Case: Smt. Laxmi Devi Vs. Sethani Mukand Kanwar &amp; Two Others

1. This appeal arises out of an application made by respondent No. 1. Smt. Mukand Kanwar, challenging the validity of an auction sale held on the 14th May, 1954 in execution of a money decree passed in favour of Ratan Lal Dani, Secretary, Hindu Charitable Aushdhalya, Ajmer, respondent No. 2, and against Umrao Mal, respondent No. 3. The property sold at the auction sale is "old Daikhana" at Ajmer. On the 24th June, 1950, Umrao Mal who was the owner of the property, mortgaged it to the appellant Laxmi Devi. Later, respondent No. 2 obtained a money decree against respondent No. 3 for a large amount, and in execution of this money decree he brought the property in question to sale. Auction sale was accordingly held on the 14th May, 1954, and the appellant purchased the property subject to the pre-existing mortgage in her favour. The amount due under the mortgage was Rs. 33,264/. and as auction purchaser, the appellant paid Rupees 2,800/- whereby she purchased the equity of redemption vesting in respondent No. 3, the judgment debtor. It is the validity of this sale that is challenged in the present proceedings.2. Long before the mortgage was executed, respondent No. 3 had executed in favour of his mother, respondent No. 1, a document whereby her maintenance was guaranteed. This document had created charge over certain properties belonging to respondent No. 3. On the strength of this document, respondent No. 1 sued respondent No. 3 (civil suit No. 233 of 1952). In this suit, she claimed arrears of maintenance and asked for a declaration that the properties specified in the plaint, which were the same as the properties covered by the previous agreement between the parties, were subject to a charge for her maintenance. The trial Court gave her a decree for arrears of maintenance, but declined to make the declaration as to charge claimed by her. This decree was pronounced on the 31st July, 1952. Against this decree, respondent No. 1 preferred an appeal (No. 80 of 1952) to the Judicial Commissioner, Ajmer. Her appeal succeeded and the charge over the properties was declared in her favour. This decision was pronounced on the 10th February, 1954.3. After the auction sale was held on the 14th May, 1954, it was challenged by two separate applications, one was made by respondent No. 3, the judgment-debtor, on the 28th June, 1954, and the other by respondent No. 1 on the same date. Both these applications were made under O. 21 R. 90 of the Code of Civil Procedure. The application made by respondent No. 3 was dismissed on the 30th April, 1955, while the application made by respondent No. 1 went to a trial, the Executing Court which heard this application tried three issues. The first issue was whether the sale had been vitiated by any irregularity as required by O. 21 R. 90. The second was whether respondent No. 1 was a person whose interests had been affected by the impugned sale; and the third was whether the irregularity alleged by respondent No. 1 had caused substantial loss to her. All these issues were decided in favour of respondent No. 1. In the result, the impugned sale was set aside on the 4th May, 1955.4. The appellant challenged the correctness of this decision before the Judicial Commissioner, Ajmer. It was urged on behalf of the appellant that the application made by respondent No. 1 did not satisfy the requirements of O. 21 R. 90 of the Code inasmuch as appropriate allegations had not been made in the application showing that substantial injury had been suffered by respondent No. 1 by reason of the irregularities which, according to her, had vitiated the said sale. This plea, was rejected by the Judicial Commissioner. It was then urged that respondent No. 1 was not competent to make the said application. The Judicial Commissioner did not accept even this plea. The last argument which was pressed before the Judicial Commissioner was that the finding recorded by the Executing Court that respondent No. 1 had suffered substantial injury was not justified, and that in fact, the appellant had no opportunity to lead her evidence on that issue, because all the three issues on which the Executing Court had made its findings had been framed by it at a very late stage of the proceedings. This plea was upheld by the Judicial Commissioner, and so, he set aside the finding of the Executing Court on that issue and sent the case back for disposal in accordance with law, with a direction that the issue as to substantial injury should be tried afresh. This order was pronounced on the 26th August, 1955.5. After remand, the Executing Court considered the issue as to substantial injury and held that respondent No. 1 had failed to show any substantial injury. As a result of this finding, it ordered that her application under O. 21 R. 90 should be dismissed, and the sale should be confirmed. This order was pronounced on the 27th April, 1957.6. Aggrieved by this order, respondent No. 1 preferred a appeal, and since the High Court of Judicature at Rajasthan had then come into existence, her appeal was heard by the said High Court. The High Court has held that the Executing Court was in error in coming to the conclusion that respondent No. 1 had not proved substantial injury. The contentions raised by the appellant in support of the ultimate decision reached by the Executing Court were rejected by the High Court, and as a result, the application made by respondent No. 1 was allowed and the impugned sale set aside. This appellate order was pronounced on the 29th July, 1960. It is against this order that the appellant has come to this Court with a certificate granted by the said High Court.

