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PETITIONER: PADANATHIL RUAMINI AMMA

       Vs.

RESPONDENT: P.K. ABDULLA

DATE OF JUDGMENT:       17/01/1996

BENCH: MANOHAR SUJATA V. (J) BENCH: MANOHAR SUJATA V. (J) PUNCHHI, M.M.

CITATION:  1996 AIR 1204            JT 1996 (1)   381  1996 SCALE  (1)359

ACT:

HEADNOTE:

JUDGMENT:                       J U D G M E N T Mrs. Sujata V. Manohar, J.      The property  in dispute  originally  belonged  to  one Padanattil Chengottu Kunnath Tarwad. One Mohammed Haji filed a suit being suit No. 397 of 1941 for recovery of possession of some properties held by this Tarwad on tenancy rights. On 12th of September, 1942 an ex party decree was passed in the suit in  favour of  Mohammed Haji for recovery of possession of the lease-hold property and also for arrears of rent. The ex  party   decree  was  executed.  A  number  of  items  of properties  belonging  to  the  Tarwad  including  the  suit properties were  attached and  sold in court auction held on 18.3.45 in  execution proceedings.  The suit property herein (one acre  and ten cents of agricultural land) was purchased by the decree-holder Mohammed Haji in the court auction. The delivery of the suit property was given to the decree-holder auction purchaser  on 12.3.1946  as per order on E.A. 389 of 1946.      After purchase  the suit property was given on lease by Mohammed Haji  to one Raghavan Nair on 2.5.45. Raghavan Nair in turn sold his rights in the suit property to one Avyapoan who, in  turn, sold  his rights  to one  Raman Menon.  Raman Menon sold  his rights  in the said property on 3.10.1950 in favour of the respondent, P.K. Abdulla.      One of  the members  of the  Tarwad challenged  the  ex party decree  in OS No. 397 of 1941 by filing an application under order  IX, Rule  13 of  the Civil  Procedure Code. The trial court  declined to  get aside the ex party decree. The order of  the trial  court was  reversed  by  the  appellate Court. Ultimately  the High  Court by its judgment and order dated 29.1.1958 set aside the ex party decree.      After the ex party decree was set aside, proceedings by way of  restitution were  started by the first defendant and Karnavan of  the Tarwod  by filing  E.P. 29 of 1959. All the properties which  had been  taken possession  of by Mohammed

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Haji in  execution of  the ex  party  decree  and  of  which restitution was  sought were  set out  in a  schedule in the proceedings for  restitution. Item  No. 6 in E.P. 29 of 1959 was the  suit property.  E.P.  29  of  1959  had  originally contained a  prayer for  only symbolic  re-delivery  of  the properties which  had been  taken possession of in execution by Mohammed  Haji.  But  the  application  was  subsequently amended and actual delivery was asked for.      This  restitution   application  was  allowed  and  the properties were  re-delivered pursuant  to these restitution proceedings.  Such  re-delivery  of  the  suit  property  is evidenced by  Exh. 82  dated 5.4.1966.  Exhibits A25 and A27 are a  report and  account  of  the  Amin  who  re-delivered possession of the suit property to the Tarwad.      The respondent,  P.K.  Abdulla,  thereupon  filed  suit being OS 288 of 1966 contending that he was not evicted from the suit property pursuant to the restitution proceeding and there was no re-delivery of the suit property to the Tarwad. He prayed  for an  injunction to restrain the defendant from interfering with his possession of the property.      The trial  court dismissed  his suit holding that there was a  proper re-delivery of the property and the Tarwad got back the  property. In appeal the trial court’s judgment was confirmed. A  second appeal was filed by the respondent P.K. Abdulla before  the Kerala  High  Court.  He  also  filed  a petition for amending the plaint to incorporate a prayer for a declaration of his title and for recovery of possession of the suit  property. This prayer was granted and the judgment and decree  of the courts below was set aside and the matter was remanded to the trial court permitting the respondent to amend the  plaint as indicated in the judgment and directing the trial  court to  dispose of  the suit in accordance with law and in the light of the findings and observations in the High Court’s judgment.      After remand  the trial court found that the Tarwad had obtained  possession   of  the   property  pursuant  to  the restitution proceedings.  It also  found that the respondent who was  the plaintiff there in had Established his title to the suit  property and  his right  to recover possession. It accordingly  decreed   the   suit   allowing   recovery   of possession. This finding was confirmed by the district court and by  the High  Court. Hence  the present  appeal has come before us.      The appellant before us is the successor-in-interest of the Tarwad and its members who were the defendants in OS No. 397 of  1941. After the ex party decree in OS No.397 of 1941 was set  aside the  suit has  been heard  on merit  and  the Munsif’s  court   by  its  judgment  and  order  dated  26th November, 1962  has dismissed  the suit of Mohammed Haji for eviction and recovery of possession but has decreed the suit for arrears  of rent  and costs.  It is,  therefore, not  in dispute that  the appellant  as the successor-in-interest of the original defendants in OS No.397 of 1941, is entitled to restitution in  so far  as it  is  permissible  in  law,  in respect of  the properties  which were  sold in execution of the ex party decree which was set aside.      It is,  however, contended by the respondent that he is a lessee  from  the  decree-holder  auction  purchaser.  The appellant cannot  seek restitution  of properties  leased to him by the decree-holder auction purchaser. The lease in his favour is  protected, he  being a  third party  to the court proceedings and  the auction  sale. This contention has been upheld by the Kerala High Court and is challenged before us. Now, under Section 144 of the Civil Procedure Code where and insofar as  a decree or an order is varied or reversed or is

