D. Kondaiah vs Guntha Rama Subbaiah and Another

S.V. Maruthi, J.—This Revision is filed against the order in C.M.A.No. 30/94 and E.A.No. 306/93 in E.P.No. 64/90 in OS No. 468/86. The Judgment-debtor is the petitioner. There was a money decree, for Rs. 5,71,000/- and there are other mortgages. The second respondent obtained money decree. In execution of the money decree the property was brought to sale. Originally the property was auctioned for Rs. 80,000/- on 16-9-1993 and one G.Venkatarami Reddy s/o G. Adireddy was the highest bidder. However, he did not deposit the amount required under the Rules and therefore, on 26-10-1993 second auction was conducted and the property was sold for Rs. 28,000/-. The judgment-debtor filed a petition Under Order 21 Rule 90, CPC complaining that there is non-compliance with Order 21 Rule 67 Sub-rule (2), CPC and that the price fetched was inadequate and therefore, he suffered substantial injury and hence the sale is liable to be set aside. The learned Prl. Dist. Munsif, Nandyal held that the property is subject to mortgage amount which will be around Rs. 5,71,000/- and the highest bidder offered bid for Rs. 28,000/-. In all the property was sold approximately for Rs. 6,00,000/-. He also held that the petitioner-judgment-debtor has knowledge of Court auction sale as on 16-9-1993. When the sale could not be completed because of technical reasons he was present in the Court and he was aware of next date of auction in the Court. He also held that the contention of the petitioner that torn torn was not effected and the proclamation was not affixed to the door of the house are all of no avail as all formalities are followed to that effect and there are records. He also negatived the contention of the petitioner that the sale proclamation is published in "Kurnool Nedu" which is not a popular paper and has no wide circulation and observed that Kurnool Nedu" is a daily from Kurnool which is at a distance of 74 kms from Nandyal and that the District Judge, Kurnool has recognised "Kurnool Nedu" as one of the Newspapers wherein the Court publications can be ordered and every day number of Court publications relating to the sale of properties, summons etc., are being published. Holding as above, the learned Munsif rejected the petition Under Order 21 Rule 90 CPC. On appeal the learned Sub-Judge, Nandyal agreed with the view of the learned Dist Munsif. He observed that the publication was made in the recognised Newspaper "Kurnool Nedu" and the sale was held as per the procedure in the open Court and that therefore, there is no irregularity or fraud in conducting the sale. He also observed that according to the evidence of P.Ws. 1 to 4 the petition schedule property is worth more than Rs. 7,00,000/- and that the property amount fetched out of sale is nearly touched Rs. 6,00,000/-. Therefore, the sale amount is not inadequate. Aggrieved by the same the present Revision is filed.

The main argument of the learned Counsel for the petitioner is that Under Order 21 Rule 67 Sub-rule (2), CPC it is mandatory for the Court to publish the proclamation of sale in local Newspaper in addition to the publication in accordance with Order 21 Rule 54 Sub-rule (2). "Kurnool Nedu" is not circulated within Nandyal taluk and therefore, there is violation of mandatory provision of Order 21 Rule 67, CPC. Since there is violation of mandatory provision Under Order 21 Rule 67, the sale is liable to be set aside.

In support of his contention he relied on Desh Bandhu Gupta Vs. N.L. Anand and Rajinder Singh, and Lal Chand Vs. VIIIth Addl. District Judge and others, . The second submission of the learned Counsel for the petitioner relying on Ramasesha Iyer v. C.V. Ramanujachariar, AIR 1935 Madras 459 is since the properties have been grossly undervalued and sold for a very low price the Court has to draw an inference that the inadequacy of the price obtained for the property at the sale was the result of the under-valuation and resulted in substantial injury to the petitioner. He also brought to my notice the judgment in Seethammal Vs. Senthil Finance and another, . While the Counsel for the respondent submitted that Under Order 21 Rule 67 there is substantial compliance in publishing the sale proclamation and the price fetched is not inadequate. He submitted that the property is subject to mortgage of Rs. 5,71,000/- and it is sold for Rs. 28,000/-. In all, the property was sold for Rs. six lakhs. He brought to my notice the observation of the Supreme Court in Kayjay Industries (P) Ltd. Vs. Asnew Drums (P) Ltd. and Others, as to how the validity of the Court sales have to be judged.

The question, therefore, is whether the publication of the, date of auction in a local Newspaper which according to the petitioner has no wide publication vitiates the sale resulting in substantial injury to the petitioner Under Order 21 Rule 90, CPC and, therefore, the sale has to be set aside.

