Helped to distinguish situations where decree ceases before sale (then sale is void) from situations where it ceases after sale but before confirmation. |
| Zain-ul-Abdin Khan v. Muhammad Ashgar Ali Khan (Privy Council) | Principle protecting bona fide auction purchasers whose rights arise after sale but before confirmation; such purchasers' rights should remain unaffected by subsequent setting aside of decree on appeal. | Adopted as guiding principle: if purchaser is a third party bona fide, private satisfaction after sale but before confirmation does not extinguish decree so as to prevent confirmation in favour of the third party. |
| Joshi Shib Prakash v. Jhinguria; Tota Ram v. Panna Lal; Anant Potdar v. Mangal Potdar | Recognize principle that Section 151 CPC (inherent powers) cannot be applied to override express statutory procedure. | Relied upon to reject reliance on inherent jurisdiction under Section 151 to allow private settlements to defeat statutory protections for auction-purchasers. |
| Sabitri Thakurain v. Savi (Privy Council) | Observations to the effect that inherent jurisdiction cannot override express provisions. | Supported the view that statutory procedural protections cannot be circumvented by private agreements between decree-holder and judgment-debtor. |
| Nizamuddin v. Jumma (Findlay, J.C.) | Referred to in context of limits on inherent jurisdiction (Section 151 CPC). | Referred to for similar statutory-construction support. |
| Shivlal Bhagvan v. Shambhuprasad; Indar Sain v. Prabhu Lal; Agha Husain v. Qasim Ali | Cases where the principle in Zain-ul-Abdin Khan was stated as repeatedly applied in India to sales in execution of money decrees. | These decisions were cited and followed as confirming the Full Bench's conclusion protecting third party purchasers. |
Court's Reasoning and Analysis
The Full Bench (opinion authored by Kinkhede, A.J.C., with Findlay, J.C., and Prideaux, A.J.C., concurring) proceeded in structured steps:
- Identification of the conflict: Earlier decisions (notably Nilkanth v. Yeshwant and related rulings) seemed to state that a decree admitted to be satisfied ceases to exist for execution purposes, and therefore the Court loses power to confirm a sale. Other judges doubted the breadth of that proposition.
- Factual commonality: In the referred cases the decree-holder and judgment-debtor privately effected satisfaction after the sale but before confirmation, no 5% deposit or application under R. 89/O. 21 was made within the 30-day period, and the first courts in some instances set aside sales despite lack of compliance with those rules, while appellate courts in other instances confirmed sales.
- Statutory focus on O. 21 CPC and R. 92: The Bench analyzed the specific procedural scheme laid down by the Code for execution and sale of immovable property. It emphasized that R. 92, O. 21 is peremptory — it casts a duty on the executing Court to confirm the sale unless the precise conditions in Rr. 89, 90 or 91 are satisfied. The Bench stressed the mandatory character of the 30-day period and the necessity that both application and deposit (the 5%) be made within that period.
- Protection of auction-purchasers and legislative design: The Bench analyzed provisions (including Rrs. 64, 69, 72–97 and Section 65) and observed a legislative policy to protect bona fide purchasers at auctions — e.g., rules governing bidding, prohibition on private alienation after attachment (Section 64), the solatium/compensation of 5% to purchasers, and Section 65 making purchaser's title date from the date of sale when sale is made absolute. The Court held that these rules show a clear legislative intention to protect auction-purchasers and to limit the circumstances in which the Court may refuse confirmation.
- Distinction between decree-holder purchaser and third-party purchaser: Applying the statutory scheme and authorities (notably the Privy Council decision in Zain-ul-Abdin Khan and Ramchandra v. Lakshman), the Bench concluded that where the auction-purchaser is a third party who purchased bona fide, private satisfaction of the decree after the sale but before confirmation does not extinguish the decree for the purpose of preventing confirmation in favour of that purchaser. By contrast, if the decree-holder himself is the purchaser, private satisfaction may extinguish the decree and prevent confirmation because no third-party rights would be prejudiced.
