JUDGMENT
Kanhaiya Singh, J.
1. This appeal has been brought on behalf of two of the judgment-debtors from the judgment and order of the Subordinate Judge, Muzaffarpur, dated 11-8-1952, by which he dismissed their objection to the execution ot : the decree passed against them and others by sale of their portion of the mortgaged properties only.
2. The facts relevant for the disposal of this appeal are as Follows, Ono Bindabasini Prasad executed in favour of Apurba Krishna Mitra, the predecessor-in-interest of the respondents, six mortgage-bonds hypothecating his proprietary shares in different tauzis as detailed below :
(1) dated 11-5-35 for Rs. 17,000 in respect of tauzis Nos. 20805 and 9710;
(2) dated 27-5-34 for Rs. 33,000 in respect of tauzis Nos. 12595, 12597, 7462, 2086 and 10837;
(3) dated 9-2-37 for Rs. 25,000 in respect of tauzis Nos. 1216, 20690 and 915;
(4) dated 18-8-37 for Rs. 15,000 in respect of tauzis Nos. 12595, 12597, 1193. 915, 1216, 317, 20776, 2086, 20805, 9710 and 10837;
(5) dated 20-2-38 for Rs. 15,000 in respect of tauzis Nos. 915, 12597, 12595, 1193, 1216, 317, 20776, 2086, 20806, 9710, 10837, 7462 and 643; and
(6) dated 16-3-39 for Rs. 18,600 in respect of tauzis Nos. 915, 12595. 12597, 1193, 1216, 317, 20776, 2086, 20805, 9710, 10837 and 7462.
On 21-7-1941, the mortgagees filed a joint mortgage suit in the Court of the 1st Subordinate Judge, Muzaffarpur, for the enforcement of the aforesaid mortgages claiming in all Rs. 2,01,973. In due course a joint decree was passed on 10-2-1944, for Rs. 2,57,283/4/9. It appears that the appellants had obtained a money decree against the mortgagor, Bindabasini Prasad.
In execution of that decree in Money Execution Case No. 199 of 1938 they attached and put to sale his 8 annas 13 gandas share in tauzi No, 915 and themselves purchased the same at the auction on 7-4-1941. Subsequently, they obtained sale certificate and delivery of possession of the purchased milkiat interest through Court. In the meantime, Bindabasini Prasad, the mortgagor, created a trust of all his properties in favour of the Kayastha Pathsala, Allahabau, by two registered instruments dated 10-11-1941 and 14-3-1942. The respondents levied execution in respect o£ the mortgage decree in Mortgage Execution Case No. 64 of 1946 against the Kayastha Pathsala, the successor-in-interest of Bindabasini Prasad and the appellants. The former effected a compromise with the mortgagees decree-holders whereby all the properties of the late Bindahasini Prasad which were subject to the aforesaid six mortgages, except the S annas and 13 gandas share in village Bihpur, bauzi No. 915, were released in favour of the Kayastha Pathsala in consideration of the payment of Rs. 1,50,000 out of the mortgage decree to the respondents. The Kayastha Pathsala & the respondents further stipulated that the sum of Rs. 17,950 would be realised by the respondents not from the Kayastha Putlisala but from the appellants by sale of the remaining mortgaged property, namely, 8 annas 13 gandas share in tauzi No. 915 which the appellants had purchased at the auction sale.
It will appear from the above that this share was subject to the last four out of the six mortgages mentioned above. Thereafter the respondents levied another execution for the balance of the mortgage debt against the appellants by sale of the 8 annas odd share in tauzi No. 915. The appellants objected to the sale of this tauzi on tho ground that the compromise arrived at between the Kayastlia Pathsala and the decree-holders respondents was not binding upon them, as they were not parties to the said compromise and that in view of their purchase of the said tauzi at auction held in execution of their money decree,, in equity and in fairness the executing Court should proceed in the first instance against tbe remainder of the mortgaged properties and should proceed against the share purchased by them only when the sale proceeds of these mortgaged properties proved insufficient to satisfy the decree in full. The learned Subordinate Judge overruled the objection and held that the decree-holders were entitled in law to proceed against any of the mortgaged properties and only for the unsatisfied portion of the decree, irrespective of the question whether the agreement between the Kayastha Pathsala and the decree-holders respondents bound the appellants or not
3. In support of this appeal Mr. Prem Lall has reiterated the objection raised in the Court below and, in addition, contended that during the pendency of this appeal the mortgaged properties, which consisted of proprietary milkiat interest, vested in the State under the Blhar Land Preforms Act, and, therefore, under Section 4(d) of that Act the entire execution is incompetent and should be quashed.
