A.P. Ismail Rowther vs Mynoon Bivi and Others

This revision petition arises out of execution proceedings in O. S. 105 of 1950. The learned District Judge refused to set aside the sale of

attached properties in the above execution proceedings, thereby reversing the order of the District Munsif, setting aside the sale on grounds of

material irregularity and fraud in the conduct of the sale. The brief facts necessary for the disposal of this petition are as follows:

(2) The petitioner herein is a third party decreeholder. He had obtained decrees in O. S. 162 of 1960, in S. C. No. 172 of 1951 and in S. C. 455

of 1955 against one Pakkiri Moideen Rowther. The second respondent is another rival decreeholder in O. S. 105 of 1950 on the file of the

District Munsif Court, Tirunelveli, against the said Pakkiri Moidden Rowther. The petitioner filed execution petitions in the above said three suits,

but he did not pursue the execution proceedings, as he did not comply with the orders of court. While so, the decreeholder in O. S. 105 of 1950,

Rangaswami Naidu, filed E. P. 334 of 1961 out of which this revision petition has arisen, and brought items 1 to 23 for sale after attachment not

only of the said items but also several other items belonging to the judgment debtor. In the court auction sale, items 1 to 23 were purchased by the

first respondent herein, Mynoon Bivi, the wife of the judgment debtor for a sum of Rs. 1505 subject to a othi for Rs. 2500. Soon after the

purchase, the said Mynoon Bivi mortgaged item 6 of the properties for a sum of Rs. 2600 under Ex. A. 1. Now the petitioner filed the application

under O. XXI, R. 90 C.P.C. to set aside the sale, on the ground that the properties would be worth more than Rs. 5000 that there was no proper

publication of the sale proclamation, that respondents 2 and 3 herein had colluded with the first respondent herein, that the judgment debtor had

fraudulently purchased the properties in his wife''s name for a very low price, that the sale was not valid in law and that therefore the sale must be

set aside. The petitioner''s contention is that he is interested in the properties as he had already obtained decrees against the judgment debtor and

therefore he is affected.

(3) The learned District Munsif came to the conclusion that there was no proper sale proclamation as required by O. XXI, Rr. 54(2), 66 and

67(1) C.P.C. that the judgment debtor, the third respondent herein had so fraudulently arranged to purchase the properties in court auction in the

name of his wife for his own benefit for a very inadequate price and that the petitioner herein had locus standi to file the application. On those

findings, the learned District Munsif set aside the sale held on 6-10-1961.

(4) On appeal the learned District Judge of Tirunelveli reversed the finding of the District Munsif and came to the conclusion that the sale was not

hit by any material irregularity or fraud, that the property was sold for good consideration and that the petitioner had no locus standi to file the

application for setting aside the sale. On these findings, the learned District Judge dismissed the application of the petitioner. It is against this order

the revision petition has been filed.

(5) The points for consideration in this petition are (1) whether the court has got inherent jurisdiction to set aside the sale on grounds of material

irregularity and fraud practised upon either by the decreeholder or the judgment debtor, in bringing the properties to sale, and (2) whether the

petitioner is directly and immediately interested in the properties brought to sale.

(6) Learned counsel for the petitioner cited a number of decisions. In P.V. Raghavachariar, by his authorised Agent, P.R. Srinivasan Vs. Murugesa

Mudali and Others, it has been held that O. XXI, R. 92 C.P.C. does not oust the inherent power of a court to interfere to cancel the sale, even

though no party has applied for cancellation when the court discovers in the course of the proceedings that the decreeholder deliberately misled it

and profited thereby to the disadvantage of the judgment debtor or the judgment debtor''s creditors. In Punjab Mercantile Bank Ltd. Vs. Sardar

Kishan Singh, a person who had not even obtained a decree filed an application for setting aside a sale, on the ground that he was very eager to

purchase the property, that he had offered to purchase the property for Rs. 20,000, but suddenly without his knowledge the property was sold for

a very low sum of Rs. 5000 and that he was ready and willing to purchase the property for the sum offered by him. Now, the court had to

consider whether that person had any locus standi to bring the application. The Punjab High Court held:

Even if the person who brought to light the fraud had no locus standi either under S. 47 or O. 21, R. 90, the court had an ample reserve of

inherent powers to satisfy itself suo motu that its process had been abused. Because the source of information happened to be a person who had

no locus standi, the court could not close its eyes and decline to exercise its inherent powers to set aside the sale on being satisfied that as a result

of conspiracy a fraud had been perpetrated and its process had been abused.

It is clear from the two decisions cited above that the court has got inherent powers to set aside a sale, even though the petitioner had locus standi

or not to file an application for setting aside the sale.

(7) The next point is whether the petitioner is directly and immediately interested in the properties sold in the course of the execution proceedings.

It is a common fact that he is a rival decreeholder against a common judgment debtor. It is also an admitted fact that he filed execution applications

in three suits, though he did not pursue the matter, since he did not comply with the orders of the court. He has also purchased some items of

properties from the judgment debtor long before the decreeholder in O. S. 105 of 1950, the second respondent herein, attached items 1 to 23.

The purchases are admittedly purchases by the wife of the judgment debtor for a low sum of Rs. 1505 subject to an othi for a sum of Rs. 2500.

