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Andhra High Court · body

2010 DIGILAW 848 (AP)

Vemula Venkateswarlu v. Vakati Prabhakara Reddy

2010-08-31

C.V.RAMULU

body2010
Judgment This civil miscellaneous appeal, under Order 43 Rule 1 of the Code of Civil Procedure, is directed against an order and decree made in E.A. No. 609 of 2002 in E.P. No. 51 of 1997 in O.S. No. 87 of 1990, dated 6.7.2005, on the file of learned Principal Senior Civil Judge, Nellore, whereunder the petition filed under Sections 94(e), 51 and Order 21 Rule 90 CPC, by the judgment-debtor against decree-holder/ auction purchaser, praying to set aside the sale held on 4.10.2002 in respect of the E.P. Schedule property, was allowed setting aside the sale held on 4.10.2001. Appellant is the auction purchaser and 2nd respondent in E.A. No. 609 of 2002. 1st respondent is the judgment-debtor and 2nd respondent is the decree-holder. It appears, 1st respondent herein laid suit in O.S. No. 87 of 1990 for recovery of money. The said suit was decreed. When the judgment-debtor did not comply with the decree, decree-holder filed E.P. No. 51 of 1997 for attachment and sale of petition schedule property. Initially, it appears, Court Amin had fixed the value of the petition schedule property at Rs.20.00 lakhs. Subsequently, the decree-holder filed E.A. No. 498 of 2002 seeking reduction of the said amount from Rs.20.00 lakhs to Rs.2.00 lakhs, which was allowed without notice to judgment-debtor and accordingly auction was conducted on 4.10.2002 whereunder the appellant participated and the auction was knocked down in his favour for Rs.3,23,400/-. Immediately thereafter, the present petition – I.A. No. 609 of 2002 was filed by judgment-debtor, seeking to cancel the auction conducted on 4.10.2002, on the ground that, firstly he had no notice before reducing the value of the petition schedule property from Rs.20.00 lakhs to Rs.2.00 lakhs in I.A. No. 498 of 2002 and, secondly, the upset price was fixed basing on the report of the Amin regarding the properties situated at Pothireddipalem panchayat area instead of the value fixed by the Amin on 15.10.1997 with regard to the lands situated at Jangalakandriga village h/o Pedathapoluru village and thereby great injustice and irreparable loss was caused to him. Further, it is not a case where bidders did not turn up for want of reduction of the value of the property, but, straightaway, the decree-holder, who is aware of the fact that the value of the property at the time of test was fixed at Rs.20.00 lakhs on 15.10.1997 and it is true and correct value, with a mala fide intention, filed application on 16.9.2002 seeking to reduce the value of the petition schedule property and the said application was allowed on the same day, without any notice to him, and thereby great injustice and irreparable injury was caused to him, which is opposed to all principles of natural justice. The said application was allowed setting aside the sale conducted on 4.10.2002 by an order dated 6.7.2005 in I.A. No. 609 of 2002, holding as under: “The Amin never stated in the said schedule whether they have enquired about the rates prevailing in the adjacent lands or enquired the adjacent land holders about the rates prevailing adjacent to the lands of the E.P. Schedule mentioned property. The Amin ought to have filed detailed report as to how himself, the Panchayat Secretary, and other signatories came to the conclusion and fixed at Rs.30,000/- per acre. Therefore, the purpose of issuing warrant for testing the value of the E.P. schedule mentioned property was not properly complied with by the Amin and there is no positive evidence to come to conclusion that the Amin, Panchayat-Secretary, decree-holder and others arrived that Rs.30,000/- per acre was prevailing to the E.P. Schedule mentioned property or to the lands adjacent to the E.P. schedule mentioned property. The Amin filed report on 24.9.2002 and thereafter Panchayat Secretary issued Ex.A-1 on 10.22.2002 fixing the value at the rate of Rs.4,00,000/- per acre. If there is no such rate as per Ex.A-1, the MRO, Muthukur would not have countersigned on the certificate issued by PW-2. Further, it cannot be said that the rates in between the report of Amin dated 24.9.2002 and Ex.A-1 have been increased to such an extent. Therefore, the evidence of PW-2 and the contents in Ex.A-1 could be taken into consideration and said that the value fixed by PW-2 in Ex.A-1 is true and correct and the value fixed by the Amin on 24.9.2002 is not proper and genuine. Therefore, the evidence of PW-2 and the contents in Ex.A-1 could be taken into consideration and said that the value