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1961 DIGILAW 192 (KER)

Govinada Kymal v. Velu

1961-07-06

M.MADHAVAN NAIR

body1961
Judgment :- 1. The judgment-debtor's property having been sold in execution on June 6, 1956, petition to set aside the sale under 0.21, R.90 was filed in due time, and thereby its confirmation was averted. On September 11, 1956 the Travancore-Cochin Indebted Agriculturists Relief Act 3 of 1956 came into force; and on November 8, 1956, the judgment-debtor filed a petition before the executing court to allow him to discharge the decree as per the provisions in that Act and nullify the sale. On November 26,1956, the learned Munsiff found that the defendant has not made out "any material irregularity or fraud in the conduct of the sale," dismissed the petition under 0.21 R.90, held that "merely because the sale was not confirmed the petitioner cannot be considered to have any right in the property sold; by the sale the rights of the petitioner have ceased in the decree-schedule properties; he cannot therefore claim any relief under Act 3 of 1956", and dismissed the latter petition also. The judgment-debtor took the matter in appeal. C.M.A. No. 40 of 1957 was against the order dismissing the petition under 0.21, R.90, and A.S. No. 15 of 1957 against the order disallowing the petition under Act 3 of 1956. The learned District Judge allowed them both. CRP. No. 262 of 1958 is against the order allowing the petition under 0.21, R.90, CPC., and S.A. No. 246 of 1958 is against the order allowing the petition under Act 3 of 1956. 2. It is not denied that the judgment-debtor in the instant case is an agriculturist within the meaning of Act 3 of 1956, or that, if the debt is found to subsist at the commencement of the Act in spite of the unconfirmed court-sale, the judgment-debtor would be entitled to the benefits of the Act to get the decree discharged as per its provisions. 3. Act 3 of 1956 does not provide for setting aside sales held in execution. It defines debt as meaning "any liability in cash or kind, whether secured or unsecured, due from an agriculturist on the commencement of this Act, whether payable under a contract or under a decree or order of a Court, Civil or Revenue, or otherwise " 4. Act 3 of 1956 does not provide for setting aside sales held in execution. It defines debt as meaning "any liability in cash or kind, whether secured or unsecured, due from an agriculturist on the commencement of this Act, whether payable under a contract or under a decree or order of a Court, Civil or Revenue, or otherwise " 4. The material dispute in the case is whether the debt subsists on the date the Act came into force; the judgment-debtor contends that, in spite of the unconfirmed court-safe the decree debt subsists so as to attract Act 3 of 1956; and the decree-holder-auction purchaser maintains that, once the sale had taken place at which with the permission of the court he had set off the decree amount against the purchase money, the decree became satisfied and therefore any further application to have the decree discharged by instalments under Act 3 of 1956 cannot lie. 5. The learned counsel for the appellant laid considerable stress on the provisions of 0.21 R.72, CPC: "(1) No holder of a decree in execution of which property is sold shall, without the express permission of the court, bid for or purchase the property. (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 S.73, be set off against one another, and the Court executing the decree shall enter up satisfaction of the decree in whole or in part accordingly." The contention is that the 'purchase' is made as soon as the court-sale takes place; it does not await a confirmation; on the sale taking place the title to the property vests in the auction purchaser subject only to a later defeasance if an order comes to be made under R.92 (2) of 0.21, CPC; and therefore satisfaction that is mentioned in R.72 has taken place on the date of the sale itself when, as in this case, the decree-holder has purchased the property and been allowed to set off the decree amount against the purchase money. All that R.72 provides is where a decree holder 'purchases' satisfaction of the decree may be entered to the extent of the purchase money. It does not go further and say when the decree-holder is to be taken as having 'purchased' the judgment-debtor's property. All that R.72 provides is where a decree holder 'purchases' satisfaction of the decree may be entered to the extent of the purchase money. It does not go further and say when the decree-holder is to be taken as having 'purchased' the judgment-debtor's property. Guidance has to be looked elsewhere in the provisions of the Civil Procedure Code as to when, exactly the 'purchase' in a court-auction becomes a fact 6. S.65 of the Civil Procedure Code, dealing with the purchaser's title, enacts: "Where immovable property is sold in execution of a decree and such sale has become absolute, the property shall be deemed to have vested in the purchaser from the time when the property is sold and not from the time when the sale becomes absolute." Here the vesting of the property is, related "when such sale has become absolute". It indicates that the purchase becomes a fact when the sale becomes absolute; that is, only when it is confirmed by the court. It follows therefore that the satisfaction of the decree mentioned in R.72 of 0.21 CPC. can be entered only on confirmation of the sale. It may be that on confirmation of