# KANHAIYALAL v. Dr. D.R. BANAJI AND OTHERS

- **Citation:** [1959] 1 S.C.R. 333
- **Court:** Supreme Court of India
- **Decided:** 1959
- **Bench:** B. P. Sinha, Jafer Imam, SuBBA RAO
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/kanhaiyalal-v-dr-d-r-banaji-and-others-1633
- **Pages:** 14

## Headnote

R~venue Sale-Property in possession of Receiver appointed by
Court-Absence of leave of Court for sale-Notice to Receiver not
given-Whether sale illegal-Whether suit to set aside sale by civil
court barred-Berar Land Revenue Code, I928, ss. I55, IS6, Ij7, I92.
The appellant was the auction-purchaser of the property at
a revenue sale held under the provisions of the Berar Land
Revenue· Code, 1928, for recovery of land revenue due. The
property at the time of the attachment and sale was in the possession of a Receiver appointed under Or. 40, R. 1 of the Code of
Civil Procedure by the Jilombay High Court. Notice to the
Receiver, however, was not given of the attachment and sale of
the pi;operty, nor was any leave of the Court taken for the sale.
In a suit instituted by the Receiver for a declaration that the sale
was a nullity o~, at any rate, was illegal and liable to be set aside,
the auction-purchaser contended that the sale without notice to
•
Workmen of
Assam Co.
v.
Assam Co. Ltd.
Kapur ].
lvJarcll JI.
•
334
SUPREME COURT REPORTS
[1959]
z958
the Receiver or without impleading him was not void but only
voidable and that, in any event. the suit was barred by the proKanhaiyalal
visions of ss. 157 and 192 of the Berar Land Revenue Code, 1928 :
D
D ;·
. ..
Held, (1) that the sale was illegal in the absence of the leave
'·
d. 0 ·hB,.naJ> of the Court and the necessary notice to the Receiver;
an
t ers
·
Sinha].
(2) that the suit was not barred by any of the provisions of
the Code.
Sub-section (1) of s. 157 of the Code which bars the institution of a suit to set aside a sale is confined only to claims on
the ground of irregularity or mistake i11 publishing or conducting
'
the sale as referred to in s. 156, and suits based on other grounds,
including those referred to in sub-s. (2) of s. 157, are not within
the prohibition of sub-s. (1).
Section 192 of the Code is not applicable as the suit is not
one simpliciter to set aside the sale held by the revenue authorities, but one for a declaration and consequential relief on the
grounds taken by the Receiver not covered by the specific provisions of the Code for setting aside the sale which the several
authorities under the Code have been empowered . to determine,
decide or dispose of within the meaning of s. 192(1).
CIVIL APPELLATE Jt:RISDICTION: Civil Appeal No.
128of1954.
Appeal from the judgment and decree dated January 25, 1951, of the Nagpur High Court in L. P. Appeal
Nq. 10 of 1945, arising out of the judgment and decree
dated March 29, 1945, of the said High Court in Second
Appeal No. 453 of 1941, against judgment and decree
dated April 5, 1941, of the Adell. District Judge, Yeotmal in Civil Appeal No. 47-A of 1940 arising out of
the judgment and decree dated September 14, 1940, of
the Add!. Sub-Judge, :First Class, Yeotmal in Civil Suit
No. 72-A of 1940 .
"Radhey Lal, for the appellant .
. P. N. Bhagwati, J. B. Dadachanji, S. N. Andley and
Rameshwar-Nath, for respondent No.· I.
· R. H. Dheb'fl,r, for respondent No. 2.
1958.
March 31.
The following Judgment of the
Court was delivered by
SINHA J.-The main question in controversy iJJ. this
appeal on a certificate of fitness granted by the High
Court of Judicature at Nagpur (as jt then was}, is
•
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T
S.C.R.
SUPREME COURT REPORTS
335
whether the provisions of the Berar Land Revenue
Code, 1928 (which will hereinafter be referred to as the
Ktmhaiyalal
Code), bar the suit out of which this appeal arises.
In order to appreciate the points in controversy in
v.
.
