Lakhan Choudhry vs Bacha Lal Singh

Adami, J.—Tha petitioner purchased an occupancy holding of about six bighas for the sum of Rs. 42 at a sale held in execution of a rent decree obtained by the landlord on 14th April 1927. On 22nd September 1927 the opposite party filed an application before the Munsif under Order 21, Rule 90, Civil P.C., to set aside the sale on the ground that there had been fraudulent suppression of process in the execution proceedings resulting in a sale at a grossly inadequate price.

The opposite party had previous to the rent sale obtained a decree for Rs. 1,060 on the basis of a mortgage of the holding executed in his favour by the tenant judgment-debtor. He alleged that owing to fraudulent suppression of the process he had not come to know of the rent decree and sale until 24th August 1927, and that the real value of the holding was not less than Rs. 600. The Munsif in a brief order stated that from the evidence on record he did not find any ground for fraud, which had been alleged simply to save limitation. He also found there was no irregularity in conducting the sale. He rejected the application.

On appeal the learned Subordinate Judge, after detailing and considering the evidence found that there had been fraudulent suppression of the sale proclamation and other processes at the instance of the decree-holder and the judgment-debtor who had set up the petitioner, a relation, to bid for and buy the holding at a price that was grossly inadequate, the lands being worth more than Rs. 100 a bigha. He allowed the appeal and set aside the sale.

The contention put forward before me is that the mortgagee decree-holder, opposite party, was not a person whose interests were affected by the sale and therefore could not make an application under Order 21, Rule 90. There is no finding by the lower Courts as to whether the holding was transferable without the consent of the landlord or not but in the absence of a finding that it was transferable it must be taken to be non-transferable. That question, however, is not of much importance in coming to a conclusion in the present case.

Mr. Lakshmi Kant Jha''s argument on behalf of the petitioner is that since if the landlord himself had purchased at the rent auction sale he would not have been obliged to annul the incumbrance, since as landlord of a non-transferable occupancy holding he could refuse to recognize any transfer, and since likewise a tenant, settled on the land by the landlord, who has purchased at a rent sale but has not annulled the incumbrance, could not be interfered with by the mortgagee of the previous tenant who had purchased at a sale in execution of his mortgage decree: Badlu Pathak and Others Vs. Sibram Singh and Others, Therefore a third person purchaser at a rent auction sale cannot be affected by the previous mortgages, and the mortgagee has no interest affected by the sale.

The argument cannot be supported. Where the landlord is purchaser at a rent sale of a non-transferable holding over which there is a mortgage incumbrance, under the terms of the law he would have to annul the incumbrance as purchaser within the time fixed, but as a landlord having the right to ignore the mortgage, or any transfer under it his failure to annul as purchaser will leave his right as landlord to ignore the mortgage intact, and where that right exists in the landlord it will protect also the tenant settled on the land by the landlord after his purchase at the rent execution sale.

Where, however the purchase at the rent auction sale is by a third person, as in the present case, if that person wishes to avoid the incumbrance the law requires that he should annul it within one year u/s 157, Ben. Ten. Act.

The petitioner did not annul the incumbrance within one year and so far as he is concerned it still subsists how-lever ineffectual it might be against the landlord.

It is further contended that the opposite party having obtained a decree on his mortgage the mortgage has merged in the decree and no longer subsists. The answer to this is that the mortgage is not extinguished until there has been a sale under the mortgage decree. In the present case there has been no such sale.

The whole question to be decided is whether the mortgagee opposite party is a person whose interests are affected by the sale. The words "whose interests are affected by the sale" are wide and have been held to include "pecuniary interests" There is no doubt in my mind that the pecuniary interests of the opposite party mortgagee were seriously affected.

As mortgagee he would be entitled to claim in satisfaction of his mortgage debt any surplus proceeds of the rent sale as against his mortgagor. The lower Court has found that process was fraudulently suppressed and that the property was sold for a grossly inadequate price, so that the opposite party''s interest were affected, and he was therefore a person entitled to make an application under Order 21 Rule 90.

As to the question whether the application was made within time, on the finding that process was suppressed and considering that in no case would the landlord decree-holder be called on to issue any notice to the mortgagee about the sale, I think the lower Court was justified in accepting the application as within time. The application is rejected with, costs. Hearing fee two gold mohurs.