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PETITIONER: JIBON KRISHNA MUKHERJEE & ANOTHER

       Vs.

RESPONDENT: NEW BHEERBHUM COAL CO.  LTD. & ANOTHER.

DATE OF JUDGMENT: 10/11/1959

BENCH: GAJENDRAGADKAR, P.B. BENCH: GAJENDRAGADKAR, P.B. SUBBARAO, K. SHAH, J.C.

CITATION:  1960 AIR  297            1960 SCR  (2) 198  CITATOR INFO :  E          1984 SC1471  (54)

ACT:        Decree,  execution of-Receiver appointed and  authorised  by        court  to sell Property-Sale by receiver-Application to  set        aside  such  sale on deposit-Maintainability-Code  of  Civil        Procedure (Act V of 1908), ss. 51, 151, O. 21, r. 89.

HEADNOTE: On  the  judgment  debtor’s default  in  paying  the  agreed instalments of the decretal amount a receiver was  appointed by  the Court in execution of the decree under s. 51 of  the Code  of  Civil Procedure with power to  sell  the  judgment debtor’s  property  either by private  agreement  or  public auction.   The  receiver  entered  into  an  agreement  with respondent  No.  2,  a  third party, for  the  sale  of  the property  for a larger sum than the decretal amount  on  the condition  that  the sale should be confirmed  by  the  High Court.    The  High  Court  allowed  the   decree   holder’s application for confirmation of the sale by the receiver but allowed  the judgment debtor time to pay the balance of  the decretal  amount  in  which  case the sale  was  not  to  be confirmed.   The judgment debtor made partial  payments  but failed  to  pay  the  entire  decretal  amount  within   the prescribed time and in spite of several opportunities  given to him by the Court to do so.  He ultimately applied to  the Court  for  cancellation of the agreement for  sate  by  the receiver  and prayed for leave to deposit the whole  balance of  the decretal amount.  I his was disallowed by  a  Single judge  and on appeal by a Division Bench of the High  Court. The  main question that arose for decision both in the  High Court,  and Supreme Court, oil appeal by special leave,  was whether the provisions of s. 21, r. 89 of the Code of  Civil Procedure  apply to a sale held by a receiver  appointed  by the  Court.   The High Court answered this question  in  the negative. Held, that the High Court was right in refusing to entertain the appellant’s applications under s. 21, r. 89. In  a  sale by the receiver lie is not required to  issue  a proclamation of sale as required by s. 21, r. 66 of the Code of  Civil Procedure and as such the provisions of s. 21,  r.

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89 under which a sale proclamation is an essential  element, do not apply to a sale held by him. Minatoonnessa  Bibee  and Others v.  Khatoonnessa  Bibi  and Others (1898) I.L.R. 21 Cal. 479, Golam Hossein Cassin Ariff v.  Fatima  Begam (1910) 16 C.W.N. 394,  jogemaya  Dasee  v. Akhoy  Coomar  Das (1912) I.L.R. 40 Cal. 140, Basir  Ali  v. Hafiz  Nazir  Ali, (1916) I.L.R. 43 Cal. 124 and  Rani  Bala Bose and Others v. Hirendra Chandra Ghose and Others  (1948) 52 C.W.N. 739, considered.                             199 Held, further, that the High Court was right in holding that the  court’s jurisdiction could not be invoked in favour  of the appellant under s. 151 of the Code of Civil Procedure in view  of  the fact that he committed  repeated  defaults  in spite of several opportunities given to him by the Court  to pay the balance of the decretal amount, and that this  court would  not  interfere with the discretion exercised  by  the High Court in such circumstances. The  order  of  the High Court confirming the  sale  by  the receiver was not a conditional one.  It gave an  opportunity to  the  judgment debtor to pay the decretal amount  in  the manner prescribed by it failing which the sale was to  stand confirmed.   There  is no scope for applying  the  principle that   the  court  had  inherent  power  to  deal  with   an application to set aside an order made ex parte on a  proper case being substantiated, as laid down in S. M. Sudevi  Devi v. Sovaram Agarwallah (1906) 10 C.W.N. 306.