Dr. D. R. Banaji ·
this appeal, it is necessary to state the following facts:
and others
One Bhagchand J airamdas was the occupant of a
plot, situated in the District town of Yeotmal in what
was then called the Province of Central Provinces and
Berar, measuring 1,91,664 square feet in area, on
which stood a ginni~ factory and its appurtenant
buildings.
Bhagchand aforesaid had executed a
mortgage-bond in favour of one Abubakar.
The
mortgagee aforesaid instituted a suit on the origi

## Text

S.O.R.
SUPREME COURT REPORTS
333
allowed depreciation and rehabilitation on an erroneous
basis, we would set aside the order of the Labour
Appellate Tribunal and would restore that of the
Industrial Tribunal with this modification that the
Respondent shall make available the
additional
amount required for payment of the proportional bonus
to the artisans.
• The appeal is, therefore, allowed to this extent, the
order of the Labour Appellate Tribunal set aside and
the award of the Ind11strial Tribunal restored with this
modification that the respondent shall also provide an
additional amount for these three years for payment
to the artisans of proportionate bonus on the basis of
the "Unit System". As neither of the parties have
succeeded in their main contentions, the fair order in
regard to costs should be that the parties do bear their
respective costs throughout.
KANHAIYALAL
v.
Dr. D.R. BANAJI AND OTHERS
(B. P. SINHA, JAFER IMAM and SuBBA RAO JJ.)
R~venue Sale-Property in possession of Receiver appointed by
Court-Absence of leave of Court for sale-Notice to Receiver not
given-Whether sale illegal-Whether suit to set aside sale by civil
court barred-Berar Land Revenue Code, I928, ss. I55, IS6, Ij7, I92.
The appellant was the auction-purchaser of the property at
a revenue sale held under the provisions of the Berar Land
Revenue· Code, 1928, for recovery of land revenue due. The
property at the time of the attachment and sale was in the possession of a Receiver appointed under Or. 40, R. 1 of the Code of
Civil Procedure by the Jilombay High Court. Notice to the
Receiver, however, was not given of the attachment and sale of
the pi;operty, nor was any leave of the Court taken for the sale.
In a suit instituted by the Receiver for a declaration that the sale
was a nullity o~, at any rate, was illegal and liable to be set aside,
the auction-purchaser contended that the sale without notice to
•
Workmen of
Assam Co.
v.
Assam Co. Ltd.
Kapur ].
lvJarcll JI.
•
334
SUPREME COURT REPORTS
[1959]
z958
the Receiver or without impleading him was not void but only
voidable and that, in any event. the suit was barred by the proKanhaiyalal
visions of ss. 157 and 192 of the Berar Land Revenue Code, 1928 :
D
D ;·
. ..
Held, (1) that the sale was illegal in the absence of the leave
'·
d. 0 ·hB,.naJ> of the Court and the necessary notice to the Receiver;
an
t ers
·
Sinha].
(2) that the suit was not barred by any of the provisions of
the Code.
Sub-section (1) of s. 157 of the Code which bars the institution of a suit to set aside a sale is confined only to claims on
the ground of irregularity or mistake i11 publishing or conducting
'
the sale as referred to in s. 156, and suits based on other grounds,
including those referred to in sub-s. (2) of s. 157, are not within
the prohibition of sub-s. (1).
Section 192 of the Code is not applicable as the suit is not
one simpliciter to set aside the sale held by the revenue authorities, but one for a declaration and consequential relief on the
grounds taken by the Receiver not covered by the specific provisions of the Code for setting aside the sale which the several
authorities under the Code have been empowered . to determine,
decide or dispose of within the meaning of s. 192(1).
CIVIL APPELLATE Jt:RISDICTION: Civil Appeal No.
128of1954.
Appeal from the judgment and decree dated January 25, 1951, of the Nagpur High Court in L. P. Appeal
Nq. 10 of 1945, arising out of the judgment and decree
dated March 29, 1945, of the said High Court in Second
Appeal No. 453 of 1941, against judgment and decree
dated April 5, 1941, of the Adell. District Judge, Yeotmal in Civil Appeal No. 47-A of 1940 arising out of
the judgment and decree dated September 14, 1940, of
the Add!. Sub-Judge, :First Class, Yeotmal in Civil Suit
No. 72-A of 1940 .
