*THE HON’BLE SRI JUSTICE L.NARASIMHA REDDY + Second Appeal No.261 of 2011 % 02-11-2011 # Manduva Sreeramamurthy & others ..appellants And The Manager, Andhra Bank, Court Street Branch, R.P. Road, Ongole & another ..Respondents !Counsel for the appellants: Sri T. Sreedhar ^Counsel for respondents . : Sri M. Narender Reddy, for R-1 Sri Nimmagada Satyanarayana, for R-2 < Gist: > Head Note: Citations: 2010 (1) L.S. 52 THE HON’BLE MR JUSTICE L. NARASIMHA REDDY Second Appeal No.261 of 2011 JUDGMENT: This Second Appeal has several dimensions and involves few substantial questions of law also. The facts, that gave rise to the filing of the Second Appeal, are as under: The 1st appellant, in his capacity as the proprietor of a Tobacco Company raised loan from the 1st respondent. His father Venkatrayudu mortgaged certain items of landed property, as a security for repayment. Alleging that the amount was not paid, in spite of demands, the 1st respondent filed O.S.No.73 of 1992 in the Court of Principal Senior Civil Judge, Ongole, for foreclosure of mortgage. A preliminary decree was passed on 29-01-1993, and that was followed by a final decree dated 12-07-1994. The 1st respondent filed E.P.No.153 of 2003 with a prayer to bring the mortgaged property to sale. During the pendency of the proceedings, Venkatrayudu died. His son, the 1st appellant, his wife and daughter, appellants 2 and 3 herein were brought on record. The sale proclamation was issued and the sale was conducted on 29-03-2004. The 2nd respondent herein has emerged as the highest bidder for items 4 and 5. The 1st appellant filed E.A.No.483 of 2004, under Rule 90 of Order XXI C.P.C., with a prayer to set aside the sale. That application was dismissed on 12-08-2004. Certain other applications were also filed. The 1st appellant deposited the decretal amount with the 1st respondent on 29-06-2004. The 1st respondent filed full satisfaction memo into the Executing Court on 07-07-2004. During the pendency of that memo, the Executing Court confirmed the sale on 16- 08-2004. However, on 29-12-2004 the Executing Court recorded full satisfaction. The possession of the property is said to have been delivered on 10-04-2005. The appellants filed O.S.No.297 of 2006 in the Court of Principal Senior Civil Judge, Ongole, with a prayer to declare the sale of the properties in the execution petition and confirmation thereof on 16-08-2004 as invalid, ultra vires, illegal; and for consequential relief of perpetual injunction, restraining the 2nd respondent from interfering with their peaceful possession and enjoyment of the property. According to them, the possession of the property is still with them. The appellants pleaded that the sale conducted by the Executing Court in E.P.No.153 of 2003 was defective in several respects. It was further pleaded that the property sold in the auction was owned by the joint family and that the sale was invalid in the absence of the other coparceners as parties to the proceedings. They have also submitted that, once the decree-holder agreed to receive the amount, with the intervention of the District Collector, and the entire decretal amount was paid, there was absolutely no basis for the Executing Court in proceeding with the sale or confirmation thereof. Other subsidiary grounds, such as that proper publication of the sale was not made, that value of the property was not shown as per law were also raised. The 1st respondent filed a written-statement, narrating the circumstances that led to the filing of O.S.No.73 of 1992 and the manner in which the decree was passed therein was executed by the Court. The various allegations pertaining to the legality of the sale are denied. The fact that the decretal amount was paid, that full satisfaction memo was filed, and that the full satisfaction was recorded were not disputed. The principal contest in the suit was, by the 2nd respondent. In his written-statement, he raised a serious objection as to the maintainability of the suit. According to him, a separate suit is barred, both under Section 47, and Rule 92 of Order XXI C.P.C. He stated that the appellants failed in their efforts to get the execution sale set aside, and once the sale has become final in law, it is not open to them to challenge it, in separate set of proceedings. He denied the allegation of the appellants that they are still in possession of the property. According to him, the receipt of the decretal amount by the 1st respondent does not have any effect upon the sale and that the appellants have no right to challenge the proceedings in the E.P., by filing a separate suit. He filed an additional written-statement, raising the plea of res judicata. The trial Court dismissed the suit, through judgment dated 22-04-2009. The appellants filed A.S.No.70 of 2009 in the Court of II Additional District Judge, Ongole. The appeal was dismissed on 20-12-2010. Hence, this Second Appeal. Sri T. Sreedhar, learned counsel for the appellants submits that the suit filed by his clients is very much maintainable, since the prohibition contained under Section 47 C.P.C. operates against the persons, who are parties to the suit, that resulted in a decree, which is put to execution, and not others. He contends that though the 1st appellant was party to O.S.No.73 of 1992, appellants 2 and 3 cannot be said to be parties, since they were impleaded only at the stage of execution, in their capacity as legal representatives. He submits that a legal representative cannot urge or enforce his independent rights in the proceedings instituted by or against his predecessor, and is circumscribed by the plea that was raised by or available