BHIMAVARAPU BUTCHI REDDI Vs. BHARTIPADI SRI LAKSHMI VENKATA SURYAPRAKASARAO BY GUARDIAN MOTHER ANNAPURNAMMA AND ANR.
HIGH COURT OF MADRAS
BHIMAVARAPU BUTCHI REDDI
Bhartipadi Sri Lakshmi Venkata Suryaprakasarao By Guardian Mother Annapurnamma And Anr.
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(1.) I do not see any reason to interfere with the decree of the lower appellate Court. Two sets of properties were purchased by the plaintiff in Court auction in execution of a money decree which was obtained by defendant 2's father against one Nagi Reddi. Under the column "details of encumbrances to which the property is liable," a registered mortgage deed was mentioned as having been executed on 22nd June 1930, and it was said that the mortgage was a fraudulent transaction not supported by consideration and therefore not binding. It so turned out that on the date' of the Court sale the mortgagee had already filed the suit O.S. No. 108 of 1934. The Court sale at which the plaintiff became the purchaser was on 7th May 1934, which was subsequent to the institution of O.S. No. 108 of 1934. The plaintiff's purchase was therefore lis pendens and subject to the result of the mortgage suit and of the further proceedings taken therein. It was the duty of the auction -purchaser to have impleaded himself in that suit and to have sought redemption if he so wanted. He did not do it. The result was that a decree was passed, the properties were brought to sale and they were purchased by the mortgagee himself. The property was thus lost. The plaintiff then filed the suit out of which this second appeal arises against the two defendants, defendant 1 being the mortgagee Court auction -purchaser and defendant 2 the decree -holder in execution of whose decree the properties were sold and purchased by the plaintiff. As against defendant 1, the plaintiff sought a declaration that the mortgage was collusive and not supported by consideration. On the merits the trial Court found that the mortgage was not either collusive or not supported by consideration and therefore rightly refused any relief against defendant 1 and the plaintiff left it at that. As against defendant 2 the decree -holder, the argument was that as the plaintiff lost the properties which were brought to sale at his instance, the plaintiff is entitled to a refund of the money that he paid for the Court sale.
(2.) THIS claim is one based on a decision of the Pull Bench of this Court in Macha Koundan v. Kottara Koundan, A.I.R. 1936 Mad. 50. The trial Court upheld the claim of the plaintiff as against defendant 2 and granted a decree against defendant 2. On appeal the lower appellate Court reversed the decree. In the present second appeal though both the defendants are made respondents, relief is claimed only against respondent 1 who is defendant 2 in the trial Court. Mr. V. Subramaniam the learned advocate for the appellant argues that this case is directly covered by the Full Bench decision of this Court. Before proceeding further it must be mentioned that six items of properties were brought to sale and that five of those items were covered by the mortgage which has been mentioned above. These items were sold as a single lot and purchased by the plaintiff. It would appear that the other item which is not the subject of the mortgage and the sale in execution of the mortgage decree was also lost as. The result of a claim put forward by a third party. The appellant's learned advocate therefore says that his client has lost all the properties which were purchased by him and that therefore he is entitled to the refund of his bid amount. The facts of the case which came up for decision before the Pull Bench are however entirely different and I do not agree with the contention that the decision of the Pull Bench covers this case. In that case a property which was not the property of the judgment -debtor on the date of the Court sale was put up for sale. The fact that the judgment -debtor had no title to the property even on the date of the sale was not discovered within 80 days from the date of the sale. The sale was confirmed. The auction -purchaser lost the property as a result of a later suit by a third party and he thereafter filed the suit for recovery of the amount which was paid by him for the purchase. The question was whether the auction -purchaser's remedy was not confined to an application Under Order 21, Rule 91, Civil P.C., on the ground that the judgment, debtor had no title at all. This remedy can be availed of only if the want of title was discovered before the sale was confirmed. If the want of title is discovered after the Court sale is confirmed, then he has no remedy under the Civil Procedure Code. A right to recover the purchase money when the mistake or want of title was discovered thereafter was provided in the Code of 1882, but that was omitted in the Code of 1908. The question therefore was whether, in a case where the judgment -debtor had no title at all on the date of the Court sale and the defect of want of title was discovered long after the Court sale was confirmed, the auction -purchaser has a right to sue for the recovery of the purchase money. The learned Judges held that a person who purchased the property at a Court auction could, if he lost the property owing to want of title in the judgment -debtor, file a suit for recovery of the purchase money. In the present case there was no want of title in the judgment -debtor on the date of the Court sale. He had the equity of redemption. A suit had been filed by the mortgagee, but there is