Sharimati Bhagwanti vs Faqir Chand Aggarwal (deceased) and others

Man Mohan Singh Gujral, J.—The plaintiff-appellant, Shrimati Bhagwanti, filed a suit for the recovery of Rs. 1,00,30. Originally the suit was only filed against Faqir Chand and Mansa Singh respondents as her claim was only against these persons, but subsequently in the course of trial the Custodian of Evacuee Properly was also impleaded and ?he plaint was amended. Though the suit was instituted as far back as the 29th March, 1954, but for some reason or the other its trial could not be brought to conclusion till the 23rd October, 1962, as during the trial a number of interim orders were assailed in revision and the proceedings were stayed by the High Court pending the disposal of those revision petitions.

Faqir Chand respondent obtained a decree against one Maula Bakhsh and in execution of that decree certain machinery originally belonging to Maula Bakhsh was attached and sold by Court auction on the 21st April, 1948. The machinery was purchased by Faqir Chand and Mansa Singh respondents. On the 8th July, 1948, these two respondents sold that machinery to the plaintiff for a sun of Rs. 85,000.

On the allegation that the machinery was evacuee property the Custodian applied to the executing Court for obtaining an order setting aside the sale, but the application was dismissed and the Custodian then filed a revision petition in the High Court. By order dated the 29th March, 1951, the High Court set aside the order of the executing Court and in pursuance of this order the Custodian obtained possession of the machinery from the plaintiff on the 4th October, 1951. For the next three years the plaintiff took various steps and approached different authorities of the Custodian Department including the Custodian-General to obtain relief, but all these attempts filed. The final order was passed by the Assistant Custodian-General on the 8th March 1954, dismissing the plaintiff''s objection. Having failed to get satisfaction from the Custodian Department, the plaintiff filed the present suit claiming refund of the amount paid by her and interest from defendants No. 1 and 2. In the alternative, the plaintiff based her claim on failure of consideration and claimed compensation of the same amount.

The suit was resisted on various grounds including that the suit was not properly valued for the purpose of Court fee and jurisdiction, that no notice u/s 80 of the CPC was served on the Custodian, that the property was not evacuee property, that the sale could not be set aside by the High Court and that the plaintiff had no cause of action. On the pleadings of the parties numerous issues were framed. By order dated the 7th March, 1956, the trial Court directed that the following issues be tried as preliminary issues :--

(1) Whether the suit is within time ?

(4) Whether the machinery auctioned by the Court was not declared as evacuee property and did not vest in the Custodian ?

(5) Whether the sale of machinery was not set aside by the High Court ?

(6) Whether the order of the High Court dated the 29th March, 1951, is a nullity for reasons given in the written statement ? If so, its effect ?

(7) Whether the plaintiff has a cause of action ?

(12) In what capacity is the plaintiff in possession of the machinery and to what effect ?

By judgment dated the 17th May, 1962, the trial Court dismissed the suit finding issues Nos. 1, 4, and 7 against the plaintiff or in favour of the defendants. Under issue No. 5 and 6 it was held that the plaintiff was not bound by the order of the High Court setting aside the sale in favour of defendants Nos. 1 and 2 while under issue No. 12 it was concluded that the possession of the machinery by the plaintiff was as a lessee under the Custodian and that the attornment was voluntary and not under any lawful coercion. Being dissatisfied, the plaintiff has come up in appeal to this Court and in appeal the findings on all these issues have been challenged before us.

Issue No. A--it is not disputed that the limitation in this case would be governed by article 97 of the Limitation Act which provides that the period of limitation for filing a suit for recovery of money paid upon an existing consideration which afterwards fails would be three years and the starting point of limitation would be the date of the failure of consideration. It is also nor challenged that the date when the possession was taken by the Custodian would be the date of the failure of consideration, and a suit, in order to be within limitation, had to be Sled on or before the 4th October, 1954, the plaintiff having been dispossessed on the 4th October, 1951. The suit in this case was filed on the 29th March, 1954, and was therefore, well within time The principal contention raised on behalf of the defendants in this respect is that as the Custodian was impleaded as a party after the expiry of the period of limitation, the suit must be held to have been barred by time. The Custodian was admittedly impleaded by the order of the Court dated the 6th January. 1955 and the amended plaint was filed on the 11th February, 1952. It is well settled that when a necessary party is added after the expiry of the period of limitation the suit is time barred as the suit would be deemed to have been instituted when that party was impleaded.