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set aside,  the court  which passed  the  decree  or  order, shall, on  the application  of any  party  entitled  to  any benefit by  way of  restitution  or  otherwise,  cause  such restitution to  be made as will, so far as may be, place the parties in  the position  which they would have occupied but for such  decree or  order. For  this purpose  the court may make such  orders including  orders for  the refund of costs and for  the payment  of interest, damages, compensation and mense profits,  which are  properly  consequential  on  such variation, reversal,  setting aside  or modification  of the decree or order.      In the  present case,  as the  ex party  decree was set aside, the  judgment-debtor was entitled to seek restitution of the  property which  had been  sold in  court auction  in execution of  the ex  party decree.  There is  no doubt that when the decree-holder himself is the auction purchaser in a court auction  sale held  in execution  of a decree which is subsequently set  aside, restitution  of the property can be ordered in  favour of the judgment-debtor. The decree-holder auction purchaser  is bound  to return  the property.  It is equally well  settled that  if at  a court  auction sale  in execution of  a decree,  the properties  are purchased  by a bona  fide   purchaser  who  is  a  stranger  to  the  court proceedings, the  sale in his favour is protected and he can not be  asked to  restitute the  property to  the  judgment- debtor if  the decree  is set  aside. The  ratio behind this distinction between  a sale to a decree-holder and a sale to a stranger  is that  the court,  as a matter of policy, will protect honest  outside purchasers  at  sales  held  in  the execution  of   its  decrees,  although  the  sales  may  be subsequently set aside, when such purchasers are not parties to the  suit. But  for such protection, the properties which are sold  in court  auctions would  not fetch a proper price and  the   decree-holder  himself  would  suffer.  The  same consideration does  not  apply  when  the  decree-holder  is himself the  purchaser and  the decree  in his favour is set aside. He  is a  party to  the litigation  and is  very much aware  of  the  vicissitudes  of  litigation  and  needs  no protection.      In  the   case  of  Binayak  Swain  v.  Ramesh  Chandra Panigrahi and Anr. (AIR 1966 SC 948) this Court considered a case where  in execution  of an ex party decree the property of the  judgment-debtor was  purchased by the decree-holder. The decree was set aside in appeal and the case remanded for fresh disposal. This Court said that the judgment-debtor was entitled to  restitution even  though ultimately after fresh disposal a decree was passed in favour of the decree-holder. It said that the principle of the doctrine of restitution is that on  the  reversal  of  a  decree  the  law  imposes  an obligation on the party to the suit who received the benefit of the  erroneous decree  to make  restitution to  the other party  for   what  he   has  lost.  This  obligation  arises automatically on  the reversal or modification of the decree and necessarily  carries with it the right to restitution of all that  has been  done under the erroneous decree; and the court in  making restitution is bound to restore the parties so far  as they  can be  restored to  the same position they were in  at the  time when the court by its erroneous action had displaced them.      As far back as in 1888, however, a distinction was made between  sales  to  decree-holders  and  Sales  to  outsider purchasers. In  the case  of Zain-UI-Abdin  Khan v. Muhammad Asghar Ali  Khan and  Ors. (1888 ILR [X] Allahabad 166), the Privy Council  held  that  there  was  a  great  distinction between the  decree-holders who  come in  and purchase under

