Ouseph Ouseph vs Devasia Chacko

Sankaran, J.—The stranger auction purchaser in O.S. 829/1107 on the file of the Changanchery Munsiff''s Court is the Appellant. The decree-holder in that case is the Respondent. Both of them have claimed the auction amount deposited in this case. The execution Court upheld the claim of the auction-purchaser and directed the auction amount to be refunded to him. Against that order the decree-holder filed an appeal as A.S. 16/1125 in the District Court of Kottayam. In allowing that, appeal the lower appellate Court held that the auction amount deposited in this case has to be disbursed to the decree-holder and accordingly reversed the order of the execution Court and dismissed the auction-purchaser''s application to get refund of that amount. Hence this second appeal by the auction-purchaser.

The circumstances which prompted the auction purchaser to apply for a refund of the auction amount deposited by him in this case may be briefly stated. The judgment-debtor owed money to the decree-holder under an unsecured debt and also under an hypothecation bond for Rs. 50/- charged on the suit property. The decree in this case was obtained by him for money due under these two transactions. Over and above the charge obtained under the decree an attachment was also placed on the property for the unsecured debt. In execution of the decree, the entire rights over the property were sold in Court auction and were purchased by the present Appellant for 2162 fanams which amount was deposited by him in Court. The sale was later on confirmed. The property was subject to a subsequent encumbrance. All the same the subsequent encumbrance has not been made a party to the present suit. The subsequent encumbrancer had already obtained the decree in O.S. 612/1107 for recovery of the amount due to him under the subsequent encumbrance and in execution of that decree he had purchased the property in Court auction and had obtained possession of the same through Court.

He intervened in the execution proceedings in the present case and prayed that he may be allowed to redeem the prior charge due to the decree-holder in this case. That prayer was disallowed by the execution Court. He therefore instituted a fresh suit O.S. 137/1121 in the Changanachery Munsiff''s Court for a declaration that the decree and execution proceedings in O.S. 829/1107 are not binding on him and that he is entitled to retain possession of the property on redemption of the prior charge by payment of the principal amount of Rs. 50/- together with one-half of the same by way of interest. The auction purchaser as well as the decree-holder in O.S. 829/1107 were respectively Defendants 1 and 2 in O.S. 137/1121. That suit was finally allowed by the District Court as per the decree passed in A.S. 382/1121 holding that the Plaintiff in that case was not bound by the auction sale in O.S. 829/1107 and that he was entitled to redeem the property sold under the decree in that case on payment of Rs. 75/- towards the extinguishment of the prior charge on the property. As per that direction he has already deposited Rs. 75/- in this case towards the satisfaction of the prior charge covered by the decree.

The present Appellant who is the auction-purchaser in this case has construed the decree in A.S. 382/1123 as having set aside the Court sale in this case and it is on that ground that he has claimed a refund of the auction amount deposited by him. The remedy available to an auction-purchaser to apply to the execution Court for a refund of the auction amount is that prescribed by Order 21, Rule 93, Code of Civil Procedure. In order that he may maintain an application under this rule, two conditions are necessarily to be satisfied. These conditions are that there must have been an application under Rules 89, 90 or 91 of Order 21 to set aside the Court sale and that as a result of such an application the sale must have been set aside under Rule 92. In the present case, there has been no application under Rules 89, 90 or 91 and there has been no order by the execution Court setting aside the sale. The position taken up by the auction-purchaser is that the judgment-debtor had no saleable interest in the property sold. If so, he ought to have applied under Rule 91 to get the sale set aside.

Admittedly, no such application was made by him and there has been no order by the execution, Court setting, aside the sale. On the other hand, the records in the case show that the sale has been duly confirmed on the expiry of the period prescribed for applications under Rules 89, 90 and 91. Thus it is clear that the auction-purchaser is not entitled to maintain an application under Rule 93 for a refund of the auction amount. The next position taken up by him is that the Court sale has been act aside as per the final decision in the fresh suit O.S. 137/1121 instituted by a third party on the ground that the judgment-debtor in the present case has no saleable interest in the property sold.

It is also contended that when the sale has thus been set aside and the auction purchaser has been deprived of the property purchased by him in Court auction, he is entitled to get back the auction amount. Reliance is placed on the rulings in - AIR 1932 401 (Lahore) , - ''Bahadur Singh v. Ram Phal'' AIR 1930 Oudh 143 (FB) (B) and - ''Macha Kounden v. Kottora Koundan'' AIR 1936 Mad 50 (FB) (C), in support of this position. The decisions in these cases are to the effect that where subsequent to the confirmation of the Court sale the auction purchaser is deprived of the property purchased by him as a consequence of the sale having been set aside in a fresh suit instituted by a third party on the ground that the judgment-debtor had no saleable interest in the property at the time of the Court auction, the auction purchaser has a right to recover the purchase money from the decree-holder to whom the same has been paid and that such recovery can be made by instituting a fresh suit against him.

While upholding the auction-purchaser''s right to institute a fresh suit for recovery of the purchase money under the special circumstances already mentioned it has been made clear in these rulings that when once the sale has been confirmed by the execution Court it is not open to the auction-purchaser to apply to the execution Court under Order 21, Rule 93 for a refund of the auction amount; what the auction purchaser has done in the present instance is to put in such an application which is not sustainable in law.

There is yet Anr. and more important reason for holding that the present application put in by the auction purchaser is unsustainable. The Court sale in this case has not been set aside by the final decree passed in O.S. No. 137/1121 nor is there a finding in that case that at the time of the auction sale the judgment-debtor had no saleable interest at all in the property sold. By the decree in that case, the Plaintiff was allowed to retain possession of the property after redeeming the rights covered by the Court sale in the present case on payment of Rs. 75/- towards extinguishment of the prior charge over the property. Such a decree cannot be deemed to have the effect of setting aside the Court sale in toto. On the other hand, the decree has only specified the extent of the rights that passed under the Court sale. Subject to such specification the Court sale has been left intact. It was therefore not a case where the judgment-debtor had no saleable interest at all in the property sold in Court auction or that the auction purchaser got nothing under that Court sale. The judgment-debtor had really some saleable interest in the property at the time of the auction sale, but such saleable interest has been subsequently found to be very much less than what had been proclaimed for sale.

There is no warranty of title in a Court sale and the purchaser bids at his own risk. He has to be satisfied with the extent of the right that really passes to him under the sale. He can avoid the sale only where there has been a total failure of consideration for the price paid by him at the Court sale on account of the fact that in the property put up for sale the judgment-debtor had no interest at all to be conveyed under the sale. But, where the judgment-debtor had some saleable interest however small it may have been, the Court sale cannot be set aside on the ground that the judgment-debtor had no saleable interest in the property sold. So far as the auction sale in the present case is concerned, the, right that passed under the sale has been settled as per the final decision in O.S. 137/1121 as the right to recover Rs. 75/- as a prior charge on the property. The auction purchaser who was a party to that suit is bound by that decision. It follows therefore that towards the auction sale in his favour he can get only the amount of Rs. 75 deposited in O.S. 137/1121 by the Plaintiff in that case towards the discharge of the prior charge on the property.

Since the auction sale which had already become absolute remains intact the amount realised at the Court sale held in satisfaction of the claim under the decree in this case has to be paid to the decree-holder. The lower Court was therefore right in dismissing the auction purchaser''s application for a refund of the auction amount.

In the result this second appeal is dismissed with costs.