Ramrao Jankiram Kadam vs State Of Bombay
Rewritten Version Notice: This is a rewritten version of the original judgment.
Court: Supreme Court of India
Case Number: Civil Appeal No. 67 of 1956
Decision Date: 26 September 1962
Coram: N. Rajagopala Ayyangar, Bhuvneshwar P. Sinha, K.C. Das Gupta
In this case the Supreme Court of India delivered its judgment on 26 September 1962 in the matter of Ramrao Jankiram Kadam versus the State of Bombay. The opinion was written by Justice N. Rajagopala Ayyangar, who was joined by Justices Bhuvneshwar P. Sinha and K. C. Das Gupta. The citation of the decision is reported in 1963 AIR 827 and in the 1963 Supplement (1) SCR 322, and it is also referenced in R 1964 SC 436. The case involved questions under the Revenue Sale‑Public auction provisions, particularly the meaning of “sale,” the legality of a sale made for a predetermined nominal price, the suitability of a suit to set aside such a sale, issues of limitation, waiver, and estoppel, and the application of sections 167 and 203 of Chapter XI of the Bombay Land Revenue Code of 1879, sections 4(c) and 11 of the Bombay Revenue Jurisdiction Act of 1876, and section 41 of the Transfer of Property Act of 1882. The factual background disclosed that the appellant, Ramrao Jankiram Kadam, owed the Government roughly Rs 9,000 as excise duty. Because of this liability, his movable and immovable assets were repeatedly offered for sale by auction under Chapter XI of the Bombay Land Revenue Code, yet the revenue remained unrecovered and three parcels of land stayed unsold. By a Government Order dated 30 August 1933, a procedure was prescribed whereby the Mahalkari could seek the Collector’s permission to place a nominal bid of Re 1 on each unsold parcel in the next auction. The Collector granted this permission, and the Mahalkari informed the appellant that if no other bidders appeared, the land would be sold to the Mahalkari for Re 1 each. When the auction took place, no other bidders attended, and the Mahalkari submitted the nominal Re 1 bid for each parcel; the bid was accepted and the sales were subsequently confirmed. Later the Collector resold the lands for adequate consideration, and the new purchasers were given possession. The appellant instituted a suit challenging the validity of those sales. The purchasers argued that the suit was time‑barred because it was not filed within one year of the sales, that sections 4(c) and 11 of the Bombay Revenue Jurisdiction Act barred the suit, and that the appellant was precluded from relief on the grounds of acquiescence and estoppel. The Court held that the sales were invalid and that the suit could be decreed. It explained that a purchase for a predetermined nominal price of Re 1, irrespective of the market value, did not constitute a sale by public auction as contemplated by section 167 of the Bombay Land Revenue Code. An auction, the Court observed, is a process in which persons are invited to compete for the purchase of property by making successive higher bids, and a sale by auction serves to determine the fair market price of the property. If no bids are received at the auction, a sale does not occur. The Court further noted that the Government Order of 1933 possessed no statutory authority and could not, by itself, authorize or validate the transaction.
The Court held that the transaction could not be sustained because there was no authority in the applicable Code to permit a forfeiture of a defaulter’s property. No provision existed that empowered the revenue machinery to seize and sell the land in the manner described. It was therefore irregular that the Collector, who had organised the recovery of arrears by sale and who was designated as the official to examine allegations of irregularity in the conduct of the sale, placed a bid at the auction conducted by his own deputy without any statutory power to do so. The Court further noted that the mere pre‑notice to the appellant of the nominal amount to be bid did not by itself validate the sale. Likewise, the appellant was not prevented, or estopped, from challenging the legality of the sale. The Court relied on the decision in Tumdu Dhansing v. Government for the Province of Bombay, I.L.R. 1947 Bom. 75, which was approved. The Court observed that the suit was not barred by Article 11 of the Limitation Act, because that article applied only where a lawful sale needed to be set aside, not where no sale, as defined by law, had taken place. Section 4(c) of the Bombay Revenue Jurisdiction Act, 1876, was intended for cases involving an actual sale that was sought to be set aside on grounds of irregularities other than fraud; it did not apply to a purported sale that never conveyed title. Section 11 barred a suit only when an appeal was available against the act or omission of a revenue officer and the aggrieved party failed to avail himself of that remedy. In the present matter, no order existed that could be appealed under Section 203, and therefore Section 11 was inapplicable. Moreover, there was no basis for invoking Section 41 of the Transfer of Property Act, as the purchasers had relied not on any representation, act, or conduct of the appellants but on the belief that the Government possessed good title to the lands. The Court concluded that if the Government itself lacked title, the purchasers could not acquire any title whatsoever.
