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PETITIONER: RAMCHANDRA  SPG. & WVG. MILLS

       Vs.

RESPONDENT: BIJLI COTTON MILLS & ORS.

DATE OF JUDGMENT: 16/12/1966

BENCH: SHELAT, J.M. BENCH: SHELAT, J.M. WANCHOO, K.N. BACHAWAT, R.S.

CITATION:  1967 AIR 1344            1967 SCR  (2) 301

ACT:      Civil  Procedure  Code (Act 5 of 1908), ss.  2(2),  47, O.21  R.84  and  O.21 R.90--Sale of  property  in  execution proceedings--Sale held by executing court to be a nullity on ground   that   one-fourth  of  purchase  price   not   paid immediately  after auction--Order  whether  appealable--O.21 R.90 whether applicable.

HEADNOTE:      The   appellant’s  factory  was  sold  by  auction   in execution of a decree and was purchased by the  respondents. The  appellant  challenged the sale on the  allegation  that one-fourth  of  the sale-proceeds was not paid to  the  Amin immediately  after the auction and thus 0. 21 R. 84 had  not been   complied   with.   The  evidence  produced   by   the respondents showed that they had paid the required amount to the  Amin after the latter had consulted the Munsif  on  the same  day.   The Civil Judge disbelieving  the  respondents’ version held the sale to be a nullity and ordered a re-sale. The High Court however decided in favour of the  respondents and rejected the appellant’s legal contentions that (i)  the order  of  the  Civil  Judge  being  interlocutory  was  not appealable and (ii) that 0. 21 R. 90 was not applicable.  On appeal by Special Leave to this Court, HELD  : (i) The sale had been declared to be a  nullity  and there  was thus no question of material irregularity  having been committed. 0. 21 R. 91 therefore did not apply. [304 A] (ii) The order of the Civil Judge however finally determined the question whether the sale was a nullity.  After that  no question  was  left to be decided as between  the  judgment- debtor  and the auction purchaser.  The order was  therefore not an interlocutory order but a final order determining the rights  of the parties.  It fell within the definition of  a decree  under s. 2(2) read with s. 47 of the Code  of  Civil Procedure  and was appealable under s. 96 of the Code.  [307 G; 305 A] Case law considered. Mrs.   Peliti  v.  Kanshi  Gopal,  A.I.R.  1939  Lah.   210, disapproved. Manilal  Mohanlal  Shah & Ors. v. Sardar Sayed  Ahmed  Sayed Mohamad  & Anr. [1955] 1 S.C.R. 108 and Jethanand & Sons  v.

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State of Uttar Pradesh, A.I.R. 1961 S.C. 794, followed.

