Jayakumar vs State Bank Of Travancore, Kottayam Main Branch(D.H), Pin 686001

P.G.Ajithkumar, J.

This is an appeal filed by the 6th judgment debtor in EP No.332 of 1999 in O.S No.1048 of 1992 on the file of the Additional Sub Court, Kottayam. He has filed E.A No.79 of 2007 under Order XXI Rule 90 of the Code of Civil Procedure, 1908 seeking to set aside the sale held on 06.01.2007. The Additional Sub Court dismissed that application as per the order dated 15.07.2010. Challenging the said order, this appeal is filed under Section 104 read with Order XLIII Rule 1(j) of the Code.

Heard the learned counsel appearing for the petitioner, the learned counsel appearing for the 1st respondent and also the learned counsel appearing for the 2nd respondent.

O.S.No.1048  of  1992  was  filed  by  the  1st respondent seeking recovery of money. That suit was decreed on 25.11.1997 allowing the 1st respondent to realise Rs.6,06,003/- and paise 39 along with interest. The 1st respondent filed E.P.No.332 of 1999 for execution of the said decree. Additional respondents 5 and 6 were impleaded in the execution petition following the death of the 2nd judgment debtor. 26.5 cents of land comprised in survey no.284/21 of Aymanam village was brought on sale in execution of the decree. The said property was sold in public auction on 06.01.2007 and the property was bid by the 2nd respondent for an amount of Rs.6,00,000/-. Petitioner filed E.A.No.79 of 2007 for setting aside the said sale alleging that there was irregularity and fraud in publishing and conducting the sale. It was alleged that the property was sold for a totally inadequate price and there was no due proclamation of the sale. In the proclamation for sale, material particulars were not stated, particularly, place and time for the sale and that petitioner was not given sufficient opportunity to raise his objections.

The 2nd respondent filed an objection opposing the application for setting aside the sale. They maintained that proclamation was duly publicised and the auction was conducted strictly in terms of the Rules. There were no bidders on the first occasion and therefore the sale was proclaimed again. It was in that public auction, the 2nd respondent bid the property for a commensurate price. Respondents accordingly contended that the application filed by the petitioner is without any bonafides.

The Additional Sub Court considered the matter in detail. Although no evidence was let in, learned counsel appearing on either side raised serious contentions and the Court after considering such contentions held that there was no sufficient reason to set aside the sale. Accordingly the application was dismissed.

Learned counsel appearing for the petitioner would submit that the property having an extent of 26.5 cents abutting the public road was sold for a price of Rs.6,00,000/-whereas the value of the property was Rs.1,00,000/- per cent. Since the Court did not conduct any enquiry, but by accepting a valuation certificate produced by the 1st respondent proceeded to sell the property for a totally inadequate price. The learned counsel by placing reliance on Desh Bandhu Gupta v. N.L.Anand & Rajinder Singh [(1994) 1 SCC 131] would submit that the sale of the property was totally in violation of the provisions of Rules 64 and 66 of Order XXI of the Code and it is invalid. The learned counsel further would submit that when the proceedings of the execution Court in conducting the sale was totally against the provisions of law, Sub-rule 3 of Rule 90 of Order XXI of the Code does not stand in the way of invoking the provisions for setting aside the sale. The learned counsel further would submit that the proclamation schedule was not drawn up properly inasmuch as it did not contain the place and time for the auction, and such other details, for which reasons also the sale is invalid.

The  learned  counsel  appearing  for  the  2nd respondent on the other hand would submit that after affording sufficient opportunity only auction was held, and without raising objections regarding valuation of the property at that time, the appellant could not raise such contentions in the petition for setting aside the sale in view of the bar contained in sub-rule 3 of rule 90 of Order XXI of the Code. The 2nd respondent is a stranger to the proceedings and when he bid the property, a plea for setting aside the sale shall not ordinarily be entertained. The distinction between the decree holder-purchaser and a third party-purchaser is clearly drawn by the Apex Court in Janak Raj v. Gurdial Singh and another [AIR 1967 SC 608] and Chinnammal & others v.P.Arumugham [1990(1) SCC 513] and  therefore  the order rejecting plea of the appellant to set aside the sale does not suffer from any illegality.

