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2015 DIGILAW 2679 (MAD)

R. Viswanathan v. R. Santhanam

2015-07-31

V.M.VELUMANI

body2015
JUDGMENT : The appellant is the Judgment Debtor in O.S.No.5 of 2002 and respondent in E.P.No.15 of 2004. He filed a petition in E.A.No.23 of 2005, to set aside the sale held on 26.10.2005, in respect of the suit schedule property and to declare the sale as null and void. By the order, dated 25.09.2009, the said application was dismissed by the learned Additional District and Sessions Judge (Fast Track Court No.I), Trichy. Against the said order, the present appeal is filed. 2. The first respondent is the Decree Holder/Petitioner in the E.P. The second respondent is the third party auction purchaser. 3. The case of the Appellant: (i) The first respondent filed a suit in O.S.No.5 of 2002 on the file of Additional District and Sessions Court (Fast Track Court No.I), Trichy, for recovery of money based on the mortgage. By consent, a preliminary decree was passed and a final decree was passed on 23.12.2003, in I.A.No.67 of 2003. The first respondent filed E.P.No.15 of 2004. The appellant filed various applications in the E.P., at various stages. All the applications were dismissed after contest. The suit property was sold by public auction on 26.10.2005. The appellant filed E.A.No.23 of 2005, to set aside the Court auction sale held on 26.10.2005. (ii) The first respondent obtained a consent decree by fraud. Therefore, he filed E.A.No.4 of 2005 under Order 21 Rule 58 C.P.C. The said application was dismissed. The Court directed the Senior Bailiff to value the property on 29.03.2004. The Senior Bailiff without inspecting the suit property and enquiring the witness, has arrived at value of property at Rs.11,50,000/-. As per the guideline value, the value of vacant site comes to Rs.15,79,200/-and the value of the building comes around Rs.11,50,000/-. According to the appellant, the value of the suit schedule property is not less than Rs. 35,00,000/-. (iii) The appellant filed a petition to enhance the upset price of the schedule mentioned property. The said petition was dismissed. The appellant filed E.A.No.12 of 2005, for adjournment of sale. The said petition was also dismissed. At the same time, the auction was adjourned to 22.06.2005 with same proclamation. (iv) Again, the appellant filed E.A.No.15 of 2005, for adjournment of sale and the said application was also dismissed. On the date of auction, there were no bidders. On 06.09.2005, E.A.No.4 of 2005 was dismissed. The said petition was also dismissed. At the same time, the auction was adjourned to 22.06.2005 with same proclamation. (iv) Again, the appellant filed E.A.No.15 of 2005, for adjournment of sale and the said application was also dismissed. On the date of auction, there were no bidders. On 06.09.2005, E.A.No.4 of 2005 was dismissed. The appellant filed petition for stay of all further proceedings to enable him to file a revision before this Court. The Court directed the appellant to pay a sum of Rs.10,000/-to the first respondent, as cost, on or before 21.09.2005. The first respondent refused to receive the said amount. Therefore, the learned Judge directed the appellant to deposit the same into Court and granted stay for two weeks. (v) As per Order 21 Rule 69 C.P.C., when the sale is stayed by the Court for whatever reason, fresh sale proclamation and fresh date of sale has to be fixed, when the stay was vacated. This condition was violated, as the first respondent failed to issue fresh sale proclamation on the fresh date of sale i.e., on 26.10.2005. The first respondent fraudulently failed to comply the mandatory provision, which amounts to irregularity in publishing and conducting the sale. (vi) The first respondent filed a Memo on 19.09.2005, stating that the upset price was high and there were no bidders on the date of auction i.e., on 14.09.2005 and prayed for fresh sale on the same upset price to avoid further delay. The first respondent did not serve copy of the Memo to the appellant's counsel. (vii) The appellant filed E.A.No.21 of 2005 to revise the upset price and another petition to appoint an Advocate Commissioner, to value the suit property with the help of Chartered Engineer and file a report in E.A.No.20 of 2005. The appellant and the first respondent had entered into an agreement of sale on 04.05.1996, by which, the first respondent has agreed to purchase the suit schedule property for Rs.13,00,000/-. Therefore, the value of the property after nine years will be more than Rs.34,00,000/-. The first respondent with an ulterior motive, quoted a very low amount of Rs.8,00,000/-, as value of the property. E.A.Nos.20 of 2005 and 21 of 2005 were posted on 26.10.2005, for enquiry and the sale of property was also fixed on 26.10.2005. (viii) The first respondent had filed a Memo to fix the same upset price. The first respondent with an ulterior motive, quoted a very low amount of Rs.8,00,000/-, as value of the property. E.A.Nos.20 of 2005 and 