JUDGMENT: CIVIL APPELLATE JURISDICTION : Civil Appeal No. 877 of 1964. Appeal  by special leave from the judgment and  order  dated May  9, 1963 of the Allahabad High Court in Execution  First Appeal No. 410 of 1962. Ravinder Narain, for the appellant. J. P. Goyal and E. C. Agarwala, for respondents Nos.  1  and 2. The Judgment of the Court was delivered by Shelat, J. This appeal by special leave raises the  question whether  an  order,by an executing Court  setting  aside  an auction sale as a nullity is an appealable order 302 In pursuance of a decree passed against the appellant (judg- ment  debtor)  the  judgment  creditor  took  out  execution proceedings.   An auction sale of the factory  belonging  to the  appellant  was  ordered by  the  executing  court.   In pursuance of that order the Amin (the auction officer)  held an auction sale on September 10, 1962.  Respondent No. 1 was held  to  be  the highest bidder for  Rs.  2,45,000/-.   The appellant challenged the auction sale alleging that the Amin had  not  realised 1/4th of the sale  proceeds immediately after the said auction was closed as required by 0.21 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  before  the  Civil  Judge, Aligarh. 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 it  in the Treasury.  He also alleged that the  Amin  wanted ,to  know whether he could accept a cheque instead  of  cash and therefore took Chhotelal, his representative, along with him  to  the  residence  of the  Munsif,  Hathras,  to  take directions.   Leaving  Chhotelal  in  the  car  outside  the Munsif’s  residence, the Amin went in to consult the  Munsif if  he could accept a cheque but the Munsif advised  him  to take cash.  Thereafter the Amin returned to the car where he accepted the said amount from Chhotelal and issued there and then  a receipt therefor.  The respondent’s .case  therefore was  that he offered the amount immediately, that is was  no fault of his that the Amin did not then accept it, and  that it  was  paid  in  any event  soon  after  the  auction  and therefore payment was in consonance with 0. 21 R. 84. The Civil Judge refused to accept the case of respondent No. 1  ,and  setting  aside the auction sale held  it  to  be  a nullity.   He  rejected the report of the Amin that  he  had accepted  the  money  immediately after  seeing  the  Munsif outside  the Munsif’s house where Chhotelal was in the  car. The  Civil Judge thought that the Munsif’s evidence did  not support  the Amin as the Munsif had stated that it was  only the Amin who had come to see him.  Therefore the evidence of the  Amin and Chhotelal that the amount of Rs. 61,250/-  was paid in the car outside the Munsif’s house was not free from doubt.  What impressed the Civil Judge was the fact that  in his  report  dated  September  10, 1962  the  Amin  had  not mentioned  the fact of his having received the  said  amount and  the receipt issued by him that day.  There was  however an endorsement at the foot of that report made on  September 11,  1962  in which the Amin had mentioned the fact  of  his

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having received the said amount and the receipt having  been issued  by  him  on September 10, 1962.   The  Civil  Judge, however, felt that if he had received that                             303 amount  on  September 10, 1962, the Amin was bound  to  have mentioned  that  fact in the body of that report  that  very day, that is, on the 10th and that therefore the endorsement was  written out as an afterthought to  support  Chhotelal’s evidence.   Apart from the evidence of the Amin, the  Munsif and  Chhotelal, there was also the evidence that  respondent No.  1 had that day withdrawn Rs.1,51,000 from the Bank  and had  available with him cash and there was no reason why  he should  not have paid Rs. 61,250 from that amount that  very day. Respondent  No. 1 filed an appeal against the said order  in the  High Court.  The High Court accepted the Amin’s  report and his evidence and reversed the judgment and order of  the Civil Judge holding that there was no breach of 0. 21 R.  84 and  that  the sale therefore could not be set  aside  as  a nullity.  The High Court held-and rightly, that there was no contradiction between the Munsif’s evidence and that of  the Amin.  For, if Chhotelal was waiting in the car outside  the Munsif’s  house  the Munsif was not likely to  see  him  and would  naturally depose that the Amin alone had come to  his house for consulting him.  The High Court also rightly  held that  there was no valid reason to doubt the Amin’s  report, the  said receipt and the evidence that sufficient cash  was available with respondent No. 1 from which he had no  reason not  to pay the amount of Rs. 61, 250 immediately after  the auction and that though some time elapsed after the  auction as  the Amin went to consult the Munsif the said amount  was paid in accordance with 0. 21 R. 84. Counsel for the appellant tried to challenge this finding of fact by the High Court but as the evidence on this  question was  clear and the High Court’s finding was fully  justified we, in our discretion under Art. 136 declined to permit  him to  go  into  the evidence with a view to  reopen  the  said finding. The only question which the appellant’s Counsel then  raised was  that the order of the Civil Judge was made under 0.  21 R.  84, and that order was not a final but an  interlocutory order.   It did not conclude the execution  proceedings  but only  ordered a fresh auction sale therefore no  appeal  Jay before  the  High Court.  He also contended  that  the  sale being  contrary  to  0.  21 R. 84,  it  was  a  nullity  and therefore  0. 21 R. 90 did not apply.  Hence there could  be no  appeal against the said order.  These  very  contentions were raised before the High Court but they were rejected  on the  ground  that the appellant’s application could  not  be under  0.  21 R. 84 and that therefore the  application  was under R. 90 of that order, that is, that it was an objection to a material irregularity in the conduct and publication of the  said  sale.   The High Court also  held  that  such  an objection  related to execution of the decree and  therefore would  fall under section 47 of the Code and an  appeal  lay against such an order. 304 In Manilal Mohanlal Shah & Ors. v. Sardar Sayed Ahmed Saiyed Mohammed & Anr.(1) this Court has held that Rules 84 and  85 of  Order XXI being mandatory if they are not complied  with there  would  be no sale at all and the court  is  bound  to order  a resale.  That decision also held that  since  there would  be  no sale and the imported sale  is  nullity  there would  be  no  question of a material  irregularity  in  the conduct of the sale and R. 90 would therefore not apply.  An