JUDGMENT:        CIVIL APPELLATE JURISDICTION: Civil Appeal No. 342 of 1959.        Appeal  by special leave from the judgment and decree  dated        April  29, 1959, of the Calcutta High Court, in appeal  from        Original Order No. 188 of 1958.        H.   N. Sanyal, Additional Solicitor-General of India.        T.   S. Venkatarama, K. R. Sarma and K. R. Chaudhry, for the        appellants.        S. N. Mukherjee, for respondent No 1.        N.   C.  Chatterjee,  S. K. Acharyya and R. S.  Narula,  for        respondent No. 2.        1959.  November 10.  The Judgment of the Court was delivered        by        GAJENDRAGADKAR     J.-The    principal    question     which        Gajendragadhar J. which this appeal by special leave  raises        for our decision is: Whether the provisions of s. 21, r.  89        of  the  Code of Civil Procedure apply to a sale held  by  a        receiver  appointed by the court and authorized to sell  the        property  in  question.   The learned Single  Judge  on  the        Original  Side  of the Calcutta High Court as  well  as  the        Division  Bench of the, said High Court have  answered  this        question  in the negative.  The appellants contend that  the        view taken by the Calcutta High Court is erroneous.        This question arises in this way.  In Suit No. 1024 of  1953        on the Original Side of the Calcutta High Court a decree for        the payment of Rs. 18,497-15-0 was        200        passed  by consent in favour of the New Bheerbhum  Coal  Co.        Ltd.,  (hereinafter  called respondent 1) and  against’  the        Benares Ice Factory, Ltd., (hereinafter called appellant  2)        on December 5, 1955.  The decree provided for the payment of        the decretal amount by six equal instalments and it directed        that  in case of default of any one of the  instalments  the        balance  of the decretal dues would at once become  payable.        A  first charge was created by the decree on the  plant  and

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      machinery  of appellant 2 for securing the payment  of  ,the        decretal  amount.  A default having occurred in the  payment        of instalments respondent I applied for the execution of the        decree  on April 10, 1956.  On this application  an  interim        order was made on May 17, 1956, appointing Mr. A. K. Sen, as        Receiver  of the properties charged.  The  said  application        was  finally decided by an order passed on May 30, 1956,  by        which  the appointment of the receiver was confirmed and  he        was  given  liberty to sell the said  properties  either  by        private  treaty or by public auction.  It is  common  ground        that  the receiver took possession of the said  property  in        December 1956.        Subsequently,  on March 10, 1958, the receiver entered  into        an  agreement with Sukhlal Amarchand  Vadnagra  (hereinafter        called  respondent 2) for the sale of the said property  for        Rs.  30,000.  The terms and conditions embodied in the  said        agreement provided inter alia that within one month from the        date of the receipt by the purchaser of intimation from  the        receiver that the sale bad been confirmed by the High  Court        the purchaser shall deposit with the said receiver the  full        price  of  Rs.  30,000.  On March  31,  1958,  respondent  I        applied to the court for confirmation of the said  agreement        and   on  May  9,  1958,  G.K.  Mittter,  J.,  allowed   the        application.  He ordered that the appellants should  deposit        the sum of Rs. 3,000 with the attorneys of the decree bolder        towards its claim under the said decree and further directed        that  if the said amount was paid within the time  aforesaid        and  the balance of the decretal amount was paid within  ten        weeks  thereafter  the  agreement  of  sale  shall  not   be        confirmed.  The order further provided that in default 201 of the appellants paying the amounts as directed within  the respective due dates the sale of the charged property by the receiver  to  the  second  respondent  as  get  out  in  the agreement shall be confirmed. Pursuant  to  this order the appellants deposited  with  the attorneys  of  the decreeholder Rs. 3,000 on May  30,  1958. They  had  also paid to the receiver Rs. 3,500    in August, 1957,  towards the decretal dues.  It appears that when  the appellants were unable to pay the balance as directed by the court  appellant  2 applied to the court  praying  that  the agreement  of sale should be cancelled and the  time  within which  he  was directed to pay the balance of  the  decretal amount should be extended.  The application also sought  for certain  other directions.  G.K. Mitter, J., who heard  this application dismissed it on July 29, 1958, and confirmed the agreement of sale. On August 20, 1958, appellant 2 took out a notice of  motion of  an application made by him on the same day praying  that leave  may  be granted to him to deposit the  whole  of  the balance of the decretal amount and that the receiver  should be  restrained from receiving any money from  the  intending purchaser  in  terms of the agreement of sale.   It  appears that on August 22, 1958, respondent 2 tendered a cheque  for Rs.  30,000  to  the receiver towards  the  payment  of  the purchase   money   under  the  agreement  of   sale.    Soon thereafter,  however, respondent 2 took back the cheque  and paid  Rs.  30,000  in  cash  on  September  1,  1958.    The application made by appellant 2 for leave to pay the balance of the decretal amount was dismissed by G. K. Mitter, J., on September  4, 1958.  The learned judge, however, stayed  the delivery of possession of the property to respondent 2 for a week from the date of his order. The appellants then filed an appeal against the order of the learned judge before a Division Bench of the High Court  and