The judgment was delivered in a civil appellate jurisdiction in Civil Appeal No. 67 of 1956, which arose from the decree dated 20 March 1950 of the Bombay High Court in first appeals Nos. 142 and 211 of 1947. Counsel for the appellant included S.P. Varma, S.N. Andley, Rameshwar Nath and P.L. Vohra, while counsel for respondent No. 1 comprised H.R. Khanna, R.H. Dhebar and T.M. Sen, and counsel for respondents Nos. 2 and 5 were C.B. Agarwala and Naunit Lal. The judgment was pronounced on 26 September 1962 by Justice Ayyangar, following a certificate of fitness granted by the High Court of Bombay under Article 133(1)(a) of the Constitution. The appeal had been heard in November, and judgment was reserved on 9 November 1961. Shortly thereafter, counsel for the appellant informed the registry that respondent No. 2 had died on 5 November 1961 and that steps were being taken to bring the legal representative on record. The Court subsequently received the certificate under Order XVI‑r.13, confirming the procedural steps required to substitute the deceased party.
On the basis of the certificate of fitness, a substitution of the judge was ordered at the end of August 1962. After the substitution, the appeal was listed for hearing and the counsel for both sides were heard. The factual background of the appeal was set out as follows. The plaintiff, who was also the appellant, instituted a suit before the Civil Judge in Jalgaon seeking a declaration that the sale of certain parcels of his land, which at the time of sale were in the possession of the Revenue Authorities, was void. He also prayed for the recovery of possession of those lands from the defendants who had purchased them at a revenue auction. Because the suit required a declaration that the sale was invalid, the Province of Bombay was impleaded as a defendant. The plaintiff’s father had been an excise contractor, and both father and son had been licensees of several opium shops during the years 1931‑32. By the end of March 1934, approximately Rs 8,500 were owed to the Government as excise dues on those opium shops. To recover those dues, the lands belonging to the plaintiff were brought to sale. Among the properties offered were Survey Field Nos 35, 40 and 80 in Mauje Therole, Peta Edalabad, and a house identified as Survey No 23A in the village of Kurhe. Each of these three parcels of land was purchased by the Government at the sale for a nominal bid of one rupee per item, and the sale was confirmed. The Government subsequently took possession of the lands. Later, the Government sold the land bearing Survey No 80 to the second defendant for Rs 2,000, and the lands bearing Survey Nos 35 and 40 to the fifth defendant for Rs 1,750. Possession of those properties was delivered to the respective defendants in 1939. Because the arrears due to the Government remained substantially unpaid, the house at Kurhe was attached, brought to sale and sold on 6 November 1940. The purchaser was not the Government; instead, the second defendant bought the house for Rs 76, and a certificate of sale was issued to him on 13 February 1941. The validity of these sales was the subject of the suit that gave rise to the present appeal. The trial judge essentially decreed in favour of the plaintiff, but on appeal the plaintiff’s claim for relief concerning the three plots sold on 21 September 1938 and the house sold on 6 November 1940 was dismissed. The trial judge had held that those sales did not comply with the provisions of the Bombay Land Revenue Code and were therefore void. By contrast, the learned judges of the High Court were of the opinion that
In this appeal the Court examined whether the sales of the three plots and the subsequent purchase by the Government for a nominal price of one rupee each were authorized by the applicable Code and therefore binding upon the plaintiff. The High Court had held that the sales were valid because they were conducted under the authority of the Code, and the present appeal required a determination of whether that view was correct.
Before addressing the specific arguments concerning the validity of the sales, the Court set out the statutory provisions that govern the Government’s power to effect sales for the purpose of recovering arrears. Section 34 of the Bombay Abkari Act permits arrears of excise revenue to be treated as “arrear of land revenue.” Chapter XI of the Bombay Land Revenue Code contains the procedure for realizing land revenue and other revenue demands. Within that Chapter, Section 155 states: “The Collector may also cause the right, title and interest of the defaulter in any immovable property other than the land on which the arrear is due to be sold.” Section 165 requires the Collector to issue a proclamation, in the vernacular language of the district where the sale is to take place, specifying the time and place of the sale; the following section mandates that a written notice of the intended sale be affixed in the public offices named therein. Section 167 provides that sales shall be made by auction by persons directed by the Collector. Section 171 reads: “When the sale is finally concluded by the officer conducting the same, the price of every lot shall be paid for at the time of sale, or as soon after as the said officer shall direct, and in default of such payment the property shall forthwith be again put up and sold. On payment of the purchase‑money the officer holding the sale shall grant a receipt for the same, and the sale shall become absolute as against all persons whomsoever.”