On behalf of the plaintiff, however, it is urged that a defendant against whom no relief was claimed and who was a formal party can be impleaded even after the expiry of the period of limitation and that the suit cannot be treated as time barred in that situation. So far as the legal aspect of this argument is concerned, it is unexceptionable and consequently the decision of this issue would depend on whether the Custodian was a necessary party or was only a formal party. The learned trial Court while coming to the conclusion that the Custodian was a necessary party was mainly influenced by the order dated the 6th January, 1955, by which the Custodian was ordered to be impleaded as a defendant. This order proceeded on the basis that it was necessary to implead the Custodian as the decision of some of he questions involved could not be given behind the back of the Custodian. In this view of the matter, it was held that the Custodian ought to be impleaded as a party.

No doubt the order of the trial Court dated the 6th January, 1955, stated that the Custodian ought to be impleaded, but having regard to the averments in the pleadings and the relief claimed, we find that the Custodian was not a necessary party and can at best be a proper party. In the amended plaint the only addition made was that of paragraph 16 which stated that defendant No. 3 having been held to be a necessary party by the Court of the Subordinate Judge. Amritsar, by order dated the 6th January, 1955, was being impleaded as a party to the suit, in the prayer clause no relief was claimed against the Custodian find the only prayer was for a decree for Rs. 1,00.300 against defendants Nos. 1 and 2 jointly and severally or in the alternative for Rs. 43.660 with costs against defendant No. 1 and for Rs. 56,640 against defendant No. 2. We are also of the opinion that the learned trial Court was in error in holding that the rights of the Custodian in the property in dispute were involved and that his interests were vitally affected. The plaintiff''s claim was that the Custodian had taken possession of the property under a valid order of the High Curt and that as the consideration had failed she was entitled to recover the amount paid by her from defendants Nos. 1 and 2. As regards the plea raised by defendants Nos. 1 and 2, it is of no consequence, as even if it is held the order made by the High Court setting aside the sale was not legal, it would not affect the rights of the Custodian I have consequently no hesitation in coming to the conclusion that the Custodian was not a necessary party and that the fact that he was impleaded after the period of limitation had expired would have no effect on the question of limitation This issue is, therefore, found in favour of the plaintiff.

Issues Nos. 5 and 6.--After the auction in favour of Faquir Chand and Mansa Singh defendants-respondents had been confirmed the Custodian made an application to the executing Court to have the auction sale set aside, but this application was dismissed vide order dated the 20th March, 1950. Being aggrieved by this order, the Custodian filed a revision in the High Court which was accepted. In this revision petition, however, the Custodian neither impleaded Mansa Singh one of the auction purchasers nor the present appellant who had in turn purchased the machinery from Faquir Chand and Mansa Singh though both Mansa Singh and Bhagwanti plaintiff were parties in the application filed by the Custodian in the executing Court. The learned trial Court found that the order of the High Court was neither binding on Mansa Singh nor binding on the plaintiff. Support for this decision was sought from Ram Lal and another v. Kharaiti Ram AIR 1935 Lah 102, Mokam Haldar Vs. Naimaddi Shaikh, , Sailendra Nath Bhattachrjee Vs. Bijan Lal Chakravarty and Others, , Govindan Asari and Another Vs. Nagayan Chettiar and Others, and Rasool Bhai and others v. Nandram AIR 1955 NUC (Raj.) 4626. The correctness of the view taken by the learned trial Court could not be reasonably assailed by the Learned Counsel for the appellant and no authority to the contrary has been brought to our notice. The findings on these issues are, therefore affirmed.

