GARVIN S.P..T.—Anamally Chetty 0: tSi'damtarayn- Chetty.
Present: Garvin S.J.P. and Maartensz A.J.ANNAMALY CHETTY v. SID AMB ARAM CHETTY.120—D. C. (Inty.) Colombo, 25,761.
Sale in execution of mortgage dccrcc^-Decree-holder allowed to purchase aboveappraisedvalue.—Purchaser,a nominee ofdecree-holder—Fraud—
Civil Procedure Code. $. 344.
Where after a mortgage decree had been entered, the Court directedthe sale to be held by the Fiscal and gave permission to the decree*holder to purchase the property at or above the appraised value andwhere the property was purchased by a nominee of the decree-holderbelow the appraised value,—
Held, that an application may be made, to set aside the sale under section 844of the Civil Procedure Code;
Notwithstanding that certain of the facts which constitute the fraud allegedmay of themselves amount to a material irregularity, an application for reliefbased on fraud, as apart from, a mere irregularity, may be made under theprovisions of the section.
H. V. Perera, for purchaser, appellant.
G. P. Jayatileke (with him Wikramanayake), for plaintiff,respondent.
Nadarajah, for first defendant, respondent.
December 21, 1931. Garvin S.P.J.—
This is an application to set aside a sale held in execution of a hypothe-cary decree. Acting under the provisions of section 12 of-' OrdinanceNo. 21 of 1927, the District Judge directed that the sale should be heldby the Fiscal upon certain terms specified by him, one of them beingthat the plaintiff or any one else 011 his behalf may be permitted to bidfor and purchase such properties' at the sale, and that in the event ofthe plaintiff becoming the purchaser thereof * the plaintiff should beallowed credit for his claim and costs. Upon an application made bythe plaintiff's proctor who had not apparently, familiarized himself withthe terms of the decree the District Judge made order that the propertymay be purchased by the plaintiff at or above the appraised value. Atthe sale held by the Fiscal, the appellant became the purchaser." After
PPEAL from an order of the District Judge of Colombo.
278GARVIN 8.P.J.—AnamaMy CheLty v. Sidombarnm Chetty.
the lapse of thirty days in the absence of any application to set it asidethe sale was duly confirmed under the provisions of section 282 of theCivil Procedure Code. The present application was made on July 12,
It was alleged that in order to defeat and circumvent the orderof the Court, permitting the plaintiff to bid for and purchase the premisesat or above the appraised value, he arranged with the appellant topurchase the premises on his behalf. Various other grounds were setout with which we need not concern ourselves since they are matterswhich should have been brought before the Court in a proceeding toset aside the sale under the provisions of section 282 of the Code.
In the Court below the objection was taken that the provisions ofsection 844 of the Code which the defendant invoked in support of liis.application did not apply to a case in which the hypothecary decreewas carried into execution by the Fiscal. The learned District Judgehas considered the arguments addressed to him and lias come to theconclusion that the effect of section 12 of the new Mortgage Ordinance,No. 21 of 1927, where the Court acting under its provisions directs thesale in execution of a hypothecary decree should be carried out by theFiscal, is to 'bring into operation all the provisions of sections 255 to288 and sections 290 to 297 of the Civil Procedure Code, and that it wascompetent therefore for any person having the right to do so to proceed,if so advised, under the provisions of section 282. He has further heldthat there is nothing in the provisions of Ordinance No. 21 of 1927 to-prevent a person proceeding under the provisions of section 844 to have,,a sale set aside in any case in which it would otherwise be competentfor him to do so. It seems to me that the learned District Judge is righton both points. Section 344 is a procedural provision, the purposeand effect of which is to require persons in all matters relating to theexecution of a decree to take steps in the action in which the decree waspassed and not to resort to a separate action to obtain the relief claimed.The provisions of section 282 are applicable when it is sought to set asidea sale in execution “ on the ground of a material irregularity in publishingor conducting it”. But there are cases in which a person is entitledto be relieved from the consequences of a sale in execution notwith-standing that in the publishing or conducting of the sale there has beenno material irregularity, and one of these is a case in which a personis able to establish the existence of a fraud which would entitle himunder the Common law to maintain an action to have the sale set aside.Fraud is not one of the grounds specified in section 282 for setting asidea sale. Notwithstanding that certain of the facts which constitutethe fraud alleged may of themselves amount to a material irregularity,an application for relief based on fraud as apart from a mere irregularity,if the fraud is such as would entitle a plaintiff to relief in an action, maybe made under the provisions of section 844. A purchase by the decree-holder in the name of a nominee has been treated as an irregularitywithin the contemplation of section 282.
■ A purchase made in such circumstances may conceivably amount toan irregularity and no more. It may on the other hand in conjunctionwith other circumstances amount to a fraud which vitiates the whole
Zahan t. Fernando.
proceeding from which a Court will give relief, notwithstanding thatthe sale was confirmed under section *282 by the Court in ignorance ofthe fraud.
The main ground upon which this appeal was pressed upon us wasthat the averments in the affidavit filed by the petitioner did not disclosesuch fraud as would entitle him to have the sale set aside. It was urgedthat the specific averments in the affidavit did not amount to more thanthat the property has been purchased by the decree-holder in the nameof his nominee, and that the District Judge was, therefore, wrong infixing the matter for inquiry.
Fraud should be specifically and clearly set.out in an application ofthis nature and no general allegation of fraud will suffice. But, aftercareful consideration, I have come to the conclusion that this case must-go back for the inquiry ordered by the learned District Judge. Inthe first place, the objection pressed in appeal was not taken in the Courtbelow. In the next place, although the petition and affidavit are not agood example of how such a ground of relief should be pleaded it maynevertheless be gathered from the averments that relief is claimed onthe ground that the decree-holder who was only permitted by Court tobid for and buy the property at or about the appraised price enteredinto a conspiracy with the purchaser to buy the same for him, thoughin the name of the purchaser and- did in fact so purchase the propertyvery considerably below its true value and to the loss of the judgment-debtor.
The appeal will therefore be dismissed with costs, and the case will beremitted to the Court below to be proceeded with in due course.
^Iaartensz A.J.—I agree.