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2016 DIGILAW 315 (KER)

BABU JOHN v. A. K. RAMAKRISHNAN

2016-03-18

ANTONY DOMINIC, P.V.ASHA

body2016
JUDGMENT : Antony Dominic, J. 1. FAO.306/13 is filed by the judgment debtor in EP.24/08 in OS.30/03 on the file of the Sub Court, Nedumangad, challenging the order passed by that court in EA.87/11, whereby, his application filed under Order XXI Rule 90 of the Code of Civil Procedure seeking to set aside the sale conducted on 26.5.2011 was dismissed. FAO.27/14 is filed by the purchaser of the property in court auction, aggrieved by the order dated 23.7.2013 allowing EA.105/13 filed by the judgment debtor. 2. On facts, it is only relevant to state that the first respondent had filed OS.30/03 which was decreed in his favour and the decree has become final. EP.24/08 was filed to realise the decree debt by sale of the attached properties owned by the appellant judgment debtor. In the execution petition, on 25.7.2009, the decree holder submitted schedule of properties for proclamation and sale. This consisted of two items, having an extent of 25 cents and 11 cents respectively. 3. In EA.124/10 filed by the appellant judgment debtor, he inter alia pleaded that it was not necessary to sell both items of properties for realisation of the decree debt. This application was considered by the court in exercise of its power under Order XXI Rule 64 and order dated 7.4.2011 was passed, which, inter alia, reads thus: "Therefore the two items shall be sold as separate lots. The second item shall be sold at the first instance and if the sale proceeds are found to be not sufficient to satisfy the decree debt and costs, the first item shall be sold distinctly. If the sale proceeds of the second item is found sufficient as above, further sale shall be stopped. The petition is partly allowed accordingly." 4. However, proclamation was issued on 7.5.2011 without adverting to the order dated 7.4.2011 and fixing an upset price of Rs.13,50,052/-. Auction was conducted on 25.6.2011 and the property was purchased by the second respondent. According to the appellant, throughout, the parties were under the impression that the property was sold in conformity with the order dated 7.4.2011. 5. Subsequently, the appellant filed EA.87/11 under Order XXI Rule 90, seeking to set aside the sale. According to the appellant, ignoring the pendency of EA.87/11, the execution court confirmed the sale on 30.11.2012 and issued the sale certificate. Thereupon, the appellant filed EA.105/13 seeking to review the said order. 5. Subsequently, the appellant filed EA.87/11 under Order XXI Rule 90, seeking to set aside the sale. According to the appellant, ignoring the pendency of EA.87/11, the execution court confirmed the sale on 30.11.2012 and issued the sale certificate. Thereupon, the appellant filed EA.105/13 seeking to review the said order. This EA was allowed by order dated 23.7.2013 and accordingly, the order dated 30.11.2012 was reviewed. Thereafter, EA.87/11 was heard and according to the appellant, it was at that stage, it was revealed that the property sold in the court auction held on 26.5.2011 was the first item of 25 cents and not 11 cents, in compliance with the order dated 7.4.2011. According to him, it was also revealed that the property was sold for Rs. 10,53,052/- which was far below the upset price of Rs.13,50,052/- fixed in the proclamation of sale. By the impugned order dated 12.9.2013, EA.87/11 was dismissed by the execution court. 6. It is aggrieved by the order dated 23.7.2013 in EA.105/13 that the purchaser of the property has filed FAO.27/14 and FAO.306/13 has been filed by the judgment debtor aggrieved by the order dated 12.9.2013 dismissing EA.87/11. 7. We have heard learned counsel for the parties and have considered the submissions made. 8. In so far as FAO.27/13 is concerned, as we have already stated, the judgment debtor had filed EA.87/11 under Order XXI Rule 90, praying for an order setting aside the sale conducted on 26.5.2011. It was during the pendency of that application that the execution court confirmed the sale on 30.11.2012 and issued the certificate of sale. This, obviously, was a mistake committed by the court and it was accepting that mistake, that the court below passed order dated 23.7.2013 in EA.105/13 reviewing the order dated 30.11.12 and restoring status quo ante in the matter. This exercise, according to us, was one correcting an obvious mistake committed by the execution court and such an order is well within its powers. Therefore, we are not persuaded to think that the execution court had committed any illegality in allowing EA.105/13, which order is under challenge in FAO.27/14 at the instance of the purchaser of the property in the auction held on 26.5.2011. 