"Radhey Lal, for the appellant .
. P. N. Bhagwati, J. B. Dadachanji, S. N. Andley and
Rameshwar-Nath, for respondent No.· I.
· R. H. Dheb'fl,r, for respondent No. 2.
1958.
March 31.
The following Judgment of the
Court was delivered by
SINHA J.-The main question in controversy iJJ. this
appeal on a certificate of fitness granted by the High
Court of Judicature at Nagpur (as jt then was}, is
•
·.
T
S.C.R.
SUPREME COURT REPORTS
335
whether the provisions of the Berar Land Revenue
Code, 1928 (which will hereinafter be referred to as the
Ktmhaiyalal
Code), bar the suit out of which this appeal arises.
In order to appreciate the points in controversy in
v.
.
Dr. D. R. Banaji ·
this appeal, it is necessary to state the following facts:
and others
One Bhagchand J airamdas was the occupant of a
plot, situated in the District town of Yeotmal in what
was then called the Province of Central Provinces and
Berar, measuring 1,91,664 square feet in area, on
which stood a ginni~ factory and its appurtenant
buildings.
Bhagchand aforesaid had executed a
mortgage-bond in favour of one Abubakar.
The
mortgagee aforesaid instituted a suit on the original
side of the Bombay High Court, being Civil Suit
No. 1543 of 1934, to enforce the said mortgage, A
Receiver was appointed on October 20, 1936, during
the f>endency of the suit in respect of the mortgaged
properties including the plot described above. The
land and the buildings and the factory, have been
valued by the courts below at about Rs. 70,000.
The
revenue payable in respect of the plot in question, at
the rate of Rs. 129 per year, appears to have remained
in arrears for two years, namely, 1936-37 and 1937-38.
The Sub-Divisional Officer of Yeotmal, functioning.as
the Deputy Commissioner under the Code, sold at
auction the plot in question, free of all encumbrances,
on December 17, 1937, without impleading or giving
notice to the Receiver who was in-charge of the estate
of Bhagchand, as aforesaid. At that auction, Kan-.
haiyalal, the appellant, purchased the property for
Rs. 270 only.
The sale in his favour was confirmed
on January 26, 1938, but it appears that the tlien
Heceiver had sent Rs. 275 by a cheque to the SubDivisional Officer concerned, in full payment of the
arrears of land revenue, and thus, to have the sale set
aside. But it was received two days afte\' the confirmation of the sale.
Before the confirmation of the sale,
the Receiver had made an application on January 19,
1938, to the Sub-Divisional Officer, offering to pay the
arreMs, but it appears that through some bungling in
the office, the attention of the Sub-Divisional Officer
was not dra-wn to the application until after the
•
Sinha ].
•
K anhaiyalal
v.
Dr. D.R. Banaji
and Others
Sinha ].
336
SUPREME COURT REPORTS
[1959]
confirmation of the sale. Tho H,eceiver then applied for
a review of the order confirming the sale, and the
Sub-Divisional Officer allowed the application and set
aside the sale.
The Deputy Commissioner, Yeotmal,
and the Commissioner, Berar, also upheld the order
setting aside the sale.
Thereupon, the auctionpurchaser, Kanhaiyalal, moved in revision the Financial Commissioner who was then the highest Revenue
authority under the Code, against the order of the
Commissioner, and ultimately, t1'.e order setting aside
the sale, was vacated by the Financial Commissioner
on the ground that there was no application under
s. 155 or s. 156 of the Code.