4. The first contention is based upon misconception of the law of marshalling of security.
“The doctrine of marshalling assets and securities depends upon the principle that a person, having two funds out of which to satisfy his demands, shall not, by his election, prejudice a person who has only one such fund” : Whartoa’s Law Lexicon (14th Ed.).
This equitable principle has been enacted in Section 56 and Section 81 of the Transfer of Property Act The former prescribes
the rule as to marshalling by subsequent purchasers, whereas the latter provides for the marshalling of securities at the instance of a subsequent mortgagee.
The rule of law enacted by these two sections is that if the owner of two or more properties mortgages them to one person and then sells or mortgages one or more of the properties to another person, the buyer or the subsequent mortgagee is, in the absence of a contract to the contrary, entitled to have the mortgage debt satisfied out of the property or properties not sold or mortgaged to him, so far as the .same will extend, but not so as to prejudice the rights of the prior mortgagee or persons claiming under him or of any other person who has for consideration acquired an interest in any of the properties. (See Md. Karimul Rah man Khan v. Saras-wati Sugar Syndicate, Lahore, AIR 1939 All 314). Thus, subject to file equities of the parties the subsequent mortgagee or subsequent purchaser of one of the mortgaged properties may as a matter of right claim marshalling in a suit for enforcement of the mortgage and the Court will give effect to this right so long as it docs not prejudice the rights of the mortgagee or prior mortgagee or persons claiming under him or any other person who has for consideration acquired an interest in any of the properties.
Even where the right of marshalling, as enacted in the above two sections, is not available, the Court has under Rules 4 and 5 of Order 34, Civil Procedure Code, ample power to direct the order in which the various mortgaged properties should be sold, but this power can be exercised not arbitrarily but judicially to square up the equities between the contending parties and to prevent prejudice to the mortgagee.
In Jatadhari Singh v. Baldco Lal, AIR 1919 Pat 281, a Division Bench of this Court has laid down that under Order 34, Rule 4, Civil Procedure Code, it 13 the fluty of the Court in making a mortgage decree to order that the mortgaged property or a sufficient portion thereof be sold, and this gives a right to the Court making the decree to declare what portion of the mortgaged properties shall first be sold, but that discretion is not to be arbitrarily exercised and is subject to the general principle that the Court cannot prejudice the rights of the mortgagee if ho has not himself done any act which prejudices the rights of those having equities against the mortgagor. The same power is vested in the Court under Rule 5 of Order 34 of the Code while passing the final decree in a mortgage suit. The power so conferred is to be exercised in the suit while passing the decree.
Where no order or sale of the mortgaged properties has been prescribed by the decree, in other words, where the decree merely states generally that the properties mentioned therein should be sold without laying down the order in which such properties are to be sold, the executing Court has, in certain exceptional cases where equity demanded it, a discretion to regulate the order in which the mortgaged properties ought to be sold.
There are, however, two limitations on the power of the executing Court. Where the Court passing the mortgage decree has definitely laid down the order in which the mortgaged properties are to be sold the executing Court cannot ignore the original decree and proceed to sell the properties in a different order, especially when the decree-holder or the judgment-debtor raises objection to such a procedure. (Sec Mehdatunnissa Begam v. Sewak Ram, AIR 1933 Pat 161. Secondly, the executing Court has no power to exclude any of the properties decreed against.
All the properties must be advertised for sale, and when they are actually brought into execution and. become subject to sale, it would be then for the Court to decide on just and equitable principles which property ought to be sold first. The decree-holder is entitled to have all the properties mortgaged to him, put up for sale, but at the time of sale it is entirely in the discretion of the Court executing the decree to direct in which order the properties should be sold. (See Bhagwan Chandra Das v. Dharam Narain Das, AIR 1924 Pat 802). The executing Court ought not ordinarily to fetter the discretion of the decree-holder to put to sale whatever property he wished first to sell. A decree-holder is entitled to execute his decree against any of the mortgaged properties where the decree is silent on the point; the judgment-debtor has no legal right to demand that the decree-holder should execute his decree in any particular manner to suit the individual judgment-debtor. See Narayanaswami Chetti v. Vellaya Pillai, AIR 1924 Mad 366.
