076-NLR-NLR-V-34-SILVA-v.-CARUPPEN-CHETTIAR.pdf
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Silva v. Caruppen Chettiar.
1933Present: Garvin S.P. and Drieberg J.
SILVA v. CARUPPEN CHETTIAR.
159—D. C. (Inty.) Kandy, 39,945.
Fiscal’s sale—Application to set aside—Hypothecary decree and order of credit—Payment of one-fourth deposit—Obligation of decree-holder—CivilProcedure Code, ss. 260 and 272.
A decree-holder, in whose favour an order for credit is made in terms ofsection 272 of the Civil Procedure Code, is not bound to deposit twenty-five per centum of the purchase money under section 260 of the CivilProcedure Code, in the event – of his becoming the purchaser of theproperty sold in execution.
T
HIS was an application to set aside a sale held in execution of ahypothecary decree. The decree-holder, in whose favour an order
for credit to the extent of his claim was made, was represented at the saleby an agent, who bid a sum of Rs. 3,950 for the property. The Fiscal’s
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Officer then inquired from the agent whether he was prepared to depositone-fourth of the purchase money and poundage, whereupon the latterstated that he had brought no money for the purpose. The Fiscal’sOfficer then intimated to him that he was not prepared to accept any bidfrom him and the property was knocked down to another for Rs. 4,000.The decree-holder moved to set aside the sale on the ground that theaction of the Fiscal’s Officer amounted an irregularity, and that as a resultthe property did not fetch an adequate price. The learned District Judgeset aside the sale.
H. V. Perera for purchaser-appellant.—The point is not covered byauthority. The Indian Code makes provision for cases where a depositmay be waived. The conditions of sale are unambiguous. The sale is tobe governed by the Civil Procedure Code. A deposit is required ofone-fourth in the nature of a security which is forfeited if the salp is notcompleted. A plaintiff purchaser is not exempt from the liability tomake the deposit. A distinction must be drawn between a payment ofthe purchase price and the liability to pay. a sum of money as earnest.If plaintiff’s bid is within his claim there is a payment by him at once ofthe full amount. There is no postponement of the payment of the three-fourth. A purchaser at a Fiscal’s sale enters into an agreement to buy.That is why he pays a deposit. If the plaintiff buys within his claimthe purchase is at once complete. There is no postponement of thecompletion of the sale.
[Garvin S.P.J.—Credit is the credit available against the amount ofthe bid.]
One is not then applying the provisions of section 262 of the Code.The Mortgage Ordinance makes all these sections applicable. A fund isrequired for the satisfaction of the Fiscal, if nothing else. In India thereis the addition of certain words to the section. Order 21, Rule 84—Sub-section (1) is almost indentical with section 260 of our Code. The additionof sub-section (2) exempts a decree-holder from making a deposit. (Sarkar6th. ed. 1299; O’KineaJy 330). Section 260 is an imperative provisionand is not taken away by credit being given under section 272.
Hayley, K.C. (with him Weerasooria), for plaintiff-respondent.—Creditis required only for the purpose of the deposit. Credit and debit of thepurchase price is done by the Court under section 272. The Indiansection does not say the Fiscal may give credit but the Court may makean order. That is the same as our Courts giving credit.
Navaratnam, for defendant-respondent.
IFebruary 27, 1933. Garvin S.P.J.—
This was an application to set aside a sale held in execution of ahypothecary decree. The applicant is the plaintiff in the action. In thedecree which follows the usual form of a hypothecary decree we find afurther order in the following terms:—“It is further ordered that in the«vent of a sale the plaintiff be allowed to bid for and purchase the propertyand that he be allowed credit to the extent of his claim At the sale theplaintiff was represented by his agent who bid a sum of Rs. 3,950 for theproperty. At that stage the Fiscal’s Officer appears to have demanded,
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GARVIN S.P.J.—-Silua v. Caruppen Chettiar.
or at least inquired whether the bidder would deposit, a sum equivalent toone-fourth the amount of the purchase price plus the poundage. Thereply was that the plaintiff was the holder of an order to bid to the extent ofhis claim. The Fiscal’s Officer however persisted in his demand, where-upon the plaintiff’s representative said that he had not with him therequired amount of money. The officer appears then to have intimatedto him that he was not prepared to accent any bid from him and proceededwith the sale. The premises were eventually knocked down for the sumof Rs. 4,000 to W. Hendrick Silva. The sale was in due course reportedto Court. It was urged with success on behalf of the plaintiff that thissale was bad for irregularity in that the Fiscal’s Officer was wrong inmaking the demand he did in view of the fact that the amount which hedemanded was much less than the amount for which the plaintiff wasentitled to credit, and that, as a result of his action, the plaintiff through hisagent was denied the privilege of continuing to bid for and purchase theproperty. It is specially averred that the amount which was realized bythe sale is a wholly inadequate price and that the plaintiff was prepared topay a higher price for. the premises. As to the facts, the learned DistrictJudge has substantially accepted the story as told by the plaintiff’switness, and there is no reason to doubt that his finding is correctthat there was only one sale and that if followed the course which theplaintiff’s witness says it did.
The purchaser appeals from the order of the learned District Judgewhereby he upheld the objection to his sale and set it aside. It is notdenied that the plaintiff held an order for credit to the amount of Rs. 2,377which was the amount of his claim, interest and costs at the date of thesale.. But it is urged that notwithstanding the order for credit the Fiscal’sOfficer was entitled to demand of him a deposit of one-fourth the purchaseprice and the amount payable by way of poundage.
