LORD ATKINSON, LORD MACNAGHTEN, SIR ANDREW SCOBLE, SIR ARTHUR WILSON
body1908
DigiLaw.ai
Judgement Appeal from a judgment of the Chief Court on its appellate side (February 13, 1907) affirming a judgment of the same Court on its original side (June 12, 1906). The appellant sued to set aside a sale to him of the property in suit and prayed that all proceedings to recover the amount bid by him might be stayed. He stated in his plaint that the said property belonged to Kain Choay, the second respondent, but had been attached by the first respondents in execution of a I decree, that the property was subject to a number of charges amounting to Rs. 64,500 and interest, and that at the auction sale he bid for it and it was knocked down to him for Rs. 38,000. The appellant specifically alleged that before the bidding commenced one Hadji Shah Mahomed Ali said that he did not understand the proclamation, which had been read in English, and asked the bailiff what was being sold. The deputy bailiff, Mr. Innes, thereupon said in Hindustani, " There are four mortgages. Therefore the sale takes place by order of Court. The title deeds can be seen at the registrars office." He also alleged that he bid for the property under the bona fide mistaken belief that it was being sold free of the mortgages upon it, that as it was not worth more in any case than Rs. 40,000 he would not have bid anything if he had known that it remained liable to the mortgages, and that under all the circumstances he was desirous of having the sale set aside on the ground of mistake as above mentioned. The execution creditors consented to the sale being set aside, but Kain Choay, the judgment debtor, defended the suit, and in his written statement put the appellant to strict proof of his allegations and submitted that they afforded no ground for setting aside the sale. The trial judge dismissed the suit.
The execution creditors consented to the sale being set aside, but Kain Choay, the judgment debtor, defended the suit, and in his written statement put the appellant to strict proof of his allegations and submitted that they afforded no ground for setting aside the sale. The trial judge dismissed the suit. He considered that, even if the words imputed to the deputy bailiff had been used, "an intimation that the property was to be sold free of mortgages cannot by any process of interpretation be found in them directly or be inferred from them indirectly." He added that they did not prove that the appellant had been induced to buy by misrepresentation, and "consequently there is no proof, or indeed suggestion, that his conduct caused, however innocently, the plaintiff (appellant) to make a mistake as to the substance of the thing which is the subject of the agreement." He held that the contract of sale was not voidable or terminable by the appellant, who had therefore made out no case for relief under s. 35 of the Specific Belief Act, and as for s. 36 of that Act, there was no mistake at all, for the terms under which the property was to be sold were clearly set out in the proclamation, made in the language of the Court as required by s. 287 of the Code of Civil Procedure and previously advertised. Therefore, if the appellant did not take the trouble to ascertain clearly under what terms he was bidding, that was his fault and no one elses, and he must take the consequences of his own carelessness. The Chief Court in appeal found that the appellant was induced to bid for the land by misrepresentation as defined in s. 18, clause 3, of the Indian Contract Act; also that the appellant had been " culpably careless in failing to ascertain the truth in the obvious way, namely, by having the proclamation read and carefully translated to him," and, that being so, the exception to s. 19 of the same Act put him out of Court, and the contract was not voidable by reason of the misrepresentation. Roskill, K.C., and J. W. McCarthy, for the appellant, contended that s. 19 of the Contract Act was not applicable, to the facts. The appellant bid on the terms announced by the deputy bailiff and not otherwise.
Roskill, K.C., and J. W. McCarthy, for the appellant, contended that s. 19 of the Contract Act was not applicable, to the facts. The appellant bid on the terms announced by the deputy bailiff and not otherwise. He was entitled so to do, relying on the announcement, and there was no negligence attributable to him in not inquiring and discovering that the representation so made did not represent the true terms on which the property was for sale. His bidding was for that which the responsible official of the Court stated he was selling; that is, the property at the instance of the mortgagees, which implied that it was sold free of the mortgages. He bona fide, believed him, and there was no want of ordinary or due diligence within the meaning of s. 19 in not proceeding to inquire whether the officer had deceived him. In consequence the parties were not ad idem as to the thing offered and accepted. Reference was made to Redgrave v. Hurd (( 1881) 20 Ch. D. 13, 17.) ; Leake on Contracts, 5th ed., c. 6, s. 2, p. 263; and Morgan v. Government of Haiderabad, (( 1888) I. L. R. 11 Madr. 419.) The respondents did not appear. The judgment of their Lordships was delivered by LORD MACNAGHTEN. Their Lordships regret to say that in their opinion there has been a lamentable miscarriage of justice in this case. It is an appeal from the Chief Court of Lower Burma. It was heard ex parte, but the facts are not open to dispute. At an auction sale in execution held under the direction of the Court the appellant, who had dropped in quite casually, was tempted to bid and was declared the purchaser. The thing put up for sale was knocked down to him for Rs. 38,000. The sale was conducted by two officers of the Court—a Mr. Spencer, who was chief clerk and officiating bailiff, and a Mr. Innes, his deputy, who was the auctioneer. Mr. Innes read the pro clamation in English, a language which no native present seems to have understood. It stated clearly enough that only the interest of the judgment debtor was for sale. Then, in answer to a native who asked what the proclamation said, Mr.
