1 IN THE HIGH COURT OF BOMBAY AT GOA APPEAL FROM ORDER NO.69/2002. Shri Damodar Ramnath Alve, major, businessman, resident of Rawanfond, Margao, Goa. ... Petitioner. (Inventariado) V/s Janakibai Ramnath Alve(deceased) through her heirs 1. Shri Gokuldas R. Alve. 2. Shri Ajit R. Alve 3. Smt. Manik Laximikant Alve 4. Kum. Varsha Laximikant Alve 5. Shri Sidesh Laximikant Alve 6. Kum. Priya Laximikant Alve All residents of H.No.222, Opp. Indian Bank, Old Station Road, Margao – Goa - 403 601, Nos.1 to 6 through Advocate J.P. Mulgaonkar 7. Shri Mangaldas Yeshwant Alve, Ajit Alve's Chawl, 57 (4), Dicarpale, Navelim, Salcete, Goa. 8. Shri Pradeep Yeshwant Alve, Aquem Baixo, Margao, through Advocate F.M. Reis, Margao, Goa. 9. Shri Gajanan Ramnath Alve, 2 Janata Housing Co-op. Society, Behind Babu Naik's Bungalow, Aquem Alto, Margao, Goa. ... Respondents (Inventariados) Mr. E.P. Lobo, Advocate for the Petitioner. Mr. J. P. Mulgaonkar, Advocate for the Respondents no.1, 2, 3, 5, 6 and 7. Mr. F.M. Reis, Advocate for the Respondents no.8 and 9. CORAM: R. C. CHAVAN, J. Date of reserving the judgment :20 th August, 2008. Date of pronouncing the judgment :29 th August, 2008. JUDGMENT This appeal is directed against an Order passed on 11.4.2000 by the learned Comarca Judge of Salcete and Quepem whereby he rejected application dated 7.12.1999 filed by the appellant for depositing owelty money or in the alternative to participate in the auction. 2. This case has a chequered history. In the inventory proceedings initiated in the year 1975, in a licitation held on 14.7.88, appellant offered the highest bid individually for Item no.2, and alongwith three others for item no.3. On 10.3.1989, Appellant sought extension of time to pay owelty amount. On 14.3.1989 at 11.00 a.m. Trial Court granted time. At 12.50 noon 3 the Court rescinded the order and declared auction null and void. This Order was challenged before this Court. This Court quashed the order and remanded the matter for re-hearing. On 30.4.1992 Trial Court rescinded its order dated 14.3.1989 and this Court upheld this order on 12.2.1996 in Appeal From Order no.44/92. On 9.4.1999 the Trial Court permitted Pradeep Yeshwant, respondent no.8, to take part in a fresh auction. On 11.10.1999, in Civil Revision Application No.127/99 the High Court confirmed this order. Thereafter appellant filed application dated 7.12.1999, which was rejected by the impugned Order. 3. According to the appellant, Articles 1412 and 1417 of the Portuguese Code do not provide for disqualification of a defaulting bidder. Further, when other defaulting bidders have been permitted to deposit owelty money before start of new auction, (presumably by order in Civil Revision Application no.127/99 by this Court) denying the same right to petitioner would amount to discrimination. Highest bid for property item no.3, of Rs.13,01,010/- was offered by 4 parties who were to contribute proportionately. Failure by one would make auction ineffective as a whole. Lastly, according to appellant, licitation is after all an auction and therefore provisions of Articles 1417 read with Article 904 of Procedure Code would apply. 4 4. I have heard both the learned Counsel for the appellant and respondents. Arguments advanced give rise to the following points for determination: (1) Is a defaulting bidder at a licitation disqualified from bidding at a subsequent licitation? (2) Is a defaulting bidder entitled to deposit the price at the start of the auction? 5. At the outset, the learned Counsel for the respondents submitted that appeal is not tenable as these very questions had been previously raised and dealt with by this Court in judgment dated 12.2.1996 in Appeal From Order No.44/1992. Therefore they cannot be re-agitated now. His learned adversaries submitted that question which came up for determination in appeal From Order no.44/1992 was not the same. They submitted that observations in the judgment would have to be read in the context of the controversy raised. I have carefully considered these submissions. 6. It may be recalled that Appeal from Order No.44/92 was filed by this very appellant to challenge Order passed by the learned Civil Judge, Senior Division, Margao on 30.4.1992 revoking his earlier Order dated 14.3.1989, whereby appellant had been granted five days time to deposit owelty money. Facts 5 which led to passing these Orders are enumerated in paragraphs 7 to 12 of the judgment of this Court in Appeal from Order No.44/92. Submissions of parties relating to extension of time are then dealt with upto para 21. This Court held that the Trial Court rightly rescinded Order extending time for paying owelty money. In para 22, the Court observed as under:- “Undisputedly the scheme of the inventory proceedings is that the person-successful bidder fails to deposit the money within 5 days, auction held earlier in his favour is cancelled and his right extinguishes. Consequently, debars him from participation in licitation. Property comes back to others debarring his participation in auction. Such person is entitled to get his share only but not bid for others share.” 