- Treatment of precedents relied upon by Kotval, A.J.C.: The Bench examined Mul Chand v. Mukta Prasad and Khushalchand Premraj v. Nandram Sahebram (and others) relied upon to support the broad Nilkanth proposition and found that Mul Chand applied properly to decree-holder purchasers only, while Khushalchand was largely obiter and concerned different procedures (Collector's proceedings) and thus not a sound authority for the broad proposition. The Bench therefore limited the reach of Nilkanth.
- Rejection of reliance on inherent jurisdiction to override the statutory scheme: The Bench rejected reliance on inherent jurisdiction (Section 151 CPC) or the parties' "inherent" right to settle to defeat statutory protections for auction-purchasers where the effect would be to contravene explicit procedural provisions (R. 92 and related rules). The Bench cited decisions holding that Section 151 cannot be used to override express statutory procedure.
- Conclusion on the posed question: Applying the statutory scheme and authorities, the Bench concluded that private satisfaction extinguishes the decree and prevents confirmation only when the purchaser is the decree-holder; it does not produce that result where a third person has purchased bona fide at the auction.
Holding and Implications
Holding: That a private satisfaction of a decree, certified in Court after the sale of immovable property has been held and before confirmation of the sale is ordered, extinguishes the decree and prevents the Court from confirming the sale in favour of the auction-purchaser if the auction-purchaser is the decree-holder himself, but it does not extinguish the decree and prevent the Court from confirming the sale where a third person has purchased the property bona fide at the auction sale.
Implications and direct effects recorded in the opinion:
- The Full Bench opinion resolves the conflict of decisions in this Court on the point by limiting the broad proposition in Nilkanth to decree-holder purchasers and protecting bona fide third-party auction-purchasers under the statutory scheme.
- In the specific revision(s) before the Bench, the revision failed and was dismissed with costs. The Court fixed Rs. 15 as pleader's fees in the order made on 30th April 1928.
- The opinion emphasizes that the mandatory procedural provisions of O. 21 (Rrs. 89, 90 and 92) and associated statutory protections must be complied with; private settlements behind the back of an auction-purchaser cannot be allowed to circumvent those statutory protections where a third-party purchaser's rights are involved.
The opinion does not set out further, separate policy declarations beyond its statutory construction and the direct resolution of the referred questions; it records the Full Bench view and disposes of the revisions accordingly.
Prideaux, A.J.C:— This is another case now pending before me in which the question arises whether the decision of Kotval, A.J.C, in Nilkanth v. Yeshwant(1) is not incorrect. There has been considerable discussion as to the correctness of that ruling, and it seems to me that the question should be finally decided by a Full Bench.
2. In Maroti v. Vithoba(2) the Judicial Commissioner and myself refused to consider whether the ruling in the above case had been too widely expressed; but we held that if the judgment-debtor and the decree-holder came to a settlement before the sale had been confirmed, there is no decree left capable of execution and the executing Court was functus officio. In Kabiruddin v. Krishnarao(3) Hallifax and Kotval, A.J.C, disagreed, and Macnair, A.J.C, supported the former, holding that after the trial Judge had been informed that the decree had been satisfied and had been asked by the decree-holder and the judgment-debtor to take no further steps, he had still power to confirm or set aside the sale.
3. In Ramchandra v. Lakshman(4) Hallifax, A.J.C, held:
A sale in execution to a person not a party to the decree cannot be set aside only because the decree is afterwards set aside in appeal, and still less only because it is satisfied, but it must be set aside for either of those reasons if the purchaser is the decree-holder himself.
4. In Seth Nanhelal v. Umrao Singh(5) Mitchell, A.J.C, referred the question I am now dealing with to a Bench. Kotval, A.J.C, held that the Bench decision in Maroti v. Vithoba was against the appellants and dismissed the application.
5. Please also see Ramchandra v. Sadashiv(6) disposed of in the same judgment on 30th August 1924 by Baker, J.C
6. I would submit the following question for decision by a Full Bench:
Does the private satisfaction of a decree, certified in Court after sale of immovable property has been held and before confirmation of the saleis ordered, extinguish the decree and prevent the Court from confirming the sale; and does it make any difference whether the auction-purchaser is or is not the decree-holder?
