Sahibzadi Yavarunnisa Begum vs Syed Ahmed Ali Khan and Others

Sahibzadi Yavarunnisa obtained a money decree on account of her dower-debt and as money equivalent of her share in the estate of the deceased propositus on 3rd October 1951 for Rs. 1,04,101-10-0 charged upon certain Immovable properties on the basis of a compromise entered into between her and the other heirs of Mir Sardar Ali duly recorded under Order 23, R. 3, CPC In execution of this decree, a house known as Sardar Munzil situate in Begumpet with its appurtenances was sold by public auction (through Khaleel & Co.), to Kothari Brothers Ltd. (represented by their Director Jorawar Mull Motilal) to whom it was knocked down as the highest bidder for Rs. 70,000/- on 24-8-1952. On the same day, a cheque for Rs. 1500/- drawn on Grindlya Bank was handed over by the auction-purchaser to the auctioneer in compliance with the provisions of Order 21, R. 84, Code of Civil Procedure, and the balance of the purchase-money was paid through another cheque drawn on the Central Bank of India.

Before the sale could be confirmed and made absolute under Order 21, R. 92, Code of Civil Procedure, the First Judge, City Civil Court by his letter No. 4731, dated 22-9-1952, issued an injunction in the case of � ''Mir Azam Ali v. Mir Hamid Ali'' requesting the Court below not to make the sale absolute till the disposal of that case on his file. The letter was received by the Court below on 23-9-1952. On that same day, the judgment-debtors put in an application under Order 21, R. 90, CPC for setting aside the sale on the ground that property worth, not less than Rs. 1,50,000/- fetched a lower price for want of proper publication of sale and inordinate haste on the part of the auctioneer. In the alternative,'' they prayed that the proceedings be transferred to the Jagirdars'' Debt Settlement Board which had come into existence by then u/s 4, Hyderabad Jagirdars'' Debt Settlement Act, 1952 (12 of 1952) (hereinafter referred to as the Act) and was actively functioning. Following uporr this application came the letter of the Secretary to the Jagirdars'' Debt Settlement Board No. 46/ DSB dated 24-9-1952 asking the Court to send the original and transfer the execution file of the case to the Board. On 6-10-1952, the auction-purchasers Kothari Brothers Ltd., through their Director, Jorawar Mull Motilal filed an application objecting that inasmuch as the Act had come into force on 18-3-1952, the Court had no jurisdiction to conduct the sale, consequently all the proceedings subsequent to 18-3-1952 would be void and the sale a nullity, and that they were therefore entitled to a refund of the purchase-money and the amount of Rs. 3500/- paid by them to the auctioneers as commission. The decree-holder in her separate replies of 22-10-1952 took strong exception to the objections raised by the judgment-debtors and the auction-purchaser and prayed that the sale be confirmed and made absolute. In disposing of the matter in controversy, the learned Additional District Judge, Hyderabad, held that the injunction issued by the First Judge, City Civil Court had no binding effect and can therefore be ignored. He overruled the objections raised by the judgment-debtors on the ground that the auctioneer was appointed by the mutual consent of the parties and the mere fact that the property did not fetch higher price according to the expectations of the judgment-debtor did not amount to fraud or material irregularity within the meaning of Order 21, R. 90. He further held that the validity of the sale could not be impugned because it was a ''fait accompli'' before the Jagirdars Debt Settlement Board (hereinafter referred as the Board) exereised its powers u/s 25 of the Act, by requisitioning the files of the Court to itself. The Additional District Judge however stayed his hand from confirming the sale because in his opinion the statutory requisition made by the Board took away his jurisdiction to deal further with the proceedings. In regard to the moneys deposited by the auction-purchaser, he stated as follows:

I do not know how long it will take the Board to come to any conclusion, hence the money deposited by the auction-purchaser cannot be made to remain idle. It would therefore be refunded to him on his furnishing a proper security for the like amount with a definite undertaking that if the Board upholds the sale, the auction-purchaser will deposit the amount of Rs. 70,000/- within a week''s notice I therefore (further) order that in case the decretal amount is otherwise conciliated (scaled down) by the Board the auction-purchaser will be entitled to claim the sum paid to the auctioneer not from the latter but from the judgment-debtor.

The judgment-debtors and the auction-purchasers have remained content with this order but the decree-holder has come up in revision and it was strenuously contended on his behalf that the learned Additional District Judge had wrongly refused to exercise jurisdiction, to confirm and make the sale absolute. The learned Advocate for the auction-purchasers contrary to his contentions in the Court below made common cause with the Petitioner before us. The real support for the judgment under revision came from the judgment-debtors who remained ex parte "on the date when the arguments were heard by the Court below.