7. In para 24 the Court observed as under: “ On the failure to deposit the money within five days, the auction held earlier in his favour is cancelled and his right of participation in fresh auction extinguishes, means the bidder is ousted. “ 8. In para 26, this Court pinpointed the question which arose for determination in the said appeal, in the following words. “In the instant case, the only question that goes to the root of the matter is whether extension can be granted or not even with the consent of the parties.” 6 The Court then dismissed the appeal. 9. It may be impermissible for the respondents to make much ado of observations in paras 22 and 24 that a bidder in the position of appellant is debarred from participating in licitation. The appeal had arisen from order rejecting appellant's prayer for extension of time. Therefore the only question that this Court was called upon to consider is whether extension of time to pay owelty money could have been granted. Further observations about disqualifications of appellant are clearly only a part of discussion and not determination of issues arising in the said appeal. Consequently, the contention that issues raised in this appeal are already concluded has to be rejected. 10. Even as obiter , the observations as to disqualification paras 22 and 24 above, do not illuminate as to why such an observation was made. 11. The question whether such a defaulting bidder incurs disqualification had been squarely raised in Civil Revision Application no.127/1999 decided by this Court on 11.10.99. Some of the respondents herein had filed the said revision application taking exception to participation of Pradeep 7 Yashwant (respondent no.8 herein) in a fresh auction after he had defaulted. The trial Court had permitted such participation by minutes of auction dated 9.4.99. Revision petitioners had urged that such a defaulting bidder incurs disqualification. This contention was negatived by this Court and the revision petition was dismissed. 12. Revision petitioners therein had conceded that relevant Article 1417 does not in terms provide for such disqualification. Article 1417 reads as under: “Where the office finds, at the time of drawing the chart, that the properties gifted or taken by licitation exceed the share of the respective party or the disposable portion of the deceased, a note shall be recorded in the file, in the shape of a chart, indicating exactly what is the amount of the excess, and thereupon the following shall be observed: (a) Where in between the properties gifted to a co- heir there exists any property not divisible, which does not fit wholly in the share to the donee, such property shall form part of the mass of partible properties as any other property of the inheritance; in other cases, the donee shall be notified to exercise, within three days, his right of choice which is conferred upon him by paragraph 4 of Article 2107 of the Civil Code, failing which his share will be 8 allotted with the properties indicated by the Judge; (b) Where the gift made to a stranger is inofficious, the same shall be reduced in terms of Article 1493 onwards of the Civil Code; © Those who have not taken the properties in licitation and who are to be allotted the owelty money due by those who were successful in the licitation, shall be notified to demand within three days the payment, if they so desire. If the demand is made the successful bidder shall be notified to deposit the amount failing which the licitation will be of no effect. Where the payment is not demanded, the owelty money shall earn the legal interest from the date of final judgment of partition and the creditors thereof may register the legal hypothecation over the properties adjudicated to the debtor.” 