Sivathi Ammal vs Arulayee Ammal and Others

P.S. Kailasam, J.—This petition is filed by the judgment-debtor against the order of the learned District Munsif of Paramakudi in E. A. No.

366 of 1972 in E.P. No. 27 of 1972 in O.S. No. 163 of .1963. E.A. No. 366 of 1973 was filed by the respondents herein for permission to bid

and set off. The suit is one for partition and the decree-holders are entitled to certain shares and as the judgment-debtor committed default in

payment of certain moneys which she was directed to pay to equalise her share, the execution petition was taken. In granting leave to -the

respondents herein to bid and set off, the Court considered the upset price. In the counter to the execution petition the judgment-debtor stated that

the property is worth Rs. 10,000. In the application for permission to bid and set off, the judgment debtor stated that the property was worth Rs.

12,000 The Court declined to accept that there was any increase in the value. It observed that ""it has been ordered in the Execution Petition that

the bid has to be begun from the defendant''s value viz. Rs. 10,000"". The lower Court held that as there were no bidders on the first occasion, the

judgment -debtor would not be prejudiced by granting permission to the decree-holders to bid and set off.

The learned Counsel for the petitioner-judgment-debtor submitted that it his been the established practice to grant permission to the decree-

holder to bid and set off only if there Were no bidders in the prior two sales. Order XXI Rule 72 (1) provides:

No holder of a decree in execution of which property is sold shall, without the express permission of the Court, bid for or purchase the property.

Sub-rule (2) provides that where a decree-holder purchases with such permission, the purchase money and the amount due on the decree may be

set off. Sub-rule (3) provides that where the decree-holder purchases by himself or through another, without such permission, the Court may set

aside the sale and direct the costs of the application and any deficiency of price which may happen on the resale and all expenses to be paid by the

decree-holder. Rule 199 (1) of the Civil Rules of Practice provides:

An application for leave to bid at the sale shall be supported by art affidavit setting forth any facts showing that an advantageous sale cannot

otherwise be had....

It will be seen that Order 21, Rule 72* as well as Rule 199 of the Civil Rules of Practice safeguards the interests of the judgment-debtor. The

Court itself is bound to consider the facts, of the case and grant permission to the decree-holder to bid or purchase the property. In doing so, the

Court will have to be satisfied that, unless by granting permission to the decree-holder, an advantageous sale cannot otherwise be had. It has been

held that though. Order 21, Rule 72 Civil Procedure Code, and Rule 199 of the Civil Rules of Practice do not provide for notice to the judgment -

debtor, it is necessary that the judgment-debtor should be given notice in order to enable the Court to satisfy itself that an advantageous sale

cannot otherwise be had and to decide whether permission should be, granted to the decree-holder or not. It is expected that great caution should

be exercised by the Court before leave is granted to the decree-holder to bid and set off.

In Seonath Doss v. Janki Prasad Singh ILR (1889) Cal. 132, it was held that permission to a mortgagee to bid should be very cautiously

granted and, only when it is found, after proceeding with a sale, that no purchaser at an adequate price can be found, and even then, only after

some enquiry as to-whether the sale proclamation has been duly published. The two safeguards insisted upon by the Calcutta High. Court are that

the Court should be satisfied that no purchaser at an adequate, price can be found and that the sale proclamation has been duly published., This

decision was considered by the Privy Council in Mahomed Mira Ravuther v. Sayyasi Vijaya Raghunatha Gopalar ILR (1900) Mad. 227 : 27 I.A.

17 : 10 M.L.J. 1. It observed ""Indeed it laid down such conditions as would make the granting of leave a very rare thing instead of being, as their

Lordships believe it is, a very common thing"". The conditions laid down by the Calcutta High Court were not accepted by the Madras High Court.

In M. Varadarajulu Pillai Vs. Gendapodinanniar and Others, Krishnaswami Nayudu, J., observed as follows:

Though I am not in entire agreement with the conditions laid down by the learned Judges in the Calcutta case....I am however of opinion that the

power to grant leave to bid must be cautiously exercised and unless the Court is satisfied from the circumstances shown in the affidavit that

otherwise an advantageous sale could not be obtained, no such leave should be granted.

The view of the learned Judge is strictly in accordance with the requirements of Order 21, Rule 72 CPC and Rule 199 of the Civil Rules of

Practice. The condition is that before granting leave to bid the Court must be satisfied from the circumstances stated in the affidavit that otherwise

an advantageous sale could not be obtained. It must be noted that the learned Judge has not laid down that leave to bid should not be granted on

the first occasion itself.