to the deceased-party. Learned counsel further submits that the auction or sale conducted in contravention of Rule 64 of Order XXI C.P.C., is void ab initio and that it can be challenged at any stage, and, if necessary, by instituting in separate proceedings. He contends that once the decretal amount was paid and full satisfaction memo was filed, there was absolutely no justification or necessity for the Executing Court to confirm the sale thereafter. He places reliance upon several judgments rendered by the Supreme Court, this Court and other High Courts. Sri M. Narender Reddy, learned counsel for the 1st respondent, submits that the occasion to conduct the sale has arisen on account of the default committed by the 1st appellant and his father. He contends that his client received the amount agreed to between the parties, a full satisfaction memo was filed and that the same was recorded. He raises objection as to limitation. The actual contest to the appeal is by the 2nd respondent. Sri Nimmagadda Satyanarayana, learned counsel for the 2nd respondent submits that the appellants herein were very much parties to the E.P.No.153 of 2003, and if they had any grievance about the sale of the property, they ought to have pursued the remedies, vis- à-vis the said proceedings by filing appeals or revisions. He contends that challenge to the sale conducted in execution through a separate suit is barred under Section 47 and various Rules of Order XXI C.P.C. Learned counsel submits that the only way through which the prayer for setting aside the sale conducted in execution can be made is, by filing an application under Rule 89 or 90 of Order XXI C.P.C., and the applications filed by the appellants under the said provision were dismissed. Learned counsel further submits that the distinction sought to be made between the principal parties, on the one hand, and legal representatives of deceased parties, on the other hand, is untenable in law. He submits that the trial Court and the lower Appellate Court have concurrently held that the suit is barred by limitation; barred by Section 47 of C.P.C., and that even on facts, concurrent findings were recorded against he appellants. Learned counsel submits that no substantial question of law arises for consideration in this Second Appeal. He too relied upon certain decided cases. By filing O.S.No.297 of 2006, the appellants prayed for the relief of a declaration to the effect that the sale of the suit schedule property and the confirmation thereof in execution proceedings, in O.S.No.73 of 1992 are invalid, illegal, and prayed for the consequential relief of perpetual injunction. The suit was opposed by the respondents. The trial Court framed the following issues for its consideration: 1. Whether plaintiffs got right title possession to the schedule property? 2. Whether the suit is maintainable under law? 3. Whether the plaintiffs are entitled for declaration as prayed for? 4. Whether the plaintiffs are entitled for consequential permanent injunction as prayed for? Additional Issue: Whether the suit is hit by res judicata? The suit was dismissed by the trial Court. In A.S.No.70 of 2009 filed by the appellants, the lower Appellate Court framed the following points for its consideration: 1) Whether the suit filed by the plaintiffs to declare the confirmation of sale of the schedule property on 16-08-2004 as invalid, is maintainable? 2) Whether the plaintiffs are entitled to the declaration as prayed for? 3) Whether the plaintiffs are entitled to the injunction prayed for? 4) Whether there are any grounds to interfere with the judgment and decree of the trial Court? The appeal was also dismissed. In view of the extensive submissions made by the learned counsel for the parties, this Court feels that the following substantial questions of law arise for consideration, viz., 1) Whether a person who figured as a legal representative of a judgment-debtor in execution proceedings can maintain separate suit, to challenge the sale conducted in execution, and such a suit, if filed, is barred, under Section 47 and Rules 58 and 101 of Order XXI C.P.C.? 2) Whether a sale conducted by the Executing Court in contravention of Rule 67 of Order XXI C.P.C. is void or voidable? and 3) Whether an Executing Court can confirm the sale of a property, once the decree-holder files a full satisfaction memo? Adjudication of the civil disputes involves several stages. The rights of the parties to the suit are determined through the judgment, leading to a decree. Once the decree becomes final, after exhaustion of the remedies of appeal etc., provided for in law, or where the parties have not chosen to question the decree, execution may become necessary, in case the parties do not act as ordained in the decree. Different modes of execution are prescribed under Order XXI C.P.C., depending on the nature of the decree. Even in the course of execution, certain disputes may arise either as between the parties to the decree or between parties to the decree, on the one hand, and third parties on the other hand. To ensure that the process of execution is not delayed, nor is subjected to other parallel proceedings, Section 47 C.P.C., mandates that all questions pertaining to execution, discharge or satisfaction of the decree, shall be determined by the Court, which is entrusted with the execution of the decree and not by filing a separate suit. The provision is too well-known, for any practitioner of civil law. However, the reproduction of the same becomes necessary to understand some of its niceties. “Section 47: Questions to be determined by the Court executing decree – (1) All