vil Appeal Nos
2990 91 of 1980
From the Judgment and Order dated 209
1979  11979 of the Madhya Pradesh High Court in Misc
Appeal No 113 of 1976
Shiv Dayal Srivastava TS Krishna Moorthy lyer DN Mishra RP Srivastava section Sukumaran and HK Puri Harish N Salve KK Mohan AK Sanghi SK Agnihotri Ashok Singh HK Puri and 700 SK Gambir for appearing parties
The Judgment of the Court was delivered by OJHA J
These two appeals by special leave raise an interesting question as to whether the provisions contained in Order 34 Rule 5 of the Code of Civil Procedure hereinaf ter referred to as the Code are attracted during the course of execution of an order of sale of mortgaged property passed under section 32 of the State Financial Corporation Act 1951 hereinafter referred to as the Act
Necessary facts in order to appreciate the context in which this question arises may be stated in brief
Maganlal who is the appellant in Civil Appeal No 2990 of 1980 executed a mort gage on July 16 1965 in favour of MP State Financial Corporation hereinafter referred to as the Corporation as security for a loan taken by him from the Corporation
The amount of loan not having been paid by Maganlal the Corpora tion initiated proceedings under section 31 of the Act for recovery of Rs51799 which according to it was the amount due by attachment and sale of the mortgaged property
This application was made as contemplated by Section 31 of the Act before the District Judge
After adopting the procedure contemplated by section 31 of the Act the District Judge passed an order for sale of the property which was ultimate ly sold for Rs53000 in an auction
Ms Jaiswal Industries hereinafter referred to as the first purchaser was the highest bidder
Magahlal made an application under Order 21 Rule 90 of the Code for setting aside the sale
This appli cation was allowed by the Additional District Judge and the sale was set aside
Aggrieved by that order the first pur chaser preferred a miscellaneous appeal in the High Court and also made an application for staying further proceedings for re sale
The High Court however did not stay further proceedings for re sale but only ordered that the fresh sale should not be confirmed till the disposal of the appeal
Fresh auction accordingly took place and the sale was knocked down in favour of Ramnarayan and others hereinafter referred to as the second purchaser who are the appellants in Civil Appeal No 2991 of 1980
The appeal of the first purchaser was subsequently allowed by the High Court
The application made by Maganlal under Order 21 Rule 90 of the Code was dismissed and the sale in favour of the first purchaser was confirmed
It is this order which has been challenged in Civil Appeal No 2990 of 1980 by Maganlal and by the second purchaser in Civil Appeal No 2991 of 1980 as already indicated above
Maganlal has made an application before this Court under order 701 34 Rule 5 of the Code being CMP No 9940 of 1982 to which an objection has been filed
This application was ordered to be put up at the time of the hearing of the appeal
Subse quent events and proceedings of the court below on the basis whereof this application has been made as stated therein are these
A sum of Rs65000 was paid by Maganlal to the Corpora tion on December 3 1988 in full and final settlement of its claim and the Corporation acknowledged it by granting a receipt
Certification of the adjustment thus made was recorded by the District Judge on April 6 1981
An applica tion purporting to be under Order 34 Rule 5 of the Code was made on November 20 1981 by Maganlal for depositing Rs2650 equivalent of 5 of Rs53000 which was the highest bid of the first purchaser and a further sum of Rs7300 that is 5 of Rs 146000 which was the highest bid of the second purchaser
The prayer which was made in this applica tion was that the aforesaid sums may be paid to the first and second purchasers respectively and a final decree be passed in his favour in accordance with Order 34 Rule 5 of the Code
The Additional District Judge by his order dated November 27 1981 permitted Maganlal to deposit the two amounts separately at his risk and we are informed by his learned counsel that these amounts were deposited in pursu ance of the said permission
According to learned counsel for Maganlal no final orders were passed on the aforesaid application by the Additional District Judge in view of the pendency of these appeals in this Court and it was as such that CMP No 9940 of 1982 referred to above was filed in this Court
It was urged by learned counsel for Maganlal that in case CMP No 9940 of 1982 is allowed it will not be necessary for him to press the merits of the appeals and it is only in the event of the said application being dismissed that merits of the appeal will have to be pressed
He therefore made a request that the said application may be decided first
Learned counsel for the first and the second purchasers did not seriously dispute the above contention
We have accordingly heard learned counsel for the parties on the said application and have not heard them on the merits of the appeals at this stage
The aforesaid application has been opposed by learned counsel for the first and second purchasers on the ground that an order of sale of the mortgaged property passed by the District Judge under Section 32 of the Act after affect ing an attachment under section 31 thereof will not come within the purview of a final decree for sale of mortgaged property contemplated by Order 34 Rule 5 of the Code and as such the 702 benefit of that provision could not be extended to Maganlal
According to learned counsel for the purchasers Order 34 Rule 5 of the Code could be applied only if in a suit insti tuted in this behalf on the basis of a mortgage deed a final decree for sale was obtained and the property was put to auction in pursuance of such decree
The other submission which was made by them was that in any view of the matter the High Court after allowing the appeal filed by the first purchaser having confirmed the sale in his favour an appli cation under Order 34 Rule 5 of the Code was not maintain able inasmuch as the said provision contemplated payment on or before the day fixed or at any time before the confirma tion of a sale