Issues Nos. 4, 7 and 12.--It is not disputed that the machinery originally belonged to one Maula Bakhsh who migrated to Pakistan and this property was therefore, evacuee property and vested in the Custodian in view of the provisions of section 4 of the East Punjab Act No. 14 of 1947. This Act was repealed by Punjab Ordinance No. 9 of 1949. u/s 5 of this Ordinance all evacuee property which had vested in the Custodian under Act No. 14 of 1947 immediately before the commencement of the Ordinance was to continue vest in the Custodian under the Ordinance. This Ordinance was replaced by the Central Ordinance No. 22 of 1940. According to this Ordinance also, evacuee property which had vested in the Custodian before the commencement of the Ordinance would be deemed to be evacuee property and would continue to so vest Act No. 31 of 1950 then replaced Ordinance No. 27 of 1949. Sub-section (2) of section 8 of this Act provides that any property which had vested as evacuee property in the Custodian before the commencement of the Act would be deemed to be evacuee property and shall continue to vest in the Custodian. In view of these provisions, the learned trial Court was right in holding that the property was originally evacuee property. It was further found that after the property was sold by Court auction the Custodian was left with no title in the property and it ceased to be evacuee property. On behalf of the appellant, it is the latter part of the finding that has been mainly assailed before us. In order to appreciate the relevant contentions of the parties, reference will have to be made to the following provisions of the Ordinances and Acts in relation to evacuee property.

East Punjab Evacuee''s (Administration of Property) Act, 1947 (Act No. XIV of 1947),

6.--(1) The Custodian shall take possession of all evacuee property vesting in him under this Act.

(1) The Custodian shall comply with the following provisions in taking possession of any immoveable property under sub-section (1), namely,

* * * * *

Exemption from attachment-All property of which the Custodian has taken possession u/s 6 shall be exempt from attachment, distress or sale in execution of a decree of a court or an order of any other authority.

Section 8 of Act No. 14 of 1947 was amended by the East Punjab

Evacuees'' (Administration of Property) (Second Amendment) Act, 1948, and the following section 8 was substituted by the amending

Act :--

Exemption from attachment, distress or sale.--(1) All property which vests in the custodian shall be exempt from attachment, distress or sale or execution of the decree of a Civil or Revenue Court or in pursuance of the order of any other authority.

(2) All subsisting attachments of Evacuees'' Property effected after 13th September, 1947, under orders of a Civil or Revenue Curt or officer or other authority shall cease to have any effect, and all sales leases or other forms of alienation by any Court, officer or authority of such property effected after the above-mentioned date shall be liable to be set aside at the instance of the Custodian on an application filed before the Court, officer or authority which ordered the sale, lease or alienation as the case may be, within three months of the coming into force of East Punjab Evacuees'' (Administration of Property) (Second Amendment) Ordinance, 1948, or the date of the sale, lease or alienation, whichever is later.

By Act No. 3 of 196 the following sub-section was added to section 8 :--

(2A). Without prejudice to the generality of the provisions contained in Sub section (2), all properly which under any law repealed hereby purports to have vested as evacuee property in any person exercising the powers of Custodian in any State shall notwithstanding any defect in, or the invalidity of, such law or any judgment, decree or order of any Court, be deemed for all purposes to have validly vested in that person as if the provisions of such law had been enacted by Parliament and such property shall, on the commencement of this Act be deemed to have been evacuee property declared as such within the meaning of this Act and accordingly, an order made or other action taken by the Custodian or any other authority in relation to such property shall be deemed to have been validly and lawfully made or taken.

Under section 6 of the East Punjab Evacuees'' (Administration of Property) Act, 1947 (hereinafter called the 1947 Act), the Custodian was required in take possession of all property vested in him under this Act. It was consequently open to the Custodian to take possession of the machinery which was under attachment as Maula Bakhsh had migrated to Pakistan and this machinery was evacuee property In case this had been done, this property would have been exempt from distress or sale in execution of a decree of a Court and could not have been put to auction in view of the provisions of the 1947 Act. Section 8 of the 1947 Act, however, did not relate to the property which had already been sold under a decree of a Court, as by this provision exemption regarding attachment and sale was only operative in case of properties of which the Custodian had taken possession. In respect of the properties of which the Custodian had not taken possession and which had been sold in execution of a decree section 8 of the 1947 Act was not attracted. To remedy this defect, section 8 of the 1947 Act was amended by the East Punjab Evacuees'' (Administration of Property) (Second Amendment) Act, 1948, which came into operation on the 28th November, 1948. In view of this amendment, all property which had vested in the Custodian was exempt from attachment, distress or sale in execution of a decree of a civil or revenue Court even though the Custodian had not taken possession of the property. Furthermore, all subsisting attachments of evacuee Property effected after the 13th September, 1947, were to cease to have any effect With regard to sales, leases or other forms of alienations which had taken place after the 13th September, 1947, sub-section (2) of section 8 provided that these shall be liable to be set aside at the instance of the Custodian on an application filed before the Court, officer or authority which had ordered the sale, lease or alienation. The application was to be made within three months of the coming into force of the East Punjab Evacuees'' (Administration of Property) (Second Ordinance), 1948, or the date of sale, lease or other alienation, whichever was later. This provision would clearly show that the sale, lease or other alienation of evacuee Property which was not in possession, of the Custodian at the time of the coming into force of the 1948 Amendment Act and which had been sold or alienated in execution of a decree of a civil or revenue Court could only be set aside on an application by the Custodian, and if such application was not made, these alienations were not void or illegal. In sub-section (2) of section 8 a clear distinction was drawn between subsisting attachments of evacuate property effected after the 13th September, 1947, and sales, leases or other alienations made after this due by any Court, Officer or authority with regard to the subsisting attachments, these were to have no effect ; but with regard to alienations, these could only be set aside after a proper application was made and an order was passed thereon. If no such application was made or an order was not obtained from the Court which had ordered the sale, the sale would be perfectly legal and would confer a good title on the vendee.

