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Issues: (i) Whether the appellant had established that it was a tenant of a portion of the property. (ii) Whether the appellant was estopped from setting up the plea of tenancy for failure to disclose that claim in the execution sale proceedings.
Issue (i): Whether the appellant had established that it was a tenant of a portion of the property.
Analysis: The burden lay on the appellant to prove creation of a tenancy. Mere payment described as rent, and correspondence referring to rent, did not by themselves establish a legal relationship of landlord and tenant. No resolution of the company in liquidation creating a tenancy was produced, no resolution of the appellant accepting tenancy was shown, and the oral evidence did not prove the terms, date, or creation of any lease. The surrounding circumstances, including the absence of contemporaneous disclosure of tenancy during the sale process, further weakened the claim.
Conclusion: The appellant failed to prove that it was a tenant. The finding of tenancy was set aside and the issue was answered against the appellant and in favour of the respondent.
Issue (ii): Whether the appellant was estopped from setting up the plea of tenancy for failure to disclose that claim in the execution sale proceedings.
Analysis: Under Order 21 Rule 66 of the Code of Civil Procedure, 1908, the proclamation of sale must fairly and accurately state every matter material for a purchaser to know, and the application for sale must contain verified particulars so far as they are known or can be ascertained by the applicant. A tenancy materially affects the value of immovable property and was therefore a fact that ought to have been disclosed. The appellant, while conducting the execution sale, did not disclose its alleged tenancy at any stage. By omitting a material claim in the sale proceedings, it represented the property as free from such encumbrance for the purposes of the auction.
Conclusion: The appellant was estopped from asserting tenancy against the auction purchaser. The issue was answered against the appellant and in favour of the respondent.
Final Conclusion: The auction purchaser was entitled to possession of the entire property, and the appellant's claim to retain a portion as tenant was rejected.
Ratio Decidendi: A decree-holder who conducts an execution sale must disclose any claim of tenancy or other material interest affecting the value of the property in the sale proclamation and verified statement, and failure to do so can both defeat the factual plea of tenancy and create estoppel against asserting that claim later.
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