1

954

Shankar

Sitaram

Sontakke

· and Another

v.

Balkrishna

Sitaram · Sontakke

and Otherf.

Ghulam Hasan J.

1954

April 14.

108 SUPREME COURT REPORTS [1955]

the motor business subsequent to

Mar.ch 31, 1946. His

subsequent suit to enforce a part

of the claim is founded

on the same cause

of

action which he deliberately relin­

quished. We are clear, therefore, that the cause of

action in the two suits being the same, the suit

is barred

under

Order II, rule 2(3), of the Civil Procedure Code.

As the suit is barred both by res judicata and Order

II, rule 2(3), of the Civil Procedure Code, no further

question as to the applicability of section 90 of the

Indian Trusts Act can possibly arise under the circums-

tances'. ·· ·

'·'.

The result is that ·we allow the appeal and dismiss

the suit with

costs throughout.

Appeal allowed.

MANILAL MOHANLAL

SHAH AND OTHERS

ti.

SARDAR SAYED AHMED SAYED MAHAMAD AND

ANOTHER.

·[MEHR CHAND MAHAJAN C.J., VIVIAN BosE and

GHULAM HASAN JJ.]

Civil Procedure Code (Act V of i908), Order XX!, rules 84 and

85-Provisions requiring deposit of 25 Per cent of purchase money

t'mmediately after sale· and payment of balance within 15 days of

·-~

J

the sale-Whether mandatory-Non-compliance with such provisions llllii

-Legal effect thereof on sale-Inherent powers-Whether can be

exercised-Civil Procedure Code-Order 21, rule 72-Decree-holder

not to bid for or purchase property without permission-This provi-

sion direc~ory. . r

Held, that the provisions' of rules 84 and 85 of Order XX! of,-4

thC CoOe of Civil Procedure requiring the deposit of 25 per cent of "·.,.

the purchase · money immediately on the person being declared as

a· purchaser and the payment of the balance within 15 days of the

sale are mandatory and if ·these provisions are not complied with

there is no sale at all. · 4

N:oll-payme"nt of the price· .on the part of the def a lilting pur­

chaser 'renderS'.the Sa_le proceedings as a complete nullity .

. The inhe'rent powers Of the' ·court cannot be anowed to· cir­

cµmve~r, the !11-a~datory provisions of ' the · ~ode and relieve the 4 ·~

purchasets of. their obligation· -to make the deposit. -

I

-

S.C.R. SUPREME COURT REPORTS 109

Under Order XXI, rule 72, of the Code of Civil Procedure a

<lecree-holder cannot · purchase property at the Court-auction in

execution of his own decree without the express permission of the

Court and that when he does so with such permission, he is entitled

to a set-off, but if he

does so without such permission, then the court

has a discretion to set aside the sale upon the application by the judgm<'.nt-debtor, or any other person whose interests are affected

by the sale. As a matter of pure construction this provision is

directory and not mandatory.

Rai Radha Krishna and Others v. Bisheshar Sahai and Others

( 49 I.A. 312), Munshi Md. Ali Meah v. Kibria Khatun (15 Weekly

Notes (Cal.)

p.

350), Sm. Annapurna Dasi v. Bazley Karim Pezley

Moula (A.LR.

1941 Cal. 85), Nawal Kishore and

Others v. Buttu

Mal and Subhan Singh (I.L.R.

57 All. 658), Haji Inam

Ullah v.

Mohammad Idris (A.I.R. (30) 1943 All. 282), Bhim Singh v. Sarwan

Singh (I.L.R.

16 Cal. 33), Nathu Mal v. Malawar Mal and

Others

(A.LR. 1931 Lah. 15) and A. R. Davar v. Jhinda Ram (A.I.R. 1938

Lah. 19 8) referred to :

,.A CIVIL APPELLATE JuRrsmcnoN: Civil Appeal No.

93 of 1953.