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application under R. 90 as held by the High Court  therefore would not lie. The  question then is whether section 47 of the  Code  would apply.   It  has  been  consistently held  in  a  number  of decisions  by  the Privy Council and the  High  Courts  that section  47 is wide and should be liberally construed so  as not  to  drive the parties to a separate  suit  and  thereby prolong   litigation.    All  questions  relating   to   the execution,  discharge  or satisfaction of the  decree  which arise  between  the parties fall within the  scope  of  this section.   The  Explanation  added to the  section  in  1956 includes a purchaser at a sale in execution of the decree as a party to the suit.  Consistently with the decisions giving a  libreral interpretation to this section it has been  held that an order setting aside an auction sale for  non-payment of deposit as provided by R. 85 of O. 21 falls under section 47 irrespective of whether the purchaser is a  decree-holder or  a stranger. (See Nandlal v. Siddiquan) 2 The High  Court of Madras has also held that where an auction purchaser  has deposited  the balance amount under R. 85 but has failed  to lodge  a receipt therefor and the court orders  re-sale,  an application for review of such an order falls under  section 47  and such an order is appealable. (Veerayya  v.  Tirichi- rapalli   District  Board)3.   Various  High   Courts   have similarly  held  that when a sale in execution of  a  decree whose  validity is not questioned is attacked on the  ground that  it is not merely irregular but illegal and  void  that must be done by a proceeding under section 47 and not by  an independent  suit.  [See cases collected in  Mulla’s  C.P.C. 13th  ed.   Vol.  1 p. 236, footnote (i)  ].  If  the  order setting  aside  the sale on the ground that the  deposit  as provided for under R. 85 was not made falls within the scope of section 47 there does not appear to be any reason why  an order holding the sale to be a nullity on the ground that R. 84  was  not  complied  with cannot  also  fall  under  that section. Under section 2(2) of the Code a decree is deemed to include the determination of any question falling within section 47. An  execution  proceeding  no doubt is not a  suit  but  the combined  effect of section 2(2) and section 47 is  that  an order  passed  in execution proceeding is  tantamount  to  a decree in so far as regards the court (1) [1955] 1 S.C.R. 108 (2)A.I.R. 1957 All’-558- (3)  A.I.R. 1961-Mad.409.                             305 passing  it is conclusively determines the question  arising between  the  parties  to the  suit  (which  expression  now includes an auction purchaser) and relating to the execution of  the  decree.  Therefore if an order decides  a  question relating  to the rights and liabilities of the parties  with reference to the relief granted by the decree it would  fall under section 47 and would be a decree within the meaning of section 2(2).  If such an order is a decree it is appealable under section 96 of the Code. Reliance  was  placed on the judgment of the High  Court  of Bombay in Manilal Mohanlal Shah v. Sardar Sayed Ahmed  Sayed Mohamed(1),  (from  which  the appeal came  up  before  this Court),(2) where the High Court took the view that since  it is  the  duty of an executing court to order  re-sale  where conditions  of R. 84 are not complied with even  though  the Rule  does not expressly provide for an application, if  the Court sets aside the sale upon an application made to it  it can  be said to have acted suo moto and the order  therefore would be under R. 84.  It is however not necessary for us to

