@JUDGMENTTAG-ORDER
S. Palanivelu, J.@mdashThe first petitioner in E.A. No. 475 of 2003 is one Komala Ammal, wife of Jeganathan. Her son is K.J. Prakashkumar. Both of them were defendants in the original Suit. Jaganathan is no more. Pending enquiry in the execution petition, she died. 2nd and 3rd petitioners are her daughters. Wherever the words "first petitioner" occur, it would refer to Komala Ammal.
2. The following are the averments found in E.A. No. 475 of 2003 filed by these petitions:
2. (i) The first respondent obtained an exparte decree in O.S. No. 9158 of 1995 for recovery of money against the husband of the first petitioner and these petitioners. Since the decree holder agreed to deduct not only payments made but also agreed to give interest on the amounts paid, the defendants did not conduct the suit. However, far from expectation, the decree holder/first respondent filed E.P. No. 199 of 1998 for sale of the property viz., Door No. 90, Ashtabujam Road, Choolai, Chennai-112, which even according to the Government market value is worth more than Rs. 50,00,000/-. Unfortunately, the second petitioner was admitted to Stanley Hospital, Chennai and the first petitioner has no male member to help her in the execution process and it seems that in E.A. No. 2017 of 2002 without notice to them, the upset price was reduced and on that basis the property for sale proclaimed was not sold on the spot, but in the Court premises. It is understood that the sale was knocked down in favour of the nominee of decree holder for a very low price of Rs. 11,00,000/- on 12.09.2002.
2.(ii) Originally the upset price shown by the petitioners was not fixed. The reduction of upset price by order dated 11.7.2002 without notice to these petitioners is illegal. Sale proceedings of an immovable property should be held only at the spot particularly in the Court premises which is not legally sustainable. There is also irregularity and illegality in the conduct of the sale and on that account also the sale is liable to be set aside. The entire proceedings of sale are totally against Order 21 Rule 66 of C.P.C. Hence, the sale dated 12.09.2002 in E.P.No.199 of 1998 has to be set aside.
3. In the Counter filed by the first respondent it is stated as follows:
3.(i) Execution petition was filed against the Judgment Debtor for attachment of immovable property for the E.P. Claim amount of Rs. 4,98,145.50. On 14.12.1998 attachment was ordered and it was accordingly attached. On 1.11.1999 sale proclamation was made and the date of sale was fixed for 05.01.2000. Though this respondent requested the Court to fix the upset price at Rs. 10,50,000/-, the Court fixed the same at Rs. 16,25,000/-. On 5.1.2000 there was no bidders for the said upset price and thereafter this respondent filed E.A. No. 271 of 2000 for fixing upset price at Rs. 13,25,000/-, but the Court reduced the upset price to Rs. 14,75,000/- and 30.01.2001 was fixed for sale. On that date also the property was not sold. Hence on E.A. No. 504 of 2001, upset price was reduced to Rs. 14,00,000/-.
3. (ii) Since slum dwellers area situates on the back side of the property, purchasers did not come forward to participate in the auction. In another Execution Application, because the property was not sold, the Court again reduced the upset price to Rs. 12,00,000/-. Again there was no sale and as per the order in E.A. No. 2017 of 2002, the upset price was reduced to Rs. 11,00,000/- by the Court and the auction was held in the City Civil Court campus. The second respondent bid the auction for Rs. 11,03,000/- on 12.09.2002, Sale Certificate was issued to him and he has filed petition for delivery in E.P.No.545 of 2003 which is pending. This respondent already filed petition to receive E.P. amount and the same was ordered by the Court. This respondent received the E.P. amount.
3. (iii) The present petition is not maintainable at this stage because the sale was already confirmed, sale certificate was issued to auction purchaser and the same was also registered. From 1995, the petitioners have not paid any amount so far. The Court followed the procedures. Hence, the petition has to be dismissed.
4. These defendants suffered a decree in O.S. No. 9158 of 1995 on the file of the 9th Assistant Judge, City Civil Court, Chennai, since they remained exparte. They did not take any steps to set aside the same. The first respondent filed E.P.No.199 of 1998 for attachment and sale of the property belonging to the Judgment Debtors. The property was attached and it was brought for sale. Both the defendants died and these petitioners are their legal representatives.