The Court noted that counsel had raised a point of alleged violation of Sections 172 and 173 in the present case and accordingly reproduced those provisions. Section 172 provides: “When the sale is subject to confirmation, the party who is declared to be the purchaser shall be required to deposit immediately twenty‑five per centum on the amount of his bid, and in default of such deposit the property shall forthwith be again put up and sold. The full amount of purchase‑money shall be paid by the purchaser before sunset of the day after he is informed of the sale having been confirmed, or, if the said day be a Sunday or other authorized holiday, then before sunset of the first office day after such day. On payment of such full amount of the purchase‑money, the purchaser shall be granted a receipt for the same, and the sale shall become absolute as against all persons whomsoever.” Section 173 begins: “In”
In every case involving the sale of immovable property, the law required that the individual who was declared to be the purchaser must deposit immediately twenty‑five per centum of the amount of his bid; if such deposit was not made, the property was to be put up for sale again without delay. Section 175 dealt with the consequences of a default in the payment of the purchase‑money. It provided that when the full amount of purchase‑money, whether for movable or immovable property, was not paid within the prescribed period, the deposit would first be applied to defray the expenses of the sale and then would be forfeited to the Provincial Government. The property would thereafter be resold, and the defaulting purchaser would lose any claim to the property as well as any right to any part of the sum for which the property might subsequently be sold. Section 178 authorized a sale to be set aside on the ground of a material irregularity, mistake, or fraud in publishing or conducting the sale, provided that an application was made to the Collector within thirty days from the date of the sale. Except as otherwise provided in the following section, the sale could be set aside only if the applicant proved to the Collector’s satisfaction that he had sustained substantial injury because of the alleged irregularity. If the Collector allowed the application, he was required to set aside the sale and order a fresh one. The consequential provision, Section 179, stated that after the thirty‑day period expired, if no such application had been made or if an application had been made and rejected, the Collector was to confirm the sale by order. However, the Collector retained discretion to set aside the sale even in the absence of an application, or on grounds other than those alleged in any rejected application, provided that he recorded his reasons in writing. Section 182 required the certificate of sale to contain the name of the person declared at the time of sale to be the actual purchaser; it further provided that any suit brought in a civil court against the certified purchaser on the ground that the purchase had been made on behalf of another person, even though the parties had agreed to use the name of the certified purchaser, must be dismissed. Finally, Section 214 of the Code empowered the State Government, by a notification published in the official gazette, to make rules that were not inconsistent with the provisions of the Act, so as to carry out the purposes and objects of the Act and to guide all persons in matters connected with the enforcement of the Act or in cases not expressly provided for therein.
