# Sept'1flber, 26. 322 SUPREME COURT REPORTS [1963] SUPP. RAMRAO JANKIRAM KADAM v. STATE OF BOMBAY . (B. P. SINHA, C. J., K. C. DAS GUPTA and

- **Citation:** [1963] Supp. 1 S.C.R. 322
- **Court:** Supreme Court of India
- **Decided:** 1961-11-05
- **Case number:** Civil Appeal No. 67 of 1956
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/sept-1flber-26-322-supreme-court-reports-1963-supp-ramrao-jankiram-kadam-v-2712
- **Pages:** 22

## Headnote

1962
Sept'1flber, 26.
322 SUPREME COURT REPORTS [1963] SUPP.
RAMRAO JANKIRAM KADAM
v.
STATE OF BOMBAY
. (B. P. SINHA, C. J., K. C.
DAS GUPTA and
N. RAJAGOPALA AYYANGAR, JJ.)
Revenue Sale-Public auction-Connotation of "Sale"-
!Vhether sale for preiletermined nominal price is such sale-Legality-Suit to set asiile sa/,e-Limitation--!Vaiver arui estoppelBombay Land Revenue Code 1879 (Bom. V. of 1879) Oh. XI,
ss. 167, 203-Bmnbay Revenue Juri~diction Act, 1876, (Bom.X of
1876), ss. 4(c) a.nd 11-Transfer of Property Act, 1882 (IV of
1882), 8. 41.
A sum pf about Rs. 9 ,000 was due from the appellant to
the Government on account of excise dues.
The movable and
immovable property of the appellant was several times put for
sale by auction under Ch. XI Bombay Land Revenue Code but
the amount remained unrecovered and three item• of lands
remained unsold. In view of a Government Order dated August,
30, 1933, which prescribed such a course, the Mahalkarl sought
permission of the Collector to make a nominal bid of Re. l/~
for each jtem of land in the next auction.
The perrr1ission was
granted and the Mahalkari informed the appellant that if no
bidders came forward at the next auction the lands would be
sold at the nominal price of Re. 1.
The auction was held and
as no stranger came- to bid the Mahalkari made the nominal bid
of Re. 1 for each item of land. The bid was accepted and the
sales were later confirmed. Subsequently, the Collector sold
the,e lands for -adequate consideration and the purchasers were
put in possession.
The appellant filed a suit challenging the
validity of these sales. The purchasers contended that the suit
not having been brought within one year of the sales was time
barred, that the suit was barred by ss. 4(c) and 11 of the
Bombay Revenue Jurisdiction Act and , that :he appellant was
disentitled to relief on the ground of acquiescence
and
estoppel.
Held, that the Sales were invalid and the suit was liable
to be decreed. The purchase for a pre-determined nominal
price of Re 1, irrespective of the actual market value was not
a sale by public auction as contemplated bys. 167 of the Bombay
Land Revenue Code.
An auction is a proceeding at which
people are invited to compete for purchase of property by
successive offers of advancing surr1s and a sale by auction is a
means of ascertaining what the property is worth i.e. its fair
1 S.C.R. SUPREME COURT REPORTS
323
market price. If at the sale there are no bids there cannot be
a sale. The Government Order had no statutory force at all,
and could not authorise or render valid the transaction if
otherwise it lacked a legal basis.
There was no provision in the
Code 'vhich authorised such a course which an1ounted to forfeiture of the property of a defaulter. It was anomalous that
the Collector who moved the machinery for realisation of
arrears by sale and who was constituted the authority to determine judicially allegation of irrel{ularity in the conduct of the
sale should, wit~out authority of any statutory power, bid at
the auction conducted by his deputy. The mere fact that the
appellant had been informed before hand of the nominal bid
did not render the sales valid. Nor was the appellant estopped
from questioning the legality of the sales.
Tumdu Dhansing v. Government for the Provine' of Bombay,
I.LR. 1947 Born. 75, approved.
The suit was not barred hv Art. 11 of the Limitation Act.
The article was applicable only to cases where there was need
for setting aside a sale and not to cases where no sale as contemplated by law had taken place.
The provisions s. 4(c) Bombay Revenue Jurisdiction Act,
1876 applied to cases where there was a sale and it was sought to
be set aside on the ground of irregularities other than fraud.
They did not apply where there was only a purported sale
which did not pass title.
Section 11 barred a suit when there
was an appeal provided against the act or omission of a revenue
officer and the party failed to avail of the remedy.
In the
p~sent case there w

## Text

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1962
Sept'1flber, 26.
322 SUPREME COURT REPORTS [1963] SUPP.
RAMRAO JANKIRAM KADAM
v.
STATE OF BOMBAY
. (B. P. SINHA, C. J., K. C.