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obtained an order for stay of delivery pending the  decision of  the  appeal.   On April 29,  1959,  the  Division  Bench dismissed the appeal and refused to grant certificate to the appellants to file an appeal in this Court.  The appellants 26 202      then  applied for and obtained special leave from  this Court  on  May 20, 1959.  That is how this appeal  has  come before us; and the main point which Mr. Sanyal,   for    the appellants, has raised for our decision is that   the courts below  were  in  error in refusing to  give  relief  to  the appellants  under 0. 21, r. 89 on the ground that  the  said rule was inapplicable to the sale held by the receiver. It  is  common ground that the receiver was  appointed  with "power  to him to get in and collect the  outstanding  debts and  claims due in respect of the charged property and  with all powers provided for in 0. 40, r. 1, cl. (d) of the  Code of Civil Procedure ". The order appointing the receiver also expressly directed that the receiver shall be at liberty  to sell  the  said property charged in favour of  respondent  1 either by private treaty or by private auction to ’the  best purchaser or purchasers that can- be got for the sale but he shall  not  hold such sale before the 13th  day  of  August, 1956.   In  other  words,  the  receiver  was  appointed  in execution  proceedings  under s. 51 and was  given  all  the powers under 0. 40, r. 1(d) of the )Code.  It is by  virtue, of  those powers that he entered into the agreement of  sale with respondent 2 and sold the property to him and gave  him its  possession.  Section 51 which deals with the powers  of the court to enforce execution provides for the execution of the  decree by five alternative modes specified in cls.  (a) to (e).  One of the modes of execution is the appointment of a  receiver  which means that a decree for  the  payment  of money can be executed by the appointment of a receiver.   He may  either collect the income of the property belonging  to the judgment-debtor and thereby satisfy the decree, or if so authorised  he may sell the property of the  judgment-debtor and  thereby  arrange for the satisfaction  of  the  decree. Thus,  in dealing with the question as to whether the  -,ale held by the receiver is a sale ordered by the court to which 0.  21, r. 89 applies it is necessary to remember  that  the appointment of the receiver itself is a mode of execution of the decree. 203 When the receiver so appointed is given all the powers under 0. 40, r. 1(d) it is these powers which he seeks to exercise when selling the judgment-debtor’s property in execution  of the  decree.   The  sale held by  the  receiver  under  such conditions  would no doubt be governed by the provisions  of 0.  40, and the court may  supervise or issue  directions in respect  of  such a sale under the provisions  of  the  said order.  Prima facie the sale held by the receiver  appointed in   execution  proceedings  in  pursuance  of  the   powers conferred  on him under 0. 40, r. 1(d) would be governed  by the powers conferred on him and the terms and conditions  on which  the said powers may have been conferred and by  other relevant provisions of 0. 40.  It does not seem, to  attract the provisions of 0. 21.   Courts  have had occasion to consider questions about  the applicability  of several provisions of 0. 21 to sales  held by  receivers and opinions expressed on such questions  have differed more particularly in the Calcutta High Court as  we will  presently indicate.  In the present appeal we  do  not propose to consider or decide the general question about the character of the sale held by the receiver nor do we propose