21 of 2005 were posted on 26.10.2005, for enquiry and the sale of property was also fixed on 26.10.2005. (viii) The first respondent had filed a Memo to fix the same upset price. The appellant has filed a petition to revise the upset price. No upset price was fixed as on 26.10.2005. The appellant filed E.A.No.22 of 2005, to adjourn the sale for three months. The learned Judge adjourned E.A.Nos.20 and 21 of 2005 to 28.10.2005 and dismissed E.A.No.22 of 2005, for adjournment of sale. (ix) On 26.10.2005, the second respondent offered Rs.11,50,250/-, which was the highest bid amount. The first respondent suppressed the prior mortgage in favour of State Bank of India in the proclamation of sale and the property is worth about Rs.34,00,000/-, but the upset price was fixed at Rs.11,50,000/-. While E.A.Nos.20 and 21 of 2005 filed by the appellant and Memo filed by the first respondent, for revision of upset price were pending, the learned Judge committed irregularity in ordering auction on 26.10.2005. Therefore, he filed E.A.No.23 of 2005, to set aside the sale. 4. The case of the first respondent: The first respondent denied various allegations made by the appellant. According to the first respondent, the petitions were filed by the appellant only to drag on the proceedings and to prevent the first respondent from enjoying the fruits of the decree. The appellant did not file any appeal against the preliminary decree and final decree. The various petitions filed by the appellant were dismissed and he did not file any revision. The Court Amin only after inspection of suit property, fixed the value and filed report. The appellant in spite of various opportunities being given to him, did not object the value fixed by the Court Amin before the auction, being conducted by the Court. The value as given by the appellant is not correct. The appellant without paying any money, has filed petitions, for adjournment and all the petitions were dismissed. The auction was conducted only after issuance of fresh proclamation of sale and therefore, prayed for dismissal of E.A. 5. The value as given by the appellant is not correct. The appellant without paying any money, has filed petitions, for adjournment and all the petitions were dismissed. The auction was conducted only after issuance of fresh proclamation of sale and therefore, prayed for dismissal of E.A. 5. The case of the second respondent: The second respondent/Auction Purchaser filed counter affidavit and stated that he came to know about the auction, when the same was announced by beating of tom tom. The price offered by the second respondent is proper and he deposited the amounts as per orders of the Court. The Court auction was validly held and if the sale in his favour is set aide, he would be put to irreparable loss and hardship and therefore, prayed for dismissal of E.A. 6. The learned Judge considered all the materials on record, dismissed the petition in E.A.No.23 of 2005. Against the said order, dated 25.09.2009, the present civil miscellaneous appeal is filed. 7. The learned counsel for the appellant contended that; (a) the learned Judge failed to consider that the procedure contemplated under Order 21 Rule 54 (1)(2) was not followed; (b) the first respondent did not pay the fresh proclamation Batta and did not serve the proclamation notice on the appellant; (c) the learned Judge failed to ascertain as to whether the auction was held on 26.10.2005 based on the new upset price or on the original upset price; (d) though the total value of property was worth about Rs.35,00,000/-during 2003, it was sold for Rs.11,50,000/-in the year 2015; (e) the procedure contemplated under Order 21 Rules 54, 66 and 67 C.P.C. were not followed; and (f) when fresh proclamation is ordered, earlier upset price fixed, is set aside automatically. 8. In support of his submission, the learned counsel for the appellant relied on the following Judgments: (i) M.Vijaya Vs. M.R.Chinnadurai and others [ 2015 (3) LW 329 ], wherein at paragraphs 8 and 9, it has been held as follows: "8.Order XXXIV Rule 5 CPC recognises the right of the judgment-debtor to pay the decretal amount in an execution relating to a mortgage decree for sale at any time before the confirmation of sale. In the instant case, when the sale is challenged and that is pending appeal, the judgment debtors have filed an application to deposit the entire sale amount. In the instant case, when the sale is challenged and that is pending appeal, the judgment debtors have filed an application to deposit the entire sale amount. As such, it is clear that the question of sale is yet to be decided by the First Appellate Court and therefore, the sale is deemed to be not confirmed. 