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1944 Supreme(Mad) 187

IN THE HIGH COURT OF MADRAS
Bhimavarapu Butchi Reddi
Versus
Bhartipadi Sri Lakshmi Venkata Suryaprakasarao by guardian mother Annapurnamma and Anr.
Decided On : 16.08.1944

The judgment clarified that the right to recover the purchase money at a court auction applies when there is a total failure of title, and not when there is a partial failure of title.

Headnote:

Court Auction - Mortgage Suit - Full Bench Decision - Summary of Acts and Sections: Civil Procedure Code, 1908 - Order 21, Rule 91 - Macha Koundan v. Kottara Koundan A.I.R. 1936 Mad. 50 - Izatunnissa Begum v. Pertab Singh (1909) 31 All. 583

Fact of the Case:

The plaintiff purchased properties in a court auction, subject to a mortgage suit. After losing the properties, the plaintiff sought a refund of the bid amount from the decree-holder.

Finding of the Court:

The court found that the Full Bench decision did not apply to the case as there was no want of title in the judgment-debtor at the time of the court sale. The court also referenced a case where an auction-purchaser was granted a decree for a proportionate part of the price paid at the court auction when the entire property was not lost.

Issues: The main issue was whether the plaintiff was entitled to a refund of the bid amount after losing the properties purchased in a court auction.

Ratio Decidendi: The court held that the Full Bench decision did not apply as there was no want of title in the judgment-debtor at the time of the court sale. The court also considered a case where an auction-purchaser was granted a decree for a proportionate part of the price paid at the court auction when the entire property was not lost.

Final Decision: The court dismissed the second appeal and left the parties to bear their own costs.

JUDGMENT

1. I do not see any reason to interfere with the decree of the lower appellate Court. Two sets of properties were purchased by the plaintiff in Court auction in execution of a money decree which was obtained by defendant 2s father against one Nagi Reddi. Under the column "details of encumbrances to which the property is liable," a registered mortgage deed was mentioned as having been executed on 22nd June 1930, and it was said that the mortgage was a fraudulent transaction not supported by consideration and therefore not binding. It so turned out that on the date of the Court sale the mortgagee had already filed the suit O.S. No. 108 of 1934. The Court sale at which the plaintiff became the purchaser was on 7th May 1934, which was subsequent to the institution of O.S. No. 108 of 1934. The plaintiffs purchase was therefore lis pendens and subject to the result of the mortgage suit and of the further proceedings taken therein. It was the duty of the auction-purchaser to have impleaded himself in that suit and to have sought redemption if he so wanted. He did not do it. The result was that a decree was passed, the properties were brought to sale and they were purchased by the mortgagee himself. The property was thus lost. The plaintiff then filed the suit out of which this second appeal arises against the two defendants, defendant 1 being the mortgagee Court auction-purchaser and defendant 2 the decree-holder in execution of whose decree the properties were sold and purchased by the plaintiff. As against defendant 1, the plaintiff sought a declaration that the mortgage was collusive and not supported by consideration. On the merits the trial Court found that the mortgage was not either collusive or not supported by consideration and therefore rightly refused any relief against defendant 1 and the plaintiff left it at that. As against defendant 2 the decree-holder, the argument was that as the plaintiff lost the properties which were brought to sale at his instance, the plaintiff is entitled to a refund of the money that he paid for the Court sale.

2. This claim is one based on a decision of the Pull Bench of this Court in Macha Koundan v. Kottara Koundan A.I.R. 1936 Mad. 50. The trial Court upheld the claim of the plaintiff as against defendant 2 and granted a decree against defendant 2. On appeal the lower appellate Court reversed the decree. In the present second appeal though both the defendants are made respondents, relief is claimed only against respondent 1 who is defendant 2 in the trial Court. Mr. V. Subramaniam the learned advocate for the appellant argues that this case is directly covered by the Full Bench decision of this Court. Before proceeding further it must be mentioned that six items of properties were brought to sale and that five of those items were covered by the mortgage which has been mentioned above. These items were sold as a single lot and purchased by the plaintiff. It would appear that the other item which is not the subject of the mortgage and the sale in execution of the mortgage decree was also lost as. The result of a claim put forward by a third party. The appellants learned advocate therefore says that his client has lost all the properties which were purchased by him and that therefore he is entitled to the refund of his bid amount. The facts of the case which came up for decision before the Pull Bench are however entirely different and I do not agree with the contention that the decision of the Pull Bench covers this case. In that case a property which was not the property of the judgment-debtor on the date of the Court sale was put up for sale. The fact that the judgment-debtor had no title to the property even on the date of the sale was not discovered within 80 days from the date of the sale. The sale was confirmed. The auction-purchaser lost the property as a result of a later suit by a third party and he thereafter filed the suit for recovery of the amount which was paid by him for



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