S. Venkatesh Kotadia Vs. Shantha Bai and ors. - Court Judgment

Veeraswami, J.

1. This appeal raises an interesting question as to whether an execution sale of immovable property to a stranger purchaser has got to be confirmed under Order XXI, Rule 92, C. P. C., notwithstanding the fact that the decree, in execution of which the sale took place had, before its confirmation, been modified on appeal there from, with the result that on the date of the sale, the decree remained overpaid and nothing was due under the same. In such circumstances, the lower Court declined to confirm the sale on the view that, on the date of the sale, nothing was due to the decree-holders for which they could put up the property for sale. Aggrieved by that order, the stranger purchaser has filed this appeal.

2. On 31-3-1954 in suit No. 17 of 1941, the Joint Civil Judge, Nadiad passed a decree tor Rs. 39,878-7-9 with costs in favour of Santha Bai and Dave Bhavani Sankar and against three defendants, Deva Jetharama Jebhai (deceased), Dave Ganpatram Jetharam and Dave Jayadevlal Jetharam. By E. P. No. 133 of 1955 on the file of the City Civil Court, Madras, the house and ground No. 8 Ragunayakulu Street, P. T, Madras was sold for Rs. 15,000 in execution, but on an application made by one of the defendants the sale was set aside. Davey Govindararn, the 2nd efendant, paid Rs. 20,000 and part satisfaction of the decree was entered by an order dated 19th March, 1956.

By the same execution petition an one-third share in the house and ground No. 88 Mint Street, P. T. Madras, was also put up for sale and knocked down to Venkatesh Kotadia, a stranger, who is the appellant before us, for Rs. 7,000 on 4-5-1956. Meanwhile, there was an appeal against the decree in suit No. 17 of 1941, and by judgment dated 31-10-1956, the appellate court varied the' decree by reducing the amount recoverable to Rs. 5326-4-1 with interest and costs. There is no dispute about these facts and it would be seen that on the date of the sale in favour of the appellant, the decree as revised remained more than satisfied on account of the payment of Rs. 20,000 by the second defendant in the suit.

3. The appellant had deposited the entire sale price and there was no application filed by any of the parties within the prescribed time to set aside the sale. He, therefore, filed the application out of which the present appeal arises for confirmation of the sale.

4. It was contended in support of the appeal before us that once a valid sale had taken place and no application filed to set it aside under any of the rules, 89, 90 or 91, the Court had no option but to confirm the sale and that the fact that on the date of the stile no amount was owing under the revised decree for which the property could have been sold, was not a ground for refusing confirmation where the interests of a stranger purchaser were involved. The learned counsel for the appellant based his contention on the authority of Nanhelal v. Umrao Singh , Sorimuthu Pitlai v. Muthukrishna, I.L.R. Mad 808: (A.I.R. 1933 Mad. 598) and Ambujammal v, Thangavelu Chettiar, : AIR1941Mad399 . The legislative history of Section 65, C. P. C., the language Of Rule 92 of Order XXI, which appears imperative and the considerations for safeguarding the interests of a bona fide stranger purchaser for value have led the Court in these cases to the conclusion that the subsistence of an outstanding decree on the date of confirmation is not an essential requisite for confirmation of the sale and that the only grounds for refusing confirmation are those provided by the Code . was a case /in which after a sale to a stranger in execution of a decree and before confirmation thereof, the decree-holders and the judgment-debtors reported an adjustment of the decree out of court and it was prayed that the same might be recorded and certified and that the properties sold be released to the judgment-debtors from the sale.

The courts in India having granted the prayer, the stranger auction purchaser by special leave successfully appealed to the Privy Council. The view on which the court of the Judicial Commissioner had refused confirmation was that an adjustment between the decree-holder and the judgment-debtor come to at any time before confirmation of an execution sale nullified the decree, taking away the very foundation of the court's power to execute the decree, namely, the existence of a decree capable of execution. Dealing with this view, Sir George Lowndes observed on behalf of the Board:

'Their Lordships are unable to concur in this reasoning. In the first place Order 21, Rule 2 which provides for certification of an adjustment come to out of court clearly contemplates a stage in the execution proceedings when the matter lies only between the judgment-debtor and the decree-holder, and when no other interests have come into being. When once a sale has been effected, a third party interest intervenes, and there is nothing in this rule to suggest that it is to be disregarded. The only means by which the judgment-debtor can get rid of a sale which has been duly carried out, are those embodied in Rule 89, viz., by depositing in court the amount for the recovery of which the property was sold, together with 5 per cent on the purchase money, which goes to the purchaser as statutory compensation, and this remedy can only be pursued within 30 days of sale: -- see Article 166 Sch. I of the Limitation Act, 1908. That this is so, is, in their Lordships' opinion, clear under the wording of Rule 92, which provides that in such a case (i.e., where the sale has been duly carried out), if no application is made under Rule 89, 'the court shall make an order confirming the sale and thereupon the sale shall become absolute'.'

On that interpretation, the Privy Council allowed the appeal holding that the purchaser was entitled to confirmation of the sale. Although it should not be within the province of the decree-holder and the judgment-debtor by an agreement between themselves out of court to prejudice the rights of a third party purchaser in a court auction sale, the decision of the Privy Council was also grounded on the imperative character of the language used in Rule 92. The point was elaborately considered by Madhavan Nair, J., in AIR 1933 Mad 598.

