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PETITIONER: RADHY SHYAM

       Vs.

RESPONDENT: SHYAM BEHARI SINGH

DATE OF JUDGMENT: 12/08/1970

BENCH: SHELAT, J.M. BENCH: SHELAT, J.M. VAIDYIALINGAM, C.A.

CITATION:  1971 AIR 2337            1971 SCR  (1) 783

ACT: Letters  Patent-Allahabad High Court-Clause 10-If  order  on Application under Order 21 r. 90 C.P.C. is a ’Judgement’. Civil  Procedure   Code,  1908, Order  XXI,  rules  69,  90- Material irregularity in auction sale What is.

HEADNOTE: After  the  respondent had obtained a decree for  about  Rs. 9,000/against  the  appellant, the appellant’s  share  in  a house was put up for sale in execution proceedings initiated by him and a proclamation setting out the date and hour  for the  sale  was issued.  But the sale was  postponed  at  the instance of the appellant.  At the auction sale held on  the adjourned date the respondent purchased the appellants share for   Rs.  8,000/-.   The  appellant  thereafter  filed   an application for setting aside the sale under Order XXI, r.90 C.P.C. on the ground that contrary to the provisions of r.69 the  notice relating to the adjourned sale did not  set  out the  hour  when  the auction would be  held  and  that  this omission  was  a material irregularity  which  vitiated  the sale.    Although  the  application  was  rejected  by   the Execution Court, a single judge of the High Court upheld the appellant’s  objection holding that the failure to  set  out the  hour amounted to a material irregularity.   However,  a Division  Bench in an appeal under clause 10 of the  Letters Patent of the Allahabad High Court reversed the order. In appeal to this Court it was contended (i) that the  order of the single judge was not a ’judgment’ within the  meaning of cl. 10 of the Letters Patent and hence no Letters) Patent appeal  could  be filed thereunder; and (ii) that  the  sale suffered   from   a  material  irregularity   which   caused substantial injury to the appellant and was therefore liable to be set aside. HELD: Dismissing the appeal, (i)  An  order  in  a proceeding  under  O.XXI,  r.90  is  a ’judgment’   inasmuch   as  such  a  proceeding   raises   a controversy  between  the parties  therein  affecting  their valuable  rights  and  the order  allowing  the  application certainly deprives the purchaser of rights accrued to him as a  result  of the auction-sale.  ’Me High  Court  was  there after  right  in holding that a Letters  Patent  appeal  law against the order of the single Judge. [789 C-D]

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(ii)  Rule  90  of  O.XXI of the Code,  as  amended  by  the Allahabad High Court, inter alia provides that no sale shall be  set  aside on the ground of irregularity or  even  fraud unless upon the facts proved the Court is satisfied that the applicant  has  sustained  injury by reason  of  such  irre- gularity  or fraud.  Mere proof of a  material  irregularity such  as  the one under r.69 and even  inadequacy  of  price realised  in  such  a  sale,  in  other  words  injury,  is, therefore, not sufficient.  It has further to be shown  that such injury was the result of material irregularity. [789 E] The  Division Bench of the High Court was right in  holding, on  the  facts in the present case, that the  appellant  had failed to show inadequacy 784 of  the price or that such inadequacy was occasioned by  the said material irregularity. [789 G] Standard Glass Beads Factory v. Shri Dhar, A.I.R. 1960  All. 692  (F.B.); Piare Lai v. Madan Lai, A.I.R. 1917  All.  325; Muhammad  Naimullah Khan v. lbsanullah Khan, (1892) 14  All. 226 (F.B.); Ram Sarup v. Kaniz Ummehani, I.Y.R. [1937]  All, 886;  Asrumati  debi v. Kumar Rupendra  Deb  Raikot.  [1953] S.C.R. 1159; Justices of the Peace for Calcutta v.  Oriental Gas Co., 8 Beng.  L.R. 433; Tuliaram v. Alagappa, I.L.R.  35 Mad. 1; Dayabhai v. Murugappa Chettiar, I.L.R. 13 Rang. 457; State  of  Uttar Pradesh v. Vijay Anand  Maharaj,  [1963]  1 S.C.R.  1,  Begum Aftab Zamani v. Lai Chand  Khanna,  I.L.R. [1969]  Delhi 34(F.B.); Shankarlal Aggarwal v.  Shankar  lal Poddar, [1964] 1 S.C.R. 717; Mohan Lai Magan Lai Thacker  v. Gujarat,  [1968]  2 S.C.R. 685; and Tarapore & Co.  v.  M/s. V/O Tractors Export, Moscow, [1969] 2 S C R 699 referred to.

