Paliram vs Laheria Sarai Central Co-operative Bank Ltd.

Rowland, J.—The appellant was an auction purchaser at a sale in course of Execution Case No. 75 of 1923 in the Munsif''s Court at Darbhanga. Four lots of property were put up for sale on 2nd October 1928 on a decree obtained by the Laheria Sarai Central Co-operative Bank Limited against certain judgment-debtors. The plaintiff-appellant became the auction-purchaser of 5 bighas 8 kathas and 17 dhurs of land over which he obtained delivery of possession on 12th November 1928. Six claim oases under Order 21, Rule 100 were presented and were decided on 4th July 1931 with the following result: The first lot purchased by the plaintiff at the sale was 5 bighas 11 kathas for Rs. 11. The Court found that the judgment-debtor had no title to this lot. The second was 2 bighas 1 kathas 5 dhurs which the plaintiff purchased at Rs. 410 and the Court found that the judgment-debtor had no title to this. The third was 7 katbas 7 dhurs purchased for Bs. 42 and the Court found that the judgment-debtor had title to 18 dhurs only and the fourth lot was 2 bighas 14 kathas 9 dhurs, the auction price of which was Rs. 360 and the Court found that the judgment-debtor had a good title to 1 bigha 14 kathas and 12 dhurs only of this. Having lost so much of the property purchased by him, the plaintiff applied to the executing Court on 24th ''September for re-payment of the purchase money of the lots to which the, judgment-debtor had been held to have no title from the former decrea-holder, Laheria Sarai Central Cooperative Bank. The application was re. fused on 22nd April 1932 taking the view that his remedy was by a regular suit. He instituted a regular suit on 16th December 1932 impleading the Bank, that is to say the decree-holder of the former suit but not the judgment-debtors.

The suit was dismissed by both the Courts, the District Judge holding that such a suit did not lie; that in such a case as the present when the judgment-debtor is found to have had no saleable interest in the property sold, his remedy is to apply to have the sale set aside under Order 21, Rule 91, Civil P.C., failing which an order confirming the sale is to be made under Order 21, Rule 92 and as Sub-clause (3) of that Rule bars any suit to set aside an order made under this Rule no such suit is maintainable at the instance of a person against whom such an order is made.

The position is on all fours with that which was considered in Nagendra Nath Ghosh Vs. Sambhu Nath Panday and Others, where the view is taken after a consideration of numerous authorities and an examination of the relevant provisions of the Code and the previous enactments beginning from Regulation 7 of 1825 that under the present Code auction purchaser has only one remedy and that is by way of an application under Order 21, Rule 91 and after getting the sale set aside upon such application he may then apply under Rule 93 for an order for re-payment of his purchase money.

For the appellant, it is contended that the correctness of that decision ought to be re-examined in the light of the Full Bench decisions of the Madras High Court in V. Macha Koundan v. Kottora Koundan A.I.R.1936. Mad. 50 a Full Bench decision of the Chief Court of Oudh in AIR 1930 148 (Oudh) and of a Full Benoh decision of the Allahabad High Court in Bindshari Pershad Tiwari v. Badal Singh A.I.R.1923. All. 394 and finally a Full Benoh deoision of the Lahore High Court in Mehr Chand v. Milkhi Ram A.I.R.1923. Lah 401. Reference has also been made to some decisions of this Court.

The decisions of this Court are in Khetro Mohan Datt Vs. Sheikh Dilwar and Others, ; Radha Kishun Lal Vs. Kashi Lal and Another, and Ganga Ram Gulraj Ram Vs. Muktiram Marwari and Others, . I do not think the decision in Khetro Mohan Datt Vs. Sheikh Dilwar and Others, , has very much bearing on the case before us. It was merely observed where the auction purchaser discovered that his judgment-debtor had no title and this fact had been known before the sale to the decree holder who fraudulently concealed the fact and thereby misled and defrauded the auction purchaser, the latter would be entitled to recover the purchase money by a suit.

In similar circumstances there was a similar result in Maharajadhiraj Kameshwar Singh Bahadur Vs. Bansidhar Marwari, ; but in the judgment of that case the correctness of decision in Nagendra Nath Ghosh Vs. Sambhu Nath Panday and Others, , was not questioned. In fact my learned brother who himself decided the case said that as at present advised he found no justification for holding a contrary view. The decisions in Radha Kishun Lal Vs. Kashi Lal and Another, , and Ganga Ram Gulraj Ram Vs. Muktiram Marwari and Others, , tend to support the contention of the appellant and we have been pressed, in view of those decisions and of the Full Bench decisions of other Courts which I have cited, to make a reference of this case to a Full Bench. But there has already been a reference to a Full Bench on a point almost identical with that which we have to decide here and the Full Bench of this Court in Surendar Kumar Singh v. Srichand Mahata A.I.R.1936. Pat. 97 accepting as correct the view of law taken by Kulwant Sahay, J. in 1.Nagendra Nath Ghosh v. Sambhu Nath Pandy A.I.R.1925. Pat. 106 adhered to the view that in a Court sale there is no guarantee of title, and answered the first of the questions propounded by the referring Judges in the following terms:

A Bale of immovable property In which the judgment-debtor has no interest at the date of the Bale is not a nullity in the sense of being beyond the jurisdiction of the executing Court or void as between the judgment-debtor and the decree-holder auction-purchaser.