The then Receiver, having ultimately failed in
having the sale of the valuable properties by the
revenue authorities, set aside, instituted the suit out
of which this appeal arises, impleading the Provincial
Government of Central Provinces and Berar, as the
first defendant, Kanhaiyalal, the auction-purchaser,
as the second defendant, and Dulichand Bhagchand as
the third defendant. He prayed for a declaration that
the auction-sale held on December 17, 19:37, was void,
on a number of grounds including the grounds that
no ilotice of demand had been sent to the H,eceiver
who was in-charge of the property; that the attachment and sale proclamation had not berm effected ·
according to law, and that though the revenue authorities were aware of the appointment of a Receiver
of the property, by the Bombay High Court, they did
not implead the Court Receiver. This snit was contested on the preliminary ground that it was barr@d
by"the provisions of ss. 157 and 192 of the Code. That
plea found favour, both, with the trial court and the
court of appeal(Additional District Judge, Yeotmal).
On second appeal to tho High Court of Judicature at
Nagpur, the ~ase was heard by a Single Judge,
Niyogi J. who allowed the appeal by judgment dated
March 29, 1945.
On a Letters J.>atent appeal by the
auction-purchaser, Kanhaiyalal, the matter was heard
by a Division Bench (Mangalmurti and Deo JJ.) -The
Bench affirmed the decision of the learned Single
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S.C.R.
SUPREME COURT REPORTS
337
Judge, and held that the suit was not barred. Hence,
this appeal.
It was urged on behalf of the appellant, the auctionpurchaser, who was the second defendant in the suit,
and who only is interested in having the sale in question, sustained by the Court, that the sale without
notice to the Receiver or without impleading him,
~as not void but only irregular, and secondly, that in
any event, the suit was barred by the provisions of
ss. 157 and 192 of the Code.
The first defendant,
the State Government, which was represented by
Mr. Dhebar, prayed that, in any event, there should
be no order for costs either in favour of or against the
Government.
On behalf of the plaintiff-respondent, it was urged
that .Property in the hands of a Receiver is custodia
legis, and is exempt from all judicial processes except
to the extent that the Court which. has appointed
the Receiver, may accord permission to the Receiver
or to third parties to institute proceedings in respect
of the property; that no permission of the Bombay
High Court which had appointed the Receiver, having
been taken for the sale of the property, the sale
held without such· a permission, is a nullity; that,
at any rate, such a sale was not a mere irregularity
but an illegality and could be avoided by suit; that
there being no valid attachment of the property with
notice to the Receiver, the attachment itself was illegal,
and on that ground also, the sale was void; and
lastly, that the suit was not barred by the provisions
of the Code, as held by' the High Court.
•
The facts as set out above, are not in controversy.
During the time that the proceedings culminating in
the sale of the property, had been pending in the
Revenue Courts, the Receiver was in effective control
and management of the property. The r~venue authorities had been apprised of the fact that the Receiver
appointed by the Bombay High Court, was in-charge of
the property. As a matter of fact, an attempt had been
made•by the revenue authorities, in the first instance,
to approach the Collectol' of Bombay for realising the
43
•
Kankaiyalal
v.
Dr. D. R. Banafi
and Others
Sinha ].
J{anhaiyalal
v.
Dr. D. R. Banaji
and Others
Sinha ].
338
SUPREME COURT REPORTS
[Hl59]
arrears of land revenue in respect of the plot in question, but the mistake was that no approach was made
to the Bombay High Court or even to the Receiver
for paying up the arrears of the Government demands.
It was certainly the duty of the Receiver to see to it
that all public demands in respect of the properties in
his charge, were paid in due time, and in this case,
certainly, the arrears in respect of the year 1937-3~,
which fell due in August, 1938, accrued in his time, if
not also the arrears in respe<!t of the previous year
1936-37. If the Receiver had been more vigilant, or
if the revenue authorities had made the demand . from
the Receiver in respect of the arrears, they may have
been paid up in due course without the necessity of
putting the property to sale.
So far as the Indian Courts are concerned, it is
settled law that a sale held without making attachment of the property, or without duly complying with
the provisions of the law relating to attachment of
property, is not void but only voidable. Rule 52 of 0. 21
of the Code of Civil Procedure, requires that where the
property is in the custody of any court or public
officer, attachment shall be made by a notice to such
court or officer.