5.(i) As narrated in the Counter filed by the first respondent, the sale was not held on all occasions earlier to 12.09.2002. On 12.09.2002 alone the sale was conducted and it was knocked down in favour of the second respondent for a sum of Rs. 11,03,000/-. It is the version of the first respondent that these Judgment Debtors had all along been remaining exparte, ignoring the Court proceedings and filing of petition under Order 29 Rule 90 C.P.C is not at all maintainable, since they did not raise any objections in any of the proceedings anterior to the sale. It is further stated that they had been in receipt of notice from the Court in every stage of the proceedings.
5. (ii) But it is the allegation levelled by the these petitioners that no notice was served on them during relevant stages in the execution proceedings, that the property is worth more than Rs. 50 lakhs on the date of sale and it has been sold for a meagre sum of Rs. 11,03,000/- and the sale is not valid on account of material irregularity.
6. Mr. V. Raghavachari, Learned Counsel for the petitioners would contend in vehemence that inasmuch as the property is in the prime locality, which would fetch value several times than the upset price fixed by the Court, the Executing Court should have taken judicial notice of the fact of the increase of value of the immovable properties in Chennai and that it has failed to observe the mandatory provisions contained in Sub-Rule 2(a) of Rule 66 of Order 21 of Code and hence the sale suffers from material irregularity.
7. Contending on the other side of the coin, Mr. M.V. Muralidharan, learned Counsel for the respondents would submit that these petitioners had been consciously aware of the execution proceedings, who received notices from the executing Court then and there and keeping themselves silent for a long time and raising objections on the sale on the ground of irregularity is not sustainable and that the executing Court has conducted the sale proceedings as per the procedures laid down in the CPC and that no substantial injury has been caused to these petitioners.
8. The first petitioner examined himself as P.W.1 and one Civil Engineer examined as P.W.2 to show the value of the property. He produced a report stating that the property is worth about Rs. 37,52,000/-. Conversely, besides examining himself, the first respondent also brought to box another Civil Engineer who filed a report Ex.R.1 opining that the property could be valued at Rs. 10,95,000/-. Projecting these two reports the parties are at loggerheads. The oral evidence adduced by both parties may not be essential for deciding the matter. However, the upset price for the property as fixed by the Court is under challenge which is crucial. A perusal of the orders passed on the Execution Petition shows that these petitioners had been making their appearance for some time and at one point of time they remained exparte. The value given by the decree holder was Rs. 10,50,000/- and the Court Bailif estimated as Rs. 15,25,000/- and the Court fixed the upset price at Rs. 16,25,000/-.
9. Since there was no bidders on 11.1.2000, petition for reducing of the upset price was filed by the first respondent and it was reduced to Rs. 14,75,000/-. As the sale was not held on 23.11.2000 another E.A. was filed to reduce upset price upon which the same was reduced to Rs. 14,00,000/-. Even on the next date of sale i.e., on 17.09.2001 sale could not be conducted due to the absence of bidders and another petition was filed to reduce the price, on which the it was reduced to Rs. 12,00,000/-.
10. On 15.4.2002 also, sale did not take place as there was no bidders. Upset price was reduced to Rs. 11,00,000/- as per order in Execution Application and the sale was held on 12.09.2002, in which the second respondent was auction purchaser for Rs. 11,03,000/-. Sale Certificate was issued to him and subsequently he filed E.P. for delivery.
11. At the outset, the upset price was fixed by the Court at Rs. 16,25,000/- and the amount claimed in the Execution Petition was Rs. 4,98,145.50. The value of the property as fixed by the Court was three times than the value of the property. In this juncture, it is stressed before this Court by the petitioners'' side that the statutory mandate in Order 21 Rule 66(2)(a) has been violated and the Court should have brought a portion of the property alone for sale, which would satisfy the decree and taking the property in entirety to sale is invalid in the eye of law. In order to have a thorough discussion on this point, extraction of Order 21 Rule 662(a) and Order 21 Rule 90 CPC is advantageous:
Order XXI, Rule 66 of CPC
66. Proclamation of sales by public auction
(1) Where any property is ordered to be sold by public auction in execution of a decree, the Court shall cause a proclamation of the intended sale to be made in the language of such Court.
