MUHAMMAD ISHAQUE Versus IRSHAD ALI
1. Section 64, C. P. C. provides as follows :‑
2. "Where an attachment has been made, any private transfer or delivery of the property attached or of any interest therein and any payment to the judgment‑debtor of arty debt, dividend or other monies contrary to such attachment, shall be void as against all claims enforceable under the attachment.
3. Explanation.‑For the purposes of this section, claims enforceable under an attachment include claims for tee rateable distribution of assets."
4. In the instant case the house belonging to the judgment‑debtor was attached in execution of the decree against him on the 1st December 1956. Before that, on the 20th October 1956, a decree for possession of this house by a specific performance of the contract had been passed in favour of the respondent against the judgment. debtor. A sale deed in pursuance of this decree was duly executed by the Court on the 15th December 1956. The respondent, who had secured the sale deed objected to the attachment under Order XXI, rule 58, C. P. C. but his objection was dismissed. He then brought a suit under Order XXI, rule 63, C. P. C. for a declaration which was decreed in his favour and against the appellant‑decree‑holder on the 27th January 1960. It was held on the authority of Yeshvant Shankar Dunkhe v. Pyaraji Nurji Tamboli A I R 1943 Bom. 145, that this was not a private sale but was a sale in execution of the decree of the Court and as such the bar of section 64, C. P. C. was not attracted to it.
5. This finding was maintained by Captain Muhammad Daud Khan, Additional District Judge, Lahore, viae his judgment dated the 6th June 1964.
2. The only question in this case is whether the sale in favour of the plaintiff‑respondent amounts to a private transfer of the property attached.
3. A decree for a specific performance of contract contemplates an agreement to sell and the cause of action is based on the refusal of the person contracting to sell, to abide by the contract. In such circumstances, the Court intervenes and by a decree for a specific performance directs the person so contracting to complete the sale, inter alia, by execution of the sale deed. In case of his default, the sale deed can be executed by the Court on behalf of the defendant who had agreed to sell the property. It is thus clear that although the agreement to sell is the result of a private arrangement and a private treaty but there is some indicia of compulsion by Courts in the actual sale although while executing the sale deed the Court steps into the shoes of the defendant and acts on his behalf. Order XXI, rule 34, C. P. C. which deals with execution of a decree for a specific performance of a contract shows that the Court while executing the document acts for the defendant. It is further provided there that in case of default by the judgment‑debtor the decree‑holder has to prepare a draft in accordance with the terms of the decree and deliver the same to the Court. The Court has to serve this draft upon the judgment debtor together with a notice requiring his objections, if any, to be made. It is only after such notice that the deed is to be executed by the Court on a proper stamp‑paper and it is to be registered if it requires registration. The procedure provided in this rule is different from the procedure of sale in execution of other decrees.
4. The authorities relied upon by the learned Courts below do support the case‑ of the plaintiff respondent. In A I R 1943 Bom. 145 it was held that where prior to the attachment of the property an agreement to sell or of sale has been executed by the judgment‑debtor, the decree for specific performance and subsequent sale, even though it is made after the attachment, prevails against the attachment. In A I R 1932 Born. 301, the same view was taken and it was held that if after the decree for a specific performance of agreement to mortgage the property, the same is attached, the decree for specific performance and‑subsequent sale prevails against the attachment. Some High Courts, including the Bombay High Court, have gone to the extent of holding that section 64 does not affect a transfer in pursuance of the contract entered into prior to the attachment. See Ghusaram and others v. Parashram and others A I R 1936 Nag.
163. In a Rangoon case Maung San Pwe and another v. Hamadanee and others A I R 1925 Rang. 382, this view was upheld. It was held that where under the contract of sale possession ‑had been delivered to the promisee prior to the attachment, the beneficial interest stood transferred before attachment and conveyance of legal title after attachment is not affected by section 64. The Calcutta High Court in Madan Mohan De Sarkar and others v. Rebati Mohan Poddar and others A I R 1916 Cal. 927, was of the view that the contract of sale created interest to the ownership of the property under section 40 of the Transfer of Property Act and that the attachment and sale must be deemed to have been made of the property only subject to such obligation. But the same Court in Tarok Nath Mukerjee v. Sanat Kumar Mukerjee and others A I R 1929 Cal. 494, held as follows :‑
6. "As the agreement to sell entered into before attachment does not create any interest or charge on the property, it cannot prevail against attachment."
