Gnan Das vs Paulin Moraes

K.S. Radhakrishnan, J.—The question that has come up for considerate not raised by the judgment debtor in the early. tiff missing tiff missing page no 85 that any property attached by it and liable to sale or such portion thereof as may seem necessary to satisfy the decree, shall be sold and that the proceeds of such sale, or a sufficient to satisfy the decree, the same will be sold in public auction. Form 27 of Appendix E of the Schedule also directs the Court auctioneer to sell so much of the said property and realise such amount as to satisfy the decree. The executing court will get jurisdiction to sell properties attached by it only to the point at which the decree is fully satisfied. Beyond that there is no jurisdiction. In all execution proceedings, court has to decide as to whether it is necessary to bring the entire attached property to sale, or such portion thereof, as it may seem necessary to satisfy the decree. Court should itself make comparison with regard to the value of the property attached and the decree amount. When the property attached is large, and the decree to be satisfied is small, a duty is case on the court to ascertain whether by selling the small portion, the decree would be satisfied. Supreme Court in Takkasccla Pedda Subba Reddi v. Pujari Padmavathamma (1997) 3 SCC 337, while considering the scope of O. XXI R. 64 CPC, held as follows:

Under O.XXI, R.64, the Executing Court deprives 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 sales fetches a price equal to or higher then the amount mentioned in the said proclamation, and is sufficient to satisfy the decree, no further sale should be held and the court should stop at that stage.... The fact that the judgment debtor did not raise an objection on this ground before the Executing Court is not sufficient to put him out of court because this was a matter which went to the very root of the jurisdiction of the Executing Court to sell the properties and the non-compliance with the provisions of O.21, R.64 of the Code was sufficient to vitiate the same.

Supreme Court in Ambati Narasayya Vs. M. Subba Rao and another, also considered the scope of O. XXI, R. 64 CPC. and held as follows:

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 violation of 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 so sale to consideration of which is sufficient to meal 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.

Supreme Court in Shalimar Cinema Vs. Bhasin Film Corporation and Another, pointed out that it is the duty of the court to see that the requirement of O.XXI, R.66 is properly complied with. Court said:

...we do with to say that the court has a duty to see that the requirements of O. XXI R. 66 are properly complied with. In the words of the Judicial Committee, ''In sales under the direction of the court, it is incumbent on the court to be scrupulous in the extreme''. Though it may not be necessary for the court to make a valuation and enter it in the sale proclamation in every case, it is desirable at least in cases of sale of valuable property that the court make its valuation and enter it in the sale proclamation. We think it necessary to add that no action of the court or its officers should be such as to give rise to the criticism that it was done in an indifferent or casual way.

The dictum was subsequently followed by the Supreme Court in Desh Bandhu Gupta Vs. N.L. Anand and Rajinder Singh, . The Court held that the CPC has taken special care charging the duty on the executing court and it has a salutary duty and a legislative mandate to apply its mind before setting the terms of proclamation and satisfy that if part of such property as seems necessary to satisfy the decree should be sold if the sale proceeds or portion thereof is sufficient for payment to the decree holder or the person entitled under the decree to receive the amount and so much of that property alone should be ordered too be sold in execution. The non-application of mind to the question whether sale of a part of the property would satisfy the decree debt is a material irregularity doing substantial injury to the judgment debtor attracting O.XXI R.90.

Supreme Court in a recent decision in Lal Chand Vs. VIIIth Addl. District Judge and others, set aside the sale conducted by the executing court to effect sale of reasonable portion of the property for realisation of the decree amount. Supreme Court held so relying on the decision in Ambali Narasayya''s case (supra), since non-consideration of the said aspect would render the sale illegal and without jurisdiction.

In the instant case, the court below took the view that since judgment debtor did not raise the contention that a portion of the property would fetch the decree amount before proclamation of sale was drawn up, he cannot raise the said objection in view of O.XXI, R.90(3) of the CPC. O. XXI, R. 90 is extracted below:

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, or whose interest arc 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 conducting 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 any ground while the applicant could have taken on or before the date on which the proclamation of sale was drawn up.

Court below therefore, found that by virtue of O.XXI, R.90(3), the judgment debtor cannot make an application to set aside the sale upon any ground which the applicant could have taken on or before the date on which the proclamation of sale was drawn up.