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to  attempt to specify which provisions of 0. 21 will  apply to  such sales and which will not.  We are dealing with  the narrow question as to whether 0. 21, r. 89 applies to such a sale; and it is to the decision of this narrow question that we will address ourselves in the present appeal.  Order 21 , r. 89 enables the persons specified in subr. (1) to apply to have the sale held in execution proceedings  set aside on two conditions, (a) the applicant must deposit  for payment  to the purchaser a sum equal to 5% of the  purchase money,  and (b) for payment to the decreeholder  the  amount specified  in  the  proclamation of sale  as  that  for  the recovery of which the sale was ordered less any amount which may  since the date of such proclamation of sale  have  been received  by  the  decreeholder.   The  second   requirement immediately  raises  the  question  as  to  whether  it   is necessary for the receiver in selling immoveable property in execution proceedings to issue 204 a proclamation as required by 0. 21, r. 66 of the Code.   In our opinion there can be no doubt that the provisions of the said  rule  do  not apply to sales held  by  receivers.   No decision has been cited before us where a contrary view  has been expressed.  The provisions of the said rule apply where property  is  ordered  to  be  sold  by  public  auction  in execution by the court, and  the order for the sale of  such property  must be made by any court other than the Court  of Small Causes as provided by r. 82.  Where the court appoints a  receiver and gives him liberty to sell the  property  the receiver  may either sell the property and  thereby  realise the  money  for the satisfaction of the decree, or  he  may, even  without  selling  the property, seek  to  satisfy  the decree  by the collection of rents due from the property  or other ways open to him under the law.  In such a case it  is difficult  to  hold  that by- the very  appointment  of  the receiver clothing him with the power to sell the property if he  thought it necessary to do so the court had ordered  the sale  of the said property within the meaning of 0.  21,  r. 82.  If the provisions of r. 66 of 0. 21 are inapplicable to sales  held  by  receivers it is  obvious  that  the  second condition prescribed by r. 89(1)(b) is equally  inapplicable and  it is undoubtedly one of the two  essential  conditions for  the successful prosecution of an application under  the said rule.  In our opinion this fact clearly emphasises  the inapplicability   of  the  whole  rule  to  sales  held   by receivers.  We are, therefore, satisfied that the High Court was   right  is  refusing  to  entertain   the   appellants’ application under 0. 21, r. 89.   It  is  then  argued  that  the  High  Court  should  have considered the appellants’ prayer under s. 151 of the  Code. It is no doubt a hard case where the appellants have to lose their  property though presumbly at the time when they  made the present application in the High Court they were able  to produce for the payment to the decreeholder the whole of the balance  of  the decretal amount.  As the  judgment  of  the Division  Bench  shows the learned  judges  themselves  have observed that it was difficult not to feel sympathy for  the appellants; but, on the other hand, it is clear 205 from  the  record  that the  appellants  were  given  enough opportunity  to  pay the decretal amount.   The  decree  was passed  by  consent  and included  a  default  clause.   The appellants  committed default and incurred the liability  to pay the whole of the decretal amount.  When the agreement of sale executed by the receiver  came before the court another opportunity was given to the appellants to pay the  decretal

