Important point
In an auction sale where there is no compliance with the law, it cannot be held that the certificate of sale conveyed good title to the purchaser.

Headnote:(i) Civil Procedure Code, 1908-Section 11-Res-judicata-An order dismissing a subsequent appeal for default-Whether can operate as res-judicata in respect of an earlier appeal-(No)-Appeal filed only at the instance of sole appellant, who was defendant 8 in original suit filed by respondent 8-Decree made by High Court qua other respondents has attained finality-Suit was contested only by defendants 5 and 8-Appeal filed by defendant 5 was dismissed in default.
       Held : It is not possible to accept that the principle of res-judicata will apply to bar the appeal. Section 11 of the CPC would bar the Court from trying any suit or issue in which the matter “directly and substantially in issue” between the same parties or between the parties under whom they or any of them claim, litigating under the same title in a Court competent to try such subsequent suit or suit in which such issue has been subsequently raised, has been “heard and finally decided by such Court”. In the present case, Bajaranglal and Shyamsunder were defendants in the Original Suit No. 118 of 1973. The suit was dismissed and the plaintiff Satyavati carried an appeal to the Division Bench. In the appeal, both Bajranglal and Shyamsunder were respondents. The Division Bench, reversed the Single Judge’s judgment and decreed the suit by its judgment. As the respondents in the appeal before the Division Bench both Bajranglal and Shyamsunder were aggrieved by the decree against them. The present appellant Bajranglal filed SLP No. 8425/93 on 27.5.1993, while Shyamsundar filed his appeal No. SLP 18492/93 on 17.12.1993. Leave was granted in Bajranglal’s appeal on 4.10.1993 while leave was granted in Shyamsundar’s case on 17.12.1993. Subsequently, Bajranglal’s appeal was numbered as Civil Appeal No. 5293 while Shyamsundar’s appeal was numbered as Civil Appeal No. 7490/93. Shyamsundar’s appeal was dismissed for default for non-removal of office objections on 15.1.2000. Thus, it is obvious that both in the matter of filing the SLP and granting of leave, Bajranglal’s appeal was earlier and Shamsundar’s was later in time. In these circumstances, we are unable to accept the contention that an order dismissing a subsequent appeal for default can operate as res-judicata in respect of an earlier appeal. Neither Section 11 of the CPC, nor any principle derivable therefrom, would bar the appeal as contended by the respondents. The contention is misconceived and we see no merit in the contention. In our judgment, the appeal is perfectly maintainable. (Paras 41 and 42)
       (ii) Civil Procedure Code, 1908-Order XLI Rule 33, Rule 4-Appeal by sole appellant where there are several defendants-Maintainability challenged on ground of conflict of decrees-Appeal filed by defendant 5 was dismissed in default-Whether appeal filed by sole appellant, defendant 8 was maintainable-(Yes).
       Held : Where there are several defendants, who are equally aggrieved by a decree on a ground common to all of them, and only one of them challenges the decree by an appeal in his own right, the fact that the other defendants do not choose to challenge the decree or that they have lost their right to challenge the decree, cannot render the appeal of the appealing defendant infructuous on this ground. In fact, Rule 4 and Rule 33 of Order XLI of the CPC are enacted to deal with such a situation. (Para 44)
       The appeal before us cannot be dismissed. Shyamsunder is the 5th respondent before us, who has been served, but has chosen to remain absent. The fact that Shyamsunder’s own appeal failed for non-compliance with the office objections cannot have the consequence of defeating the appeal of the present appellant Bajaranglal. Order XLI Rule 4 read with Rule 33 invests this Court with sufficient power to entertain the appeal of Bajranglal before us and to make any appropriate order thereupon consonant with justice, equity and good conscience. In the result, we overrule the preliminary objections and hold that the appeal is maintainable. (Para 67)
       (iii) Bombay Municipal Corporation Act, 1888-Section 206-Auction sale-Validity-Sale was held for recovery of arrears of property tax-Suit filed challenging the auction sale as nullity on ground of non service of demand notice on all the heirs and co-owners, irregularities and breach of law-Single Judge of the High Court held that there was clear contravention of provisions of the Act, sale had taken place without any reserved bid-Division Bench held the suit filed as barred by time-Whether Division Bench was justified in interfering with the conclusions drawn by the single Judge-(No)-Division Bench erred on all counts.
