A. Shanmugham vs Lakshmipathy Naidu and Another

S.A. Kader, J.—This civil revision raises an important question about the validity of the Madras Proviso to Order 21, Rule 90, C.P.C. of

1908 hereinafter referred to as the Principal Act, as amended by the Amendment Act 104 of 1976.

Order 21, Rule 90(1) of the Principal Act runs thus-

Where any immovable property has been sold in execution of a decree, the decree-holder or the purchaser, or any other person entitled 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.

To this main provision the following proviso has been added by this Court-

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 that realised by the sale, whichever is less, or to deposit such

amount in court.

It is the validity of this proviso that is in question.

The petitioner herein, who is the judgment-debtor in the above suit, filed an application to set aside the court auction sale held in E.P. 361 of

1984 and the learned. District Munsif called upon the petitioner to furnish security in accordance with the aforesaid proviso. The petitioner then

filed an application to dispense with the furnishing of security and the learned District Munsif dismissed the same. Hence this revision.

It is contended on behalf of the revision petitioner that the Madras proviso empowering the Court to call upon the applicant to furnish security is

inconsistent with Order 21, Rule 90 of the principal Act, and is therefore invalid. The learned District Munsif was, therefore; in error in calling upon

the petitioner to furnish security before admitting his application to set aside the sale. Reliance is sought to be placed on the decision of

Balasubrahmanyan, J. in V. Kannan v. Haji Abdul Rawood Skhil (1982) T.L.N.J. 502, where the learned 3udge has held that the proviso

introduced by this Court is inconsistent with the principal Act as amended by the Amending Act 104 of 1976. The learned 3udge has proceeded

on the assumption that Order 21, Rule 90 of the principal Act before the principal Act was amended by the Amending Act 104 of 1976 contained

a provision for calling for security and that the Amending Act 104 of 1976 has dispensed with that condition and hence the Madras proviso is

inconsistent with the principal Act as amended by Act 104 of 1976, as is clear from the following passages in his judgment:

The Learned Counsel for the decree holder does not dispute that in the rule which now stands introduced by the, Parliament as Order 34, Rule 90

by Act 104 of 1976 there is no mention at all of any security as a pre-condition for an application by the judgment-debtor for setting aside the sale

on the ground of material irregularity. The omission of a provision of this kind might'' have passed unnoticed but for the fact that in Order 21, Rule

90, C.P.C. as framed by the High Court of this State there was a specific provision to the following effect:

''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 proviso is conspicuous by its absence in the rule after it was re-fashioned by Act 104 of 1976.... The enquiry therefore is whether the

provision in the High Court rule insisting upon the furnishing of security as a pre-condition for admission of the application under Order 21, Rule

90, can be said to be consistent with the amended Order 21, Rule 90 as it exists after Act 104 of 1976. The requirement as to furnishing of

security imposed.an erroneous burden on the judgment-debtor. The proviso passed by the High Court in Order 21, Rule 90 says that the security

must be for an amount equal to that mentioned in the sale warrant, or, where the sale had taken place, equal to that realised by the sale whichever

is less. The proviso also lays down that such security must be furnished to the satisfaction of the Court. As an alternative to furnishing the security

the judgment-debtor must deposit the amounts into court. All these conditions are to be satisfied or to be fulfilled by the judgment-debtor even

before his application under Order 21, Rule 90 is admitted. These onerous requirements are now gone by the board by a sheer non-mention in the

rule as amended and re-enacted by the Parliament. I fail to see how in these circumstances, the rule passed by this Court can be as being read-

consistent with the principal Act as amended by Amending Act 104 of 1976. The conclusion is that the proviso to Order 21, Rule 90 stands

repealed by Section 97 of the Act 10 of 1976.

But, as a matter of fact,Order 21, Rule 90 of the principal Act has not been touched by the Amending Act 104 of 1976. The said rule stands as it

was before the Amending Act. Hence, the very assumption on which the learned Judge has proceeded to hold that the Madras proviso is

inconsistent is not correct.

In Ganpat Giri Vs. Second Additional District Judge, Ballia and Others, the Supreme Court had occasion to deal with the effect of Section

97(1) of the Amending Act 104 of 1976 on local amendment. The said section runs thus-

Any amendment1 made or any provision inserted in the principal Act by a State Legislature or a High Court before the commencement of this Act

shall, except in so far as such amendment or provision is consistent with the provisions of the principal Act as amended by this Act, stand repealed.

The learned Judges of the Supreme Court have held that:

The effect of Section 97(1) is that all local amendments made to any of the provisions of the Code either by a State Legislature or by a High Court

which were inconsistent with the Code as amended by the Amending Act stood repealed irrespective of the fact whether the corresponding

provision in the Code had been amended or modified by the amending Act.