9.Learned counsel appearing for the respondents 1 and 2 brought to the attention of this Court the judgment rendered by the Hon'ble Supreme Court in Kharaiti Lal vs. Raminder Kaur and others [ AIR 2000 SC 1148 ]. In the said case, the Hon'ble Apex Court held that the sale would attain finality only on disposal of the appeal. In this regard, it would be relevant to refer to paragraph 11 of the judgment which reads as follows:- “The above question is identical to the question framed by the Division Bench of the High Court in this case. This Court, on a consideration of a number of decisions, including the decision of this Court in Hukamchand's case ( AIR 1968 SC 86 ) (supra) laid down that if an appeal was pending against an order refusing to set aside the sale, the confirmation of sale as also the issuance of Sale Certificate would be in a nebulous state and, consequently, it would be open to the judgment-debtor to invoke the provisions of Order 34 Rule 5 C.P.C. and make the necessary deposits to save his property from being transferred to a third person or, may be, to the decree-holder, in execution of the decree passed in the mortgage suit. It may be mentioned that in U.Nilan's case (1999 AIR SCW 3795 : AIR 1999 SC 3750 ) (supra), reliance was also placed upon the decision of this Court in Maganlal & Anr. v. Jaiswal Industries, Neemach & Ors., [1989] 4 SCC 344=[1989] 3 SCR 696=AIR (1989) SC 2113, in which it was held that the sale does not become absolute or irrevocable merely on passing an order confirming the sale under Order 21 Rule 92, but it would attain finality on the disposal of the appeal, if any, filed against an order refusing to set aside the sale."" (ii) C.Velu @ Venkatesalam and 2 others Vs. S.Kandasamy Chettiar (died) and others [ 2010 (5) CTC 77 ], wherein at paragraphs 24 and 35, it has been held as follows: "24. S.Kandasamy Chettiar (died) and others [ 2010 (5) CTC 77 ], wherein at paragraphs 24 and 35, it has been held as follows: "24. In pari materia with the salient features as found embodied in Order 21 Rule 72-A of CPC, Rule 199 of Civil Rules of Practice also would contemplate the very same wholesome principle that a decree holder should not in any case be allowed to snatch away the property of the judgment debtor for a song. In this case, absolutely there is no shard or shred, molecular or miniscule, iota or jot of evidence to show that the Executing Court before passing order applied its mind on those provisions of law, which embody the wholesome principle. 35. At this juncture, the learned counsel for R4 would submit that if for any reason the Court finds that the sale conducted was not in order, the only course open for the Court is to set side the sale and once again direct the Executing Court to conduct fresh sale as per law, for which, the learned counsel for the revision petitions/judgment debtors would submit that in ordinary circumstance that might be the order of this Court, but here already C.M.P.No.1431 of 2008 is pending seeking permission of this Court to deposit the entire dues under the mortgage and this Court can even impose reasonable cost also to be paid by the judgment debtors to the decree holders." (iii) Philomina Jose Vs. Federal Bank Ltd. and others [ 2006 (2) SCC 608 ], wherein at paragraphs 6 and 10, it has been held as follows: "6. The High Court held that the petitions under Order 34 Rule 5 were not maintainable on two grounds, namely,: (1) Under Section 60 of the Transfer of Property Act, 1882 (in short “the Act”) right to redemption continues to inhere in a mortgage only until it is extinguished by act of parties or by a decree of court. By the passing of a decree, the mortgage security merges in the decree and is replaced by the security of the order of sale. Accordingly the right of redemption is extinguished by the final decree under Order 34 Rule 5(3) of the Code. Reliance was placed on a decision of the Patna High Court in Sheo Narain Sah v. Deolochan Kuer [AIR 1948 Pat 208 : ILR 26 Pat 97]. Accordingly the right of redemption is extinguished by the final decree under Order 34 Rule 5(3) of the Code. Reliance was placed on a decision of the Patna High Court in Sheo Narain Sah v. Deolochan Kuer [AIR 1948 Pat 208 : ILR 26 Pat 97]. (2) Though a right under Order 34 Rule 5 was available under the Code, after the substitution of Order 34 by the Kerala Amendment there is no such right available to the mortgagor. 10. The view taken by the Patna High Court was held to be not the correct view as observed by this Court in Mhadagonda Ramgonda Patil v. Shripal Balwant Rainade [ 1988 (3) SCC 298 ]. It was held that unless and until a decree or order debarring the mortgagor from redeeming the property is passed under sub-rule (3)(a) of Rule 8 of Order 34 the right of redemption is available. ...." (iv) Mahakal Automobiles and another Vs. Kishan Swaroop Sharma [ 2008 (13) SCC 113 ], wherein at paragraphs 8 and 11, it has been held as follows: "8. In support of the appeal, learned counsel for the appellant submitted as follows: (i) Records reveal that no process fee was paid by the decree-holder as per order dated 4-10-1997. (ii) Attachment of warrant was not as per Order 21 Rule 54(1-A) CPC. (iii) No notice was given to the appellants when execution proceedings got delinked from the suit and got transferred