Order 21 Rule 67 provides for the mode of making proclamation. It says that every proclamation shall be made and published, as nearly as may be, in the manner prescribed by Rule 54, Sub-rule (2). Sub-rule (2) of Rule 67 says where the Court so directs, such proclamation shall also be published in the official gazette or in a local news paper, or in both, and the costs of such publication shall be deemed to be costs of the sale. Order 21 Rule 54 Sub-rule (2) provides for the attachment of immovable property and deals with the manner in which the property has to be attached. According to the Rule, the order of attachment shall be proclaimed at some place on or adjacent to such property by beat of drum or other customary mode, and a copy of the order shall be affixed on a conspicuous part of the property and then upon a conspicuous part of the Court-house, and also, where the property is land, paying revenue to the Government, in the office of the Collector of the District in which the land is situate and, where the property is land situate in a village, also in the office of the Gram Panchayat, if any, having jurisdiction over that village.

Order 21 Rule 67 Sub-rule (2) provides that in addition to the mode of publication prescribed Under Order 21 Rule 54 (2) where the Court so directs, such proclamation shall also be published in the Official Gazette or in a local Newspaper, or in both, and the costs of such publication shall be deemed to be costs of the sale.

A reading of the Order 21 Rule 67 Sub-rule (2) makes it clear that proclamation can be published in the Official Gazette or a local Newspaper in addition to the publication following the procedure prescribed Under Order 21 Rule 54 Sub-rule (2) for publication of proclamation of sale. Therefore, the publication in the Newspaper cannot be said to be mandatory. It is not disputed that sale proclamation was published in accordance with the procedure prescribed Under Order 21 Rule 54(2), CPC. Even otherwise in this case the requirement Under Order 21 Rule 67 Sub-rule (2) is complied with. The finding of the learned Dist. Munsif as well as the Sub-Judge is that the District Judge, Kurnool recognised this paper ''Kurnool Nedu'' as one of the Newspapers where Court publications are ordered and every day number of publications relating to the sale of property and summons are published. Therefore, the requirement of Order 21 Rule 67 Sub-rule (2) is satisfied.

The learned Counsel for the petitioner relied upon the evidence of P.W.3 who stated that no News papers are being published in Nandyal either weekly or daily. Kurnool is the nearest place to Nandyal where the papers are being published and he admits that he has necessary permission to publish the Newspaper and also recognition by the District Court to publish the Court publications in his Newspaper and his paper is mainly devoted to Court publications. It is no doubt true that in the chief-examination he says that he sells his paper at Kurnool Bus-stand and not in other places and there are no private sales. From the chief-examination it cannot be held that ''Kurnool Nedu'' has no circulation in Nandyal. When once the Dist. Judge recognises the paper for the purpose of publication of Court matters, it cannot be said that it has no wide publication and in my view, the publication of proclamation of sale in ''Kurnool Nedu'' did not result in substantial injury to the petitioner.

The next aspect to be considered is whether the sale price fetched at the second auction is inadequate.

It is not disputed that the property is subject to mortgage of Rs. 5,71,000/-. It is also not disputed earlier the property was put to auction and the auction amount fetched was Rs. 80,000/-. However, the learned Magistrate observed that the auction bidder G.Venkataramireddy did not deposit the amount and gave a slip and sale could not be completed and therefore, a proclamation was again issued. It is not disputed that the amount now fetched is Rs. 28,000/-. The main contention of the learned Counsel for the petitioner is that the property is worth Rs. 7 lakhs and there is difference of one lakh and hence it should be held that the price fetched is inadequate. In this context the observations of the Supreme Court in Kayjay Industries v. Asnew Drums (5 supra) are relevant. It was held

"Certain salient facts may be highlighted in this context. A Court sale is a forced sale and, notwithstanding the competitive element of a public auction, the best price is not often forthcoming. The judge must make a certain margin for this factor."

"Be it by a Receiver, Commissioner, liquidator or Court this principle must govern. This proposition has been propounded in many rulings cited before us and summed up by the High Courts. The expressions material irregularity in the conduct of the sale must benignantly construed to cover the climax act of the Court accepting the highest bid. Indeed, under the Civil Procedure Code, it is the Court which conducts the sale and its duty to apply its mind to the material factors bearing on the reasonableness of the price offered is part of the process of obtaining a proper price in the course of the sale. Therefore, failure to apply its mind to this aspect of the conduct of the sale may amount to material irregularity. Mere substantial injury without material irregularity is not enough even as material irregularity not linked directly to inadequacy of the price is insufficient. And where a Court mechanically conducts the sale or routinely signs assent to the sale papers, not bothering to see if the offer is too low and a better price could have been obtained, and in fact the price is substantially inadequate there is the presence of both the elements of irregularity and injury. But it is not as if the Court should go on adjourning the sale till a good price is got, it being a notorious fact that Court sales and market prices are distant neighbours. Otherwise, decree-holders can never get the property of the debtor sold. Nor is it right to judge the unfairness of the price by hindsight wisdom. May be, subsequent events, not within the ken of the executing Court when holding the sale, may prove that had the sale been adjourned a better price could have been had. What is expected of the judge is not to be a prophet but a pragmatist and merely to make a realistic appraisal of the factors, and if satisfied, that, in the given circumstances, the bid is acceptable, conclude the sale. The Court may consider the fair value of the property, the general economic trends, the large sum required to be produced by the bidder, the formation of syndicate, the futility of postponements and the possibility of litigation, and several other factors dependent on the facts of each case. Once that is done, the matter ends there. No speaking order is called for and no meticulous post-mortem is proper. If the Court has fairly even if silently applied its mind to the relevant considerations before it while accepting the final bid, no probe in retrospect is permissible. Otherwise, a new threat to certainty of Court will be introduced."