JUDGMENT: CIVIL  APPELLATE JURISDICTION : Civil Appeal.  No.  1569  of 1966. Appeal  by special leave from the judgment and  order  dated August  22,  1961  of the Allahabad High  Court  in  Special Appeal No. 417 of 1959. Avadh Behari, for the appellant. Mohan Behari Lal, for the respondents. The Judgment of the Court was delivered by Shelat,  J.  The respondent had obtained a  decree  for  Rs. 9000/- and odd against the appellant.  In execution proceed- ings taken out by him, the appellant’s one fourth share in a house was put up for sale and a proclamation setting out the date  and hour when the sale would be held was duly  issued. The  sale,  however, was postponed to July 30, 1956  at  the instance of the appellant and on his offering to pay a  part of  the decreetal amount.  At the auction sale held  on  the adjourned date the respondent himself purchased the said one fourth share of the appellant for Rs. 8000/-.  The appellant filed an application for setting aside that sale under Order XXI, r. 90 of the Code of Civil Procedure on the ground that contrary  to  the  provisions of r. 69 of  that  Order,  the notice  relating to the adjourned auction sale did  not  set out  the  hour  when the auction would be  held  though  the original proclamation under which the auction sale was to be held  on  the earlier date specified both the hour  and  the date.   The appellant contended that the failure to  mention the  hour  contravened  Order XXI, r. 69  and  that  such  a contravention was a material irregularity which vitiated the sale.   The objection was overruled by the Execution  Court. The  appellant thereupon filed an appeal in the  High  Court where  a single Judge upheld the objection holding that  the

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failure  to  set  out  the  hour  amounted  to  a   material irregularity,  inconsequence whereof the appellant had  been prejudiced by the sale having fetched too 785 low  a value.  On these findings the learned  Judge  allowed the appeal and set aside the auction sale.  Aggrieved by the said  order’ the respondent filed. a Letters  Patent  appeal under  cl.  10 of the Letters Patent of the  Allahabad  High Court  and,  rule 5 of Ch.  VIII of the Rules  of  the  High Court.   A  Division Bench of the High  Court  reversed  the order  passed  by the learned single Judge and  allowed  the appeal.   Following  the Full Bench decision  of  that  High Court  in Standard Glass Beads Factory v. Shri  Dhar(1)  the Division  Bench rejected the appellant’s contention that  no Letters  Patent  appeal lay against such an order  and  held that  the order of the learned single Judge was a  ’judgment within  the  meaning of cl.10 of the  Letters  Patent.   The Division Bench further held that even assuming that the sale suffered  from  a material irregularity the  learned  single Judge  was  in  error  in holding  that  the  appellant  had established  any  prejudice to him in  consequence  of  that irregularity.   The  order of the learned single  Judge  was reversed  and the said sale was upheld.  On the  High  Court refusing a certificate, the appellant obtained special leave from this Court and filed the present appeal. In  support of the appeal counsel for the  appellant  raised two  points: (1) that the said order of the  learned  single Judge was not a judgment within the meaning of cl. 10 of the Letters  Patent and hence no Letters Patent appeal could  be filed thereunder, and (2) that the said sale suffered from a material irregularity which caused substantial injury to the appellant and was therefore liable to be set aside.  Counsel cited  certain decisions, in support of the contention  that the  order of the learned single Judge was not a  ’judgment’ within the meaning of cl. 10 of the Letters Patent.  Some of these decisions however, are under ss. 109 and 1 1 0 of  the Code  of  Civil  Procedure  and Arts. 133  and  134  of  the Constitution which would have no bearing on the construction of cl. 1 0 of the Letters Patent.  But before we enter  into the  controversy as to the meaning of the term  judgment  in cl. 10 it would be necessary to remember that the respondent having  been  declared  as the, highest  bidder  became  the purchaser  of the appellant’s one fourth share in  the  said property.   No  doubt the sale had to be  confirmed  by  the Court  under r.92 of 0. XXI before it could become  absolute and in the meantime the appellant could apply under r. 90 to have  it set aside.  If the Court, on such  an  application, were  to pass an order setting aside the sale such an  order would  clearly affect the rights acquired by the  respondent as  a  result  of  the sale.  On  the  other  hand,  if  the application were to be dismissed, such dismissal affects the right  of the judgment-debtor under r. 90.  The  application under  that Rule and the order made thereon, therefore,  are not merely procedural matters but are matters affecting  the rights of both the (1) A. I. R. 1960 All. 692 (F.  B.) 9Sup.CI(P)171-6 786 auction purchaser and the judgment-debtor.  The question  is whether such an order setting aside the sale is a ’judgment’ within the meaning of cl. 10 of the Letters Patent. At  one time the view held by the Allahabad High  Court  was that  no  Letters Patent appeal could, lie against  such  an order.   Thus,  in  Piare  Lai  v.  Madan  Lal(1)  it  held, following its earlier decision in Muhammad Naimullah Khan v.

