c RAMCHANDRA SPG. & WVG. MILLS BIJU COTTON MILLS & ORS. December 16, 1966. (K. N. WANCHOO, R. S. BACHAWAT AND J.M. SHELAT JJ.j CMI Procedure Code (Act 5 of 1908), ss. 2(2), 47,, 0.21 R.84 a11d 0.21 R.90-Sale of properly i11 exec11tion proceedi11gs-Sa/e held by exe- c11tir.g court to be a 11ullity 011 ground 'I/lat 011e fourth of purchase price not paid i111,11ediately after a11ctio11-0rder whether appea/ab/e-0.21 R.90 whether applicable.
The appellant's factory was sold by auction in execution of a decrc1> and was purchased by the respondents. The appellant challenged the sale on the allegation that one-fourth of the sale-proceeds was not paid !<> the Amin immediately after the auction and thus 0. 21 R. 84 had not been complied with.
The evidence produced by the respondents showed that they had paid the required amount to the Amin after the latter had con- '1.lltc<l the Munsif on the same day. The Civil Judge disbelieving the
respondents' version held the oale to be a nullity and ordered a re-sale. The High Court howeve·r decided in favom· of the respondents and rejected the appellant's legal contentions that (i) the order of the Civil Judgo being interlocutory was not appealable and (ii) that 0. 21 R. 90 was not applicable.
On appeal by Special Leave to this Court. HELD : (i) The sale had been declared to be a nullity and there was thus no question of material irregularity having been committed. 0. 21 R. 91 therefore. did not apply. (304 A]
(ii) The order of the Civil Judge however finally determined the question whether the sale was a nullity. After that no question was left to be decided as between the judgment-debtor and the auction purchaser. The order was therefore not an interlocutory order but a firlal order determining the rights of the parties.
It fell within the definition of a decree under s. 2(2) read with s. 47 of the Code of Civil Procedure and was appealable unde.r s. 96 of the Code. (307 G; 305 Al Case law considered.
Mrs. Pe/iii v. Kans/ii Gop,1/, A.LR. I 939 Lah. 210, disapproved. Manila/ Mohan/a/ Sha/I & Ors. v. Sardar Sayed Ahmed Sayed Mohamad & Anr. (1955] 1 S.C.R. 108 and Jetlia11a11d & S011.1 v. Stare of Uttar Pra- desh, A.I.R. 1961 S.C. 794, followed.
CIVIL APPELLATE JURISDICTION : Civil Appeal No. 877 of 1964. Appeal by special leave from the judgment and order dated May 9, 1963 of the Allahabad High Court in Execution First Appeal No. 4TO of 1962.
Ravinder Narain, for the appellant. J.P. Goyal and E. C. Agarwala, for respondents Nos. I and 2. The Judgment of the Court was delivered by Shelat, J. This appeal by special leave raises the question whether an order by an executing Court setting aside an auction sale as a nullity is an appealable order.
(1967] ~ S.C.R. In pursuance of a decree passed against the appellant (judg- ment debtor) the judgment creditor took out cx~cution proceed- ings. An auction sale of the factory belonging to the appellant
was ordered by the executing court. In pursuance of that order the Amin (lhe auction officer) held an auction sale on September 10, 1962. Respondent No. I was held to be the highest bidder for
Rs. 2,45,000/-. The appellant challenred th~ auction sale alleging that the Amin had not realised I/4th of the sale proceeds immediately after the said auction was closed as required by 0. 21 R. 84 of the Code of Civil Procedure. His case was that the Amin realised the said amount and deposited it in the Treasury on September 11. 1962. The appellant thereafter filed an application under 0. 21
before the Civil Judge, Aligarh. Respondent No. 1 contested that application stating that he had tendered the said amount immediately after the auction, that the said amount being large
the Amin hesitated to accept it in cash as it was too late that day lo deposit it in the Treasury. He also alleged that lhe Amin wanted to know whether he could accept a cheque instead of cash and therefore took Chhotelal, his representative, along with him to the residence of the Munsif, Hathras, to take direclions. Leaving Chhotelal in the car outside the
Munsif's residence, the Amin went in to consult the Munsif if he could accept a cheque but the Munsif advised him to take cash. Thereafter the Amin returned to the car where he accepted the,.<>aid
amount from Chhotelal and issued there and then a receipt therefor. The respondent's case therefore was that he offered the amount immediately, that is was no fault of his that the Amin did not then accept it, and that it was paid in any event soon after the auction and therefore pay- ment was in consonance with 0. 21 R. 84.