(8) Adverting to the case law on the point, in Narayanan v. Pappayi, 26 Mad LW 164: AIR 1927 Mad 783 the question arose whether the fourth

defendant has locus standi to file the application and whether he was a person whose interests were affected by the sale. The fourth defendant

purchased item 1 of the property which was directed to be sold after items 2 and 3. After the court sale of items 2 and 3, the legal representatives

of the fourth defendant filed an application under O. 21, R. 90 C.P.C. to set aside the sale on the ground of irregularity and fraud. The learned

Judge (Srinivasa Aiyangar J.) held:

The mere fact that a person is a creditor of a judgment debtor is not sufficient to show that he would be affected by any sale of the property of the

judgment debtor. It depends upon circumstances. It depends upon the solvency of the judgment debtor. It may depend upon various other

matters. But the expression used by the Legislature being ''interested'' it must be taken to mean directly or immediately interested and even so

construed it is clear that the fourth defendant''s legal representative is a person that is directly interested and even immediately interested in the price

realised by the sale and therefore a person directly and immediately affected by sale.

(9) In Ayyappa Naicker Vs. Kasiperumal Nayakar and Others, the petitioner attached certain properties before judgment and in due course

obtained a decree; but before the date of that decree, the attached properties were sold in execution of a decree obtained by another creditor. As

soon as the petitioner obtained his decree, he filed an application under O. XXI, R. 90 to set aside the execution sale. The Full Bench, following

the principle laid down in 26 Mad LW 164: AIR 1927 Mad 783 viz, that the legislature intended to confer the right to apply, on any one who was

directly and immediately affected by the sale, held that a person who had obtained an attachment before judgment was a person whose interests

were affected within the meaning of O. XXI, R. 90 C.P.C. when the property attached had been sold in execution of a decree obtained by another

person. In M.R.RM.MR.RM. Murugappa Chettiar and Others Vs. Kannammai Achi and Others, , the question was whether a creditor who had

obtained a decree against a debtor whose property had been sold in execution of a decree obtained by another creditor could apply to have the

sale set aside under O. XXI, R. 90 C.P.C. Of course, if the applicant was not only the holder of another decree, but also had applied for rateable

distribution, then he would have the right to apply; but in the case before the Division Bench, admittedly the decreeholder who was the appellant

before them had not taken any step in execution. The Division Bench held that he would not, therefore, be a person entitled to share in the rate-

able distribution of the assets. The only question that remained for consideration of the Division Bench was whether he could be said to be a

person whose interests were affected by the sale. Explaining the decision of the Full Bench in Ayyappa Naicker Vs. Kasiperumal Nayakar and

Others, the Division Bench consisting of Rajamannar C.J. and Ganapatia Pillai J. observed as follows:

The words are indeed very wide and on a literal construction of the words not only decree-holders but even ordinary creditors who have not yet

sought to enforce their claims can be said to be affected by the sale of any of the properties of their debtor. Indeed any one who has a prospective

claim which can be satisfied by a sale of any of the properties of a person against whom he has the claim can be said to be a person whose

interests are affected by the sale of such property. We have no hesitation in holding that this wide construction was not contemplated by the words.

The interests which are alleged to be affected by the sale should be interests which are directly and immediately likely to be affected and not

interests which may hypothetically and remotely be affected by the sale.

Now, the learned counsel for the respondents wants to make a distinction. Here the petitioner, except obtaining decrees against the judgment

debtor, did not even attach the properties. He did not pursue his execution applications. He was not at all entitled to rateable distribution, if he filed

application in the execution proceedings. There is apparently some force in the argument advanced by learned counsel for the respondents. Still, I

think the petitioner has got locus standi to file the application under O. XXI, R. 90 C.P.C. He filed execution application in the suits but he did not

pursue them, as he failed to comply with the orders of the court. But before the decree-holder in O. S. 105 of 1950 brought items 1 to 23 for sale

the decreeholder also attached some items of property which are admittedly in the possession of the petitioner which he purchased from the

judgment debtor long before the attachment effected by the decreeholder, the second respondent herein. He is, therefore, vitally interested in

setting aside the sale. If the second respondent decreeholder is not able to realise his decree amount by sale of items 1 to 23, he has got to bring

the attached properties which are now in the possession of the petitioner for sale for the balance of the decree amount. The petitioner is, therefore,

vitally interested and in his own interest, he must set aside the sale on the grounds of illegality and fraud. Now it the property is sold for valuable

consideration and the sale proceeds are enough to satisfy the decree amount, then the property of the petitioner would be safe from harassment or

further execution proceedings. Therefore I feel that the petitioner is interested in setting aside the sale. His interests are not hypothetically and

remotely affected by the sale but are directly and immediately affected by the sale.

The question that follows for consideration is whether the property is sold for proper consideration. It is an admitted fact that items 1 to 23 were

sold for a sum of Rs. 1505 subject to a mortgage. The first respondent herein, who purchased the properties, did not pay the amount immediately.

She mortgaged one item of property under Ex. A-1 for a sum of Rs. 2800 and then she paid the sum of Rs. 1505 the sale price, fetched in court

auction for items 1 to 23. Learned counsel for the petitioner contended that, when item 6 has fetched Rs. 2800 it is impossible to hold that the

items 1 to 23 have been sold for an adequate price. The learned District Judge did not consider whether the property was sold for adequate

consideration. He stated that no one would be prepared to purchase the properties in court auction, paying the market value for the properties.

Further, there seems to be some unseemly haste in bringing the properties to sale. And the properties were purchased by the wife of the judgment

debtor. There is no evidence about the exact market value of the properties brought to sale in the court auction. The order of the District Judge

cannot therefore be sustained.

(10) In the result, the civil miscellaneous appeal is remanded to the file of the District Court, Tirunelveli, for fresh disposal according to law and in

the light of the observations contained in this judgment.

EI/LGC/DVC

(11) Case remanded.