DAS GUPTA and
N. RAJAGOPALA AYYANGAR, JJ.)
Revenue Sale-Public auction-Connotation of "Sale"-
!Vhether sale for preiletermined nominal price is such sale-Legality-Suit to set asiile sa/,e-Limitation--!Vaiver arui estoppelBombay Land Revenue Code 1879 (Bom. V. of 1879) Oh. XI,
ss. 167, 203-Bmnbay Revenue Juri~diction Act, 1876, (Bom.X of
1876), ss. 4(c) a.nd 11-Transfer of Property Act, 1882 (IV of
1882), 8. 41.
A sum pf about Rs. 9 ,000 was due from the appellant to
the Government on account of excise dues.
The movable and
immovable property of the appellant was several times put for
sale by auction under Ch. XI Bombay Land Revenue Code but
the amount remained unrecovered and three item• of lands
remained unsold. In view of a Government Order dated August,
30, 1933, which prescribed such a course, the Mahalkarl sought
permission of the Collector to make a nominal bid of Re. l/~
for each jtem of land in the next auction.
The perrr1ission was
granted and the Mahalkari informed the appellant that if no
bidders came forward at the next auction the lands would be
sold at the nominal price of Re. 1.
The auction was held and
as no stranger came- to bid the Mahalkari made the nominal bid
of Re. 1 for each item of land. The bid was accepted and the
sales were later confirmed. Subsequently, the Collector sold
the,e lands for -adequate consideration and the purchasers were
put in possession.
The appellant filed a suit challenging the
validity of these sales. The purchasers contended that the suit
not having been brought within one year of the sales was time
barred, that the suit was barred by ss. 4(c) and 11 of the
Bombay Revenue Jurisdiction Act and , that :he appellant was
disentitled to relief on the ground of acquiescence
and
estoppel.
Held, that the Sales were invalid and the suit was liable
to be decreed. The purchase for a pre-determined nominal
price of Re 1, irrespective of the actual market value was not
a sale by public auction as contemplated bys. 167 of the Bombay
Land Revenue Code.
An auction is a proceeding at which
people are invited to compete for purchase of property by
successive offers of advancing surr1s and a sale by auction is a
means of ascertaining what the property is worth i.e. its fair
1 S.C.R. SUPREME COURT REPORTS
323
market price. If at the sale there are no bids there cannot be
a sale. The Government Order had no statutory force at all,
and could not authorise or render valid the transaction if
otherwise it lacked a legal basis.
There was no provision in the
Code 'vhich authorised such a course which an1ounted to forfeiture of the property of a defaulter. It was anomalous that
the Collector who moved the machinery for realisation of
arrears by sale and who was constituted the authority to determine judicially allegation of irrel{ularity in the conduct of the
sale should, wit~out authority of any statutory power, bid at
the auction conducted by his deputy. The mere fact that the
appellant had been informed before hand of the nominal bid
did not render the sales valid. Nor was the appellant estopped
from questioning the legality of the sales.
Tumdu Dhansing v. Government for the Provine' of Bombay,
I.LR. 1947 Born. 75, approved.
The suit was not barred hv Art. 11 of the Limitation Act.
The article was applicable only to cases where there was need
for setting aside a sale and not to cases where no sale as contemplated by law had taken place.
The provisions s. 4(c) Bombay Revenue Jurisdiction Act,
1876 applied to cases where there was a sale and it was sought to
be set aside on the ground of irregularities other than fraud.
They did not apply where there was only a purported sale
which did not pass title.
Section 11 barred a suit when there
was an appeal provided against the act or omission of a revenue
officer and the party failed to avail of the remedy.
In the
p~sent case there was no order which was appealable under
s. 203 and s. 11 could not be applied.
There was no scope for invoking the aid of s. 41 Transfer of Property Act. The purchasers had not relied upon any
representation, act or conduct of the appellants but on the
belief that Government had acquired a good title to the lands.
If t~e Government had no title the purchasers could not
acquire any.
CIVIL APPELLATE JURISDICTION : Civil Appeal
No. 67 of 1956.
Appeal from the judgment and decree dated
l\1arch 20, 1950, of the Bombay High Court in first
Appeals Nos. 142 and 211 of 1947.
S. P. Varma, S. N. Andley Ramuhicar Nath
and P. L. Vohra, for the appellant.
1962
Ramr110 JankirQ.11
Kadttrn
v.
Stott of Bombay
1962
Ramrao Jankiram
Kadam
v.
State of Bombay
324 SUPREME COURT REPORTS [1963] SUPP.
H. R. Khannn, R. H. Dhebar and T. M. Sen,
for the respondent No. 1.
C. B. Agarwala and Naiinit Lal, for the respondents Nos. 2 and 5.
1962. September 26.
The Judgment of the
Court was delivered by
tfyyangar, J.
AYYANGAR, J.-This appeal CClmes before us on
a certificate of fitness granted by the High Court of
Bombay under Art. 133 (1) (a) of the Constitution.
