Ranbir Singh v. Board of Revenue, U. P. , Lucknow — 1992 DIGILAW 3 (ALL)

ORDER S.R. Singh, J. - This petition under Art. 226 of the Constitution seeks issuance of a writ of certiorari quashing the judgment and order dated 12-4-1985 (Annexure 7 to the writ petition) passed by the Board of Revenue, U.P. Allahabad. In Revision No. 137 LR; 81-82 District Saharanpur. 2. That fact giving rise to this petition are not in dispute. The fourth respondent Sri Rao Mohd. Ahmad Khan being the defaulter of Government dues to the extent of Rs. 23,026.37 was proceeded against for recovery of the said amount as arrears of land revenue and on 11-5-1986 the Collector Saharanpur attached immovable property of the 4th respondent comprising khasra No. 162, Mohal Small Khan, Khewat No. situate in village Palhanpur in Tehsil and district Saharanpur. The said property was put to auction on 18-10-1973. The petitioner too offered his bid which being the highest for Rs. 31,500/-, the hammer fell in his favour. The Sale Officer taking the bid to be the reasonable accepted the same and directed the petitioner to deposit the 25% of the bid money at once and rest within 15 days by his order dated 18-10-1973, as is evident from the auction memo (Furd Nilami). 3. It is averred in paragraph 3(b) of the writ petition that the petitioner wanted to deposit the th of the bid money in cash, but the concerned Sale Officer having full satisfaction of the financial position of the petitioner directed him to make the payment by cheque for the sake of convenience and in pursuance of the said direction the petitioner made the deposit of Rs. 8,000/- by means of a cheque which was encashed and accounted for in Tehsil account on 22-10-1973 and the balance of the bid money amounting to Rs. 23,500/- was deposited in cash on 30-10- 1973 well within time stipulated by Rule 285- E of the U.P.Z.A. and L.R. Rules, 1952 (in short the Rules). The 4th respondent, however, filed an objection on 17-11-1973 for setting aside the auction sale, inter alia, on the grounds that th of the bid money was not deposited as required by law and that the auction was fictitious and collusive in that the same very property when put to auction earlier in 1969 the highest bid offered was Rs. The 4th respondent, however, filed an objection on 17-11-1973 for setting aside the auction sale, inter alia, on the grounds that th of the bid money was not deposited as required by law and that the auction was fictitious and collusive in that the same very property when put to auction earlier in 1969 the highest bid offered was Rs. 55,000/-, but the same was rejected by the Sales Officer, Saharanpur on the ground of the bid money being meagre as compared to the value of the property, whereas the sub-sequent auction giving rise to this petition held in 1973 could fetch only Rs. 31,500/- as the highest price due to collusion of Tehsil Authorities with the petitioner. 4. The objection filed by the 4th respondent was rejected and the sale held on 18-10- 1973 in favour of the petitioner as aforesaid was confirmed by the Collector vide order dated 9-5-1974. The revision filed against the said order was recommended by the Commissioner, Meerut Division, Meerut to the Board of Revenue for dismissal. But the Board of Revenue vide its order dated 31-5-1977 remanded case back to the Commissioner for deciding the revision himself. The Commissioner by order dated 25-5-1978 dismissed the revision on merits. It was held by the Commissioner that no material irregularity was committed in the publication and the conduct of the auction sale nor was it proved that the 4th respondent who was applicant before the Commissioner had sustained any substantial injury by reason of any of the alleged irregularities or mistakes. The order dated 25- 5-1978 was, however, set aside in the revision under S. 333 of the U. P.Z. A. and L.R. Act by the Board of Revenue vide its order dated 12-4-1985 on the ground that the deposit of th of the bid money by means of cheque was not a valid deposit within the meaning of R. 285-D of the Rules and the sale was therefore, void. It is the validity of this order which has been challenged by means of this petition under Art. 226 of the Constitution. 5. I have heard Sri Banarsi Das, learned counsel for the petitioner and Sri G. N. Verma, learned counsel for the respondent No. 4 at some length. 6. It is the validity of this order which has been challenged by means of this petition under Art. 226 of the Constitution. 5. I have heard Sri Banarsi Das, learned counsel for the petitioner and Sri G. N. Verma, learned counsel for the respondent No. 4 at some length. 6. The questions that arise for consideration in this writ petition are : (1) whether non-deposit of 25 per cent of the bid money immediately after the bidder was declared purchaser by the Sale Officer as required under R. 285-D of the Rules rendered the sale a nullity, and (ii) whether `deposit' within the meaning of the rule comprehends deposit in cash only and not a deposit by cheque which being not an immediate deposit amounts to committing default within the meaning of the rule attracting the consequences provided therein. 