7. Reliance was placed for this upon section 54 of the Transfer .of Property Act. It was further held that section 40 referred to an obligation only which did not amount to an interest in the property. The above case was explained as having been decided do the principles of natural justice. The High Court of Lahore had taken the same view as in the later Calcutta case on the basis of Order XXI, rule 54, C. P. C. which prohibits a private transfer during attachment. Reliance was placed before the Court on the Madras and Calcutta cases, but they were distinguished. Madan Mohan De Sarkar and others v. Rebati Mohan Poddar and others and S. Sitaiya v. Mudargaddi Sanyasi and another A I R 1924 Mad. 610 were distinguished on the ground‑that the alienations there were net private transfer, but were' made in pursuance of the decree for specific performance.
5. The nature of the suit and decree for specific performance of contract has been considered in a large number of cases relating to exercise of right of pre‑emption. There are provisions in various Statutes relating to the right of pre‑emption saving involuntary sales from the right of pre emption. But even before such a Legislation the Courts had found against the accrual of the right of pre‑emption in case where the sale was not an act of volition on the part of the transferer. In Chikhoree Singh v. Hukeem Nujuf Ali 1854 N W P S D A Rep. 40, it was .held that Con, t sales were not subject to pre‑emption for the reason that‑
8. "The right of pre‑emption supposes an act of volition on the part of the vendor, a principle inapplicable to a transaction of compulsory sale made by any authoritative order or injunction, and that the incident of a public sale creates a new element beyond the ordinary scope of such right."
9. The same view was adopted in‑
(1) Mudar Bukhsh v. Muhammad Hassan 1855 N W P S D A Rep. 597.
(2) Sah Koondun Lal v. Ram Bukhsh 1860 N W P S D A Rep. 194.
(3) Seith Luchmee Chund v. Mst. Kesur Buhoo 1855 N W P S D A Rep. 139.
(4) Baboo Ram Narain Singh v. Syed Sadik Ally (1863) Vol. 1, N W P S D A Rep. 325.
10. In Baji Nath v. Sital Singh I L R 13 All. 224, Mahmood, J., while discussing the question whether compulsory sales were subject to a right of pre‑emption, distinguished compulsory sales from the sales which are not "the result of any private contract to which the person whose property is sold is a party" and held that the first mentioned sales are the result of an authority conferred by the Legislature upon the Courts for the purposes of awarding remedies against those who have failed to perform their pecuniary obligations. The object of such sales was explained as follows :-
11. "The object of such sales is to secure satisfaction of debts by well defined means and methods calculated to achieve the object with certainty and expedition, and it seems clear that the object would be frustrated if such sales were hampered by the rules which govern private sales. The Legislature, however, in so interfering has not been heedless of the right of pre‑emption. Under the rules of procedure compulsory sales take place after a public proclamation, which, being an act of the Court or revenue authority, is taken to be sufficient notice to the pre‑emptors, along with the public at large, to come forward and purchase the property ; and it seems reasonable to suppose that those who do not appear to bid at the auction sale have no wish to purchase the property. These considerations seem sufficient to render the ordinary ,law of pre‑emption inapplicable to sales by public auction in execution of decrees, and this view has received judicial sanction."
