caselaws
Supreme Court of India
Chilamkurti Bala Subrahmanyam vs Samanthapudi Vijaya Lakshimi & … on 2 May, 2017Bench: R.K. Agrawal, Abhay Manohar Sapre
REPORTABLE
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL No.5988 OF 2007
Chilamkurti Bala Subrahmanyam ….Appellant(s)
VERSUS
Samanthapudi Vijaya Lakshmi
& Anr. …Respondent(s)
J U D G M E N T
Abhay Manohar Sapre, J.
1) This appeal is filed by the auction purchaser against the final
judgment and order dated 23.12.2005 passed by the High Court of Judicature,
Andhra Pradesh at Hyderabad in Civil Misc. Appeal No. 1721 of 2000 whereby
the High Court allowed the appeal filed by judgment debtor-respondent No.1
herein and set aside the order dated 20.04.2000 passed by the Senior Civil
Judge, Kovvur in E.A. No. 1020 of 1999 in E.P. No. 46 of 1998 in O.S. No.
192 of 1987 dismissing the application filed by the judgment debtor under
Order 21 Rule 90 read with 151 of the Code of Civil Procedure, 1908
(hereinafter referred to as “the Code”).
2) Facts of the case need mention, in brief, to appreciate the
controversy involved in this appeal.
3) Respondent No.2-State Bank of India is the plaintiff/decree holder
whereas respondent No.1 is the defendant/judgment debtor in O.S. No.192 of
1987. Respondent No.2 obtained a money decree for Rs.5,15,390/- against
respondent No.1 on 16.03.1998 in O.S. No.192 of 1987 for the loan given to
her by respondent No.2 and which remained unpaid by respondent No.1. Since
respondent No.1 failed to satisfy the decree, respondent No.2 filed
execution application and brought the schedule property owned by respondent
No.1-judgment debtor to auction sale through the process server of the
Court of Senior Civil Judge, Kovvur, in execution proceedings in E.P. No.
46 of 1998 in O.S. No.192 of 1987 for realization of decretal dues.
4) The suit schedule property was, accordingly, attached by the
executing Court under a warrant. Notice was, accordingly, issued to
respondent No.1-judgment debtor in respect of the said executing
proceedings on 14.07.1999 to which she filed counter affidavit raising
certain objections. On 31.09.1999, the executing Court overruled the
objections raised by respondent No.1 in her counter affidavit and fixed
22.09.1999 as the date of settlement of terms. On 22.09.1999, the terms of
proclamation of sale were settled fixing the date for sale of the said
property on 17.11.1999.
5) Pursuant to the above referred proceedings, proclamation of the sale
was issued on 05.10.1999 by the executing Court under Order 21 Rule 64 of
the Code mentioning therein the conditions of sale. Proclamation of the
sale was entrusted to the Process Server of publication on 27.10.1999. The
Process Server gave endorsement on 02.11.1999 that the sale proclamation
was affixed to the house/suit schedule property and also by beat of tom tom
near the property and also affixed the same on the notice board of the
Court. On 04.11.1999, sale warrant was issued to the Bailiff to give 15
days’ notice by affixing the same in court house, making due proclamation
of the suit schedule property. The proclamation of the sale was published
in the newspaper on 05.11.1999 stating that the sale would be held on
17.11.1999.
6) On 17.11.1999, the property was brought to auction sale where 7
bidders participated. The appellant herein was the highest bidder of
Rs.7,15,000/-. Out of the said bid amount, Rs.1,78,750/- was paid to the
Bailiff. The Bailiff filed a return on 18.11.1999 about the sale stating
that he published about sale by tom tom and the appellant was the highest
bidder and the initial amount was deposited with respondent No.2-Bank after
deducting poundage.
7) Dissatisfied with the auction, the judgment debtor filed an
application under Order 21 Rule 90 seeking setting aside of the sale, inter
alia, on the ground that the proclamation was done within 15 days and hence
it is illegal, tom tom wala neither made proclamation and nor took
neighbours’ signatures, proclamation was not published in Nagar Panchayat
office, publication was defective in nature because it did not mention the
valuation of the property etc. It was also objected that the Bank brought
only three bidders whereas if more bidders had participated, the property
put to sale would have fetched easily between 12 to 14 lakhs.
8) By order dated 20.04.2000, the Senior Civil Judge, Kovvur found no
merit in any of the objections raised by respondent No.1 and accordingly
dismissed the application.
9) Challenging the said order, the judgment debtor-respondent No.1 filed
an appeal before the High Court.