(2) Such proclamation shall be drawn up after notice to the decree-holder and the judgment-debtor and shall state the time and place of sale, and specify as fairly and accurately as possible-
(a) the property to be sold [or, where a part of the property would be sufficient to satisfy the decree, such part];
[Sub-rule 2 (b) to (e) and Sub-rules 3 and 4 omitted]
Order XXI, Rule 90 of CPC
90. Application to set aside sale on ground of irregularity or fraud
(1) Where any immovable property has been sold in execution of a decree, the decree-holder, or the purchaser, or any other person entitled to share in a ratable distribution of assets, whose interests are affected by the sale, may apply to the Court to set aside the sale on the ground of a material irregularity or fraud in publishing or conduction it.
(2) No sale shall be set aside on the ground of irregularity or fraud in publishing or conducting it unless, upon the facts proved, the Court is satisfied that the applicant has sustained substantial injury by reason of such irregularity or fraud.
(3) No application to set aside a sale under this rule shall be entertained upon an ground which the applicant could have taken on or before the date on which the proclamation of sale was drawn up.
Explanation.-There mere absence of, or defect in, attachment of the property sold shall not, by itself, be a ground for setting aside a sale under this rule.]
12. Rule 66(2)(a) of Order 21 of C.P.C., mandates the executing Court to consider the value of the property in entirety and if it finds that sale of a portion of the property would be adequate to satisfy the decree without deviation from the rules and procedures, it shall bring such portion of the property to sale. In case, if the executing court does not advert to the said rule and the entire property is brought to auction and the same was sold then the sale would get vitiated by material irregularity.
13. Insofar as Sub-rule 90(3) of Order 21 is concerned, whatever be the objections or obstructions which the Judgment Debtor would raise as to the sale for the purpose of praying the Court to set aside the sale setting out the allegations of irregularity or fraud, he ought to have taken steps earlier to the drawing of proclamation of sale and he is precluded under this Sub-rule to raise them after the proclamation of sale was drawn. But as for the applicability of Section 47 C.P.C., it is relatable to execution, discharge or satisfaction of the decree that shall be determined by the Executing Court and the pre-sale illegalities occurred in execution are amenable to the remedy under this Section and it is settled that post-sale illegalities or irregularities cause substantial injuries to the Judgment Debtor are covered under Order 21 Rule 90.
14. The learned Counsel for the petitioners argues that as per the provisions in Order 21 the Executing Court should have guided itself to restrict the extent of the property so as to satisfy the decree debt and its failure in this regard has invalidated the sale. He placed much reliance upon the decision of the Supreme Court for this aspect in
The non application of mind whether sale of a part of the property would satisfy the decree debt is a material irregularity doing substantial injury to the appellant attacking Order 21 Rule 90. In either case the sale is liable to be set aside. It is true that there is distinction between mere irregularity and material irregularities and the sale is not liable to be set aside on proof of mere irregularity. It must be material irregularity and the court must be satisfied that on account thereof substantial injury was sustained by the appellant. The sale of 550 Sq. yards for recovery of a paltry sum of Rs. 7,780.33, without selling a portion thereof, caused substantial injury to the appellant. [Desh Bandhu Gupta''s case]
It is of importance to note from this provision that in all execution proceedings, the court has to first decide whether it is necessary to bring the entire attached property to sale or such portion thereof as may seem necessary to satisfy the decree. If the property is large and the decree to be satisfied is small, the court must bring only such portion of the property, the proceeds of which would be sufficient to satisfy the claim of the decree holder. It is immaterial whether the property is one, or several. Even if the property is one, if a separate portion could be sold without violating any provision of law only such portion of the property should be sold. This, in our opinion, is not just a discretion, but an obligation imposed on the court. Care must be taken to put only such portion of the property to sale the consideration of which is sufficient to meet the claim in the execution petition. The sale held without examining this aspect and not in conformity with this requirement would be illegal and without jurisdiction. [Ambati Narasayya''s case] (para 7)
15. In the above said decision, another earlier decision was referred and relied upon. It was reported in
Under this provision the executing court derives jurisdiction to sell properties attached only to the point at which the decree is fully satisfied. The words ''necessary to satisfy the decree'' clearly indicate that no sale can be allowed beyond the decretal amount mentioned in the sale proclamation. In other words, where the sale fetches a price equal to or higher than the amount mentioned in the sale proclamation and is sufficient to satisfy the decree, no further sale should be held and the court should stop at that stage.