In Ambati Narasayya v. Subba Rao [AIR 1990 SC 119], the Apex Court held 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.

Therefore, it is the obligation of the court to ensure that only such portion of the property which is sufficient to meet the claim in the execution petition alone is sold. The words 'necessary to satisfy the decree' in Rule 64 clearly indicate that no sale can be allowed beyond the decretal amount mentioned in the sale proclamation. It follows that the issue as to whether the property brought on sale is sufficient portion or excess is a matter touching jurisdiction of the court and not merely one of propriety or regularity. Any violation of the Rule therefore will vitiate the process and the sale would be illegal and coram non judice. The said principle was reiterated in Desh Bandhu Gupta(supra).

The learned counsel appearing for the appellant contends that the property would fetch more than Rs.50 lakhs, whereas it was sold for a paltry sum of Rs.16 lakhs. It is alleged that the property happened to be sold for such a low price since the upset price was fixed as Rs.6 lakhs only. An auction sale always is in the nature of a distress sale. So, it is unlikely to get its exact market price in a court auction. Whether or not the sale was for a sufficient price, may not always be a decisive factor while deciding a petition under Rule 90 Order XXI of the Code. It was held by a three-Judge Bench of the Apex Court in Kayjay Industries (P) Ltd. v. Asnew Drums (P) Ltd. and others [(1974) 2 SCC 213] that inadequacy of price in an auction sale cannot demolish every court sale. Therefore, the fact that the property was sold for a comparatively low price alone cannot be a reason to set aside the sale. But the question is whether the court exercised its jurisdiction legally while settling the proclamation since the invariable rule is that the Court is obliged to ensure whether a portion of the property would be sufficient to meet the claim in the execution petition or the entire property is required to be sold.

From the perusal of the records in E.P No.332 of 1999, it is seen that proclamation for auction sale scheduled to 20.01.2006 was settled by the Court without adverting to any reliable material. The decree debt due at that time was Rs.10,09,585/-. It is not stated in the proclamation schedule as to what was the price of the property, which has an extent of 26.5 cents, suggested by the decree holder. True, if the appellant - 6th judgment debtor did not file any objection or statement suggesting value of the property, there was no need or possibility to state the value suggested by him. However, even if it is not mandatory for fixing upset price, it is the obligation of the Court to record its satisfaction that sale of the whole of the property is required to satisfy the claim in the Execution Petition. No such enquiry or recording of satisfaction is seen done by the Execution Court.

A valuation certificate was produced by the decree holder and that might have seen taken into account by the Court. That was a valuation report given to the bank-1st respondent by a private valuer. When the Court acted upon the said report alone as the basis for taking a decision for putting whole of the property on sale, the decision became erroneous. The upset price was fixed in the warrant for sale which is exactly the valuation made by the private valuer. The said approach of the Execution Court amounted to acting upon the ipse dixit of the decree holder. Sale was not taken place on 20.01.2006. Therefore the sale was adjourned and after a fresh proclamation, auction was held on 05.01.2007. A similar proclamation schedule and sale warrant were drawn and sale was accordingly taken place for an amount of Rs.6,00,000/-. The 2nd respondent, who alone participated the auction, bid the property. In view of the aforesaid aspects, by applying the principle laid down by the Apex Court in Desh Bandhu Gupta(supra) the sale has to be held illegal.

The execution Court referred to the principle laid down by this Court in M/s.Klorofarm v. Union Bank of India [2000(2) KLT 854] where it was held that under Order XXI Rule 69, the Court may in its discretion, adjourn any sale hereunder to a specified day and hour, and the officer conducting any such sale may in his discretion adjourn the sale, recording his reasons for the adjournment. Rule 341 of the Civil Rules of Practice states as follows: “All Court sales shall commence at 1.45 P.M and the sale of any lots not completed before 3.15 P.M shall be adjourned to 1.45 P.M on the next Court day.” On the basis of the decisions rendered by various Courts, it is clear that omission to specify the time and place of the auction will amount to material irregularity under Order XXI Rule 90 of the Code of Civil Procedure.