The question of poundage which is a wholly subsidiary question mightbe disposed of at once. An argument was addressed to the learnedDistrict Judge to the effect that there is no provision which requirespoundage to be paid at the time of the sale. This argument foundacceptance with the learned District Judge, but it seems to me unnecessaryto express any opinion upon the point ourselves. There is no suggestionthat any separate demand was made for the poundage. The incident sofar as it is disclosed in the evident indicates that the demand was for thelump sum consisting of one-fourth of the purchase price plus the poundagewhich could only have amounted to something under Rs. 50, and thatwhat the Fiscal’s Officer insisted upon being paid was the deposit withoutwhich he was not prepared^© accept any bid made by the plaintiff’s agent.
We are therefore free to address ourselves to the only question whichproperly arises for consideration, namely; whether a person who is entitledto credit by reason of an order tojhat effect in his favour is a person who iscompelled by reason of the provisions of section 260 of the Civil ProcedureCode to make a deposit of 25 per cent, of the amount of the purchasemoney in the event of his becoming the purchaser of property sold inexecution. Now section 260, if it be read by itself, clearly places everypurchaser under an obligation to make such a deposit, but that sectionand the sections which follow, sections 261 and 262, must clearly be read
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in conjunction with section 272 which is in* the following terms:—“Aholder of a decree in execution of which property is sold may, with theprevious sanction of and subject to such terms as to credit being givenhim by the Fiscal and otherwise as may be imposed by the Court, bid for■or purchase the property. When a decree-holder purchases, the purchasemoney and the amount due on the decree may, if the Court thinks fit, beset off aganist one another, and the Court in execution of whose decreethe sale is made may enter up satisfaction of the decree in whole or inpart accordingly.” It will be noticed that the holder of a decree mustobtain the sanction of the Court to bid at all. It is clear fromthat provision and the language of sections 260 and 261 that the earliersections in the first instance contemplated a purchase by a person who is astranger to the action. That at least is the normal case, whereas apurchase by a decree-holder is the exception. But the words which are•of the greatest importance in deciding the matter immediately before usare those which relate to the terms which a Court may direct should begiven to an execution-creditor by the Fiscal. Inasmuch, therefore, assuch an order for credit has been made in this case, the plaintiff wasentitled to demand of the Fiscal that he should, in respect of any moniesdue and payable by him in consequence of his becoming the purchaser atthis sale, be given credit to the amount of his decree, interest and costs,which in this case amounted to R.s. 2,377. The amount which at the•date of the sale the plaintiff would have become liable to pay by reasons■of the provisions of section 260 was one-fourth of the sum of Rs. 3,950 orRs. 987.50. That sum was considerably leps than the amount for whichthe execution-creditor was entitled to receive credit. If the provisions ofsection 272 and an order for credit made thereunder are to have any effectat all, it must be at the stage- of the sale, for it is at that stage alone thatany question of being allowed credit by the Fiscal arises. In respect ofthe balance which under the law becomes payable within a month fromthat date no difficulty arises for the latter part of the section expresslyprovides that, the Court may deal with the matter if it thinks fit by■directing that the purchase amount should be set off against the decreeand enter up satisfaction of the decree in whole or in part accordingly.The only stage at which any question of credit being allowed by theFiscal arises therefore is at the time the bidding closes.
,- In support of the argument that the terms of section 260 are imperativeand apply as much to a decree-holder in whose favour an order for credithas ben made as to any other purchaser, we were referred in the firstinstance to the judgment in the case of Gopal Singh v. Roy Bunwaree ofwhich a brief nojte is to) be found in O’Kinealy’s Commentaries on the Codex of Civil | Procedure, s. 294.—“ The purchaser under this section mustmake deposit in | cash required. ” But the provisions of the correspondingIndian sections are different from those of our section. There is no suchprovision as is contained in the first clause of section 272, nor in there(anything corresponding to a direction to the Fiscal to give credit to aholder of a decree when he becomes the purchaser. The provisions ofthat section are akin to the second clause of section 272 where the Court is■empowered to set off the purchase money as against the amount of the
1 5 C. L. R. p. 181.
300
Thamotherampillai v. Sellapah.
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decree. The whole system in India would appear to be entirely differentto ours. In India the whole matter is left in the hands of the Court andadjustments are made by the Court. Here the Court empowers theFiscal to give credit. The policy of the Indian Courts is continued evenin the new rules and orders where, to give relief in such cases, a specialprovision has been added which enables the Court to make a special orderin appropriate cases dispensing with the requirements of the rules whichcorrespond to our section 260 in a case where the decree-holder is thepurchaser and is entitled to set off the purchase money against the amountof the decree.
It has further been urged that unless the provisions of section 260 areregarded as imperative and binding upon any and every purchaserincluding a decree-holder in whose favour an order under section 272 hasbeen made that it will not be ppssible to give effect to the provisions ofsection 262. That section assumes that a deposit will be made anddirects how when that deposit is made it should be applied and makesfurther provision as to what is to happen in the event of the purchaserfailing to implement his purchase by paying in the balance. Thatprovision appears to me in the first instance to have been enacted for theprotection of the judgment-creditor and as in the case of section 260 tocontemplate a purchase by a stranger to the action.. But whether thatview be correct or not, it is quite impossible to say that because thelegislature has not provided for the special case of a purchase by a decree-holder in whose favour an order for credit under section 272 has beenmade, that, therefore the credit and the whole purpose for which it wasmade should be rendered nugatory by giving to the provisions ofsection 260 an interpretation which takes no note of the intentionsand objects of the legislature as manifested in the language used when itenacted section 272.
For these reasons I think that the learned District Judge has come to aright conclusion in this case and that the provisions of section 260 do notplace a purchaser, as the purchaser in this case, under an obligation tomake a deposit of 25 per cent, of the purchase money.
The appeal must therefore be dismissed with costs.
Drieberg J.—I agree.
Appeal dismissed.