Learned counsel for Maganlal on the other hand urged that notwithstanding an order of confirmation of sale in favour of the first purchaser having been passed by the High Court Order 34 Rule 5 of the Code would still be attracted inasmuch as these appeals have been filed against the said order and till these appeals are decided the sale in favour of the first purchaser cannot become absolute
As regards the second purchaser he pointed out that while permitting fresh sale during the pendency of the appeal by the first purchaser the High Court had specifically directed that the fresh sale which may take place shall not be confirmed
He also urged that Order 34 Rule 5 of the Code was attracted even to an order of sale of mortgaged property passed under section 32 of the Act and since the right of redemption which vests in Maganlal has not yet extinguished in view of the pendency of these appeals there was no impediment in the relief contemplated by Order 34 Rule 5 of the Code being granted
We shall first deal with the question with regard to the effect of an appeal being pending against an order dismiss ing an application under Order 21 Rule 90 of the Code
In Chandra Mani vs Anarjan Bibi AIR 1934 PC Page 134 in execution of two final mortgage decrees for sale the mort gaged properties were sold by auction
The judgment debtors filed applications under Order 21 Rule 90 of the Code which were dismissed and the sales were confirmed in pursuance of Order 21 Rule 92 on April 22 1924
Appeals were filed against this order by some of the judgment debtors in the High Court which were dismissed on March 17 1927
Sale certificates were thereafter granted to the two auction purchasers on May 19 1928 and June 6 1928 respectively who thereupon applied on September 10 1928 for possession of the properties purchased by them
These applications were objected to by the judgment debtors on the ground that they were barred by limitation under Article 180 of the Limita tion Act 1908 703 which provided that such an application must be made within three years from the time when the sale becomes absolute
The Subordinate Judge overruled the objection on the ground that in view of the pendency of the appeals filed by the judgment debtors against the order dismissing their applica tions under Order 21 Rule 90 of the Code time did not begin to run until March 17 1927 when the said appeals were dismissed by the High Court
On appeal by the judgment debtors the High Court took the view that the sale became absolute on April 22 1924 when the Subordinate Judge con firmed the sales
On further appeal by the auction purchas ers the order of the High Court was reversed by the Privy Council and it was held Upon consideration of the sections and orders of the Code their Lordships are of opinion that in construing the meaning of the words when the sale becomes absolute in Act
180 Tim
Act regard must be had not only to the provisions of 021 R 921 of the schedule to the Civil Procedure Code but also to the other material sections and orders of the Code including those which relate to appeals from orders made under 021 R921
The result is that where there is an appeal from an order of the Subordinate Judge disallowing the application to set aside the sale the sale will not become absolute within the meaning of article 180 Lim
Act until the disposal of the appeal even though the Subor dinate Judge may have confirmed the sale as he was bound to do when he decided to disal low the above mentioned application
Their Lordships therefore are of opinion that on the facts of this case the sales did not become absolute within the meaning of article 180 Lim
Act until 17th March 1927 and that the applications for possession of the properties purchased at the auction sales were not barred by the Limita tion Act
 A similar view was taken by this Court in Sri Ranga Nilayam Ramkrishan Rao vs Kandokari Chellayamma and another  where it was held that when an appeal is filed against an order refusing to set aside an execution sale under Order 21 Rule 90 of the Code no finality can be attached to the order confirming the sale until the appeal is decided
In SV Ramalingam  others vs KE Rajagopalan and other 1975 2 MLJ Page 494 the question came up directly in connection with the applicability of Order 34 Rule 704 5 itself which contemplates payment into court on or before the day fixed or at any time before the confirmation of a sale
In that case too in pursuance of a final decree passed in this behalf the mortgaged property was sold and the applications made by the mortgagors for setting aside the sale were dismissed and the sale was confirmed and the sale certificate was also engrossed on stamp papers
The mortgagors filed an appeal against that order before the High Court and during the pendency of the appeal an applica tion under Order 34 Rule 5 was filed for redemption of the mortgage
This application was opposed inter alia on the ground that such an application could not lie after the sale had been confirmed by the lower court
While repelling the objection of the auction purchaser and holding that the judgment debtors were entitled to the benefit of Order 34 Rule 5 of the Code it was held by Mr Justice section Natarajan as His Lordship then was The confirmation of a sale subsequent to the dismissal of a petition under Order 21 rule 90 cannot in reality alter the situation when the mortgagor judgment debtor has pre ferred within time an appeal against the dismissal of his petition under Order 21 Rule 90
Though the confirmation of the sale does take the auction purchaser a step further than before the confirmation of the sale the confirmation by itself is in one sense inchoate
The confirmation gives the sale only viability but does not render the sale an indefeasible one till such time as the appeal preferred by the mortgagor against the validi ty of the sale remains undisposed
In that sense the confirmation effected by the exe cuting Court may become final as far as the executing Court is concerned but it certainly does not stamp the transaction with irrevoca ble finality when alone the rights of parties get crystallised beyond retracement