But the absence of such a notice
would not render the sale void ab initio, because the
jurisdiction of the court or the authority ordering the
sale, does not depend upon the issue of the notice of
attachment. It is also settled law that proceedings
taken in respect of a property which is in the possession and management of a Receiver appointed by
Court under 0. 40, r. 1 of the Code of Civil Procedure,
without the leave of that Court, are illegal i\l the sense
that the party proceeding against the property without the leave of the Court concerned, is liable to be
committed for contempt of the Court, and that the
proceedings s
0
0 held, do not affect the interest in the
hands of the Receiver who holds the property for the
benefit of the party who, ultimately, may be adjudged
by the Court to be entitled to the same. The learned
counsel for the respondent was not able to brtng to
our notice any ruling of any Court in India, holding
that a sale held without notice to ·the Receiver or
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S.C.R.
SUPREME COURT REPORTS
339
without the leave of the Court appointing the Receiver
in respect of the property, is void ab initio. In the
instant case, we do not think it necessary to go into
Kanhaiyalal
v.
the question raised by the learned counsel for the Dr. D.R. Banaji
respondents that a sale of a property in the hands of
and Others
the Court through its Receiver, without the leave of
the Court, is a nullity. The American Courts appear
~o have taken the view that such a sale is void. In
our opinion, it is enough to point out that the High
Court took the view• that the sale was voidable and
could be declared illegal in a proper proceeding or by
suit.
We shall assume for the purposes of this case
that such a sale is only voidable and not void ab
initio.
On the assumption that the sale held in this case
without the leave of the Court and without notice to
the "Receiver, is only voidable and can be declared
illegal on that very ground, the suit had been instituted for the declaration that the sale by the revenue
courts was illegal.
The plaint was subsequently
amended by adding the relief for recovery of possession, because in the meanwhile, the auction-purchaser
had obtained delivery of possession of the property
through the revenue authorities, some time in 1940.
The general rule that property in custodia legis
through its duly appointed Receiver is exempt from
judicial process except to the extent that the leave of
that court has been obtained, is based on a very sound
reason of public policy, namely, that there should be no
conflict of jurisdiction between different Courts. If a
court has exercised its power to appoint a Receiver of
·a certain property, it has done so with a view to presei·ving the property for the benefit of the rightful owner
as judicially determined. If other Courts or Tribunals
·of co-ordinate or exclusive jurisdiction were to permit
proceedings to go on independently of tne Court which
has placed the custody of the property in the hands of
the Receiver, there was a likelihood of confusion in
the administration of justice and a possible conflict of
juri~iction. The Courts represent the majesty of law,
and naturally, therefore, would not do anything to
weaken the rule of law, or to permit any proceedin~s
•
..
Sinha ].
I<anhaiyalal
v.
Dr. D.R. Banaji
und Others
Sinha ].
?40
SUPREME COURT REPORTS
[1959]
which may have the effect of putting any party in
jeopardy for contempt of court for taking recourse to
unauthorised legal proceedings. It is on that very
sound principle that the rule is based. Of course, if
any Court which is holding the property in custodia
legis through a Receiver or otherwise, is moved to
grant permission for taking legal proceedings in
respect of that property, the Court ordinarily woukl
grant such permission if considerations of justice
require it. Courts of justice, therefore, would not be a
party to any interference with that sound rule.
On
the other hand, all Courts of justice would be only too
anxious to see that property in custodia legis is not
subjected to uncontrolled attack, while, at the same
time, protecting the rights of all persons who may
have claims to the property.
After making these general observations, we 'have
to examine the provisions of the Code, to find out how
far that general rule of law is affected by those provisions.
The Berar Land Revenue Code provides
that " land revenue assessed on any land shall be a
first charge on that land and on the crops, rents and
profits thereof" (s. 131).
Section 132 makes the
occupant in respect of the land in question" primarily
liable for the payment of the land revenue", but
s. 133 provides that in case of default of payment of
land revenue by the person who is 'primarily liable',
" the land revenue including arrears shall be recoverable from any person in possession of the land."
Hence, in this case, the revenue authorities could
legally call upon the Receiver to pay the arrears of
lahd revenue, and as pointed out above, it would have
been the duty of the Receiver to pay up.those arrears.