The Civil Judge refused to accept the case of respondent No. I and setting aside the auction sale held it to be a nullity. He rejected the r~port of the Amin that he had accepted the money immedialely after seeing the Munsif outside the Munsif's
house where Chhotelal was in the car. The Civil Judge thought that the Munsif's evidence did not support the Amin as the M unsif had stated that it was only the Amin who had come to see him. There- fore the evidence of the Amin and Chhotelal that the amount of Rs. 61,250/- was paid in the car coutside the Munsifs house was not free from doubt. What impressed the Civil Judge"was the fact that in his report dated September IO, 1962 the Amin had not mentioned the fact of his having received the said amount and the receipt issued by him that day. There was however an endorse- ment at the foot of that report made on September 11, 1962 in
which the Amin had mentioned the fact of his having received the said amount and the receipt having been issued by him on September Ill, 1962. The Civil Judge, however, felt that if he had received that c
c RAMCHANDRA MILLS v. BIJLI MILLS (She/at, J.) amount on September 10, 1962, the Amin was bound to have mentioned that fact in the body of that report that very day, that is on the 10th and that therefore the endorsement was written out a; an afterthought to support Chhotelal's evidence. 'Apart from the evidence of the Amin, the Munsif and Chhotelal, there was also the evidence that respondent No. I had that day withdrawn
Rs.1,51,000 from the Bank and had available with him cash and there was no reason why he should not have paid Rs. 61,250 from that amount that very day. Respondent No. 1 filed an appeal against the said order in the High
Court. The High Court accepted the Amin's report and his evidence and reversed the judgment and order of the Civil Judge holding that there was no breach of 0. 21 R. 84 and that the sale therefore could not be set aside as a nullity. The High Court held-and rightly, that there was no contradiction between the Munsif's evidence and that of the Amin. For, if Chhotelal was waiting in the car outside the Munsif's house the Munsif .. as not likely to see him and would naturally depose that the Amin alone had come to his house for consulting him. The High Court also rightly held that there was no valid reason to doubt the Amin's report, the said receipt and the evidence that sufficient cash was available with respondent No. I from which he had no reason not to pay the amount of Rs. 61, 250 immediately after the auction and that though some time elapsed after the auction as the Amin went to consult the Munsif the said amount was paid in accordance with 0. 21 R. 84.
Counsel for the appellant tried to challenge this finding of fact by the High Court but as the evidence on this question was clear and the High Court's finding was fully justified we, in our dis- cretion under Art. 136 declined to permit him to go into the evi- dence with a view to reopen the said finding.
The only question which the appellant's Counsel then raised was thzt the order of the Civil Judge was made under 0. 21 R. 84, and that order was not a final but an interlocutory order. It did not conclude the execution proceedings but only ordered a fresh auction sale therefore no appeal lay before the High Court. He also coptended that the sale being contrary to 0. 71 R. 84, it was a nullity and therefore 0. 21 R. 90 did not '1PJJ<Y:
Hence there could be no appeal against the said order. These very con- tenti:ms were raised before the High Court but they were rejected on the ground that the 11ppellant's application could not be under 0. 21 R. 84 and that therefore the application was under R. 90 of that order, that is, that it was an objection to a material irregu- larity in the conduct and publication of the said sale. The High Court also held that such an objection related to execution of the decree and therefore would fall under section 47 of the Code and an appeal Jay again~! such an order.
:104 [1967] is.C.R. In Ma11i/a/ Molra11/a/ Slrafr & Ors. v. Sardar Sayed Ahmed Sayed Mohammed & A11r.(I) this Court has held that Rules 84 and 85 of Order XX! being mandatory if they are not complied with there would be no sale a•. all and the court is bound to order a re- sale. That decision also held that since there would be no sale and the imported sale is nullity 1here would be no question of a material irregularily in the conduct of the sale and R. 90 would 1herefore not apply. An application under R. 90 as held by the High Court therefore would not lie.
The question then is whether section 47 of the Code \1culd apply. It has been consistently held in a number of decisions by the Privy Council and the High Courts that section 47 is wide and should he liberally construed so as not to drive the parties to a separate suit and thereby prolong litigation.
All questions relating to the execution, discharge or satisfaction of the decree which arise between the parties fall within the scope of this section. The Ex- planation added to the section in 1956 includes a purchaser at a sale in execution of the decree as a party to the suit. Cor •. ;istently with the decisions giving a librcral interpretation to this sectiun it has been held that an order setting aside an auction sale for non-payment of deposit as provided by R. 85 of 0. 21 falls under section 4.' irrespec- tive of whether the purchaser is a decree-holder or a stranger. (See Nand/al v. Siddiq11a11P The High Court of Madras has also helc; that where an auction purchaser has deposited the Lalancc amount under R. 85 but has failed to lodge a receipt therefor and the court orders re-sale, an application for review of such an order falls under section 47 and such an order is appealable. ( Viwayya v. Tiriclri- rapalli District Board)'.