Conse quently the appeal preferred by the judgment debtor has the effect of rendering a sale and its confirmation fluidal and nebu lous
It therefore follows that the finality of the sale is rendered at large before the appellate Court in appeal and as such the petitioners will be entitled to exercise the right conferred on them under Order 34 rule 5 to redeem the mortgage
 The same view was reiterated in almost an identical case by a Bench of the Madras High Court in M Sevugan Chettiar vs VA Narayana Raja AIR 1984 Madras Page 334
It was held that so long as there is no confirmation of sale in the eye of law and matter was sub 705 judice in appeal time was available for the judgment debtor to make the deposit under Order 34 Rule 5 of the Code and the process of deposit could be worked out until the confir mation of sale reaches the finality
Section 60 of the Transfer of Property Act confers on the mortgagor a right to redeem a mortgage
In so far as it is relevant for the purpose of these appeals the said sec tion reads as hereunder 60
Right of mortgagor to redeem 
At any time after the principal money has become due the mortgagor has a right on payment or tender at a proper time and place of the mortgage money to require the mortgagee a to deliver to the mortgagor the mortgage deed and all documents relating to the mortgaged property which are in the possession or power of the mortgagee b where the mortgagee is in possession of the mortgaged property to deliver possession thereof to the mortgagor and c at the cost of the mortgagor either to re transfer the mortgagedproperty to him or to such third person as he may direct or to execute and where the mortgage has been effected by a registered instrument to have registered an acknowledgment in writing that any right in derogation of his interest trans ferred to the mortgagee has been extinguished Provided that the right conferred by this section has not been extinguished by act of the parties or by decree of a Court In Raghunath Singh and others vs Pt
Hansraj Kunwar and others AIR 1934 PC Page 205 in a suit filed for re demption of a mortgage a decree was passed containing the provision that in case of default by the plaintiff in payment his case will stand dismissed
Payment as contem plated by the decree was however not made and subsequently a second suit for redemption was filed
It was contested inter alia on the ground that in view of the non payment of the decretal amount the previous suit stood dismissed and on account of the dismissal of that suit the subsequent suit was not maintainable inasmuch as right of redemption stood extinguished
The Privy Council after making reference to the proviso to section 60 of the Transfer of Property Act rejected the aforesaid objection and held The right to redeem is a right conferred upon the mortgagor by enactment of which he can only be deprived 706 by means and in manner enacted for that pur pose and strictly complied with
In the present case the only basis for the claim that the right to redeem has been extinguished in section 60 but in their Lordships  view the old decree cannot properly be construed as doing that which it does not purport to do viz as extinguishing the fight to redeem
 This question came up very recently before this Court in Mhadagonda Ramgonda Patil and others vs Shripal Balwant Rainade and others 1988 3 SCC Page 298
The mortgagors in that case filed a suit for redemption and obtained a final decree for sale of the mortgaged property
They however did not execute that decree and allowed the same to be time barred
Subsequently a second suit for redemption was filed claiming that the mortgage still subsisted and the mortgagors were entitled to redeem the same and get possession of the mortgaged property
The suit was contested inter alia on the ground that as the mortgagors did not pay the decretal dues under the decree passed in the previous suit their right of redemption had been extinguished
The aforesaid plea raised in defence was repelled by the trial court and the suit for redemption was decreed
The defend ants preferred an appeal against that decree before the High Court and raised a similar contention as was their defence in the trial court
It was held by the High Court that in spite of the fact that in the earlier suit a preliminary decree and final decree were passed and the mortgagors did not redeem the mortgages by depositing the decretal dues still the right of redemption was not extinguished
The findings of the High Court aforesaid with regard to the maintainability of the second suit for redemption were challenged by the defendants before this Court and it was reiterated by their learned counsel that second suit was not maintainable
While repelling this submission and interpret ing the provisions to section 60 of the Transfer of Property Act it was held It is thus manifestly clear that the right of redemption will be extinguished 1 by the act of the parties or 2 by the decree of a court
We are not concerned with the question of extinguishment of the right of redemption by the act of the parties
The question is whether by the preliminary decree or final decrees passed in the earlier suit the right of the respondents to redeem the mortgages has been extinguished
The decree that is referred to in the proviso to Section 60 of the Trans fer of Property Act is a final decree in a suit for foreclosure as provided in sub rule 2 of Rule 3 of Order 34 and a final decree in a redemption suit as 707 provided in Order 34 Rule 83a of the Code of Civil Procedure
Sub rule 2 of Rule 34 inter alia provides that where payment in accordance with sub rule 1 has not been made the court shall on an application made by the plaintiff in this behalf pass a final decree declaring that the defendant and all persons claiming through or under him are debarred from all right to redeem the mort gaged property and also if necessary order ing the defendant to put the plaintiff in possession of the property
Thus in a final decree in a suit for foreclosure on the failure of the defendant to pay all amounts due the extinguishment of the right of re demption has to be specifically declared
