Parmanand And Others vs Ganpatrao And Others

Rewritten Version Notice: This is a rewritten version of the original judgment.

Court: Supreme Court of India

Case Number: Civil Appeal No. 110 of 1960

Decision Date: 12 September, 1962

Coram: Gajendragadkar

In the matter titled Parmanand and Others versus Ganpatrao and Others, a judgment was delivered on 12 September 1962 by the Supreme Court of India. The case was listed as a civil appeal, numbered 110 of 1960, and proceeded on a petition filed under special leave. The parties were identified as the petitioners, Parmanand and others, and the respondents, Ganpatrao and others. The bench comprised the Supreme Court, and the opinion was authored by Justice Gajendragadkar. The substantive statutory provision under consideration was section 149 of the C.P. Land Revenue Act, 1917 (C.P. II of 1917), which deals with the validity of revenue sales. The judgment also referenced the relevant legislative act, namely the C.P. Land Revenue Act, 1947, and cited the specific provision, section 149, as the focal point of the dispute.

The factual situation involved the appellants, who were Lambardars of Mahal No. 2 in the mouza of Gujarkhedi. In that capacity, they owned an undivided share in the revenue lands designated as As. –/II /‑. It was established that the appellants were in arrears of land revenue amounting to Rs 730 13/‑. Consequently, the revenue authorities effected a sale of the property for a consideration of Rs 600/‑. However, the proclamation of sale stated that the arrears due were Rs 1 345 9/‑ and that the sale was being conducted to recover that higher amount. The appellants contested the sale on the ground that the arrears for which the land was sold were not actually due, and therefore they alleged a right to have the sale set aside in a civil court. They argued that the discrepancy between the actual arrears and those stated in the proclamation rendered the sale invalid.

The procedural history revealed that the appellants instituted a suit in the Court of the Additional Judge at Nagpur on 12 November 1946, seeking to annul the revenue sale. The trial court dismissed the suit, holding that the suit did not lie, essentially concluding that the appellants lacked a cause of action to set aside the sale. The appellants appealed this decision, and the Nagpur High Court affirmed the trial court’s dismissal. Upon further appeal to the Supreme Court, the Court examined the construction of section 149(2) of the C.P. Land Revenue Act. The Court noted that the provision was plain and unambiguous: if the arrear that formed the basis of the sale was not actually due, the owner of the property possessed a statutory right to obtain relief in a civil court. The Court further observed that any subsequent accrual of additional land‑revenue dues after the date of the sale proclamation, even if they became payable on the date of the sale, did not affect the validity of the sale, because the Act required separate proceedings for each distinct arrear.

The Court’s reasoning also distinguished between procedural mistakes or irregularities contemplated by the Act, which do not by themselves constitute grounds for invalidating a sale, and the situation where a sale is conducted for an arrear that is not due, which falls within a separate category of invalidity. In reaching this conclusion, the Court referred to earlier authorities, specifically Rewa Mahten v. Ram Kishan Singh (1886) L.R. 13 I.A. 106 and Ram Prosad Choudhury v. Ram Jadu Lahiri (1936) 40 C.W.N. 1054, and held that those cases were distinguishable on the facts. The appeal, therefore, centered on the interpretation of section 149(2) and the question of whether the revenue sale of the appellants’ properties, made on 27 February 1941 under section 128(f) of the Act, could be set aside on the basis that the arrear stated in the proclamation was not actually due. The parties were represented by counsel, with counsel for the appellants and counsel for the respondents presenting their arguments before the Court, which ultimately clarified the statutory construction and the scope of relief available to owners under the Act.