The appeal was heard by us in November last
and judgment was reserved on 9/11/1961. Within a
short time thereafter, learned Counsel for the Appellant
intimated the Registry that the 2nd respondent had
died on November 5, 1961, and that steps were being
taken to have the legal representative brought on record. The certificate under 0. XVI r.13 was received
by this Court and on its basis substitution was ordered
at the end of August 1962. The appeal was subsequently reported for hearing and we have now heard
the learned Counsel for the parties.
The facts giving rise to the appeal are briefly
as follows : The plaintiff who is the appellant brought
a suit in the Court of the Civil Judge atJalgaon for
a declaration that the sale of certain of his lands
which were held by the Revenue Authorities in
circumstances which we shall detail later was void,
and to recover possession of the landJ from the defendants who had purchased these lands in revenue
auction.
In view of the prayer for the declaration
regarding the invalidity of the sale, the Province of
Bombay was impleaded as a defendant to the suit.
The plaintiff's father was an excise contractor
and he and the plaintiff were licensees of certain
opium shops in 1931-32. By the end of March 1934
a sum of about Rs. 8,500/- were due to the Government in respect of the excise dues froru these opium
shops. For the realisation of these dues the lands
> '
·!
•
1 S.C.R.
SUPREME COURT REPORTS
325
belonging to the plaintiff were brought to sale and
among others Survey Field No. 35, 40 and 80 in
Mauje Therole, Peta Edalabad and a house bearing
Survey No, 23A in the village of Kurhe was brought.
to sale and sold.
The three items of lands were
purchased by government at the sale for a nominal
bid of Re. 1/- for each item for realisation of these
dues. The sale was confirmed and possession taken
by government of these lands.
Later the government
sold the land bearing Survey No. 80 to the second
defendant for Rs. 2,000/-and Survey Nos. 35 and 40
to the fifth defendant for Rs. 1, 750/-.
Possession of
these properties was delivered to the
respective
defendants in 1939.
As substantially the arrears due
to government still remained undischarged, because
the sales were for nominal amounts, the house property
at Kurhe was attached and brought to sale and was
sold on November 6, 1940, but the purchase in the
case of the house was not by the government but the
property was bid for and purchased by the second
defendant for Rs. 76/-.
A certificate of sale was
issued to him on February 13, 1941. It was the
validity of these sales that was challenged in the suit
which has given rise to this appeal.
The suit was substantially decreed in favour of
the plaintiff by the trial-Judge but on appeal the
plaintiff's suit was dismissed in respect of the relief in
regard to the three plots above-named which were the
subject of. sale on September 21, 1938, and of the
house which was sold on November 6, 1940. The
learned trial-Judge had held that these sales were not
in accordance with the provisions of the Bombay Land
Revenue Code and were consequently void. The
learned Judges of the High Court, on the other hand
were of the opinion that the sales and the purchase by
government for a nominal sum of Re. I/ for each of
the plots were authorized by the Code and were
therefore valid <i;nd . binding on 0e plaintiff. It is the
correctness of this view of the High Court that is raised
for consideration in the appeal.
1962
Ramrao Jankiram
Kadam
v.
State of Bombay
Ayyangar, J.
1962
Ramrao Jan/dram
Kadam
v.
State of Bombay
Ayyangar, J.
326 SUPREME COURT REPORTS [1963] SUPP.
Before dealing with the arguments addressed to
us regarding the validity of the sales it is necessary to
set out the statutory provisions which bear upon the
power of government to effect sales for the realisation
of arrears due to them.
Section 34 of the Bombay Abkari Act enables
arrears of excise revenue to be recovered as an
"arrear of land revenue". Chapter XI of the Bombay
Land Revenue Code lays down the procedure for the
realisation of land revenue and other revenue demands.
Among the provisions of this Chapter it is necessary
to refer to s.155 reading :
"155. 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 directs the Collector to issue a proclamation, in the vernacular language of the district, of the
intended sale, specifying the time and place of sale,
while the section following requires that a written
notice of the intended sale should be affixed in the
public offices named therein.
Section 167 enacts
that sales shall be made by auction by such persons
as the Collector may direct. Section 171 is the next
relevant section and this 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."
As some point was made before us of a violation in
the instant case of the provisions of ss. 172 and 173,
we shall read these also :
1 S.C.R.
SUPREME COURT REPORTS 327
"l 72. 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.''
"l 73. In all cases of sale of immovable property, 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."
Section 175 sets out the effect of a default in payment of purchase-money and this runs:
"l 7 5.
In
default of payment
within the
prescribed period of the full amount of purchase-money, whether of movable or immovable property, the deposit, after defraying
thereout the expenses of the sale, shall be
forfeited to the Provincial Government, and the
property shall be re-sold, and the defaulting
purchaser shall forfeit all claim to the property
or to any part of the sum for which it may be
subsequently sold."
Section 178 enables sales to be set aside for irregularity and this section runs :
1962
Ramrao Jankiram
Ka dam
v.
