Goan Personal Law - Portugese Civil Code| Right To Property Of Highest Bidder Is Heritable And Not A Personal Right - Supreme Court
A Division Bench of the Supreme Court of India observed that an heir's right to participate in licitation and claim a specific item of property, "at the appropriate stage – when owelty was to be demanded", was not merely a personal right which would extinguish upon the heir's death under the Portuguese Civil Procedure Code. Since a bid is offered by the heir in their capacity as a member of...
A Division Bench of the Supreme Court of India observed that an heir's right to participate in licitation and claim a specific item of property, "at the appropriate stage – when owelty was to be demanded", was not merely a personal right which would extinguish upon the heir's death under the Portuguese Civil Procedure Code. Since a bid is offered by the heir in their capacity as a member of the family, an item of property for which they had bid successfully, but for which no owelty was demanded by the other heirs, would be heritable, the apex court clarified. It was observed –
"If all other items are heritable by his heirs and legal representatives, an entirely different conclusion is unsupportable in regard to the item of property for which he bid successfully, but for which no demand was made, for payment of any amount…[The heir's] position and right as a successful bidder, and his obligation to pay the concerned amount, when called upon to do so, were heritable by his heirs and legal representatives."
Thus, the Supreme Court affirmed the decision of the Bombay High Court that had been challenged in the present appeal, holding that the property in dispute would devolve upon the respondents, who were the heirs of the highest bidder (now, deceased) in a licitation.
The Bench comprised of Justices S. Ravindra Bhat and Sudhanshu Dhulia. [Mrs. Ethel Lourdes D'Souza Lobo v. Lucio Neville Jude De Souza & Ors.]
Conspectus of Facts
The present dispute can be traced back to the inventory proceedings that were commenced in 1985 for the partition of the estate of Lt. Guilherme Caetano Souza and his wife, Maria Guilhermina Augusta Lourdes Aguiar Souza after their death. Guilherme and Maria were survived by six heirs. The disputed property was a part of the licitation (closed auction in which participants comprise the heirs of the deceased who are entitled to shares in the estate). One of the heirs, Maria (now, deceased), was the highest bidder, but a fresh bid was ordered because she defaulted in payment of the owelty amount, i.e., the amount paid by a member in proceedings of partition in exchange of being allotted properties in excess of their share.
In the second round of auctions, another heir, Hermano, was successful. But before the final partition chart was drawn and any amount could be demanded from him as owelty, Hermano passed away. One of the successors of another heir (appellant herein) moved an application for reauction of the property, but this claim was resisted by Hermano's heirs who argued that they could continue the proceedings and were entitled to the said property.
The trial court held that the property had to be reauctioned, but both the court of first appeal and the High Court disagreed, holding that the obligations and rights of the heir, including the right to pay owelty, devolved upon his legal successors (respondents herein).
Summary of Arguments
Advocate Keane Sardinha, appearing for the appellant, argued that the rights conferred upon a successful bidder who is a party to inventory proceedings did not devolve upon his heirs on his death. He submitted that neither did a bid in an auction create any right or interest in the property, nor was there a concluded contract between the bidders and other interested parties. Consequently, no heritable right or legally enforceable right would pass to the heirs of the deceased participant in a licitation proceeding. The right to claim an asset through an auction, it was urged, could never be a heritable right, and would extinguish upon the death of the bidder.
Per contra, the counsel for the respondents, Vibha Dutt Makhija argued that there were no grounds to interfere with the concurrent findings of the appellate court and the High Court. Makhija submitted that it was not the highest bid, but the amount that was indicated in the chart of partition that had to be paid as owelty. In the present case, the stage of final partition had not been reached since the chart of partition was not prepared when Hermano was alive. It was also urged that Hermano's estate comprised not only his rights and obligations, but also his right as a shareholder in the inventory proceedings, which included his right as a successful bidder for the disputed property.
Decision of the Court
The Court dismissed the appeal and upheld the decision of the Bombay High Court, Goa Bench, to reject the application for reauction with respect to the disputed property.
First, relying upon its decision in Baburao Karekar v. Vilas Atmaram Bandodkar [(2015) 12 SCC 659], as well as a number of Bombay High Court rulings, the Court reiterated that the question of paying owelty, or any amount, by any heir, including one who bids successfully for an item, is dependent upon a demand by one or the other heirs. The Court explained –
"The limitation period, so to say, is dependent upon the demand so made. The rationale for this rule is that till the amount in excess of such bidder's share is not computed, they remain in the dark about the sum to be paid. In the present case, it is not disputed by the appellant that such a demand was not made; the parties were not notified as to the amounts they were entitled to; or that the respondent did not make the demand. For this reason, this court is not persuaded by the submissions of the appellant."
Then, the Court proceeded to Hermano's entitlement to claim a particular item upon payment of owelty when demanded, was 'property' or a mere personal right. Noting that 'inheritance' in Article 1737 of the Code was cast in wide terms and encompassed "all properties, rights and obligations of the author, which are not merely personal, or which are otherwise excepted by the disposition…", the Court finally concluded that the entitlement to bid in the licitation process was not a personal right. Therefore, like other heritable items, the property, for which a successful bid was made but no owelty demanded and paid, would also devolve on the heirs of the author of the bid. The Court held –
"The final chart of partition containing the excess payments to be made, by one or other members of the family had not been prepared; no demand for payment or deposit of owelty was concededly made by any member of the family. However, that did not mean that the highest bid by Hermano was, in some inexplicable manner, effaced. His position and right as a successful bidder, and his obligation to pay the concerned amount, when called upon to do so, were heritable by his heirs and legal representatives."
Cause Title
Mrs. Ethel Lourdes D'Souza Lobo v. Lucio Neville Jude De Souza & Ors
Citation : 2022 LiveLaw (SC) 795
Headnotes
Goan Personal Law – Inventory proceedings – Licitation – Owelty – Portuguese Civil Procedure Code – Chapter XVII (Articles 1369 to 1447) – Articles 1737, 2126, 2127 – Right to property of highest bidder in licitation heritable and not mere personal rights, even if no owelty demanded and paid – Court refused plea for reauction of disputed property – Demise of highest bidder before determination and payment of owelty amount – Held, not ground for setting aside the auction – Owelty only to be paid when demanded – Position and right as a successful bidder, as well as obligation to pay amount heritable by heirs and legal representatives – Amount determined to be paid by successors when called upon to do so
[Paras 18, 20-24]