from one court to another. (iv) Attachment proceedings were carried out in the absence of the judgment-debtor. (v) No notice was given to the appellant under Order 21 Rules 54 and 66(2) CPC. The procedure under Order 21 Rules 54(1-A) and 66(2) CPC is mandatory. Hence, the objections taken by way of IAs Nos. 1, 2 and 6 should have been accepted. (vi) The Court found total absence of drawing up of the proclamation of sale and its terms by judicial application of mind. (vii) It was held that the executing court did not follow the mandatory procedure as provided under the Code. 11. .... Each stage of the sale is governed by the provisions of the Code. For the purposes of the present case, the relevant provisions are Order 21 Rule 54 and Order 21 Rule 66. (vii) It was held that the executing court did not follow the mandatory procedure as provided under the Code. 11. .... Each stage of the sale is governed by the provisions of the Code. For the purposes of the present case, the relevant provisions are Order 21 Rule 54 and Order 21 Rule 66. At each stage of the execution of the decree, when a property is sold, it is mandatory that notice shall be served upon the person whose property is being sold in execution of the decree, and any property which is sold, without notice to the person whose property is being sold is a nullity, and all actions pursuant thereto are liable to be struck down/quashed." 9. Per contra, the learned counsel for the first respondent contended that various petitions filed by the appellant for the very same relief, were dismissed by the learned Judge on various occasions by giving valid reasons. The intention of the appellant is only to drag on the proceedings and preventing the first respondent from enjoying the fruits of the decree. The property was sold after following the procedure contemplated in Order 21 C.P.C. There is no irregularity in the Court auction sale and no fraud has been committed in conducting the sale and therefore, she prayed for dismissal of the civil miscellaneous appeal. 10. The learned Senior Counsel for the second respondent contended that the appellant had filed various petitions only with an intention to be in possession of the suit property. The appellant had participated in all the proceedings at every stage. He was present at the time of Court auction. On the application filed by the appellant, the sale was postponed on number of occasions. 11. In support of her submission, the learned Senior Counsel relied on the Judgment reported in AIR 1991 SC 770 [Jaswantlal Natvarlal Thakkar Vs. Sushilaben Manilal Dangarwala], wherein 14 at paragraph 3, it has been held as follows: "3. .... O.21, R.72 having been passed without such notice. We have been taken through the relevant facts in detail by Sri Dholakia but we are unable to find any such overwhelming circumstances as can enable us to hold that this irregularity was such as has caused substantial injury to the appellant within the meaning of the rule in the circumstances of the case." 12. We have been taken through the relevant facts in detail by Sri Dholakia but we are unable to find any such overwhelming circumstances as can enable us to hold that this irregularity was such as has caused substantial injury to the appellant within the meaning of the rule in the circumstances of the case." 12. I have heard the learned counsel appearing for the parties and considered the arguments put forth by them and perused the materials on record. 13. The contention of the learned counsel for the appellant is that the lower appellate Court failed to follow the procedure laid down in Order 21 Rules 54, 66 and 67 C.P.C. When a fresh upset price is fixed or fresh proclamation is issued, the same must be put on notice to the appellant/Judgment Debtor. From the Judgments relied on by the learned counsel for the appellant, it is seen that, (i) at every stage of proceedings for sale of property, notice must be given to Judgment Debtor. The Judgment Debtor must be given notice with regard to attachment and issue of sale of proclamation; and (ii) the provisions of Order 21 Rules 54 and 66 are mandatory. Any sale effected without publication would be nullity and the action taken pursuant to the said sale, are liable to be struck down. 14. The judgments relied on by the learned counsel for the appellant, reported in 2015 (3) LW 329 (supra), 2010 (5) CTC 77 (supra) and 2006 (2) SCC 608 (supra) are not applicable to the facts of the present case. Those Judgments are rendered in respect of Order 34 Rule 5 and Order 21 Rules 72, 72-A and 92 C.P.C. 15. The appellant has not taken any proceedings under Order 34 Rule 5 C.P.C. and no permission was granted under Order 21 Rules 72 and 72-A C.P.C., for decree holder or mortgagee to bid. The second respondent, the purchaser in the Court auction, is a third party. 16. The points for consideration in this appeal are, (i) Whether the value of the property fixed is very low? (ii) Whether the appellant was not given any notice for issuance of fresh proclamation? 