sale the property is deemed to have vested in the purchaser from the date of the sale. When a statute asks a fact to be deemed to be, it is only importing a legal fiction. Every fiction connotes a falsity; but that has not only legal sanction behind it, but also the force of a conclusive presumption to support it. As observed by Lord Asquith "If you are bidden to treat an imaginary state of affairs as real, you must surely imagine as real the consequences and incidents which, if the putative state of affairs had in fact existed, must inevitably have flowed from or accompanied it." See Venkatachalam v. Bombay Dyeing & Manufacturing Co. Ltd., (AIR. 1958 SC. 875); Commissioner of Income-tax, Delhi v. Teja Singh (AIR. 1959 SC. 352). Hence, if sale is deemed to have taken place, not on confirmation but on date of sale the satisfaction also, following the same has to be deemed to have taken place on the date of sale. But even then the distinction cannot be overlooked that the sale and the satisfaction take place only on confirmation of the sale, though when that takes place, it takes place with retroaction. But even then the distinction cannot be overlooked that the sale and the satisfaction take place only on confirmation of the sale, though when that takes place, it takes place with retroaction. Such a provision may be necessary, because once the sale has taken place in which the purchase money had been equal to or more than the decree amount no further execution is contemplated by the Code of Civil Procedure. It may be that in actual events confirmation may come to be only long after the date of the court-sale and till then the purchase money will lie idle in court. If the purchaser is not to be prejudiced by the delay in the confirmation of the sale, the title has to be related back to the date of the sale leaving the purchaser to claim mesne profits, if so advised, for all the period from the date of the sale. 7. The learned counsel for the appellant relied on Akbar Ali Fida Hussain v. Sobharam Motiram Parwar (AIR. 1939 Nagpur 282) to show that "the proceedings for confirmation of sale are not proceedings in respect of the debts." This dictum apparently supports the contention of the learned counsel for the decree-holder. But no indication is given in that judgment how their Lordships arrived at that conclusion. Earlier in that judgment it is observed: "Once the debt has merged in the decree and matters have reached a stage in which it is no longer in the judgment-debtor's power to recall the sale, we are unable to regard proceedings from that point on as relating to the debt. They may or may not relate to the execution, discharge or satisfaction of the decree, but they cease to have effective connection with the debt." Here, their Lordships seem to make a distinction between proceedings in execution, discharge or satisfaction of the decree, and proceedings in connection with the decree-debt. I must confess my inability to follow this distinction. In my humble view, a proceeding relating to execution, discharge or satisfaction of the decree is necessarily a proceeding in connection with the debt in the decree; and the satisfaction of the decree' is an expression without any significance in the case of money decrees unless the satisfaction be of the debt covered by the decree. In my humble view, a proceeding relating to execution, discharge or satisfaction of the decree is necessarily a proceeding in connection with the debt in the decree; and the satisfaction of the decree' is an expression without any significance in the case of money decrees unless the satisfaction be of the debt covered by the decree. If it was this distinction that led their Lordships to the conclusion mentioned above, I regret I have to respectfully dissent from that dictum. This High Court has already taken a definite view that a proceeding for confirmation of a court-sale is part of the proceeding 'to execute the decree'. See Kannan v. Krishnan Nair (1958 KLT. 669). If execution of the decree is continued till confirmation of sale, the decree cannot be said to be satisfied or the liability to be extinguished before such confirmation. 8. A reading of several other provisions of the Code of Civil Procedure also leads to the same inference. The Code as amended in the State of Travancore-Cochin, under which the instant sale was held, provided in its 0.21, R.89 thus: "Where immovable property has been sold in execution of a decree, any person either owning such property or holding an interest therein by virtue of a title acquired before or after such sale may apply to have the sale set aside on his representing in court. Here, obviously, an acquisition of title "after such sale" is contemplated. It necessarily indicates that the judgment-debtor is capable of passing a title to the property by a conveyance executed after the court-sale has taken place. If title to the property has vested in the auction-purchaser on the date of the sale and all that remained with the judgment-debtor was a right of action to set aside the sale under 0.21, R.89 or 90, which itself is not transferable as per S.6 of the Transfer of Property Act, how can the judgment-debtor convey a title to the property after the court-sale at all? It cannot be assumed that 0.21, R.89 has made a provision in derogation of the rules of the Transfer of Property Act. It does not advert to any conveyances as such; it only says that a person deriving title under a conveyance executed after the sale is entitled to have the sale set aside by making the proper deposit in Court. It does not advert to any conveyances as such; it only says that a person deriving title under a conveyance executed after the sale is entitled to have the sale set aside by making the proper deposit in Court. It is clear therefore that the title to the property remains with the judgment-debtor even after the sale and before the confirmation is made. And, if property does not pass to the auction purchaser, no question of satisfaction of the decree by such purchase arises; and the consequence must be that the decree debt subsists as a fact till the vesting is effected by confirmation of the sale. 9. 