13. Article 1412 was referred to by the revision petitioners to show that licitation is an auction. Reliance was then placed on Article 904 of the Procedure Code. It reads as under. “The bidder shall deposit, at the time of auction one tenth of the price and the amount corresponding to the probable costs of the auction without which the asset shall not allotted to him. 9 The balance shall be paid within 15 days, on the penalty of arrest and the assets being auctioned again for any amount being the first bidder responsible for the difference of the price and for the costs resulting thereupon. The new auction shall be made known by proclamation and advertisements seven days in advance. The imprisonment shall not last more than one year and shall end no sooner the amount for which the bidder is responsible is recovered. After being assessed by the office this responsibility, the bidder shall be executed in the same proceedings, on the application of any interested party, by filing the certificate of summons and following the other terms of annexure. Para 1 – The negligent bidder shall not be admitted to the new auction, but the latter shall be without effect, subsisting the bid, if the bidder deposits the price till the start of the auction. Para 2 – If the bidder is the Government or any local authority, the imprisonment shall not take place and the civil responsibility shall be enforced through competent means. If it is any other collective person, the penalty of imprisonment shall apply to the representative who is responsible for the auction.” 10 14. This Court dealt with all these provisions and held that provisions of Article 904 could not be incorporated into inventory proceedings. The Court also found that property which was being put to auction was different, being original item no.2 and 1/5th of item no.3, whereas earlier defaults by Pradeep Yashwant (respondent no.8) and Damodar (appellant) were in respect of only item no.3. 15. The learned Counsel for respondents submitted that this Judgment of Nijjar, J could not be an authority for the proposition that a defaulter is not disqualified from bidding, because this judgment does not consider consistent view to the contrary. In Zacarias Durate Domingos Pereira V/s Camilo Inacio Evaristo Pereira reported at AIR 1984 Bom. 295, the question was whether provisions of the Indian Code of Civil Procedure would apply to inventory proceedings. The Court observed in para 20 of the Judgment as under: “From the aforesaid two decisions, it is clear that Inventory proceedings would still lie under the Portuguese Civil P.C. And if a person is aggrieved by any order interlocutory or final made in Inventory, an appeal (Agravo ro Apelacao) or revision, as the case may be, depending upon the nature of the order, would lie under and shall be governed by the Indian Code. However yet another situation arose before 11 the Hon'ble Acting Judicial Commissioner, Dr. G.F. Court in Civil Revision Application number 86/1981 in yet another different circumstance. The parties involved in the Civil Revision Application No.86/81 are the same who are before me in the present Revision Application and what is more in the same Inventory, but however, on a different point. In the said Revision Application the present petitioner had contended that inasmuch as there is no prohibition under Order 21 for a defaulter auction purchaser from taking part in a fresh auction ordered by the Court, the prohibition contained in Article 904 of the Portuguese Civil P.C. Stands repealed. The auction held in this very Inventory in his favour once having been annulled as he failed to deposit the monies for the items bidded by him within time, he was precluded from bidding at the fresh auction under Article 904 of the Portuguese Civil P.C. The point canvassed by the petitioner in the said Revision was that Article 904 of the Portuguese Civil P.C., stood repealed. Inasmuch as Order 21, Rule 86 does not prohibit the defaulter auction purchaser from bidding at the fresh auction the prohibition as contained in Article 904 of the Portuguese Civil P.C. Cannot be made applicable. The Acting Judicial Commissioner Dr. G.F. Couto as he then was and who has since been elevated to the Bench of this High Court held that the auction in the Inventory Proceedings cannot be equated to auction under Order 21 and although the prohibition contained in Article 904 of the Portuguese Civil P.C. Is not found in the part or body of the Code relating to Inventory 12 proceedings, yet such prohibition would stand as against the petitioner and the petitioner did not succeed before him in the said revision application. For applicability of Article 904 and thereby prohibiting the petitioner in the said fresh auction, the learned Judge held that those Articles relating to auction although outside Chapter XVII of the Portuguese Civil P.C. Yet nevertheless such provisions are applicable with necessary modifications and alterations as may be required by the very nature of the Inventory proceedings and he further held that to that extent those Articles outside Chapter XVII will become a special law applicable to Inventory proceedings, with the result that he repelled the contention of the petitioner in the said revision. 16. It may be seen that the recitals in this para 20 only enumerate what was held in an earlier case in order to support the conclusion that procedure in inventory proceedings was regulated by Portuguese Civil Procedure Code. It cannot be said to reflect the ratio of the judgment. 