Again in a final decree in a suit for redemp tion of mortgage by conditional sale or for redemption of an anomalous mortgage the extinguishment of the right of redemption has to be specifically declared as provided in clause a if sub rule 3 of Rule 8 of Order 34 of the Code of Civil Procedure
These are the two circumstances 1 a final decree in a suit for foreclosure under Order 34 Rule 32 and 2 a final decree in a suit for redemption under Order 34 Rule 83a of the Code of Civil Procedure When the right of redemption is extinguished
 It was further held that in a suit for redemption of a mortgage other than a mortgage by conditional sale or an anomalous mortgage the mortgagor has a right of redemption even after the sale has taken place pursuant to the final decree but before the confirmation of such sale
In view of these provisions the question of merger of mortage debt in the decretal debt does not arise at all
In this view of the matter we are of the opinion that in case the provisions of Order 34 Rule 5 of the Code are held to be applicable to the facts of the instant case appropri ate relief can be granted thereunder as the order of confir mation of the sale passed by the High Court in favour of the first purchaser has not become absolute due to the pendency of these appeals against that order nor has the right of redemption of Maganlal yet extinguished
We shall now advert to the question as to what is the nature of an order passed by the District Judge under sec tions 31 and 32 of the Act
Clause a of sub section 1 of Section 31 of the Act which is relevant for the purpose of these appeals reads 31
1 Where an industrial concern in breach of any 708 agreement makes any default in repayment of any loan or advance or any instalment thereof or in meeting its obligations in relation to any guarantee given by the Corporation or otherwise fails to comply with the terms of its agreement with the Financial Corporation or where the Financial Corporation requires an industrial concern to make immediate repayment of any loan or advance under section 30 and the industrial concern fails to make such repayment then without prejudice to the provisions of section 29 of this Act and of section 69 of the any officer of the Financial Corporation generally or specially authorised by the Board in this behalf may apply to the district judge within the limits of whose jurisdiction the industrial concern carries on the whole or a substantial part of its business for one or more of the following reliefs namely a for an order for the sale of the property pledged mortgaged hypothecated or assigned to the Financial Corporation as security for the loan or advance or Sub section 1 of section 32 of the Act provides 32
1 When the application is for the reliefs mentioned in clauses a and c of sub section 1 of section 31 the district judge shall pass an ad interim order attaching the security or so much of the property of the industrial concern as would on being sold realise in his estimate an amount equivalent in value to the outstanding liability of the industrial concern to the Financial Corpora tion together with the costs of the proceed ings taken under section 31 with or without an ad interim injunction restraining the industrial concern from transferring or remov ing its machinery plant or equipment
 Sub section 4 of section 32 contemplates issue of a notice to the industrial concern in the manner stated there in
Sub section 5 inter alia contemplates that if no cause is shown on or before the date specified in the notice the District Judge shall forthwith make the ad interim order absolute and direct the sale of the attached property
Sub section 6 on the other hand contains the procedure to be followed by the District Judge if cause is shown by the industrial concern 709 on receipt of the notice and provides that after making an investigation as contemplated the District Judge may inter alia confirm the order of attachment and direct the sale of the attached property
Sub section 8 of section 32 pro vides 8 An order of attachment or sale of proper ty under this section shall be carried into effect as far as practicable in the manner provided in the Code of Civil Procedure 1908 for the attachment or sale of property in execution of a decree as if the Financial Corporation were the decreeholder
 In Gujarat State Financial Corporation vs Ms Natson Manufacturing Co P Ltd  Ors 1979 1 SCR Page 372 the question as to what was the nature of proceedings under Sections 31 and 32 of the Act came up for consideration before this Court in connection with an objection about payment of court fee on an application under section 311
It was held that the form of the application the nature of the relief the compulsion to make interim order the limit ed inquiry contemplated by sub section 6 of section 32 and the nature of relief that can be granted and the manner of execution clearly show that the application under section 311 is neither a plaint as contemplated by Article 1 of Schedule 1 nor an application in the nature of a plaint as contemplated by Article 7 of the Court Fees Act 18701t was also held that section 311 of the Act prescribes a special procedure for enforcement of the claims of the Financial Corporation and it is not even something akin to a suit of a mortgagee to recover mortgage money by sale of mortgaged property
It was pointed out that the distinguishing fea tures noticeable between a suit for recovery of mortgage money by sale of mortgaged property and an application under section 31 for one or more reliefs specified therein are that even if the Corporation applicant so chooses it cannot in the application pray for a preliminary decree for ac counts or final decree for payment of money nor can it seek to enforce any personal liability even if such one is in curred under the contract of mortgage
The Corporation cannot pray for a decree of its outstanding dues and can make an application for one of the three reliefs mentioned in section 311 none of which if granted results in a money decree or decree for recovery of outstanding loans or advance