       Held : In our view, this reasoning of the Division Bench is erroneous. Although the period of limitation prescribed in the Limitation Act, 1963, precludes a plaintiff bringing a suit which is barred by limitation, as far as any defence is concerned, there is no such limitation. In reply to the plaintiffs suit that she had derived title to the suit property by virtue of the auction sale and the certificate of sale issued by the BMC, it was perfectly open to the defendants, including Bajranglal, to contend to the contrary. The burden of proving the facts alleged in the plaint was squarely upon the plaintiff. After recording evidence on both sides, if the evidence showed that the auction sale held by the BMC was contrary to the provisions of the BMC Act and the Regulations made thereunder, the defendants were entitled to urge upon the learned Single Judge to come to the conclusion recorded by the learned Single Judge. (Para 71)
       The finding of the Division Bench in the impugned judgment that the action of the Bombay Municipal Corporation in holding the auction sale could not have been challenged by Bajaranglal after withdrawal of the suit by Mahavirprasad and that the right to challenge the auction sale would not subsist in Bajaranglal by way of a defence in the suit filed by the plaintiff auction purchaser for recovery of possession, is erroneous. The Division Bench has also taken note of the fact that Mahavirprasad, who was a co-owner of the property, had filed suit No. 218/73 (to which other co-owners including Bajaranglal were parties) for setting aside the auction sale and thereafter withdrew the suit. This, according to the Division Bench, precluded all other co-owners from challenging the auction sale on the same ground or by way of a defence in a suit instituted by auction purchaser to recover possession. The reasoning of the Division Bench appears to be that, as Bajaranglal could not have instituted a suit for challenging the auction sale and the sale certificate, equally, he could not raise a defence to the suit and plead that the auction sale was invalid. This reasoning in our view, is wholly erroneous in the light of the authoritative pronouncements of this Court to which we have already referred. (Paras 85 & 86)
       The sale certificate has been issued under section 206 of the BMC Act, Sub-section (6) thereof provides that, after the sale of the immovable property as aforesaid, the Commissioner shall put the person declared to be the purchaser in possession and shall grant him a certificate to the effect that he has purchased the property to which the certificate refers. The evidence led by the plaintiff merely shows that Janardan Dhuri was the highest bidder. The records produced by BMC show that Janardan Dhuri was the highest bidder. If that be so, there is no acceptable explanation as to how the sale certificate could have been issued in the name of plaintiff Satyavati for she did not participate in the bid at the auction sale; much less was she the highest bidder. The Division Bench has made a very curious finding that “the sale certificate was issued in favour of the plaintiff by the Corporation and was duly registered”. We must say that this finding is totally without basis. The sale certificate ex-facie shows that it was given in the name of plaintiff Satyavati and there is no record in the BMC books that the plaintiff was registered as the highest bidder nor as a purchaser in the auction sale. Neither the plaintiff Satyavati, Janardan Dhuri, nor any competent officer of the BMC entered the witness box to explain this discrepancy as to how the sale certificate was issued in the name of Satyavati when the highest bidder was Janardan Dhuri, who did not even claim to have bid as an agent of Satyavati. It is only in the plaint that the plaintiff for the first time claimed that she had paid the entire price of the auction sale. This was an averment in the plaint which was not substantiated by any evidence. Nonetheless, the Division Bench facilely accepted this averment and held that the sale certificate was issued in favour of the plaintiff as Janardhan Dhuri was the highest bidder and because he was in the employment of Ramprasad, the certificate of the sale could be in the name of Satyavati and it conveyed her good title. To say the least, the reasoning appears to be faulty. (Para 96)
       In the circumstances of the case, and upon overall evaluation of the evidence on record, we are satisfied that the conclusions drawn by the learned single Judge were perfectly justified and in accordance with law. The Division Bench erred on all counts in interfering with and setting aside the judgment of the learned single Judge. (Para 98)