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amount  on the specified conditions.  The  appellants  again committed a default.  It is only later when it was too  late that they rushed to the court with a prayer that they should be  allowed to pay the decretal amount themselves and  their property should be saved.  Under such circumstances, if  the learned  judge  who heard their application as well  as  the appellate  court  came to the conclusion  that  the  court’s jurisdiction   under  s.  151  cannot  be  invoked  by   the appellants, we do not see how we can interfere with the said decision.   It  is  true that s.  151  is  not  specifically mentioned in the judgment of either of the courts below, but that must be obviously because no specific plea under s. 151 was raised.  Even so the Division Bench has observed that it could not interfere with the order of the learned judge when in  his discretion he refused to make an order as asked  for by  the  appellants.   This must  inevitably  refer  to  the discretion under s. 151, because if 0. 21, r. 89 had applied and  the appellants had satisfied the conditions  prescribed by  it there would be no discretion in the court  to  refuse such an application.  It would then have been a right of the appellants  to claim that the sale should be set aside.   We are,  therefore, unable to accede to the plea raised  before us by Mr. Sanyal under s. 151 of the Code. There is another point which Mr. Sanyal attempted to  raise. He  contended that the sale had not been properly  confirmed before  he  moved the court for leave to  pay  the  decretal amount,  and  so  the  courts below were  in  error  in  not allowing  his  application.   This argument is  based  on  a decision  of the Calcutta High Court in S.M. Sudevi Devi  v. Sovaram  Agarwallah(1).   In that case  Woodroffe,  J.,  was dealing with a  (1) (1906) 10 C.W.N. 306. 206 conditional  decree which entitled the decreeholder, on  the default of the defendant, to apply to the court which passed the  decree  to direct the ejectment of the defend  ant.  It appears    that    when   disputes   arose    between    the decreeholder  and  the  judgment-debtor  in  regard  to  the performance  of  the conditions imposed by  the  decree  the decreeholder   obtained   an   order   for   ejectment    of the  defendant without notice to the  judgment-debtor.   The judgment-debtor then applied for setting aside, modifying or reviewing the said order.. Woodroffe, J., held that a  court had inherent power to deal with an application to set  aside an   order   made  ex  parte,  on  a   proper   case   being substantiated.   Mr.  Sanyal contends that the sale  in  the present  case  being conditional in the sense  that  it  was subject to the confirmation by the court it was open to  the court  to refuse to confirm it when the  appellants  applied for  leave to pay the balance of the decretal amount.   This argument  necessarily  assumes  that  the  order  passed  by Mitter, J., on May 9, 1958, was a conditional order.  In our opinion this assumption is not well-founded.  The said order no  doubt gave an opportunity to the appellants to  pay  the decretal  a-mount  in  the manner prescribed by  it  but  it clearly provided that in default of the appellants complying with the said conditions within the respective due dates the sale  of  the property by the receiver to  respondent  2  be confirmed and that the said receiver do make over possession of  the  said property to the said purchaser.  It  is  clear that this order is not a conditional order at all.  It is  a composite  order.   It  provided  for  the  payment  of  the decretal amount by the appellants and in that sense gave  an opportunity  to  the appellants to avoid the sale  of  their property  but, on the other hand, it also provided  that  on