It was further held that a substantive relief in an application under section 311 is something akin to an application for attachment of property in execution of a decree at a stage posterior to the passing of the decree
With regard to the scope of sub section 6 of section 32 it was held that it has to be read in the context in 710 which it is placed and it does not expand the context in the application as if it is a suit between a mortgagee and the mortgagor for sale of mortgaged property
The relief claimed under section 311 was held not to be a substantive relief which can be valued in terms of the monetary gain or preven tion of monetary loss
It was pointed out that the claim of the Corporation in an application under section 311 was that there is a breach of agreement or default in making repayment of loan or advance or instalment thereof and therefore the mortgaged property could be sold
In Ms Everest Industrial Corporation and others vs Gujarat State Financial Corporation 1987 3 SCC Page 597 a question arose as to whether an order under section 34 of the Code could be passed in proceedings under section 311 of the Act
After referring to the decision in the case of Gujarat State Financial Corporation supra it was held that if as held by this Court in that case the proceed ing instituted under section 311 of the Act is something akin to an application for attachment of property in execu tion of a decree at a stage posterior to the passing of the decree no question of passing any other under section 34 of the Code would arise since that section could be applicable only at the stage of the passing of the decree and not to any stage posterior to the decree
In view of these two decisions the law seems to be settled that an application under section 311 of the Act cannot be put on par to a suit for enforcement of a mortgage nor the order passed thereon under section 32 of the Act be put on par as if it was an order in a suit between a mortga gee and the mortgagor for sale of mortgaged property
On the other hand the substantive relief in an application section 311 is something akin to an application for attachment of property in execution of a decree at a stage posterior to the passing of the decree
We now turn to the crucial question as to whether the relief contemplated by Order 34 Rule 5 of the Code which in substance is to permit redemption of the mortgage during the course of executing of a final decree for sale of mortgaged property can be granted even after the property which was mortgaged as security for loan taken from the Corporation has in execution of an Order under Section 32 of the Act passed on an application under Section 311 thereof been sold by the District Judge following the procedure contem plated by Sub section 8 of Section 32 of the Act
711 In this connection it is relevant to note that in neither of the two cases namely Gujarat State Financial Corporation and Ms Everest India Corporation supra Sub section 8 of the Section 32 of the Act came up for consid eration
Section 46 B of the Act reads as hereunder 46B
The provisions of this Act and of any rules or orders made thereunder shall have effect notwithstanding anything inconsistent therewith contained in any other law for the time being in force or in the memorandum or articles of association of an industrial concern or in any other instrument having effect by virtue of any law other than this Act but save as aforesaid the provisions of this Act shall be in addition to and not in derogation of any other law for the time being applicable to an industrial concern
 No provision in the Act or any Rule or Order made there under has been brought to our notice stating that the effect of any action taken thereunder including the passing or orders of attachment and sale under Sections 31 and 32 thereof is to extinguish the right of redemption
In other words there is nothing in the Act or in any Rule or Order made thereunder which may be inconsistent with Section 60 of the particularly the proviso there to
Consequently no provision in the Act can be read in derogation of the 
said Section 60
It is true that under the Code it is not necessary to attach the mortgaged property before putting it to sale but Section 31 of the Act contemplates attachment of even the mortgaged property and Section 32 thereof speaks of an Order of sale of the attached property but that alone can by no stretch of imagination have the effect of extinguishing the equity of redemption
Such attachment does not have that effect either under the proviso to Section 60 of the Trans fer of Property Act or under any provision of the Act or Rule or Order made thereunder Sections 31 and 32 of the Act in so far as they contain the requirement of attaching the mortgaged property before its sale and ordering sale of the attached property read with Sub section 8 of Section 32 of the Act will therefore have the only effect that the said requirement shall be in addition to and not in derogation of the provisions contained in the Code for sale of mort gaged property
The purpose of enacting Sections 31 and 32 of the Act was apparently to provide for a speedy remedy for recovery of the dues of the Financial Corporation
This purpose however was in cases covered by 712 clause a of Sub section 1 of Section 31 confined to the stage of obtaining an Order akin to a decree in a suit in execution whereof the property pledged mortgaged hypothe cated or assigned to the Financial Corporation as security for the loan or advance could be sold
Sections 31 and 32 of the Act cut across and dispense with the provisions of the Code from the stage of filing a suit to the stage of obtaining a decree in execution whereof such properties as are referred to in clause a of Sub section 1 of Section 31 could be sold
After this stage was reached sale in execution of an Order under Section 32 of the Act was for purposes of execution put at par with sale in execution of a decree obtained in a suit by enacting Sub section 8 of Section 32 of the Act
This Sub section as noted earlier provides that an order of attachment or sale of property under this section shall be carried into effect as far as practicable in the manner provided in the Code of Civil Procedure 1908 for the attachment or sale of property in execution of a decree as if the Financial Corporation were the decreeholder