SJat of ·Bombay
A_vyangar, J.
1962
Ramrao Jankiram
Kadam
v.
Stute 1{ Bomba.v
Avyangar, J.
328 SUPREME COURT REPORTS [1963] SUPP.
"178. At
any time within thirty days
from
the date of the sale of immovable property
application may be made to the Collector to set
aside the sale on the ground of some material
irregularity, or mistake, or fraud, in publishing
or conducting it;
but, except as is otherwise provided in the
next following section, no sale shall be set
aside on the ground of any such irregularity or
mistake, unless the applicant proves to the
satisfaction of the Collector that he has sustained
substantial injury by reason thereof.
If the application be allowed, the Collector
shall set aside the same, and direct a fresh
one."
The consequential provision is ins. 179 which reads:
"171!.
On the expiration of thirty days from
the date of the sale, if no such application as is
mentioned in the last preceding section has been
made, or if such application has been made and
rejected, the Collector shall make an order
confirming the sale; provided that, if he shall
have reason to think that the sale ought to be
set aside notwithstanding that no such application has been made, or on grounds other than
those alleged in any application which has
been made and rejected, he may, after recording his reasons in writing, set aside the sale."
and s. 182 enacts:
"182. The certificate shall sta<e the name of
the person declared at the time of sale to be the
actual purchaser; and any suit brought in a
Civil Court against the certified purchaser on
the ground that the purchase was made on
behalf of another person not the certified
purchaser, though by agreement the name of
the certified purchaser was used,
shall be
dismissed."
I
1 S.C.R.
SUPREME COURT REPORTS
329
Section 214 of the Code empowers a State
Government by a notification published in the official
gazette to make rules not inconsistent with the provisions of the Act to carry out the purposes and objects
of the Act and for the guidance of all persons in
matters connected with the enforcement of the Act or
in cases not expressly provided for therein. In the
Rules framed under the Code Ch. XVIII is concerned
with making provision for sales.
Rule 128 which is
the second of the Rules in this Chapter prescribes :
"Where any land or other property is sold by
public auction, an upset price shall, if the
Collector thinks fit, be placed thereon;.
Provided that 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, no such
upset price shall be placed."
Rule 129 has a new sub-r. (4) added after the sales
which are now in controversy were effected reading :
'.'"".here in the opinio~ of the _Collector difficulty
is hkely. to be expenenced m effecting speedy
recovery of the arrears or bidsders arc 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."
We shall now proceed to narrate the proceedings
tha~ preceded th~ impugned sales where are stated to
be m contravention of statutory provisions .
. Before doing so, however, we might point out
~athn rega~d to the sale of the house in the village of
1:1r e no ITregularity which would vitiate the sale as
Ph1!1~d out, a!ld the only complaint was that the house
w IC was e;stimated to the worth about Rs. 200/- was
sold ~or an madequate sum of Rs. 76/-.
Obvious!
standmg alone this could not be a ground for holdin~
J.962
Ramrao Jankiram
Kadam
v.
Stale of Bomba;•
Ay;•angar, J.
1962
Ramrao Jankiram
Kadam
v.
State of Bombay
A.J.Jllntllr, J.
330 SUPREME COURT REPORTS [1963] SUPP.
the sale void.
In the rest of this judgment, therefore,
we shall confine our attention to the sale of the three
plots bearing Su,rvey Nos. 35, 40 and 80 which were
purchased by the Government for a nominal bid of
Ke. 1/-.
The relevant facts in relation to the sale of these
three plots were
these:. In J anua:ry 1934 the
Mahalkari of Edalabad brought to the notice of the
Collector of East Khandesh that an amount of over
Rs. 9,000/- was due in respect of excise transactions
from the plaintiff and his father and he pointed out
that the amount remained unrecovered notwithstanding that the defaulter's movable property was put up
for sale eighteen times and his immovable property
eight times. He 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 August 30, 1933,
might be applied to them. The procedure indicated
was that contained in a Government resolution in the
Revenue department bearing No. 474 of 1933 that
"if defaulters were contumacious the Collector would
have authority to purchase on behalf of Government
the defaulter's property on a nominal bid." By this
letter the Mahalkari desired to have the permission
of the Collector to make a nominal bid of Re. 1/- at
the next auction of the defaulter's property. The
principal question raised in this appeal is whether or
not the procedure indicated in this resolution is in
accordance with the provisions of the Land Revenue
Code. Before continuing the narrative it is necessary
to refer to a further resolution No. 4135 of April 16,
1936. which ran :-
"The procedure of purchasing on behalf of
Government a defaulter's property by offering a
nominal bid should be adopted in order to effect
a speedy recovery of (}ovemment d\les in c<l;Ses
where a real difficulty is experienced 1n makmg
l S.C.k.