Various High Courts have similarly held that when a sale in execution of a decree whose validity is not ques- tioned is attacked on the ground that it is not merely irregular but illegal and void that must be done by a proceeding under section 47 and not by an independent suit. (See cases collected in Mulla's C.P.C. 13th ed. Vol. 1 p. 236, footnote (i) ]. If the order setting aside the sale on the ground that the deposit as provided for under R. 85 was not made falls within the scope of section 47 there docs not appear to be any reason why an order holding the sale to be a nullity on the ground that R. 84 was not complied with cannot also fall under that section.
Under section 2(2) of the Code a decree is deemed to include the determination of any question falling within section 47. An execu- tion proceeding no doubt is not a suit but the combined effect of section 2(2) and section 47
is that an order passed in execution proceeding is tantamount to a decree in so far as regards the court ——- -···–·· (I) !1955) t S.C.R. 108. (2) A.t.R. 1~7 All. 558. (3) A.t.R. 1961 Mad. 409.
c ll c RAMCHANDRA MILLS v. BIJLI MILLS (She/at, J.) 3 0 5 passing it is conclusively determines the question arising between the parties to the suit (which expression now includes an auction pur- chaser) and relating to the execution of the decree.
fherefore if an order decides a question relating to the rights and liabilities of the parties with reference to the relief granted by the decree it would fall under section 47 and would be a decree within the mean- ing of section 2(2). If such an order is a decree it is appealable under section 96 of the Code.
Reliance was placed on the judgment of the High Court of Bombay in Mani/al Mohan/al Shah v. Sardar Sayed Ahmed Sayed Mohamed('), (from which the appeal came up before this Court),(2) where the High Court took the view that since it is the duty of H11 executing court to order re-sale where conditions of R. 84 are not complied with even though the Rule does not expres- sly provide for an application, if the Court sets aside the sale upon an application made to it it can be said to have acted suo moto and the order therefore would be under R. 84. It is however
not necessary for us to decide whether it is so or not, for, the only question before us is whether such an order amounts to a decree and is therefore appealaole. Counsel for the appellant then relied upon Mrs. Peliti v. Kanshi Gopa/(3) where it was held that such an order was not appealable on the ground ( 1) that an auction purchaser even if he is not a stanger is not a party to the suit and (2) that such an order setting aside an auction sale would not be one relating to the execution, discharge or satisfaction of the decree and therefore not an order under section 47. The first ground no longer survives in view of the Explanation added to section 47. It therefore remains to be seen whether the second ground is a valid ground. In Bharat National Bank v. Bhagwan Sin[?h(<)
the judgment-debtor raised three contentions: (I) with regard to his objection to the proclamation of sale, (2) the jurisdiction of the executing court and (3) limitation. The Division Bench which heard them upheld the first contention holding that his objection to the proclamation was valid and there- fore ordered a .fresh sale but rejected his other two objections. In an application for leave to appeal to the Privy Council heard by a F111l Bench of that High Court, the judgment-debtor contended that he was entitled to leave on the ground that though the first part of the order did not finally determine the rights of the parties the High Court's decision on the rest of his other two contentions amounted to a decree. The Full Bench by a majority decision disallowed the application 011 the ground that there was no final determination of the execution proceedings as the High Court had ordered a resale and even if the order in regard to the contentions as to jurisdiction and limitation were to be considered to be a final d.etermination the judgment of the High Court could not be divided (1) 57 Bombay Law Reporter 10.
. (3) A.LR. 1939 Lah. 210. Ml Sup. C. I./67-6 (2) [ 1955 J 1. s.c.R. 10s . (4) A.LR. 1943 Lah. 210. [196 7] 2 S.C.R. into parts. The question whether ordering a fresh sale would be a final determination if raised by an auction purchaser was not before the High Court.
As regards the judgment-debtor the order olJviously "'•as not a final determination as the execution proreedings were not finally concluded. The decision in Md. Zakaria v. Kishu11(') relied on by Counsel for the appellant laid
down two propositions: (1) that an order under R. 66 of 0.21 was not an appealablc order and (2) that the only orders which are appealable are those which determine the rights of the parties to the execution.