In Chapter XVIII of the Code, the provisions dealing with sales were set out. Rule 128, which is the second rule in that chapter, provided that when any land or other property was sold by public auction, the Collector could, if he thought it appropriate, fix an upset price on the sale. The rule further stipulated that if, in the Collector’s opinion, there was likely to be difficulty in obtaining a speedy recovery of arrears or if bidders were likely to be discouraged from making bids, then no upset price should be fixed. Rule 129 was later amended by the addition of a new sub‑section (4). The added sub‑section read: “Where in the opinion of the Collector difficulty is likely to be experienced in effecting speedy recovery of the arrears or bidders are likely to be deterred from offering bids, it shall be lawful for the Collector or his nominee to bid at the auction and purchase the land or other property for a bid of rupee one.” The Court then indicated that it would now set out the factual background that preceded the sales which were being challenged on the basis that they allegedly contravened the statutory provisions. Before recounting those facts, however, the Court observed that regarding the sale of a house in the village of Kurhe, no irregularity was found that would invalidate the sale. The only grievance recorded was that the house, which had been assessed at a value of about rupees two hundred, had been sold for the comparatively small sum of rupees seventy‑six. The Court noted that this discrepancy, by itself, could not constitute a ground for declaring the sale void. Consequently, the remainder of the judgment would be confined to the sale of three plots bearing Survey Numbers thirty‑five, forty and eighty, which the Government had acquired for the nominal price of one rupee each. The factual matrix concerning those three plots was as follows: In January 1934, the Mahalkari of Edalabad informed the Collector of East Khandesh that an amount exceeding rupees nine thousand was due from the plaintiff and his father in respect of excise transactions. The Mahalkari pointed out that despite the fact that the defaulter’s movable property had been offered for sale on eighteen occasions and his immovable property on eight occasions, the amount remained unrecovered. He then suggested to the Collector that, “in order to bring home a sense of responsibility to the defaulters and to make them realise the need for quickly paying up the arrears,” the procedure laid down in a Government order dated 30 August 1933 could be applied. That procedure was contained in Government resolution No. 474 of 1933 issued by the Revenue Department, which provided that if defaulters were contumacious, the Collector would have authority to purchase the defaulter’s property on behalf of the Government for a nominal bid. By the Mahalkari’s letter he sought the Collector’s permission to place a nominal bid of one rupee at the next auction of the defaulter’s property. The principal question that was raised.
The appeal turned on the question of whether the procedure set out in the earlier government resolution was consistent with the provisions of the Land Revenue Code. Before proceeding further, it was necessary to refer to another resolution, numbered 4135 and dated 16 April 1936. That resolution stated that the method of purchasing a defaulter’s property on behalf of the Government for a nominal bid should be employed only to achieve a speedy recovery of Government dues when genuine difficulty was encountered in effecting such recoveries and no private purchaser was willing to buy the land. The resolution added that this method should be used only as a last resort after all other remedies for recovering dues had failed, or when it was clear that potential bidders were being discouraged for reasons other than purely economic considerations.
The purpose for adopting this procedure, as recorded in the resolution, was to create a strong deterrent effect and to put an end to any obstructive tactics employed by defaulting licence‑holders. The Collector granted the permission sought, thereby authorising the Mahalkari to place bids at the scheduled auction. Following the grant of permission, the Mahalkari informed the defaulters – the plaintiff and his father – that if no private bidder appeared at the public auction‑sale, the lands mentioned in the proclamation would be sold for a nominal price of one rupee. After this notice was given, the Government proceeded to purchase the lands on the stipulated terms.
The auctions were conducted, and no private bidder offered any bid. Consequently, acting under the authority of the government resolution and the Collector’s permission, the Mahalkari made a nominal bid of one rupee for each lot on behalf of the Government. Those bids were accepted and the sales were thereafter confirmed.
The validity of those sales was contested before this Court on several grounds. First, it was alleged that Rule 128 required the Collector to fix an upset price, and that the Collector’s failure to fix such a price rendered the sale void. Second, it was contended, inconsistently with the first ground, that the Collector had in fact fixed an upset price and that, in view of that fixation, the Mahalkari’s purchase of the property for the nominal sum of one rupee on behalf of the Government was illegal and therefore void. Third, it was argued that, under Section 171, the sale price had to be paid at the time of the sale; because payment was not made then, the sale officer was statutorily obliged to re‑offer the property for sale. Fourth, it was submitted that Sections 172 and 173 imposed a duty on the purchaser to deposit twenty‑five per cent of the sale price immediately after the bid was accepted and to pay the balance within fifteen days, and that failure to comply would result in the sale being avoided and a resale being ordered; it was claimed that in the present case the Mahalkari, who had bid on behalf of the Government, had not complied with those payment requirements.