SUPREME COURT REPORTS
331
such recoveries and no purchaser is forthcoming
to buy the land ........ .It should not be adopted
except as a last resort when various remedies
for the recovery of dues have failed or unless it
is clear that bidders arc deterred from offering
bids by other reasons than purely economic
considerations."
The reason for the adoption of this procedure was
stated to be that it would produce a good deterrent
effect and would put a stop to any obstructive tactics
on behalf of defaulting licensees.
The permission sought was granted by
th~
Collector enabling the 'lVIahalkari lo bid at the auction.
Thereafter the .Mahalkari intimated the defaultersthe plaintiff and his father that if no bidder came
forward at the time of the public auction-sale and
nobody bid, the lands mentioned in the proclamation
would be sold at a nominal price of Re. 1/- and it
was after this notice that the purchase by Government
on the above terms was effected. The sales were
held, no stranger bid at the sale and thereupon the
:tvlahalkari acting under the resolution of Government
and the
terms of the permission granted by the
Collector, made a nominal bid of Re. l /- for each lot
on behalf of the Government and the bids
were
accepted and thereafter the IBles were confirmed.
The validity of the sale was attacked before us
on several grounds : (J) that under r. 128 the Collect~r "".as bound to have fixed an upset price and that
~1s fa1!ure to do.so rei_idered the sale void., (2) Rather
mcons1stently with. this that the Collector had actually
fixed an upset pnce and that in the face of this
fixation the purchase by the Mahalkari on behalf of
!he Government for a nominal sum of Re. 1/- was
illegal and rendered the sale void., (8) that on the
terms ~f section 171, the sale-price had to be paid for
at the time of the sale and that as this was not done
the sale-officer was statutorily bound to have put up
1962
Rtimra" .T•nkir4m
lladam
v.
Sttite of Bf.m1bay
Ay}'angar, J.
1962
Ramrao Jankiram
Kadam
v.
State of Bon.bay
Ajyangar, J.
332 SUPREME COURT REPORTS [1963] SUPP.
the property for sale again, ( 4) that ss. 172 and 173
laid an obligation on the purchaser to deposit 25
per cent of the sale-price immediately the bid was
knocked down and further required him to pay the
balance within 15 days thereafter and also prescribed
the consequences of default, viz., the sale shall be
avoided and that a resale shall take place and that
in the present case the Mahalkari who bid on behalf
of the Government, or the Government itself had not
made either the deposit or the final payment with the
result that the purchase stood automatically cancelled
by reason of that default and ( 5) that the purchase
by the Government on a nominal bid of Re. 1/- was
not a sale by public auction as was contemplated by
s. 167 of the Code and in consequence the sale was
void and that no title passed by reason of that sale.
As regards the first four of the objections set out
above, they have, in our opinion, no substance on the
facts of the present .::ase. We do not however consider
it necessary to deal with them because they were
raised for the first time in this Court and they involve
questions of fact which were not the subject of pleading or investigation in the Courts below. We intimated to the learned Counsel that we would not
permit him to urge those grounds before us. It is
only the last of these grounds that therefore requires
to be considered.
This raises a question of some importance in
the law relating to revenue sales. The question of
the validity of such sales was raised before the High
Court of Bombay on an earlier occasion and the
judgment of the Court is reported in Tumdu Dhansing ·v. Government for tke Province of Bombay (').
The Court was then concerned with an auction-sale
conducted by the Mamlatdar--a revenue officer of
the Government by which a property of a substantial
value belonging to a surety for a toll-contractor was
sold to the Rt:venue-Patel acting for and on behalf of
the government for a nominal sum of Re. 1/-. The
(I) I. L. R, 1947 Bom. 75.
1 S.C.R. SUPREME COURT REPORTS
333
i:ontractor was in default and for the recovery of the
amount due from him the provisions of Ch. XI of
the Bombay Land Revenue Code became applicable.
Several attempts were made to sell the property of
the defaulter and the reserve prices which were fixed
for the lots were never reached. Subsequently at the
next auction when no bids were forthcoming, the
Patel acting under the orders of the Collector made a
bid on behalf of Government, of Re. I/- for each lot
and this was accepted by the Mamlatdar who was
conducting the auction, and this sale was confirmed
later by the Collector and possession was thereafter
taken of the property thus purchased. It was the
validity of this sale that was challenged in a suit
filed by the defal)lter.
Support for the validity of
the sale was sought in the resolutions of the Government of 193:~ and l 93fi which we have extracted
earlier.
On the facts of the case before the Court
there were certain special features to which attention
was drawn by the learned Judges : ( l) The first was
that the proclamation of sale set out that a reserve
price had been fixed and where a sale was subject to
such a condition, "the conditions of sale'' which arc
prescribed by the rules made a special provision
invalidating the acceptance of bids below the reserve
price, (2) there was no evidence that the defaulter
had been served with any special notice that the
different procedure of the purchase for a nominal
price by government would be resorted to.