16. It has been repeatedly held by the Supreme Court that the blind sale of the entire property ignoring the provisions of law in execution case shall be deprecated, that a portion of the property has alone to be sold which is necessary to satisfy the decree and that the mandate of legislature cannot be ignored. In a nutshell, any sale proceedings in contravention of provisions of Order 21 Rule 64 and 66(2)(a) CPC cannot be sustained.
17. Learned Counsel for the petitioners also garnered support from a Division Bench decision of Kerala High Court in 1998 (1) KLJ 986 [Thomas Joseph v. Catholic Syrian Bank] in which it is held that if the property to be sold in auction is large and the decree to be satisfied is small, such portion of the property required to satisfy the claim of the decree alone should be sold in auction.
18. In another Division Bench decision of Kerala High Court in 1998 (2) KLT 640 [Regi Gerorge v. Bhaskaran Nair] it is observed that obtaining of inadequate price in auction sale amounts to substantial injury and it shall be the endeavour of the courts to obtain adequate price for the property put in for sale and that when the Supreme Court mandates that equal endeavor should be made to fetch adequate price, it is imperative on the part of the Court below to probe into the question whether the fraud or irregularity alleged has resulted in obtaining inadequate price.
19. The Calcutta High Court in
56. It is matter of shock and regret that the learned Judge of the Executing Court failed to realise that the valuation of the three-storied building in the year 1969 could not be Rs. 30,000/-, when the bare land was purchased in the year 1949 at Rs. 22,264 and 8 annas over which subsequently the said three-storied building was constructed. After a long lapse of 20 years the valuation of the land and building in any part of the country had considerably increased and in the city like Calcutta such valuation of the property had increased considerably. The learned Judge cannot be ignorant of the aforesaid fact.
20. Referring to this decision, the learned Counsel for the petitioners would say that the Court has to take judicial notice of the raise in the value of the immovable properties in a particular locality and then to act and as per Calcutta High Court, the presiding officer of the Court cannot ignore the fact as regards the value of the property in a particular area.
21. Learned Counsel for the petitioners also relies upon a Division Bench decision of this Court in 2008 (1) KLT 604 [Kuruvilla v. Corporation Bank] in which it is held that the Executing Court has to apply its mind and decide whether it is necessary to bring whole property to sale or whether to bring a portion of the property to sale to satisfy the decree.
22. Repelling the contentions of the learned Counsel for the petitioner, learned Counsel for the respondents would reiterate his contentions and places reliance upon certain decisions.
23. In
24. In
25. A Division Bench of the Andhra Pradesh High Court in
26. This Court while dealing with Order 21 Rule 90 has held in 1991 (2) MLJ 79 [P.S.S. Sathappan v. Andhra Bank Ltd., Coimbatore and Ors.] that any objections as regards the description of the property and as to its value, they have to be raised before the proclamation of sale was settled and they could not be raised under Order 21, Rule 90 against the validity of the sale.
27. In another Division Bench decision of Kerala High Court in
28. In 1997 TLNJ 379 [A. Kuppusamy Mudaliar v. G. Subramania Mudaliar and Palani], learned Judge of this Court has held that when the judgment debtor applied for adjournment of sale waiving fresh proclamation, it would amount to waiver of any defect apparent in the proclamation of sale.
29. When the principles and guidelines in the illuminating judicial pronouncements aforementioned are borne in mind, the following points transpire:
29. (i) The Executing Court has to consciously apply its mind while fixing the market value of the property on the material available. Then it is mandatory on its part to advert to the decree amount as claimed in the execution petition and the value of the property brought for sale and to see whether the auction sale of the entire property through court is absolutely necessary to satisfy the decree. If, in the opinion of the Executing Court that the proceeds of auction of a portion of the property would be adequate to satisfy the decree, then the Court shall bring such portion alone for sale even if the property is one.