Appeal by Special Leave granted by the Supreme

Court of India, by its Order dated the 5th March, 1951,

from the Judgment and Decree dated the 28th

January,

1949, of the High

Court of Judicature at

J Bombay in Appeal from Order No. 43 of 1947 arising

) out

of the

Order dated the 14th April, 1947, of the

/

-Court of the Joint First Class Sub-Judge at Ahmedabad

in Darkhast No.

249 of

1940.

. Appellant No. I in person for self and co-appel-

lants.

C. K. Daphtary, Solicitor-General for India (!. B.

Dadachanji and A. C. Dave, with him) for respondent

No.

1.

. 1954. April 14. The Judgment of the

Court was

delivered by

GHULAM HASAN J.-This appeal ?rought by the

auction-purchasers

by special leave raises the question

of the validity of a

sale of certain properties which

took place on August

13, 1942. The respondents are

the judgment-debtor and the legal

representative of

the deceased decree-holder.

The decree-holder applied on March 30, 1940, for

execution of his decree by sale of 4 lots , of property

1954

M anilal Mohan/al

Shah arul Othus

v.

Sardar Sayed

Ahmed Sayed

Mahmedand

Another.

110 SUPREME COURT REPORTS [1955] r--

,,• ...

1

954, . belonging to' the judgment-debtor. The properties were

Manilai Mohan/al . valued at Rs. 1,50,000 and were subject · to a previous

S""!' and., Others mortgage of Rs. 60,000 existing in favour of the

iiarda~'Sajed auction-purchasers. It appears that under the terms

Ahm<N Si!J!ed of the mortgage-deed the mortgagees were entitled to

Mahniiid and

Another proceed in the first instance against the first 3. lots and

against the fourth lot only in the event of a deficiency

Ghulam Hasan J.

......_.,.._<

'in .'sale price to . cover the decretal amount. The first ,

3 lots with which alone we are concerned in the appeal

were sold

to the mortgagees for Rs.

53,510 on August 13,

1942. They were scild free from the encumbrance under

the order . of the Court passed at the instance of the

decree-holder and the mortgagees but without notice

to the judgment-debto~. It may, however, · be no,ted

that on the application of certain third parties their

~ight of annuity over the properties sought to be sold l..

was nptified in the sale proclamation. On the same

date 'Hi~ mortgagees. applied for a set-off stating that

the purchase · price was Rs. 53,510 while the amount

Clue to them was Rs. 1,20,000. The Court allowed the

set-off \hen • and there. It is' important to bear in mind

that .the mortgagees had filed no suit and obtained no.

decr~e to recover the money due on the mortgage. I,~ .

· The order : notifying the ~!aim to annuity was

challenged

by the judgment-debtor in revision to the

High

Court but · it ' was dismissed on November 10,

1943, by Sen J. who observed that as the sale had

already taken

place, the proper remedy of the

judg­

ment-debtor was to move the Court for setting aside the

sale. Thereupon · the judgment-debtor applied on

November 20, 194~, under Order XX!,. rule 90, of the ,

Civil Procedure Code to have the · sale set aside · _..

(Exhibit 5p. Allegations imputing fraud and collusion -.

to th'e dwrtgagees were made . in the application, in

particular .it. was. alleged . that the 3 lots were purchased

at. a grossly" inaaequate price 'l:iy under~yaluing them ..

. i'n ',the·' proClaination and , that the. mortgagees not

having paid 25% of the bid, the sale .should not have

been sanctione~ .in ,their, favour:" Whik this application

was. pending, the judgment-debto'r made. another. appli­

cation on January 15, 1947, • challenging the sale as . a

nullity on the ground that the purchaser had neither

-

-

I

S.C.R. SUPREME COURT REPORTS 111

~ made the deposit required under rule 84 of Order XXI,

nor paid the balance of the pur.chase-price as required

by rule 86, and praying for resale of the property to

realise the price.