In that case between the date of sale to a stranger and the date of confirmation thereof, the decree on the foot of which the sale had taken place, was set aside by the appellate court. The judgment-debtors, in the circumstances, prayed that the auction sale should not be confirmed and that the sale should be set aside. Though their application purported to be under Order XXI, Rule 89, the applicants had not complied with the requirements of that rule by making all the necessary deposits mentioned therein. The question of confirmation of the sale had, therefore, to be viewed apart from Rule 89.

The argument was that since the decree had been set aside by the appellate court, there was no jurisdiction for the court to confirm the sale. The learned Judge rejected the contention and reached the conclusion that there was no option for the court but to confirm the sale on the view that the omission of the proviso to Section 316, Civil Procedure Code, 1882, was indicative that the continued existence of a decree was no longer necessary as a condition for confirming the sale and that having regard to the decision of the Privy Council already referred to, the language of Rule 92 left no choice for the court.

The same view was taken of the relative provisions by Wadsworth, J., in : AIR1941Mad399 . That again was a case of an execution sale to a stranger and an application under Order XXI, Rule 90 had been dismissed, But before confirmation of the sale, the appellate court had set aside the decree and dismissed the suit so that on the date when the confirmation of the sale came up for consideration the decree had ceased to have a judicial existence.

Nevertheless, the sale was confirmed. It was the correctness of this order that was challenged before the learned Judge. After considering , and certain other cases of the Calcutta and Nagpur High Courts, the learned Judge held that the balance of authority was in favour of the view taken by Madhavan Nair, J., and that he could see no reason to take a different view. With respect, we concur with Wadsworth, J.

5. Section 316 of the Code of 1882 ran thus : 'When a sale of immovable property has become absolute in manner aforesaid, the court shall grant a certificate slating the property sold and the name of the person who at the time of the sale is declared to be the purchaser. Such certificate shall bear the date of confirmation of the sale; and so far as regards the parties to the suit and persons claiming through or under them, the title to the property sold shall vest in the purchaser from the date of such certificate and not before:

Provided that the decree under which the sale took place was still subsisting at that date.' It is clear from this provision that (1) the property sold vested in the purchaser not from the date of sale but from the date of the certificate and that (2) on the date of issuing the certificate the decree under which the sale took place must still be subsisting. Section 316 of the old Code is now substituted by the present Section 65 and Rule 94 of Order XXI of the Code of 1908. Section 65 states that:

'Where immovable property is sold in execution of a decree and such sale has become absolute, the property shall he deemed to have vested in the purchaser from the time when the property is sold and not from the time when the sale becomes absolute.'

The sale becomes absolute when it is confirmed under Rule 92. The position, therefore, obtaining under the existing provisions of the Code is that the property becomes vested in the purchaser on the date of the sale and as a result of the omission of the proviso to Section 316 of the old Code from the present Code, the requirement that the decree under which the sale took place should still he subsisting on the date when the certificate under Rule 94 is issued, has disappeared. The vesting of the property in the purchaser on the date of sale no doubt becomes effective when the sale is confirmed.

But the fact that the vesting is on the date of sale coupled with the fact that the continued subsistence of a decree is no longer a condition precedent to the issue of a sale certificate under Rule 94 appears to point to the necessary corollary that confirmation of a sale under Rule 92 is no longer conditional upon the existence on the date of confirmation, of an outstanding decree in execution of which the sale had taken place. Apart from that, where a sale has taken place, Rules 89 to 91 provide the grounds and the procedure for setting aside the sale. Where one or the other of these rules has not been availed of, or if availed of but unsuccessfully, Rule 92 directs 'the court shall make an order confirming the sale'.

The language is imperative and leaves no discretion. In such circumstances, the court is bound to consider confirmation of the sale and no considerations outside what is provided under Rule 92 may be germane, especially in cases in which the rights of stranger purchasers at court auction sale for value are involved. Cases of fraud in execution sales may stand on a different footing. So too in cases where the decree-holder himself is the; purchaser, different considerations in particular circumstances, may apply and the judgment-debtor, in the event of a decree, in execution of which his property has been sold, being set aside on appeal, may properly ask for cancellation or restitution. Rut we arc not called upon in this case to decide those questions.

6. The learned counsel for the judgment-debtors conceded before us that the balance of authority was against him but urged that from the standpoint of justice to his clients, we must invoke our inherent powers under Section 151, C. P. C., and refuse confirmation of the sale. It is obvious that we cannot accede to this request because it is well settled that where a matter is covered by specific provisions in the Code, resort cannot be had to Section 151. Further, the question of confirmation of a sale in favour of a stranger purchaser has to be approached not so much from the standpoint of justice, as it is essentially a question of policy in relation to the power of the Court to effectively enforce its own decrees and safeguard the rights and interests of an innocent third party or stranger purchaser for value in court auction. On this aspect as well we are, with due respect, in agreement with the observations of Wadsworth, J., in : AIR1941Mad399 .

7. The appeal is, therefore, allowed and E. A. No. 2209 of 1956 will stand ordered. The appellant will have his costs from respondents 3 and 4 throughout.