Expressions as far as practicable and in execution of a decree as if the Financial Corporation were the decree holder are the only expressions which qualify the manner provided for sale of property in execution of a decree as contained not only in some specific provision of the Code eg Order 21 thereof but in the Code of Civil Procedure 1908 namely all the provisions in the Code in this regard  wherever they may be
If in its anxiety to ensure speedy recovery of the dues of the Financial Corporation Parliament had intended also to cut across and dispense with the procedure contained in the Code for execution of a decree for sale of such properties
as are referred to in clause a of Sub section 1 of Section 31 of the Act it would have made some provision analogous to provisions contained in the enactments for revenue recovery
But that was not done
Instead Sub sec tion 8 was incorporated in Section 32 of the Act
It is in this background that the question whether provisions of Order 34 Rule 5 of the Code will be attracted or not to the facts of the instant case has to be considered
Relying on a decision of the Karnataka High Court in Ms Hotel Natraj vs Karnataka State Financial Corporation AIR 1989 Karnataka 90 it was urged by learned counsel for Maganlal that in view of sub section 8 of section 32 of the Act the applicability of the provisions of Order 34 Rule 5 of the Code cannot be denied to the facts of the instant case
Learned counsel for the purchasers on the other 713 hand urged that section 328 of the Act made the manner provided in the Code Applicable only as far as practicable and there was neither a decree nor was the Financial Corpo ration as decree holder in a suit for sale but was only deemed to be a decree holder by legal fiction because of the expression in execution of a decree as if the Financial Corporation were the decree holder We shall first deal with the scope and import of the expres sion far as practicable and in execution of a decree as if the Financial Corporation were the decree holder used in sub section 8 of section 32 of the Act
Without anything more the expression as far as practicable will mean that the manner provided in the Code for attachment or sale of property in execution of a decree shall be applicable in its entirety except such provision therein which may not be practicable to be applied
It will be for the person assert ing that a particular provision with regard to execution of a decree for sale of an immovable property contained in the Code of Civil Procedure will not apply to execution of an order under section 32 of the Act on the ground that it was not practicable to show as to how and why it was not prac ticable
As regards the second expression namely in execu tion of a decree as if the Financial Corporation were the decree holder it may be pointed out that even though an order under section 32 as seen above is not a decree stricto sensu as defined in section 22 of the Code and the Finan cial Corporation would not as such be called the decree holder section 326 of the Act imports a legal fiction whereby the order under section 30 of the Act for purposes of execution would be a decree and the Financial Corporation a decree holder
Apparently the person against whom such decree has been executed namely the debtor of the Financial Corporation would be the judgment debtor
In East End Dwell ings Company Limited vs Finsbury Borough Council 1952 Appeal Cases 109 Lord Asquith at page 132 observed if you are bidden to treat an imaginary state of affairs as real you must surely unless prohibited from doing so also imagine as real the consequences and incidents which if the putative state of affairs had in fact existed must inevita bly have flowed from or accompanied it 
The Statute says that you must imagine a certain state of affairs it does not say that having done so you must cause or permit your imagination to boggle when it comes to the inevitable corollaries of the state of affairs It is also settled law that a legal fiction is to be limited to the purpose for which it was created and should not be extended beyond the legitimate field
Reference for the proposition may be made to the 714 decisions of this Court in The Bengal Immunity Company Limited vs The State of Bihar and others 1955 2 SCR Page 603 The Commissioner of Income Tax Bombay City 1 Bombay vs Amarchand N Shroff 1963 Supp 1 SCR Page 699 and Commissioner of Income Tax
Gujarat vs VadilaI Lal lubhai etc
 As is apparent from the plain language of section 328 of the Act the legal fiction was created for the purpose of executing an order under section 32 of the Act for sale of attached property as if such order was a decree in a suit for sale and the Financial Corporation was the decree holder whereas the debtor was the judgment debtor
Consequently the provisions of the Code of Civil Procedure with regard to execution of a decree for sale of mortgaged property con tained in Order 21 of the Code including the right to file an appeal against such orders passed during the course of execution which are appealable shall apply mutatis mutandis to execution of an order under section 32 of the Act unless some provision is not practicable to be applied
It cannot be disputed that the provisions contained in Order 34 Rule 5 of the Code are attracted as is apparent from the plain language thereof during the proceedings in execution of a final decree for sale and are thus provisions contained in the Code with regard to and having a material beating on the execution of a decree as aforesaid
As seen above the provisions contained in Order 34 Rule 5 of the Code in substance permit the judgment debtor to redeem the mortgage even at the stage contemplated by Order 34 rule 5 unless the equity of redemption has got extinguished
Since the contin gency whereunder an equity of redemption gets extinguished is contained in the proviso to section 60 of the and since as indicated above in the instant case the equity of redemption has not extinguished we find no good ground to take the view that even though all the remaining provisions with regard to execution of a decree for sale of mortgaged property will apply to execution of an order under section 32 of the Act the provision contained in Order 34 Rule 5 of the Code shall not apply