7. In order to appreciate the questions involved in this petition, I deem it necessary to quote the related Rr. 285-D to 285-I of the Rules as below for ready reference : "285-D. The person declared to be the purchaser shall be required to deposit immediately twenty five per cent of the amount of his bid and in default of such deposit the land shall forthwith be again put up and sold and such person shall be liable for the expenses attending the first sale and any deficiency of price which may occur on the re-sale which may be recovered from him by the Collector as if same were an arrear of land revenue...... 285-E. The full amount of purchase money shall be paid by the purchaser on or before the fifteenth day from the date of the sale at the district treasury or any sub treasury and in case of default the deposit, after the expenses if sale have been defrayed therefrom, shall be forfeited to Government and the property shall be sold and the defaulting purchaser shall forfeit all claims to the property, or to any part of the sum for which it may be subsequently sold. , 285-F. If the proceeds of the sell which is eventually made are less than the price bid by such defaulting purchaser, the difference shall be recoverable from him as if it were an arrear of the revenue. , 285-F. If the proceeds of the sell which is eventually made are less than the price bid by such defaulting purchaser, the difference shall be recoverable from him as if it were an arrear of the revenue. 285-G. No sale after postponement under R. 285-A, 285-D or 285-E in default of payment of the purchase money shall be made until a fresh proclamation has been issued as prescribed for the original sale. 285-H. (1). Any person whose holding or other immovable property has been sold under the Act may at any time within thirty days from the date of sale, apply to have the sale set aside on his depositing in the Collector's office. (a) for payment to the purchaser, a sum equal to 5 per cent of the purchaser money; and (b) for payment on account of the arrear, the amount specified in the proclamation in Z.A. from 74 as that for the recovery of which the sale was ordered, less any amount may since the date of such proclamation of sale, have been paid on that account; and (c) the costs of the sale. On the making of such deposit, the Collector shall pass an order setting aside the same : Provided that if a person applied under R. 258-I to set aside such sale he shall not be entitled to make an application under this rule. 285-I. (i) At any time within thirty days from the date of the sale, application may be made to the Commissioner to set aside the sale on the ground of some material irregularity or mistake in publishing or conducting it; but no sale shall be set aside on such ground unless the applicant proves to the satisfaction of the Commissioner that he has sustained substantial injury by reason of such irregularity or mistake." 8. The provisions of law enacted in rules 285-D and 285-E regarding deposit of th of the bid money immediately after a person is declared to be the purchaser and the payment of the full amount of purchase money on or before the fifteenth day from the date of the sale at the district treasury or any sub-treasury and the consequences of default in making the deposit of 25% of the amount of the bid and the payment of the full amount of purchase money within the stipulated period, are in pari materia with the provisions of law contained in Rr. 84(1) and 85 of O.21 of the Code of Civil Procedure. In Main Lal Mohan Lal v. Sayed Ahmad, AIR 1954 SC 349 , the Hon'ble Supreme Court had an occasion to consider the provisions enacted in R. 84(1) and 85 of O. 21 of the Code of Civil Procedure and it has laid down that the provisions regarding deposit of th of the bid money by the highest bidder immediately after he is declared to be the purchaser under O.21, R. 84 (1) C.P.C. is mandatory. It was held in this case as under : "Having examined the language of the relevant rules and the judicial decisions bearing upon the subject we are of the opinion that the provisions of rules 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 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 contemplation of these rules, there can be no question of material irregularity in the conduct of 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. 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 rights at all." 9. In Mool Chand v. Collector, Jalaun, AIR 1982 All 141 a Division Bench of this Court held that the provisions contained in R. 285-D and 285-E of the Rules are in pari materia with Rr. 84 and 85 of O. 21 of the Code of Civil Procedure and that these rules are mandatory and further that the Execution Court or the Officer conducting sale is not vested with any jurisdiction to extend the period provided for making these deposits. The Division Bench ruled that 25% of the bid money is to be deposited immediately after the declaration of the person to be purchaser and the balance amount of the purchase money payable has to be paid on or before the 15th day of the date of sale and that non-payment of price would render the sale proceedings as a complete nullity. Similar was the view expressed by another Division Bench of this Court in Narendra Prakash Goel v. State of U.P. Civil Misc. Writ Petition No. 11 of 1980, decided on 23-9-1981. 