Thakarlal v. Rama — 1960 DIGILAW 216 (RAJ)

JAGAT NARAYAN J.—This purports to be a second appeal by one Thakarlal, an auction purchaser who purchased some immovable property at an auction sale held on 30.4.48 for Rs. 8300/-. The sale took place in execution of the decree of Smt. Rama respondent No.1 against Smt. Gulab respondent No. 4. Ram Chandra respondent No. 2 and Gulabchand respondent No. 3 also held decrees against Smt. Gulab and the assets received as a result of the sale of the above property were ratcably distributed amongst Smt. Rama, Ram Chander and Gulab Chand. Thakarlal auction purchaser was put in possession of the immovable property shortly after the confirmation of the sale which took place on 10.7.48. 2. During the pendency of the proceedings in execution of the decrees of Smt. Rama, Ramchander and Gulab Chand Ladulal instituted a suit for possession over the immovable property which was attached in execution of Smt. Ramas decree in 1945. In this suit he claimed that he was the adopted son of Smt. Gulabs deceased husband Kesharlal. Smt. Rama, Ram Chander and Gulab Chand were impleaded as defendants in the suit. This suit was pending when the present auction sale took place. After it was confirmed Thakarlal auction purchaser was also impleaded as a party to the suit. The suit was decreed by the trial court on 6.1.49. The appeal preferred against the decree by the defendants was dismissed on 8.1.51. On 1.4.51 Ladukl was put in possession of the immovable property, sold in execution of the decree against Smt. Gulab and Thakarlal was thereby dispossessed. He then filed the present application on the 23.4.51 to the executing court under secs. 47, 144 and 151 C.P.C. against the three decree-holders praying that they may be ordered to refund the purchase money to him. The sole ground on which the application was based was that is was discovered after the confirmation of the sale that the judgment-debtor had no saleable intere;t in the property. The executing court dismissed it holding that there was no warranty of title at a court sale and that after the sale was confirmed the auction purchaser had no right to get the refund of the purchase money. Against this order Thakarlal preferred an appeal to the District Judge who confirmed the decision of the executing court. 3. The executing court dismissed it holding that there was no warranty of title at a court sale and that after the sale was confirmed the auction purchaser had no right to get the refund of the purchase money. Against this order Thakarlal preferred an appeal to the District Judge who confirmed the decision of the executing court. 3. The main question which arises for determination in this case is whether the auction purchaser is entitled to recover back the purchase money from the decree-holder after the confirmation of sale if it is discovered that the judgment-debtor has no saleable interest in the property merely on the ground of such discovery. 4. On this question there is a divergence of judicial opinion amongst the High Courts in India. The High Courts of Calcutta, Bombay, Allahabad and Patna are of the view that he is not entitled to do so. The Madras High Court and the Punjab High Court have taken a contrary view. The former Chief Court of Oudh had taken a similar view. The following are the leading cases on the point—Raja Risheecase Vs. Manik Molla (1) AIR 1926 Cal., 971(D.B.), Santimnappa Vs. Balbhim Co-op, Credit Society(2) AIR 1950 Bombay 313(D.B.) Amar Nath Vs. Firm Chotelal(3) AIR 1938 Allahabad 593(F.B.), Kameshwar Singh Vs. Bansidhar Marwari (4) AIR 1937 Patna 532(D. B.), Macha Koundan Vs. Kottora Koundan (5) AIR 1936 Madras, 50(F.B.), Mehr Chand Vs. Milkhi Ram(6) AIR 1932 Lahore 401(F.B.), Bahadur Singh vs. Ram Phal(7) AIR 1930 Oudh I48(F.B.). I am in respectful agreement with the former view and fully subscribe to the reasoning given in the Bombay and Allahabad cases cited above. In these two cases the reasons which appealed to the learned Judges who decided the Madras and Lahore Full Bench cases referred to above have been considered in detail. 