The order allowing set-off was

attracted

as being without jurisdiction. No separate

order

was passed on this application as the application

Exhibit

51 was granted on the same grounds. The

trial Court found that at the time of attachment on

>---c April 30, 1940, lots Nos. 1 and 2 and lot No. 3 were

"' valued at Rs. 40,000 each separately but at the time

of proclamation of sale on March 6, 1942, the first

two were valued at

Rs.

45,000 and the third at

Rs. 8,000 only. The property did not consist of mere

survey numbers but admittedly had bungalows, and

superstructures and in the opinion of the Court the

subsequent valuation

was bound to mislead bidders . ......l The Court, however, set aside the sale on the ground

that the provisions of Order XXI, rules 84 and 85, had

not been complied with in that the price

was

not deposit­

ed but a set-off was wrongly claimed and ailowed in

the absence

of the judgment-debtor by the Court which

had

no authority or jurisdiction. The Court observed.

"There is nothing to show that these opponents

took any permission from the Court to bid at the auc­

-·" tion and in fact they could hardly have obtained any

such permission, they being mortgagees whose dues

had

yet to be proved and determined. If they could

ask for

set-off, there is no reason why they should not

be required also to seek previous permission from the

Court to bid under

Order XXI, rule 72, of the Civil Pro-

cedure Code. It may be noted that one of these

opponents

is himself a pleader and he was not ._justified in taking such an unauthorised order . from

.-J the Court without fully acquainting with all the facts.

Under all these circumstances, these opponents can

with little justification avoid the consequences

of

non­

compliance with the provisions of Order XXI, rules 84

and 85, referred to above. Without proving their claim

under the mortgage, they have succeeded in purchas­

ing for a gross under-value these properties and even

-t that value they have not paid in Court by taking re-

.,.•QP course to the device of set-off ........................... .

. . . . .. .. . . . . .. . . .. . In my opinion, there could not be a

1954

Manila! Mohan/al

Shah and Others

v.·

Sardar Sayed

Ahmed Sayed

Mahmadand

Another. ·

Ghulam Hasan].

1954

Manilal.Mohanlal

Sha4 and Others

. , 'II• .

Sarda Sqytd

Ahmed Sayed

Mahmadand

Another. .'

Chu.lam Hasan J.

112 SUPREME COURT REPORTS [1955J r

more fraudulent and materially irregular · procedure

thari what has. taken place in the present

case at the instance of these mortgagees, to the great detriment

and injury o( the present applicant,

viz., the

judgment­

debtor."

The Court held that the application under rule 90

was barred by limitation but this being a case of a

void

sale and not of a mere material irregularity the Court was bound to re-sell the property irrespective of

any application being made

by the judgment-debtor.

. The High Court of Bombay (Chagla C. J. and

Gajendragadkar

J.) dismissed the appeal of the

.mortgagee-purchasers on the ground that

. the order of

the trial Court was under Order XXI, rule 84 and/or

~.,.

rule 86, of the Civil Procedure Code and therefore no .L

appeal lay against such .and order. The High Court held

that the order of set-off was without jurisdiction and the

subsequent deposit of the purchase price on December

14, 1945, made long after the period

. had elapsed was

of no avail.

One of the auction-purchasers, who is a pleader, has

himself argued the appeal before us.

The principal

question which falls to

be considered is whether the

-,. .

failure to make the deposit under Order XXI, rules 84

and 85, is only a material irregularity in the sale which

can only be set aside under rule 90 or whether it is

wholly void. It is argued that the case falls within

the former category and the application under rule 90

being barred by limitation, the sale cannot be

set aside. It

is also contended that the Court having

,

once allowed the set-off and condoned .the failure to .

deposit, the mistake of the . Court should not be allowed--',

to prejudice the purchasers who would certainly have ~

depc;>sited the purchase price but for the mistake. We

are of opinion ·that . both the contentions are devoid of

substance.