12. In Ramnath and others v. Narayan A I R 1932 Nag. 44, while interpreting the‑ word "sale" in section 205 of the Berar Land Revenue Code, which confers a right of pre‑emption, Niyogi A. J. C., was of the view that compulsory sales were not included. It was observed as follows :‑
13. "Accordingly that right springs up where there is a privity of contract between the owner, who sells, and the purchaser. The seller is incompetent to enter into contract of sale with any one unless the party having the option to purchase has had the opportunity to exercise his option ; if no such opportunity is given the purchaser is as much culpable of acting in derogation of the pre‑emptor's right as the seller. A judicial sale, however, takes place against the will of the owner and is, therefore, not the outcome of his volition. There is no privity of contract between the judgment‑debtor and the execution purchaser. The sheriff authorised by the writ simply seizes the property of the execution debtor and passes his debtor's title to it without even warranting that title to be good. Drab Ally Khan v. The Executors of Khojah Moheeooddeen I L R 3 Cal. 806. It is clear that unless the right of pre‑emption is expressly conferred by statute, the right cannot arise in respect of involuntary sales."
14. In Sheobaran Singh v. Mst. Kalsum un‑Nisa and others AIR 1927 P C 113, it was argued before their Lordships of the Privy Council that as a sale in execution was not pre‑emptible the sale by the Official Assignee should also be placed on the same footing. This argument was, however, repelled.
15. There are some cases decided by the High Court of Allahabad wherein it dealt with the question whether sale by the Court made in execution of the decree for a specific performance of the contract is "a sale in execution of a decree of a civil Court" which was not pre‑emptible under the Agra Pre emption Act. In Sahu Lal Chund v. L. Ram Chandra and others A I R 1929 All. 462, Sulaiman and Sen, JJ. considered this question and gave the following reply :‑
16. "The next question to consider is whether the case comes within the exception contained in section 6. If it can be called a sale in execution of a decree of a civil Court then by virtue of that section no right of pre‑emption can arise in respect of it. Having considered the language of the section we have come to the conclusion that the exception does not apply to this case. The expression `sale in execution of a decree' is not identical with the execution of a sale deed by the Court in pursuance of a decree. There has really been no sale in execution but the execution of a sale‑deed, because the judgment‑debtor Raushan Lal declined to execute it. We, therefore, think that there is no prohibition against the accrual of the right of pre‑emption."
17. The nature of a decree for specific performance and the sale effected in pursuance thereof was more explicitly explained in Hakim Enayat Ullah v. Khalil Ullah Khan and another A I R 1938 All. 432 and Than Singh and others v. Lakhpat Singh and others A I R 1948 All. 265. In the first case the following principle was laid down :‑
18. "The sale deed executed by a Court in pursuance of a decree for specific performance is a transfer by the Court on behalf of the judgment debtor and it is the title of the judgment‑debtor to the property that is transferred by the sale deed executed by the Court If the judgment debtor‑As precluded from transferring his property by some statutory provision, the Court cannot, in violation of that provision, execute a sale deed of the property."
19. While in the second case it was observed as under :‑
20. "The essence of a sale in the execution of a decree is that the will or volition of the judgment‑debtor does not enter into it. It is made in the exercise of statutory powers and its object is to satisfy a decree.
21. "The basis of a decree for specific performance of a contract for sale is the contract of the parties and what the Court does is only to give effect to that contract."
22. In a Calcutta case Gopi Nath Das v. Namai Charan Das and another A I R 1951 Cal. 551, the Court was held to be an agent of the promissee defendant while executing the deed. It was held as follows :‑
23. "In the first place he contended that section 26‑F, Bengal Tenancy Act would not apply to this case at all because the conveyance here was conveyance by the Court and not by a co‑sharer. It is true that in this case the conveyance or deed of sale was executed by the Court merely because the defendants had refused to carry out a decree for specific performance. The Court executed the transfer not as owner of the property as obviously the Court had no title at all. The Court merely executed this transfer as an agent as it were of the defendant and the transfer is in fact and in law a transfer by the defendant‑ who was a co‑sharer. That being so there is no substance in this contention."