In order to appreciate the arguments advanced on behalf of the contesting parties, it would be useful to refer at the outset to Section 25 of the Act. That section reads as follows:

25 (1) All suits, appeals, applications for execution and proceedings other than revisional in respect of any debt pending in any civil or revenue Court shall, if they involve the questlons whetber the person from whom such debt is due is a debtor and whether the total amount of debts due from him on the date of the application is less than Rs. 5000/- be transferred to the Board.

When an application for adjustment of debts made to a Board u/s 11 or a statement submitted to a Board u/s 21 includes a debt in respect of which a suit, appeal application for execution or proceeding other than revisional, is pending before a civil or revenue Court, the Board shall give notice thereof to such other Court. On receipt of such notice, such other Court shall transfer the suit, appeal, application or proceeding, as the case may be, to the Board.

When any suit, appeal, application or proceeding is transferred to the Board under Sub-section (1) or Sub-section (2), the Board shall proceed as if an application under, Section 11 had been made to it.

If the Board, to which any suit, appeal, application or proceeding is transferred under Sub-section (1) or Sub-section (2), decides the preliminary issue mentioned in Clause (a) of sub-s (1) of Section 24 in the negative or that mentioned in Clause (b) of the said Sub-section (1) in the negative, it shall retransfer the suit, appeal, application or proceeding to the Court from which it has been transferred to itself after the disposal and subject to the result of the appeal where an appeal is filed and after the expiry of the period prescribed for an appeal where no appeal is, filed.

When any suit, appeal, application or proceeding is retransferred to the Court under Sub-section (4), the said Court shall proceed with the same.

There is agreement on each side with which we agree that in so far as unrealised balance of the amount decreed by the Court below is concerned, the application for execution will have to be transferred to the Board under the mandatory provision of the above section, and the Court will become divested of its jurisdiction unless the file is retransferred to it. The controversy, however, centered round the question whether the proceedings at the stage of confirmation where the interest of a stranger to the decree has intervened can be said to be a proceeding in respect of a debt and consequently liable to be transferred to the Board. It was argued on behalf of the Petitioner that once the Court disallowed the judgment-debtor''s application purporting to be one under Order 21, R. 90, it ought to have proceaded to confirm the sale under Order 21, R. 92, and not transferred the proceeding to the Board because that proceeding cannot be said to be in respect of a debt. Reference is made in this connection to the � AIR 1937 98 (Nagpur) (A); � ''Madhao Mukund v. Ramchandra AIR 1938 Nag 273 (B) and � AIR 1948 180 (Nagpur) (C). The learned advocate for the judgment-debtors in reply contended that the expression "proceedings in respect of a debt'''' used in Section 25 of the Act includes and covers proceeding in respect of confirmation of sale and the auction-purchaser being a representative of the judgment-debtors, would be bound by the result of any decision to which the Board may make in adjusting the account between the parties to the decree. In support of the contention raised by him, the learned Advocate relied on � Nukala Surya Rao Vs. Yedida Bullemma alias Venkayya and Another, (D)� Rathnasabapathi Ayyer Vs. Subramania Pillai and Others, (E), and certain other rulings to which we shall advert later.

Before dealing with these contentions, it is to be noted that the judgment-debtors after the sale was held did not take advantage of the provisions of R. 89, Order 21, CPC They applied under R. 90 and failed, and the portion of the order disallowing the application has now become final in view of the fact that they did not attempt to have it set aside by way of appeal as provided by CI. (j) of R. 1 of Order 43. It is thus apparent that so far as the relevant rules of CPC are concerned, there is nothing to prevent the sale being confirmed and made absolute. The law holds out a definite assurance to the auction-purchaser under R. 92, that the sale shall be confirmed in his favour unless the judgment-debtor or any other persons entitled to apply under R. 89 or the decree-holder or any other persons entitled to apply under R. 90 or he himself exercises the right conferred upon him to apply under R. 91, to have it set aside after satisfying the conditions mentioned in the rule respectively applicable to each applicant.

It is next to be seen whether confirmation can be withheld in view of any of the provisions of the Act.

The learned Advocate for the judgment- debtors contends that whatever may be the posi- tion under the Code of CPC the fact that a debt which had been concluded by a decree of a Civil Court can be reopened under the Act and adjusted between parties to the decree, would imply that the auctioneer would be bound by the decision which the Board may arrive at in that respect. This contention, he urges, is supported by the provisions of Section 6 of the Act. That section provides:

6 (1) Subject to the provisions of this Act, the Board shall have full power to decide all questions, whether of title or priority or of any nature whatsoever, and whether involving matters of law or fact, which may arise in any case within the cognizance of the Board or which the Board may deem it expedient or necessary to decide for the purpose of doing complete justice or making a complete settlement of debts in any such case.