In

o.rder. · to . resolve this contrnversy a

reference to the relevant rules of Order XXI

of the

Civil

Procedure Code will be necessary. These rules are 72,

Ii

-

84, 85 .and 86 : *

"72. · (1) No holder of a decree in e~ecution of _..... .......

which property is sold shall, . without the express per-

mission of the Court, bid for or purchase the property.

---S.C.R.

SUPREME COURT REPORTS 113

}----:

(2) Where a decree-holder purchases with such

permission, the purchase-money and the amount due on

the decree may, subject to the provisions

of section 73,

be set

off against one another, •.... , ••. , , •... _ ••

(3) Where a decree-holder purchases, by himself

or through another person, without such · permission,

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 ; ....................................... . "84. (1) On every sale of immovable property

the person declared to

be the

purchasei: shall pay im­

mediately after such declaration a deposit of twenty-five

per cent. on the amount

of his purchase-money to the

officer or other person conducting the sale, and in

default of such deposit, the property shall forthwith

be

resold.

(2) Where the decree-holder

is the purchaser and

is entitled to set

off the purchase-money under rule 72,

the Court may dispense with the requirement of this

rule·

"85. The full amount of purchase-money payable

shall

be paid by the purchaser into Court before the

Court

closes on the fifteenth day from the sale of the

property:

Provided that, in calculating the amount to be so

paid into Court, the purchaser shall have the advantage

of any set-off to which he may be entitled under rule 72.

"86. In default of payment within the period

mentioned in the last preceding rule, the deposit may,

if the Court thinks

fit, after defraying the expenses of

the

sale, be forfeited to the Government, and the

pro­

perty shall be re-sold, and the defaulting purchaser

shall forfeit all claim to the property or

to any part of

the sum for which it may subsequently be

sold."

The scheme of the rules quoted above may be shortly

stated. A decree-holder cannot purchase property at

the Court-auction in execution

of his own decree with­

out the express permission

of the Court and that when

he does so with such permission, he is entitled to a

set-off, but if he does so without such permission, then

15

1954

Manila/ Mohanlal

Shah and Others

v.

Saria 1SaJ1d

Ahmea SayeCl

Mahmedand

Another.

Ghulam Hasan .J.

. 1954

Manildl Mohanlal

Shah and· Others

. '. v .. ''

Sardar_$ayed

.AhmeJ'Sayed

Mahmidand

· · Anothe;

Ghula~ Hasan J.

114 SUPREME COURT REPORTS [1955]

the Court h~s ; discretion to . ~et aside the sale upon the

application

by the judgment-debtor, or any other

person

whose interests are affected by ·the sale (Rule 72) .

As a matter of pure .construction this provision is

obviously directory and not mandatory-:-See . Rai

Radha Krishna and Others v. Bisheshar Sahai and

Others(

1

). The moment .. a person is declared to be the

purchaser, he

is bound to deposit 25 per cent. of the

purchase-money unless he happens to

be the decree­

holder, in which

case the Court may not require him to

do

so (Rule 84).

· · ·· ·

The. provisi.on. regarding the deposit. of 25 per cent.

by the purchaser other than the decree-holder is manda­

tory

as the

language of the rule suggests. The full

amount of the purchase-money must

be paid within

fifteen days from the date of the sale but the

de~ree­

holder is entitled to the advantage of. a set-off. The

provision for payment is, however, mandatory .....

(Rule 85). If the payment is not made within the

period of fifteen ·days, the Court has the discretion to

forfeit the deposit, and there the discretion ends b\lt

the obligation of the Court to re-sell the property is

imperative. A further consequence of non-payment is

that the defaulting purchaser forfeits all claim to the

property

... (Rule . 86).

It is not denied that the pur.chasers had not obtained

any decree on foot of their mortgage and the claim of

Rs.