The Court noted that neither the Government nor its agents had paid either the required deposit or the balance of the purchase price, so that the transaction was automatically cancelled because of that default. Accordingly, the Court held that the purchase made by the Government for a nominal sum of one rupee did not constitute a public auction sale as contemplated by section 167 of the Code, and therefore the sale was void and no title could have passed by virtue of that transaction. With respect to the first four objections earlier enumerated, the Court found that, on the facts of the present case, they lacked any substantive basis. The Court further explained that it was unnecessary to examine those points in detail because they were raised for the first time before this Court and they involved factual questions that had not been pleaded or investigated by the lower tribunals. The Court conveyed to counsel that those grounds would not be permitted to be urged in the present proceeding. Consequently, only the fifth objection, concerning the validity of a sale made for a nominal consideration of one rupee, required detailed consideration. This issue raised an important question of law relating to revenue sales. The Court recalled an earlier decision of the Bombay High Court in the matter of Pumdu Dhansing v. Government for the Province of Bombay, reported in I. L. R. 1947 Bom. 75. In that earlier case, the High Court examined an auction sale conducted by the Mamlatdar, a revenue officer, in which a property belonging to a surety of a toll‑contractor was sold to the Revenue‑Patel acting for the Government for a nominal amount of one rupee per lot. The contractor was in default, and under Chapter Eleven of the Bombay Land Revenue Code the authority to recover the debt was invoked. After several unsuccessful attempts to obtain the reserve price for the lots, the next auction produced no bids. At that point, the Patel, acting under the Collector’s instructions, entered a bid of one rupee on behalf of the Government for each lot, a bid that was accepted by the Mamlatdar conducting the auction. The Collector later confirmed the sale and possession of the property was taken by the purchaser. The validity of that sale was challenged by the defaulter in a suit. The Government relied on the resolutions of 1933 and 1936 to support the sale’s legality. The High Court judges highlighted certain special features of the case: first, the proclamation of sale indicated that a reserve price had been fixed and that, where a sale was subject to such a condition, the “conditions of sale” prescribed by the rules specifically prohibited acceptance of bids below the reserve price; second, there was no evidence that the defaulter had been served with any special notice indicating that a different procedure involving a nominal purchase price by the Government would be employed. Although the judges noted these features, their reasoning for declaring the sale void rested on broader grounds. The Court quoted the earlier judgment, stating that a token payment of one rupee could not be regarded as a genuine bid at an auction of property divided into separate lots each having its own reserve price, and that the term “nominal” demonstrated the lack of substance in the offer. The formalities employed to give an appearance of regularity could not, in the Court’s view, transform a device intended to vest the appellant’s property in a revenue officer acting on behalf of the Government into a lawful sale under the Bombay Land Revenue Code.
The Court noted that the regulations contained a special provision that invalidated any acceptance of bids that were below the reserve price, and that there was no evidence that the defaulter had received any special notice that the Government might resort to a different procedure of purchasing the property for a nominal price. Although the lower courts highlighted these two points, the reason they gave for declaring the sale void was based on broader considerations. Speaking for the Court, Stone C.J. observed that the receipt of a one‑rupee amount for the entire property could not be treated as a genuine bid in an auction where five separate lots each had their own reserve price. He explained that the term “nominal” indicated that the offer lacked any real substance, and that the formalities employed to give an appearance of regularity could not, in his view, conceal the fact that the transaction was essentially a device to place the appellant’s land in the hands of a Revenue Officer acting on behalf of the Government. He further pointed out that the Bombay Land Revenue Code did not confer any power to forfeit or foreclose the property of a defaulter. Nevertheless, the scheme set out in the Government Resolutions of 1933 and 1936 was intended, if carried out, to extinguish all of the appellant’s rights and ownership in his land in favour of the Government. Consequently, in his judgment, the alleged auction sale had no legal effect and did not convey any right, estate, or interest in the appellant’s property to either the Revenue Pail or to the Government. When the appeal reached the Bombay High Court, the Division Bench considered the argument that the decision in Tumdu Dhansing v. Government for the Province of Bombay (1) should control the present case and therefore entitle the plaintiff to succeed, calling for dismissal of the appeal. The judges remarked that if the Tumdu Dhansing decision represented good law, the trial court’s decision would be affirmed. However, they also expressed serious difficulty in understanding the reasoning of the Tumdu Dhansing judges and doubted the correctness of that conclusion. They cited I. L. R. 1947 Bom. 75 and recommended that a Full Bench be asked to answer the question whether, when land is sold under section 153 of the Bombay Land Revenue Code and the Government acquires it by means of a nominal bid, the sale is void or merely voidable. The Full Bench, without resolving the correctness of the Tumdu Dhansing decision, nevertheless upheld the sale in the present case.