OPINION
Kinkhede, A.J.C:— The following important question of law has been referred to the Full Bench for opinion by Prideaux, A.J.C:
Does the private satisfaction of a decree certified in Court after Bale of immovable property has been held and before confirmation of the sale is ordered extinguish the decree and prevent the Court from confirming the sale; and does it make any difference whether the-auction-purchaser is or is not the decree-holder?
7. The necessity for this reference arose out of the circumstances that the correctness of Kotval, A.J.C'.s reported decision of Nilkanth v. Yeshwant has-since been doubted by the other Judges-of this Court. As the question is of general importance it is absolutely necessary that the conflict of decisions which exists in this Court should be set at rest once for all.
8. Without narrating in detail, in this opinion, the facts of the two cases which gave rise to this reference I think I may simply state them in a few words. Ira both the cases referred to this Bench, the private satisfaction or adjustment of the decree was effected between the decree-holder and judgment-debtor behind the back of the auction-purchaser. No provision for depositing in Court within 30 days, the commission of 5 per cent, payable to the purchaser when the sale is sought to be set aside by an application under R. 89, O. 21 of the CPC, was made in either. In one the satisfaction having been brought to the knowledge of the Court after the order confirming the sale was passed the Court revoked the confirmation; in the other, the confirmation was refused from the outset in view of the satisfaction. In both, the sales which were in favour of third persons, were set aside without the prescribed deposits in Court or any application, purporting to be made by any person entitled to make it, either under R. 89 or R. 90, O. 21 of the CPC, being made. In short, in neither of them was there any compliance with the requirements of the aforesaid rules, and still the imperative provisions of R. 92 of the said order were not obeyed by the first Court; whereas the same were given effect to in appeal by the District Judge who ordered the sales to be confirmed.
9. The decree-holder in one case, and the judgment-debtor and decree-holder in the other have preferred revisions to this Court, which have given rise to this reference. The question is whether the District Judge was right in confirming the sales even after the decree-holders admitted private satisfaction of their decrees and in thus ignoring the aforesaid decision of this Court which lays down the following proposition:
Where a decree is admitted by the decree-holder to be satisfied it ceases to exist as a decree capable of execution. The very foundation of the powers of a Court to execute a decree, namely, the existence of a decree capable of execution having disappeared, the Court's powers in execution also cease, and confirmation of the sale which is a proceeding in execution cannot be ordered: vide Khushalchand Premraj v. Nandram Sahebram(7) and Mul Chand v. Mukta Prasad(8).
10. I will first examine the facts of Nilkanth v. Yeshwant. There, within 30 days, i.e, while the sale was still unconfirmed, the decree-holder deposited 5 per cent, of the purchase money for payment to the auction-purchaser and applied for dismissal of his execution application, as he had received a part of the decretal amount and had allowed two months time from the date to the judgment-debtor to satisfy the balance. The application came on for hearing after the expiry of 30 days from the date of sale in connexion with the confirmation proceedings. The decree-holder then informed the Court that the decree was fully satisfied on a date within 30 days of the sale, and prayed that the sale be set aside. The first Court granting the application refused to confirm the sale. But the Additional District Judge in appeal reversed the first Court's order and confirmed the sale. The reasoning adopted by the Additional District Judge was that the Code of Civil Procedure gave no option to the decree-holder or the judgment-debtor to defeat the rights of an auction-purchaser by any settlement between themselves; and that under R. 89, O. 21 of the Code, although the payment to the decree-holder may be treated as a deposit in Court, yet, as the application to set aside the sale and the deposit of the 5 per cent of the purchase money were not made by a person who had an interest in the judgment-debtor's property, that rule had no application and the sale had to be confirmed under R. 92, O. 21. Kotval, A.J.C, while inclined to support the view of the Additional District Judge, as “perhaps technically correct,” did not express any definite opinion on the point and leaving that question aside proceeded to hold that the decree, having been admitted to be satisfied before confirmation the Court's; power to confirm the sale, was at an end and quoted the Bombay and the Allahabad cases already referred to in support of his decision.