24. This question came up for consideration before a Full Bench of the Lahore High Court in Nur Ahmad and other., v. B. Muhammad Ibrahim and another P L D 1953 Lah. 470. Under the Punjab Pre‑emption Act, 1913; section 3(v), sale does not include a sale in execution of a decree for money or of an order of a Civil, Criminal or Revenue Court or of a Revenue Officer. In a pre‑emption suit against the sale made by the court under Order XXI, rule 34, C. P. C., it was contended on behalf by the defendant that this was not a sale and although it was not a sale in execution of a decree for money but all the same it was a sale under the order of the civil Court. After considering the above mentioned authorities relating to pre‑emption, Kaikaus, J., who wrote the main judgment summarised the grounds for exempting Court sales from the operation of the pre‑emptive right as follows :‑
25. "(a) There is no act of party or contract to which alone the right can attach The so‑called sale is really an exercise of the power that exists in a Court to seize the property of the judgment debtor and to transfer it to satisfy an order of decree.
(b) There is an opportunity in such sale to bid at the auction.
(c) The object of such sales would be defeated if they are hampered by pre‑emption.
(d) In such sales pre‑emption has been separately provided by statute and where not provided, the provision being by presumption exhaustive the right of pre-emption is negatived.
26. When the grounds (a), (b), (c) and (d) , mentioned above are considered it will be obvious that no one of them applies to a sale deed executed by Court on account of a decree for specific performance. Although I have referred to all the various considerations pointed out in the judgments the true principle recognised seems to be that the right of pie‑emption attaches only to sales by act of parties and not to those which take place by operation of law or the special authority of a Court as stated in ground (a) above."
27. In Rangi Ram and others v. Mehr Bakhsh and others 111 P R 1919 and Genda Ram and another v. Ram Chand and another A I R 1924 Lah, 163, also it was held that such a sale is pre‑emptible.
28. The principles laid down by these authorities are that a compulsory sale is to be distinguished from the voluntary sale. In Nur Ahmad and others v. B. Muhammad Ibrahim and another the Lahore High Court was of the view that the right of pre‑emption attaches only to sales by act of parties and not to those which take place by operation of law or the special authority of the Court. The sale deed executed by the Court in pursuance of the decree for a specific performance has been, held to be a transfer by the Court on behalf of the judgment‑debtor (vide Hakim Enayat Ullah v. Khalil Ullah Khan and another). According to the principles laid down in Than Singh and others v. Lakhpat Singh and others the basis of a decree for specific performance of a contract for sale is the contract of the parties and what the Court does is only to give effect to that contract The Calcutta High Court in Gopi Nath Das v. Namal Charan Das and another found that such a sale deed is executed by the Court merely as an agent of the promisee transferor. In Nur Ahmad v. Muhammad Ibrahim the Lahore High Court distinguished the incidents of the compulsory sale from those of sale by Court in execution of the decree for performance of the‑contract, with. reference to different provisions of the Code of Civil Procedure and the Transfer of Property Act and held that such a sale is a sale by act of parties. In this connection it was observed as follows :‑ ‑
29. "The execution is to have the same effect as execution of the document' by the party ordered to execute or endorse the same. If the act of the party was to give rise to a right of pre‑emption, the act of Court on party's behalf will have the same effect."
30. In the Bombay case relied upon by the learned Courts below, the nature of the decree for a specific performance of the contract is not considered and that authority is 'therefore distinguishable. In view of the above discussion, I am of the view that a sale effected by a Court ire pursuance of a voluntary contract to sell has been made. by the Court as .an agent of the judgment debtor and on his behalf. Such a sale remains a private sale to spite of the intervention of the Court. If the sale had been effected by a person authorised by the judgment‑debtor to make it or a person having a power of attorney, it could not have been treated otherwise than as a private sale. I do not see any reason why a sale made by a Court acting as an agent of the promisee will cease to be a private sale. In my view, the sale is in contravention of the provisions of section 64 of the Code of Civil Procedure and is void.
6. The appeal is, therefore, allowed, the judgments and decrees of the Courts below are set aside and the suit of the plaintiff respondent is dismissed. As a difficult question of law is involved in this case, there will be no order as to costs.
31. K. B. A. Appeal accepted.