17. The learned Counsel made available a copy of the Judgment in Civil Revision Application No.86/81 rendered by the learned Acting Judicial Commissioner on 31.3.1982, which was referred to in para 20 in Zacarias (supra). In that case, upon a licitation, petitioners were required by respondents to pay 13 owelty money. The inventory Judge directed petitioners to make payment. Lawyer for the petitioners submitted that petitioners had not left money with him and individual notices be given to petitioners. The inventory Judge rejected the application, declared auction ineffective and precluded petitioners from bidding in a fresh auction. The learned Acting Judicial Commissioner held that petitioners could not have claimed notices personally when they were represented by a lawyer. He rejected the contention that Article 904 of Procedure Code was repealed and the proceedings were governed by Order XXI Rule 86 of Indian Civil Procedure Code. While considering provisions of Articles 1412, 1415 and 1417 of Procedure Code and Article 2127 of Civil Code, in paras 6 and 7, the learned Acting Judicial Commissioner, observed that “it does not follow that provisions of Portuguese Civil Procedure Code relating to auctions are not to be applied” to licitations and that they are to be applied with necessary alterations. Para 8 of the judgment, which is material, reads as under: “The next question to be considered is whether the defaulter is entitled to bid in the fresh 'licitacao' or whether is barred from doing so. I already said that 'licitacao' is not, strictly speaking, an auction, for it is not a judicial sale and it is a means to correct the value of the assets to be distributed and to make the 14 allotment by choice of the interested parties. But, at the same time, the legislature in its wisdom laid down that when the successful bidder had exceeded in his bidding and as such, is being allotted in the assets to be distributed more than the value of his share, he has to pay in money the value he receives in excess of his share to the other heirs so as all the interested parties are not deprived and do not receive less than what they are entitled in accordance with their share. Therefore, the defaulter, who by his bidding higher and higher might have deliberately deprived any other heir from being successful in the bidding, cannot be admitted to bid in the fresh 'licitacao', specially when he gave cause to the repetition of the 'licitacao' for no fault of the others. It is there that the provision of Art. 1412 which defines the 'licitacao' as an auction comes in operation and brings the matter straight within the provision of Art. 904 $ 1st of the Portuguese Civil Procedure Code which expressly forbids the defaulting bidder from bidding in the fresh auction. It is true that Mr.Mulgaonkar argued that the said Art.904 has been repealed by the coming into force of the Indian Civil Procedure Code. I am unable, however, to accept in its entirety the submission of Mr.Mulgaonkar, for, although with the coming into force in this Territory of the Indian Civil Procedure Code the corresponding procedural law existing in this Territory was repealed, the fact remains that, as correctly contended by Mr. Pinto de Menezes, the chapter regulating the Inventario proceedings was not repealed and is still in force. This chapter 15 constitutes a Code by itself and therefore, it becomes pertinent to emphasise that, though licitacao is not an auction, nevertheless the provisions regulating auctions in the Portuguese Civil Procedure Code were made applicable with the necessary modifications or alterations as required by the very nature of the inventario proceedings. This very nature requires that a defaulter bidder in a 'licitacao' should not be allowed to bid in the fresh 'licitacao' and as such, the corresponding provision of the Portuguese Civil Procedure Code forbidding a defaulter bidder from bidding in the fresh auction becomes a special law, applicable to the inventario proceedings.” 