Ganpatrao Vishwanathji Deshmukh, who had been purchased as the successful bidder at the auction, was named as defendant No. 1 in the suit filed by the appellants. While the proceedings were ongoing, Ganpatrao passed away and his heirs were subsequently entered into the court record. For the purpose of this judgment those heirs are collectively referred to as respondent No. 1. The appellants sought to set aside the contested sale by relying on five separate grounds. First, they contended that the sale had been conducted without jurisdiction. Second, they argued that the final bid had never been accepted by the Deputy Commissioner, rendering the sale invalid. Third, they asserted that the sale had been procured through fraud, alleging collusion between respondent No. 1 and the Revenue Clerk. Fourth, they maintained that the Commissioner who confirmed the sale on 13 November 1945 lacked the competence to do so and therefore the confirmation was void. Fifth, they claimed that the sale could not be justified as a means of recovering the amount of Rs 1,354 9/‑ shown in the proclamation, because that sum was not the correct arrear for which the property was offered. The trial court examined each of these contentions and rejected them all, consequently dismissing the injunction that the appellants had sought to prevent respondent No. 1 from taking possession of the land and from disturbing the appellants’ possession. Unhappy with that outcome, the appellants appealed to the Nagpur High Court. The High Court affirmed the trial court’s findings and dismissed the appeal. The appellants then obtained special leave to approach this Court, putting forward a single argument through their counsel that the lower courts erred in holding that the appellants could not effectively challenge the sale under section 149 (2) of the Land Revenue Act, and that a fair and reasonable construction of that provision would permit such a challenge. The material facts necessary to decide this question are few and undisputed.

The appellants are the Lambardars of Mahal No. 2 in the mouza of Gujarkhedi, situated in Tehsil Saoner of District Nagpur, and they owned an undivided share measured at As /11/‑ in that parcel. On or about 4 October 1940, they were found to be in arrears of land revenue amounting to Rs 730 13/‑, pertaining to the suspended Rabi kist of the 1938‑39 season and the Rabi kist of the 1939‑40 season. The Tehsildar of Saoner prepared a report on that same date, addressed to the Deputy Commissioner, indicating that the arrears were due from the appellants and requesting sanction to sell the disputed property by auction. Along with the report, a draft of the sale proclamation, containing all relevant details, was submitted for the signature of the Sub‑Divisional Officer (S.D.O.) in the event that the Deputy Commissioner approved the sale. The S.D.O. forwarded the report to the Deputy Commissioner, who granted sanction to the Tehsildar’s proposal on 17 December 1940. Following this approval, the S.D.O. signed the proclamation on 23 December 1940. After receiving the signed documents, the Tehsildar issued an order on 7 January 1941 directing that the sale proclamation be published, thereby setting the stage for the subsequent auction.

In this case the authorities directed that the notice of sale be issued and that the sale of the disputed property should be conducted on 26 February 1941. Because no sufficient bids were received on that day, the sale was postponed to 27 February 1941. On the rescheduled date the sale proceeded and the estate was purchased by respondent No 1 for a consideration of six hundred rupees. The decree confirming the sale was subsequently issued. Both parties agreed that at the time of the sale the arrears claimed from the appellants amounted to seven hundred thirty rupees and thirteen annas, yet the record of the sale, the Parchanama, recorded the amount as one thousand three hundred fifty‑four rupees and nine annas. The property was consequently sold for the purpose of recovering the larger amount under clause (f) of section 128 of the Land Revenue Act. The appellants argued that the larger sum of one thousand three hundred fifty‑four rupees and nine annas was not actually owed to the State; the true debt was only seven hundred thirty rupees and thirteen annas. Accordingly, they contended that the sale was invalid because it was based on a non‑existent arrear, invoking the protection afforded by section 149(2) of the Act.

To address the dispute, the Court examined the relevant statutory provisions. Chapter X of the Act, covering sections 122 to 160, governs the collection of land revenue. Section 124 empowers the State Government to determine the number, amount, and schedule of instalments, and to prescribe the time, place, and manner of payment for any sum due under a settlement, sub‑settlement, or assessment. Sub‑section (2) of section 124 provides that, unless the State Government directs otherwise, all payments must follow the prescription of sub‑section (1). A notice of demand may be issued by the Tehsildar or Naib Tehsildar under section 127; such a notice must be served on any defaulter before any recovery process under section 128 is initiated. Section 128 outlines the procedures for recovering arrears, including, in clause (f), the power to sell any estate, mahal, land, or share of a co‑sharer who has failed to pay the portion of land revenue attributable to him. Section 131 prescribes the method for attaching and selling movables and for attaching immovable property. Section 132 requires that an enquiry be held regarding claims of third parties concerning any attached or proceeded‑against property. Section 138(1) provides that a purchaser of an estate, mahal, share or land sold for recovery of land revenue acquires the property free of all encumbrances, grants and contracts entered into by anyone other than the purchaser; the remaining sub‑sections of section 138 are not essential to the present analysis. Finally, section 143 stipulates that if the arrear for which the property is to be sold is discharged at any time before the lot is allotted, the sale must be stayed.