fixed by PW-2 in Ex.A-1 is true and correct and the value fixed by the Amin on 24.9.2002 is not proper and genuine. Further, the first respondent/decree-holder did not choose to examine any other persons signed in the schedule filed along with the report by the Amin on 24.9.2002, to prove that the value fixed by them is true and correct and the same was prevailing on the date of 24.9.2002. No suggestion was put to PW-2 regarding the presence of the decree-holder and others as shown in the schedule or as to how they have fixed the rate at Rs.30,000/- per acre. Simply putting a suggestion that the report of Amin dt. 24.9.2002 contains the signature of PW-2 is not sufficient and it could not be proved that Amin assessed the value of the E.P. schedule mentioned property as per the rates prevailing in the area where the E.P. schedule mentioned property has to be set aside”. Aggrieved thereby, present appeal is filed. Learned counsel for the appellant Sri O. Manohar Reddy strenuously contended that for entertaining an application under Order 21 Rule 90 CPC, three conditions need to be satisfied, namely, (1) there shall be material irregularity or fraud in the procedure for conducting auction, (2) the said material irregularity or fraud should result in substantial injury to judgment-debtor and (3) any such objection has to be taken at the earliest point of time. All these requirements are absent in the case on hand. There was no objection that the certificate was not properly issued or the proclamation was not made in accordance with Order 21 Rule 66 CPC. Further, attachment of the schedule property was made during pendency of the suit and, therefore, no notice is required under Order 21 Rule 54 CPC. The judgment-debtor was aware of every situation as well as the proceedings being initiated by the executing Court. Only on the basis of evidence of PW-2 and Ex.A-1 the sale was set aside, which is arbitrary and illegal. In support of his contentions, learned counsel relied upon the following decisions: 1) Saheb Khan v. Mohd. Yusufuddin and Ors. The judgment-debtor was aware of every situation as well as the proceedings being initiated by the executing Court. Only on the basis of evidence of PW-2 and Ex.A-1 the sale was set aside, which is arbitrary and illegal. In support of his contentions, learned counsel relied upon the following decisions: 1) Saheb Khan v. Mohd. Yusufuddin and Ors. (2006) 4 SCC 476 wherein it is held: “Before us the appellant has contended that the High Court did not construe the provisions of Order XXI Rule 54(2) read with Rule 67(1) correctly. Although wide publicity had been directed to be given by the Trial Court, there was no direction to publish the advertisement in any newspaper. It was further said that there was no material irregularity in the conduct of the sale which could justify the High Court in setting it aside. It was further contended that the alleged offer brought forward by the respondent No. 1 was not followed up by any actual deposit and could not form the basis of the High Court coming to the conclusion that the property has been sold for at an undervalue to the appellant. 9. According to the learned Counsel appearing on behalf of the respondent No. 1, by using the word "wide publicity", the Trial Court had intended that the sale should be advertised in the newspaper. It was also submitted that no notice was given to the respondent No. 1 at any stage. The Advocate Commissioner's notice of sale had been addressed to a lawyer, who did not in fact represent the respondent No. 1. It was further submitted that the sale had been held in collusion between the other parties and the purchaser and that the sale had been made at an undervalue. 10. We are unable to sustain the reasoning of the High Court. Order XXI 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. Order XXI 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-section (2) of Order XXI Rule 90 however places a further condition on the setting aside of a Court sale in the following language: 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. 11. 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”. 2 S. Nooruddin v. Khadam Gnanoba AIR 2004 (AP) 495 wherein it is held: “The above facts would only indicate that the judgment-debtor had the knowledge of sale by way of notice from the Court below regarding the proclamation of sale and the date of settlement of the terms was the initial date and on that date, the judgment-debtor should and could have filed his objections, if any, on the valuation assessed by the decree-holder. Even if no valuation was made by the decree-holder, the judgment-debtor is not precluded from quoting his price. 