11. I think the reasoning of the learned Additional District Judge was perfectly sound and in accordance with law and his order based on it deserved to be allowed to stand unreversed. As a matter of fact, on the day the sale was held, the decree was not satisfied; it was satisfied subsequently, but within 30 days of the auction sale. Although the private satisfaction of the decree dispensed with the necessity on the part of the decree-holder to seek the Court's aid to apply-the sale-proceeds realized from the auction-purchaser towards the satisfaction of the decree, I think it did not put-and end to the right of the auction-purchaser to urge that the sale be made absolute in his favour in terms of R. 92, O. 21 of the CPC, in the absence of any application under Rr. 89 or 90 of the said, order, and the sale-proceeds be ordered to be paid to the judgment-debtor in-, stead of to the decree-holder. The provisions of R. 92 are imperative, and that Court cannot refuse to confirm the sale, unless the requirements of Rr. 89 and 90; are strictly complied with. The deposit; must be full and must be made within; 30 days prescribed for an application, under that rule. The words may apply to have the sale set aside on his depositing in Court, &c.,
show that not only the application but also the deposit must be made within 30 days. The Court has no power to extend this period of 30 days under Section 48 of the CPC: cf. Rameshwar Misser…Judgment-Debtor v. Sureshwar Misser….(9).
12. In Raoji v. Bansilal Naraijan(10) it was held that the mere depositing of money into Court within time was not enough, and that an application to set aside the sale ought to have been made within the time prescribed by Article 166, Lim. Act. The first Court's order con firming the sale for want of such an application was upheld by the District Judge on appeal, and the High Court declined to interfere with that order in revision. The deposit of 5 per cent., required by R. 89(1)(a), to be made in Court, is payable to the purchaser as a solatium or compensation for his trouble and disappointment for the loss of the bargain: Chandi Charan v. Banke Behary Lal(11) and Tirumal Rao v. Dastaghiri Miyah(12); as such it cannot be dispensed with. In addition to it the amount specified in the proclamation as that for the recovery of which the sale was ordered, less any amount which may since the date of such proclamation of sale have been received by the decree-holder, has also to be deposited in Court.
13. The provisions of sub-R. (1), R. 92, O. 21 of the CPC, also are peremptory. They cast an imperative duty on the executing Court to make an order confirming the sale unless the conditions specified in Rr. 89, 90 or 91 were fulfilled: of observations of Findlay, J.C, in Sitaram v. Kaniram(13). Sub-R. (2) lays down the conditions under which alone the Court is permitted to make an order setting aside the sale. The proviso to that sub-rule makes notice of the application to be given to all persons affected thereby. Sub-R. (3) bars a civil suit for setting aside an order made under R. 92. Taking these special provisions and restrictions into consideration, I must say that in the case of Neilkanth v. Yeshwant, in which neither the deposit nor the application Co. set aside the sale as required by law was made by the person entitled to make it within the time prescribed, the sale was bound to be confirmed under the mandatory provisions of R. 92, O. 21 of the CPC.
14. With these remarks I proceed to consider the further question whether, as held by Kotval, A.J.C, a mere intimation by the decree-holder before confirmation that his decree is satisfied relieves She Court of its imperative duty to confirm the sale in the interests of the auction-purchaser. I can very well understand that if the decree-holder is himself the auction-purchaser and the intimation affects none else except him self, and if, as the result of his declaration, he releases in favour of the judgment-debtor whatever right he acquired by the auction, the Court may be justified in acting on the declaration and setting aside the sale, unless the benefit of the assets realized by the auction has already been claimed by other decree-holders under Section 73 of the CPC. But, if an outsider has purchased at the auction, his rights cannot be lightly ignored, simply because the decree-holder so intimates, and even the judgment-debtor joins in intimating, that the decree being otherwise satisfied the execution should cease from that moment. If such an intimation were acted upon, very serious consequences would enure to a third party, auction-purchaser. Not only this, but the Court would be acting in violation of the duty cast on it by R. 92(1), O. 21 of the CPC: of observations of Macnair, A.J.C, in Kabiruddin v. Krishnarao.
