Valliappa Chettiar and Others vs Muthu Koundan and Others

Somayya, J.—The plaintiffs sued for possession of the properties claiming title from the ninth defendant who in turn purchased them in Court

auction in execution of a money decree against the first defendant herein in S.C.S. No. 1668 of 1915 on the file of the District Munsif''s Court,

Salem. The lands in question were then situated within the jurisdiction of the Namakkal District Munsif''s Court and the decree was transferred to

that Court for execution. The properties were brought to sale by that Court and were purchased by the ninth defendant. The ninth defendant

subsequently conveyed the property to the plaintiffs and the suit is based upon the purchase by the ninth defendant in Court auction as the root of

their title. This purchase was attacked by defendants 5 to 8 on the ground that the ninth defendant, who was the Court auction purchaser, was the

benamidar for the plaintiffs decree-holders. Under Order 21, Rule 72, Civil Procedure Code, a decree-holder cannot purchase the property in a

Court auction except with the leave of the Court. Clause 3 of that rule provides that

Where a decree-holder purchases, by himself or through another person,

without the permission of the Court

the Court may, if it thinks fit,-on the application of the judgment-debtor or any other person whose interests are affected by the sale by order, set

aside the sale.

In the present case no application was made to set aside the sale on the ground that the ninth defendant who was the Court auction purchaser was

really a benamidar for the decree-holders. The sale certificate was issued and delivery proceedings were gone through. The present suit was filed

in 4935 for recovery of possession in the District Munsif''s Court of Sankaridrug at Salem. It is true, as held by both the lower Courts, that the

plaintiffs who were the decree-holders in the prior suit, played a fraud upon the Court by purchasing the property through the ninth defendant after

getting him to file an affidavit that he was purchasing the property for his own benefit and not on behalf of his master. But the question is whether

the sale does not entitle the plaintiffs to maintain this action.

It was held by the Judicial Committee in the case, (1922) L.R. 49 I.A. 312 (Privy Council) that a Court auction-sale at which the decree-holder

purchased the property .without leave of the Court is not void, but voidable. After setting out the section of the old CPC which corresponded to

Order 21, Rule 72, of the present Code, the Judicial Committee say this:

Upon the construction of this section it is evident that a purchase by a decree-holder who has not obtained permission is not void nor a nullity, but

is only to be avoided on the application of the judgment-debtor or some other person interested. It would be injurious to those interested in the

sale if a decree-holder who had been forced up in the bidding to give a large sum of money, could escape from fulfilling his contract by getting the

sale declared a nullity, and it would make all titles under such sales insecure if at later periods they were liable to be treated as nullities. A sale is to

be set aside upon application and upon cause shown.

Then they refer to the fact that the decree-holder had applied for permission and had been refused. As in the present case, the properties were

purchased in the name of a third party who was alleged to be the benamidar for the decree-holders. Dealing with this contention the Judicial

Committee say that the conduct of the decree-holder in having made an application for permission which was refused and in still purchasing the

property in the name of a third party does not make any difference. They say:

He is still a decree-holder who has not obtained permission to bid. He is that and nothing more. If indeed an application were made under the last

paragraph of the section, his conduct might be one of the points which the Court would take into consideration in determining whether it would

avoid the sale or not. It is doubtful even then whether it would be of any importance. The question would not be whether the decree-holder had

been contumacious, but whether the property had been really realised to the best advantage. If it had not, the Court would set the sale aside ; if it

had, then it matters not that the decree-holder bought without permission or that he had applied and been refused.

This decision appears to me to be exactly in point. The purchaser was held not to be a benamidar for the decree-holder; but nevertheless the

Judicial Committee proceeded to consider the question on the footing that the purchase was benami for the decree-holder and made the

observations I have set out. That being the considered judgment on the alternative looting, this Court is bound to follow it. Following this decision

of the Judicial Committee, Sundaram Chetty, J., in Chinnakannu Padayachi Vs. Paramasiva Mudaliar and Others, , held that a purchase by the

decree-holder without the Court''s permission is only voidable and that a suit to set aside the sale must be brought within one year of the sale. Here

it is true that the defendants are in possession and therefore there is no question of their suing for possession. But the question is whether they ought

not to have the sale set aside by a proper application under Order 21, Rule 72 (3), CPC within the time limited by law. The answer must be that

they must have filed such an application and in the absence of such an application we must take it that at present there is a sale which is valid until it

is set aside. The sale not having been set aside, the plaintiffs are entitled to realise their rights under that sale. The procedure followed in the

decision in Thathu Naick v. Kondu Reddi I.L.R.(1908) Mad. 242 namely of treating the pleading in the suit as an application under Order 21,

Rule 72, might be followed; but, unfortunately, the Court which has tried the present suit is different from the Court which executed the decree and

held the sale; and an application under Order 21, Rule 72, lies only to that Court and there is further the question of limitation.

The lower appellate Court observes that the present case is one of deliberate fraud upon the Court and that therefore the case is not covered by

the decision of the Judicial Committee referred to above. In every case where, in violation of the provisions of Order 21, r, 72, a purchase is made

by the decree-holder, one might say that it is a fraud upon the Court. It will be observed that in the case before the Judicial Committee an

application for leave to bid was made and refused and then the purchase was made through another person who, for the purpose of this part of the

judgment, was taken to be a benamidar for the plaintiff. That was a case of a deliberate fraud and yet it was held that the sale was only voidable,

that is, that the sale was valid until set aside by an application made by the judgment debtor.

I reverse the decree of the lower appellate Court and restore that of the District Munsif with costs here and in the lower appellate Court.

Leave to appeal is refused.