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Ibsanullah Khan(’), that no appeal lay under cl.  I 0 of the Letters  Patent from an order of a single Judge of the  High Court  dismissing  an appeal from an order of  an  executing court on an application under 0. XXI, r. 90.  That decision, however, was rendered, on a view that s. 104(2) of the  Code debarred  even  a  Letters  Patent  appeal  under  cl.   10. Subsequently, the High Court abandoned that view and held in Ram Sarup v. Kaniz Ummehani(3) that S. 104(2) did not affect Letters Patent appeals from an order thereby falling in line with  the  other  High  Courts (see  Mulla,  Code  of  Civil Procedure, (13th ed.) 452).  None of these decisions was  on the question whether an order made under 0. XXL r. 90 was  a ’judgment’ or not. In  Standard Glass Beads Factory v. Shri Dhar (4)  the  High Court of Allahabad construed the term judgment as  including a final judgment as also a preliminary and an  interlocutory judgment and observed that it did not exclude an order.   On this view it held that an order passed by a single Judge  of the  High  Court dismissing an appeal against  an  order  of interim  injunction was a ’judgment’ within the  meaning  of cl.  10 of the Letters Patent, and a Letters Patent  appeal, therefore,  lay thereunder against it.   Reliance,  however, was placed on the decision in Asrumat Debi v. Kumar Rupendra Deb  Raikot(5)  where  the question  was  whether  an  order transferring  a  suit from a subordinate court to  the  High Court  under  cl. 13 of the Letters Patent of  the  Calcutta High  Court was a ’judgment’ within the meaning of  cl.  15. This  Court  held that it was not.  In doing  so  the  Court referred to the divergence Of opinion amongst the  Calcutta, Madras  and Ran on High Courts on the interpretation of  the term ’judgment’ in cl. 15 of the Letters Patent reflected in Justices  of the Peace for Calcutta v. Oriental Gas  CO.(6), Tuljaram   v.   Alagappa(7)  and   Dadabhai   v.   Murugappa Chettiar(8), but without resolving the divergence held  that an  order of transfer of a suit did not fall within any  one of  the  three  aforesaid views, and  therefore,  a  Letters Patent appeal therefrom was not maintainable.  Mukherjea, T. at  page II 67 of the report stated that although in such  a case there would be a controversy between the parties as  to whether the suit should be tried by the (1)  A. I. R. 1917 All. 325. (3)  I. L. R. [1937] All. 886. (5)  [1953] S. C. R. 1159 (7)  I. L. R. 35 Mad. 1. (2)   [1892] 14 All. 226 (F.  B.) (4)   A.I.R. 1960 All (P.D.) (6)   8 Beng.  L. R. 433. (8)   L. R. 13 Rang. 457. 787 court  where it was filed or in the High Court which had  to be determined, a decision on any and every point in  dispute between  the  parties to a suit was not judgment.   Such  an order  did not affect the merits of the controversy  between the  parties  in the suit itself, nor did  it  terminate  or dispose of the suit on any ground, and therefore, could  not be  placed  in  the same category as an  order  rejecting  a plaint or one dismissing a suit on a preliminary ground.  it Will  be  noticed  that  the order in  question  was  on  an application  in  the  suit  as a step  in  aid  towards  the determination of the controversy between the parties in the, suit.  It was, therefore, that the said observation was made that the order sought to be appealed against did not  affect the  merits  of  the  controversy in the  suit  nor  did  it terminate  or  dispose of the suit.  For an order  to  be  a ’judgment’ it is not always necessary that it should put  an