Nothing has been brought to our notice as to how and why it is not practicable to apply the said provision
As already pointed out earlier it has been held by this Court in the case of Mhadagonda Ramgonda Patil supra that in a suit for re demption of as mortgage other than a mortgage by conditional sale or an anomalous mortgage the mortgagor has a right of redemption even after the sale has taken place pursuant to the final decree but before the confirmation of such sale and that in view of these provisions the question of merger of mortgage debt in the decretal debt does not at all arise
We again do not find any good ground for holding that he said principle will not be attracted to 715 a sale which has taken place pursuant to an order under section 32 of the Act in so far as the provisions in the Code with regard to execution of a decree are concerned
Of course in view of the limited scope of legal fiction as indicated above the provisions in the Code shall be applica ble to an order of sale under the Act only with regard to execution of that order as if it was a decree in a suit and the Financial Corporation was a decree holder and the debtor a judgment debtor and this legal fiction will not be capable of being extended so as to treat an order of sale passed under the Act to be a decree in a suit for any other purpose for instance applying section 34 of the Code as was sought to be done in the case of Ms Everest Industrial Corpora tion supra nor could it be extended for treating the application made under section 311 of the Act as a plaint for purposes of payment of court fee as was sought to be done in the case of Gujarat State Financial Corporation supra
That the provisions of the Code with regard to execution of a decree for sale of mortgaged property would apply to execution of an order under section 32 of the Act is clear from section 328 of the Act and the reasons stated above
It would also be so inasmuch as even otherwise once the order under section 32 for sale is made executable by a District Judge in his capacity as District Judge and not persona designata the provisions of the Code which are exercisable by the District Judge in execution of a decree for sale of mortgaged property would get attracted
In National Sewing Thread Co Ltd vs James Chadwick  Bros Ltd 1953 SCR Page 1028 an appeal was filed before a Single Judge of the Bombay High Court under section 761 of the which provides that an appeal shall lie from any decision of the Registrar under the Act or the rules made thereunder to the High Court having jurisdiction
The  however did not make any provision with regard to the procedure to be fol lowed by the High Court in the appeal or as to whether the order of the High Court was appealable
Against the judgment of the Single Judge an appeal was preferred under clause 15 of the Letters Patent
That appeal was allowed and the judgment of the Single Judge was reversed
Before the Su preme Court an objection was raised that the Letters Patent appeal was not maintainable
While repelling the said objec tion it was held Obviously after the appeal had reached the High Court it has to be determined according to the rules of practice and 716 procedure of that Court and in accordance with the provisions of the charter under which that Court is constituted and which confers on it power in respect to the method and manner of exercising that jurisdiction
The rule is well settled that when a statute directs that an appeal shall lie to a Court already estab lished then that appeal must be regulated by the practice and procedure of that Court
This rule was very succinctly stated by Viscount Haldane LC in National Telephone Co Ltd vs Postmaster General 19 13 AC 546 in these terms When a question is stated to be referred to an established Court without more it in my opinion imports that the ordinary incidents of the procedure of that Court are to attach and also that any general right of appeal from its decision likewise attaches
 The same view was expressed by their Lordships of the Privy Council in RMAR KLA
Adaikappa Chettiar vs Ra
Chandrasekhara Thevar 1974 741A 264 wherein it was said Where a legal right is in dispute and the ordinary Courts of the country are seized of such dispute the Courts are governed by the ordinary rules of procedure applicable thereto and an appeal lies if authorised by such rules notwithstanding that the legal right claimed arises under a special statute which does not in terms confer a fight of appeal Again in Secretary of State for India vs Chellikani Rama Rao Mad 617 when dealing with the case under the Madras Forest Act their Lordships observed as follows It was contended on behalf of the appellant that all further proceedings in Courts in India or by way of appeal were incompetent these being excluded by the terms of the statute just quoted
In their Lord ships  opinion this objection is not well founded
Their view is that when proceedings of this character reach the District Court that Court is appealed to as one of the ordi nary Courts of the country with regard to whose procedure orders and decrees the 717 ordinary rules of the Civil Procedure Code apply Though the facts of the cases laying down the above rule were not exactly similar to the facts of the present case the princi ple enunciated therein is one of general application and has an apposit application to the facts and circumstances of the present case
Section 76 of the con fers a right of appeal to the High Court and says nothing more about it
That being so the High Court being seized as such of the appel late jurisdiction conferred by section 76 it has to exercise the jurisdiction in the same manner as it exercises its other appellate jurisdiction and when such jurisdiction is exercised by a single Judge his judgment becomes subject to appeal under clause 15 of the Letters Patent there being nothing to the contrary in the 
