RAJA BOMMADEVARA NAGANNA NAIDU BAHADUR ZAMINDAR GARU Vs. RAJA BOMMADEVARA VENKATRAYULU NAIDU BAHADUR ZAMINDAR GARU

JUDGEMENT

(1.) This appeal arises out of an application by the appellant who is a judgment-debtor to set aside a court sale of six items of property belonging to him which were sold in execution of the decree in Original Suit No. 38 of 1919 in the Court of the Subordinate Judge of Ellore, obtained against him by respondent 1, the decree- holder. This appeal relates only to three items of the properties; these being items 4, 5 and 6, specified in the sale proclamation. At the sale the properties were purchased by the decree-holder himself. The application to set aside the sale was made under O. 21, R.90, Civil P.C., which empowers the Court to set aside a sale "on the ground of material irregularity or fraud in publishing or conducting it." This power of the Court is subject to the proviso "that no such sale be set aside on the ground of irregularity or fraud unless upon the facts proved the Court is satisfied that the appellant has sustained substantial injury by reason of such irregularity or fraud."

(2.) The subordinate Judge of Ellore to whom the application had been made, set aside the sale on the grounds that the sale proclamation did not mention the revenue assessed on the properties as required by O.21, R.66 (2) (b), and that the sale proclamation was not published in the Collector's office as required by O.21, R.54, read with R.67, Civil P.C.; and that as a result of these irregularities the appellant had suffered substantial injury in that the sale prices were unreasonably low. The High Court of Madras reversed this decision by its order dated 23 January 1940, holding that in the circumstances of the case the omission to mention the Government revenue was not a material irregularity; and that the failure to affix the sale proclamation in the Collector's office, though it was an irregularity, caused no substantial injury to the appellant. This appeal has been brought against the above decision of the High Court. Besides the irregularities referred to, the appellant had alleged also fraud in his petition, but both the Courts in India have found that no fraud had been committed.

(3.) The question for determination in this appeal is whether or not the appellant is entitled to set aside the court sale by reason of the above mentioned irregularities. In order to set aside a sale under O.21, R.90, it should be proved (1) that there was material irregularity or fraud in publishing or conducting the sale, and (2) that the applicant had sustained substantial injury by reason of such irregularity or fraud. More irregularity or fraud in publishing or conducting the sale will not entitle the Court to set it aside, unless upon the facts proved the Court is satisfied that the applicant has sustained substantial injury by reason of such irregularity or fraud. The words in the proviso "unless upon the facts proved, the Court is satisfied" have been substituted in the present Code for the words "unless the applicant proves to the satisfaction of the Court" in the proviso to S. 311 of the Code of 1882. In the course of the arguments the question was raised in connexion with the High Court's observation "Nor is there any evidence to connect this irregularity (failure to affix the notice in the Collector's office) with any defect in price," as to whether the substantial injury sustained by the applicant by reason of the material irregularity or fraud complained of could be proved only by "direct evidence" as stated in the judgment of the Board in 20 IA 1761or if it could be proved also by evidence from which it might be reasonably inferred that the substantial injury was the result of the material irregularity or fraud. It appears to their Lordships that upon the language of the proviso as it now stands, what is required is that the Court should be satisfied that the applicant has suffered substantial injury by reason of material irregularity or fraud, and if the Court is so satisfied from the facts proved then the applicant may, be said to have discharged his burden. Their Lordships think that this burden may be discharged not only by direct evidence connecting the material irregularity or fraud with the substantial injury, but also by circumstantial evidence, that is evidence from which a reasonable inference may be drawn that the substantial injury was the result of the material irregularity or fraud, as pointed out in AIR 1935 Mad. 4592where all the relevant decisions have been considered. The Madras and Calcutta High Courts have always been of this opinion. Sir Dinshaw Mullah says in his commentary on the rule that the amendment of the language of the proviso was made to give effect to the Madras and Calcutta decisions. The High Court of Allahabad which followed the rigid construction has now adopted the new rule: see 55 ALL 182.3