The Learned Counsel for the petitioner would rely upon this decision and contend that even though the provisions of Order 21, Rule 90 have not

been amended by the Amending Act 104 of 1976, the Madras proviso is still inconsistent with the same and is not valid. The Supreme Court in

that case was dealing with the provisions of Rule 72 of Order 21, C.P.C. which runs thus-

(1) Decree-holder not to bid for or buy property without permission - No holder of a decree in execution of which property is sold shall, without

the express permission of the Court, bid for or"" purchase the property. (2) Where decree holder purchases, amount of decree may be taken as

payment - Where a decree-holder purchases with such permission, the purchase money and the amount due on the decree may, subject to the

provisions of Section 73, be set off against one another; and the Court executing the decree shall enter up satisfaction of the decree in whole or in

part accordingly. (3) Where a decree-holder purchases, by himself or through another person, without such permission, the Court may, if it thinks

fit, on the application of the judgment-debtor or any other person whose interests are affected by the sale, by Order set aside the sale, and the

costs of such application and Order, and any deficiency of price which may happen on the resale and all expenses attending it, shall be paid by the

decree holder.

It may be mentioned here and now that this rule has not been amended by the Amending Act 104 of 1976. The rule as it was in force in the State

of Uttar Pradesh prior to the commencement of the Amending Act 104 of 1976 was that in the State of Uttar Pradesh Sub-rules (1) and (3) of

Rule 72 of Order 21 had been completely deleted and Sub-rule (2) had been renumbered as Rule 72 with the modification that for the words

''with such permission'' the words ''the property sold'' had been substituted, The result was that in the case of the decree-holder the need for

obtaining the express permission of the executing Court before offering the bid for or purchasing the property put up for sale under Sub-rule (1)

was not there and the power of the Court ''to set aside'' the sale under Sub-rule (3) of Rule 72 in the absence of such permission had also been

taken away. The Supreme Court held that the High Court was in error in holding that because no amendment had been made to Rule 72 by the

Amending Act 104 of 1976, Section 97(1) of the Amending Act 104 of 19 76 had no effect on the rule as it was in force in the State of Uttar

Pradesh before the commencement of the Amending Act. The Supreme Court found that the Allahabad amendment cannot continue to be in force

after 1st February 1977, when the Amending Act 104 of 1976 came into force. That was a case where there was a clear inconsistency between

the provisions of the principal Act embodied in Rule 72 of Order 21 and the Allahabad amendment. The principal Act laid it as a condition

precedent for the decree-holder to obtain prior permission of the court before purchasing the property brought to sale in execution of his decree

and empowered the executing court to set aside the sale if he purchases the property without such permission. The Allahabad amendment

dispensed this condition. Because of this patent inconsistency Section 97(1) of the Amending Act is attracted. But, the case on hand is entirely

different. Order 21, Rule 90 of the principal Act is totally silent about imposing any pre-condition before an application to set aside the sale is

admitted, while the Madras amendment provides for imposing a pre-condition for furnishing security. The Madras proviso is only a case of

legislation in an unoccupied field and is not inconsistent with or contrary to the provisions of the principal Act.

I shall now refer to the Full Bench decision of this Court in Gunturu Seeta Ramanjaneyulu, minor by mother and guardian Seetamma Vs.

Vishnubhotla Ramayya and Others, , where the vires of the Madras Proviso to Order 21 Rule 90, C.P.C. came up for consideration. The

appellant therein filed an application to set aside the Court auction sale on the ground of material irregularity. The District Munsif of Masulipatnam

Ordered the appellant to enter into a security bond in the amount for which the property had been sold acting under the Madras proviso to Order

21, Rule 90. As the security was found unsatisfactory, the Court Ordered the appellant to deposit the amount into Court in cash if he wished to

proceed with his application. The appellant failed to deposit the amount within the time allowed and consequently the District Munsif dismissed the

application. When the matter came up before the Full Bench, the validity of the Madras proviso was challenged. The Madras proviso originally ran

as follows:

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.

In Order to avoid any misunderstanding as to whether the applicant must be heard before e is directed to furnish security, the proviso was re-

framed in 193 7 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 whichever is less or to deposit such amount in Court.

As pointed out by the Full Bench, this amended proviso put it beyond doubt that opportunity must be given to the applicant of showing cause

before an Order requiring security is passed against him* According to the> Full Bench, even before this amendment, the proviso as it stood

should be read as giving a right to the applicant to be heard on the matter of security and the opportunity had been given to the applicant in that

case by the District Munsif of Masulipatnam. It was contended before the Full, Bench that the court had no power in any circumstance to require

security to be furnished, even where his application to set aside the sale was entirely unwarranted. The Full Bench observed:

That is an argument which we are not prepared to accept. A person has a right of being heard but once he had 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 and that

therefore the District Munsif has power to pass the Orders which he did on 26th June, and 19th August, 1937.

More so, in case of the amended proviso which makes it explicit that an opportunity must be given to the applicant before directing him to furnish

security.

For the foregoing reasons 1 hold that the Madras proviso of Order 21, Rule 90 is not inconsistent with Rule 90 of Order 21 of the principal Act

and is not hit by Section 97(1) of the Amending Act 104 of 1976. The learned District Munsif was therefore, well within his rights in directing the

revision petitioner to furnish security before admitting his application to set aside the sale. The civil revision petition fails and is dismissed. No

Costs.