10. A conspectus of the rules and the relevant authorities referred to hereinbefore would make it abundantly clear that the deposit of 25% of the amount of his bid by the purchaser immediately after he is declared to be the purchaser is a must to avoid the ensuing of the consequences of non-deposit enumerated in R. 285-D of the Rules and similarly the payment of the balance of the purchase money within the stipulated period is a must to avoid re-sale and forfeiture of the deposit already made together with the forfeiture of all claims to the property or any part of the sum for which it may subsequently be sole as contemplated by R. 285-E. 11. The crucial question for consideration, however is as to whether the terms `deposit' and `paid' occurring in Rr. The crucial question for consideration, however is as to whether the terms `deposit' and `paid' occurring in Rr. 285-D and 285-E respectively comprehend the deposit or payment by cheque. The cheque is defined in S. 6 of the Negotiable Instruments Act, 1881 as `A bill of exchange drawn on a specified banker and not expressed to be payable otherwise than on demand.' A bill of exchange is defined in S. 5 of the said Act as "An instrument in writing containing an unconditional order, signed by the maker, directing a certain person to pay a certain person or to the bearer of the instrument." In substance, therefore, a cheque is an instrument in writing, containing an unconstitutional order, signed by the maker, directing a specified banker to pay on demand, a certain sum of money only to or to the order, a certain person or to the bearer of the instrument, Sir Lawrence Jenkins said in Kedar Nath Mitra v. Dinabandhu Saha, (1915) ILR 42 Cal 1043: "It seems to me clear that if a cheque be delivered to a payee by way of payment and is received as such by him, it operates as payment and is an extinguishment to that extent of the debt, though this is no doubt subject to condition subsequent that if upon due presentation the cheque is not paid, the original debt revives." 12. There are decided cases to the effect that when a cheque is accepted at conditional payment, on fulfilment of the condition, i.e. on the cheque being duly cashed on presentation, the payment relates back to the time when the cheque was given, and takes effect ab initio. In Commissioner of Income-tax v. Ogale Glass Works Ltd., (1954) 25 Comp. Cas 520, the Hon'ble Supreme Court has held as under: "The position, therefore, is that in one view of the matter there was, in the circumstances of this case, an implied agreement under which cheques were accepted unconditionally and, on another view, even if the cheques were taken conditionally, the cheques not having been dis-honoured but having been cashed, payment related back to the dates of the receipt of the cheques and in law the dates of payment were the dates of the delivery of the cheques." 13. The above proposition of law as to the payment by cheque relating back to the time when the cheque was given may not apply to a post dated cheque as was held in the majority judgment of the Supreme Court in Jeevan Lal Acharya v. Rameshwar Lal Agrwalla, 1967 SC 1118, but it applies on all fours to the present case. 14. The Privy Council had, in Arsen A. Larpeque v. Hyaciuthe Beachemin, 1897 AC 358 to consider a some what similar,question and while doing so the following passage from the judgment of James, L. J. in Reharmony and Montaque Tin and Copper Mining Co. Spargo's case (1873) 8 Ch 407 was quoted with approval by Lord Macnaghten : "It was said by Lord Chancellor and we entirely concurred with him that it could not be right to put any construction upon that Section (Section 25 of the Companies Act, 1867) which would lead to such an absured and unjustifiable result as this, than an exchange of cheque would not be payment in cash, or that an order upon a banker to transfer money from the account of company would not be a payment in cash." 15. The passage extracted above was found to be apposite by the Hon'ble Supreme Court in Sitaram Jhunjhunwala v. Bombay Bullian Association, AIR 1965 SC 1628 and it was held that, "where a payment was made by a cheque drawn on an account with Bullian Exchange Sub-Branch and the amount represented by cheque was transferred to Clearing House Account of the Association, it is virtually a payment in cash, though in form a payment by cheque." 16. On the face of the above authorities it is difficult for me to accept the contention of the learned counsel for the respondent that the payment of 25% of the bid money in the instant case by cheque on 18-10-1973 which was admittedly cashed on (and) accounted for in Tahasil account on 22-10-1973, was not a deposit within the meaning of R. 285-D of the Rules. 