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their own  decree which is afterwards reversed on appeal and the bona  fide purchasers who come in and buy at the sale in execution of a decree to which they are not parties and at a time when  the decree  is a valid decree and when this order for sale  is a valid order. It held that the sales in favour of bona  fide purchasers  who were not parties to the decree at a  time when  the decree was valid would be protected. In the case  before the  Privy Council there were three sets of purchasers. Some  of the  defendants who  had purchased were the decree-holders.  Some persons had purchased from decree- holders  or  came  under  them,  while  others  were  merely purchasers in  execution and  strangers to  the decree  upon which the  execution had issued. The Privy Council said that the decree-holder  purchasers as well as persons who came in under them  are in  the same  position and  they have  to be classed  under   the  head   of  decree-holders  as  against strangers to  the decree.  The Privy Council was required to consider only  the case of strangers to the decree. But from the judgment  it is  quite clear  that  it  categorized  the decree-holder auction  purchaser as  well as  those claiming under such  decree holder purchasers in the same category of decree-holders. This category, therefore, would be liable to render restitution.      In the  case of  Satis Chandra  Ghose v. Rameswari Dasi and Ors.  (AIR 1915  Calcutta 363),  the Calcutta High Court relied upon these observations of the Privy Council and held that the  decree-holders and  those who  claim under decree- holders will  form one  class as  against strangers  to  the decree who  purchase in a court auction sale. The title of a purchaser from  one who  has bought at the sale in execution of his  own decree  is liable to be defeated when the decree is subsequently  set aside.  The Calcutta  High Court  said, "The court  as a  matter of  policy has  a tender regard for honest purchasers  at sales held in execution of its decrees though the  sales may be subsequently set aside, where those purchasers are  not parties  to the  suit and the decree has not been  passed without  jurisdiction. But the same measure of  protection   is  not  extended  to  purchasers  who  are themselves the  decree-holders; nor  can the purchasers from such decree-holders  claim that  the  court  owes  them  any duty......"  The  policy  which  prompts  the  extension  of protection to  the strangers  who purchase at court auctions is based on a need to ensure that proper price is fetched at a court  auction. This  policy has  no application  to sales outside the  court.  The  purchasers  from  a  decree-holder auction purchaser have bought from one whose title is liable to be defeated. The title acquired by the purchaser from the decree-holder is  similarly defeasible.  The  Court  further observed, "The  defeasibility  of  a  decree-holder’s  title where the  decree is  ex party  is of such common occurrence that the plea of a purchaser for value without notice hardly applies".      The same  view has been reaffirmed by the Calcutta High Court in the case of Abdul Rahman v. Sarat Ali and Anr. (AIR 1916 Calcutta  710) where it has held that the assignee of a decree-holder auction purchaser stands in no better position than his  assignor. The  special protection  afforded  to  a stranger who  purchases at an execution sale is not extended to an assignee of the decree-holder auction purchaser.      The distinction  between a stranger who purchases at an auction sale  and an assignee from a decree-holder purchaser at an auction sale is quite clear. Persons who purchase at a court auction  who are  strangers to the decree are afforded protection by  the court  because they  are not  in any  way connected with the decree. Unless they are assured of title;

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the court  auction would not fetch a good price and would be detrimental to  the decree-holder. The policy, therefore, is to protect  such purchasers.  This policy  cannot extend  to those outsiders who do not purchase at a court auction. When outsiders purchase  from a decree-holder who is a an auction purchaser clearly their title is dependant upon the title of decree-holder auction  purchaser. It  is a  defeasible title liable to  be defeated  if the decree is set aside. A person who  takes  an  assignment  of  the  property  from  such  a purchaser is  expected to  be aware  of the defeasibility of the title of his assignor. He has not purchased the property through the  court at  all. There is, therefore, no question of the  court extending  any protection to him. The doctrine of a  bona fide  purchaser for  value also  cannot extend to such an  outsider who  derives his  title through  a decree- holder auction  purchaser. He  is aware or is expected to be aware of  the nature  of the title derived by his seller who is a decree-holder auction purchaser.      The High  Courts of  Patna, Madras and Kerala, however, appear to  have taken a different view. They have equated an assignee from  a  decree-holder  auction  purchaser  with  a stranger auction  purchaser on  the basis  that an  assignee from a  decree-holder auction purchaser has to be considered as a bona fide purchaser for value who should not be allowed to suffer  on account  of  the  mistakes  or  irregularities committed in  a court  of law. It is difficult to see how an assignee from  a  decree-holder  auction  purchaser  can  be equated with a bona fide purchaser for value without notice. He is  aware of  the nature  of the  title of  his seller or assignor. He is also aware that the title of his assignor or seller is  subject to  the doctrine  of restitution  if  the decree is  ultimately set aside particularly in a case where the decree  is an  ex party  decree and  there is  a greater possibility of  such a  decree being  set aside. The reasons which prompt the courts to protect strangers who purchase at court auction  sales also  do  not  apply  to  assignees  or purchasers from  a  decree-holder  auction  purchaser.  They purchase outside  the court  system and  cannot  expect  any protection from  the court.  Their title  is  liable  to  be defeated if  the  title  of  their  seller  or  assignor  is defeated. The  view, therefore,  expressed by the Patna High Court in  the case of Gopi Lal and Anr. v. Jamuna Prasad and Ors. (AIR  1954 Patna  36), the  Madras  High  Court  in  S. Chokalingam Asari  v. N.S.  Krishna Iyer  and Ors. (AIR 1964 Madras 404),  and the  cases cited  therein as  also by  the Kerala High  Court in the case of Parameswaran Pillai Kumara Pillai and  Ors. v.  Chinna Lakshmi  and Anr. (1970 Ker.L.J. 458) is not the correct view. The High Court, therefore, was not right  in protecting  the lease created in favour of the respondent by  Mohd. Haji  who was  a decree-holder  auction purchaser at  the sale  in execution  of the ex party decree which was subsequently set aside.      The respondent,  however, contends that although he was evicted in  restitution  proceedings,  he  can  nevertheless maintain a  suit on  title because  as a  lessee he  enjoyed certain protection  under the  land  reform  legislation  in Kerala. The  Kerala Land  Reforms Act, 1964 was in operation at the  time when he was evicted on 5.4.1966. Since the suit of the  appellant was based on his title on the date when he was evicted,  we need to examine the land reform legislation which applied  to the tenants in 1966. It is, however, urged by the  respondent that  in 1966  when he  was evicted,  his rights under  Section 43  of the  Malabar Tenancy  Act  were protected. Section  43 provides  that a  cultivating  tenant shall be  entitled to  continue on  the holding although the