The particular case which the Full Bench were considering was one in which the decree-holder himself had been the auction purchaser arid sought to resume execution of his decree as if there had been no sale and he could ignore the entry of satisfaction of the decree made in pursuance of the sale and of the set off of the purchase money. In the case before us the auction-purchaser is a third party, but the principles on which the Full Bench decision is based adequately cover the case we are considering.

I am of opinion that the law is correctly stated in the decision in Nagendra Nath Ghosh v. Sambhu Nath Pandy A.I.R.1925. Pat. 106 with the reasoning in which I respectfully agree and there is no occasion to refer this case to a Full Bench.

I would dismiss the appeal with costs.

Fazl Ali, J.

The question raised in this appeal is an important one but it has been fully discussed by Kulwant Sahay, J. in Nagendra Nath Ghosh v. Sambhu Nath Pandy A.I.R.1925. Pat. 106 and even after hearing the very able arguments advanced by the learned advocate appearing for the parties and considering the numerous authorities cited before us, I am unable to change the opinion which I expressed in Maharajadhiraj Kameshwar Singh Bahadur Vs. Bansidhar Marwari, Kulwant Sahay, J. has in his elaborate judgment after comparing the provisions of the old CPC of 1882 with the Code of 1908 pointed out that though the auction purchaser could, by reason of the specific provisions of Section 315 of the old Code, claim a refund of the purchase money in those oases where it was found that the judgment, debtor had no saleable interest in the property purchased by him (the auction-purchaser) he cannot recover the money now because there is no provision in the new Code corresponding to Section 315 of the Code of 1882. This view has been criticized in certain later Full Bench decisions of the other High Courts on the ground that a Code which regulates procedure could not create a right of action which did not otherwise exist. It must however be pointed out that even when the Coda of 1832 was in force, it was doubted is several oases as to whether the auction-purchaser would have had a right of action against the decree-holder apart from the specific provisions to be found in Section 315 of the Code. In this connexion I shall merely refer to the following observations made by Straight, J. in his order referring the case in Munna Singh v. Gajadhar Singh 1883. 5 All. 577 to the Full Bench:

It is to be observed that an unusual course has been adopted in this latter paragraph of introducing into a Code regulating procedure a novel and somewhat startling declaration of substantive law. Now, no doubt according to the Contract Law of this country a purchaser by private sale can hold the seller responsible for any loss he may sustain if through the invalidity of the latter''s title to sell, the former is deprived of his purchase. It may be that the framers of the Code of 1877 had this present to their minds when they introduced) the innovation in Section 315, and contemplated placing purchasers by public and private sales Upon the same footing, though it is to be noticed that while in the case of private sale the buyer is to be recouped for any loss he has sustained, that is to say his solatium is to be in the shape of damages, in the case of a public sale of immovable property the auction-purchaser "shall be entitled" to "receive back his purchase money".

Before a party can be said to have a right of action, it must be shown that he has a cause of action. The decree-holder can by no stretch of reasoning be said to be the vendor of the auction-purchaser and there being no privity of contracts between them, one cannot deal with their respective rights as if they were parties to a private sale. In a private sale the vendor sells what he represents to be his own property and therefore he is expected to know the defects in his own title. In a sale however which is brought about through the intervention of the Court, the decree-holder purports to sell what does not belong to himself but to a stranger. There is no doubt a representation by him to the Court in his petition for execution that the property against which he wishes to proceed belongs to his judgment-debtor but the representation is subject to the qualification that it is made only to the best of his knowledge and belief. The procedure which follows the filing of the execution petition is usually an elaborate one and before the property is sold the sale is widely advertised and if any claim is preferred by a third party it has to be investigated before the sale takes place. The result is that the Court purports to sell nothing more than what appears upon reasonable enquiry to be the property of the judgment debtor and the auction-purchaser buys what is in common legal parlance described as the right, title and interest of the judgment debtor. How can it be held in these circumstances that the decree-holder offers an unqualified guarantee as to the good title of the judgment-debtor or that the auction-purchaser should have a right of action against the decree-bolder, if it transpires that the judgment-debtor has no saleable interest in the property. It is true that the proceeds of the sale are either wholly or in part appropriated by the decree-holder but it must be remembered that he gives up the whole or part of his decree as the case may be in lieu thereof.

The position therefore after the sale is really this: The decree-holder''s decree is satisfied by the sale of a property which does not belong to the judgment-debtor and the degree-holder has no power to proceed against the judgment-debtor inasmuch as the sale has become absolute.

In such circum. stances if there can be any equity in favour of the auction-purchaser, there ought to be a corresponding remedy avail, able to the decree-holder to proceed against the judgment-debtor who is the only person benefited by the transaction.

Before concluding my judgment, I should like to point out that the facts of the present case do not warrant the relief claimed by the appellant. As my learned brother has pointed out, the present suit was brought by the plaintiff after an order had been made in favour of the objector under Order 21, Rule 100. Now, a decision of the Court in a summary proceeding under Order 21, Rule 100 is strictly speaking not a decision as to title and is also not necessarily final. Under the law such a decision may be brought into question by a suit under Order 21, Rule 103. The plaintiff did not bring any such suit and he cannot therefore ask the Court to hold as a fact, merely upon the basis of an order passed in a summary proceeding, that the judgment, debtor bad no saleable interest in the property.

I therefore agree with my learned brother that the appeal must be dismissed with costs.