Section 145 of the Act stipulates that a sale may be set aside if the arrear due is deposited, and section 146 allows an application to set aside a sale on the basis of any irregularity in the sale process. Section 148 provides that if, within thirty days from the date of the sale, no application has been filed under section 145 or section 146, and no claim has been made under section 151, or if an application or claim has been made and subsequently rejected, the Deputy Commissioner is required to pass an order confirming the sale. Section 151 deals with claims of pre‑emptive rights. Section 149 then addresses the effect of a failure to file an application under section 146. Sub‑section (1) of section 149 declares that if no application under section 146 is filed within the prescribed period, all claims based on irregularity or mistake are barred. Sub‑section (2) clarifies that nothing in sub‑section (1) prevents the institution of a suit in a civil court to set aside a sale on the ground of fraud or on the ground that the arrear for which the property was sold was not due. The Court observed that the provisions governing revenue sales form a self‑contained scheme. The revenue process begins with a report of arrears and culminates in the confirmation of sale, with specific provisions for examining third‑party claims and for setting aside sales either on the basis of deposit of arrears or on account of procedural irregularities. Accordingly, section 149(1) means that a party aggrieved by a revenue sale who wishes to challenge the sale on the basis of irregularity or mistake must do so by filing an application under section 146 within the time allowed; failure to do so bars any subsequent suit on those grounds. The Court noted that this restriction presents no difficulty. However, sub‑section (2) provides an exception: a civil suit is not barred if the plaintiff alleges fraud in the sale or contends that the arrear for which the property was sold was not due. In such cases, the remedy of a suit remains available even though the time for filing an application under section 146 has passed.

In this case, the Court explained that when a revenue sale is challenged on the ground of fraud, a suit may be filed and the sale set aside; likewise, if it is shown that the arrear for which the property was sold was not actually due, a suit may also be filed and the sale set aside. The Court noted that there is no dispute about this rule. The real dispute before the Court concerned the meaning of the expression “the arrear for which the property is sold.” The High Court had held that the clause does not require the arrear amount to be stated with meticulous precision, and that a mistake in the calculation of the arrear would not invalidate the sale; such a mistake would fall within the scope of subsection (1) and therefore subsection (2) would not apply. Conversely, the respondent’s counsel argued that the clause is plain and unambiguous. According to that view, the court must examine the proclamation of sale to determine whether the amount shown as arrears truly was due from the defaulter. If the amount shown was not due, the clause would apply even if a smaller amount was actually owed. The Court observed that when construing section 149(2) it is important to remember that the provision relates specifically to revenue sales, which are conducted under the summary procedure laid down in the relevant sections of the Act. Consequently, a strict construction of the provision is not unreasonable. The Court therefore rejected the view that the legislature did not expect the authorities to specify the arrear with exactness. When a property is sold under a revenue sale and the proclamation is issued to indicate the arrear for which the sale is made, the Court considered it fair to require that the arrear be stated with absolute accuracy. It would not be sufficient to assert that some arrear was due and to uphold the sale when, in fact, the sale was purportedly for recovery of a much larger amount. This consideration is not merely academic. Section 143 provides that if the arrear for which the property is to be sold is paid before the lot is knocked down, the sale shall be stayed. In the present case, had the arrear been correctly shown as Rs 730,113, the appellants might have been able to deposit that amount before the lot was knocked down, thereby staying the sale. Because the arrear was shown as a much larger sum, the appellants could not realistically make a successful deposit.

