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1922 Supreme(SC) 30
PRIVY COUNCIL [ON APPEAL FROM THEEAST INDIES]
LORD PHILLIMORE, LORD CARSON, AND SIR JOHN EDGE.
RAI RADHA KRISHNA - Appellant
Versus
BISHESHAR SAHAY - Respondents
On Appeal from the High Court at Patna.
Decided On : May 22, 1922.
Solicitors for appellants: Truefitt & Francis.
Solicitors for first respondent: Barrow, Rogers & Nevill.
A purchase by a decree-holder without court permission under Section 294 of the Code of Civil Procedure is voidable, not void, even if permission was previously refused. Consequently, such sales are subject to the one-year limitation period under Article 12 of the Indian Limitation Act.
Headnote:(A) Code of Civil Procedure, 1908 - Section 294 - Indian Limitation Act, 1908 - Articles 12 and 141, Section 18 - Sale in execution of decree - Purchase by decree-holder without permission - Void vs. Voidable - Limitation period - A purchase by a decree-holder who has not obtained express permission of the Court is not void or a nullity, but is only voidable on the application of the judgment-debtor or any other person interested in the sale. This position holds even if the decree-holder had applied for permission and been refused; the sale remains voidable rather than absolutely void.
(B) Indian Limitation Act, 1908 - Article 12 - Where a sale in execution of a decree is voidable and not void, the suit to set aside such sale is governed by Article 12, which prescribes a limitation period of one year from the date when the sale is confirmed or would otherwise have become final and conclusive.
Facts of the case:
A property was sold in execution of a mortgage decree. The decree-holder had applied for permission to bid but was refused by the Court. The property was subsequently purchased by a third party. The heirs of the original judgment-debtor later instituted a suit to recover possession, alleging that the purchaser was a benamidar for the decree-holder and that the transaction was fraudulent and void. They contended that the suit was not barred by limitation as it was a suit to recover possession by heirs in reversion or based on concealed fraud.
Findings of Court:
The court found that it was not proved that the purchaser was a benamidar for the decree-holder. Regarding the legal nature of the sale, the court held that under the applicable provisions of the Code of Civil Procedure, a purchase by a decree-holder without permission is voidable, not void. The fact that permission had been specifically refused did not change the voidable nature of the transaction into a nullity.
Issues: Whether the purchase was a benami transaction and whether a sale by a decree-holder who was refused permission to bid is void or voidable, and consequently, which article of the Indian Limitation Act applies.
Ratio Decidendi: The court reasoned that treating such sales as nullities would create insecurity of titles and prejudice other interested parties. Since the sale was voidable, the remedy to set it aside must be sought within the one-year period prescribed by Article 12 of the Indian Limitation Act. The suit, having been filed well beyond this period, was barred by limitation.
Result: Appeal dismissed with costs.
Legal Category Hierarchy
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practice and procedure
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execution of decrees
- sale of property
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limitation
- period of limitation
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execution of decrees
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civil law
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property law
- benami transactions
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property law
Judgement
Appeal (No. 38 of 1921) from a judgment and decree of the High Court (February 27, 1919) reversing a decree of the first Court of the Subordinate Judge of Mozaffapur (November 27, 1916).
The suit was brought in 1914 by one Rai Mahabir Prasad (now represented by the appellants) to recover possession of a village, the plaint alleging that certain execution proceedings in which the village had been sold on April 18, 1899, were illegal, collusive, and fraudulent. The first defendant, the present first respondent, by his written statement denied the facts alleged, and pleaded that the suit was barred by limitation.
The material facts appear from the judgment of the Judicial Committee.
The Subordinate Judge found that one Hari Narain, the purchaser at the sale, was merely a benamidar for the first respondent, as the plaintiff alleged. He held that the first respondent, having purchased after the refusal of an application by him under s. 294 of the Code of Civil Procedure, 1908, for permission to do so, the sale was void and inoperative. In his view the case was governed by art. 141, and not art. 12, of Sch. I. of the Indian Limitation Act, and the suit was therefore not barred by limitation. He made a decree for possession of the village.
An appeal to the High Court was allowed. The learned judges (Atkinson and Das JJ.) found on the evidence that it was not established that Hari Narain was a benamidar.
1922. May 2, 4. De Gruyther K.C., Parikh and Abdul Majid for the appellants. Upon the evidence it was established that Hari Narain purchased as benamidar for the first respondent. The decree-holder having been refused leave to bid, the transaction was fraudulent and wholly void. Under s. 18 of the Indian Limitation Act the suit was not barred since the appellants had no knowledge of the true facts. Although under s. 294 of the Code of Civil Procedure a purchase made by the decree-holder without the permission of the Court is merely voidable, a purchase by him after a refusal of permission is absolutely void; consequently art. 12 of the Indian Limitation Act, Sch. I., does not apply Syamlal Mandal v. Nilmony Das (( 1907) I. L. R. 34 C. 241.); Srimati Sarat Kumari v. Nimai Charn Dey (( 1918) 23 Cal. W. N. 265.) ; Mahomed Gazee Chowdhry v. Ram Lall Sen (( 1884) I. L. R. 10 a 757.); Mahibir Pershad Singh v. Macnaghten . (( 1889) L. R. 16 I. A. 107.)
Dunne K.C. and Dube for the first respondent. It was not established that Hari Narain was a benamidar. The nature of the evidence requisite appears from Sreemanchander v. Gopaulchunder (( 1866) 11 Moo. I. A. 28.) and Mahbub Ali Khan v. Bharat Indu . (( 1918)23Cal. W.N.325(P. C).) But in any case the sale was merely voidable, not void, and the suit was barred by art. 12 (a) Malkarjun v. Narhari . (( 1900) L. R. 27 I. A. 216.) The question of concealed fraud was not raised in India, and there was no issue or finding as to the date at which the alleged fraud became known ; it cannot be raised in this appeal.
De Gruyther K.C. replied.
May 25. The judgment of their Lordships was delivered by
LORD PHILLIMORE. Rai Gudar Sahay, a landowner in the district of Mozaffapur, borrowed from a joint family of moneylenders to whom the defendants belong, a sum of Rs. 16,000 on May 2, 1873, and mortgaged for it his village Mauza Kataya. The family afterwards separated, and upon the partition of their property various fractions in the mortgage became allotted to the different members. They, however, all joined in a suit brought in 1886 to enforce the mortgage, and in the ordinary course obtained a decree on May 31, 1886, under which if the money was not paid the property was to be brought to sale.
For a time no steps were taken to realize this decree, and the judgment debtor paid off portions by purchasing, through a benamidar, the shares of some of the decree-holders, for prices which it is noteworthy were considerably less than the nominal values. In January, 1889, he bought a share nominally worth