questions arising between the parties to the suit in which the decree was passed, or their representatives, and relating to the execution, discharge or satisfaction of the decree, shall be determined by the Court executing the decree and not by a separate suit. (2) [xxx] omitted (3) Where a question arises as to whether any person is or is not the representative of a party, such question shall, for the purposes of this section, be determined by the Court”. Rules 58 and 97 of Order 101 are almost on the same lines. The object is to ensure that the decree is taken to a logical conclusion by the same Court. The expression “between the parties to the suit in which the decree is passed” occurring in sub-section (1) of Section 47 has its own significance. The prohibition imposed against institution of a suit to avail remedies against the decree passed in another suit operates against the parties to the suit and obviously, not those who are not parties to it. If a person who is not a party to the suit feels aggrieved by a decree in a suit, two options are open to him. The first is to prefer an appeal against the decree before an appellate authority by obtaining leave and the second is to file a separate suit in a Court of competent jurisdiction with a prayer to set aside the decree. Section 47 takes in its fold not only parties to the suit, but also their representatives. A subtle distinction is to be maintained here. It is too well-known that a legal representative of a party to the suit cannot put forward his independent defence in a suit in which he is brought on record. His presence in the suit would be only to enable the Court to continue the proceedings, and his plea or defence is confined to the one which the party whom he represents has, or could have taken. In case the legal representative of a party to the suit has an independent right of his own, his right to prosecute remedies by filing a separate suit vis-a-vis the decree suffered by his predecessor cannot be taken away. Viewed in this context, the first appellant may certainly be precluded from instituting a separate suit vis-à-vis the decree in O.S.No.73 of 1992. However, the other appellants, who were brought on record as legal representatives that too at the stage of execution cannot be prohibited from instituting a separate suit. The remedies that are available under Rules 58 and 97 of Order XXI are of limited scope. It is only when a person has no grievance about a decree to which he is a party, but only about the execution thereof, that he can take recourse to such remedies. The second question touches the merits of the matter. The appellants submit that the value of the property was not shown in the execution proceedings as required under Rule 64 of Order XXI C.P.C. Rule 66 of Order XXI, in so far as it applies to the State of Andhra Pradesh, mandates that the Executing Court shall take into account, the value of the property furnished by the decree-holder, judgment- debtor and the one obtained from the office of the Sub-Registrar. In the instant case, the judgment-debtor was not even given an opportunity to furnish the value of the property. The record discloses that even the Court did not make necessary efforts to ascertain the value from the Registrar’s office. I n Chirravuri Veerabhadra Rao v. State Bank of India, Rajahmundry[1], this Court has undertaken extensive discussion about the purport of Rule 66 and the effect of violation thereof. It was held that the entire execution proceedings become void, in case the violation of Rule 66 of Order XXI is demonstrated. There is a clear violation of the said Rule in this case. There is ample authority of precedents to the effect that the sale becomes void in such cases and the ground can be raised in subsequent proceedings also. The third question is about the effect of recording of full satisfaction of the decree. It hardly needs any mention that the very purpose of initiating execution proceedings is to realize the decretal amount. In case the amount is realized at any stage before the sale is confirmed, the proceedings must stop and the E.P. must be closed. It is not in dispute that the amount, to the satisfaction of the decree- holder in O.S.No.73 of 1992 was paid to the decree-holder, and a memo of full satisfaction was filed by the decree-holder on 07.07.2004. Still, the Executing Court confirmed the sale on 16.08.2004. The Executing Court recorded full satisfaction on 29-12- 2004. Once recorded, the effect thereof relates back to the date of filing of the memo. A clear incongruity has emerged in this case. On the one hand, the Executing Court recorded full satisfaction on receipt of the decretal amount by the decree-holder, and it has confirmed the sale for realization of that very amount, on the other. This is never intended much less permitted under C.P.C. Once an Executing Court receives a memo from the judgment-debtor, under Rule 2 of Order XXI C.P.C., reporting full satisfaction, there does not exist any basis to proceed further and any step taken thereafter, is voidable at the instance of the judgment-debtor. The three aspects discussed above, are substantial questions of law and all of them are answered in favour of the appellant. For the foregoing reasons, the Second Appeal is allowed and the judgments rendered by the trial Court and the lower Appellate Court are set aside. As a result, O.S.No.297 of 2006 filed in the Court of Principal Senior Civil Judge, Ongole, is decreed as prayed for. There shall be no order as to costs. _______________________ L. NARASIMHA REDDY, J. Dt.02-11-2011. Note: LR copy to be marked. (B/O) KO/GJ [1] 2010 (1) L.S. 52