9. Therefore, we are not persuaded to think that the execution court had committed any illegality in allowing EA.105/13, which order is under challenge in FAO.27/14 at the instance of the purchaser of the property in the auction held on 26.5.2011. 9. In so far as the order in EA.87/11 challenged in FAO.306/13 is concerned, although the second paragraph of the impugned order shows that various contentions were urged by the judgment debtor seeking to invalidate the sale conducted on 26.5.2011, admittedly, the factual position is that by order dated 7.4.2011, the court below had exercised its powers under order XXI Rule 64 and ordered that the two items of the attached properties shall be sold in separate lots and that the second item, having an extent of 11 cents, shall be sold at the first instance and that if the sale proceeds realised are found insufficient to satisfy the decree debt and costs, then alone shall the first item, a plot of land of 25 cents, be sold distinctly. The other admitted factual position is that the second item is the property having an extent of 11 cents comprised in Re-survey No.261/10 of block No.33 of Nedumangad taluk and the first item was 25 cents comprised in Re-survey No.261/10/1 in block 33 of Nedumangad taluk. Nobody has a dispute that in total violation of this order passed in exercise of its powers under Order XXI Rule 64, when the proclamation of sale was settled, the court below settled for sale of the property having an extent of 25 cents. 10. This has been taken note of by the execution court in its order thus: ". . . . It is pointed out by the learned counsel for the petitioner Judgment Debtor that he has filed objection to the Rule 66 notice as early as on 4.12.2009 in which he has raised the definite contention that the 25 cents sought to be put in auction shall fetch 75,00,000/- and the value shown in the proclamation schedule is very megre. According to the petitioner he has raised the objection regarding under valuation from the very beginning. As pointed out by him the objection filed on 4.12.2009 reveals the same. According to the petitioner he has raised the objection regarding under valuation from the very beginning. As pointed out by him the objection filed on 4.12.2009 reveals the same. A perusal of records reveals that on the basis of the contention raised by the petitioner/Judgment Debtor that sale of item No.2 in the 11 cents of property attached schedule No. alone is sufficient to satisfy the decree debt this court as per the order dated 7.4.2011 directed that the 2nd item in the attachment schedule having an extent of 11 cents has been sold at the 1st instance and if the sale proceeds are found not sufficient to satisfy the decree debt, the 1st item of 25 cents is to be sold. After that order auction was conducted on 26.5.2011 but the property sold in auction is item No.1 ie.25 cents owned by Judgment Debtor. No doubt auctions conducted on 26.5.2011 is not in accordance with the order of this court dated 7.4.2011." 11. Despite the above, the court below justified the sale conducted on 26.5.2011 by stating thus in the impugned order: "The argument advanced by the learned counsel for the counter petitioner No.1 decree holder is that the Petitioner/ Judgment Debtor himself has to know that prejudice has been caused to him by the sale of 25 cents instead of the 11 cents which is item No.1 in the attachment schedule. It is to be noted that there is no mentioning in the present petition regarding the mistake in conducting sale of item No.1 in the attachment schedule having an extent of 25 cents. Even in the present application the petitioner/Judgment Debtor has contended that 11 cents was sold in item No.2 in attachment schedule auction. The negligence on the part of the Judgment Debtor is evident. It is to be noted that the proclamation was settled after giving notice to the petitioner/ Judgment Debtor. Now he has raised a contention that a pucca building is available in the property sold in auction. The existence of such a building is not pointed out by the Judgment Debtor before settlement of proclamation or even at the time of conducting sale. It is revealed that the petitioner Judgment Debtor has not raised any objection even at the time of confirmation of sale on 30.11.2011. The existence of such a building is not pointed out by the Judgment Debtor before settlement of proclamation or even at the time of conducting sale. It is revealed that the petitioner Judgment Debtor has not raised any objection even at the time of confirmation of sale on 30.11.2011. He has came up by raising his grievance only when the property was about to be delivered to the auction purchaser. Here in this case petitioner has no specific case that by the sale of 25 cents instead of 11 cents ie item No.2 in the attachment schedule prejudice has been caused to him. He has not seen raised any objection regarding the non production of the valuation certificate, Encumbrance Certificate etc at the time of settling the proclamation. Considering the entire circumstances I am of the opinion that there is no sufficient reason to set aside the sale conducted on 26.5.2011." 