15. As pointed out by Mitchell, A.J.C, in his order of reference in Seth Nanhelal v. Umraosingh I may say with due respect that the view of Kotval, A.J.C, though it proceeds upon the fundamental provision of law governing the satisfaction of a decree as contained in Rr. 1 and 2, O. 21 of the CPC, overrides the special rules of procedure which the legislature has laid down regarding satisfaction of decrees in particular cases, the particular case relevant here being the one in question, namely, where a sale of immovable property has been held, in spite of it the decree-holder or judgment-debtor or both plead complete satisfaction of the decree before confirmation.
16. If the scheme of O. 21 of the Coda be carefully examined, it will be seen that during the initial stage of execution the matter of satisfaction of the decree has entirely between the decree-holder and the judgment-debtor with the Court as umpire and recording agency.” If any adjustment or satisfaction is effected as between them in that initial stage, it is not the concern of anybody else; and the Court's duty is to record it, if it be certified within the time prescribed by, law, and is either admitted or proved.
17. If, however, the execution proceedings proceed further and steps are taken be levy attachment of immovable property, the legislature imposes further safeguards in the interest of the decree-holder as also of the other persons having claims enforceable under the attachment, by prohibiting private alienations under Section 64 of the CPC. This, in the long run, enures for the benefit of the purchaser at the auction sale, if any held on the basis of the attachment, as R. 95 gives him a right to obtain possession even against a transferee after attachment. If the attachment has injuriously affected the prior, superior or equal titles or lien of any persons other than the judgment-debtor, the law gives them also an opportunity to intervene and obtain orders for their protection. If, after all these preliminaries are satisfied, the Court decides to pass an order for sale, under R. 64, a situation is created by which advantage of the order can be claimed by a limited number of decree-holders, so that, if they want to share the sale proceeds, they may resort to the prescribed procedure to become entitled to rateable distribution under Section 73 of the CPC.
18. When the execution proceedings pass beyond the stage of the order for sale and the proclamation for sale is issued, the law holds out an opportunity to the judgment-debtor to raise the amount under R. 83 by private treaty subject to certain conditions as to payment of the amount into Court, and gives the Court power even to postpone the sale to enable the judgment-debtor to achieve that end. R. 69(3) even contemplates the stopping of the sale by the officer conducting the sale, if, before the lot is knocked down, the amount to be realized is actually tendered to him or proof is given to his satisfaction that the amount his been paid into Court which ordered the sale. A very elaborate procedure is laid down even as regards the proclamation of the sale and the manner of holding the sale, with a view to avoid disappointment to the bidders at the auction, as far as possible. The solicitude of the legislature, to procure the full price for the judgment-debtor's property sold at the compulsory sale, is so greet that, in order to keep off unwholesome competition or to prevent underhand dealings on the part of the decree-holder or the officers of Court, it precludes them from bidding, although, in the case of a decree-holder wishing to compete at the auction, it makes the obtaining of an express permission to bid obligatory under R. 72, and entitles the judgment-debtor and other interested persons to have the sale wet, aside for any contravention of the rule if he so desires.
19. As soon as the sale is held and the officer conducting the sale accepts the bid and declares the highest bidder to be the purchaser, the law fastens upon the person so declared the obligatory duty of complying with the imperative provisions of Rr. 84 and 85 of punctually paying the purchase money, on pain of forfeiting the 25 per cent or even all claim, to the property or to any part of the sum, for which it may be subsequently sold, under R. 86. R. 84 renders him liable to be proceeded against on the execution side itself, for making good the deficiency if any, in case of resile occasioned by reason of his default in making punctual payment. The auction-purchaser thus subjects himself to great risks, and, therefore, his rights, after he has fulfilled the condition of punctual payment of the price, cannot be lightly ignored. The law holds out under R. 92 a definite assurance to him that the sale shall be confirmed in his favour, unless the judgment-debtor or any other persons entitled to apply under R. 89, or the decree-holder-or any other persons entitled to apply under R. 90, or he himself under R. 92, exercises the right conferred on him to apply to have it set aside after satisfying the conditions mentioned in the rule respectively applicable to each applicant.
