Sharma Rice Mills vs Zimidara Friends Traders

A.P. Chowdhary, J.—The facts giving rise to this revision petition are that respondent No. 1 took out execution for the recovery of Rs. 47,129.10 against M/s. Sharma Rice Mills, a partnership concern, and its partners, in the court of the Additional Senior Subordinate Judge, Nabha. It appears that in the execution the judgment - debtors'' Rice Mills together with the land measuring 8 Bighas 15 Biswas situated on the outskirts of the town of Nabha was attached. The decree holder moved the executing court under Order 21 Rule 66 of the CPC (hereinafter referred to as ''the Code'') for settling the terms of proclamation. The judgment-debtors filed a reply, as also objections under Sections 47 and 60 of the code. Without deciding the objections filed by the judgment-debtors, the executing court proceeded to fix a schedule of dates for sale by auction. Aggrieved by the above order of the executing court, the judgment-debtors filed Civil Revision No. 2517 of 1991. The relief claimed by the petitioners in the said Civil Revision was that the executing court be directed to dispose of the judgment-debtors'' objections before settling the terms of the proclamation and proceeding with the sale. The petitioners also prayed for staying the auction till decision of the revision petition. By order dated August 2, 1991 in the said Civil Revision, G.C. Garg, J. directed notice of motion to be issued to the decree-holder for September 3, 1991, and in the meantime directed stay of the sale subject to the petitioners furnishing bank guarantee in the sum of Rs. 25,000/ -. It was farther directed by the learned Judge that if the petitioners failed to furnish the said bank guarantee the property only to the extent of Rs. 50,000/ - shall be sold and not the entire property under attachment. Later on, on behalf of the decree-holder Civil Misc. No. 8196-CII of 1991 u/s 151 of the Code was made in which it was stated that the judgment debtors failed to furnish the bank guarantee as ordered by this Court and accordingly the stay against the sale did not become operative and on August 3, 1991, the executing court allowed time to the judgment-debtors to furnish bank guarantee in terms of the order of this Court upto September 7, 1991. The judgment debtors having failed to furnish the bank guarantee, the executing court directed that property under attachment worth Rs. 50,000/- only be sold. The sale was fixed for September 30, 1991. It may be mentioned here that the executing court did not decide the objections under 21 Rule 66 of the code filed by the judgment-debtors. In compliance with the above orders, a part of the land of the Rice Mills 16 Karams x 50 Karams from out of Khasra No. 1031 was put to auction by the Tehsildar. The highest bid of Rs. 53,500/ - was made by the decree holder, Karnail Singh, partner of the decree-holder firm, and in view of the sale having already been held, it was prayed that the revision petition aforesaid be dismissed as infructuous. By order dated October 7, 1991, a learned Judge of this Court dismissed Civil Revision No. 2517 of 1991 as infructuous.

The executing court dismissed the judgment-debtors'' objections under Order 21 Rule 66 of the Code by order dated August 12, 1991. Aggrieved by the order, the judgment-debtors preferred the present Civil Revision No. 3647 of 1991.

Mr. K.S. Grewal, learned Counsel for the respondent decree-holder, has taken a preliminary objection that the sale having already taken place, the only remedy available to the petitioners was to make an application under Order 21 Rule 90 of the Code assailing the sale and the present revision must be dismissed as infructuous. He has placed reliance on Jaswantlal Natvarlal Thakkar Vs. Sushilaben Manilal Dangarwala and others,

A perusal of the above cited decision fails to show how it helps the decree-holder. The only point which came up for consideration was whether notice to judgment-debtor before granting permission to the decree-holder to bid at the auction under Order 21 Rule 72 of the Code was mandatory. The apex Court noticed a conflict of Judicial opinion amongst the various High Courts and approved the view that such a notice was mandatory. However, the decision was rendered on the facts of that case and there is nothing laid down in that decision to support the proposition of Mr. Grewal. Even, otherwise, if it is found that the sale has been ordered without complying with the mandatory provisions of Order 21 Rule 66, the same will be in the nature of a dependent order and if the revision petitions is allowed on the merits of the case, the sale will have to be set aside. In Mls. Aman Industries and Anr. v. Punjab Financial Corporation 1991 PLJ 152 a learned Judge of this Court held that even if the requirement of Order 21 Rule 66 is taken to be directory and not mandatory the court has a duty to see that the said provisions are complied with. In coming to the above conclusion, the learned Judge relied on the observations of the Apex Court in Shalimar Cinema Vs. Bhasin Film Corporation and Another, Mr. Grewal, learned Counsel for the respondent-decree holder sought to distinguish M/s. Shalimar Cinema''s case (supra) by pointing out that case related to total failure to comply with the requirements of Order 21 Rule 66 of the Code. No doubt, factually it is so, but I fail to see any difference between total non-compliance of Order 21 Rule 66 on the one hand and disposing of the application made by the judgment debtors under the said provision without dealing with the questions raised therein on the other hand, It will be seen from the discussion which follows that the learned executing court has failed to apply its mind to the objections raised by the judgment-debtors altogether and it has thus exercised its jurisdiction with material irregularity.