17. In Ram Babu Mehrotra v. Hanuman Singh, 1988 RD 405, it was held that, deposit of 25% of the bid money by cheque under O. 21, R. 84, C.P.C. was a valid deposit. 17. In Ram Babu Mehrotra v. Hanuman Singh, 1988 RD 405, it was held that, deposit of 25% of the bid money by cheque under O. 21, R. 84, C.P.C. was a valid deposit. In the said case auction purchaser deposited 25% of the bid by cheque which was subsequently withdrawn by the auction purchaser three days after the auction sale with the permission of the Court and in its place the amount was deposited in cash. It was held that-the requirement of O. 21, R. 84, C.P.C. was complied with and the auction sale was held to be valid. 18. In R.C. Spg. 4 Wvg. Mills v. Bijli Cotton Mills, AIR 1967 SC 1344 , the Hon'ble Supreme Court has placed reliance upon its earlier decision in Mani Lal Mohan Lal v. Sayed Ahmad, AIR 1954 SC 349 and held that Rr. 84 and 85 of O. 21 being mandatory, if they are not complied with, there would be sale at all and the court is bound to order re-sale. In the said case auction was held on September 10, 1962. M/s. Bijli Cotton (P) Ltd. Hathras was held to be the highest bidder for Rs. 2,45,000/-. The appellant M/s. R. C. Spg. and Wvg. Mills. "challenged the auction sale alleging that the Amin had not realised th of the sale proceed immediately after the said auction was closed as required by O. 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 O. 21, R. 84, C.P.C. before the Civil Judge, Aligarh. The 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 to deposit in the treasury. He also alleged that the Amin wanted to know whether he would accept cheque instead of cash and, therefore, took Chhote Lal, his representative, along with him to the residence of Munsif, Hathras, to take direction. Leaving Chhote Lal in the car outside the Munsif's residence, Amin went to consult the Munsif if he could accept cheque, but the Munsif advised him to take cash. Leaving Chhote Lal in the car outside the Munsif's residence, Amin went to consult the Munsif if he could accept cheque, but the Munsif advised him to take cash. Thereafter the Amin returned to car where he accepted the said amount from Chhote Lal and issued a receipt therefor. The respondent's case, therefore, was that he offered the amount immediately, that it was no fault of his when did not accept it and that it was paid in any event soon after the auction, and, therefore, the payment was in consequences with the O.21, R.84." The Civil Judge set aside the auction sale and held it to be a nullity, but the High Court held in favour of the auction purchaser and the judgment of the High Court was maintained by the Supreme Court. Though the question as to whether the deposit or payment by cheque is a valid deposit or payment within the meaning of Rr. 84 and 85 respectively, was not directly considered by the Hon'ble Supreme Court, but the facts of the said case as set out herein before do reveal that the payment of th of the bid was not made in cash on the spot though the payment was really offered soon after the highest bidder was declared to be the purchaser and actual payment was made after some time, on the date of auction itself. The said case supports to some extent the view that the word "immediately" occurring in R. 285-D has to be construed reasonably and in a practical manner. 19. It is true that the expression "deposit immediately" and the expression "in default of such deposit the land shall forthwith be again put up and sold" occuring in R. 285-D of the Rules give impression that the deposit under the rule has to be made instantly, immediately after the bidder is declared to be the purchaser which is possible only if the deposit is made in cash as distinguished from a deposit by cheque. But the expression "forthwith" occurring in the rule does not warrant such an impression inasmuch as resale, in the event of default, is controlled by R. 285-G which provides that no sale in default of payment of purchase money shall be made until a fresh proclamation has been issued as prescribed for the original sale. But the expression "forthwith" occurring in the rule does not warrant such an impression inasmuch as resale, in the event of default, is controlled by R. 285-G which provides that no sale in default of payment of purchase money shall be made until a fresh proclamation has been issued as prescribed for the original sale. The expression "deposit immediately" occurring in R. 285-D would, in my opinion, stand complied even if the deposit is made by cheque and not in cash for the reasons set out by the Hon'ble Supreme Court in Sitaram Jhunjhunwalla v. Bombay Bullion Association, AIR 1965 SC 1628 and other cases referred to herein before dealing with issue in question. 