I have already referred in the earlier paragraphs that the Court sold the property subject to a mortgage. Once it was already sold and the bidder perhaps having found that the property does not fetch that much amount gave a slip and the property was to be re-auctioned. Further, in spite of repeatedly asking, the counsel for the petitioner could not say what is the decretal amount. Therefore, the total amount fetched in the auction is the mortgage amount of Rs. 5,71,000/- + Rs. 28,000/- fetched at the auction + Decretal amount. Therefore, the total amount nearly is Rs. 7 lakhs. This being a Court sale, it is difficult to expect a best price. Further, it is not a case where the sale was conducted mechanically and it cannot also be said that the price is substantially inadequate. As pointed out by the Supreme Court a margin should be given in determining whether the price fetched in Court auction is inadequate or not. If the sale is postponed on the ground that the price fetched is not adequate at no point of time the decree-holder can get the property of the judgment-debtor sold. Therefore, it is to be seen whether the price is unfair taking into account the facts and circumstances of the case. If the price fetched is not unfair with a little margin it cannot be said that nay substantial injury is caused. On the facts and circumstances, I have already pointed out that it cannot be said that the price fetched is unfair. The judgment in Desh Bandhu Gupta v. N.L. Anand and Rajinder Singh (1 supra) is a case where it was held:

"Sub-rule (1) of Rule 66 enjoins the Court that the details enumerated in Sub-rule (2) shall be specified as fairly and accurately as possible. The duty to comply with it arises only after service of the notice on the judgment-debtor unless he voluntarily appears and is given opportunity in the settlement of the value of the property. The absence of notice causes irremedial injury to the judgment-debtor. Equally publication of the proclamation of sale Under Rule 67 and specifying the date and place of sale of the property Under Rule 66 (2) are intended that the prospective bidder would know the value so as to make up their mind to offer the price and to attend to at sale of the property and to secure competitive bidders and fair price to the property sold.....

It was also held:

"Therefore, a proclamation of sale drawn casually without compliance with the mandatory requirement and a sale held in furtherance thereof is not a sale in the eye of law. In the present case, the procedure adopted by the Court in non-compliance of Order 21 Rules 66 and 67 is in flagrant breach of the mandatory provision. It is a nullity ab initio."

There cannot be any dispute about the proposition laid down by the Supreme Court Under Order 21 Rule 67 Sub-rule (1), CPC. Order 21 Rule 67 Sub-rule (1) is mandatory and non-compliance of the said rule vitiates the sale. A distinction is to be drawn between Order 21 Rule 67(1) and Order 21 Rule 67(2). While the publication of proclamation of sale in accordance with Order 21 Rule 67(1) is mandatory, the publication of proclamation of sale in accordance with Order 21 Rule 67 (2) is directory. Failure to comply with the requirement of Order 21 Rule 67 (2) does not vitiate the sale whereas failure to comply with the requirement Under Order 21 Rule 67(1) vitiates the sale provided substantial injury is caused. The sale proclamation in Kurnool Nedu is in substantial compliance with the Rules: Order 21, Rule 67 Sub-rule (2), CPC.

The Judgment of the Madras High Court in Ramasesha Iyer v. C.V. Ramanaujachariar (3 supra) is a case where there is gross inadequacy of price. Since, I found that the price fetched in this case is not inadequate the judgment is irrelevant.

Similarly the judgment in Desh Bandhu Gupta Vs. N.L. Anand and Rajinder Singh, is a case where the facts as disclosed are after the bid was started sale was notified in the village by beat of drum and people started coming thereafter and five persons including the respondent participated in the bid. Evidently the procedure adopted by the Court is in violation of Order 21 Rule 67 Sub-rules (1) and (2). Under these circumstances, it was held that the sale is illegal. The judgment is not applicable to the facts of the present case.

The judgment in Seethammal v. Senthil Finance (4 supra) is a case where the property worth Rs. 75,000/- was sold for Rs. 15,100/-. There is a difference of Rs. 60,000/-. Under these circumstances, it was held that the sale conducted was illegal. The judgment in Kondre Munemma Vs. Jarugumallu Veerabhadraiah, is a case where notices were not issued to the judgment-debtor. Under these circumstances, it was held that substantial loss is caused to the debtor and the sale was set aside.

It follows from the above that there are no merits in the Revision Petition and it is accordingly dismissed. No Costs.