Perusal of the proclamation schedule shows that time for the auction or the place where auction would be conducted were not stated therein. When only one person attended the auction and the property was sold for, an amount just above the upset price and the contention of the appellant is that the property was worth more than five times the auction value, lack of mentioning time and place for the auction has the effect of vitiating the sale.

As rightly pointed out by the learned counsel appearing for the 2nd respondent, there is a difference between the decree holder-purchaser and the third party-purchaser. But the said distinction was drawn in the Janak Raj and Chinnammal supra in the context of setting aside of the decree in execution of which the property has been put in auction.

If, after the sale of the property, the decree is happened to be set aside in the appeal or such other proceedings, the sale need not necessarily be set aside, if the purchaser is a third party. Whereas, if the decree holder himself is the purchaser, setting aside of the decree has the obvious effect of rescinding the sale. The said distinction shall not have application while deciding an application under Order XXI Rule 90 of the Code, where the relevant considerations are totally different. The questions are whether there was fraud or irregularity in publishing or conducting the sale and also whether the owner of the property sustained substantial injury. If those questions are answered in the affirmative, a third party-purchaser cannot claim impunity and get the sale protected. Therefore the said contention of the learned counsel appearing for the 2nd respondent is not able to be accepted.

The  learned  counsel  appearing  for  the  2nd respondent raised yet another contention that the appellant had filed E.A. No.172 of 2013 invoking the provisions of Order XXI Rule 89 of the Code and having the same been dismissed, the appellant lost the right of pursuing the application under Order XXI Rule 90 of the Code. Sub-rule 2 of Rule 89 of Order XXI says that a person applies under rule 90 to set aside sale of his immovable property, is not entitled to make or prosecute an application under Rule 89 unless he withdraws his application under rule 90 of the Code. Here the position is just the converse. A petition under Rule 89 is not made a bar for a petition under Rule 90 of the Code. That apart from Annexure 2 produced by the 2nd respondent along with I.A. No.1 of 2023, which is an order of the Additional Sub Court, Kottayam in E.A.No.172 of 2013, it is seen the application under Rule 89 of Order XXI was dismissed as barred by the law of limitation. It is also observed in the said order that the petition was barred under Rule 89(2) of Order XXI of the Code. Since E.A. No.172 of 2013 was dismissed as time barred, and the bar under rule 89(2) of Order XXI of the Code is for filing or prosecuting a petition under Rule 89, the said contention of the learned counsel for the 2nd respondent is not tenable.

For the reasons stated above, we are of the view that sale conducted by the Court below on 06.01.2007 is vitiated by illegality. When a property is sold for a totally inadequate price, and the sale has occurred on account of non compliance of the provisions of Rule 64 and 66 of Order XXI of the Code, the obvious inference is that the owner of the property sustained substantial injury. Therefore, the sale dated 06.01.2007 is liable to be set aside. The impugned order of the Additional Sub Court, Kottayam is therefore liable to be reversed.

Accordingly, this appeal is allowed. Order dated 15.07.2010 in E.A No.79 of 2007 in E.P.No.332 of 1999 in O.S.No.1048 of 1992 of the Additional Sub Court, Kottayam is set aside. That application stands allowed. The Additional Sub Court will restore the Execution Petition on file and proceed with it in accordance with law. Sale price deposited by the 2nd respondent shall be refunded. If the said amount was withdrawn by the 1st respondent, the sale price along with interest at the rate of 9% per annum from the date of receipt of that amount by the 1st respondent till repayment shall be paid to the 2nd respondent. Parties shall appear before the Additional Sub Court, Kottayam on 26.06.2023.