P. Kasturi Bai vs T. Varadan and Others

V. Ramaswami, J.—The Plaintiff is the Appellant. The suit was filed by her for declaration that the sale held on 6th June 1968 at the instance

of the Defendants 1 to 3 in favour of the fourth Defendant for Rs. 6,000 in pursuance of the power of sale under the mortgage, dated 17th May,

1956 is illegal, void and not binding on the Plaintiff. Though the suit property originally belonged to the Plaintiff and the eighth Defendant, the

Plaintiff himself, later became the owner of the entirety of the property. Under the mortgage dated 17th May, 1956, the property was mortgaged in

favour of one Thangavelu Naicker, whose legal representatives are Defendants 1 to 3. The Defendants 6 and 7 in this suit filed Civil Suit No. 107

of 1964 on the file of this Court which was later on transferred and numbered in City Civil Court Madras as Original Suit No. 5268 of 1968, in

which Defendants 6 and 7 laid a claim of title to the property. In this suit, the Plaintiff, eighth Defendant and the mortgage were made parties.

During the pendency of the suit, a receiver was appointed in respect of the suit property and he was in possession of the same. Subsequent to the

appointment of the receiver, without prior sanction and permission of the Court, which had appointed the receiver, the mortgagee purporting to

exercise his power u/s 69 of the Transfer of Property Act, brought the property to sale and sold the same on 6th June, 1968 for sum of Rs. 6,000

to the fourth Defendant in this suit. Subsequent to this sale, the suit tiled by Defendants 6 and 7 claiming title was dismissed, thereby upholding the

title of the Plaintiff to the entirely of the property. Thereafter the Plaintiff had filed this suit for a declaration that the sale u/s 69 of the Transfer of

Property Act was illegal and no binding on her on the ground hat the sale was effected during the period when the receiver was in possession and

without the permission of the Court which appointed the receiver. Both the Courts below held that the sale was valid and binding and accordingly

dismissed he suit. It is further held by he Courts below that the sale itself could be avoided only on a substantial legal ground and since the Plaintiff

had not stated any ground for setting aside the sale, except the statement that the sale was held when the receiver was in possession of the

property in question and without the sanction of the Court and that, therefore, the suit is liable to be dismissed. The learned Counsel for the

Appellant submitted that this view of the Courts below is not correct and that the Plaintiff is entitled to have the sale set aside on the mere fact that

the sale was held without the Prior permission of the Courts which appointed the receiver. In support of this contention, the learned Counsel for the

Appellant relied on a decision of the Supreme Court in Kanhaiyalal Vs. D.R. Banaji and Others, . In that case in a suit on a mortgage a receiver

was appointed and the property was in the custody of the receiver. The Government for recovery of the land revenue, took proceedings under the

Berar Land Revenue Code and ultimately brought the property to sale and sold the same for a sum of Rs. 270 while the mortgage itself was for

Rs. 70,000. The revenue sale was held without the leave or the Court concerned. The receiver thereafter filed a suit to set aside the revenue sale

on the ground that the revenue officer could not sell the property without the prior permission of the Bombay High Court as the property was in

possession of that Court through the receiver appointed by it. The trial Judge set aside the revenue sale which was confirmed by the Division

Bench in a Letters Patent Appeal. The purchaser at the revenue sale preferred a further appeal to the Supreme Court. It was contended on behalf

of the auction purchaser that the sale without the notice to the receiver or without the leave of the Court was not void but only irregular and that in

any event a regular suit in a civil Court was not maintainable and the suit should have been filed in a revenue Court as provided for under the Land

Revenue Code, if the receiver was aggrieved by the sale and that the civil suit was barred by the provisions of Sections 157 and 192 of the Land

Revenue Code. It may be mentioned that the suit was filed by the receiver to set aside the sale on the ground: (1) the proceedings started against

the original occupant and not against the receiver, were without jurisdiction and void ab initio;

No demand was made before putting the property to sale; (3) There was no attachment as required by law; (4) The sale proclamation was

illegal as it did not specify the area to be sold and the name of the receiver who was then the occupant and it was not proclaimed as required by

Section 24, Berar Land Revenue Code; and (5) No proceedings for recovery could be taken against the receiver or against any property in his

possession without the leave of the Bombay High Court which appointed him. The Supreme Court first considered the question as to the effect of

not obtaining the leave of the Court and observed (at page 727):

It is also settled law that proceedings taken in respect of a property which is in the possession and management of a receiver appointed by court

under Order 40, Rule 1 of the Code of CPC without the leave of the courts are illegal in the sense that the party proceeding, against the property

without the leave of the court concerned, is liable to be committed for contempt of the Court, and that the proceedings so held, do not affect the

interest in the hands of the receiver, who holds the property for the benefit of the party who, ultimately, may be adjudged, by the court to be

entitled to the same. The learned Counsel for the Respondent was not able to bring to our notice any ruling of any Court in India, holding that a

sale held without notice to the Receiver or without the leave of the court appointing the receiver in respect of the property, is void ab initio.... In our

opinion, it is enough to point out that the High Court took the view that the sale was viodable and could be declared illegal in proper proceedings

or by suit. We shall assume for the purposes of this case that such a sale is only voidable and not void ab initio.