16. It is on record that the judgment-debtor did not file any objections on the date fixed by the Court below for settlement of the terms of sale indicating the value of the property under sale. On the other hand, on all the three occasions, the judgment-debtor came forward only to pay some amount and sought for adjournments of the sale, that means, at no point of time, particularly, at the initial stage i.e. at the time of settlement of terms of sale, the judgment-debtor did not make any assessment or indicate the value of the property. The earliest opportunity, as held by the apex Court in Desh Bandhu Gupta v. N.L. Anand and Rajinder Singh (supra), should be at the stage of issuing notice under Order 21, Rule 54(1-A) of the Code”. 3) V.V. Narayan Chetty v. Nenla Dhanamma and Anr. AIR 1984 AP 159 wherein it is held: “8. The proviso, therefore, makes it clear that it is not necessary for the court to mention its valuation in the proclamation. It also does not make it obligatory for the judgment-debtor, though it requires the Court to mention in the proclamation, if the value is given either by the judgment-debtor or by the decree-holder or by both the parties. If the proclamation does not give valuation of judgment-debtor, the sale is not vitiated under the amended provision. 12. As the notice was given to the judgment-debtor under sub-r. (1) of R. 54 of O. 21 requiring the judgment-debtor to attend the Court on a specified date to take notice of the date to be fixed for settling the terms of the proclamation of sale, the judgment-debtor has to attend the Court and participate in the settling on the terms and give valuation of the property. When he failed to do so, he cannot complain that the sale is vitiated on the ground that the proclamation does not contain the valuation of the judgment-debtor. 14. When the property was sold at Rs. 70,500/- as against the decree-holder's valuation of Rs. 50,000/- given in the sale proclamation, it cannot be said that the property was sold for a low sum. It is now well settled that the sale cannot be set aside under O. 21, R. 90 C. P. C., on the mere ground of low price for which the property was sold in the court-auction, unless it is proved that the property fetched low price as a result of fraud being playing by the decree-holder in getting the low price published for the purpose of getting the bidders only for such a low price and consequently the judgment-debtor has suffered substantial injury. The Supreme Court held in Radhey Shyam v. Shyam Behari, [1971]1SCR783 that R. 90 of O. 21 of the Code provides that no sale shall be set aside on the ground of mere irregularity or fraud in publishing or conducting it unless, upon the facts proved, the Court is satisfied that the appellant has sustained substantial injury by reason of such irregularity or fraud. It is, therefore, clear that it is not sufficient if the judgment-debtor proves irregularity being committed in publishing or conducting the sale under this rule. He is further required to satisfy the Court that he has sustained substantial injury by reason of such irregularity or fraud. If he has not proved that he has sustained substantial injury by reason of such irregularity or fraud, the sale cannot be set aisde, even if an irregularity in publishing or conducting the sale is committed. The learned Sub-ordinate Judge and the learned single Judge concurrently held that he judgment-debtor was not able to establish that he has sustained substantial injury as a result of difference of the value of the property in the sale publication and the proclamation. We think that the concurrent finding is certainly well founded as the property fetched a sale price of Rs. 70,500/- as agiasnt the valuation of Rs. 50,000/-shown in the proclamation of Rs. 25,000/- shown in the paper publication. Further the property sold was in possession of the tenant and hence the sale price of Rs. 70,500/-for the property cannot be said to be unreasonable Hence we find no substance in the contention of Sri P. L. N. Sarma on this aspect”. 