Sreemutty Mukhoda Dasi vs Hem Chunder Bhuttacharjee

The question raised in this appeal, which arises out of a suit to enforce a mortgage, is whether, upon an ex parte decree made in a mortgage suit being set aside, and subsequently re-affirmed after trial, the mortgagor becomes entitled to redeem the property, not only as against the mortgagee, but also as against a third party who purchased it at a sale held in execution of the ex parte mortgage decree and confirmed whilst the ex parte decree was still in force. The Court of Appeal below has answered this question in the negative, relying upon the eases of Rewa Mahton v. Ram Kissen Singh L.R. 13 Ind. App. 106 (1886), and Nawab Zain-ul Abdin Khan v. Muhammad Asgar Ali Khan I.R. 15 Ind. App. 12 (1887).

In second appeal it is contended, on behalf of the Defendant mortgagor, that the decree of the lower Appellate Court is wrong in law and that the cases relied upon in the judgment of the Court below, which are cases of sales in execution of money decrees, are distinguish able from a case like the present, it which the auction-purchaser, whose rights have been held to remain unaffected by the subsequent reversal of the decree in execution of which he made his purchaser was an auction-purchaser in execution of a mortgage decree.

We are of opinion that, so far as the present question is concerned, there is no real distinction between an auction purchaser at a sale in execution of a money decree and an auction-purchaser at a sale in execution of a mortgage decree. The way in which the learned vakil for the Appellant sought to distinguish this case from the cases relied upon by the lower Appellate Court was this : He contended, in the first place that the reason of the rule in the cases of Rewah Mahton I.R. 13 Ind. App. 106 (1886) and Nawab Zain-ul Abdin Khan I.R. 15 Ind. App. 12 (1887) was the same as the reason for the decision in the case of Jan Ali V. Jan Ali Chowdhry 10 W.R. 154. (1868), which is stated in the following passage in the judgment in the last mentioned case, "if the sale of the chattel should be avoided, the vendor would lose his chattel, and his money too, and thereupon great inconvenience would follow;" and he argued that that was a reason which could not hold good in the case of a sale in execution of a decree in a mortgage suit as the mortgagor being required to redeem the property, the mortgage money will always go to recoup the auction-purchaser. He also argued that in the ease of a sale in execution of an ordinary money decree, the reversal of the decree does not amount to a reversal of the order for sale, under which the sale in execution was held, but that the reversal of -a decree in a mortgage suit means, and, in terms, carries with it a reversal of the order for decree itself. In the second place, it was argued that as a purchaser at a sale in execution of a mortgage decree, acquires all the interest that the mortgagor and mortgagee can jointly transfer, and that as, if the decree-holder had been the auction-purchaser, the reversal of the decree would result in the reversal of the sale; the purchaser at a sale in execution of a mortgage decree being, in part at least, the representative in interest of the mortgagee, decree-holder, the purchase by him would become inoperative upon the reversal of the mortgage decree.

We are of opinion that these contentions ought not to prevail. With reference to the first contention, we would observe that the real reason for upholding a sale, notwithstanding the subsequent reversal of the decree, in execution of which it takes place, is stated in the judgment of the Privy Council in the case of Rewah Mahton L.R. 13 Ind. App, 106 (1886) in these words : "To hold that a purchaser at a sale in execution is bound to inquire into such matters would throw a great impediment in the way of purchases under executions. If the Court has jurisdiction, a purchaser is no more bound to inquire into the correctness of an order for execution than he has as to the correctness of the judgment upon which the execution issues." In other words, a sale in execution of a decree at which a third party becomes the purchaser is upheld notwithstanding the subsequent reversal of the decree, because otherwise there will be less inducement to intending purchasers to buy at an execution sale, and consequently less chance of property fetching proper value at such sales. So again in the case of Nawab Zain-ul Abdin Khan L R. 15 Ind App. 12 (1887) their Lordships of the Privy Council observe :-- It appears to their Lordships that there is a great distinction between the decree-holders who came in and purchased under their own decree, which was afterwards reversed on appeal, and the bond fide purchasers who came in and bought at the sale in execution of the decree to which they were no parties, and at a time when that decree was a valid decree and when the order for the sale was a valid order.

There is no real distinction between the two cases, namely, the case in which a sale takes place in execution of a money decree and that in which a sale takes place in execution of a decree on a mortgage, by reason of the order for sale in the one case being distinct from the decree, and in the other case being part of the decree itself. In both cases, the order is a valid order as long as the decree remains unreversed, and in both cases it would lose, its force upon reversal of the decree. Nor is there any real distinction between the two classes of cases by reason of the money paid by the auction-purchaser being irrecoverable in the one case and recoverable in the other, as will appear from the following considerations.

The property sold in execution of a mortgage decree would not necessarily sell for exactly the amount of the mortgage debt. In many cases it may sell for more, and the difference between the amount of the mortgage debt which will go to the decree-holder and the purchase money, might, before the decree is reversed, be seized and taken out of Court by any creditor of the mortgagor, in which case the mere fact of any subsequent decree ordering redemption of the mortgaged property may not be sufficient to reimburse the auction-purchaser. Then again, it may be that the decree made after the reversal of the decree, in execution of which the sale took place, may be for a very much smaller amount, in which case also, an order for the redemption of the mortgaged property would not reimburse the auction-purchaser. It was argued that in such cases the Court might put the judgment-debtor to terms. So might the Court do in any case in winch a sale in execution of a money decree takes place; but that has not been considered a sufficient reason for holding that, after the reversal of the decree, the sale ought to be held liable to reversal when a third party was the auction-purchaser.

Then as to the second branch of the Appellants'' contention, although it is true, that the purchaser at a sale in execution of a mortgage decree may avail himself of the rights of the mortgage for certain purposes such as to meet the claim of any subsequent mortgagee, or other person claiming any right to the property created after the date of the mortgage, still it could not be said that he was, for all purposes, a representative of the mortgagee, decree-holder; and in so far as the rights claimed by the auction-purchaser are derivable from the mortgagee, decree-holder, those rights will be available or not, according as the mortgage decree stands or not. In the present case no such question arises.

We should add that though the ex parte decree was set aside, it has subsequently been practically re-affirmed; in other words according to the facts found, it appears that the same decree that was originally made would have been made if the suit had been a contested suit from the beginning. We should also add that the Defendant No. 1 who is the sole Appellant before us, in her defence disclaimed all interest in the property sold. We are unable, on the grounds suggested in the argument for the Appellant, to distinguish this case from the class of cases in which the rule has been laid down that where a third party purchases in execution of a decree whilst that decree is in force, the subsequent reversal of that decree cannot affect his rights. The fact that the decree in execution of which a sale took place was an ex parte decree subsequently set aside, might, perhaps, under certain circumstances, form a ground for distinguishing the case of such a sale from the cases cited. But it is unnecessary to consider this point as it was not raised in this Court or in the Courts below, and as, moreover, the Appellant before us in her written statement in the first Court disclaimed all interest in the property sold. The appeal, therefore, fails and must be dismissed with costs.