There can be no objection to these propositions. But this decision has no bearing on the contention raised before us and can therefore be of no assistance. Mo/1ir Narain Jha v. Thaka11 Jha(2).
i~ again a case of an order passed under 0.21 R. 66 refusing to notify a certain lease in the pro~lamation of sale. There being no determi- nation of the rights of the parties and the order at best being a pro- <:essual one th•; High Court was right in holding that such an order was neither a <lecrec nor appealable. The decision in Radhe Lal v. Ladli Persad( 3)-which the Counsel referred lo docs not also assist him but lays <!own on the contrary that where a pka which is over- ruled is the subject of a separate petition under section 47 and it is a self contained plea with no reference to the other matters in dispute the order over ruling such a plea is fi.ial as regards that particular objection raised by the judgment-debtor and is appealablc. In
Pankaj Kumar v. Na11ibala(') the High Court was concerned with the question whether the order in question was a final order under Art. 133 of the Constitution. The order against which an appeal lo this Court was sought for was one dismissing certain objections raised by the judgment-debtor. The order did not dispose of the execution proceedings in which it was raised and on that ground the High Court held that no appeal lay before this Court and refused to issue the certificate. Thus, except for the decision in Mrs. J. P£ii1i v. Kanshi Gopal(') none of the decisions relied on by Counsel relates to the question before us and thertforc they are not of any assistance.
As to what is a final order was stated hy this Court in Jetlwnand & Sons v. Slate of U11ar Pradrs/i(6) in the following terms: "An order is final if it amounts to a final decision
relating to the rights of the parties in dispute in the civil proceeding. If after the order the civil proceeding still remains to be tried and the rights in dispute between the parties had to be determined, the order is not a final order within the meaning of Art. 133."
(1) A.1.R. 1926 All. 268. (3) A.l.R. 1957 Punjab 92. (5) A.l.R. 1939 Lah. 210. 12) 1.L.R. 4 Pat. 731. (4) A.l.R. 1963, Cal. 524. (6) A.l.R. 1961 S.C. 794. c c RAM CHANDRA MILLS v. BIJLI MILLS (She/at, 1.)
3 0 7 Similarly in Abdul Rahman v. D. K. Cassim(') Sir George Lowndes observed : "The finality must be finality in relation to the suit. If after the order the suit is still alive in which rights of the parties have still to be determined no appeal lies against it. The fact that the order decides an important and even a
vital issue is by itself not material. If the decision on an issue puts an end to tt.e suit, the order will undoubtedly be a final one." In deciding the question whether the order is a final order determining the rights of parties and therfore falling within the definition of a decree in section 2(2), it would often become neces- sary to view it from the point of view of both the parties in the present case-the judgment debtor and
the auction-purchaser. So far as the judgment-debtor is concerned the order ·obviously does not finally decide his rights since a fresh sale is ordered. The position, however, of the auction purchaser is different. When an auction-purchaser is declared to be the highest bidder and the auction is declared have been concluded certain rights accrue to him and he becomes entitled to conveyance of the property through the court on his paying the balance unless the sale is not confirmed by the Court. Where an application is made to set aside the auction sale as a nullity, if the court sets it aside either by an order on such an application or suo
moto the only question arising in such a case as between him and the judgment debtor is whether the auctionwasanulEtybyreasonofanyviolationofO. 21 R. 84or other similar mandatory provisions. lf the court sets aside the auction sale there is an end of the matter and no further question remains to be decided so far .as he and the judgment,debtor are concerned. Even though a resale in such a case is ordered such an order cannot be said to be an interlocutory order as the entire matter is finally disposed of. It is thus manifest that the order setting aside the auction sale amounts to a final decision relating to tlie rights of the parties in dispute in that particular civil proceeding, such a proceed- ing being one in whirh the rights and liabilities of the parties arising from the auction· sale are in dispute and wherein they are finally determined by the court passing the order setting it aside. The parties in such a case are only the judgment-debtor and the auction- purchaser, the only issue between them for determination being whether the auctioa sale is liable to be set aside. There is an end of that matter when the court passes the order and that order is final as it finally determines the rights and liabilities of the parties, viz., the judgment-debtor and the auction-purchaser in regard to that sale, as after that order nothing remains to be determined as between them.
(I) 6'.l I.A. 76. [1967] c S.C.R. An auction sale is held in pursuance of execution proceedings taken nut by the judgment-creditor and the order passed by the executing court. Until the decree is satisfied or discharged th~
execution proce~dings cannot be said to have been completed. It is by the payment of sale proceeds resulting from such sale that the decree is satisfied either in part or in whole. That being clearly the posit10n it is difficult to comprehend
as to why as held in Mrs. J. Pe/iti v. Kans/11' Gopa/(') an order declaring an auction sale as a nullity cannot he said to be one relatir.g to the execution discharge or satisfaction of the decree "'ithin the meaning of section 47.
In our view the order in question was a final order determining the rights of the parties and therefore fell within the definition of a decree under section 2(2) read with section 47 ~nd was therefore an appealab!e order. The appeal therefore lay before the High Court. The contentions raised on behalf of the appellant therefore must be rejected.
The appeal is dismissed with costs. G.C. Appeal dismissed. —··–·— (!) A.l.R. 1939 Lah. 210.