12. In a proceedings under Order XXI CPC, when proclamation of sale is settled by an execution court, the procedure thereof prescribed in Rule 66 requires the court to exercise its power with due application of mind. This has been reiterated in several decisions and suffice it to notice the judgment of this Court in Thankamma v. Leelamma Abraham [ 2008 (2) KLT 500 ], where, in paragraphs 7 and 8, it has been held thus: "7. . . . . It is a case of non-application of judicial mind and abdication of judicial duty. Though the insertion of an order judicially passed need not be made in the sale proclamation, the record should indicate that a judicial order has been passed showing that it had applied its mind to the need for determining all the essential particulars, which would reasonably be looked for by an intending purchaser. The relevant and material particulars should be inserted in the sale proclamation as accurately and precisely as possible. It should not merely accept unhesitatingly the ipse dixit of one or either side or both. Where the court mechanically conducts the sale or routinely signs assent to the sale papers, not bothering to see if the offer is too low and a better price could have been obtained, and in fact the price is substantially inadequate, there is the presence of both the elements of irregularity and injury. Where the court mechanically conducts the sale or routinely signs assent to the sale papers, not bothering to see if the offer is too low and a better price could have been obtained, and in fact the price is substantially inadequate, there is the presence of both the elements of irregularity and injury. It shall be the endeavour of the court, throughout the entire process of sale, to obtain the adequate price of the property put in for sale. Obtaining of inadequate price in auction sale no doubt amounts to "substantial injury" contemplated under sub-rule (2) of Rule 90 of Order XXI C.P.C. 8. Non-application of mind is a material irregularity which vitiates the sale. Sale of land at Rs.83,509/- after ten years of the transaction between the parties at Rs.92,250/- is bad. The drawing up of the proclamation of sale and settlement of its term by non-application of judicial mind renders the sale a nullity, being void. The execution court has a salutory duty and a legislative mandate to apply its mind before settling the terms of proclamation and satisfy that if part of such property as seems necessary to satisfy the decree should be sold if the sale proceeds or portion thereof is sufficient for payment to the decree holder, so much of that property alone should be ordered to be sold in execution. It is a mandate of the legislature which cannot be ignored. Non-application of mind to the question whether sale of a part of the property would satisfy the decree debt is a material irregularity causing substantial injury to the judgment debtor attracting Order XXI Rule 90 C.P.C. In this case, a portion of the property put to sale would have been sufficient to satisfy the decree. Sale of the entire property for an amount of Rs.83,509/- caused substantial injury to the judgment debtor. The procedure adopted by the execution court bristles with several irregularities touching the jurisdiction of the courts. They are not only material irregularities causing substantial injustice, but are in violation of the mandatory requirements of the rules." 13. Facts of this case would show that admittedly, in the settlement of proclamation and the sale conducted, irrespective of whether the judgment debtor has objected to it or not, the execution court has violated its own order dated 7.4.2011. They are not only material irregularities causing substantial injustice, but are in violation of the mandatory requirements of the rules." 