Subject to the provisions of this Act and notwithstanding anything contained in any other law for the time being in force, every such decision shall be final and binding for all purposes on all parties and all other persons who are parties to the proceedings in which such decision is given.

The learned Advocate for the judgment-debtors lays great deal of stress on the provisions of Sub-section (2) but that Sub-section does not expressly say that the auction-purchaser would be a person claiming through or under any parties to the proceeding. The Privy Council in � Zain-ul-Abdin Khan v. Muhammad Asghar Ali Khan 15 Ind App 12 PC (F), has decided that stranger auction-purchasers who purchase in execution of a simple money-decree are not bound by the result of any appeal against the decree. It follows that such persons cannot be regarded as claiming by or under the judgment-debtor for purposes of the Act, for, if they are not bound by the result of an appeal against the very decree under which they purchase, much loss will they be bound by the results of some independent suit or proceedings to which they are not parties. The learned advocate for the judgment-debtors refers to � AIR 1948 94 (Nagpur) (G); � Thondam Annamalai Mudali Vs. Tiruttani Ramasami Mudali and Others, (H); � Bhiku Mal v. Firm Ram Chandar Babu Lal AIR 1946 Lah 134 FB (I); � Gulzari Lal v. Madho Ram 26 All 447 (J); � Mt. Basumati Kuer Vs. Mt. Harbansi Kuer and Another, (K), and � Ajodheya Lal Mahaseth and Another Vs. Mahanth Brij Kishore Das, (L), for the proposition that the auction-purchaser should be held to be the representative of the judgment-debtors. But these decisions are based on a consideration of the provision of Section 47, CPC In the present case, at the stage with which we are concerned, no question falling u/s 47 arises, and therefore the authorities cited are distinguishable and need not be elaborately discussed.

As already stated, the real question to be determined is whether the proceedings at the stage of confirmation are proceedings in respect of a debt, which ought to be transferred to the Board the moment the requisition is made. ''Debt'' has been defined in Section 2 (e) of the Act to mean any liability in cash or kind, whether secured or unsecured debt from a jagirdar whether payable under the decree or order of any "Court or otherwise. The concept of debt implies the existence of two parties between whom privity of contract forms the nexus or between whom the relationship of debtor and creditor comes into existence by operation of law. Once the auction-purchaser purchases the property, the rights of the decree-holder cease except as regards the purchase price. Thereafter the rights reside in the auction-purchaser, and, according to the Privy Council, no one can resist him unless an application is made under Order 21, Rr. 89, 90 and 91. The judgment-debtor in the present case had made an application which was disallowed and which had become final as stated above. In such circumstances, it is difficult to see how an auction-purchaser can be said to be a party to the debt which he has not contracted or otherwise took upon himself the liability to pay. This view is fortified by the provisions of Section 21 of the Act which direct the Board to give notice to the debtor and to the creditor and publish a general notice requiring the debtor and all creditors to submit a statement in the prescribed form within one month from the date of the service of the notice or the publication of the general notice whichever is later. It is thus clear that the persons who appear before the Board are the debtor and the creditor. The award by the Board after taking the account according to Section 28 shall be between the creditor and the debtor and it shall be registered and executed by the Collector against the debtor and the money due from him will be recovered as arrears of revenue (vide Sections 66 and 42 of the Act). These provisions make it sufficiently clear that the scope of the inquiry before the Board shall be confined to the parties to the debt and the auction-purchaser does not come into the picture except upon the theory of representation, which we have held, does not apply in the circumstances of this case. The result is that the expression "proceeding in respect of a debt" would not apply to a confirmation proceeding.

The authorities cited by the learned advocate for the judgment-debtors to which reference has been made in an earlier portion of the judgment are based on Section 25, Madras Debt Conciliation Act which reads as follows:

When an application has been made to a Board u/s 4 any suit or other proceedings then pending before a civil Court in respect of any debt for the settlement of which application has been made shall not be proceeded with until the Board has dismissed the application.

In interpreting the provisions of this section Wadsworth J., in � Nukala Surya Rao Vs. Yedida Bullemma alias Venkayya and Another, (D) held that where there has been a decree on a mortgage debt and an application is filed under Order 21, R. 90 by the judgment-debtor to set aside the sale on the ground of material irregularity, that proceeding is a proceeding in respect of a debt within the purview of Section 25, Madras Debt Concilation Act. In � Rathnasabapathi Ayyer Vs. Subramania Pillai and Others, (E), a Bench of the Madras High Court, has held that the language of Section 25 is mandatory. Consequently, where the judgment-debtor files a petition u/s 4 the Court executing the decree has no jurisdiction to proceed with the petition for execution until the petition u/s 4 has been dismissed and as the Court has no jurisdiction to sell the property in the meantime its action in so doing must be regarded as nullity.