Though
the learned Judges pointed out these two features the
re'.1soning by which they held the sale void rested on
w~der grounds.
Stone C. .J. speaking for the Court
said:
"The production of the nominal one rupee for
all the J?ropcrty, cannot be regarded as bid at
a~ auct10n sale for property lotted into five lots
with a separate reserve price on each
Tl
d '
· l' h
·
le
wor
nomma s ows that there was nothing of
substance about the offer ;iml the endorsem~nts
1962
Ramrao Jankiram
Kadam
v.
State of Bombay
AyyangaT, J.
1962
Rllmrao Jankiram
K11dam
v.
State of Bombay
334 SUPREME COURT REPORTS p963] SUPP.
and formalities by which an attempt was made
to give some semblance regularity to what
was done cannot in my opinion cloak in legal
guise that which was nothing better than a
device to vest the appellant's property in a
Revenue Officer holding on behalf of Govern·
ment. The Bombay Land Revenue Code
contains no power either to forfeit or to fore·
close a defaulter's property. Yet the scheme
formulated by the Resolutions referred to at
the commencement of this judgment aims in
effect at bringing about such a result, for, if
effective it would achieve the extinguishment
in favour of Government of all the appellant's
rights and ownership in his land. In my judgment what took place at the alleged auction
sale was of no eJfoct and did not give to the
Revenue Patil or to Government any right,
estate or interest in the appellant's proprrty."
When the present appeal was before the learned
Judges of the Bombay High Court it was pressed
before the Division Bench which heard the appeal
in the first instance that the reasoning of. the decision
in Tumdu Dhansing v. Government for the Province
of Bombay (') governed the present case also and
entitled the plaintiff to succeed and that the appeal
should be dismissed.
The learned Judges observed:
"It must be concede~ that if the decision in
Tumdu Dhansing v. Government for the Pro·
vince of Born bay represents good law, the decision of the trial Court is correct".
They however, went on to say :
"With respect however, to the learned Judges
who decided that case (Tumdu Dhansing v.
Government for the Province of Bombay) we
find gteat difficulty in understanding the ~easo~
ing and doubt whether the conclus1on
1s
correct".
(I) I. L. R. 1947 Bom. 75.
1 S.C.R. SUPREME COURT REPORTS
335
They therefore suggested a reference to a Full Bench
for an answer to the question :
"Whether when at a sale held under s. l ii3 o! the
Bombay Land Revenue Code the land is purchased bv the Government under a nominal bid
the sale is either void or voidable".
The learned Judges of the Full Bench however without deciding whether the decision in Tnn,du Dhansiny v. Goncrnment for the Pro1,ince of Bombay (')
was right or wrong, upheld the sale in the present
case on certain distinguishing features : (l) the sale
proclamation in the present case did not fix a reserveprice and therefore there was no purchase for a
nominal sum in disregard of the price so fixed, (:!)
Before the bid for a nominal sum and a sale by the
acceptance of such a bid notice had been given to
the defaulter stating that the Government intended
to pursue that course.
Though on these grounds
they held the sale not to be void, the learned Judges
proceeded to point out that this practice of purchasing
property for nominal bids was neither fair nor equitable. With this answer the case came back to the
Division Bench where the appeal hy the defendant
was allowed.
Th" <JUCstion
now for our consideration is
whether a sale for a "nominal" bid of Re. 1/- is "a
sale by auction" within the provisions of the Bombay
Land Revenue Code. Before rnt"ring on ii discussion
of the relevant provisions i L is necessary to state that
the Government Resolutions of l!l:{;3 and 193() do not
purport to have ancl have no statutory force at all.
They cannot authorise or render valid the transaction
if otherwise it lacked a legal basis.
A further matter
which requires to be poi'ntcd out is that para. (4) of
r. 129, already set out, which authorises the purchase
~y Gov?rnment for a nominal price was added only
m 19-Hl long after the sales in the present case a11.d
cannot serve as ail\' basis for sustaining the validitv
(I) l. L. R. 1947 Born. 75.
1'62
Ramrao Jankiram
Kadam
v.
State of Eumba_v
A)'.vangar, J.
1962
RtJmrao Jankiram
Kadam
v.
State of Bombay
A_vyan,~ar, J.
336 SUPREME COURT REPORTS [1963) SUPP.
of the sale. In the circumstances it is not necessary
to consider the scope or validity of this rule or its
legal efficacy for authorising such a sale or purchase.
It is common ground that the power of Government to effect a sale by summary process for the
recovery of amounts due to them has to be gathered
from the four corners of Ch. XI of the Code read
in conjunction with the relevant rules in Ch. XVIII.
Section 155 of the Code enables the Collector to cause
the right, title and interest of the defaulter in the
immovable property to
be sold.
The manner in
which those sales might take place is provided for by
s. Hi7 which enacts that "sales shall be by public
auction by such person as the Collector may direct."