13. Facts of this case would show that admittedly, in the settlement of proclamation and the sale conducted, irrespective of whether the judgment debtor has objected to it or not, the execution court has violated its own order dated 7.4.2011. The order dated 7.4.2011 was passed by the execution court in exercise of its powers under Order XXI Rule 64 CPC. The importance of rule 64 and the consequence of its non-compliance have been explained by the Apex Court in its judgment in Ambati Narasayya v. M.Subba Rao [ AIR 1990 SC 119 ], where, it was inter alia held thus: "7. It is of importance to note from this provision that in all execution proceedings, the Court has to first decide whether it is necessary to bring the entire attached property to sale or such portion thereof as may seem necessary to satisfy the decree. If' the property is large and the decree to be satisfied is small, the Court must bring only such portion of the property. the proceeds of which would be sufficient to satisfy the claim of the decree-holder It is immaterial whether the property is one or, several. Even if the property is one, if a separate portion could be sold without violating any provision of law only such portion of the property should be sold. This, in our opinion, is not just a discretion, but an obligation imposed on the Court. Care must be taken to put only such portion of the property to sale the consideration of which is sufficient to meet the claim in the execution petition. The sale held without examining this aspect and not in conformity with this requirement would be illegal and without jurisdiction. 8. In Takkaseela Pedda Subba Reddy v. Pujari Padinavathamma, (1977)3 SCC 337 at p. 340 : ( AIR 1977 SC 1789 at p. 1791); this Court after examining the scope of R. 64 of Or. XXI, C.P.C. has taken a similar view: "Under this provision the executing Court derives jurisdiction to sell properties attached only to the point at which the decree is fully satisfied. The words 'necessary to satisfy the decree' clearly indicate that no sale can be allowed beyond the decretal amount mentioned in' the sale proclamation. XXI, C.P.C. has taken a similar view: "Under this provision the executing Court derives jurisdiction to sell properties attached only to the point at which the decree is fully satisfied. The words 'necessary to satisfy the decree' clearly indicate that no sale can be allowed beyond the decretal amount mentioned in' the sale proclamation. In other words, where the sale fetches a price equal to or higher than the amount mentioned in the sale proclamation and is sufficient to satisfy the decree, no further sale should be held and the court should stop at that stage." 14. It was at least in prima facie recognition of substance in the contention raised by the judgment debtor that if item No.1 having an extent of 11 cents is sold that might be sufficient to satisfy the decree debt, the execution court passed order dated 7.4.2011, directing sale of item No.2 having an extent of 11 cents and that the sale of item No.1 having an extent of 25 cents need be resorted only if the sale proceeds of item No.2 was insufficient to satisfy the decree debt. The execution court having exercised its power under Rule 64 and passed order dated 7.4.2011 should have settled the proclamation in terms thereof only. This deviation demonstrates non application of mind and a material irregularity in conducting the sale, invalidating the impugned sale. 15. Secondly, law is also settled that under Rule 66 of Order XXI, the proclamation shall be drawn up as fairly and accurately as possible and clause (e) of sub rule (2) mandates that every other thing which court considers material for a purchaser to know in order to judge of the nature and value of the property shall be included in the proclamation. The extracted portion of the impugned order would show that despite the fact that the property sold had a structure with RCC roof having plinth area of more than 2500 sq. feet, that was not mentioned in the proclamation of sale. Such an omission, an admitted fact, indicates the non compliance of rule 66 (2) (e) of Order XXI CPC. This also is in violation of the obligation of the execution court in giving necessary particulars in a proclamation. feet, that was not mentioned in the proclamation of sale. Such an omission, an admitted fact, indicates the non compliance of rule 66 (2) (e) of Order XXI CPC. This also is in violation of the obligation of the execution court in giving necessary particulars in a proclamation. In this context, the judgment of this Court in Chandradas v. A.Nizar [2009 (4) KLT SN 8(C.No.8)], being relevant, is extracted thus: "An obligation cast on the court to incorporate such relevant particulars which even the decree holder omits to furnish. If there has been any failure on the part of the Court in that regard, the judgment debtor to whom notice has been given cannot be found fault with for not raising objections with regard to omissions which the court considers material. It is an admitted fact that the description of the property put up for sale did not show the existence of the house in which the appellant is residing. This mis-description by way of omission had certainly dissuaded the intending bidders from participating in the auction. The question has to be considered