4 Ram Maurya v. Kailash Nath and Ors. 1999 (9) SCC 276 wherein it is held: “Where party objecting in execution proceedings to the sale of suit property on grounds of material irregularity and fraud must clearly plead that he has put to substantial injury as a result of such material irregularity, it was held that under Order 21 Rule 90(2), in the absence of such pleading it was not open to the executing Court to set aside the auction sale of the suit property”. Whereas, learned counsel for the respondent No.1 – judgment-debtor stated that this is not an application under Order 21 Rule 89. It is an application under Order 21 Rule 90 CPC. Whereas, learned counsel for the respondent No.1 – judgment-debtor stated that this is not an application under Order 21 Rule 89. It is an application under Order 21 Rule 90 CPC. On 15.10.1997, Amin fixed the value of the schedule land at Rs.20.00 lakhs and vide report dated 24.9.2002 it was reduced to Rs.2.00 lakhs. It is understandable had the auction been conducted as per the value fixed by the Amin at Rs.20.00 lakhs, but no such effort was made and since an application was filed by the decree-holder in I.A. No. 498 of 2002, the value was reduced to Rs.2.00 lakhs. While reducing the value to Rs.2.00 lakhs, no notice of any kind was issued to the judgment-debtor. Straightaway auction was conducted on 4.10.2002 showing the upset price at Rs.2.00 lakhs and the auction purchaser is setup by the decree-holder to knock away the property at a cheaper rate. The very reduction from Rs.20.00 lakhs to Rs.2.00 lakhs is prejudicial to the interest of judgment-debtor. The Amin never stated in the report whether they have enquired with the adjacent landholders about the rates prevailing inand around the subject land. The Amin has not filed any detailed report. There was no positive evidence to come to the conclusion that the figure arrived at Rs.30,000/- per acre by Amin, Panchayat Secretary and decree-holder was prevailing for the adjacent lands of petition schedule property. With a mala fide intention and to defraud the judgment-debtor, the price was reduced from Rs.20.00 lakhs to Rs.2.00 lakhs without there being any notice and without participation of the judgment-debtor in the so-called report prepared by the Amin. Therefore, the execution Court has rightly set aside the sale conducted on 4.10.2002 in respect of the E.P. schedule mentioned property and, as such, the Court below has not committed any error or illegality calling for interference of this Court. I have given my earnest consideration to the respective submissions made by the learned counsel on either side and perused the impugned order and other material made available on record. There is no dispute as to the decree obtained by 2nd respondent and filing E.P. for bringing the schedule mentioned property for sale. It is also not in dispute that at the first instance the Amin tested the E.P. schedule property and fixed the value of the property at Rs.20.00 lakhs. There is no dispute as to the decree obtained by 2nd respondent and filing E.P. for bringing the schedule mentioned property for sale. It is also not in dispute that at the first instance the Amin tested the E.P. schedule property and fixed the value of the property at Rs.20.00 lakhs. However, 2nd respondent-decree-holder filed an application to re-test and to reduce the value fixed by the Amin from Rs.20.00 lakhs to Rs.2.00 lakhs. In the said application, as per the findings recorded by the Court below, no notice was issued to the judgment-debtor. The records also show that no notice was issued to the judgment-debtor and re-test was ordered in I.A. No. 498 of 2002. Though an argument was advanced by the learned counsel for the appellant that no notice is necessary for proclamation and sale under Order 21 Rule 66 CPC, it cannot be said that when an application is filed by the decree-holder for re-test, notice is not necessary to judgment-debtor to express his objections, if any. Therefore, it cannot be said that no notice is necessary to the judgment-debtor even in an application filed for re-test and re-fixation of the value of the property. Admittedly, the Amin filed report dated 15.10.1997 and it indicates that he had visited the E.P. schedule property situated at Jangalakandriga village in the presence of mediators and fixed the value of the said property at Rs.20.00 lakhs. In the application - E.A. No. 498 of 2002 filed by the decree-holder for re-test, it is stated that the decree-holder also followed the Amin and visited the E.P. schedule mentioned property for test and when the Amin informed the decree-holder that the rate would be decided by him, decree-holder returned and, therefore, decree-holder could not know the value fixed by the Amin. Though it was the case of the decree-holder that if the value of the E.P. schedule mentioned property is fixed at Rs.20.00 lakhs nobody would participate, such a plea could not have been accepted without conducting any auction. In this case, admittedly no auction was held after fixing the value of the schedule property at Rs.20.00 lakhs. In the absence of any such auction being conducted and verifying as to whether there are any bidders who would come forward or