These cases no doubt in a way support the argument of the learned Advocate. But the difficulty in accepting them as good authority for the proposition with which we are concerned lies in the fact that the position of the stranger purchaser has not been considered in them. To stress that point the learned advocate for the Petitioner relied upon Nagpur cases already referred to above. In the first two cases i.e., the � AIR 1937 98 (Nagpur) (A)'' and � ''AIR 1938 Nag 273 (B) provisions similar to those enacted in Section 25, Madras Debt Conciliation Act, came in for consideration. It was held in the former case that after an execution sale has been held and the sale price has been set off against the judgment-debt or deposited in Court, subsequent proceedings for confirming the sale are proceedings between the judgment-debtor and the auction-purchaser, just as are proceedings for the delivery of possession to the auction purchaser. In these proceedings, the decree-holder plays no part and they do not amount to executing a decree so as to fall under this proviso to Section 21. C. P. Debt Conciliation Act. The property had been sold in execution of the decree and the title of the auction-purchaser vests in him from the date of sale, subject to confirmation, which is inevitable in the absence of any objection. In the latter case Niyogi J., decided that the object of the C. P. Debt Conciliation Act is the settlement or adjustment of debts owed by agriculturists and in the settlement of the debts any interest which arises in favour of a third party should not be disregarded. The proceeding in respect of a debt occurring in Section 21, Debt Conciliation Act, must be understood as referring to (hose proceedings in which the decree-holder and the judgment-debtor alone are conceited and its meaning should not be extended to cover a case of an auction purchaser. The proceeding relating to confirmation of sale cannot be over-ridden by any other provision of law unless there is an express provision controlling or impairing the effect of R. 92, Order 21, CPC Consequently, Section 21 does not preclude the executing Court from confirming the execution sale held prior to an application made by the debtor u/s 4 of the Debt Conciliation Act. In the last case cited on behalf of the Petitioner Bose J. as he then was in considering the effect of stay order u/s 6 (3), C. P. Relief of Indebtedness Act observed that under that Sub-section the stay does not operate until the Court receives notice. The notice cannot be said to be given until it is actually handed over. It is not enough to sign an order in the Debt Relief Court. Hence, even if the notice is issued before the sale but the sale is completed before the notice is received by the Court, the sale is valid and cannot be set aside. As the sale is good and cannot be set aside under Order 21, Rr. 89, 90 and 91, Civil P. C, its confirmation made subsequently is also good. In addition to these authorities, we may quote the case of � Thachil Maruth Kunhikkavu alias Ammini Amma and Others Vs. Kizhakka Purakkal Thattan Kesavan and Others, (M). In that case Pancha pagesa Sastri J., while dealing with the provisions of Section 4, Madras Tenants and Ryots Protection Act, overruled the contention that sale becomes good only on confirmation and held that the CPC in various rules under Order 21 makes a clear distinction between ''sale'' and "confirmation of sale". Section 4 of that Act applies only to cases where the property has not been sold. The section is inapplicable to a case where auction sale had been affected but what remains to be done is only the confirmation of the sale by the Court under Order 21, R. 92, CPC Code.

In our opinion the view expressed in Nagpur cases and in the later Madras cases is more in consonance with the law as laid down by the Privy Council. It has been held in � AIR 1931 33 (Privy Council) (N), that if a sale has been duly effected, it is not competent to the decree-holder or the judgment-debtor to get rid of it by adjusting or otherwise satisfying the decree out of Court. In � AIR 1936 204 (Privy Council) (O), Sir Shadilal who delivered the judgment of the Board observed:

It is obvious that after the expiry of the statutory period for setting aside the sale, there was no person who could question the title of the auction purchaser and a certificate of sale granted by the Court would in such a case be formal document of title In the absence of an order setting aside the sale, the Court is bound to confirm it.

Even if it be supposed that such proceedings as the one with which we are concerned, are covered by the provisions of Section 25 of the Act and are to be transferred on requisition made by the Board, the question arises whether the Board will have jurisdiction to deal with them. There are no provisions in the Act to the effect that notwithstanding that the sale has reached the stage of confirmation the Board on the proceedings being transferred to it shall set aside the sale or refuse to confirm it and order a de novo sale to satisfy the debt in case of judgment-debtor''s default. According to Section 51 of the Act only the proceedings under Chapter III of the Act are to be governed by the Code of Civil Procedure. Chapter III contains no provision for confirmation or setting aside by the Board of the sale already held by the Civil Court. In such a case there would be no sense in transferring a proceeding to the Board which it cannot effectively deal with.

For the reasons stated above, we hold that confirmation proceedings are not proceedings in respect of a debt and cannot therefore be trans ferred to the Board.

The result is that the revision petition succeeds and is hereby allowed with costs. The order of the Additional District Judge is set aside with the direction that he will proceed further in the case in accordance with law.