0.21, R.89 contains another indication as it requires deposit being made "for payment to the decree-holder" of the amount "for the recovery of which the sale is ordered". It is not disputed before me that, even in a case where the auction purchaser at an execution sale is the decree-holder himself, the provision of 0.21, R.89 is available to the judgment-debtor. If by the sale the decree has become satisfied on the date of the sale itself, there cannot be any provision for a subsequent payment to the decree-holder of the amount "for the recovery of which the sale was ordered" which is nothing other than the decree debt itself. 10. The learned counsel for the respondent-decree-holder relied on three rulings of the Madras High Court reported in Bhyraraju Ramaraju v. Pulavarthi Lakshmiah (AIR. 1931 Madras 103), Ponnamchand Chatrabam v. Vijiapu Satyanandam (AIR. 1933 Madras 801) & Murugappa Chettiar v. Ramaswami Chettiar (AIR. 1935 Madras 893), and contended that co instanti the court-sale takes place the decree must be taken to be satisfied. I may at once say that those three cases were cases of rateable distribution. No question of satisfaction of a decree as such arose in any of them. In the first of those cases, the decree-holder who brought the judgment debtor's property to sale purchased for his decree amount, with permission to set off under R.72 of 0.21 CPC. Ten days after the sale another decree-holder applied for execution of his decree and claimed rateable distribution of the sale proceeds. In the first of those cases, the decree-holder who brought the judgment debtor's property to sale purchased for his decree amount, with permission to set off under R.72 of 0.21 CPC. Ten days after the sale another decree-holder applied for execution of his decree and claimed rateable distribution of the sale proceeds. In repelling that claim, it was held "the whole of the set off must be deemed as made on the date of the sale and the whole of the amount must be deemed to have been received or realised co instanti the sale is made". S.73, CPC. requires that a decree-holder claiming rateable distribution should have applied for execution of the decree before the concerned assets were received by court. So, in the dictum quoted above the expression "received or realised" refers only to receipt or realisation by the court, and not by the decree-holder; nor does it indicate a receipt in satisfaction of the decree. When the court receives or realises the judgment-debtor's assets, such assets do not change in character. They continue to be judgment-debtor's assets unless and until an order is made to disburse the same to a :decree-holder. Ponnamchand Chatraban v. Vijiapu Satyanandam (AIR. 1933 Madras 804) followed this ruling in very similar circumstances and concluded "as soon as such decree-holder is declared the purchaser, the set off must be taken as having been made, and S.73 will give no benefits to other decree-holders who apply for rateable distribution after the conclusion of the sale however soon after its conclusion their applications may be made." Murugappa Chettiar v. Ramaswamy Chettiar (AIR. 1935 Madras 893), followed the above two cases and held that decree-holders applying for execution subsequent to the date of the court-sale cannot claim any rateable distribution of the sale proceeds. On the other hand the question was pointedly considered in Nataraja Pillai v. Rangaswamy Karamundar (AIR. 1942 Madras 119). It was held there by Wadsworth,J. and Patanjali Sastri, J. [as he then was]: "It has been argued that by reason of 0.21, R.72, Civil P. C., there is an immediate satisfaction of the decree in a case where the decree-holder has been given leave to set off the purchase money against his decree. 1942 Madras 119). It was held there by Wadsworth,J. and Patanjali Sastri, J. [as he then was]: "It has been argued that by reason of 0.21, R.72, Civil P. C., there is an immediate satisfaction of the decree in a case where the decree-holder has been given leave to set off the purchase money against his decree. This is a contention which it is difficult to maintain not only by reason of decisions to the contrary, but also in view of the provisions of R.89 which enable the judgment-debtor to get such a sale set aside on payment of the amount due together with the solatium to the purchaser. It has not been contended that R.89 does not apply to a sale to a decree-holder, and in such a case, it seems to follow that the decree cannot be regarded as satisfied so long as the judgment-debtor can proceed under R.89. There are, moreover decisions which to our minds show conclusively that the decree is not satisfied in such a case as this until the sale has been confirmed; for example, 33 Bom. 311, 41 All 526 and the decision of the Privy Council in 12 Pat. 305, which, though it relates to an