Court's reasoning:
18. That raises the question as to whether the said injury can be said to amount to substantial injury within the meaning of proviso to O. 21 R. 90(1); and this inevitably would be a question of fact. The High court appears to have held that as soon as it is shown that the charge would become unenforceable against the appellant auction-purchaser by virtue of the provisions of S. 100, it follows as a matter of law that respondent No. 1 has suffered substantial injury, and so, the impugned sale must be set aside. We are not prepared to accept this view. We do not think it can be reasonably assumed as a matter of law that in every case where a charge has become unenforceable against an auction purchaser by reason of the fact that it was not shown in the proclamation preceding the auction sale, it follows that the charge-holder has suffered substantial injury. Whether or not the injury suffered by the charge-holder is substantial, must depend upon several relevant facts. How many properties have been sold at the auction sale; how many out of them were the subject-matter of the charge; what is the extent of the claim which the charge-holder can legitimately expect to enforce against the properties charged, these and other relevant matters must be considered before deciding whether or not the injury suffered by the charge-holder is substantial. It is from this point of view that the material facts in the present case must now be considered.19. Properties which are the subject matter of the charge are five in number. Out of these properties, it is property No. 3 alone which has been sold at auction sale. It appears that properties Nos, 1 and 2 had already ceased to be available to the charge-holder, and so, the consideration of the question as to whether the injury suffered by respondent No. 1 is substantial, must depend upon the relative values of properties Nos. 4 and 6. This question has been considered by the Executing Court when the matter was sent back to that Court by the Judicial Commissioner and the Executing Court made a definite finding that the injury suffered by respondent No. 1 cannot be said to be substantial. According to it, properties Nos. 4 and 6 which would be available to respondent No. 1 would be enough to meet all her legitimate claims against the judgment debtor, respondent No. 3. The value of property No. 4 is Rs. 1,18,967/-, whereas the value of property No. 6 is Rs. 1,25,464 / -. The Executing Court has taken into account the amount which respondent No. 1 is entitled to claim by way of maintenance from respondent No. 3, has also borne in mind the fact that respondent No. 1 is an old lady past 70 years of age, and has come to the conclusion that, on the whole, the sale of property No. 3 to the auction-purchaser cannot be said to have caused substantial injury to her.In our opinion, it is difficult to differ from this conclusion; and so, it follows that though respondent No. 1 has been able to show that her charge could not be enforced against the appellant, it is not shown that this circumstance has caused substantial injury to her. The result, therefore, is that the requirement of the proviso to O. 21, R. 90 of the Code is not satisfied in the present case.20. We ought to add that pending the appeal before this Court, respondent No. 3, Umrao Mal has died leaving behind him his mother respondent No. 1 and his widow, and the estate of Umrao Mal has devolved on these two widows; and so, respondent No. 1 has now become the owner of part of the properties against which she would otherwise have been entitled to proceed in execution of her maintenanceargument is based on the latter part of S. 100 of the Transfer of Property Act. We will presently refer to this provision. At this stage, it is enough to state that if Mr. Sharma is right in contending that an auction sale of immoveable property which has followed the proclamation issued under O. 21 R. 66 in which no reference to a charge is made, materially affects the rights of thesome injury would automatically flow from the irregularity alleged in the application filed by respondent No. 1, and so, it would not be appropriate to hold that the said application should be dismissed on the ground that no substantial injury has been alleged as required by the proviso to O. 21 R 90 (1).10. It is true that before an application made under O.21, R.90 can succeed, the applicant has to show that the impugned sale was vitiated by a material irregularity or fraud in publishing or conducting it; and as required by the proviso, it is also necessary that he should show that in consequence of the said irregularity or fraud, he had sustained substantial