20. The cheque in the instant case was admittedly cashed on 22-10-1973, but in view of the proposition of law propounded by the Supreme Court in Ogala Glass Works case (supra) the payment related back to the date of auction on which date the cheque was received by the Officer conducting sale. 21. Sri G. N. Verma, learned counsel for the 4th respondent placed reliance upon a Division Bench case of this Court in Hira Lal v. Mst. Champa, AIR 1955 All 226 , wherein it was observed as under: "A comparison of Rr. 84 and 85 will make it clear that while depositing 25 per cent on the mount of the purchase money has to be made to the Officer or other person conducting sale, balance of the purchase money has to be paid by the purchaser into court. The handing over of the cheque, therefore, to the auctioneer's were not payment into court, nor could it be said that handing over of the cheque was a deposit of the balance of the purchase money, we are, therefore, satisfied that the provisions of O. 21, R. 85 were not complied with." 22. In the said case of Hira Lal (supra) the Court was concerned with the question as to whether the payment of the balance of the purchase money under O. 21, R. 85, C.P.C. by handing over a cheque to the auctioneer would amount to payment into court within the stipulated period in terms of R. 85. The Division Bench held that the handing over of the cheque to the auctioneer were not payment into court. The Division Bench held that the handing over of the cheque to the auctioneer were not payment into court. The conclusion that "nor could it be said that the handing over of the cheque was a deposit of the balance of the purchase money" of the Division Bench in the aforesaid case was not backed by any reason and may be taken as per incuriam. 23. Sri G. N. Verma, learned counsel for the 4th respondent then placed reliance upon an unreported decision of this Court (Hon. R. B. Misra, J. as he then was) in Civil Misc. Writ Petition No. 2277 of 1978, Triloki Nath v. Board of Revenue decided on 4-7-1979 holding that payment by cheque on the terms of R. 285-D cannot be taken to be immediate deposit of 25% of the bid. In that case auction purchaser had deposited 25% of the bid by tendering a cheque which accompanied with a prayer that he may be permitted to deposit the amount covered by the cheque in cash the following day, as the banks had closed for the day and it was not possible for him to take out the required cash that day. The Sale Officer kept the cheque and allowed Triloki Nath to make cash deposit the following day. Accordingly the principle of law propounded by the Supreme Court in Ogale Glass Works Case (supra) was not available to Triloki Nath, the auction purchaser in that case. For this reaspq Triloki Nath's case is of no avail to the 4th respondent. Further the reason given by the learned Judge that if the deposit by cheque is taken to be a valid deposit for the purposes of R. 285-D, the consequence of default would be rendered in vain, is not backed by any reason. The consequence of default provided under Rr. 825-D and 285-F of the Rules would be equally attracted whether the highest bidder commits default by making no deposit at all after he is declared to be the purchaser or the default occurs subsequently on the cheque deposited by him being dishonoured for any reason whatsoever. The liability of the defaulting bidder visualised by R. 285-D read with R. 285-F would not in any way cease merely because the default had occurred due to the cheque being dishonoured. 24. The liability of the defaulting bidder visualised by R. 285-D read with R. 285-F would not in any way cease merely because the default had occurred due to the cheque being dishonoured. 24. For all these reasons I am of the firm view that on the basis of the principle of law propounded by the Supreme Court in Ogale Glass Works case (supra) and in Sita Ram Jhunjhunwalla v. Bombay Bullion Association (supra) the deposit of 25% of the bid by cheque would be a valid deposit for the purposes of R. 285-D of the Rules and the view expressed in Triloki Nath's case (supra) being inconsistant with the view expressed by the Hon'ble Supreme Court in the cases referred to above, is not acceptable to me. 25. Sri G. N. Verma tried to distinguish the Supreme Court decision in Sita Ram Jhunjhunwalla (supra) as also the case of Poddar Steel Corporation v. Ganesh Engineering Works, AIR 1991 SC 1579 , which was also relied upon by Sri Banarsi Das, learned counsel for the petitioner, on the ground that in these cases, the Supreme Court was concerned with a certified cheque and not with an ordinary cheque. I am not inclined to accept this distinction sought to be made by the learned counsel for the respondent. The Hon'ble Supreme Court has approved of the English cases referred to herein before as a general rule of law that the payment by cheque would be as good as payment in cash., 26. In view of the above conclusions the petition succeeds and is allowed. The impugned judgment and order of the Board of Revenue dated 12-4-1985 (Annexure-7 to the writ petition) is quashed. The Board of Revenue shall decide other questions involved in the revision on merits in accordance with R. 2851(i) of the Rules. 27. On the facts and circumstances of the case the parties shall bear their own costs.