 In view of the foregoing discussion we are of the opin ion that the application made by Maganlal under Order 34 Rule 5 of the Code is maintainable and the requirements of the said provision having been satisfied the application deserves to be allowed
In the result while CMP No 19760 of 1984 which is for initiating contempt proceedings is dismissed CMP No 99409 1982 under Order 34 Rule 5 of the Code filed by Magan lal is allowed
Accordingly Civil Appeal No 2990 of 1980 filed by Maganlal as also the application made by him under Order 21 Rule 90 of the Code are allowed
The order appealed against passed by the High Court is set aside and the order passed by the Additional District Judge setting aside the auction sale in favour of the first purchaser is restored
Civil Appeal No 2991 of 1980 filed by the second purchaser is also allowed in so far as it prays for the setting aside of the order of the High Court
However on the view we have taken the subsequent auction sale held in favour of the second purchaser cannot be sustained and is also hereby set aside
As a consequence we direct that since the Corporation in the instant case has accepted Rs65000 in full and final satisfaction of its claim it shall return the mortgage deed executed by Maganlal to him
The Additional District Judge in whose court the application under Order 34 Rule 5 of the Code was made as stated earlier shall strike off the execu tion in full and final satisfaction
The sum of Rs53000 deposited by the first purchaser together with Rs2650 representing 5 of the said sum deposited by Maganlal and interest which may have accrued on these amounts shall be paid over the first purchaser
Likewise the 718 sum of Rs 146000 deposited by the second purchaser to gether with Rs7300 representing 5 of the said sum depos ited by Maganlal and the interest which may have accrued on these amounts shall be paid over to the second purchaser
There shall be no order as to costs
RSS Appeals allowed


Summary:
Certain lands situated on the outskirts of a large city were acquired by the respondent State after issuing prelimi nary notification under section 41 of the Land Acquisition Act 1894 on August 6 1956 for construction of an industrial estate
The appellants claimed compensation at the rate of Rs3 per sq yard and cited in support thereof an agreement of sale dated January 211957 and a conveyance dated April 2 1957 pertaining to a piece of land adjoining the acquired land showing the sale price at the rate of Rs3 per sq yard
The respondent State relied on an auction sale dated February 23 1953 at about 41p
per sq yard evidenced by exhibit 112 and the instance evidenced by exhibit 118 pertaining to sale to a minor transacted by his father
The Land Acquisition Officer classified the land as superior agricultural land and awarded the compensation at the rate of Rs2200 per acre ie about 45p
per sq yard
In the reference the Civil Judge did not rely upon any of the instances proved before him but considering the general situation of the land and its considerable building potentiality fixed the rate of compensation at Rs4400 per acre ie about 90p
per sq yard
Dismissing the appeal the High Court took the view that the valuation fixed by the Civil Judge was justified
It held that a postacquisition sale could not be regarded as a comparable instance at all since the acquisition for con struction of the industrial estate was bound to have pushed up the prices in the surrounding area
It placed reliance on the evidence furnished by the instance at exhibit 112 over a year prior to 744 the date of section 4 notification but discarded the instance evidence by exhibit 118 relied on by the State
Allowing the claimants  appeal by special leave the Court HELD The market value of a piece of property for pur poses of section 23 of the Land Acquisition Act is stated to be the price at which the property changes hands from a willing seller to a willing but not too anxious a buyer dealing at arm s length
Prices fetched for similar lands with similar advantages and potentialities under bona fide transactions of sale at or about the time of the preliminary notification are the usual and indeed the best evidence of market value
747C Administrator General of West Bengal vs Collector Varanasi   referred to
In the instant case the instance evidenced by exhibit 112 pertaining_ to sale of land in government auction relied on by the High Court was a distress sale
There were execution proceedings pending against the vendor
It could thus hardly furnish any reliable evidence for estimating the market value of the land in question
The instance evidenced by exhibit 118 was rightly discarded by the High Court
Only a certified copy of the sale deed pertaining thereto was produced in
the trial court
The evidence of the purchaser who was minor at the time when the sale deed was executed had no evidentiary value as he had no personal information regarding the sale
No other person conversant with the sale was examined by the State
748AB CF The only comparable instance on the basis of which the market value at the time of the section 4 notification in respect of the acquired land could be determined was therefore the sale proved by the sale deed dated April 2 1957 and the preceding agreement of sale dated January 21 1957
Though entered into about five months alter the notification it could be fairly regarded as reasonably proximate to the acquisition
The price fixed under the said agreement was Rs3 per sq yard
However there seem to have been some rise in the price of land on account of the acquisition of the land in question for purposes of constructing the indus trial estate
Further the land proposed to be purchased under the agreement was adjoining the land of the purchaser and the purchaser might have paid some extra amount for the convenience of getting the neighbouring land
These factors have to be taken into account and appropriate deductions made from the rate disclosed in the agreement in estimating the market value
Considering these together with 745 the situation and potentialities of the acquired land it would be proper to fix its market value at Rs8800 per acre which comes to about Rs 180p
per sq yard
The decree passed by the Civil Judge to be amended accordingly
748G 747E