20. If the legislature had desired to refuse confirmation and veto the purchaser's-rights, on any grounds other than those mentioned in Rr. 89, 90 or 91 of the, order, there was nothing to prevent it from providing for such a contingency in the Code. If it had intended to leave him to the mercy of the decree-holder and judgment-debtor by enabling them to defeat his rights and even to oust the Court's jurisdiction by a private pact of their own, formed behind the purchaser's back, the Code would have expressly provided for the exarcisas of such a right. In my opinion the very absence, of any such provision in the Code for vetoing or negativing the purchaser's rights under the Court sale itself constitutes the strongest proof of the absence, of any such intention. Lastly, in enacting Section 65 of the CPC, the legislature has expressly laid down that, on the Court sale being absolute under R. 92, the purchaser's title to the property shall date back to the date of the sale and not merely from the date of confirmation as was the case under Section 316 of the old CPC: cf. Shiam Lal v. Nanhe Lal(14). I need act discuss the scheme of O. 21 any further. I think it is enough to remark that the object of the summary procedure prescribed by Rr. 95, 96 and 97 to 103 is so help the auction-purchaser to secure undisturbed possession of the property purchased by him as speedily as possible in the course of the very execution proceedings in which he became the purchaser.
21. It will thus be seen that the scope of the fundamental provision of law governing the satisfaction of a decree as contained in Rr. 1 and 2 of O. 21 of the CPC, es very much circumvented by the special rules of procedure prescribed in the latter part of that order in the interests of purchasers at auction sales.
22. If the intention of the legislature had been to make the acquisition of title by the auction purchaser, contingent upon the decree being a subsisting decree at the date of the confirmation, there was no point in deleting the words to that effect from Section 316 of the old CPC, when S. 65 of the new Code was, in its stead, enacted. All that appears to be necessary under the Code from the point of view of third party purchasers is that, to give them a good title at the date when the sale is held, the decree must be a subsisting decree. If that decree ceased to exist at the date of the sale there is no debt to recover and, therefore, the Court loses its jurisdiction to sell the judgment-debtor's property, and consequently every sale held under such circumstances must be treated as a nullity. The underlying principle seems to be that where the very foundation of the Court's power to bring the judgment-debtor's property to sale disappears, the Court must ipso facto cease to exercise its jurisdiction in the matter. If this disappearance of the foundation of the Court's power is brought about by the satisfaction of the decree or by a variation in appeal, and is of a date prior to the sale, as was the case in Ram Prasad v. Mahesh Kant(15), there is no difficulty. But if the disappearance of the legal basis for the sale is brought about by events happening subsequent to the date of the sale being held and confirmed, as for example, by the decree being reversed in appeal, and if rights have in the meantime sprung into existence in favour of third persons, who are not parties to the decree, i.e, of third party bona fide auction-purchasers, as was the case in Zain-ul-Abdin Khan v. Muhammad Ashgar Ali Khan(16), justice, equity and good conscience demands that their rights should remain unaffected by such disappearance. They must get the property purchased by them in lieu of the money bona fide paid by them on the faith of the auction sale.
23. This position is easily understandable on the principle laid dawn by their Lordships of the Privy Council in Zain-ul-Abdin Khan v. Muhammad Ashgar Ali Khan. That principle takes placa after the sale but before its confirmation, where the decree was necessarily subsisting at the date when the sale was held. If then the extinction of the decree by its being sat aside in appeal cannot be allowed to interfere with a sale held in favour of third parties, I cannot understand on which principle its satisfaction by payment, after valid existence, can do so.
24. If, however, under similar conditions, the purchaser at the auction was the decree-holder himself, no considerations based on justice, equity and good conscience can arise at all, because he cannot be allowed to say that, although the very decretal debt in lieu whereof he purchased the judgment-debtor's property has ceased to exist, his title under the sale which has either been confirmed or awaits confirmation in his favour should stand.