10) The High Court, by impugned judgment dated 23.12.2005, allowed the
appeal and set aside the order of the executing Court, inter alia, holding
that if the judgment debtor deposits a sum of Rs.7,15,000/- being the price
fetched at the public auction within a period of three weeks from the date
of receipt of a copy of the judgment, the sale held would not be given
effect to. It was held that if the executing Court feels that the amount
deposited by the judgment debtor is sufficient to discharge the decretal
amount, it would not be necessary to put the property to auction and the
amount so deposited earlier by the auction purchaser shall be refunded to
him. It was held that if the amount ordered to be deposited by the
judgment debtor is more than the amount due to the decree holder, excess
amount, after adjusting the amount due to the decree holder/auction
purchaser, be refunded to the judgment debtor. It was held that no clear
15 days’ notice of sale as per Rules was given and hence sale held is
irregular. It was lastly held that in default of payment of Rs.7,15,000/-
within the stipulated period, the appeal shall stand dismissed.
11) Aggrieved by the said judgment, the auction purchaser has filed this
appeal by way of special leave before this Court.
12) Heard Mr. Basava Prabhu Patil, learned senior counsel for the
appellant-auction purchaser and Mr. Gagan Gupta, learned counsel for
respondent No.1-judgment debtor and Mr. Sanjay Kapur, learned counsel for
the Bank-decree holder.
13) Having heard the learned counsel for the parties and on perusal of
the record of the case, we are inclined to allow the appeal finding merit
therein.
14) The law which governs the controversy involved in this appeal is laid
down by this Court in the case of Saheb Khan vs. Mohd. Yousufuddin & Ors.,
2006(4) SCC406 (Three Judge Bench). While examining the scope of Order 21
Rule 90 of the Code, Justice Ruma Pal speaking for the Bench held as under
:
“12. We are unable to sustain the reasoning of the High Court. Order 21
Rule 90 of the Code of Civil Procedure allows, inter alia, any person whose
interests are affected by the sale to apply to the court to set aside a
sale of immovable property sold in execution of a decree on the ground of
“a material irregularity or fraud in publishing or conducting” the sale.
Sub-rule (2) of Order 21 Rule 90 however places a further condition on the
setting aside of a court sale in the following language:
“90. (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.”
13. Therefore before the sale can be set aside merely establishing a
material irregularity or fraud will not do. The applicant must go further
and establish to the satisfaction of the court that the material
irregularity or fraud has resulted in substantial injury to the applicant.
Conversely even if the applicant has suffered substantial injury by reason
of the sale, this would not be sufficient to set the sale aside unless
substantial injury has been occasioned by a material irregularity or fraud
in publishing or conducting the sale. (See Dhirendra Nath Gorai v. Sudhir
Chandra Ghosh;(1964) 6 SCR 1001, Jaswantlal Natvarlal Thakkar v. Sushilaben
Manilal Dangarwala, 1991 Supp(2) SCC 691 and Kadiyala Rama Rao v. Gutala
Kahna Rao,(2000) 3 SCC 87)
14. A charge of fraud or material irregularity under Order 21 Rule 90 must
be specifically made with sufficient particulars. Bald allegations would
not do. The facts must be established which could reasonably sustain such a
charge. In the case before us, no such particulars have been given by the
respondent of the alleged collusion between the other respondents and the
auction-purchaser. There is also no material irregularity in publishing or
conducting the sale. There was sufficient compliance with Order 21 Rule
67(1) read with Order 21 Rule 54(2). No doubt, the trial court has said
that the sale should be given wide publicity but that does not necessarily
mean by publication in the newspapers. The provisions of Order 21 Rule 67
clearly provide if the sale is to be advertised in the local newspaper,
there must be specific direction of the court to that effect. In the
absence of such direction, the proclamation of sale has to be made under
Order 21 Rule 67(1) “as nearly as may be, in the manner prescribed by Rule
54 sub-rule (2)”. Rule 54 sub-rule (2) provides for the method of
publication of notice and reads as follows:
“54. (2) The order shall be proclaimed at some place on or adjacent to such
property by beat of drum or other customary mode, and a copy of the order
shall be affixed on a conspicuous part of the property and then upon a
conspicuous part of the courthouse, and also, where the property is land
paying revenue to the Government, in the office of the Collector of the
district in which the land is situate and, where the property is land
situate in a village, also in the office of the Gram Panchayat, if any,
having jurisdiction over that village.”
15) After examining the facts of this case in the light of the law laid
down in the case of Saheb Khan (supra), we are of the considered opinion
that the reasoning and the conclusion arrived at by the executing Court
deserves to be restored as against that of the High Court in the impugned
order. In other words, no case was made out by the judgment debtor for
setting aside of the sale of the property in question on the ground of
committing any material irregularity or fraud in publishing or in
conducting the sale so as to enable the Court to invoke its powers under
Order 21 Rule 90 (2) of the Code.