In N. T. P. Muthuswami Mudaliar v. Family Manager C.R.P. No. 239 of 1969 Ramaprasada Rao, J. referring to the above decision of

Krishnaswami Nayudu, J. observed:

I however, make it clear that such leave granted to him shall be availed of by him if there are no bidders on two consecutive sales held in respect of

the attached property; on the third occasion, and if there were no bidders on the two prior times, then the respondent pursuant to the leave

Secured by him in the Court below can bid and set off the decree amount as against the ultimate sale price.

The above direction Was in respect of the particular case. It is difficult to construe the passage as laying down the law. There is no authority either

in ''the Civil Procedure Code, or in the Civil Rules of Practice or in the decision in M. Varadarajulu Pillai Vs. Gendapodinanniar and Others, , for.

the proposition that leave to bid can only be granted on the third occasion, if there were no bidders on the earlier two occasions. All that is

required in law is that the Court should be extremely cautious in granting permission and that it should be satisfied that an advantageous sale cannot

otherwise be had than by granting leave to the decree-holder. The conditions that are not laid down in the CPC or in the Civil Rules of Practice,

cannot be insisted upon, when the requirements, of the law are satisfied. In fact, this was the view held by the Privy Council in Mahomed Mira

Ravuthar v. Sayyasi Vijaya Raghunandha Gopalar ILR (1900) Mad. 227 : 27 I.A. 17 : 10 M.L.J. 1, It observed that the conditions laid down in

Sheonath Doss v. Janki Prasad Singh ILR (1889) Cal 132, are drawn from English Practice, partly from cases in which the applicant Was a

trustee or solicitor for the debtor and they are applicable to a system under which the decree-holder has the conduct of the sale. The Privy Council

observed that the CPC clearly throws on the Court the sole responsibility of conducting the sale. In conducting the sale, the responsibility of the

Court is to see that the requirements of the law are satisfied.

The learned Counsel for the petitioner also brought to my notice a recent decision of this Court in Venkatammal v. Janaki Ammal (1971) 84

L.W. 189, where Ramanujam, J., referred to the decision in B. Susila and Another Vs. Saraswathi Ammal and Others, , where it was held that a

Court fixing an upset price is not under an obligation to issue notice of fixation of upset price or of alteration thereof to the judgment-debtor and

observed that the rationale of that decision cannot be applied to the case where the decree-holder has been given permission to bid in the first

place contrary to the established practice. The ; learned Judge proceeded to observe that the decree-holder should not have been granted

permission to bid and set off even in the first sale, without there being any special circumstance in the case. The learned Judge does not rule out

permission being granted on the first occasion itself if there are special circumstances. It is a rule of caution that normally leave should not be

granted on the first occasion because the Court will have no opportunity to know the facts about the nature of the ""bid, the value of the property

etc. which would enable it to decide whether it should grant permission to the decree-holder to bid and set-off, or not. But this decision cannot be

understood as laying down that if a Court, after having exercised caution and satisfied itself that it would be advantageous to the judgment-debtor

to grant permission to the decree-holder to bid and set off, a sale should be found to be illegal, as the decree-holder had been given permission to

bid and set-off on the first occasion itself.

In this case, on the first occassion, there were no bidders and leave was granted no the second occassion, after taking into account the

adequacy of the upset price fixed and after giving notice to the judgment-debtor and hearing him. In law, therefore, there is nothing illegal in the

lower Court granting leave to bid and set-off.

Still, the sale cannot be upheld. In the first paragraph of its Judgment, the lower Court has stated that it has been ordered in the execution

petition that the bid has to be begun from the defendant''s value viz., Rs. 10,000. This amount is in accordance with the valuation given by the

Judgment-debtor herself in her counter to the execution petition. But the property was sold with the upset price fixed at Rs. 8,000 and the property

was knocked down for Rs. 8,000 in favour of the decree-holders. From the affidavit of the petitioner, it appears that the upset price was reduced

to Rs. 8,000 on 29th July, 1972, without notice to the petitioner. It is difficult to perceive under what circumstances, the upset price which was

confirmed at Rs. 10,000 was reduced to Rs. 8,000 on 25th July, 1972. No sale was held in the meantime and the validity of the ant of leave to bid

to the decree-holders fixing the upset price at Rs. 10,000 is shaken by the upset price being reduced to Rs. 8,000. In ,these circumstances, this

petition is allowed and the sale is set aside. There will be no order as to costs.