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rights of his immediate landlord or of any superior landlord have been extinguished, whether by eviction or by redemption of a  mortgage or  otherwise.  This  section  envisages  the creation of  a tenancy by the owner of the land. Thereafter, although the rights of the landlord may be extinguished, the tenant can  continue. It does not envisage a situation where the  person   creating  the   initial  tenancy  had  only  a defeasible right to the land of another, not only to his own knowledge but  also to  the knowledge  of his "tenant". Such persons are  not protected  under Section  43. This  is also clearly brought  out by  the Kerala  Land Reforms  Act, 1964 which replaced  the Malabar  Tenancy Act  and was the law in force at the relevant time. Under Section 2(57), a tenant is defined to mean:      "2(57) any person who has paid or agreed      to pay  rent or  other consideration for      his being  allowed to  possess and enjoy      any land  by a  person entitled to lease      that land, and includes......      (j)  A person  who is  deemed  to  be  a      tenant under..........Section 7, Section      7A........." This definition  of a  tenant clearly refers only to persons who claim from a lessor who is entitled to lease the land. A person who  has obtained  a lease from somebody who does not have any  title to  the land  will  not  be  a  tenant.  The respondent, however,  placed reliance  upon Section  7. This section provides as follows:      "7:  Notwithstanding   anything  to  the      contrary contained  in section 52 or any      provision of  the Transfer  of  Property      Act. 1882.  or any  other law, or in any      contract, custom,  or usage,  or in  any      judgment, decree  or order of court, any      person in occupation at the commencement      of the  Kerala Land  Reforms (Amendment)      Act, 1969 of the land of another situate      in Malabar  shall  be  deemed  to  be  a      tenant  if  he  or  his  predecessor-in-      interest was  continuously in occupation      of such  land honestly believing himself      to be  a tenant  for not  less than  two      years within  a period  of twelve  years      immediately preceding  the 11th  day  of      April of 1967." This section  applies only  to those  who are  in occupation believing themselves  to be tenants. When a person obtains a lease from  a  lessor  whose  title  is  defeasible  to  his knowledge, he can not claim that he believed himself to be a tenant. He  will be  a tenant only so long as the lessor has title to  the land.  Once the lessor’s title is defeated the tenants’ rights also disappear. Section 7 is not intended to confer legal  immunity to  trespassers.  A  tenant  under  a person not having title can not come under the protection of this section nor can the phrase "bona fide believing himself to be  a tenant" save a person encroaching or trespassing on another’s land.  Reliance was sought to be placed on Section 7B of  the Act  which was  introduced by  amending Act 39 of 1969 with  effect from  1.1.1970 under  which protection  is orated to  certain  persons  occupying  lands  under  leases granted by  incompetent persons.  This section, however, was not on  the statute  book in  1966 and the respondent cannot avail of it assuming that it grants him any protection.      In the  premises, the respondent who lost possession as a result of an order being passed in restitution application

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and  was   dispossessed  pursuant   to  the   order  in  the restitution application  cannot maintain a suit based on his title since  he had  no title  to the  land. The High Court, therefore, was  not right  in upholding  the decree  of  the trial court.  The trial  court found  that  the  Tarwad  had obtained possession pursuant to the restitution application. It, however,  went  on  to  hold  that  the  respondent  had established his  title and could recover the property. These findings cannot  be sustained  in view  of what we have said above. The  appeal, therefore, is allowed. The decree of the trial court  is set  aside and the suit of the respondent is dismissed with costs.