25. In Mul Chand v. Mukta Prasad which was followed by Kotval, A.J.C, it was the decree-holder who had purchased the property at the auction and, therefore, the decision arrived at in that casa, that the very foundation of the executing Court's jurisdiction ceasing the power of that Court to confirm the sale must in equity also cease, was perfectly correct, but that principle could not be extended to the prejudice of the third party auction-purchasers, as in Nilkanth v. Yeshwant or in the present cases. The case in Mul Chand v. Mukta Prasad is thus distinguishable and its scope must, in view of Zain-ul-Abdin Khan v. Md. Ashgar Ali Khan, be deemed to be limited to decree-holder purchasers merely.
26. The other case relied on by Kotval, A.J.C, is Khushalchand Premraj v. Nandram Sahebram. This case has been also reported in 35 Bom. 516. I am constrained to say with due respect that it is no authority for the view in support of which it is cited. That case as pointed out by Hallifax, A.J.C, in Ramchandra v. Lakshman was concerned with the proceedings of a Collector in execution and a sale of the property in his hands by the judgment-debtor. The statement of the proposition under discussion here was obiter and the basis of the decision was the view that the retransfer of the case to the civil Court by the Collector must relate back to the date on which satisfaction of the decree was certified to him, because on certification he could do nothing else but retransfer the case. * * * the decision has no bearing on the present case.
27. In short, no question of the Court's authority to confirm the sale was raised and decided in that case. I, therefore, venture to suggest that the two cases of Mul Chand v. Mukta Prasad and Khushal Chand Premchand v. Nandram Sahebram. relied on by Kotval, A.J.C, cannot be treated as authorities for the proposition laid down in Nilkanth v. Yeshwant.
28. I need only cite with approval the case of Ramchandra v. Lakshman decided by Hallifax, A.J.C, where it was held that a sale in execution to a person not a party to the decree cannot be set aside only because the decree is afterwards set aside in appeal and still less only because it is satisfied, but it must be set aside for either of those reasons if the purchaser is the decree-holder himself.
29. Similarly I have no hesitation in expressing my concurrence in the view of law taken by Mitchell, A.J.C, in Seth Nanhelal v. Umrao Singh in this order of reference, and by Macnair, A.J.C, in the opinion recorded by him as a third referee Judge in Kabiruddin v. Krishnarao.
30. As regards the cases of Ramchandra v. Sadashiv, decided by Baker, J.C, it is sufficient to point out that in those cases, after the expiry of 30 days from the date of the auction sale but before the confirmation of the sale in favour of the third party purchaser, the decree-holder intimated full satisfaction of the decree out of Court and applied to set aside the sale, and the judgment-debtor deposited 5 per cent, of the purchase money for payment to the auction-purchaser and asked that the sale should be set aside. The executing Court ordered the purchase money deposited by the auction-purchaser to be refunded. After this was passed, the auction-purchaser made an application for confirmation of the sale on the ground that the requirements of O. 21, Rr. 89 and 92 of the CPC, were not complied with, and that the judgment-debtor's application was barred by Article 166, Lim. Act. This application was rejected by the first Court, but the Judge of the first appellate Court was prepared to entertain it having regard to Section 65 of the CPC, O. 21, R. 89 and R. 92(2) and Article 166, of the Limitation Schedule as he thought that the auction purchaser is quite within his rights to ask for a confirmation of (the) sale in his favour, notwithstanding the previous satisfaction of the decree when the judgment-debtor has not applied and deposited 5 per cent of the purchase money within 30 days from the date of the sale.
31. I think this reasoning was quite correct and would surely have been given effect to had it not come into conflict with the ruling in Nilkanth v. Yeshwant. The lower appellate Court, therefore, following that case, as it was bound to do, dismissed the appeal of the auction purchaser.
32. In second appeal Baker, J.C, took the view which may be best expressed in his own words as follows:
* * While the Code of Civil Procedure makes provision for an application by the-judgment-debtor to set aside the sale, it does not seem to provide for an application of the kind with which we are concerned in the present appeal. This being so, I am not impressed by the argument that the effect of the ruling in Nilkanth v. Yeshwant is to make O. 21, R. 92 of the CPC, of no effect or to nullify Article 166, Lim. Act. I, therefore, think that the present case is governed by the ruling in Nilkanth v. Yeshwant with which I see no sufficient reason to disagree. * * * The interests of the auction purchaser are sufficiently protected by the payment of 5 per cent, of the purchase money to him.