The Court noted that the case differed from the earlier authority on two principal points: first, the sale proclamation did not specify any reserve price, so there was no situation in which a property was purchased for a nominal sum in disregard of a predetermined price; second, before accepting a bid of a nominal amount, a notice had been served on the defaulter informing him that the Government intended to proceed by that method. On the basis of these distinctions the learned judges held that the sale was not void, but they also declared that the practice of acquiring property for nominal bids was neither fair nor equitable. Consequently the matter was remitted to the Division Bench, where the defendant’s appeal was allowed. The Court then framed the issue for further consideration: whether a sale made for a “nominal” bid of Re. 1/– qualified as a “sale by auction” under the Bombay Land Revenue Code. Before addressing the statutory provisions, the Court said it was necessary to state that the Government Resolutions of 1933 and 1936 did not purport to have any statutory force and therefore could not authorize or validate a transaction that otherwise lacked a legal foundation. The Court further observed that paragraph (4) of rule 129, which authorises purchase by the Government for a nominal price, had been inserted only in 1946, long after the sales in the present case, and thus could not support the validity of the sale. In these circumstances the Court found it unnecessary to examine the scope, validity, or legal efficacy of that rule. It was common ground that the Government’s power to effect a summary sale for recovery of dues must be derived from Chapter XI of the Code, read together with the relevant rules in Chapter XVIII. Section 155 of the Code empowered the Collector to cause the right, title and interest of the defaulter in immovable property to be sold, while Section 167 prescribed that “sales shall be by public auction by such person as the Collector may direct.” Setting aside, for the moment, the detailed procedural requirements, the Court emphasized that the realization of dues had to be by public auction conducted in the manner prescribed. Accordingly, the Code could not and did not permit forfeiture of a defaulter’s immovable property merely because of his obstinate refusal to pay when demanded, nor did it provide any punitive measure for such default. (1) I. L. R. 1947 Bom. 75.
In this matter the Court observed that the law did not penalise a landowner who failed to assist the Government in obtaining a proper price for his property that would be sufficient to discharge the revenue dues, nor did it punish him for not facilitating the realisation of those dues. The Court noted that Section 58 of the Revenue Sale Law (Bengal Revenue Sale Law) Act 1859 provides that when an estate is offered for sale under that Act for the recovery of arrears of revenue, and if no bid is received, the Collector or other officer may purchase the estate on behalf of the Government for a nominal sum of one rupee. The Court emphasized that no similar provision exists in the Bombay Code. Consequently, the Court considered whether a purchase for the predetermined nominal price of one rupee, irrespective of the property's actual market value, could be regarded as a “sale by public auction” within the meaning of Section 167 of the Code. The Court explained that an auction is defined as a proceeding in which people are invited to compete for the purchase of property by successive offers of increasing sums, and that a sale by auction serves to discover the fair market price of the property. Accordingly, if no bids are received at the auction, there is no sale. The Court held that a sale for a predetermined nominal sum cannot be characterised as a “sale by public auction” because the statute contains no provision for such a transaction. The Court likened such a sale to a situation described by Sir Richard Couch, who observed that an offer and acceptance of a rupee was a colourable attempt to obtain title without paying for the land, essentially a present that the authorities were not authorised to make (vide Luchmeswar Singh v. Chairman, Darbhanga Municipality, (1890) 1 I.R. 18 Cal. 99, 106). The Court further pointed out that it is the Collector, acting on behalf of the Government, who initiates the process for realising arrears by bringing the defaulter’s property to sale, and that the Land Revenue Code invests the Collector with the power to arrange the sale. Section 178, the Court noted, authorises the Collector to adjudicate any allegation of irregularity in the conduct of the sale. In this context, the Court found it anomalous that the Collector, of his own motion and without any statutory authority, would claim the right to bid at the auction that his deputy is conducting on his behalf for the purpose of realising the dues that the Collector, as the executive authority, is required to recover. This is particularly striking because the Collector is also the authority designated to consider the validity or irregularity of the auction that he himself has instigated and the purchase made in that very auction. The Court then turned to the next question, namely whether the fact that the defaulter was appraised.
