GANGABATTULA KANTHAMMA Vs. MANCHIRAJU REDDIPANTULU

JUDGEMENT

(1.) This is an appeal against the appellate order passed by the Subordinate Judge of Cocanada in appeal-to him from an order of the District Munsif of Cocanada in an execution proceeding. The appellant before Us was the judgment-debtor under a decree passed by the District Munsif's Court which was under execution, and her property was advertised for sale in Court auction. The sale was actually held by the Nazir, the Court officer, in the usual way and the 1 respondent bid for the property and offered a price of Rs. 4,600 which was accepted by the Court officer and the bid was knocked down in his favour. Under O. XXI Rule 84 C. P. C, the purchaser is bound to pay 25 per cent of the purchase money on the completion of the auction. The 1 respondent made default in making the payment and in consequence under the same rule the property was again put up for sale. This time the property was knocked down for a lower sum, namely, Rs. 3,750 thus leading to deficit of Rs. 850. The judgment- debtor applied to the Court under Order 21, Rule 71, C. P. C, that the auction-purchaser, the 1 respondent should be made liable for this deficit and should be called upon to pay the amount of the deficit into Court, and the District Munsif passed an order in her favour. The appeal from this order was heard by the Subordinate Judge, and he was of opinion that the 1 respondent might have bid for the property as the agent of the 2nd respondent and that as an agent he would not be responsible to pay this deficit amount under Clause (1) of Section 230 of the Contract Act which says that an agent cannot personally enforce contracts which he has entered into on behalf of his principal nor can he be personally bound by them. No evidence had been taken on this point in the. first Court and therefore the Subordinate Judge remanded the case to the first Court to take evidence in order to ascertain whether the 1st respondent was actually the agent of the 2nd respondent as he subsequently alleged after the sale was over; and as it was pleaded that in any case, even if 1 respondent was an agent, as he did not disclose the name of his principal at the time of the bid, Clause (1) would not apply, the Subordinate Judge, thinking that if the judgment-debtor whose property was sold in auction did actually know that the 1 respondent was bidding as the agent of the 2nd respondent that would take the case out of Clause (2) of Section 230 of the Contract Act, directed evidence on that point also. In taking this latter view, he treated a sale in Court auction as a contract between the owner of the property sold, namely, the judgment-debtor, and the auction-purchaser, apparently considering that the Court and its officer were merely acting as agents for the judgment-debtor for selling the property. We are unable to accept this view which he has adopted. Where in Court auction a property is sold, the auction purchaser is one party to the contract, but the other party to the contract is not in our view the judgment- debtor or the decree-holder but the Court itself. In selling property in Court auction, the Court acts under the statutory powers given to it by the Code and not as agent of any party and the contract that is made when the bid is accepted and confirmed by the Court is one between the Court on the one side and the auction-purchaser whose bid is accepted on the other; and therefore before Clause (2) of Section 230 of the Contract Act can be excluded it must be alleged and proved by the party wishing to take advantage of Section 230, Clause (1) that when making the bid or before doing so he had informed the Court or the Court officer who was acting on behalf of the Court in selling the property that he was making the bid only as the agent of some named third party. It would then be open to the Court officer, the Nazir, either to accept his bids or decline them if he is not fully satisfied that he had a proper power of attorney to make the bid. In this case it is not pretended that there was any power of attorney which the 1 respondent had from 2nd respondent or that any power of attorney was shown to the Nazir, nor is it even alleged that before the sale took place the 1st respondent informed the Nazir or, the Court that he was bidding as an agent. Therefore even if we assume that the 1 respondent was really the agent of the 2nd respondent, we have here a case where the agent did not disclose the name of his principal, and did not even inform the other party, the Court, that he was acting as, the agent of a principal. The question whether the judgment-debtor knew or not that the 1 respondent was bidding as an agent of the 2nd respondent is therefore quite immaterial. The Court was entitled to enforce the contract against the 1 respondent personally, and as the 1 respondent made himself personally liable for the deficit that has been caused by his action in not completing the sale by depositing 25 per cent. of the purchase money. Order 21, Rule 71, C. P. Code gave the Court power, at the instance of the judgment-debtor to collect the deficit that has been caused in a summary manner by way of execution. In these circumstances, we think that the order of the District Munsif was right and that there is no object in taking evidence which the Subordinate Judge has directed to be taken as to whether the 1 respondent was really the agent of the 2nd respondent, or not, and whether the judgment-debtor knew of it, for, even assuming that he was an agent, as he never disclosed to the Court officer that he was bidding as an agent till a long time after the bid was offered and accepted, he is liable for the deficit personally. Whatever rights there may be between him and the 2nd respondent he may enforce as advised but they need not be considered now at all. The order of the Court directing him to pay the money into Court is therefore correct.

(2.) The rulings relied upon by the Subordinate Judge in Mackinnon Mackenzie and Co. V/s. Lang Moir and Co. LR 5 B 584 followed in Lahore in Lyallpur Sugar Co. V/s. Mulraj (1922) 65 IC 473 are not relevant here, for it is only in the view that the judgment-debtor is a party to the contract of the auction sale that they become of any importance and necessitate a finding on the question whether the judgment-debtor did actually know that the 1 respondent was acting as the agent of the 2nd respondent.

(3.) There is one other small point which has been dealt with in the argument and that is the question whether the defaulting auction purchaser, the 1 respondent, is liable for interest on the deficit amount from the date of the sale to the date of the order of the District Munsif directing him to repay. There is nothing in Order 21, Rule 71, C. P. Code that speaks of interest and we think therefore that he is not liable for interest between those dates. Of course he is liable for interest after the date of the order of payment. With this variation we must allow the appeal of the appellant, set aside the order of the Subordinate Judge and restore that of the District Munsif.