injury. Therefore, Mr. Bishan Narain is right when he contends that the application made by respondent No. 1 ought to contain an allegation in regard to the material irregularity as well as an allegation as to substantial injury. But, in our opinion, in a case like the present where substantial injury is alleged to be implicit in the material irregularity set out in the application, it would be too technical to hold that the application should be dismissed on the preliminary ground that no specific or express averment has been made as to substantial injury suffered by respondent No.effect of this provision is that the provisions of the Transfer of Property Act will not apply to any transfer by operation of law or by, or in execution of, a decree or order of a Court of competent jurisdiction. This provision is clear and emphatic. It says that nothing in the Transfer of Property Act will apply to the transfers just indicated, and that would naturally take in the whole of S. 100. But there is an exception made to this provision by S. 2 (d) itself by the saving clause, and this exception covers cases provided by S. 57 and Chapter IV, Chapter IV deals with mortgages of immoveable property and charges, and includes sections 58 to 104. Section 100, therefore, falls within Chapter IV; and the result of the saving clause is that S. 100 would apply to transfers by operation of law. There is, therefore, no doubt that if the question as to the applicability of the latter part of S. 100 to cases of auction sales had to be determined only by reference to S. 2(d), the answer would clearly be in favour of such applicability.This position, however, has become somewhat complicated by reason of the provisions contained in S.5 of the Transfer of Property Act, Section 5 provides, inter alia, that in the following sections "transfer of property" means an act by which a living person conveys property, in present or in future, to one or more other living persons. In other words, in terms, the definition of the expression "transfer of property" as used in all the sections of the Transfer of Property Act is intended to take in transfers effected by acts of parties inter virus, and anclearly is not such an act. Section 5 would, therefore, appear to exclude auction sales from the purview of S.100 altogether. This result would appear to be consistent with the provision in the preamble of the Act which says that the Transfer of Property Act was enacted because it was thought expedient to define and amend certain parts of the law relating to the transfer of property by act of parties. That is the position which emerges from the reading of S. 5 coupled with the preamble; and that natrually raises the question as to how to reconcile these two inconsistent positions.16. In our opinion, the positive provision contained in S. 2(d) must prevail over the definition of "transfer of property" prescribed by S. 5. No doubt the purpose of the definition is to indicate the class of transfers to which the provisions of the Transfer of Property Act are intended to be applied; but a definition of this kind cannotthe clear and positive direction contained in the specific words used by S. 2(d). As we have already seen, the result of the saving clause enacted by S. 2(d) is to emphasise the fact that the provisions of S. 57 and those contained in Chapter IV must apply to transfer by operation of law. Such a positive provision cannot be made to yield to what may appear to be the effect of the definition prescribed by S. 5; cannot and so, we are inclined to hold that notwithstanding the definition prescribed by S. 5, the latter part of S. 100 must be deemed to include auction sales.17. This question has been considered by our High Courts on several occasions, and, on the whole, the majority view appears to be in favour of the conclusion which we have justwe must deal with the present appeal on the basis that as a result of the failure of the proclamation to refer to the charge in favour of respondent No. 1, she would not be able to enforce her charge against the property purchased by the appellant by auction sale; and that means that the impugned sale has been conducted in a materially irregular manner and as a consequence of the said irregularity, some injury has resulted to respondent No. 1.We ought to add that pending the appeal before this Court, respondent No. 3, Umrao Mal has died leaving behind him his mother respondent No. 1 and his widow, and the estate of Umrao Mal has devolved on these two widows; and so, respondent No. 1 has now become the owner of part of the properties against which she would otherwise have been entitled to proceed in execution of her maintenance