Judgement Key Points

Certainly. Based on the provided legal document, here are the key points summarized with references:

In auction sales, compliance with legal procedures is essential; failure to do so results in the sale being considered null and void, and the certificate of sale does not convey good title if law is not followed (!) (!) (!) (!) .
The validity of an auction sale can be challenged on grounds such as irregularities, breach of statutory provisions, or fraud. Even if a sale appears to be irregular, it remains open to the parties to raise such defenses in subsequent proceedings (!) (!) (!) (!) .
The sale certificate issued by authorities is not necessarily conclusive proof of title if the sale was conducted in contravention of laws or regulations, especially if there was no compliance with prescribed procedures like fixing a reserve bid or proper service of notices (!) (!) .
The principle of res-judicata does not bar a party from challenging the validity of an auction sale if the challenge is based on legal defects or procedural irregularities, especially when the sale is void ab initio (!) (!) (!) (!) .
A party can defend possession or title by establishing that the sale was a nullity, without necessarily resorting to a substantive suit, provided the defect affects the legality of the sale itself (!) (!) .
The absence of necessary parties, such as the municipal authority or co-owners, in a suit challenging an auction sale does not automatically invalidate the proceedings if the sale itself was unlawful or irregular (!) (!) (!) .
The law requires that notices of auction and service thereof be properly executed; failure to do so can render the sale invalid and the sale certificate void (!) (!) .
The legal provisions do not make the sale certificate conclusive evidence of compliance with all procedural requirements; therefore, a sale conducted unlawfully can be challenged and set aside (!) (!) .
The power of an appellate court under relevant procedural rules allows it to pass appropriate orders to prevent conflicting decrees and to do complete justice, even if some parties or issues were not directly involved in the appeal (!) (!) (!) (!) .
Challenges based on procedural irregularities, such as non-service of demand notices or failure to follow prescribed auction procedures, are valid grounds to declare the sale null and void, especially when such irregularities are established by evidence (!) (!) (!) .
The burden of proof lies with the party asserting the validity of the sale; if the evidence shows procedural breaches or illegalities, the sale can be declared invalid (!) (!) .
The law permits raising the plea of invalidity or nullity of a sale as a defense in a possession or title suit, without the need for a separate substantive suit, provided the sale was conducted unlawfully (!) (!) .

Let me know if you need further elaboration or assistance.

Judgment

Srikrishna, J.-This appeal is directed against the judgment of the Division Bench of the Bombay High Court granting a decree for the relief of possession of the suit property together with a direction for inquiry into mesne profits, by reversing the judgment of the single Judge who had dismissed the original suit.

Facts

2. Two brothers, Shivchandrai and Ramvallabh, purchased a plot of land measuring 1063 sq. metres at Malviya Road, Ville Parle, Bombay in the year 1928. Haribux was the third brother, whose son was Nand Kishore and who in turn had a son by name Shashikant.

3. The family tree of the contending parties is as under:

Genealogy

/ / /

Shivchandrai (D 7.6.71) Ramvallabh (D 1939) Haribux = Rukmanibai (D4) = Durgabai /

(D 25.12.87) (D 1990) Nandkishore (D 1969)

Mahavirprasad + (1 daughter) = (Chandrakala)

(D 30.6.89)

/ / / / / /

(3 daughters) (Kailash (Shyamsunder) (Ramprasad) Chandra Bajranglal Chand) / Prakash (wife Satyavati)

/ / /

Shashikant Ravikant (6 daughters)

(D-died)

4. In 1931, Shivchandrai and Ramvallabh constructed a building known as ‘Hari Niwas’ on the said land. The building comprised a ground floor, two upper floors and several separate out-houses, sheds and garages. In all, there were five separate structures having 5 different Municipal Ward and Street numbers, namely, 781 (1), (2), (3), (4) and (5). The Bombay Municipal Corporation (hereinafter “BMC”) used to issue separate property tax bills in respect of these five demarcated properties. The families of Shivchandrai and Ramvallabh were occupying Hari Niwas as their family house. Shivchandrai’s family expanded in due course of time and consisted of his wife Rukmanibai, three daughters and six sons. Ramvallabh’s family consisted of his wife Durgabai, one daughter and his son Mahavirprasad. Satyavati, the plaintiff in the suit, which has given rise to the present appeal, is the wife of Ramprasad who is one of the sons of Shivchandrai.

5. Sometime in 1933, Bajranglal, the appellant, was born to Shivchandrai in Hari Niwas itself. In 1939 Ramvallabh died leaving behind his wife Durgabai, one daughter and son Mahavirprasad. In 1962, one of the six sons of Shivchandrai, namely, Chandra Prakash, shifted his residence to Bandra and has been living separately. Shashikant with his father Nandkishore moved out to Madras and settled there.

6. In 1964, Shivchandrai also moved over to Madras to settle with his nephew Nandkishore. Until his departure to Madras, Shivchandrai was carrying on a business in partnership with Mahavir Prasad in a firm known as “Gorakh Ram Golak Chand” in Bombay. The office of the said firm was situated at Choksi Chamber, Zaveri Bazar, Bombay. The partnership employed an employee by name Janardhan Dhuri. The property tax in respect of Hari Niwas building used to be paid by the said partnership firm.

7. After Shivchandrai’s going away to Madras, Mahavirprasa

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2004 Supreme(SC) 370

Important pointIn an auction sale where there is no compliance with the law, it cannot be held that the certificate of sale conveyed good title to the purchaser.

Cases Referred (21)

Important point
In an auction sale where there is no compliance with the law, it cannot be held that the certificate of sale conveyed good title to the purchaser.