Raghurama Shetty vs Karnataka Bank Ltd.

R. Ramakrishna, J.—The Question of Law involved in this Revision is :

"Whether the provisions of Order XXI Rule 64 of the CPC are not applicable to the sale of mortgaged properties under Execution?"

The petitioner is a judgment-debtor in Execution Case No.322/87 arising out of O.S.No.93/80 pending on the file of the learned Civil Judge, Udupi, Dakshina Kannada. The said Execution is filed by the Respondent for recovery of Rs. 1,03,581-74p. Assistance of the Court is required for the recovery of the said amount by the sale of the mortgaged properties set out in the Preliminary Decree.

This Preliminary Decree was passed in O.S.No. 93/80 by virtue of a joint Memo filed by both the parties. The properties subjected to mortgage and the properties offered as collateral security are set out in the Preliminary Decree dated 12.9.1981. They are classified by the petitioner before the Executing Court as follows:

(1) a Rice Mill Building with back-yard for drying:

(2) a Residential house with front-yard.

(3) about 0.50 acres of coconut garden and about 2 acres of wet land:

Though the judgment-debtor raised contentions that sale of agricultural lands cannot be held in view of the Karnataka Land Reforms Act, and the selling of the machineries and the house, hit under Order 21 Rule 36(2) of the Code of Civil Procedure, the said contentions are given up and the prayer of the petitioner is to give a direction to the Executing Court to sell the properties in three lots one after the other, on the principles laid down under Order 21 Rule 64 of the Code of Civil Procedure.

The petitioner classified the value of the properties now under sale by virtue of the Execution Petition, as hereunder;

(a) a Rice Mill building with back-yard and machineries Rs.2,50,000-00 (b) a Residential Building Rs.4,00,000-00 6. The further grievance of the petitioner is that, the learned Civil Judge has over-ruled the objections with regard to the valuation and he has accepted the valuation made by the decree-holder. Therefore, the petitioner seeks direction that the learned Civil Judge should also mention the value of the properties as given by the petitioner and the properties shall be sold by lots one after the other.

In Gajadhar Prasad and Others Vs. Babu Bhakta Ratan and Others, , the Hon''ble Supreme Court has considered that mere mention of valuation of properties as stated by Decree-holder without deciding the valuation made by the Judgment-Debtor if amounts to material irregularity? In Para 16 of the Judgment, it was held:

"In the case before us, the execution Court had practically accepted, as its own valuation, without indicating reasonable grounds for this preference, whatever the decree holders had asserted about the value of the property. It did not bother to seriously even consider the objections of 8the judgment-debtors. We think that the duty to consider what particulars should be inserted in the sale proclamation and how the sale ought to be conducted should be performed judicially and reasonably. If the execution Court does not, as it did not in the case before us, apply its mind or give any consideration whatsoever to the objections of the judgment-debtor, we think a material irregularity would be committed by the execution Court. It is not necessary for the execution Court to order the insertion of a judicially passed order in the sale proclamation itself, but it should pass an order showing that it applied its mind to the need for determining all the essential particulars, which would reasonably be looked for by a purchaser, and which should be inserted in the sale proclamation. The order should show that it considered the objections, if any, of the decree-holders or the judgment debtors, as the case may be. It should not merely accept unhesitatingly the ipse dixit of one side. We think that the execution Court had not performed its duty fairly and reasonably in this case. After embarking on the difficult task of valuation, it rejected the judgment-debtors'' figures by merely observing that they are exaggerated and practically accepted without hesitation whatever the decree-holders submitted, but this valuation was proved to be incorrect judged by the results of auction sales taken as a whole."

Sri Gopal Hegde, learned Advocate nextly submitted that the properties now under sale consists of three lots and the decretal amount maximum works out within Rs. 1,50,000/- the decree would be satisfied by selling one item of the property and therefore, the properties are to be sold by lots one after another. If the first lot satisfy the decree there would be no necessity to sell the second item.

In Ambati Narasayya Vs. M. Subba Rao and another, , the Supreme Court considered the question of putting entire attached property for sale when only a portion of the property is capable of satisfying the decree. Para 7 of the Judgment is relevant and it reads:

"It is of importance to note from Order 21 Rule 64 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 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."

Sri Ashok Haranahalli, learned Advocate for the Respondent does not dispute the ratio of this Judgment. However, the contention is that, Order 21 Rule 64 is not applicable to a decree under mortgage. A Division Bench Judgment of this Court in G. MARAPPA AND ANR. v. STATE BANK OF MYSORE 1982(1) KLJ320 is relied on this proposition. In this Judgment, the question before the Court was, whether the instalments can be given to the defendants for payment of the amount of the mortgage decree. The Court refused to grant the relief under Order 21 Rule 11 as Order 34 of the Code is a self-contained special provision which excludes the general provision contained in Order 21 Rule 11. The learned Judges are of the opinion that Order 21 Rule 11 has no application to suit on mortgage.

The object of Rule 64 of Order 21 is that, where the amount specified in the proclamation of sale was ordered is realised by sale of certain items, the sale of further items or a portion of property should be stopped. The words "necessary to satisfy the decree" clearly indicate that no sale can be allowed beyond the decretal amount mentioned in the sale proclamation. The executing Court derives jurisdiction to sell the properties attached only to the point to which decree is satisfied. If this is accepted then the entire property of Judgment-Debtor need not be sold. Though excess amount is payable to Judgment-Debtor but his valuable right and possession to the property get extinguished.

Execution of a Mortgage or charge decree does not altogether take away the discretion vested under Order 21 Rule 64. The Mortgagee has a priority and right to choose, against which of the several properties mortgaged to him he may proceed. Where a mortgage decree does not fix any order in which the mortgaged properties are to be sold, the executing Court has the power to prescribe such an order. This power is limited and is intended only for purpose of adjusting equities between the parties.

For the view taken above, the Question of Law is held in the negative.

In the result, this Civil Revision Petition is allowed. The order passed in Execution Case No.322/87 by the learned Civil Judge, Udupi, Dakshina Kannada, on 15.11.1990, is hereby set aside. The learned Civil Judge is directed to proceed from the stage of issuing sale proclamation and to complete the Execution in accordance with law and the directions contained in this order.