Under s. 135, the Receiver would be deemed to be a
'defaulter' in respect of the land revenue. Section 140
makes the statement of account, certified by the
Deputy Commissioner or the Tahsildar, conclusive
evidence of the existence of .the arrears and of the
person shown therein as the defaulter, for the purposes of the Chapter in which the section finds a place,
namely, Chapter XII, headed as
"l~ealization of
Land Revenue". One of the modes laid down in
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,. -
S.C.R..
SUPREME COURT RE~ORTS
341
s. 141 (c) of the Code for the recovery of arrears of
land revenue, is" attachment and sale of the holding
on which· the arrear is due." If a sale is held under
the provisions of s. 141 ( c), s. 149 (2) provides that such
a sale " shall transfer the holding free of all encum.
brances imposed on
it .................. ". . Thus, the
appellant, if the sale in his favour was a valid one,
a.cquired the property said to be worth Rs. 70,000, free
from all encumbrances including the mortgage-money
due on the property: and for which the suit in the
Bombay High Court had been instituted, even though
he paid Rs. 270 only for it.
The principal question for determination in this
appeal, therefore, is whether, in view of the special
provisions of the Land Revenue Code, the present
suit could be entertained bv the civil court. It is
bey<1nd question that the Code lays down a special
machinery for the realization of Government revenue
which has been declared as the paramount charge on
the property. It lays down a summary procedure for
the realization of public revenue, and all questions
coming within the purview of the Code, must be
determined according to the procedure laid down in
that Code. Hence, in so far as the Code has laid down
specific rules of procedure, those rules and no others,
must apply in the determination of all controversies coming strictly within the terms of the statute.
One thing is absolutely clear, namely, that the Code
does not lay down any specific rules in respect of proc
perty which has been placed in custodia legis.
The
Code contemplates regular payment of Government
revenue by the owner, possessor or the occupant "of
the property in respect of which Government revenue
is payable. It also takes notice of devolution of interest by transfer or succession, but it does not
contemplate the inter-position of a Rece!ver in respect
of the property subject to'the payment of Government
revenue. This aspect .of the matter becomes important because the only point for determination in this
appe&l, is whether the auction-sale held under the
Code, without the leave of the Court or without notice
to the Receive:i; appointed by the Court, should affect
•
r958
I<anhaiyalal
v.
Dr. D. R. Banafi
and Others
Sinha ].
[(anhaiyalal
v.
Dr. D. R. Banaji
and Others
Sinha ].
342
SUPREME COURT REPORTS
[1959]
the interest which the Bombay High Court had, by
appointing the Receiver, sought to protect, if the sale
in favour of the appellant, stands.
The mortgagee's
security for the payment of the mortgage-debt, in the
event of .the auction-sale being sustained, is to that
extent adversely affected without his having any voice
in the matter. Perhaps, if the Receiver were not
there, the mortgagee may have been more vigilant and
may have taken timely steps to pay the Government
demand in respect of the property if only for conserving it for satisfying his own dues on the mortgage. It
has been strenuously argued on behalf of the appellant that the present suit cannot be maintained in
view of the provisions of the Code, particularly,
ss. 157 and 192 which we now proceed to examine.
Section 157 is in these terms :
"157. (1) Ifno application under section 156 is
made within tho time allowed therefor, all claims on
the ground of irregularity or mistake shall be barred.
(2) Nothing in sub-section (1) shall bar the institution of a suit in the civil court to set aside a sale on
the ground of fraud or on the ground that the arrPar
for which the property is sold was not due."
TJ..is section makes reference to proceedings under the
previous s. 156. -Section 156 contemplates an application for setting aside the sale " on the ground of some
material irregularity or mistake in publishing or
conducting it", at the instance of a person "whose
interests are affected by the sale". Assuming that in
t.he instant case, the Receiver is a person whose
interest can be said to have been affected by the sale,
tlie ground on which he could have moved the Revenue
authorities for setting aside the sale, was limited to
material irregularity or mistake in publishing or
conducting the sale.