In the present matter, the Court observed that if the arrear had been correctly shown as Rs 730,113, the appellants might have been able to deposit that amount before the lot was knocked down, which would have resulted in the stay of the sale. Because the arrear was instead shown as a much larger sum, it was theoretically possible that the appellants would have been unable to make a successful attempt to deposit the amount required. The Court then explained that, when applying section 143, there should be no difficulty in ascertaining the exact sum that the defaulter must deposit in order to avoid the revenue sale. The arrear must be accurately stated in the proclamation so that all parties know precisely the amount for which the revenue sale is being conducted. This requirement, the Court held, supports the construction advocated by the appellants. Counsel for respondent No 1, Mr Masodkar, argued that the construction relied upon by the appellants was purely mechanical and could give rise to anomalies. To illustrate his point, he described a hypothetical situation in which the proclamation correctly indicated the amount of arrears, but after the proclamation was issued a part of that amount was paid by the defaulter – in fact, the appellants had deposited Rs 291 in the present case. He contended that if the original amount of arrears continued to be shown in the proclamation, the sale would be invalid under the appellants’ construction. The Court was not persuaded by this argument. It noted that no specific provision of the Act authorises a defaulter to make a partial payment of the arrear due. If a partial payment is made, it can at most be treated as a deposit on account, and no deduction would be made from the arrear notified in the proclamation at that stage. The only provision cited by the parties was section 143, which expressly requires payment of the whole arrear and provides that payment of the entire amount before the lot is knocked down will stay the sale. Consequently, the hypothetical scenario of a partial payment introduced by Mr Masodkar does not affect the construction of section 149(2). The appellants’ opponents then argued that the impugned sale could not be described as irregular because, on the actual date of the sale, the amount of Rs 1,354.9 was due from the appellants as arrears. Both sides agreed that after the proclamation was issued a further sum of arrears became due, and that on the date of the sale the total amount claimed was Rs 1,354.9. The Court, however, held that arrears accruing after an order for sale has been passed and the proclamation issued cannot be taken into account when construing section 149(2). Every arrear for which a sale is ordered must be dealt with specifically as prescribed by the Act. It is not open

The law obliges the authorities to address a particular arrear in the manner prescribed by the Act, to issue an order for sale of the defaulter’s property on the basis of that specific arrear, and not to subsequently add arrears that accrue thereafter without complying with the procedure established for such additions. Once the amount of the arrear has been ascertained and the sale ordered with reference to that amount, the proclamation must display exactly that amount and the property must be sold only for that determined arrear. In our view, that requirement expresses the clear effect of the relevant clause in section 149(2) of the Act. Consequently, we must hold that the High Court erred when it concluded that the sale of the appellants’ property on 27 February 1941 was valid. We are satisfied that the arrear for which the appellants’ property was sold was not due within the meaning of section 149(2), and therefore the sale must be set aside. In support of his contention that the impugned sale cannot be declared invalid, the counsel for the respondent relied on a decision of the Privy Council in Rewa Mah‑ton v. Ram Kishen Singh (1886) L.R. 13 I.A. 106. In that case the Privy Council considered the true construction of section 246 of the Civil Procedure Code of 1877 (Act X of 1877), which provided that when cross‑decrees between the same parties for payment of money exist, execution may be taken out only by the party holding the decree for the larger sum, and only to the extent of the balance remaining after deducting the smaller sum. The court had, contrary to that provision, ordered an auction sale; when the title of the auction‑purchaser was challenged, it became necessary to examine the effect of non‑compliance with section 246 on the purchaser’s title. The Privy Council held that a purchaser under a sale in execution is not bound to inquire whether the judgment debtor possessed a cross‑judgment of a higher amount that would have rendered the execution order incorrect. If the court has jurisdiction, such a purchaser is no more bound to investigate the correctness of the order for execution than to question the correctness of the judgment on which the execution was based. In other words, the decision meant that if, in violation of section 246, an executing court orders a sale, the auction‑purchaser obtains good title notwithstanding the breach of section 246. We see no way in which that decision assists the counsel for the respondent in the present appeal, because the earlier case turned on the construction of section 246, whereas the present dispute must be resolved by construing section 149(2). It is well known that execution sales held under the Code of Civil Procedure can be challenged only in the manner prescribed and for the specific reasons enumerated in the relevant rules, and the principles applicable to such execution sales do not automatically extend to revenue sales governed by section 128(f) of the Act.