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their  default  to comply with the order the sale  do  stand confirmed  and the receiver do make over the  possession  of the  property to the purchaser.  Therefore, in our  opinion, there  is no scope for applying the principle laid  down  by Woodroffe, J., in the ’ease of S. M. Sudevi Devi (1). (1)  (1906) 10 C.W.N. 306. 207  Before  we  part  with this appeal  we-  may  very  briefly indicate the nature of the divergence of views expressed  in the Calcutta High Court on the question about the  character of sales held by receivers appointed by courts to which  our attention has been invited.  In Minatoonnessa Bibee & Ors. v. Khatoonnessa Bibee  & Ors. (1),  Mr.  Justice  Sale,  held  that  the  purchaser  at  a receiver’s sale is entitled to obtain the assistance of  the court  in obtaining the possession under the  provisions  of the  Code  relating to sales in suits.  In  coming  to  this conclusion the learned judge referred to a precedent in  the Calcutta  High Court in that behalf, and made an  order  for possession  of the property in favour of the  receiver.   It may  be pointed out that the learned judge, in dealing  with the  question,  has referred to the important fact  that  in that particular case the sale had been already treated as  a sale  by  the  court inasmuch, as  the  registrar  had  been directed  under  the provisions of the Code to  execute  the conveyance  on  behalf of some of the parties to  the  suit. Thus the question was in a sense res judicata.  However,  in dealing  with the general question the learned judge has  no doubt  observed  that  sales  by  receivers  "  are  in  all essential particulars similar to sales by the registrar, and that  if  they  are sales by a civil court  in  a  suit  the procedure  prescribed by the Code for sales in a suit  would be  applicable."  We do not think  that  these  observations should  be  divorced from the facts of the  particular  case with which the learned judge was dealing, and read as laying down  a  general proposition that sales  held  by  receivers attract the application of all the provisions in the Code in regard  to sales held by the court.  If such  a  proposition was really intended to be laid down we would hold that it is not  correct at least in regard to the provisions of 0.  21, r. 89.  In  Gulam  Hossein  Cassim Ariff v. Fatima  Begum  (2)  Mr. Justice  Fletcher, has taken a contrary view.  He  has  held that " a sale by a receiver under the direction of court  is not  a sale by court and in such a sale the court  does  not grant a sale certificate nor does it confirm the sale."  The learned judge referred to the (1) [1894] I.L.R. 21 Cal. 479. (2) (1910) 16 C.W.N. 394. 208 earlier decision of Sale, J., and dissented from him. It  is unnecessary for us to consider the correctness or  otherwise of this decision.  Fletcher, J., adhered to the same view in Jogemaya Dasee v. Akhoy Coomar Das (1).        In that case the learned  judge was   dealing   with  the  sale  of  properties       by the Commissioner  of Partition, and he held that such a sale  is not one by the court but is one made by the Commissioner  of Partition under the authority of the court.  Chaudhuri, J., considered the same question in Basir Ali v. Hafiz  Nazir Ali (2 ) and held that in all sales whether  by the  court or under the court or by direction of  the  court out  of court the purchaser is bound to satisfy  himself  of the value, quality and title of the thing sold just as  much as if he were purchasing the same under a private  contract.

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According  to this decision the sales certificate  does  not transfer  the  title.   It  is  evidence  of  the  transfer. Accordingly,-he   directed.  the  receiver  to   execute   a conveyance in favour of the purchaser.  This decision is not quite  consistent  with  the  view  taken  by  Mr.   Justice Fletcher.  In  Rani Bala Bose v. Hirendra Chandra  Ghose  Chakravarti, J.,  as  he  then was, has  incidentally  referred  to  this conflict of judicial opinion in the Calcutta High Court, and has indicated his preference for the view taken by Sale, J., though  he  has been careful enough to add that he  was  not deciding  the  point  and that the case with  which  he  was concerned  was  not  covered  by  the  actual  decision   of Fletcher, J.  These  decisions show that there has been a  divergence  of opinion  as to the character of the sale held by a  receiver as to whether it is a sale by the court, or under the court, or  under  the directions of the court.  It is  because  our attention  has been invited to these decisions that we  have thought  it  necessary  to make it clear  that  our  present decision  is confined to the narrow question as  to  whether the  sale held by a receiver attracts the provisions  of  0. 21, r. 89.  We (1)  (1912) I.L.R. 40 Cal. 140.  (2) (1916) I.L.R.  43  Cal. 124. (3) (1948) 52 C.W.N. 739. 209 hold  that r. 89 of 0. 21 does not apply to such a sale  and that  the High Court was right in rejecting the  appellants’ claim based on the said rule. The result is the appeal fails and is dismissed with costs.                             Appeal dismissed.