5. The decision turns on the question whether there is any implied warranty of title at a court sale. In England under the Common law there was no warranty of title even at a private sale. The law in India was the same before the enactment of the Transfer of Property Act in 1882 as courts in this country administered justice in accordance with the rules of English Common law in the absence of any statutory law. 6. In England under the Common law there was no warranty of title even at a private sale. The law in India was the same before the enactment of the Transfer of Property Act in 1882 as courts in this country administered justice in accordance with the rules of English Common law in the absence of any statutory law. 6. With the enactment of the Transfer of Property Act warrant of title was implied at a private sale but the doctrine of caveat emptor continued to apply to court sales. In this connection the following decisions of the Privy Council may be referred to—Sowdamini Chowdrain Vs. Krishna Kishore(8) 4 Bengal L. R. 11, Ran Tuhul Singh Vs. Biseswarlall(9) 2 I. A. 131, Dorab Ally Khan Vs. Executors of Khajah Moheeooddeen (10) ILR 3 Calcutta 806. These deci$ions were no doubt given in cases instituted on the original side of the High Court which were not governed by the Code of Civil Procedure. But the Civil Procedure Code of 1859 did not contain any provision from which any warranty of title at a court sale could be inferred. So long as that Code was in force therefore there was no warranty of title at an auction sale held under the Code of Civil Procedure. 7. That Code was replaced by the Code of 1877, in which a new provision was enacted which entitled the auction purchaser to a refund of the purchase money in case it was found that the judgment debtor had no saleable interest in the property sold. The Code of 1877 was replaced by the Code of 1882 which contained a similar provision. Section 315 of it ran as follows: — "When a sale of immovable property is set aside under sec. 312 or sec. 313, or when it is found that the judgment-debtor had no saleable interest in the property which purported to be sold, and the purchaser is for that reason deprived of it, the purchaser shall be entitled to receive back his purchase money (with or without interest as the Court may direct) from any person to whom the purchase money has been paid. The repayment of the said purchase money and of the interest (if any) allowed by the Court may be enforced against such person under the rules provided by this Code for the execution of a decree for money." The present Code which was enacted in 1908 however contains no corresponding provision. 8. Under the present Code the auction purchaser has a right to have the sale set aside under O. 21 R. 91 on the ground that the judgment-debtor has no saleable interest in the property by making an application within 30 days of the date of sale as provided under Art. 166 of the Limitation Act. Where such application is made and is allowed the purchaser is entitled to an order for repayment of his purchase money against any person to whom it has been paid (O. 21 R. 93). If however no such application is made, or if made is disallowed and the sale is confirmed, it becomes absolute and cannot be set aside even by suit at the instance of the auction purchaser (O. 21, R. 92). 9, The Full Bench cases of the Madras and Lahore High Courts proceeded on the assumption that the auction purchaser had a right to obtain a refund of his purchase money if there was no saleable interest of the judgment-debtor in the property. It was stated that sec. 315 of the Code of 1882 merely recognised the right which already existed and conferred a summary remedy on the auction purchaser to enforce it. As was pointed out in the Alld. case(3) referred to above the source of this right was not pointed out by the learned Judges who decided those leases. As I have pointed out the auction purchaser had no such right at Common law. Nor was this right conferred under the Code of 1877 for the first time. It was continued under the Code of 1882 also. The Code of 1908 did not confer such a right. As was pointed out by the learned Judges of the Bombay High Court in the case referred to above, the omission was deliberate and it was intended to take away whatever rights were given by the Codes of 1877 and 1882 in this respect. 10. In the Lahore case(6) the decision of the Privy Council in Kissorimohun Roy Vs. As was pointed out by the learned Judges of the Bombay High Court in the case referred to above, the omission was deliberate and it was intended to take away whatever rights were given by the Codes of 1877 and 1882 in this respect. 