33. With all deference to the view thus expressed I must say that it does not commend itself to me, especially as it violates the provisions of R. 92, O. 21 of the CPC, and Article 166, Lim. Act, and leads to what I may venture to describe as an anomalous result, viz., that a sale may or rather must be set aside on payment of the decretal amount at any time before it is confirmed, even after the expiry of the period of thirty days,
to use the words of Hallifax, A.J.C, in Kabiruddin v. Krishnarao. I, therefore, express my respectful dissent from the view taken by Baker, J.C,
34. A Bench of this Court which had occasion to decide the case of Maroti v. Vithoba had expressly refrained from considering the question whether the rule laid down by Kotval, A.J.C, in Nilkanth v. Yeshwant, is too widely expressed or not. The Judges of the Bench, however, purported to rest their decision principally on the so-called inherent power of the parties to the decree to settle the matter between themselves in view of the fact that the sale had not been confirmed. With due respect I venture to think that, just as in face of an express provision of the statute law there is no scope for the exercise of its inherent jurisdiction under Section 151 of the CPC, by a Court, similarly, there ought to be little or no scope for the parties to exercise their inherent right to settle their disputes, if its effect is to violate the express provisions of a statute which creates or recognizes the claims or rights of bona fide purchasers not parties to the decree. I am fortified in this view by the decision in Joshi Shib Prakash v. Jhinguria(17), Tota Ram v. Panna Lal(18) and Anant Potdar v. Mangal Potdar(19). which recognize the principle that Section 151 of the CPC, cannot be applied where the rule of procedure is already laid down: cf. also Tota Ram v. Panna Lal, [22 A.L.J 533] where it is laid down that S. 151 is not intended to override express provisions of law, but is intended for cases for which the strict letter of the law provides no remedy. There are observations to the same effect also in the judgment of their Lordships of the Privy Council in Sabitri Thakurain v. Savi(20). A view to the same effect has also been taken by Findlay, J.C, in Nizamuddin v. Jumma(21), to which a reference was made at the bar.
35. For these reasons I am of opinion that a mere intimation to the executing Court, that the decree in execution whereof the sale is held has since been satisfied, does not relieve it of its obligatory duty to confirm the sale under R. 92(1), O. 21 of the CPC, in the interest of third party auction-purchasers. Applying to the facts of the present cases the principle laid down in Zain-ul-Abdin Khan v. Muhammad Ashgar Ali Khan, which was stated in Shivlal Bhagvan v. Shambhuprasad(22), as having been repeatedly applied in India to sales in execution of money decrees, and also followed in Indar Sain v. Prabhu Lal(23) and Agha Husain v. Qasim Ali(24), I record the following as my opinion on the point referred to the Bench:
That a private satisfaction of a decree certified in Court after the sale of immovable property has been held and before the confirmation of the sale is ordered, does extinguish the decree and prevent the Court from confirming the sale in favour of the auction purchaser, if he be the decree holder himself, but it does not extinguish the decree and prevent the Court from confirming the sale where a third person has purchased the property bona fide at the auction sale.
Findlay, J.C:— I have had the advantage of perusing the opinion of Kinkhede, A.J.C, in this case, and am in fell agreement therewith. It seems to me that the principle laid down by Kotwal, A.J.C, in Nilkanth v. Yeshwant was too widely enunciated, and that the proposition can only hold good where the auction purchaser and the decree-holder are one and the same being. The two decisions relied on by Kotwal, A.J.C, for his decision were not, in reality, any sufficient basis therefor, even assuming them to be correct. I would answer this reference, therefore, as laid down by my learned brother, Kinkhede, A.J.C
Prideaux, A.J.C:— I concur with Kinkhede, A.J.C
Order (30th April 1928)
Prideaux, A.J.C:— In view of the opinion come to by the Full Bench, the revision fails and is dismissed with costs. I fix Rs. 15 as pleader's fees.
36. Revision dismissed.
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