The power of the executing Court is very limited and is intended only for the purpose of adjusting equities between the parties in exceptional cases. Where, however, there is no equity in favour of any party, it will be an illegal exercise of discretion if the executing Court prescribes the order In which the properties should be sold, especially when this order will prejudice the rights of the mortgagor and the mortgagee. In this case, it will appear that the successor-in-interest of the mortgagor and the decree-holders mortgagees have reached an amicable settlement and most of the mortgaged properties have been released from sale on satisfaction of a major portion of the mortgage debt.
A small amount that remains outstanding is to be recovered from the sale of the unreleased mortgaged properties which the appellants have purchased subsequently in execution of their money decree. In my opinion, having regard to the equities between the parties the appellants have no right to object to the decree-holders executing the decree for the unsatisfied amount by sale of that portion of the mortgaged properties which have been purchased by the appellants. The executing Court, therefore, is right in disallowing their claim. This contention must, therefore, be overruled.
5. The second contention of Mr. Lall is substantial and must prevail. In order to appreciate his contention it will be necessary to state a few facts. The aforesaid objection of the appellants was disallowed on 11-8-1952. The properties were sold on 14-8-1952. Before the sale could be confirmed the appellants preferred this appeal on 26-8-1952 against the aforesaid order dated 11-8-1952. This appeal was admitted on 12-9-1952, and on that very day an order granting ad interim stay of the execution proceeding was passed. Pursuant to this order the executing Court stayed confirmation of the sale on 15-9-1952. That order is still in force, and the sale has riot been confirmed as yet.
In the meantime, during the pendency of this appeal the mortgaged properties which consist of only proprietary interests in village Binpnr, Tauzi No. 915, vested in the State under the Bihar Land Reforms Act, 1950 (hereinafter referred to as the Act). After the vesting, on the application of the appellants made on 7-3-1956 this Court issued notice to the State Government pursuant to the provisions of Section 4(ee) of the Act. The State Covern-ment, however, has not appeared and applied for being added as a party to this appeal, The contention of Mr. Lal is that in consequence of the vesting of the mortgaged properties in the State, the entire legal position has changed, and by virtue
of the provisions of Clauses (d) and (e) of Section 4 of the Act the Civil Court has no jurisdiction to continue the execution proceeding and confirm the sale that has already taken place. Clauses (d) and (e) provide as follows :
“(d) No suit shall lie in any Civil Court for the recovery of the money due from such proprietor or tenure-holder the payment of which is secured by a mortgage of, or is a charge on, such estate or tenure and ‘all suits and proceedings for the recovery of any such money which may he pending on the date of vesting shall be dropped.'”
“(e). No such estate, or tenure shall he liable to
attachment or sale under the processes of any Court
and any order of attachment passed in respect of
such estate or tenure before the date of vesting
shall cease to be in force.” (Unclerlned here in ‘
by me).
The submission of Mr. Lall is that the proceeding in execution pending in the Court below was a proceeding for the recovery of money within the meaning of Clause (d) and the same was pending on the date of vesting, since by then the sale has not been confirmed, and accordingly the execution proceeding must be dropped.
His further contention is that even under Clause (e) the sale cannot be confirmed. He has argued that Clause (e) creates a statutory bar to the attachment or sale of any estate or tenure that has vested in the State and when before the confirmation of the sale the estate has vested in the State the jurisdiction, of the Court to confirm the sale is ousted. According to him, the confirmation of the sale, will be illegal and without jurisdiction, and, therefore, considered either under Clause (d) or Clause (e) the execution proceeding must be quashed as incompetent. Mr. G. C. Mukharji appearing for the respondents, however, contended that when the sale has already taken place in satisfaction of the mortgage decree, there was no proceeding pending, as contemplated by Clause (d), and what is prohibited by Clause (e) is the sale of an estate or tenure after the vesting, and since in this case the sale had already taken place before the date of vesting, Clause (e) has no application and, therefore, the Civil Court was fully competent to confirm the sale. The contention of Mr. Mukharji is no doubt attractive, but on a closer examination of the provisions of Clauses (d) and (e) it seems it has no force, and I am unable to accept it as correct. The auction sale that has taken place was inchoate and incomplete and not legally adequate to pass good title to the auction purchaser. Section 65 of the Code provides as follows :
“Where immovable property is sold in execution of a decree and such sale has become absolute, the property shall be deemed to have vested in the purchaser from the time when the property is sold and not from the time when the sale becomes absolute.”