1,20,000 which they put forward before the execu­

tion Court had not been adjudicated upon or deter­

mined. The mortgagees, one ·of whom is a pleader,

a1)plied on the day of the sale clairriing a set-off on foot

of the mortgage.

The Court without applying its mind

to the question immediately passed the order allowing

the set-off. This claim was obviously not

adj11issible

under the provisions of rule 84 which applies only to

the decree-holder. The Court had clearly no jurisdic­

tion

to allow a set-off. The appellants misled the Court

into

1.;assing ~ wrong order and obtaining the advan­

tage of a set-off while they knew perfectly well that

thev had go.t no <kcre'e on foot of the mortgage and

tlieir claim was undetermined. There was default in

(1) 4g I.A. 312.

A

--

,.

--

..

S.C.R. SUPREME COURT REPORTS 115

depo~iting 25 per cent. of the purchase-money and

further there was no payment of the full amount of the

purchase-money within fifteen days from the date of

1he sale. Both the deposit and the payment of the

purchase-money being mandatory under the combined

efle.ct of rules 84 and 85, the Court has the discretion to

forfeit the deposit but it was bound to re-sell the pro­

perty with the result that on default the purchaser

forfeited all claim to the property. These provisions

leave no doubt that unless the deposit and the payment

:are made as required by the mandatory provisions of

:the rules, there is no sale in the eye of law in favour of

the defaulting purchaser and no right to own and

possess the property accrues to him.

In two cases decided by the Calcutta High

Court, viz.,

.Munshi Md.

Ali Meah v. Kibria Khatun(

1

), and

Sm.

Annapurna Dasi v. Bazley Karim Fazley Moula(

2

), the

sale

was held to be no sale where the purchaser had

failed to deposit the balance of the purchase-money

as

required by rule 85. A similar view was taken by a

Division Bench of the Allahabad High

Court in Nawal

Kishore and Others

v. Buttu Mal and

Subhan Singh(3 ).

The provisions of rule 86 were held to be mandatory

in another decision of the same Court, Haji lnam Ullah

v. Mohammad Idris(

4

)

and it was held that the

Court

was bound to re-sell the property upon default irres­

pective of any application being made by any party to

the proceedings. The case of Bhim Singh v. Sarwan

Singh (

5

)

was a case of failure to make a deposit as

required by section

306 of the Code of 1882 ( corres­

ponding to rule 85 of the present Code). The Court

treated it as a material irregularity in conducting the

sale which must be enquired into upon the application

under section

311, (corresponding to rule

90 of the

present Code), and not by a separate suit to set aside

the sale. The Court did not apply its mind to the ques­

tion whether the provisions of section 306 being manda­

tory the sale should not be treated as a nullity for

non-compliance with those' provisions. The decision of

(1) 15 Weekly Notes

(Cal.) p. 350. (4) A.LR. (30) 1943 All. 282·

(2) A.LR. 1941 Cal. 85. (5) 16 Cal. 33.

(3)

57 All. 658 ..

1954

Mani/al Moh an la

Shah and Others

v.

Sardar Sa)•ed

AhmLli Sayed

Mahmadand

Another.

Ghulam Hasan].

1954

Manilal Mohunlal

Shah and Others

v.

Sarda'r Sayed

Ahmed Sayed

Mahmadand

Another.

Ghulam Hasan J.

116 SUPREME COURT REPORTS [1955]

a single Judge (Tapp J.) in Nathu Mal

v. Malawa Mal

and

Others(

1

)

is distinguishable upon its facts. There

the auction-purchaser had actually tendered the money

but the payment

was postponed by consent of parties

pending the disposal of the objection by the judgment­

debtor. We

do not agree with the remark made in that

case that the provisions of rule 85 are intended

"to be

directory only and not absolutely mandatory." A

Division Bench

of the same

Court (Tek Chand and

Abdul Rashid

JJ.) held in A; R.