16) It is noticed that respondent No. 1, in her application for setting
aside the sale, had mainly raised four objections. Firstly, clear 15 days’
notice was not given for sale of the properties as required under the
Rules. Secondly, the valuation of the property was not properly mentioned
in the concerned documents so as to enable the parties to know its proper
valuation prevailing on the date of sale. Thirdly, the market value of the
property on the date of auction was more than the price actually fetched in
the auction, and fourthly, no proper publication including beating of drum
was made before the date of auction due to which there was less
participation of the bidders in the auction sale.
17) The executing Court dealt with all the four objections with reference
to the record of the proceedings and found as a fact that none of the
objections had any merit. The High Court, however, found fault in the same
though not in all but essentially in the matter relating to giving of clear
15 days’ notice and the manner in which it was issued and finding merit in
the objection, set aside the sale on imposing certain conditions enumerated
above.
18) In our considered opinion, as mentioned above, the executing Court
was justified in overruling the objections and we concur with the reasoning
and the conclusion of the executing Court.
19) We also find on facts that firstly, the proper publicity was given
for auction sale in papers so also by beat of drums pursuant to which as
many as seven bidders including the appellant herein participated in the
auction sale. Had there been no publicity, it would not have been possible
for seven persons to participate in the auction proceedings.
20) Secondly, the details of the valuation of the property were duly
mentioned, namely, decree holder’s valuation at Rs.2,75,000/- likewise,
Amin’s valuation at Rs.4 lacs whereas the property was sold in auction for
Rs.7,50,000/-. In this view of the matter, it could not be said that the
bidders did not know the valuation or/and that it was not mentioned in the
auction papers.
21) Thirdly, judgment debtor did not adduce any evidence nor brought any
bidder to purchase the property for a higher price than the purchase bid
(Rs.7,50,000/-) except to say in the application that value of the property
was between Rs.12 lakhs to Rs.14 lakhs. In our view, this objection has no
substance for want of any evidence.
22) Fourthly, there was adequate publicity given with the aid of beat of
drums in the locality. It was proved with the record of the executing
Court as was rightly held by the executing Court and lastly, in our view, a
clear 15 days’ notice was given for auction sale fixed for 17.11.1999 when
counted from 05.10.1999. In other words, 15 days have to be counted from
05.10.1999 because it is on this date the order was issued as contemplated
under Order 21 Rule 64 for proclamation of sale fixing the date of sale as
17.11.1999.
23) The executing Court, therefore, substantially and in letter and
spirit followed the procedure prescribed under Order 21 Rules 64 and 66 of
the Code while conducting the sale of the property in question.
24) The law on the question involved herein is clear. It is not the
material irregularity that alone is sufficient for setting aside of the
sale. The judgment debtor has to go further and establish to the
satisfaction of the Court that the material irregularity or fraud, as the
case may be, has resulted in causing substantial injury to the judgment-
debtor in conducting the sale. It is only then the sale so conducted could
be set aside under Order 21 Rule 90(2) of the Code. Such is not the case
here.
25) In the light of aforesaid discussion, we are of the considered view
that none of the objections raised by respondent No.1 had any merit and nor
any of the objections constituted any kind of material irregularities so as
to enable the Court to set aside the sale under Order 21 Rule 90(2) of the
Code. So far as the plea of fraud was concerned, admittedly, it was not
raised and, therefore, it did not fall for consideration.
26) Learned Counsel for the respondent has placed reliance on the
decisions in Gajadhar Prasad & Ors. Vs. Babu Bhakta Ratan & Ors., (1973) 2
SCC 629, Ambati Narasayya vs. M. Subba Rao & Anr., 1989 Supl(2) SCC 693,
Desh Bandhu Gupta vs. N.L. Anand & Rajinder Singh, (1994) 1 SCC 131 and
Saheb Khan vs. Mohd. Yousufuddin & Ors.,(2006) 4 SCC 476. We have gone
through these cases and find that all are distinguishable on facts. When we
have held on facts that there are no material irregularities noticed in the
case and that there was compliance of the provisions of Order 21 Rules 64
to 68 then, in our view, the law laid down in these decisions are of no
help to the respondent-judgment debtor.
27) In view of foregoing discussion, we are unable to agree with the
reasoning and the conclusion arrived at by the High Court which is
factually and legally unsustainable. Its view is not in conformity with
the law laid down in the case of Saheb Khan (supra).
28) As a result, the appeal succeeds and is allowed. Impugned order is
set aside and that of the executing Court restored.
……………………………………..J.
[R.K. AGRAWAL]
……………………………………….J.
[ABHAY MANOHAR SAPRE]
New Delhi;
May 02, 2017
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