Innes, his deputy, who was the auctioneer. Mr. Innes read the pro clamation in English, a language which no native present seems to have understood. It stated clearly enough that only the interest of the judgment debtor was for sale. Then, in answer to a native who asked what the proclamation said, Mr. Innes made a statement in the vernacular to the effect that the land was being sold at the instance of the mortgagees. The appellant was thus led to believe that the invitation was an invitation to bid for a substantial property freed and discharged from all incumbrances. In the result he found himself the purchaser of a shadowy equity of redemption not worth one farthing. The value of the lot unencumbered was not more than Rs. 45,000. The charges upon it were over Rs. 64,000. As soon as the appellant realized his position he explained to Mr. Spencer that he had bid for the property under a misapprehension. Mr. Spencer reported to the Court that the appellants statement was supported by Mr. I. Sofaer and Mr. Hadji Shah Mahomed, the other two bidders at the sale, whom he had sent for and questioned. They too, it seems, were under the same misapprehension. He added that, as their statements appeared to be perfectly genuine, and as the property in his opinion was not worth more than from Rs. 40,000 to Rs. 45,000 at the most, he thought it his duty to refer the matter to the Chief Court for orders whether, under the circumstances, the sale should be set aside and the property put up again. The learned judge to whom the matter was referred declined to interfere. The appellant then applied to the Court to be discharged from his purchase, submitting affidavits which shewed that the mis-apprehension on his part was caused by a misrepresentation on the part of the auctioneer. Owing, however, to the opposition of the judgment debtor—though there was no opposition on the part of any one else—it was thought advisable to proceed by a regular suit. The learned judge of first instance dismissed the suit. Then there was an appeal to the Chief Court. The two learned judges who formed the Court of Appeal were both satisfied that the appellant did bid for the property under a misapprehension, and that the misapprehension was caused by a misrepresentation made by the auctioneer.
The learned judge of first instance dismissed the suit. Then there was an appeal to the Chief Court. The two learned judges who formed the Court of Appeal were both satisfied that the appellant did bid for the property under a misapprehension, and that the misapprehension was caused by a misrepresentation made by the auctioneer. But they both held that the appellants claim to relief failed for a reason which was not even suggested in argument either before the Court of Appeal or before the Court of first instance. They held that, although there was a misrepresentation as defined by s. 18, clause 3, of the Indian Contract Act, the case fell within the exception in s. 19, which provides that in case of "consent caused by misrepresentation " the contract is not voidable if the party whose consent is so caused had the means of discovering the truth with ordinary diligence. " To my mind," says one of the learned judges, "the appellant had such means. He could have gone to the Court and could have ascertained the exact conditions of the sale. He could have read the advertise ment in the newspaper. Further, the conditions were read out in English at the sale." No doubt the conditions were read out at the sale, and in English. But the appellant speaks and understands nothing but Hindustani. English is an unknown tongue to him. The other learned judge takes the same view. He finds that the appellant was " culpably careless in failing to ascertain the truth in the obvious way, namely, by having the proclamation read and carefully translated for him." It is plain from these remarks that the negligence for which the learned judges condemn the appellant is want of prudence in embarking so rashly on a transaction so important. The appellant had no means of discovering the truth when the auction was going on. He was perfectly justified in relying on what was said by the auctioneer in the presence and hearing of the chief clerk who had charge of the sale. The exception in s. 19 of the Contract Act has no application to the case; and there is no defence to the suit. So the matter would have stood if the question had arisen between outsiders and the Court had had no concern in the matter beyond the duty of exercising its judicial functions.
The exception in s. 19 of the Contract Act has no application to the case; and there is no defence to the suit. So the matter would have stood if the question had arisen between outsiders and the Court had had no concern in the matter beyond the duty of exercising its judicial functions. But over and above all this there is involved in this case a principle of supreme importance which the learned judges of the Chief Court entirely disregarded. It has been laid down again and again that in sales under the direction of the Court it is incumbent on the Court to be scrupulous in the extreme and very careful to see that no taint or touch of fraud or deceit or misrepresentation is found in the conduct of its ministers. The Court, it is said, must at any rate not fall below the standard of honesty which it exacts from those on whom it has to pass judgment. The slightest suspicion of trickery or unfairness must affect the honour of the Court and impair its usefulness. It would be disastrous, it would be absolutely shocking, if the Court were to enforce against a purchaser misled by its duly accredited agents a bargain so illusory and so un-conscientious as this. Their Lordships are somewhat surprised to find that the learned judges have nothing to say on this aspect of the case. They are still more surprised at the moral lesson which the presiding judge draws from the story of this auction. He points out that the appellant made no investigation into the title beforehand and that he had absolutely nothing to depend upon but the announcement of the auctioneer, and his conclusion is that the appellant " richly deserved to lose heavily over the transaction." Mr. Spencer was of course wrong in not keeping a stricter watch on the proceedings of his subordinate, but he was perfectly right in referring the matter to the Court. Both Courts censure him for not having proceeded under s. 306 of the Civil Procedure Code. But that course was out of the question. If the truth had been published, nobody but a lunatic would have bid on the property being put up again. If the truth had been kept back there would have been a gross and deliberate fraud.
Both Courts censure him for not having proceeded under s. 306 of the Civil Procedure Code. But that course was out of the question. If the truth had been published, nobody but a lunatic would have bid on the property being put up again. If the truth had been kept back there would have been a gross and deliberate fraud. In either case a claim against the present appellant would have been both dishonest and futile. Their Lordships think that the appeal should be allowed, the order of the Court of Appeal and the judgment of the Lower Court discharged with costs, to be paid by the judgment debtor, and a decree made setting aside the sale with costs against the judgment debtor. Their Lordships will therefore humbly advise His Majesty accordingly. The judgment debtor must pay the costs of the appeal.