CHINNAMMAL & 4 ORS. versus P. ARUMUGHAM & ANR.

Citation: [1990] 1 S.C.R. 78 · Decided: 17-01-1990 · Supreme Court of India · Bench: K. JAGANNATHA SHETTY · Disposal: Appeal(s) allowed

Cited by 3 judgment(s) · cites 2 · see the full citation network in Lexace

Judgment (excerpt)

A 
CHINNAMMAL & 4 ORS. 
v. 
P. ARUMUGHAM & ANR. 
~
JANUARY 17, 1990 
B 
[K. JAGANNATHA SHETTY AND T.K. THOMMEN, JJ.] 
Code of Civil Procedure: Section 144 and Order 21 rules 89-91: 
Setting aside court auction sale--Decree holder who purchases the 
property and auction purchaser who is not party to the decree-Rights 
and liabilities of. 
c 
Respondent No. 1 obtained a money decree against the original 
appellant, who has been substituted by legal heirs, on the basis of a 
promisory note. The appellant app.,aled to the High Court but could not 
get the decree stayed because he was unable to furnish security for the 
decretal amount. The decree was put into execution notwithstanding 
D the peudeucy of the appeal, and two items of appellant's properties 
were purchased by respondent No. 2 at the court sale. Later, the High 
Court allowed the appellant's appe11l on merits and set aside the decree. 
Thereupon, the appellant moved the executing court for setting 
aside the court sale inter alia on the ground that (1) the sale was vitiated 
E 
by material irregularities and properties were deliberately sold for 
under value; (2) the sale was collusive between decree holder and the 
auction purchaser; the latter, being the sambandhi of the former, was 
just a name lender; and (3) since the decree had been reversed, the sale 
should be nullified and restitution should be ordered. The executing 
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court rejected these contentions and held that subsequent reversal of 
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the decree collld not be depended upon since the sale had been con-
.., 
firmed in favour of the auction purchaser who was a stranger to the 
/ 
litigation. The learned Single Judge of the High Court, however, 
allowed the appellant's appeal and held inter alia that (a) the sale was 
vitiated by material irregularities r'esulting in fetching a low price; and 
(b) the decree holder and auction purchaser were close relatives and the 
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sale seemed to be collusive. But on .appeal, the Division Bench reversed 
the decision of the learned Single Judge. 
Allowing the appeal, this Court, 
' 
HELD: (1) A distinction is maintained between the decree holder 
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who purchases the property in execution of his own decree which is 
78 
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.. 
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CHINNAMMAL v. P. ARUMUGHAM 
79 
afterwards modified or reversed, and an auction purchaser who is not 
party to the decree. [84E] 
(2) Where the purchaser is a decree holder, he is bound to restore 
the property to the judgment debtor by way of restitution but not a 
stranger auction purchaser. The latter remains unaffected and does not 
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lose title to the property by subsequent reversal or modification of the 
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decree, and could retain the property since he is a bona fide purchaser. 
This principle is also based on the premise that he is not bound to 
enquire into correctness of the judgment or decree sought to be 
executed. He is thus distinguished from an eonomine party to the 
litigation. [84E-F] 
Janak Raj v. Gurdial Singh, [1967] 2 SCR 77 and Sardar Govin-
drao Mahadik v. Devi Sahai, [1982] 2 SCR 186, referred to. 
c 
(3) The true question in each case is wheth~r the stranger auction 
purchaser had knowledge of the pending litigation about the decree 
under execution. If it is shown by evidence that he was aware of the 
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pending appeal against the decree when he purchased the property, it 
would be ina11propriate to term him as a bona fide purchaser. Indeed, 
he is evidently a speculative purchaser and in that respect be is in no better 
position than the decree holder purchaser. [ 85B-C] 
Chhota Nagpur Banking Association v. C. T.M. Smith, [1943] 
E 
Patna 325 and Jamnomal Gurdinomal v. Qopaldas, AIR 1924 Sind 
IO l, referred to. 
R. Raghavachari v. M.A. Pekkiri Mohomed Rowther, AIR 1917 
Mad 250, overruied. 
( 4) Similarly, the auction purchaser who was a name lender to 
the decree holder or who has colluded with. the decree holder to pur-
chase the property could not also be protected to retain the property if 
the decree is subsequently reversed. [86B] 
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(5) The Code of Civil Procedure is a body of procedural law 
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designed to facilitate justice and it should not be treated as an enact-
ment providing for punishment and penalties. The laws of procedure 
', · · 
should be so construed as to render justice wherever reasonably 
possible. [87 A-BJ 
Rodger v. The Comptoir De Paris, [1869-71] LR 3 PC. 465 at 475 
H 
A 
B 
80 
SUPREME COURT REPORTS 
[1990) 1 S.C.R. 
and A.R. Antulay v. R.S. Nayak, [1988] 2 SCC 602, refer

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