10. In the Lahore case(6) the decision of the Privy Council in Kissorimohun Roy Vs. Harsukh Das (1LR 17 Calcutta 436) in which it was held that an illegal attachment under the Code of Civil Procedure is a direct act of the decree-holder for which he is responsible in law was referred to together with the provisions of O. 21 and the forms prescribed in Appendix E Schedule 1 C.P.C. and it was inferred that in a court sale there was representation by the decree-holder that the judgment-debtor had a saleable interest in the property against which he was proceeding in execution. In the execution application which is filed in form No. 6 Appendix E Schedule 1 C.P.C. with regard to the particulars furnished under col. 1 to 10 the decree-holder is required to declare that what is stated therein is true to the best of his knowledge and belief. But with regard to the interest of the judgment-debtor in the immovable property sought to be proceeded against all that the decree-holder is required to declare is that, so far as he has been able to ascertain, his interest in the property is as specified. No publicity is given to the declaration contained in the execution application. Publicity is only given to the sale proclamation which is issued by the court. It is this proclamation which invites bidders to come and bid for the property at the auction sale. Whatever representation is made to the auction purchaser is contained in this sale proclamation. This representation is not made on behalf of the decree-holder. It is made by the court on its own behalf. It is this proclamation which invites bidders to come and bid for the property at the auction sale. Whatever representation is made to the auction purchaser is contained in this sale proclamation. This representation is not made on behalf of the decree-holder. It is made by the court on its own behalf. It is in Form No. 29 Appendix E Schedule 1 C.P.C. The following condition of sale is specifically mentioned in this proclamation: — "The particulars specified in the schedule below have been stated to the best of the information of the Court, but the Court will not be answerable for any error, misstatement or omission in this proclamation." It is thus clear that there is no question of any representation by the decree-holder to the auction purchaser that the judgment-debtor has a saleable interest in the property. 11. The Oudh and Lahore cases have also taken the view that the sale can be rescinded at the instance of the auction purchaser on the ground of mistake. Sec. 20 of the Contract Act lays down that where both parties to an agreement are under a mistake as to a matter of fact essential to the agreement, the agreement is void. It is clear that to attract the provisions of sec. 20 there must be a mutual mistake of the contracting parties. An auction sale cannot be regarded as a sale by the decree-holder in favour of the auction purchaser. It cannot therefore be regarded as a case of mutual mistake. 12. Wazir Hasan J. in the Oudh case(7) referred to another type of mistake on which an action for money had and received could be founded. He has referred to a number of English cases including the following cases. In discussing the nature of an action for money had and received, Lord Mansfield said in Moses Vs. Macferlan : — "This kind of equitable action to recover back money which ought not in justice to be kept, is very beneficial, and, therefore, much encouraged. It lies only for money which ex aequo et bono, the defendant ought to refund. In discussing the nature of an action for money had and received, Lord Mansfield said in Moses Vs. Macferlan : — "This kind of equitable action to recover back money which ought not in justice to be kept, is very beneficial, and, therefore, much encouraged. It lies only for money which ex aequo et bono, the defendant ought to refund. It does not lie for money paid by the plaintiff which is claimed of him as payable in point of honour and honesty, although it could not have been recovered from him by any course of law, as in payment of a debt barred by the statute of limitation, or contracted during his infancy, or to the extent of principal and legal interest upon an usurious contract, or for money fairly lost at play; because in all these cases the defendant may retain it with a safe conscience, though, by positive law, he was barred from recovering: but it lies for money paid by mistake, or upon a consideration which happens to fail, or for money got through imposition (express or implied) or extortion, or oppression, or an undue advantage taken of the plaintiffs situation contrary to laws made for the protection of persons under those circumstances." The decision in Moses Vs. Macferlan was overruled in Marriot Vs. Hampton. 13. In Sinclair Vs. Brougham Lord Summer said : — "There is now no ground left for suggesting as a recognizable equity the right to recover the money in personam merely because it would be the right and fair thing that it should be refunded to the payer." 