Davar v. Jhinda Ram (

2

),

that the Court had no jurisdiction to extend the time

for the payment

of the balance of the purchase-money

under rule

85 and must order resale under rule 86.

Having examined the language of the

relevant rules

and the judicial decisions bearing upon the subject

we

are of opinion that the provisions of the rules requiring

the deposit of

25 per cent. of the purchase-money

immediately arr the person being declared

as a pur­

chaser and the payment

of· the balance within · 15 days

of the sale are mandatory and upon non-compliance

with these provisions there

is no

sale at all. The rules

do not contemplate that there can

be any sale in favour

of a purchaser without depositing

25 per cent. of the

purchase-money in the first

· instance and the balance

within

15 days. When there is no sale within the con­

templation of these rules, there can

be

no question, of.

material irregularity in the ~onduct of the sale. Non­

payment

of the price on the part of the defaulting

purchaser renders the

sale proceedings as a complete·

nullity. The very fact that the Court is bound to re-.

sell the property in the event of a default shows that'

the previous proceedings for sale are completely wiped

out

as if they do not exist in the eye of law. We hold,

therefore, that in the circumstances

of the present

case·

there was no sale and the purchasers acquired no · rightso

at, all.

.,.

It was urged before us that the Court .could allow a·

set-off in· execution proceedings under its inherent·

powers apart from the provisions of Order XXI, rule 19,

of the Civil Procedure Code. We do not think that the #;

inherent powers of the Court could be invoked to•

(1) A.LR. 1931 Lah. 15. (2) A.>.R. 1938 Lah. 198.

'

'~­

...

S.C.R. SUPREME COURT REPORTS 117

circumvent the mandatory provisions of the Code and

relieve the purchasers

of their obligation to make the

deposit. The appellants

by misleading the Court want

to benefit

by the mistake to which they themselves

contributed. They cannot

be allowed to take advan­

tage

of their own wrong.

The appeal

fails and is dismissed · with costs .

Appeal dismissed.

KIRAN SINGH AND OTHERS

v.

CHAMAN P ASWAN AND OTHERS.

[MuKHERJEA, VIVIAN BosE, GttuLAM Ht\SAN

·and VENK~TARAMA AYYAR JJ.]

Suits Valuation Act (Vll of 1887), s, 11-Appeal under-valued

and presented

to a

Court of inferior jurisdiction-Whether a decree

passed by

it

on the merits is a nullity-Whether mere change of

form or error in a decision on the merits, prejudice tuithin the mean­

ing of section 11 of the Suits Valuation Act-Whether a party who

invokes a jurisdiction of a Court can complain of prejudice on the

ground of over-valuation or under-valuation.

The policy underlying section ll of the Suits Valuation Act,

as also of sections 21 and 99 of the Code of Civil Procedure, is that

when a case has been tried by a Court on the merits and judgment

rendered, it sh01,1ld not be liable to be reversed purely on technical

grounds, unless a failure of Justice has resulted.

The policy of the

Legislature has been to treat objections

as to jurisdiction, both

territorial and pecuniary,

as technical and not open to

considera­

tion by an appellate Court, unless there has been prejudice on the

merits.

Mere change of form

is not prejudice within the meaning of

section 11 of the

Suits Valuation Act ; nor a mere error in the

decision on the merits of the case. It must be one directly attri­

butable to over-valuation or under-valuation.

Whether there has been prejudice or not is a matter to he

determined on the facts of each case.

The jurisdiction under

se<:­

tion 11 is an equitable one to be exercised, ·when there has been

an erroneous assumption of jurisdiction

by a Subordinate Court as

a result of over-valuation or under-valuation and a consequential

failure

of justice. It is neither possible, nor desirable to define

tiUCh jurisdiction closely or confine it within stated bounds,

1954

Manila[ Mohanlai

Shah arid Others

v.

Sardar Sayed

Ahmed Sajed

Mahmadand

·Another.

1954

April 14.