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decide  whether  it  is so or not, for,  the  only  question before  us is whether such an order amounts to a decree  and is  therefore  appealable.  Counsel for the  appellant  then relied  upon  Mrs.  Peliti v. Kanshi Gopal(3) where  it  was held that such an order was not appealable on the ground (1) that an auction purchaser even if he is not a stanger is not a party to the suit and (2) that such an order setting aside an auction sale would not be one relating to the  execution, discharge or satisfaction of the decree and therefore not an order under section 47.  The first ground no longer survives in  view  of  the  Explanation  added  to  section  47.   It therefore remains to be seen whether the second ground is  a valid  ground.  In Bharat National Bank v. Bhagwan  Singh(4) the  judgment-debtor  raised  three  contentions:  (1)  with regard to his objection to the proclamation of sale, (2) the jurisdiction of the executing court and (3) limitation.  The Division Bench which heard them upheld the first  contention holding that his objection to the proclamation was valid and therefore  ordered a fresh sale but rejected his  other  two objections.   In an application for leave to appeal  to  the Privy Council heard by a Fall Bench of that High Court,  the judgment-debtor  contended that he was entitled to leave  on the  ground that though the first part of the order did  not finally determine the rights of the parties the High Court’s decision  on the rest of his other two contentions  amounted to  a  decree.   The  Full  Bench  by  a  majority  decision disallowed  the application on the ground that there was  no final determination of the execution proceedings as the High Court  had ordered a resale and even if the order in  regard to the contentions as to jurisdiction and limitation were to be  considered to be a final determination the  judgment  of the High Court could not be divided   2,1.2 (1)  57 Bombay Law Reporter 10. (3)  A.I.R. 1939 Lah. 210.  Ml Sup.  C. 1.167-6 (2) [1955] 1.S.C.R 108 (4)  A.I.R. 1943 Lah. 210. 306 into  parts.   The question whether ordering  a  fresh  sale would  be  a  final determination if raised  by  an  auction purchaser  was  not before the High Court.  As  regards  the judgment-debtor   the  order  obviously  was  not  a   final determination as the execution proceedings were not  finally concluded.  The decision in Md. Zakaria v. Kishun(1)  relied on by Counsel for the appellant laid down two  propositions: (1) that an order under R. 66 of 0.21 was not an  appealable order and (2) that the only orders which are appealable  are those  which  determine  the rights of the  parties  to  the execution. There  can be no objection to these propositions.  But  this decision  has no bearing on the contention raised before  us and can therefore be of no assistance.  Mohit Narain Jha  v. Thakan Jha(2). is again a case of an order passed under 0.21 R. 66 refusing to notify a certain lease in the proclamation of sale.  There being no determination of the rights of  the parties  and  the order at best being a processual  one  the High  Court  was  right in holding that such  an  order  was neither a decree nor appealable.  The decision in Radhe  Lal v.  Ladli Persad(3) which the Counsel referred to  does  not also  assist him but lays down on the contrary that where  a plea  which  is  overruled  is the  subject  of  a  separate petition  under  section 4 and it is a self  contained  plea with no reference to the other matters in dispute the  order over ruling such a plea is final as regards that  particular