17. Point No.I: As far as point No.I is concerned, the appellant agitated the said issue on earlier occasions. The E.A. filed in this regard was dismissed. The points for consideration in this appeal are, (i) Whether the value of the property fixed is very low? (ii) Whether the appellant was not given any notice for issuance of fresh proclamation? 17. Point No.I: As far as point No.I is concerned, the appellant agitated the said issue on earlier occasions. The E.A. filed in this regard was dismissed. The revision filed before this Court and petition filed before the Hon'ble Apex Court, were dismissed. Therefore, it is not open to the appellant to agitate this issue again before the Executing Court or before this Court. 18. Point No.II: As far as point No.II is concerned, the appellant was participating in the Execution Petition actively and he was represented at every stage. He was actively participating in the Execution Petition at every stage, E.A.No.3 of 2005, for raising upset price and E.A.No.16 of 2005, to fix fresh upset price, were dismissed. E.A.No.4 of 2005 filed by the appellant under Order 21 Rule 58 C.P.C., alleging that the first respondent obtained consent decree by playing fraud. The appellant has not challenged preliminary decree or final decree by revision or appeal. Therefore, from these proceedings, it is clear that the intention of the appellant is to drag on the proceedings. E.A.No.23 of 2005 filed under Order 21 Rule 90 C.P.C., is devoid of merits and the learned Judge has given valid reason, for dismissing the same. 19. At this juncture, it is relevant to extract Order 21 Rule 90 C.P.C. "90. Application to set aside sale on ground of irregularity or fraud -(1) Where any immovable property has been sold in execution of a decree, the decree-holder, or the purchaser, or any other person entitled to share in a rateable distribution of assets, or whose interests are affected by the sale, may apply to the Court to set aside the sale on the ground of a material irregularity or fraud in publishing or conduction it. (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. (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. (3) No application to set aside a sale under this rule shall be entertained upon an ground which the applicant could have taken on or before the date on which the proclamation of sale was drawn up. Explanation.-There mere absence of, or defect in, attachment of the property sold shall not, by itself, be a ground for setting aside a sale under this rule." 20. When the appellant had an opportunity to raise the question of value of property, the same was rejected. Therefore, as per Sub-Rule 3 of Rule 90 of Order 21 C.P.C., no fresh application can be entertained by the Court in this regard. As per the explanation, mere absence or defect in the attachment of property sold, will not be a ground for setting aside the sale. Further, to get favourable orders in a petition filed under Rule 90 C.P.C., the appellant must not only prove irregularity or fraud, but also must satisfy the Court that he has sustained substantial injury by the irregularity or fraud. In the present case, the appellant failed to prove that there was irregularity or fraud in conducting the auction sale and that he suffered substantial injury. 21. From the records, it is seen that the appellant had participated in the proceedings at every stage and upset price was not reduced from Rs.11,50,000/-. Therefore, the contention of the learned counsel for the appellant that on the date of auction, there was no upset price, is not correct. Similarly, as he has participated in the proceedings, the contention of the learned counsel for the appellant that no notice was served, is untenable. The learned Judge has complied with provisions of Order 21 C.P.C., in conducting the Court auction. Therefore, the Judgments relied on by the learned counsel for the appellant, are not applicable to the facts of the present case. 22. In the result, the civil miscellaneous appeal is dismissed. No costs. 23. The second respondent has complied with the conditions of Court auction and sale in his favour, was confirmed. Therefore, the Judgments relied on by the learned counsel for the appellant, are not applicable to the facts of the present case. 22. In the result, the civil miscellaneous appeal is dismissed. No costs. 23. The second respondent has complied with the conditions of Court auction and sale in his favour, was confirmed. In view of the same, M.P.(MD)No.1 of 2015, filed by the appellant, to permit him to deposit a sum of Rs.6,09,832.60 together with interest on the principal amount from 19.02.2004 till 31.07.2005 at 6% p.a. along with incidental Court expenses, incurred by the first respondent for sale proclamation and sale of property within the reasonable time, is devoid of merits. Further, the appellant had not exercised the right available to him under Order 21 Rule 89 C.P.C., to set aside the sale on deposit. Therefore, M.P.(MD) No.1 of 2015, is dismissed.