14. In Re, the Bodega Co. Limited Farwell J. said: — "Lord Mansfield speaking of the action for money had and received in Moses Vs. Macferlam at 1012 says; It lies for money paid by mistake; or upon a consideration which happens to fail The mistake on which you can recover must, as Bramwell, B.. puts it in Aiken Vs. Short at 215 be a mistake as to a fact, which, if true, would make the person paying liable to pay the money: not where, if true, it would merely make it desirable that he should pay the money. puts it in Aiken Vs. Short at 215 be a mistake as to a fact, which, if true, would make the person paying liable to pay the money: not where, if true, it would merely make it desirable that he should pay the money. That I apprehend, means this; if you are claiming to have money repaid on the ground of mistake, you must show the mistake is one which led you to suppose you were legally liable to pay." 15. Now the auction purchaser is not bound to purchase property at an auction sale. His mistake in thinking that the judgment-debtor has a saleable interest in the property does not therefore entitle him to a refund of the purchase money merely on the ground that he subsequently discovers that he had no such interest. It appears to me that money paid under a mistake of fact can only be recovered in the circumstances specified by Farwell J. in the above case. 16. Another aspect of the matter is that a purchaser at an auction sale knows that no one guarantees to him that the judgment-debtor has a good title and he purchases the property with his eyes open and regulates the price which he bids for the property with reference to the circumstances under which he is purchasing and the risk he runs. There seems to be no reason why the decree-holder who is bonafide trying to realise his decree by executing it should be penalised in order to safeguard the interest of the auction purchaser. In case the decree-holder is ordered to refund the money to the auction purchaser he shall have no right to further execution of his decree which has once been satisfied in full. As was pointed out in the Allahabad Full Bench case (3) if the decree-holder perpetrates a fraud on the auction purchaser then certainly the latter would have an independent right of auction to recover the purchase money. 17. In the present case Thakarlal admitted that when he bid for the property at the auction sale he fully knew that a suit about it was pending. Having purchased the property with this knowledge and in the absence of any circumstances showing that the decree-holders in this case did not act bonafide there is no equity in his favour. 18. In the present case Thakarlal admitted that when he bid for the property at the auction sale he fully knew that a suit about it was pending. Having purchased the property with this knowledge and in the absence of any circumstances showing that the decree-holders in this case did not act bonafide there is no equity in his favour. 18. I accordingly hold that the auction purchaser is not entitled to recover back the purchase money from the decree-holders in the present case. 19. Even if the auction purchaser had a right to recover the purchase money after the confirmation of the sale he could not do so on an application. The Code does not contain any provision for it. Nor has sec. 47 any application as the matter is not one between the judgment-debtor and the decree-holder or their representatives. An auction purchaser is no doubt a party to the suit within the meaning of sec. 47. But with regard to the question which arises for determination in the present case the interests of the judgment-debtor and the decree-holder are identical. It is therefore not a matter arising between the parties to the suit within the meaning of sec. 47(1). It may be noted that it is for this very reason that an order under R. 92 of O. 21 is made appealable as an order under O. 43, R. 1(j). 20. Nor is sec. 144 C.P.C. applicable as no decree or order has been varied or reversed. An application under sec. 151 C.P.C. would also not lie. For if the auction purchaser had any such right of recovery, his remedy would be by suit as the Code does not provide for any remedy by an application. Where a party has another remedy open, the court as a general rule does not grant him relief under its inherent powers except in exceptional circumstances. Such exceptional circumstances are the mistake of the court or its officers or the fraud by a party upon it. These circumstances do not exist in the present case. 21. For the reasons given above I am unable to agree with the view taken in Piruji Hazarji Vs. Amrati (AIR 1944 Sind 233) and Jagan Nath Vs. Custodian Property (AIR 1951 Punjab 106). 22. In the result the appeal is dismissed with costs.