Before dealing with the merits of the revision petition, I may deal with another objection raised by Mr. Grewal. He has contended that the averments made in the present revision petition are substantially the same as were made in earlier Civil Revision No. 2517 of 1991 and the earlier revision petition having been dismissed as infructuous, the present revision petition was liable to be dismissed on that short ground. In order to appreciate the contention of Mr. Grewal, I have perused the record of Civil Revision No. 2517 of 1991, which was dismissed as infructuous by order dated October 7, 1991. Therein the petitioner sought appropriate directions to the executing court to deal with the three applications made by the judgment-debtors before settling the proclamation of sale under Order 21 Rule 66 of the Code as against the above. The present revision petition challenges the order dated August 12, 1991, by which the executing Court purported to summarily dismiss the objections made by the judgment-debtors under Order 21 Rule 66 of the code. The two revision petitions are, therefore, distinct in their content and scope and are directed against different orders of the executing court. I, therefore, do not find any force in the objection that the present petition is liable to be dismissed as infructuous.

Omitting what is not relevant for the present purpose, Order 21 Rule 66 lays down as under:

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;

(b) the revenue assessed upon the estate or part of the estate, where the property to be sold is an interest in an estate or in part of an estate paying revenue to the Government;

(c) any encumbrance to which the property is liable

(d) the amount for the recovery of which the sale is ordered; and

(e) every other thing which the court considers material for a purchaser to know in order to judge of the nature and value of the property.

Provided that where notice of the date for settling the terms of the proclamation has been given to the judgment-debtor by means of an order under Rule 54, it shall not be, necessary to give notice under this rule to the judgment-debtor unless the court otherwise directs:

Provided further that nothing in this rule shall be construed as requiring the court to enter in the proclamation of sale its own estimate of the value of the property, but the proclamation shall include the estimate, if any, given, by either or both of the parties.

(3) Every application for an order for sale under this rule shall be accompanied by a statement signed and verified in the manner hereinbefore prescribed for the signing, and verification of pleadings and containing, so, far as they are known to or can be ascertained by the person making the verification, the matters required by Sub-rule (2) to be specified in the proclamation.

(4) xxx xxx xxx

A perusal of the above provision shows that it is incumbent on the court to state in the proclamation the part of the property which would be sufficient to satisfy the decree vide Order 21 Rule 66(2)(a). It is necessary under Clause (c) that any encumbrance to which the property is subject is also given in the proclamation. Clause (e) requires the court to set out other things which are material for a purchaser to know in order to judge of the nature and value of the property. Pointed reference may also be made to the second proviso to Sub-rule (2), which makes it clear that it is not necessary for the court to state its own estimate of the value of the property in the proclamation and it will be sufficient to mention the estimate, if any, given by either or both the parties. In the facts of the present case, the objections filed by the judgment-debtors were dismissed by the impugned order.

An application under Order 21 Rule 66 of the Code for settling the terms of the proclamation appears to have been made on behalf of the decree-holder on November 10, 1990, in which, inter alia, it was stated that the land to be sold was 8 Bighas 15 Biswas described in terms of Khasra No. etc. in the area of village Alohran Tehsil Nabha along with the rice sheller. Claim of the decree holder of Rs. 47,000/ - odd was mentioned. The estimate value of the property, according to the decree holder, was Rs. 2 lacs. The decree-holder showed ignorance whether the property was under any encumbrance. The second application dated November 21, 1990, was then made by the decree holder, in which departing from the previous estimated price of Rs. 2 lacs, the estimated value of the property was mentioned as Rs. 5 lacs and an encumbrance of Rs. 2,25,000/ - in favour of the State Bank of Patiala, Nabha Branch, was mentioned. In the reply filed to the above application, it was stated that the estimated value of the property in question was Rs. 15 lacs that the property was under encumbrance with the banks and other persons and the estimated value of the property given by the decree holder was in a very casual manner as was evident from the fact that in one application the estimated value was given as Rs. 2 lacs, while in the other it was given as Rs. 5 lacs.

Learned Counsel for the petitioners assailed the proclamation of sale dated September 7, 1991, on various grounds. It will be sufficient to mention some of these grounds. The proclamation did not specify'' the part of the property which was required to be sold in terms of the order dated August 2, 1991, passed in Civil Revision No. 2517 of 1991. Instead the property was described in the list annexed with the proclamation as 8 Bighas 15 Biswas described in detail in terms of Khasra No. etc. It may be pointed out here that specifying of part of the property which is considered sufficient to satisfy the decree is not an empty formality. In Ambati Narasayya v. M. Subba Rao and Anr. 1990 (1) rlr, 1 (SC): 1990 CCC 1 (SC), it was held that consideration by the court whether sale of a portion of the attached property would satisfy the decree was mandatory and where sale was ordered without examining that aspect the sale was not in conformity with Order 21 Rule 64 of the Code and the same was illegal and without jurisdiction. In the impugned order, in a very casual manner, the executing Court stated, "I have already directed the Execution Clerk to inform the Court auctioneer to sell the property of the judgment-debtor worth Rs. 50,000/ - only out of the attached property and his entire property should not be sold". In other words, no effort was made to identify a particular portion of the property after hearing the parties and no such portion was specified in the proclamation.

No doubt, the court was not bound to give its own estimate of the value of the property but should have given an opportunity to both the parties to state their estimate of the value of the property identified for being sold and should have stated that value as required under Order 21 Rule 66 of the Code. The court should have further ascertained to the extent possible the encumbrance which already existed on the property in question.

For the foregoing reasons, the revision petition deserves to be allowed. The order dated August 12, 1991, of the Additional Senior Subordinate Judge, Nabha is, therefore, set aside and it is directed that the court shall settle the terms of the proclamation in the light of the observations made in this order after affording reasonable opportunity to both the parties and thereafter take further action according to law. As a necessary consequence of the above, the sale which has taken place without necessary compliance of Order 21 Rule 66 of the Code must also be set aside.

The parties are directed to appear in the executing court for further proceedings on March 6,1992.