not, application for re-test and re-fixation of the value of the schedule property was allowed. In this case, admittedly no auction was held after fixing the value of the schedule property at Rs.20.00 lakhs. In the absence of any such auction being conducted and verifying as to whether there are any bidders who would come forward or not, application for re-test and re-fixation of the value of the schedule property was allowed. Therefore, I am of the view that the Court below has rightly held that while allowing the application in E.A. No. 498 of 2002 filed by the decree-holder, no notice was issued to the judgment-debtor and the same is not proper. Further, Ex.A-1 issued by the Panchayat Secretary, Grama Sachivalayam, Pidathapoluru, shows that the E.P. schedule mentioned property is worth Rs.43,12,000/- as on 10.11.2002. The said Secretary was examined as PW-2, who categorically stated that he had issued Ex.A-1 and the Mandal Revenue Officer, Muthukur also counter-signed on Ex.A-1. Auction was held on 4.10.2002 whereas Ex.A-1 was issued on 10.11.2002. The gap between the date of auction and Ex.A-1 is less than one and half month. As per the re-test report filed by the Amin, he visited the E.P. schedule mentioned property along with the decree-holder, Panchayat Secretary and other villagers and in front of them he fixed the value at Rs.30,000/- per acre. However, there is no whisper as to what was the basis for fixing the amount at Rs.30,000/-per acre. The Amin had not stated in the said report whether they have enquired with the adjacent landholders about the rates prevailing adjacent to the lands of the E.P. schedule mentioned property. Therefore, the Court below has rightly came to the conclusion that if there is no such rate as per Ex.A-1, the M.R.O. Muthukur would not have countersigned on the certificate issued by PW-2. Further, it cannot be said that the rates in between the report of Amin dated 24.9.2002 and Ex.A-1 have been increased to such an extent. Therefore, the Court below has rightly gave a finding that the rate fixed by the Amin on 24.9.2002 is not proper and genuine. Further, the value fixed by the Amin at the time of re-test was found to be highly doubtful and, therefore, the sale held on 4.10.2002 in respect of the E.P. schedule mentioned property was liable to be set aside and it was accordingly set aside. Further, the value fixed by the Amin at the time of re-test was found to be highly doubtful and, therefore, the sale held on 4.10.2002 in respect of the E.P. schedule mentioned property was liable to be set aside and it was accordingly set aside. Though learned counsel for the appellant relied upon several decisions as cited supra, in none of those judgments a situation of this kind had arisen where the rate was fixed by the Amin was sought for re-test and re-fixation and to reduce the same to such a drastic low i.e. from Rs.20.00 lakhs to Rs.2.00 lakhs. They are all the cases where regular value was fixed and thereafter auction was conducted, sale was effected and that was sought to be set aside on the ground of fraud and material irregularity. Therefore, it was held in those cases that fraud and material irregularity must be brought out and even if there is some fraud, unless and until it has resulted in prejudice to the interest of the party concerned, the auction and sale conducted could not be set aside. But, the case on hand is not one such. Here, initially when the Amin tested and fixed the value of the E.P. schedule mentioned property at Rs.20.00 lakhs, the decree-holder was present. Of course, he left before the proceedings could be concluded. Thereafter, he filed E.A. No. 498 of 2002 seeking re-test and re-fixation of the value fixed by the Amin, which was allowed, and at the time of retest and re-fixation of the value, judgment-debtor was not present and no notice was given to him. Ex.A-1 is the certificate issued by the Secretary, Grama Sachivalayam of the village concerned, which was counter-signed by the M.R.O (Tahsildar), fixing the rate at Rs.43,12,000/-for the schedule property. Therefore, looking from any angle, it cannot be said that reducing the value of the petition schedule property from Rs.20.00 lakhs to Rs.2.00 lakhs is justified. For all the above reasons, I am of the considered opinion that the executing Court has not committed any error or illegality in setting aside the sale held on 4.10.2002, calling for interference of this Court under Order 43 Rule 1 CPC. The appeal is devoid of merit and liable to be dismissed. It is accordingly dismissed. The executing Court is directed to proceed with the matter in accordance with law. No order as to costs.