Unlike a sale by a private treaty a Court sale is not absolute and complete immediately it takes place. The property does not vest in the purchaser unless the sale has become absolute as provided in the Code of Civil Procedure.. Section 65 lays, down the effect of the sale becoming absolute. Though the property sold in execution of a decree does not Vest in, the auction purchasers, until it is confirmed, once the sale is confirmed and becomes absolute, the title of the auction purchaser shall relate back to the date of the auction sale. It follows from Section 65 that the sale is incomplete and legally ineffective to pass a good title unless and until the sale is confirmed and becomes absolute. It is only when confirmation of the sale takes place, the provisions of this section as to the retrospective Vesting of title
from the date of the sale come into operation. The
important question is when the judicial sale becomes absolute? A judicial sale becomes absolute only when the requirements of Rule 92 of Order 21 of the Code are fulfilled. It lays down as follows :
“92(1) Where no application is made under Rule 89, Rule 90 or Rule 91, or where such application is made and disallowed the Court shall make an order confirming the sale, and thereupon the sale shall become absolute.
(2) Where such application is made and allowed, and where in the case of an application under Rule 89, the deposit required by that rule is made within thirty days from the date of sale, the Court shall make an order setting aside the sale :
Provided that no order shall be made unless notice of the application has been given to all persons affected thereby.
(3) No suit to set aside an order made under this rule shall be brought by any person against whom such, order is made.”
The effect of the legal position embodied in this rule is that the auction purchaser does not obtain an indefeasible right on the date of the sale for under p. 21, Ryles 89, 90 and 91, the sale may be set aside on various grounds. It is only where no application is made under these rules, or where such applicatoin is made and disallowed that the Court under Order 21, Rule 92, makes an order confirming the sale, whereupon “the sale shall Income absolute.” (See Raghunandan Prasad Singh v. Commissioner of Income-tax, B. and O. AIR 1933 PC 101). In reply Mr. Mukharji put forward the argument that although the title of the purchaser is not complete till the confirmation of the sale he has nonetheless acquired an interest in the properties, and when the sale is not set aside in accordance with the provisions of rule 92 after the expiry of thirty days. the sale becomes automatically absolute and the confirmation of sale is a mere formal matter. It is true that under Rule 92 no sale can be confirmed or can become absolute until the expiration of the period of thirty days from the date of sale, and further it is duty of the Court to confirm the sale on the fulfilment of the conditions laid down in rule 92, even without an application by the party concerned, it will be wrong to say that there is an automatic confirmation of the sale after the expiration of thirty days.
Rule 92 prohibits confirmation of sale before thirty days from the date of the sale, but it does not provide that the sale becomes absolute ipso facto on the expiry of thirty days from the date of the sale. The confirmation of sale which comes into operation under rule 92 is not a mere ministerial or formal order; it is a judicial order, and the expression “the Court shall make an order confirming the sale” makes it absolutely clear that this rule requires an order of a Court confirming the sale. The absence of any proceeding under Rule 89, 80 or 91 to set aside the sale or disallowance of any application to set aside the sale under any of the aforesaid rules is not equivalent to confirmation of sale, and, therefore, before the sale becomes absolute as provided in rule 92 so as to confer an indefeasible title on the auction purchaser, there must be a further order of the Court confirming the sale.
Ordinarily, the Court is bound to confirm the sale when it has not been set aside, as provided in the Code. Nevertheless, there must be an order of the Court confirming the sale, and it is only when such order is made the sale becomes absolute. It is evident, therefore, that there was no automatic confirmation of sale immediately after the expiration of thirty days from the date of the sale, as contended by Mr. Mukharji. In this case, although the sale had taken place, its confirmation had been grayed by the Court; in other words, there was no confirmation of sale and, therefore, the purchaser has not as yet acquired an indefeasible title to the disputed properties.