Civil Procedure may be challenged only by following the procedure prescribed in the Code and for the specific grounds enumerated in Order XXI rules eighty‑nine, ninety and ninety‑one. The existence of certain irregularities in the conduct of execution sales does not, by operation of the relevant provisions of the Code, automatically render those sales void. Consequently, it would be unreasonable to rely on case law that deals with irregularities in execution sales in order to argue that a revenue sale conducted under section one hundred twenty‑eight clause f of the Act must be evaluated by the same principles. The question of whether the revenue sale is valid must be decided by applying the provisions that govern such sales, and that inquiry leads directly to the construction of section one hundred forty‑nine clause two. The appellant, Mr Masodkar, also cited a decision of the Calcutta High Court in Ram Prosad Choudhury v. Ram Jadu Lahiri in support of his contention that a revenue sale under section one hundred twenty‑eight clause f would not be invalid merely because the amount of arrears shown in the proclamation is inaccurate. In the Ram Prosad Choudhury case, the sale was effected under the Bengal Land Revenue Sales Act, Act eleven of 1859. That Act required, under section five, that a notice be issued before any sale could be held. The notice in that case listed a sum that had not yet become due as an arrear together with other sums that were in arrears, and the subsequent sale proceeded on the basis that the total amount shown in the notice represented the arrears due. The party challenging the sale argued that the sale was invalid because of the irregularity in the issuance of the notice under section five. The court rejected that argument and held that, notwithstanding the irregularity, the sale remained valid. To appreciate the effect of that decision, it is necessary to refer to the provisions of section thirty‑three of the same Act, under which the sale was contested. Section five required the pre‑sale notice to specify the nature and amount of the arrear or demand and the latest date for payment. Section thirty‑three provides that a sale for revenue arrears shall not be annulled except on the ground that it was made contrary to the provisions of the Act and only if the plaintiff proves that he has suffered substantial injury because of the complained‑of irregularity; the remainder of that section is not relevant here.

The argument advanced in Ram Prosad Choudhury was that, because the notice required by section five had been issued irregularly, the sale should be deemed to have been made contrary to the Act and therefore invalid. That submission was not accepted by the Calcutta High Court. It is observed that section thirty‑three permits a claim for annulment of a sale only if two conditions are satisfied: first, that the sale was made contrary to the provisions of the Act; second, that the plaintiff demonstrates substantial injury resulting from the irregularity. Applying those requirements, the Calcutta High Court concluded that the inclusion of an amount in the notice that had not yet become an arrear on the date of the notice did not invalidate the sale. The present case, however, involves the interpretation of section one hundred forty‑nine clause two, whose scope and effect are not comparable to those of section thirty‑three of the Bengal Act. Consequently, the decision in Ram Prosad Choudhury does not assist in construing section one hundred forty‑nine clause two. The Court is therefore not inclined to accept Mr Masodkar’s contention that the defect alleged in the sale relied upon by the appellants would not render that sale invalid. The result is that the validity of the revenue sale must be determined according to the specific provisions of section one hundred forty‑nine clause two, without reliance on the principle applied in the Bengal legislation.

The Court observed that section 33 of the Act permits a claim for annulling a sale only when two specific requirements are fulfilled. First, the sale must have been conducted in contravention of the provisions of the Act. Second, the plaintiff must demonstrate that he has suffered substantial injury as a consequence of the alleged irregularity. In applying these requirements, the Court noted the decision of the Calcutta High Court, which held that the inclusion of an amount in the notice that had not become an arrear at the time the notice was issued did not, by itself, render the challenged sale invalid. The High Court’s reasoning was based on the observation that the notice, although containing an amount not yet due, did not affect the essential legality of the sale under the conditions prescribed by section 33. However, the Court emphasized that this precedent concerning section 33 could not be employed to interpret section 149(2), which is the provision presently under consideration. The Court further explained that the scope and effect of the relevant provisions of section 149(2) differ fundamentally from those of section 33 of the Bengal Act, and consequently, the two sections cannot be treated as analogous. This distinction led the Court to reject the argument presented by counsel for the respondent, which contended that the defect in the sale relied upon by the appellants would not invalidate the sale.

Accordingly, the Court concluded that the appeal must be allowed. It set aside the decree that had been passed by the High Court and decreed in favour of the appellants’ suit. The Court also ordered that no costs be awarded to either party throughout the proceedings. In summary, the appeal was allowed, the earlier decree was vacated, the suit of the appellants was decreed, and there was no order as to costs.