no allegation in the present plaint that on the date of the Court sale at which the plaintiff purchased the property, it was not worth the amount due under the mortgage. The fact that at the subsequent Court auction held in execution of the mortgage decree there was no surplus left is not a ground for holding that on the date of the Court sale at which the plaintiff purchased the property, the real value of the property did not exceed the amount due under the mortgage and costs. It is notorious that in forced sales in execution, the properties do not after all fetch even half the real value and there being no allegation in the present plaint that the real value of the property was not more than the amount due under the mortgage on the date of the purchase by the plaintiff, I decline to allow the learned advocate for the appellant to raise that question at this stage. We must proceed on the basis that there was the equity of redemption in the mortgagor and that to that extent title passed to the plaintiff. It might be that the auction -purchaser thought that he was getting a property free from any mortgage and that ultimately he found that there was a real mortgage fully supported by consideration. Further he was informed of the mortgage and the decree -holder stated what he believed, namely, that the mortgage was collusive and not "supported by consideration. No one could at that stage foretell what would be held in the mortgage action. It only meant that what was put up for sale was subjected to a mortgage which might turn out to be not binding. The purchaser must have taken this element into consideration when he offered his bid. He was purchasing the property with his eyes open and subject to the possibility of the mortgage being held valid and supported by consideration.
(3.) ON the ground that some interest did pass to the plaintiff under the Court sale, I hold that the decision of the Full Bench does not apply to this case. A decision of Chandrasekhara Aiyar J. in S.A. No. 462 and 650 of 1943 has been brought to my notice. There a property said to be of the extent of four acres odd was put up for sale. Ultimately it was found to be only one acre odd. The auction -purchaser filed the suit out of which the second appeal arose for the recovery of the proportionate part of the amount that he paid in the Court auction. Following the Full Bench decision, the learned Judge gave the plaintiff a decree for a proportionate part of the price which was paid by the plaintiff at the Court auction. In so doing the learned Judge has distinguished -cases where the entire property was not lost and the auction -purchaser still had some interest though only a reduced interest in the property purchased by him. The learned Judge said this: Once it is conceded, as it ought to be, that there is a right of suit to recover money paid under these circumstances, apart from summary remedy provided for a decree -holder in the Civil Procedure Code, which is confined only to cases where the sale is set aside on the ground of absence of saleable interest, it is difficult to understand why the remedy should be deemed to exist only when there is a total failure of title and not when there is a partial failure of title partial not in the sense that the judgment -debtor had a lesser interest in the properties sold than full ownership -but in the sense that he had no title at all to a portion of the property sold. Evidently the learned Judge draws a distinction between a case where the judgment -debtor had no title whatsoever to three acres, out of the four acres sold in Court auction and a case where the judgment -debtor has still some interest though not a full absolute interest. If the property was sold as the absolute property of the judgment -debtor and it turns out that the judgment -debtor had only a life interest or a lessee's interest or only the equity of redemption, no suit would lie. The present case is covered by the exception which the learned Judge recognized in this judgment.
There are weighty considerations for reconsidering the Full Bench and these have been discussed in a decision of this Court in App. No. 90 of 1942. I hold that the principle of the Full Bench judgment must not be extended and that it should be applied only to a case where the judgment -debtor had no interest at all at the time when the Court auction was held and not to a case where the judgment -debtor had some interest; whether that interest is as valuable as the auction -purchaser thought or otherwise. In Izatunnissa Begum v. Pertab Singh, (1909) 31 All. 583 the Judicial Committee held that where property was sold in a Court auction expressly subject to a mortgage and it was later on found that the mortgage was unenforceable for some reason and the auction -purchaser got the property free of the encumbrance, the purchaser cannot be ordered to pay the amount of the mortgage. If in such a case the auction -purchaser is entitled to the benefit of the amount of the mortgage subject to which the purchased the property, then in the converse case where the property was sold with the remark that the mortgage on the property was collusive and not supported by consideration and it ultimately turned out that it was supported by consideration, the auction -purchaser ought to bear the loss. I do not see any distinction of substance between the case before me and the case before the Judicial Committee. I dismiss the second appeal. I leave the parties to bear their own costs in this second appeal. (No leave.);
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