In the instant case, admittedly judgment debtor failed to raise those contentions before the proclamation of sale was drawn up. Therefore, the question that arises for consideration is as to whether he is disabled from raising those contentions after the sale was effected. Two items of properties, which arc the subject matter of sale are 40 cents of land and a building thereon, and three cents of land with a building thereon. The decree amount comes around to Rs.60,000/-. We do not find at any point of time, the executing court has addressed itself to the question as to whether one item of property would satisfy the decree amount. Executing court has got a statutory duty to address itself to that question, when two or more properties are included in the proclamation of sale. If the property which is sought to be sold is considerably large, compared to the decree amount, the Executing Court has to consider the question as to whether by sale of a portion of the land, the decree would be satisfied. No action of the court or its officers should be such as to give rise to the criticism that it was done in an indifferent or casual way. In other words, it is incumbent on the court to be scrupulous in the extreme. Non-discharge of its statutory duty renders the entire proceedings illegal and without jurisdiction. It is a mere irregularity, but a matter which goes to the Very root of jurisdiction of the court.

In view of the above mentioned settled legal position we find that the court below has committed a grave error and acted without jurisdiction in not addressing itself to the question a to whether one item of property or portion of the properties if sold would satisfy the decree amount. We, therefore, hold that the sale conduced on 12.4:1996 is not in conformity with the statutory requirement, and is therefore illegal. and without jurisdiction. We are of the view that O.XXI, R.90(3.) would not bar such a petition, since the question of very jurisdiction of the court is involved. Court can even suo motu consider such question, if it has committed an illegality which goes to the very root of the jurisdiction of the court. We, therefore, set aside the sale conducted on 12.4 1996.

In the instant case, a contention was raised by the judgment debtor that property was in fact bid in auction by one Prabhakaran, who is a driver attached to the District Court, Trivandrum, and Chandrika, his wife, was only a benami. It is also his case, Chandrika also a Government servant, and that she should have obtained permission from the Government before participating in the auction. In the proceeding, we are not inclined to go into those questions since we have already held that the sale conducted on 12.4.1996 is bad in law.

In the instant case, sale is yet to be confirmed. If no application is made under R.89, or 90 or 91 of O.XXI, or where such application is made and disallowed, the Court shall make an order confirming the sale, under O.XXI, R.92, and thereupon the sale shall become absolute. We are of the view that even if under O.XXI; R.89 or 90 of 91, no application is filed, court can look into the question whether it has acted in excess of its jurisdiction, when the question of confirmation of sale comes up for consideration, under O.XXI, R.92..

Supreme Court in Navalkha and Sons Vs. Ramanuja Das and Others, , took the view that the condition of confirmation by the court operates as a safeguard against the property being sold at inadequate price whether or not it is a consequence of any irregularity or fraud in the conduct of the sale. It was held that in every case it was the duty of the court to satisfy itself that having regard to the market value of the property, the price offered is reasonable. Unless the court is satisfied about the adequacy of the price, the act of confirmation of the sale would not be a proper exercise of judicial discretion. Later, the Supreme Court in Kayjay Industries (P) Ltd. Vs. Asnew Drums (P) Ltd. and Others, though did not set aside the sale conducted by the executing court, held that 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. Supreme Court in LICA (P) Ltd. v. Official Liquidator (No. 1). (1996) 85 Com. Cases 788, held that the condition of confirmation by the court operates as a safeguard against the property being sold at an inadequate price whether or not it is a consequence of any irregularity or fraud in the conduct of the Sale.

However, we make it clear that it is not as if in every case the court has to reassess or reexamine whether it has committed an illegality. Mere inadequacy of price cannot demolish every court sale. But the executing court is only concerned with the question as to whether there is any failure in discharging its statutory duty or that it has acted beyond its jurisdiction. Therefore, even at the time when sale is sought to be '' confirmed under O.XXI, R.92, court can consider whether it acted beyond its jurisdiction.

In view of the above mentioned legal position, we are of the view that court below has acted beyond its jurisdiction in selling both the items of property We, therefore, set aside the sale. In consequence with the interim order passed by this Court, judgment debtor has already deposited the amount, and the amount is withdrawn by the decree holder. Consequently, the decree stands satisfied It is also seen that auction: purchaser has already deposited the decree amount in the court below. Therefore,. judgment debtor is directed to pay interest to the auction purchaser at the rate of 12% per annum from the date of deposit by the auction purchaser till 15.1.1998. Judgment debtor is further directed to deposit an amount of Rs. 2,500/- by way of costs before the court below over and above the interest. It is open to the auction purchaser to withdraw the abovesaid amounts including the amount deposited on or before 15.1.1998: The; amounts, if not deposited by the judgment debtor, would be a charge on the property and could be realised through execution.

C.R.P. and CM. A. are allowed as above.