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end  to the controversy in the suit or should terminate  the suit.  Even the narrower definition of a ’judgment as  given by Couch, C.J. in the Justices Of the Peace for  Calcutta(1) was that it must mean a decision which affects the merits of the  question between the parties by determining some  right or  liability and such a decision might be either  final  or preliminary  or interlocutory.  The question as to  when  an order is -a judgment once again arose, in the State of Uttar Pradesh  v. Dr.  Vijay Anand Maharaj(2).  The  question  was whether  an order passed by a single Judge of a  High  Court dismissing an application for a review of his earlier  order was  a  judgment amenable to a Letters Patent  appeal.   The question  arose  in the following  manner.   The  Additional Collector,   Benaras’   assessed  the   respondent   to   an agricultural income tax under powers conferred on him  Under the U.P. Agricultural Income-tax Act, 1949.  The  respondent filed  a  writ petition in the High Court for  quashing  the said  order  on the ground of want of  jurisdiction  in  the assessing  officer.  The writ petition was allowed  and  the assessment  was  quashed.   As the State did  not  file  any appeal against the said order, the order became .final.   In 1956,  the State promulgated Ordinance No. II of 1956  which was,  subsequently replaced by U.P. Act XIV of 1956.   Under the Ordinance as also under the Act, the assessments made by the  Additional  Collector were  retrospectively  validated. Also,   a  right  was  conferred  upon  any  party  to   the proceedings under the U.P. Agricultural Income-tax Act, 1949 wherein  assessment was set aside on the ground of  want  of jurisdiction  to apply for a review of the said  proceedings in the light of the provisions of the Ordinance and the Act. Further,  a statutory injunction was imposed upon the  court to  review  such orders accordingly.  Pursuant to  the  said provisions, the appellant-&ate applied to the High Court  at Allahabad for review of the said order.  The application was dismissed  on the ground that neither the Ordinance nor  the Act entitled the appellant to a review of an order passed in a writ petition under Aft, (1) 8 Beng.  L. R. 433. (1) (1963) (1) S. C. R. 1. 788 226." The appellant filed a Special appeal under Ch.   VIII, r. 5 of the Rules of the High Court against the said  order. That  was dismissed inter alia on the ground that  the  said order of the single Judge was not a ’judgment’.  On  appeal, this  Court,  after referring to the aforesaid  cleavage  of opinion  amongst the High Courts on the meaning of the  term ’judgment,  held that the order dismissing  the  application for  review  in any event fell within the  narrower  meaning given to it by the Calcutta High Court, and that  therefore, the  impugned order was a ’judgment’ within the  meaning  of cl.  10 of the Letters Patent of the Allahabad  High  Court. This  Court  held  that  the  said  Ordinance  and  the  Act conferred  a  fresh  right  upon  a  party  to  the  earlier proceedings to have the previous order set aside and to have a decision from the Court on the basis ’of the amended  Act, that  this was a valuable and a substantive right  conferred upon  a party to the proceedings and that on the rival  con- tentions  the question of the fresh right conferred  upon  a party  to the proceedings and the jurisdiction of the  court to enforce the said right would be in issue and any decision thereon  -could  legitimately  be  said  to  be  a  decision determining  the rights of parties.  It also ,observed  that the  ’decision  of the learned single Judge  dismissing  the writ petition was certainly a decision denying the right  of the  appellants  alleged to have been  conferred  under  the