from the perspective of the person whose property is being sold as also from the perspective of the class of intending bidders when they come across the sale proclamation advertised in the newspapers or any other medium. It is the obligation of the court to ensure that the judgment debtor whose property is being sold is entitled to a fairly accurate description of his property so as to secure the presence of such class of bidders who would make fair bids of the property having regard to the size, location and other features of the property. A material mis-description in a sale proclamation would vitiate the sale." 16. One contention raised before us was that under Order XXI Rule 90, even if it is found that there was material irregularity or fraud in publishing or conducting a sale in execution of a decree, the sale shall not be set aside unless upon the facts proved, court is satisfied that the applicant has sustained substantial injury by reason of such irregularity or fraud. They also relied on the judgment of this Court in C.C. Sivaprasad v. K. Sasidharan [2006 KHC 327], where, referring to the judgment of the Apex Court in Ram Murya v. Kailashnath [ (1999) 9 SCC 276 ], it was held thus: 20. They also relied on the judgment of this Court in C.C. Sivaprasad v. K. Sasidharan [2006 KHC 327], where, referring to the judgment of the Apex Court in Ram Murya v. Kailashnath [ (1999) 9 SCC 276 ], it was held thus: 20. The legal position is now well settled. Be reason of any material irregularity either in publishing or conducting the sale, a sale cannot be set aside unless the applicant establishes that by reason of such irregularity, he sustained substantial injury, Apex Court in Ram Maurya v. Kaislashnath and others ( 1999 (9) SCC 276 ) considered this aspect and held: "Even if we assume here for the sake of argument that there was material irregularity in conducting the sale of the property, we do not find any pleading by the objectors in their objections that on account of such material irregularity they were put to substantial injury". It was held that in the absence of substantial injury, the sale cannot beset aside. As declared by the Aepx Court in Jaswantlal Natwarlal Thakkar v. Sushilaben Manilal Dangar ( AIR 1991 SC 770 ) without showing that the irregularity resulted in substantial injury, no sale could be set aside on the ground of material irregularity. For the irregularity, substantial injury cannot be assumed or presumed." 17. Though the principle reiterated in the judgment in Sivaprasad (supra) is not open to doubt, we are not able to accept the case that the judgment debtor has failed to establish a case of substantial injury to him. From the order passed by the court in exercise of its power under Rule 64, it can be seen that the court had directed sale of item No.2 having an extent of 11 cents, in view of the contention that sale of that plot would generate sufficient amount to satisfy the decree. However, that order was ignored and without any application of mind, proclamation was settled for sale of item No.1 having an extent of 25 cents and this property was sold. Secondly, even in item No.1, the existence of a building which is stated to be having a plinth area of 2500 sq.feet was omitted to be mentioned. This, certainly, would have had an impact on the price that the property would have fetched. These two omissions on the part of the court certainly caused injury to the judgment debtor. Secondly, even in item No.1, the existence of a building which is stated to be having a plinth area of 2500 sq.feet was omitted to be mentioned. This, certainly, would have had an impact on the price that the property would have fetched. These two omissions on the part of the court certainly caused injury to the judgment debtor. In this context, existence of direct evidence of injury has been disapproved by the Madras High court in its judgment in Sri Rajah Satrucherla Sivaskandaraju Bahadur Garu v. Sri Narasimha Pattamani [AIR 1933 Mad 225], where, in paragraphs 4 and 14, the Division Bench, inter alia, held thus: "4. . . . As I pointed out in the course of the arguments, if the property to be sold is 1000 acres of valuable wet land, say in the Godavari delta tract, and the proclamation describes it as dry land, would any Court insist upon direct evidence for proving that the injury is the result of this irregularity? Or again, as has happened in one of the cases to which our attention has been drawn, if a sale announced to take place at 11 o'clock is held at 7, can nothing short of direct oral evidence satisfy the Court that the loss is due to that patent and obvious irregularity? It is unnecessary, as I have said, in the view I have taken to pursue this matter." "14. . . . . . Whatever may have been declared in any decision to have been the law before what corresponded to Rule 90, Order 21, Code of Civil Procedure, assumed its present form, certainly it is not necessary now to rule out reasonable inferences from evidence in order to establish that an irregularity in the conduct and publication of a sale has caused substantial loss. . . . . ." 