This provision proceeds on the
assumption that the necessary parties have been
apprised of the proceedings relating to the realization
of Government revenue. It assumes that the proceedings-have been properly taken, but there may have
been some material irregularity or mistake at a1 later
stage of the proceedings, namely, in publishing or
conducting the sale. It is clear that. the ground on
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SUPREME COURT REPORTS
343
which the present suit is based, would not be covered
by the crucial words quoted above, on which alone
s. 156 could be availed of.
" Publishing" the sale
has reference to that part of the ·proceedings which
relates to the sale proclamation, and 'conducting' the
sale has reference to acts or omissions, at a still later
stage, of some officer or public authority who is
entrusted with holding the sale. It is clear, therefore,
that the provisions of s. 156 are out of the way of
the plaintiff in this suft.
So also are the provisions of
s. 155 which relate to an application for setting aside
a sale on deposit of arrears within 30 days from the
date of the sale. An application under s. 155 can
only be made by a person " either owning such
property or holding an interest therein by virtue of a
title acquired before such sale". A Receiver appointed
under 0. 40 of the Code of Civil Procedure, unlike a
Receiver appointed under the Insolvency Act, does
not own the property or hold any interest therein by
virtue of a title. He is only the agent of the court
for the safe custody and management of the property
during the time that the court exercises jurisdiction
over the litigation in respect
of the property.
Section 157(1) of the Code, which positively bars• a
suit, is in express terms, confined to " all claims on the
ground of irregularity or mistake". It does not cover
grounds other than those-for example, if a sale is
attacked on the ground that the owner of the property
was dead at the date of the sale, or that there had
been some fraud in connection with the sale proceedings, or that he had been kept out of his remedy
under the Code by some fraudulent act, or that there
was really no arrear due in respect of the property
sold, or such allied grounds-suits based on grounds
like these, would not be within the i:irohibition of
s. 157(1). Section 157(2) specifically saves certain
suits of tlie kind referred to therein, but it does not
necessarily follow th:tt suits not directly within the
terms of sub-s. (2) of s. 157, are covered by the· provisiofls of the positive bar laid down by s. 157(1).
There may be a tertium quid between the grounds
covered by s. 0 157(1) and s. 157(2). It is clear that
•
•
Ranhaiyalal
v.
Dr. J>. R. Lianaji
and Others
Sinha J.
344
SUPREME COURT ItEPORTS
[1959]
the present suit is not covered either by the terms of
f{anhaiyalal
s. 157(1) or those of s. 157(2). As already indicated,
the position emerging in the present controversy, is not
D,. D. Ii. JJanaji covered by the express provisions of s. 157.
I958
v.
and Othm
But it has beeri argued on behalf of the appellant
Sinha J.
that even though the provisions of s. 157 do not
cover the ground raised in the present suit, s. 192(1)
of the Code, bars the suit.
Section 192(1) is in these
terms:
"192. (1) Except as othefwise provided in this
Law, or in any other enactment for the time being in
force, no civil court shall entertain any suit instituted or application made to obtain a d0cision or order
on any matter which, the Provincial Government or
any Hevenue Officer is, by this Law, empowered to
determine, decide or dispose of; and in particular and
without prejudice to the generality of this provision,
no civil court shall exercise jurisdiction over any of the
following matters :-"
It is not necessary to set out the clauses (a) to (p) under
suh-s. (1) of s. 192, because none of those clauses,
has been claimed clearly to cover the present suit.
Learned counsel for the appellant contended that
setiting aside a sale has been specifically provided for
by the Code, which the several authorities under the
Code have been empowered to determine, decide or
dispose of, within the meaning of the section. There
is no doubt that the matter of the setting aside .of
a sale by payment of the arrears under s. 155, and
on the specific grounds under s. 156, as discussed
aq,ove, has been provided for in the Code, but, as
already observed, the suit does not raise any ground
which is covered by the specific provisions of the Code
for setting aside a sale.
Strictly speaking, this is a
suit for a declaration that the sale held by the revenue
courts, does 1~ot affect the interests whi~h are in the
. custody of the Court through jts Beceiver, and for
recovery of possession as agains~ the auction-purchaser
who .. is alleged to be in wrongful possession of the
property which should have continued in possession
of the Heceiver, under the directions of the "Bombay
High Court. In short, this is not a suit simpliciter to
•
\
t
S.C.R.