income-tax matter, decide quite clearly on the basis of the Civil Procedure Code that the date on which the proceeds of the sale are received in such a case by the decree-holder is the date of the confirmation and not the date of the sale." To the same effect is Megha Ram v. Moti Ram (AIR. 1944 Lahore 325), where the question was "whether the decree can be said to have been satisfied although the sale in favour of the decree-holder was not confirmed" and the contention was that "as the decree-holder had purchased the property with the permission of the court under 0.21 R.72, CPC. and was therefore entitled under sub-rule [2] of that rule to have the amount due under the decree set off against the purchase money, the decree may be considered to have been wipe off, at least conditionally before the confirmation of the sale" Abdur Rahman, J., with the concurrence of Harries, J., held: "I do not find myself in agreement with the contention that the execution proceedings are not pending "in respect of any debt" after the sale has been held but not confirmed. Nor do I agree that the debt due under the decree can be held to have been temporarily wiped off by the auction sale. It cannot be held to have been realised until the sale has been confirmed and there seems to be no provision of law that would entitle one to hold a debt to have been wiped off only temporarily The fact that the decree-holder happens to purchase the property himself in execution does not make him entitled to the property before confirmation although his title may relate back to the date of the sale if it is eventually confirmed by the Court. The position would, in my judgment, be the same if the decree-holder himself has not purchased the property but a third party has. The purchase price would in that case remain deposited in Court and as long as the sale is not confirmed, the decree-holder would not be entitled to withdraw the money and the decree could not be held to be satisfied." 11. Above all, the Judicial Committee of the Privy Council, in Raghunandan Prasad Singh v. Commissioner of Income-tax (AIR. 1933 P.C.101) has, after adverting to the provisions of 0.21, R.72 CPC. considered the question when the decree amount shall be deemed to have been realised: "Is it the date of decree, the date of sale, the date of confirmation of sale, or the date of delivery of possession?" Their Lordships came to the conclusion: "The answer of the Commissioner and of the High Court was that the profits must be deemed to have arisen on the confirmation of sales, i. e. on the 18th and 21st December, 1925, and their Lordships are of the same opinion. The decree is only a step towards realisation, and the date of the decree is therefore plainly not the date of realisation. Nor on the date of the sale does the purchaser obtain an indefeasible right, for under 0.21, R.89, 90 and 91 the sale may be set aside on various grounds. It is only where no application is made under these rules or where such application is made and disallowed that the Court under 0.21, R.92, makes an order confirming the sale, whereupon'the sale shall become absolute". It is then that the process of realisation is completed and any profit or income is realised by the decree-holder. It is only where no application is made under these rules or where such application is made and disallowed that the Court under 0.21, R.92, makes an order confirming the sale, whereupon'the sale shall become absolute". It is then that the process of realisation is completed and any profit or income is realised by the decree-holder. This is so whether the property is purchased by the decree-holder himself or by a third party, for the right of set-off conferred on the purchasing decree-holder must also be dependent on the sale being rendered absolute by confirmation. No doubt S.65 of the Code provides that 'where immovable property is sold in execution of a decree and such sale has become absolute the property shall be deemed to have vested in the purchaser from the time when the property is sold and not from the time when the sale becomes absolute', but this provision does not come into operation unless and until the sale has become absolute. The actual date of realisation is not affected by this retrospective vesting of the property." 12. In Joseph v. Kerala Service Bank Ltd., (1961 KLT. 215) a Division Bench of this Court has also followed the dictum in AIR. 1933 Privy Council 101 and held that the judgment-debtor, retains "interest in the immovable property which has been sold in court auction and the sale of which has not been confirmed." And if the title to the property has not passed to the auction purchaser, the decree would not be satisfied by the unconfirmed court-sale. 13. It follows therefore that on the date the Travancore-Cochin Act 3 of 1956 came into force the decree debt in the instant case was subsisting as a liability of the judgment-debtor and therefore the petitioner was entitled to have it discharged as per the beneficial provisions of that Act. The S.A. No. 246 of 1958 fails; and the order of the court below is accepted. 14. In view of the fact that the judgment-debtor has been allowed to have the decree discharged under Act 3 of 1956, no question of confirmation of the sale arises in this case. The petition under 0.21 R.90 has therefore become infructuous and is hence dismissed. 15. As both parties have taken untenable contentions, the parties are directed to bear their respective costs in these proceedings throughout.