Leaving aside for the moment the provisions which
detail the procedure to be followed in the conduct
of these sales, the point to be observed is that the
realisation of the dues has to be by "sales" by public
auction to be held in the manner prescribed.
This
therefore does not and cannot authorise a forfeiture of
tl)c immovable property of a <lefaulter because of his
contumacious conduct in not paying up his dues when
demanded.
Nor does the Land Revenue Code
contemplate or provide for
any punishment of
defaulters because of their conduct in either not
paying up their dues or in not facilitating the realisation of the dues payable by them by co-operating
with the Government and securing a proper price
for their property such as would be sufficient for the
discharge of their dues.
While on this point it might
be interesting to point out that s. 58 of the Revenue
Sale Law (Bengal Revenue Sale Law) Act 11 of
18/i!) enacts :
"When an estate is put up for sale under this.
Act for the recovery of arrears of revenue due
thereon, if there be no bid the Collector or
other officer as aforesaid may purchase the
estate on account of the Government for one
..
rupee ................. .
I S.C.R.
SUPREME COURT REPORTS
337
There is no provision corresponding to this in the
Bombay Code. The question then arises whether a
purchase for a pre-determined nominal price of rupee
one for property, whatever its actual market value,
is a sale by public auction within s. 167 of the Code.
An auction has been described as "the proceeding at
which people are invited to compete for the purchase
of property by successive offers of advancing sums"
and a sale by auction is a means of ascertaining what
the thing is worth, viz., its fair market price. If at
the sale there are no bids there cannot be a sale. A
sale for a predetermined nominal sum cannot, in our
opinion, be held to be a "sale by public auction" in
the absence of any provision for such sales in the
statute. Such a sale appears to us to be somewhat
analogous to what Sir Richard Couch described,
though in a slightly different context. "The offer and
acceptance of a rupee was a co lourable attempt to
obtain a title without paying for the land. Virtually
it was a present which it was not open to the authorities to make". (vide Luchmeswar Singh v. the Chairman, of the Darbhanga Municipality('). It may not also
be out of place to point out that it is the Collector who
on behalf of Govermnent sets in motion the machinery
for the realisation of the arrears by bringing the
defaulter's property to sale and it is he who is by the
Land Revenue Code invested with the power to make
. arrangements for the sale and s. 178 constitutes him
the authority to determine judicially any allegation
about the irregularity in the conduct of the sale.
In
these circumstances it looks to us somewhat anomalous
that the Collector should of his own motion· and
without the authority of any statutory power claim
the right to bid at the auction which his deputy is
conducting on his behalf for the realisation of the
dues which he as the executive authority is to recover
and particularly when he is constituted the authority
to consider the validity or irregularity in the auction
conducted at his instance and the purchase made at
his instance.
(!) (1890) I. L. R. 18 ('al. 99, 106.
1962
Ramrao Jank iram
Kadam
v.
Slatt of Bombay
A.yyangar, .f-
•
1962
RamrtW J ankiram
Kadam
v.
State of Bombay
Ayyangar, J.
338 SUPREME COURT REPORTS [1963] SUPP.
The next question for consideration is whether
the fact that the defaulter was appraised that Goverriment would bid for a nominal sum of one rupee for
the property at the auction renders the sale valid.
We do not find it easy to discover the precise legal
basis upon which prior notice to the defaulter woulC:
have the effect of validating the sale. If a sale for
a nominal bid of one rupee were "a sale by public
auction" within s. 167 of the Code, notice to the
defaulter that such a procedure would be followed
would be legally unnecessary and would not add to
the legal efficacy of the sale. If, on the other hand,
such a sale or a sale in such circumstances was not a
sale by public auction then notice to the defaulter
could be of value only if (a) it operated as a waiver
of the requirement of s. 167, or (b) created an estoppel
which precluded him from questioning the legality
of the proceeding. First as to waiver, the power of
Government to effect the sale by summary process
is a special provision resting on public grounds and
being so very special it is clear that the limitations on
the power thus conferred should be strictly construed.
In our opinion, it is an essential condition of the passing of property from the defaulter in invitem that
there should be a sale by public auction and if a sale
in the manner in which it has been conducted in the
present case does not amount to a sale by public auction there is no question of the title to property
passing by virtue of such a sale. The plea of waiver
cannot therefore be of any avail.
Nor is there any basis for any argument that by
reason of the notice the defaulter is estopped from
questioning the legality of the sale. If waiver cannot
cure the defect there is still less scope for invoking
the rule as to estoppel, for the essential condition of
estoppel, viz., representation by the person sought to
be estopped and prejudice to the person seeking the
benefit of the rule, would both be absent. We therefore
1 S.C.R.
SUPREME COURT REPORTS
339
come to
the conclusion that the fact that the
defaulter was informed that the Government would
make a nominal bid of rupee one and purchase the
property is really irrelevant for considering the vali ·
dity of the sale.