The Supreme Court then went into the question on the assumption that the sale held without the leave of the Court and without the notice to the

receiver is only voidable and can be declared as illegal, whether there is anything in the Barer Land Revenue Code, which bar the filing of a suit for

setting aside the sale on the grounds mentioned earlier. A ter referring to the provisions in that Code, the Supreme Court held that the suit did not

raise any ground which is covered by the specific provisions of the Code for setting aside the revenue sale and the suit being not one simpliciter to

set aside the sale held by the revenue authorities, but a suit for a declaration and a consequential relief of possession, it was maintainable. Ultimately

the appeal was dismissed. The learned Counsel for the Appellant contended that the Supreme Court had upheld the setting aside of the sale

without relying on any specific grounds for setting aside the sale, but simply on the ground that the leave of the Court was not obtained before the

revenue sale was held and that, therefore, the ratio of the judgment should be taken as holding that on the very ground of absence of leave of the

Court, the sale held u/s 69 of the Transfer of Property Act could be set aside. I am unable to agree with this contention of the learned Counsel for

the Appellant. It is true that the Supreme Court had not dealt with the grounds on which the sale was sought to be set aside, except to consider the

question as to the effect or not obtaining the leave of the Court before proceeding to sell the property. But as already stated the sale was sought to

be set aside on more than one ground. One of them was that there was no valid attachment of property and that there was no opportunity for the

mortgagee to prevent the sale. The attachment of properties in a case where the property is in the possession of a receiver, is provided for under

Order XXI, Rule 52 of the Code of CPC and that was specifically noted by the Supreme Court observing that Order XXI, Rule 52 of the CPC

requires that where the property is in the custody of any Court or Public Officer, attachment shall be made by a notice to such Court or officer.

The Supreme Court also observed (at page 727):

the absence of such a notice would not render the sale void ab initio, because the jurisdiction of the Court or the authority ordering the sale does

not depend upon the issue of the notice of attachment.

This observation clearly shows that the sale held without such a notice is also not void, but could be invalidated on any of the ground known to law

at the instance of the receiver. The trial Court as also the Division Bench of the High Court had set aside the sale on merits on all the grounds

mentioned earlier, holding that there was no proper attachment, that there was no valid notice to the receiver and that the permission of the Court

appointing the receiver was also not obtained. Before the Supreme Court only certain points were urged and they were also dealt with by the

Court.

In the circumstance when the Supreme Court upheld the judgment of the High Court, in my opinion, it shall be deemed to have been upheld it on

the ground that the merit warranted to set aside the sale and not the mere ground of the absence of leave of the Court which, appointed the

receiver. In fact, similar question came up for consideration in the decision reported in Veerappa Chettiar v. Md. Mytheen Mana Pillai 75 Lav.

533 before the Division Bench of this Court and the decision of the Supreme Court was also relied on. That was also a case of a sale though by

execution through Court; but during the period when the property was in the custody of the receiver, appointed by another Court. This Court

observes:

The mere fact of failure to obtain leave will not in itself be a ground for setting aside a sale; the question of setting aside a sale will have to be

decided on the particular facts and circumstances in each case.

Therefore the mere fact of failure to obtain leave will not in itself be a ground for setting aside the sale and that ground will only enable or give a

right to the receiver or any person who is interested in the property to file a suit to have the sale set aside, if there are grounds for such setting aside

the sale. Therefore, necessarily the Plaintiff will have to state the grounds on which she wants to avoid the sale in addition to the fact that the leave

of the Court for the sale of the property was not obtained. In this case the Plaintiff had not stated any specific ground to question the sale except

the ground that the property was in the custody of the receiver when the mortgages invoked his. power of sale u/s 69 of the Transfer of Property

Act. In this case there is another fact which will estop the Plaintiff from questioning true sale itself. It is not disputed that the Plaintiff is a mortgagor

and the mortgagee is given under the deed a power of sale u/s 69. The receiver appointed by the Court was discharged when the suit filed by

Defendants 6 and 7 was dismissed. The result of it was that the receiver shall be deemed to have been holding the property on behalf of the

Plaintiff. It was not the case of the Plaintiff that she did not have any opportunity or she did not have notice of the sale u/s 69 of the Transfer of

Property Act. In the circumstances, therefore, the Plaintiff cannot plead any justifiable cause for the claim of setting aside the sale in this suit.

Accordingly, the second appeal fails and is dismissed. There will be no order as to costs.