In this case, the Court examined whether the Government’s intention to submit a nominal bid of one rupee for the property at the auction rendered the sale legally valid. The Court observed that it was difficult to pinpoint any precise statutory provision that would make a prior notice to the defaulter sufficient to validate the transaction. The Court considered that if a sale for a one‑rupee bid qualified as a “sale by public auction” under section 167 of the Code, then informing the defaulter of the procedure would be unnecessary. Such notice would also fail to add any legal efficacy to the sale, because the statutory requirements would already be satisfied. Conversely, the Court held that if the transaction did not fall within the meaning of a public auction, any notice to the defaulter could be useful only in two limited ways. One possible benefit would be that the notice operated as a waiver of the requirement imposed by section 167. A second possible benefit would be that the notice created an estoppel which would bar the defaulter from questioning the legality of the proceeding. Regarding waiver, the Court noted that the Government’s power to execute a sale by summary process is a special statutory provision rooted in public policy. Consequently, the limitations attached to that power must be interpreted narrowly to prevent abuse. The Court emphasized that because the summary sale power is granted only for specific public purposes, any deviation from the statutory safeguards must be strictly prohibited. The Court further expressed the view that an essential condition for transferring ownership from the defaulter is that the transfer occur through a sale by public auction, ensuring transparency and protecting the defaulter’s interests. Accordingly, if the present transaction failed to meet the definition of a public auction, no title could pass by virtue of that transaction. The Court concluded that the argument of waiver could not succeed because the essential condition of a public auction was missing, and thus the sale remained defective. The Court also rejected the contention that the notice imposed an estoppel, observing that estoppel requires a clear representation by the party to be estopped. It further observed that the necessary element of prejudice to the party seeking the benefit of the rule was also absent. Without a clear representation that the Government would forego the procedural requirements, the defaulter could not be said to have consented to the bypassing of the auction process. Thus, the presence or absence of a nominal bid did not cure the fundamental defect that the sale failed to comply with the statutory framework.
Consequently, the Court held that informing the defaulter that the Government would make a nominal bid of one rupee and would purchase the property had no impact on the determination of the sale’s validity. The Court stated that this conclusion was consistent with the Bombay High Court decision in Tumdu Dhansing v. Government for the Province of Bombay, which the Court affirmed had been correctly decided. The Court further expressed the opinion that the ratio of that decision extended to situations where the defaulter had been served notice of the Government’s intention to acquire the property for a nominal price. Counsel for the respondent, however, advanced several additional defenses and attempted to uphold the impugned sale on a variety of grounds. The first argument presented by the respondent’s counsel was not detailed in the excerpt, but it marked the beginning of a series of defenses. The Court noted that the counsel aimed to reinforce the High Court’s judgment by invoking the reasoning of the learned judges and by advancing further grounds to justify the contested sale. These additional defenses were examined and found to be untenable in light of the established legal principles governing public auctions and statutory compliance.
The Court considered the argument that the transaction was voidable because it was the worst form of irregularity and that, since no suit had been instituted within one year of the sale, the suit was barred by Article 11 of the Indian Limitation Act. The Court found this contention to be without merit. It held that, if, as the Court had previously determined, a sale of the kind now challenged was not authorised by the relevant statutory provision, the matter was not a mere irregularity in the conduct of a sale; rather, there was no sale at all. Consequently, no title could have passed from the defaulter, and the limitation provision could not apply because it was intended for cases in which a sale existed and needed to be set aside. The Court further noted that Article II of the Indian Limitation Act applied only where a sale required setting aside and was irrelevant where, as in the present case, the law did not recognise any sale having taken place. The Court then turned to the next submission, which claimed that the appellant’s suit was barred by sections 4(c) and 11 of the Bombay Revenue Jurisdiction Act, 1876. Section 4(c) provided that, subject to certain exceptions, civil courts could not entertain claims to set aside sales of land‑revenue arrears on grounds of irregularity, mistake or any other ground except fraud. Section 11 required a plaintiff to demonstrate that, before instituting a suit against the Government for an act or omission of a revenue officer, all appeals permitted by law had been presented within the prescribed limitation period. The Court observed that section 4(c) barred civil‑court jurisdiction only in cases where a sale, albeit irregular, had actually taken place and title had passed to the purchaser, and where the plaintiff sought to set aside that sale on non‑fraudulent grounds. In the present matter, there was merely a purported sale that did not convey title, and the suit sought recovery of possession of the property irrespective of any such sale. Accordingly, the Court concluded that neither section 4(c) nor the bar created by it was applicable. Similarly, the Court found no basis for invoking section 11. That provision rested on the principle that a party must exhaust statutory remedies before approaching a civil court for a claim against the Government. The Court identified the three conditions for the section’s operation: an act or omission of a revenue officer giving rise to a claim, a statutory right of appeal against that act or omission, and the plaintiff’s failure to avail himself of such appeal. In the present case, the only act complained of was the Collector’s direction authorising the Mahalkari to offer a nominal bid of one rupee and to purchase the property. The Court noted that there was no specific statutory provision granting an appeal against that direction. Therefore, the conditions necessary to attract section 11 were not satisfied, and the provision could not be applied to bar the suit.