18. The court below seems to have given undue importance to the failure of the judgment debtor to object to the proceedings for settlement of proclamation and also his conduct in protracting the proceedings. In our view, even if these facts are correct, that would neither absolve the execution court of its duties under Order XXI CPC nor does it disentitle the judgment debtor from contending that he lost his property in an auction sale held in flagrant violation of the mandatory requirements and safeguards. In our view, even if these facts are correct, that would neither absolve the execution court of its duties under Order XXI CPC nor does it disentitle the judgment debtor from contending that he lost his property in an auction sale held in flagrant violation of the mandatory requirements and safeguards. In this context, it is relevant to refer to the judgment of the Apex Court in Takkaseela Pedda Subba Reddi v. Pujari Padmavathamma [ (1977) 3 SCC 337 ], where, after referring to the provisions of Order XXI Rule 64, the Apex Court held thus: "Under this provision the Executing Court derives jurisdiction to sell properties attached only to the point at which the decree is fully satisfied. The words "necessary to satisfy the decree" clearly indicate that no sale can be allowed beyond the decretal amount mentioned in the sale proclamation. In other words where the sale fetches a price equal to or higher than the amount mentioned in the sale proclamation and is sufficient to satisfy the decree, no further sale should be held and the Court should stop at that stage. In the instant case, we have already indicated that the sale of lands in village Devanoor alone fetched a sum of Rs. 16,880/- which was more than sufficient to satisfy the amount of Rs. 16,715-8-0 mentioned in the sale proclamation. It is true that the decree-holder had obtained another decree in O. S. No. 19 of 1953, but there is nothing to show that the decree-holder had approached the Court for including the second decretal amount in the proclamation of sale. In these circumstances, therefore, we are clearly of the opinion that the Executing Court was not justified, in the facts and circumstances of the present case, in selling the properties situated in village Gudipadu. The fact that the judgment- debtor did not raise an objection on this ground before the Executing Court is not sufficient to put him out of Court because this was a matter which went to the very root of the jurisdiction of the Executing Court to sell the properties and the non- compliance with the provisions of O. 21, R. 64 of the Code was sufficient to vitiate the same so far as the properties situated in village Gudipadu were concerned. For these reasons, the contentions raised by counsel for the appellant must be overruled." 19. For these reasons, the contentions raised by counsel for the appellant must be overruled." 19. Subsequently, a Division Bench of this Court had also occasion to consider a similar case in P.K. Kuruvilla v. Corporation Bank [2008 (1) KHC 258], where, it was held thus: "22. It is true that the Execution Petition was filed long back. It may also be true that the judgment debtor tried to protract the execution proceedings. But that is not a ground for selling the property of the judgment debtor without complying with the mandatory requirements of law. The court could effectively prevent the judgment debtor from protracting the proceedings. Even a judgment debtor who tried to protract the proceedings, is entitled to contend that he lost his property in a court action sale which was held in flagrant violation of mandatory procedural requirements and safeguards, and impugn such sale on those grounds. It is relevant in this context to note that in the earlier round of litigation, namely, C.M.A. No. 161 of 1997, the appellant offered to deposit Rs. Ten lakhs and the amount was deposited." 20. For all these reasons, the order dated 12.9.2013 passed by the Sub court, Nedumangad dismissing EA.87/11 in EP.24/08 in OS.30/03 is unsustainable and the order has to be set aside. Accordingly, we dismiss FAO.27/14 and allow FAO.306/13 and the sale conducted on 26.5.2011 in EP.24/08 in OS.30/03 on the file of the Sub Court, Nedumangad is set aside. The court below will proceed with EP.24/08 from the stage of proclamation of sale with notice to the parties concerned and in accordance with the provisions of order XXI CPC.