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objection  raised by the judgment-debtor and is  appealable. In Pankaj Kumar v. Nanibala(4) the High Court was  concerned with the question whether the order in question was a  final order under Art. 133 of the Constitution.  The order against which  an  appeal  to this.  Court was sought  for  was  one dismissing certain objections raised by the judgment-debtor. The  order did not dispose of the execution  proceedings  in which  it was raised and on that ground the High Court  held that  no appeal lay before this Court and refused  to  issue the certificate.  Thus, except for the decision in Mrs.   J. Peliti v. Kanshi Gopal(5) none of the decisions relied on by Counsel relates to the question before us and therefore they are not of any assistance. As  to  what is a final order was stated by  this  Court  in Jethanand  &  Sons  v.  State of  Uttar  Pradesh(6)  in  the following terms:                "An  order is final if it amounts to a  final               decision relating to the rights of the parties               in dispute in the civil proceeding.  If  after               the  order the civil proceeding still  remains               to be tried and the rights in dispute  between               the parties had to be determined, the order is               not  a final order within the meaning of  Art.               133."               .lm0               (1) A.I.R. 1926 All. 268. (2)  I.L.R.  4  Pat.               731.      (3) A.I.R. 1957 Punjab 92.    (4)  A.I.R.  1963,   Cal. 524.      (5) A.I.R. 1939 Lah. 210.     (6) A.I.R. 1961 S.C. 794.                             307 Similarly  in  Abdul Rahman v. D. K.  Cassim(1)  Sir  George Lowndes observed:                "The finality must be finality in relation to               the  suit.   If after the order  the  suit  is               still  alive  in which rights of  the  parties               have  still  to be determined no  appeal  lies               against  it.  The fact that the order  decides               an  important  and even a vital  issue  is  by               itself  not material.  If the decision  on  an               issue puts an end to the suit, the order  will               undoubtedly be a final one." In deciding the question whether the order is a final  order determining  the  rights  of parties  and  therfore  falling within the definition of a decree in section 2(2), it  would often become necessary to view it from the point of view  of both the parties in the present case-the judgment debtor and the  auction-purchaser.   So far as the  judgment-debtor  is concerned  the order obviously’ does not finally decide  his rights  since  a  fresh  sale  is  ordered.   The  position, however,  of  the auction purchaser is different.   When  an auction-purchaser  is declared to be the highest bidder  and the  auction is declared have been concluded certain  rights accrue  to him and he becomes entitled to conveyance of  the property through the court on his paying the balance  unless the   sale  is  not  confirmed  by  the  Court.   Where   an application  is  made  to set aside the auction  sale  as  a nullity,  if the court sets it aside either by an  order  on such an application or suo moto the only question arising in such  a  case  as between him and  the  judgment  debtor  is whether the auction was a nullity by reason of any violation of  0. 21 R. 84 or other similar mandatory  provisions.   If the court sets aside the auction sale there is an end of the matter and no further question remains to be decided so  far as he and the judgment-debtor are concerned.  Even though  a

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resale  in  such a case is ordered such an order  cannot  be said  to be an interlocutory order as the entire  matter  is finally  disposed, of.  It is thus manifest that  the  order setting  aside the auction sale amounts to a final  decision relating  to  the rights of the parties in dispute  in  that particular civil proceeding, such a proceeding being one  in which the rights and liabilities of the parties arising from the auction sale are in dispute and wherein they are finally determined by the court passing the order setting it  aside. The parties in such a case are only the judgment-debtor  and the  auctionpurchaser,  the  only  issue  between  them  for determination being whether the auction sale is liable to be set  aside.  There is an end of that matter when  the  court passes  the  order  and that order is final  as  it  finally determines the rights and liabilities of the parties,  viz., the  judgment-debtor and the auction-purchaser in regard  to that  sale,  as  after  that order  nothing  remains  to  be determined as between them. (1) 63 I.A. 76. 308 An   auction  sale  is  held  in  pursuance   of   execution proceedings taken out by the judgment-creditor and the order passed  by  the  executing  court.   Until  the  decree   is satisfied or discharged the execution proceedings cannot  be said  to have been completed.  It is by the payment of  sale proceeds  resulting  from  such  sale  that  the  decree  is satisfied  either in part or in whole.  That  being  clearly the position it is difficult to comprehend as to why as held in Mrs.  J..Peliti v. Kanshi Gopal(1) an order declaring  an auction sale as a nullity cannot be said to be one  relating to  the  execution discharge or satisfaction of  the  decree within the meaning of section 47. In  our  view  the  order in  question  was  a  final  order determining  the  rights of the parties and  therefore  fell within  the definition of a decree under section  2(2)  read with section 47 and was therefore an appealable order.   The appeal therefore lay before the High Court.  The contentions raised  on  behalf  of  the  appellant  therefore  must   be rejected. The appeal is dismissed with costs. G.C.                                 Appeal dismissed. (1) A.I.R. 1939 Lah. 210. 309