In order for the protection contemplated by the statute to be invoked, three requirements must be satisfied. First, there must be an act or omission by a revenue officer that gives rise to a claim against the Government. Second, the statute must provide a mechanism for appealing against that act or omission. Third, the party seeking relief must have failed to use the available appellate remedy to obtain redress for the grievance. In the present case the only act that the appellant could arguably complain of was the Collector’s direction authorising the Mahalkari to tender a nominal bid of one rupee and to purchase the property. The next issue was whether the statute contained a provision for appealing against that particular act. It was conceded that no specific provision existed for such an appeal. Counsel for the respondent, however, drew the Court’s attention to section 203 of the Bombay Land Revenue Code, which provides that, in the absence of any express provision to the contrary, an appeal shall lie from any decision or order passed by a revenue officer under the Code or any other law then in force to that officer’s immediate superior. The Court observed that, in the facts before it, there was no order by any authority that could be the subject of an appeal under section 203. The Collector’s administrative authorisation for the Mahalkari to make the bid was not a “decision” within the meaning of that provision and therefore could not be appealed. No other order that might be characterised as a decision was identified for which an appeal could have been filed. Apart from the sale that is alleged to be void and of no effect, nothing else transpired. Since section 203 did not apply, the Court found no basis for suggesting that section 111 of the Revenue Jurisdiction Act created any bar to entertaining the present suit.
The respondent then contended that the plaintiff was barred from obtaining relief by reason of an estoppel under section 41 of the Transfer of Property Act. The argument was founded on the fact that, after the sale, the second defendant had purchased the plot bearing Survey No. 80 for Rs 2,600 from the Government, and the fifth defendant had similarly purchased the plots bearing Survey Nos. 35 and 40 for Rs 1,750. The respondent claimed that the plaintiff’s failure to initiate proceedings to set aside the sale amounted to a representation to the world that the Government were the rightful owners of the property, thereby invoking the estoppel provision. The Court merely stated that the argument was rejected. The respondent did not rely on any specific representation or conduct by the appellant but merely on the belief that the Government had acquired title by virtue of the nominal purchases. The Court noted that, if the Government possessed no title to convey, the respondents could not acquire any title and would, in effect, be trespassers. Consequently, there was no scope for applying the estoppel rule contained in section 41 of the Transfer of Property Act. Finally, the respondent’s claim that the respondents were entitled to compensation under section 51 of the Transfer of Property Act for improvements made to the property was dismissed because no evidence was adduced, no issue was raised before the trial judge, and it was therefore improper to consider that point at this stage.
In this case the Court found that the respondents’ belief that the Government had obtained title to the land arose solely from the Government’s purchase at the revenue sale and not from any representation, act, or conduct of the appellant. The Court held that if the Government itself lacked a valid title to convey, then the respondents could not acquire any title and would, in effect, be occupying the land as trespassers. Consequently, the Court concluded that the doctrine of estoppel under section 41 of the Transfer of Property Act could not be applied.
The respondents also argued that they had made improvements to the property after purchasing it and therefore claimed a right to compensation under section 51 of the Transfer of Property Act. However, the Court observed that the respondents offered no factual basis for this claim. No evidence was produced to support the allegation, and the issue had not been raised before the trial judge. Because the claim rested on pure fact without any evidentiary support, the Court deemed it inappropriate to consider the plea at this stage.
The Court noted that the Government of Bombay had not filed any written statement before the trial judge, nor had it sought to endorse the sale before the High Court. The Government was impleaded as the first respondent in the appeal before this Court. In the statement of case it filed, the Government did not oppose the appeal; it simply left the determination to the Court and did not participate in the hearing, except for a brief submission by counsel that no order for costs should be made against the Government.
Accordingly, the Court allowed the appeal with respect to the three parcels of land bearing Survey Numbers 35, 40 and 80, and decreed the suit in favour of the appellant on those items. The appeal was dismissed with regard to the house situated in the village of Kurhe. In view of the partial success achieved by the appellant, the Court ordered that the appellant be awarded half of the costs of the appeal, to be borne by the respondents other than the State of Bombay, which is now Maharashtra. The appeal was thus partly allowed.