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amending Act, and therefore,, the order dismissing the  writ petition  was a ’judgment’ within the meaning of cl.  10  of the Letters Patent as also r. 5 of Ch.  VIII of the Rules of the  High  Court, and therefore, the Division Bench  of  the High  Court erred in holding that no appeal Jay against  the said order. In Begum Aftab Zamwi v. Lal Chand Khanna(’), the High ,Court of Delhi also has held that the expression ’judgment’ in cl. 10  of the Letters Patent of the Lahore High-Court not  only meant  a  judgment having the effect of a  decree,  but  any order which affected the merits of a controversy between the parties by determining some disputed right or liability. In Shankarlal Aggarwal v. Shankarlal Poddae(2 ) the question was  whether an order passed by a single Judge of  the  High Court  confirming  an  auction sale during  the  winding  up proceedings of the company was appealable.  Since the  Court heard that such an order ,was appealable under s. 202 of the Indian Companies Act, 1913, it did not go in to the question whether it was a ’judgment’ within the meaning of cl. 15  of the  Letters  Patent.  The, decision,  therefore,  does  not help.  Similarly, Mohan Lal Magan Lal Thacker v.  Gujarat(1) and  Tarapora  & Co. v. M/s V/O Tractors  Export,  Moscow(’) also are strictly not relevant as they were decisions on (1)  I. L. R.  [1960] Delhi 34 (F. B.) (3)  [1968] 2 S.C.R.  685. (2)  [1964] (1) S. C. R. 717. (4)  [1969] (2) S. C. R. 699. 789 the meaning of the expression ’final order’ in Arts. 133 and 134(1) (c) of the Constitution and not on the interpretation of  the,, term judgment’ in the Letters Patent of  the  High Courts. There  can be no doubt that an application under 0. XXI,  r. 90  to  set aside an auction sale concerns the rights  of  a person declared to be the purchaser.’ If the application  is allowed, the sale is set aside and the purchaser is deprived of-his right to have the sale confirmed. by the Court  under r. 92.  Such a right is a valuable right, in that, upon such confirmation  the sale becomes absolute, and the  rights  of ownership  in the property so sold become vested in him.   A decision  ’in such a proceeding, therefore, must be said  to be  one  determining the right of the auction  purchaser  to have  the  sale  confirmed  and made  absolute  and  of  the judgment-debtor, conferred by r. 90 to have it set aside and a  resale  ordered.  In our view an order  in  a  proceeding under  0.  XXI,  r. 90 is a ’judgment’ inasmuch  as  such  a proceeding raises a controversy between the parties  therein affecting their valuable rights and the, order allowing  the application  certainly deprives the purchaser of rights  ac- crued  to  him  as  a  result  of  the  auction-sale.    We, therefore,  agree with the high Court that a Letters  Patent appeal lay against the order of the learned single Judge. Rule  90 of 0. XXI of the Code, as amended by the  Allahabad High  Court, inter alia provides that -no sale shall be  set aside  on  the ground of irregularity or even  fraud  unless upon  the  facts  proved the Court  is  satisfied  that  the applicant   has   sustained  injury  by   reason   of   such irregularity  or  fraud.   Mere proof of  a  material  iffe- gularity  such  as the one under r.. 69  and  inadequacy  of price  realised  in such a sale, in other words  injury,  is therefore,  not sufficient.  What has to be  established  is that  there  was not only inadequacy of the price  but  that that  inadequacy  was  caused  by  reason  of  the  material irregularity  or  fraud.   A  connection  has  thus  to   be established  between  the inadequacy of the  price  and  the

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material irregularity. The  learned single Judge found that the appellant had  been prejudiced  inasmuch  as  the said sale  realised  only  Rs. 8,000/-  though the value of the appellant’s share  was  Rs. 20,000/-.   This view was founded upon a report made by  the Amin of the Execution Court in which that officer had valued the  said  share  at  Rs.  20,000/-.   The  Division  Bench, however,  held,  and in our view rightly, that  the  learned single Judge was in error in relying upon that report.   The record  clearly  shows  that  no notice  was  given  to  the respondent   of  the  appellants  application  to   have   a commissioner  appointed  to value the property.   The  trial Court appointed the Amin as com. missioner without any  such notice and behind the back of the respondent.  The Amin made his   valuation  without  giving  an  opportunity   to   the respondent  to be heard.  No opportunity was ever  given  to the  respondent  to  raise  any  objection  to-  -the   said valuation.  The 790 report  was filed in the trial court without any  notice  to the respondent.  Indeed, no reference was made to the report in  the trial court so that the trial court could  not  give any chance to the respondent to raise any contention against it.   It  was  for the first time  brought  out  before  the learned  single  Judge  who  accepted it  and  held  on  the strength  of  it  that the price realised at  the  sale  was grossly  inadequate.   In these circumstances  the  Division Bench  rightly held that the learned single Judge  erred  in relying on such a report. Barring  the  report no evidence whatsoever was led  by  the appellant  to show that his share in the said  property  was worth Rs. 20,000/-, and that therefore the price realised at the auction was inadequate.  The Division Bench was, in  our view,  right  in holding that the appellant  had  failed  to ’show  inadequacy of the price or that such  inadequacy  was occasioned by the said material irregularity. When  it  was  realised  that  the  contention  as  to   the inadequacy  of price cannot be sustained, counsel  tried  to argue  that  the said sale fetched Rs. 8,000/- only  as  the proclamation  for  sale  had  set  out  the  value  of-  the appellant’s  share at that amount only.  No  such  grievance was  made before the trial court, nor was such  a  grievance incorporated  in  the memorandum of appeal before  the  High Court.   Also, no such ground has been taken in the  special leave petition before this Court.  Obviously, the  appellant could  not  raise such a contention before the  High  Court, much less before this Court. Thus,  the contentions raised by counsel for  the  appellant fail and consequently the appeal is dismissed with costs. R.K.P.S.                                 Appeal dismissed. 791