The conclusion we have indicated earlier is in
accord with the decision of the Bombay High Court
in Tumdu Dhansing v. Government for the Province
of Bombay(') and we consider that that case is correctly decided. We are further of opinion that the ratio
of that decision would also cover the case where
notice was served on the defaulter of the Govern.
ment's intention to purchase the property for a
nominal price.
Learned Counsel for the respondent raised several defences besides seeking to support the judgment
of the High Court on the reasoning of the learned
Judges and sought to sustain the impugned sale ·on
various grounds. His first submission was that the
sale was at the worst irregular which rendered it
voidable and that no suit having been brought within
one year of the sale, the suit was barred by Art. 11
of the Indian Limitation Act. We consider however
that there is no substance in this contention because
if, as we hold, a sale of the type now impugned was
not authorised by the statutory provision in that
regard then it was not a question of any mere irregularity in the conduct of a sale but a case where there
was no sale at av with the consequence that no property passed from the defaulter. It was not disputed
that Art. 11 of the Indian Limitation Act would only
apply to a case where there is need for the setting
aside of a sale and that it has no application to cases
where no sale as contemplated by law has
taken
place.
It was next submitted that the appellants' suit
was barred by ss. 4 (c) and 11 of the Bombay Revenue
(I) I. L. R. 1947
Born. 75.
ass -
/
1962
Ramrao J ankirtzm
Kadam
v.
State of Bombay
Ay)'angar, J,
1962
Ramrao J ankiram
Kadam
v.
State of Bombay
Ayyangar, J.
340 SUPREME COURT REPORTS [1963] SUPP.
.Jurisdiction Act, 1876. Section 4(c) runs:-
"4. Subjec.t to
the exceptions
hereinafter
appeanng, no Civil Cuurt shall exercise
jurisdiction as to any or the
following
matters:
(a)
(b)
(c) ...................................... .
claims to set aside, on account of
irregularity, mistake or any other
ground except fraud, sales for arrears
of land-revenue;"
and s. 11 enacts:
"11. No Civil Court shall entertain anv suit
against the Government on account of any
act or omission of anv Revenue-Officer
unless the plaintiff first proves that previously to bringing his suit, he has presented all such appeals allowed by the law
for the time being in force, as within the
period of limitation allowed for bringing
such suit, it was possible to present."
As to the applicability of s. 4 (c), it would be noticed
that resort to the Civil Courts is barred only a~
regards certain specified classes of suits in which the
validity of sales for arrears Land Revenue are
impugned. The classes so specified
arc those in
which
the plaintiff seeks to set asic'e a sale on
account of irregularities etc., other than fraud.
The
provision obviously assumes that there is in existence
a sale though irregular under which title has passed
to the purchaser and that that sale has to be set side,
on grounds other than fraud, before the plaintiff can
obtain relief.
Where however
th< re
is only a
purported sale which does not pass title and· the
suit is for recovery of possession of property 1gnormg
•
!!
.,
I S.C.R.
SUPREME COURT REPORTS
341
such a sale, the provision and the bar that it creates
have no application.
Nor is there any scope on the facts of the present case to attract the application of s. 11.
The
section is based on the principle that a party must
exhaust the remedies provided by the Act before he
can seek the assistance of the Civil Court in respect
of a claim against the Government. It therefore
posits three matters before its protection could be
invoked. ( l) There must be an act or omission of a
revenue ollicer which gives rise to a claim against the
Government; (2) the Act must provide for appeals
against the said act or omission; and (3) lastly the
party should have failed to avail himself of the remedy
by way of appeal to obtain redress for his grievance.
The only "act" of which, on the facts, the appellant
could be said to complain would be the direction by
the Collector authorising the Mahalkari to offer the
nominal bid of Re. 1/- and purchase the property.
The question that next arises is whether the Statute
had provided an appeal against this "act". It was
admitted that there was no such specific provision.
Learned Counsel for the respondent however drew
our at1ention to s. 203 of the Bombay Land Revenue
Code.
"203. In the absence of any express provision
of this Act, pr of any law for the time being in
force to the contrary, an appeal shall lie from
any decision or order passed by a revenue officer
under this Act or any other law for the time
b.cing in force, to ~hat ol.Ii.cer's immediate supenor, whether SUC<1 decision or order may itself
have been passed on appeal from a subordinate
offi.cer's decision or order or not."
In the presc11t ~ase .however, there was no order by
any authonty wh1~h. cm~l? be the subject of any
appeal under s.
203.
1 he Collector authorised
administratively the .Mahalkari to offer the bid and
that is certainly not "a decision'' which is capable or
1962
Ramrao Jank i Tam
Kadam
v.
State of Bombay
Ayyangar, J,
1962
Ramrao Jankiram
Kadam
v.
State of Bombay
Ayyangor~ J.
342 SUPREME COURT REPORTS [1963] SUPP.
appeal within s.