29. (ii) If the upset price, in view of the Executing Court, does not reflect approximate actual value of the property, there is a risk for the auction purchaser to be misled and bearing the same in mind the Court has to fix the value of the property.
29. (iii) The Court has to ensure that the Judgment Debtor is duly served with notice in each and every stage of the proceedings, so as to afford him opportunity to make a say before the Court as to the value of the property in order to avoid irremedial injury.
29. (iv) The Court shall not merely accept unhesitatingly the ipse dixit of one or both as regards the value of the property. The order of sale proclamation should show that the representations and objections of the decree holder and the judgment debtor as to the value were considered by the Court.
30. (i) Rule 90(3) of Order 21 C.P.C. puts a statutory bar on the judgment debtor to raise any ground for setting aside the sale, after the sale was conducted by the Court, which the judgment debtor could have taken on or before the date of which proclamation of sale was drawn up. To put it otherwise, he cannot file any application to set aside the sale under this rule on the ground, which he could have raised anterior to the drawing up of proclamation of sale.
30. (ii) The petitioners have already mentioned before the Court as regards the value of the property as about Rs. 40 lakhs, in a proceeding in E.A. No. 2944 of 2000, which is a petition filed by them under Order 21 Rule 64, 58 and 105 C.P.C to raise the attachment effected on 14.12.1998 over the property by Court. The said petition was hotly contested by the decree holder and ultimately the petition was dismissed on 14.08.2000. There was no appeal nor revision from the said order, wherein executing Court has observed that the judgment debtors have not produced any material to show that the property was worth about Rs. 40 lakhs. The petition was filed into the Court on 11.06.2000 much later to the drawing up of sale proclamation. The Proclamation of Sale order was passed by the Court on 01.11.1999, fixing up the upset price. It took into consideration, the decree holder''s value and Bailiff''s value as Rs. 10,50,000/- and Rs. 15,25,000/- respectively and finally fixed the upset price at Rs. 16,25,000/-.
30. (iii) On earlier occasions, before the sale proclamation order was passed, the Judgment debtors had appeared before the Court, prayed time for payment and they also paid certain sum towards the E.P. amount and at one point of time they did not appear, hence they were set exparte. Afterwards the Court went on with the proceedings to pass order of proclamation of sale on 01.11.1999.
31. As per Rule 90(3) of Order 21 of the Code, the Judgment debtors should have raised the ground prior to drawing up of proclamation of sale. But in this case the ground as to value of property was raised after the proclamation was drawn up. If the judgment debtors had notice from court and acquiesced by taking no action before the date of sale proclamation, they are precluded from assailing its legality or correctness on the subsequent point of time alleging that the execution sale is bristled with material irregularities.
32. As far as the upset price fixed by the Court is concerned, as adverted to in paragraph 10 of this Judgment, the value of the property was three times than the E.P. amount and the Executing Court should have noted the fact that a part of the sale of the property was necessary to satisfy the decree. Since such condition has been deviated, it has to be held that the sale is ab initio void, as ordained by Order 21 Rule 66(2)(a).
33. Following the ratio contained in the decisions in Ambati Narasayya''s Case and Desh Bandhu Gupta''s case (supra), the excessive sale of the property in entirety has caused substantial injury to these petitioners and the sale held on 12.09.2002 is set aside.
34. In view of the discussions and observations following the decisions of the Supreme court, the order challenged, passed by the Executing Court, does not stand, which deserves to be set aside and it is accordingly set aside. The Civil Revision Petition has to be allowed.
35. The Executing court is directed to observe the following and to further proceed with the execution proceedings.
35.(a) The second respondent/auction purchaser may get refund of the amount available in deposit.
35.(b) The decree holder shall pay the amount which he has withdrawn from the Court deposit in the sale proceedings, or if the auction purchaser so desires, he may get the amount, which the decree holder has withdrawn already from the deposit, from the proceeds of the sale, which is to be held in future.
35.(c) The executing court shall go on with the execution proceedings as per the principles laid down in Ambati Narasayya''s Case and Desh Bandhu Gupta''s case (supra) and to see that none of the principles set out therein nor the statutory provisions are violated.
With the above said directions, the Civil Revision Petition is allowed. Connected C.M.Ps and V.C.M.Ps are closed. No costs.