SUPREME COURT REPORTS
345
set aside the sale held by the revenue authorities but a
suit for a declaration and a consequential relief.
A
Kanhaiyalal
suit for such a declaration on the grounds taken by
v.
the Receiver and for possession, is not a matter, which Dr. D.R. Banaji
the several authorities under the Code, have been
and Others
empowered to determine, decide or dispose of.
.
But the learned counsel for the appellant further
"ontended that s. 192 takes in its sweep all the
relevant provisions of the Code bearing on the rights
of the Receiver to haGe a sale set aside. Undoubtedly,
it is so, but, as pointed out above, the\ Receiv~r .could
not have brought the present controversy w1th111 the
terms of any one of those sections. In this connection, reliance 'was also placed· on the provisions of
ss. 32, 38 and 159 of the Code. In our opinion, those
sections have no bearing on the present controversy.
Sect~n 32 deals with appeals and appellate authorities,
and lays down the hierarchy of officers to deal with
an appeal. Section 38 prescribes the authorities to deal
with revisional matters, and s. 159 conserves the
power of the Deputy Commissioner to pass orders
suo moto that is to say,.where no applica~ion has been
made under s. 155 or s. 156, or even beyond the
period of thirty days, which is the prescrjbed period
for making applications under thos~ sections} Thus, .
if the leave of the Bombay High bourt had been
taken to initiate proceedings under the Code, for the
realization of Government revenue, or if the Receiver
had been served with the notice of demand, it would
have been his bounden duty to pay up the arrears of
land revenue and to continue paying Government
demands in respect of the property in .his charge, 'in
order to conserve it ·for the benefit of the parties
which were before the Court in .the ip,ortg~ge suit .. If
such a step had been taken, and· if the Receiver,
in spite of notice, had allowed the auction-sale to be
held for non-payment of Government demands, the
sale would have been, valid and subject only to such·
proceedings as are contemplated under ss. 155. and
156 of the Code. In that case, there wouldlhave been
no C(}nflict of jurisdiction, and therefore, np question
•
Sinha.].
Ktiithaiyalal
v.
Dr. D. R. Banafi
and Others
Sinha ].
346
SUPREM.E COURT REPORTS
[1959]
of infringing the souml principle discussed above. But
the absence of the leave of the Court and of the
necessary notice to the Receiver, makes all the
difference between a valid and an illegal sale. The
High Conrt has also relied upon the well-known rule of
natural justice-audi alteram, parteni-as another
reason for holding the sale to be illegal. It is not
necessary for the purposes of this case to pronounCJ)
upon the difficult question of how far a principle of
natural justice can override the ~pecific provisions of a.
statute .
.E'or the reasons given above, we agree with the High
Court in its conclusion that the auction-sale impugned
in this · case, was illegal, and that the suit was not
barred'by the provisions of the Code.
The appeal is,
accordingly, dismissed with costs to the ReceiYer who
alone has contested the appeal.
•
Appeal dismissed.
, 958
G<'.>RDHANDAS PURSHOTTAMDAS SONAVVALA
lvlarclt 31.
AND ANOTHER
v.
THE EASTERN COTTON COMPANY
(BHAGWA'rI, J. L. KAPUR and GAJENDRAGADKAR JJ.)
Cotton, Contracts-Cotton Association-Statute providing for
cotton contracts to be in accordance with the by-la121s of the Association
-By-laws prescribing Forms of Contract-Substantial compliance
with Form-V aUdity of the contracts-Bombay Cotton Contracts Act,
x932 (Bom. IV of I932), s. 8(I).
·
Sub-section~r) of s. 8 of the Bombay Cotton Contracts Act,
r932. provides: "Save as hereinafter provided in this Act, any
contract .... which is entered into after the date on which this
Act comes into operation and which is.. not in accordance with the
by-laws of any recognized cotton association shall be void".
In respect of the transactions in cotton entered into bet\veen
the parties, the appellants had to pay the respondents a sum of
money for failure to gi\'e delivery of the cotto~1 bales under the
•
r
.,