Until the sale was confirmed the execution proceeding had not terminated. Therefore, in my considered opinion, the execution proceeding being a proceeding for recovery of money must be deemed to be pending on the date of vesting within the meaning of Clause (d), and, therefore, as provided therein, it most be dropped. Even under Clause (e) the Court is incompetent to confirm the sale. This clause provides specifically that no estate or tenure that has vested in the State shall be liable to attachment or sale under the processes of any Court. The word sale’ in this clause obviously means absolute sale. It does not mean a sale which, for want of confirmation, is still incomplete and invalid to convey a good title.
Thus, where after a judicial sale but before its confirmation the estate or tenure becomes vested in the State under tbe Act, the jurisdiction of the Court is ousted and no order confirming the sale can competently’ be made. I am supported in this view by a decision of a Division Bench of this Court in Gopal Bux Rai v. Babu Shyambehari Singh, AIR 1940 Pat 565, In this case a mortgage decree was passed against Gopal Bux Rai and Jugeshwar Bux Rai and other members of his family, and in execution of the decree the mortgaged property was put up to sale and purchased by the decree-holder. Jugeshwar brought a suit to set aside tbe sale and recover the property, and in that suit Gopal was added as one of the defendants.
Subsequently, Gopal applied to the Commissioner of Chota Nagpur for protection under the Encumbered Estates Act, and the Commissioner passed an order under Section 2-B of the Act prohibiting the sale of the immovable property of Gopal or any portion thereof in execution of any decree or order of any Civil or Revenue Court pending the issue of the final order on his petition for protection. This order was duly communicated to the Deputy Commissioner of Palamau. The sale in execution of the mortgage decree aforesaid had not been confirmed when the Commissior.er’s order prohibiting the sale was communicated to the Deputy Commissioner. In spite of this prohibitory order the Deputy Magistrate Subordinate Judge con-finned the sale in favour of the decree-holder.
Thereupon, Gopal filed an application before the Deputy Magistrate Subordinate Judge stating that as the Commissioner had stayed further proceedings in all Courts he prayed that delivery of possession in favour of the decree holder auction-purchaser He stayed. He apparently also asked that the order of confirming the sale be vacated. The Deputy Magistrate Subordinate Judge declined, to vacate his order confirming the sale or to stay Dakhaldehani as prayed for. Against this order Go-pal moved the High Court. Harries C, J., delivering the decision of the Division Bench, observed as follows :
“However, one thing is clear and that is that the purchaser at an auction sale does not aequire a good title to the property until the sale is confirmed. When it is confirmed, the auction-purchaser is deemed to be the owner of the property as and from the date of the actual sale. The property is deemed to have vested in him at the date of the sale. The words of Section 69, Civil P. C. make it clear that the property does not actually Vest in the purchaser at
the time of the sale; but once the sale is confirmed, it is deemed to have vested in him as and from that date.
Without confirmation tbe purchaser acquires no title and it appears to me that confirmation of a sale is an integral part of the transaction of sale. That being so, an order prohibiting sale would prohibit confirmations of sales which had already taken place but which had not been con firmed before the prohibitory order was passed. That being so, the learned Deputy Magistrate Subordinate Judge would have had no jurisdiction to confirm the sale if the property was property covered by the prohibiting of the Commissioner.”
It is plain, therefore, that after the vesting in the State the Court has no jurisdiction to confirm the
sale. Thus if after the judicial sale of an estate or tenure ana before its confirmation, such estate or tenure has become vested in the State under the Act. the execution proceeding cannot be regarded as having terminated and is a proceeding pending on the date of vesting within the meaning of Clause (d), and, therefore, the Court has no jurisdiction to proceed further with tbe execution proceeding. The legal consequence of this vesting is that the prcceed-ing must be dropped. Such a case also comes under Clause (e), and because of the statutory prohibition of attachment and sale of an estate or tenure that has vested in the State as contained therein, the Conrt should have no jurisdiction to confirm the sale. Therefore, either under Clause (d) or Clause (e) the entire execution proceeding is incompetent and must be quashed.
6. In the result, the appeal is allowed and the execution proceeding pending in the Court below is dropped. In the circumstances of the case, there will be no order for costs.
Ramaswami, C.J.
7. I agree.