In the instant case, as the property in dispute was not in the possession of the Custodian it could be sold by Court auction before the coming into force of the East Punjab Evacuees'' (Administration of Property,) (Second Amendment) Ordinance, 1948, and this sale could only be nullified by an order of the Court at whose instance the auction had been held. The executing Court had declined the application and though the revision was accepted by the High Court but this order having been obtained without impleading either Mansa Singh or the plaintiff who had in turn purchased the property from Faquir Chand and Mansa Singh would not be binding on them and would be in fact no order in the eyes of law so far as Mansa Singh and the present plaintiff are concerned. The effect would be that the property and the machinery would continue to vest in the plaintiff and it was not open to the Custodian to take possession of this property under colour of the order obtained from the High Court in revision petition filed by the Custodian. A necessary corollary from this would be that consideration for the sale cannot be said to have failed as the plaintiff was not bound to deliver possession of the machinery to the Custodian in the absence of a legal order directing such delivery. The position with regard to sale of evacuee property under order of the Court in execution of a decree did not change even under Amendment Act No. 22 of 1951, as even in this Act all that was provided was that such a sale could be set aside if an application in that behalf was made by the Custodian to the Court or authority under whose order or decree the sale was effected. Such an application was to be made before the 17th October, 1950, and related to all sales which had been effected before the 1st day of March, 1947. On behalf of the appellant, reliance was mainly placed on sub section A which was added to section 8 by Amendment Act No. 1 of 1960. In our opinion, this provision, which has already been quoted above, had no effect on the sale of evacuee property made under orders of the Court at a time when the sale was not invalid. Once the property had been sold in execution of a decree before the coming into force of the 1948 Act and a valid application to have the sale set aside had not been made, the property would cease to be evacuee property and sub-section 2A of section 8 of Amendment Act No. 1 of 1960 could not come into operation and could not invalidate such a sale. At this stage another argument may be noticed. It was pointed out by the Learned Counsel for the appellant that the Custodian had taken possession of the machinery before it was sold through auction. This argument was based on Exhibit P 26 which is copy of an application under rule 1 of the order 40 of the CPC made by Faqir Chand in the Court of the Subordinate Judge First Class Amritsar, wherein he had prayed that a receiver of the property in dispute be appointed. This application contains an averment that Faqir Chand was running the factory under the orders of the Deputy Commissioner. On the basis of this averment it is contended that the Custodian had taken possession and had then leased out the factory to Faqir Chand. In my opinion, the interpretation sought to be placed on the application is not available. Faqir Chand''s assertion in this application that he was running the factory under the orders of the Deputy Commissioner would not necessarily imply that the machinery which had been fixed in the factory had been taken into possession by the Custodian and had then been leased out to him. Moreover, this plea was not taken anywhere in the pleading and this was in fact not the case of the appellant at any stage, Consequently I find no merit in this argument either and the findings on these issues are also upheld.

No other point was raised before us with the result that the appeal fails and is dismissed. The parties are left to bear their own costs.

Rajendra Nath Mittal, J.

I agree.