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1985 Supreme(Ker) 249

Judges : U.L.BHAT,BHASKARAN NAMBIAR
K.P.M.saheed - Appellant
Versus
aluminium fabricating company - Respondent
Case No : C.M.A. No. 30 of 1979, C.R.P. No. 3003 of 1980
Decided On : 09/13/1985
Advocates Appeared :
V.P. Mohankumar, K. Ramakumar, C.M. James Chacko, K. Chandrasekharan & Philip Antony Chacko For Appellants K. C. John, George Varghese, C. Sankaran Nair, T. L Viswanatha Iyer, S. Easwaran Iyer & P.K. Lekshmanan For Respondents

Headnote:

The judgment concerns the validity of a sale of a property in 'custodia legis' without obtaining leave of the court appointing the receiver. The court analyzed the provisions of S.47 CPC, Order XXI R.90 CPC, and Order XXI R.54(2) CPC. The court held that the sale, conducted without leave of the court appointing the receiver, is illegal and liable to be set aside. The receiver was found to be entitled to maintain an application under S.47 CPC to set aside the sale. The court also discussed the application of S.151 CPC and the specific remedies available under S.47 CPC and Order XXI R.90 CPC.

Fact of the Case:

The property, an air-conditioned cinema theatre, was sold in court auction without obtaining leave of the court appointing the receiver. The judgment debtor and the lessee filed applications to set aside the sale under different provisions of the CPC. The lower court dismissed the applications, leading to the appeal.

Finding of the Court:

The court found that the sale, conducted without leave of the court appointing the receiver, is illegal and liable to be set aside. The receiver was entitled to maintain an application under S.47 CPC. The court also held that the judgment debtor's application under Order XXI R.90 CPC should have been considered under S.47 CPC due to the inherent illegality in the execution application.

Issues: The main issues were the validity of the sale of property in 'custodia legis' without obtaining leave of the court appointing the receiver, the maintainability of applications under S.47 CPC, and the interpretation of the provisions of Order XXI R.90 CPC and Order XXI R.54(2) CPC.

Ratio Decidendi: The court's decision was based on the principle that the sale of property in the hands of a receiver, conducted without leave of the appointing court, is illegal and liable to be set aside. The court also clarified the maintainability of applications under S.47 CPC and the specific remedies available under Order XXI R.90 CPC.

Final Decision: The court dismissed the revision petition and affirmed the lower court's order setting aside the sale. The court allowed the judgment debtor's application and set aside the sale. The lessee's application to set aside the sale was also allowed. The court set aside the order confirming the sale and imposed no costs.

Judgment :-

1. The main questions that arise for determination in these two connected matters are:

(1) When a property in "custodia legis", in the hands of a receiver appointed by a court is sold in court auction, without obtaining leave of court, is that sale valid; if not, can that sale be set aside under S.47 CPC. or only under Order XXI R.90 CPC.?

(2) Can a receiver maintain an application to set aside a sale under S.47 of the CPC.?

(3) Is an attachment effected in violation of Order XXI R.54(2) of the CPC valid?

2. The brief facts are these:

"Sangham", an air conditioned cinema theatre situated in about 75 cents of land in the heart of the Calicut Corporation, with all fittings and fixtures, was sold in court auction on 17-7-1978 for Rupees Twenty Thousand and ten subject to certain public and other charges. This sale is under challenge.

3. A money decree for Rs. 12,000/- and odd was obtained on 19-3-1976 in O. S No. 220 of 1973 on the file of the 1st Additional Sub Court, Ernakulam. While the suit was pending, there was an order for attachment before judgment on 19-9-1973 and it is said that the attachment was effected on 17-10-1973. An execution application was filed on 21-12-1977 in the Sub Court, Kozhikode, where it was transferred for execution and it was numbered as E. P. 2 of 1978. The properties attached, the cinema theatre and the land were brought to sale, on 17-7-1978 the sale proclamation having been settled on 13-6-1978. Two strangers bid and purchased at this auction

4. The judgment debtor filed an application to set aside the sale. This application filed under Order XXI R.90, was within time. He specifically raised the contention that the sale held without leave of the court appointing the receiver has to be ignored and the sale was not valid. The lower court held that he should have raised this contention at an earlier stage of the execution and that no grounds to set aside the sale under Order XXI R.90 were made out. It did not consider whether the application was maintainable under S.47 CPC. The application was dismissed on 21-12-1978 and the sale was confirmed on the same date. Aggrieved, the judgment debtor has filed the appeal, CMA. No. 30 of 1979.

5. The judgment debtor had, long prior to the filing of the execution application on 21-12-1977 granted a lease of the cinema theatre to a lessee on 21-9-1977 receiving an advance of Rupees three lakhs fifty thousand and fixing a monthly rental of Rs. 10,000/-. Subsequently on 27-9-1979, the lessee entered into an agreement to purchase this property and other properties for Rupees Thirty one lakhs. It is said that a further sum of Rs. 2 lakhs was given by the lessee to the judgment debtor This lessee filed an application, EA 160 of 1979, under Ss 47 and 151 of the CPC. for a declaration that the sale is invalid and that it did not convey any title to the auction purchaser. This application was filed on 5-2-1979.

6. Meanwhile, it is necessary to note that certain mortgagees of the property had filed three Original Suits 1238,159 and 160 of 1975, in the Additional Sub Court, Kozhikode, and a receiver was appointed on 1-4-1978 in OS. 159/ 75. He took charge on 5-4-1978 and the lessee was directed to attorn to the receiver. She then attorned as directed. But as the scope of the receiver order is itself in dispute, it is better to extract the relevant passages from that order.

"...The only question which the court has to look into is to see that the property is preserved and in that view, I am of the view that it is just and necessary to appoint a receiver.

It is stated that a lessee is in possession of the Sangam Theatre, and its equipments and running the Cinema. Therefore it is just and sufficient that the Receiver takes possession of the property symbolically and gets attornment from the lessee The receiver will take charge of the properties and make an inventory of the machinery present belonging to the judgment debtor and entrust them on kychit to the lessee. The les












































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