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Judgment
P. Chandra Reddy, C.J.
(1) This appeal arises out of an auction of the property, the subject matter of this appeal held on 12-9-1965. The suit was filed by respondents 1
to 4 for the administration of the estate of one Abdul Hameed, who died on 1-7-1963. Pending the suit the plaintiffs and the mortgages of some of
the properties belonging to the estate of Abdul Hameed applied to this court for the sale of the Maharaja Talkies, which is the Property involved in
the present appeal. This was ordered on 26-4-1965 and Murray and Co., Madras, the auctioneers were appointed Commissioners for the
purpose. This auction was subject to confirmation by court. Pursuant to the order of the court the auction was hold on 12-9-1965, and the
property was sold to the 9th respondent for seven lakhs of rupees, he being the highest bidder. It may be mentioned here that pursuant to the terms
of sale, the 9th respondent deposited Rs. 5000 in cash and passed a cheque for Rs. 1,70,000.
(2) It is convenient to extract here the condition relating to the deposit by the highest bidder:
Condition No. 5. The highest bidder shall pay into the hands of the auctioneers, immediately after the lot is knocked down, a deposit of Rs. 25
per centum on the highest bid amount and shall sign a copy of the conditions of sale acknowledging the bid and shall pay the residue of the
purchase money to the auctioneers, within 15 days from the date of confirmation of sale"".
The auctioneers, who are satisfied with the solvency of the highest bidder, accepted the cheque and immediately submitted a report to the court
setting out these facts and requesting the court to accept the bid.
(3) Before this bid was accepted by the court, the application giving rise to this appeal, was filed by defendants 3, 4 and 5 who have 9/24 share in
the estate alleging inter alia that the acceptance of cheque as deposit was contrary to the conditions of sale and that this facility was not made
available to the other prospective bidders.
(4) In support of this application three other persons filed affidavits suggesting that this was a facility afforded only to the 9th respondent, and that if
the other bidders had been given the same facility they would have given higher bids. The learned Judge, disbelieving the story set up in the
affidavits of third parties, that they would have been willing to offer higher bids if they were permitted to make the deposit in cheques, came to the
conclusion that the deposit by cheque complied with condition No. 8, dismissed the petition of the appellants and later on he seems to have
accepted the bid is per condition No. 1 of the conditions of sale which says.
The property is sold pursuant to the order of court and the highest bid is subject to acceptance by court. No person shall advance a less sum at
each bidding than shall be named by the Auctioneers"".
It is this conclusion of the learned Judge that is assailed before us.
(5) It is urged by Mr. Ramaswami in support of this appeal that the issue of a cheque did not amount to deposit within the contemplation of
condition No. 3. He says that condition No. 3 envisages payment in cash and it was not competent for the Auctioneers to accept anything other
than cash in coin or in currency. As supporting this proposition he cited the decision in Williams v. Evans, (1866) 1 QB 352. We do not think that
this ruling advances the case of the appellants in any way. On the other hand, it furnishes an answer to the argument advanced by Mr. Ramaswami.
In that case, Blackburn J. ruled that the payment was made to the auctioneer by a bill of exchange after his authority for receiving the money on
behalf of the owner of the property was revoked. It was for that reason it was held there that the payment to the auctioneer did not discharge the
purchaser. Said the learned Judge, (at page 354):
If the bill had become due and been paid before the authority of the auctioneer to receive payment had been revoked, it would have amounted to
much the same thing as cash. In the present case, the authority was revoked after the bill was given, but before maturity, that is before the
auctioneer received cash for the sum of pound 15, 7 Sh.
In that case the bill of exchange was said to have been given to the auctioneer two days before the due date and the bill of exchange was actually
cashed after the due date. Reference is made in that case to Thorold v. Smith, (1706) 11 Mod Rep. 87 in which payment was made in the city by
a goldsmith''s note to a servant sent by his master to receive money and Holt C. J. said:
He thought it more a matter of evidence than of law, and any jury in Guildhall would find payment by a bill to be a good payment, it being the
common practice in the city"".
It is manifest from this judgment that there would be no obstacle in the way of receiving payment by cheque as quite the same thing as cash, and,
therefore, there is nothing irregular in the auctioneers accepting a cheque especially when they were sure of the solvency of the bidden.
(6) Blumberg v. Life Interests etc., Corporation (1897) 1 Ch. D. 171, is not of much assistance to the appellants as it deals with the authority of
mortgagee''s solicitor to tender the mortgage money by cheque. In that case, the tender was partly in cash and partly in cheque made under protest
and this was not accepted with the result that the property was brought to sale. On these facts, the learned Judge held that there was no sufficient
tender and that no injunction could be granted.
(7) That issuing a cheque is as good as payment in cash appears from the judgment of a Division Bench of the Bombay High Court in Kirloskar
Bros. Ltd. Vs. Commissioner of Income Tax, Bombay, , Chagla C. J. who spoke for the court, observed (at p. 91 (of ITR): (at p. 308 of AIR)).
It is also well settled in commercial practice, as I shall presently point out, that a cheque is looked upon as a payment if a creditor accepts a
cheque in place of the country''s currency"".
The learned Judge in support of this conclusion of his referred to a passage in Benjamin on ""Sale of Personal Property"" at page 189 of the 8th Edn.
Which runs as follows:
...... a man who prefers a cheque on a banker to payment in money is not considered as electing to take a security instead of cash, for a cheque is
accepted as a particular form of cash payment, and if dishonoured, the seller may resort to this original claim on the ground that there has been a
defeasance of the condition on which it was taken"".
He also referred to Byles on ""Bills of Exchange"" at page 23 of the 20th Edn, which enunciated the position in law that ""a cheque, unless
dishonoured, is payment"".
(8) If I may say so with respect, the decision in Kirloskar Bros. Ltd. Vs. Commissioner of Income Tax, Bombay, , sums up the law on the subject
correctly. We express our respectful accord with it.
(9) It is too much to contend that a payment by cheque is not a good payment having regard to the present day practice prevailing in big cities like
Madras. That apart, here it is clear from the affidavit of one of the partners of Murray and Co., that the auctioneers told the intending purchasers
that they would receive a part of the deposit in cash and the balance in cheque provided they were satisfied about the solvency of the bidders, in
view of the fact that the bid was likely to run into several lakhs and bidders ""may have difficulty and may feel diffident to take risk to bring a huge
amount, viz., a lakh or two to the auction place"". This statement of Srivatsa, one of the partners, appealed to the learned Judge and rightly so in our
opinion. We have no hesitation, in agreement with the trial Judge, that the allegation contained in the affidavit of D. V. Narayanaswami cannot be
accepted. Although he professes to have given a bid for six lakhs of rupees, the bidders'' list filed into court discloses that he was not one of the
bidders. Much value cannot be attached to the statement of Rama Vellayan as he was admittedly not a bidder. As regards K. V. Sundaravelu,
who now claims that the same facility was not extended to him, suffice it to say that he had attested the bidders'' list which was prepared after the
highest bid was accepted. If really there is any truth in the present version of his, he would have made an endorsement of his grievance on this
bidders'' list. The story as revealed by him in his affidavit also looks very artificial. It is worthy of mention that the other parties who own 15/24
share in the estate not only do not dispute the validity of the bid, but they want this bid to be accepted.
(10) For these reasons, we feel that there is no justification for us to interfere with the order under appeal. In the result, the appeal fails and is
dismissed with costs.
(11) CJ/VGW/D.V.C.
(12) Appeal dismissed.