18. The learned Counsel for respondents submitted that this binding precedent directly on the issue was not considered by Nijjar, J., and therefore the observations in the said Judgment in Civil Revision Application No.127/99 may not create any precedent. He further submitted that even a Division Bench of this Court has taken such a view in Smt.Motibai Sarvotham Pai Cano w/o Sarvotham Pai Cano & Others V/s Smt.Maria Elsa do Perpetuo Sucorro Mota & another reported at 1994 (2) Bom. C.R. 628. After stating facts in paras 2 to 4 quoted below, and considering submissions, in para 23 of the Judgment, the bench observed as under: “2. To appreciate the controversy between the 16 parties and in the appeal reference is needed to the background of the litigation. Antonio Joaquim Mota was the owner of a property bearing matriz no.512 consisting of a house. Upon his death, inventory proceedings were launched and in the final order that emerged in those proceedings, his widow Ema Elvira Issura Rangel was allotted 5/8th share and his sons Filomeno and Victor and daughter Maria Elsa do Perpetuo Socorro Mota were allotted 1/8th share each. The third son Jose Mario Bailon Mota, for short 'Jose Mari, was left out insofar as this house property is concerned. During her life-time, Ema Elvira Issura Rangel made a gift deed in favour of Jose Mario, giftig her disposable quota corresponding to 50% of her share. Upon the death of Ema in the year 1955, in the inventory proceedings, the daughter Maria Elsa, took in auction 5/8ths share being the highest bidder in respect of the said property. Regard being had to the highest bid of Rs.40,000/- in the final chart drawn up by the inventory Court, Maria Elsa had to pay a sum of Rs.23,333.91 p. to Jose Mario. The result was Maria Elsa became the owner of 6/8ths in respect of the house property and the remaining 1/8th share was left with the brothers Victor and Filomeno. 17 3. Sometime in the year 1959, Jose Mario created a lease in favour of the original first defendant Sarvotham Pai Cano in respect of a part of the house, upon consideration of rent of Rs.70/- per month. It appears that Victor and Filomeno had been out of India during all this time and Maria Elsa was married and had been residing in Calcutta. Sometime in the year 1962, when proceedings were taken in respect of the partition of the estate of Ema, aforementioned Jose Mario was appointed as 'Cabeca de Casal' (administrator). As mentioned earlier, the proceedings in inventory culminated by final order on 7th June, 1965. 4. In June, 1968, Maria Elsa, presently respondent no.1 and her husband Clement, respondent no.2, instituted Regular Civil Suit No.111/68 against Jose Mario and his tenant Sarvotham for a declaration in the first place that the lease created by Jose Mario in favour of Sarvotham is null and void and that way not binding upon her, with a further direction to deliver vacant possession of the part let out to Sarvotham with a further prayer to direct Jose Mario to pay 18 rents unduly collected from June 1965 onwards, until the possession is handed over to him. .................................. 23. Some propositions under Portuguese Law have been canvassed on behalf of the parties to view as to how the matter of payment and/or non-payment of owelty stands and its effects and consequences. Mr. Reis, learned Counsel appearing for the respondents, says that under Article 1417 of the Civil Procedure Code (Portuguese) when owelty money is not paid, interest accrued thereon from the date of final judgment of partition until payment is liable to be paid and the creditor so-called, namely the person who is entitled to receive the owelty money may register a hypothecation over the property or properties adjudicated upon the debtor, namely the person who is liable to pay the owelty. Mr.Reis says that non-payment cannot come in the way of suit being decreed. A look at the provision of Article 1417 clearly suggests that for failure to pay owelty money the 19 creditor is entitled to legal interest from the date of judgment until recovery and is further entitled to register a sort of mortgage in respect of the property when demand is not made. It is therefore clear that failure to pay money does not bring about the reversion of the property. But, in a case where the demand is made by the person who is entitled to receive owelty and if the same is not paid within three days of the notice of demand, the allotment becomes ineffective and the property be put to re- auction and at that re-auction the defaulting party is not entitled to participate and offer any bid. Nothing is brought on record to suggest that any fresh auction was initiated by Jose Mario, with the result, there cannot be reversion of the property from Maria Elsa and the only remedy for Jose Mario is to recover owelty together with interest. Mr. Reis however, says that under the Portuguese law the recovery of interest is restricted to only a period of five years and not for the entire period. We will come to this aspect of the matter a little later after we view what was contended on behalf of the appellants. 19. As rightly submitted by his learned adversaries, these 20 observations cannot be read shorn of the context. The bench was considering a LPA arising out of a judgment in first appeal against a decree directing recovery of possession on the ground that the lease itself was null and void as created in 1959 by Jose, a person