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2020 DIGILAW 250 (AP)

Pathipati Naryanama v. Gonuguntia Prasanna

2020-03-16

M.VENKATA RAMANA

body2020
ORDER : M. Venkata Ramana, J. 1. This Civil Revision Petition is directed against order in CMA No. 16 of 2014 of the Court of learned I Additional District Judge, Anantapuramu dated 27.07.2015. It was preferred in turn against the order in E.A. No. 80 of 2012 in E.P. No. 12 of 2011 in O.S. No. 17 of 2009 dated 08.07.2014 of the Court of the learned Senior Civil Judge, Dharmavaram. 2. The 1st respondent, in execution of the decree dated 18.03.2009 in O.S. No. 17 of 2009 of the Court of Senior Civil Judge, Penukonda, levied E.P. No. 12 of 2011 for realisation of Rs. 1,27,207/- against the petitioner. Mode of execution requested was to attach the E.P. schedule property and to sell the same under Order-XXI, rules 54, 64 and 66 CPC. 3. An extent of Ac. 9-70 cents in S. No. 364/2 of Malyavantham village of Bathalapalli Mandal, Ananthapuram District is the E.P. schedule property. 4. Upon attachment of this property, its sale was ordered and on 20-07-2012 auction was conducted in open Court, in which the 2nd respondent became the highest bidder purportedly for Rs. 5,00,000/-. On the date of the sale, on behalf of the petitioner, an Execution Application in E.A. No. 55 of 2012 was filed by the petitioner under Section 47 CPC, claiming that she is not the absolute owner having right and interest in the E.P. schedule property and that her children have, in all, 24/25th share while she has only 1/25th share in the E.P. schedule property. Her claim that it was ancestral extent, where all her family members including herself upon death of her late husband to whom this property originally belonged, was dismissed in E.A. No. 55 of 2012 on 17.10.2013. 5. Similarly stating and raising other grounds questioning the manner and conduct of the sale of E.P. schedule property, the petitioner filed E.A. No. 80 of 2012 purportedly under Order-XXI, Rule-90 CPC. 6. The respondents contested it opposing such claim. 7. The objections urged on behalf of the petitioner were rejected by the Executing Court dismissing E.A. No. 80 of 2012. 8. In this revision petition, the petitioner raised three grounds questioning the sale and Order of the Executing Court. They are: (1) That there was no necessity for sale of entire extent of Ac. 7. The objections urged on behalf of the petitioner were rejected by the Executing Court dismissing E.A. No. 80 of 2012. 8. In this revision petition, the petitioner raised three grounds questioning the sale and Order of the Executing Court. They are: (1) That there was no necessity for sale of entire extent of Ac. 9-70 cents in all to realise the E.P. amount, since apart of it could have been sufficient. (2) The manner and conduct of sale is highly irregular in as much as there was no auction in real terms and that the bid was knocked down in favour of the second respondent, who is none other than the father-in-law of the 1st respondent. (3) The Executing Court did not fix up upset price while conducting auction, which is a normal practice and also mandatory and it being a serious and material irregularity causing substantial injury to the petitioner/J.Dr. 9. The learned counsel for the 2nd respondent/D.Hr. contended that there was absolutely no material irregularity in conducting the sale and even otherwise the petitioner did not raise any objection at any stage in the execution proceedings except filing the petition under Order-21, Rule-90 CPC questioning the sale and manner of conducting it as well as bringing the entire extent for such purpose. 10. Now, the point for determination is-"Whether the sale of E.P. schedule property stood vitiated on account of material irregularity in conducting the same, that caused substantial injury to the petitioner and if it was carried out on account of the collusion between the respondents 1 and 2 inter se? POINT:- 11. Among the grounds urged on behalf of the petitioner, significance has to be attached to the failure of the Executing Court in fixing upset price while conducting the auction. 12. Upset price or reserve price is a usual and conventional practice, setting out the bench mark from or above which the bid should be offered. Thus, it is the lowest or minimum sale price of the property in an auction fixed by the Executing. Court. It is a well known method and practice in Court auctions. The' object underlying in fixing upset price or reserve price is to facilitate conduct of sale and to safeguard the interest of judgment debtor. Thus, it is the lowest or minimum sale price of the property in an auction fixed by the Executing. Court. It is a well known method and practice in Court auctions. The' object underlying in fixing upset price or reserve price is to facilitate conduct of sale and to safeguard the interest of judgment debtor. Though it cannot be deemed the value of the property, which is subject matter of the sale, still, it is expected at or above which the property shall be sold in such an auction in a Court. For such reason alone, whenever a sale list (bid list) is prepared as per Rules 272, 276 to 278 of Civil Rules of Practice, there shall be a specific direction for recording upset price or reserve price while conducting an auction by the Executing Court.' The prescribed proforma of an affidavit in para 5 in Form No. 68 as per Rule 259 of Civil Rules of Practice, refers to reserve price to be fixed. Usually such upset price will be fixed as a reasonable estimate, basing on the material available on record including the market value as per the certificate issued by the concerned Sub Registrar, value offered by D.Hr. and J.Dr. as well as the value given by the Amin (Field Assistant) of the Court. 13. The upset price shall be determined upon an objective consideration of the relevant facts, which the Executing Court deems necessary and in order to safeguard interests of not only the judgment-debtor but also the auction purchaser, having regard to the nature of the property to be sold. It is further to be noted that the Court is also empowered, depending on the circumstances, including upon hearing the parties to fix upset price and also to reduce it. Once such an upset price is fixed, it insulates the executing Court from any criticism that the property, which is subject matter of the sale, was sold either for a throw away price or for a bid amount, which is abysmally low. It further protects the interests of the judgment-debtor as well as the auction purchaser and possibly enables to avoid possible objections questioning the sale itself. 14. The learned counsel for the petitioner in this context relied on C. Ryan Babu v. B.K.L. Traders, Gajuwaka, Visakhapatnam and another, 2010(4) ALD 349 : (AIR 2010 ANDHRA PRADESH 929). It further protects the interests of the judgment-debtor as well as the auction purchaser and possibly enables to avoid possible objections questioning the sale itself. 14. The learned counsel for the petitioner in this context relied on C. Ryan Babu v. B.K.L. Traders, Gajuwaka, Visakhapatnam and another, 2010(4) ALD 349 : (AIR 2010 ANDHRA PRADESH 929). In this ruling, basing on the facts, in paras 14 to 18 it is stated as under:- "14. ......in M.L. Mubarak Basha and others v. Muni Naidu, AIR 1998 Mad. 106 , wherein it, was held thus: "A reading of the above provision would in unequivocal terms indicate that it is the function of the Court, while proclamation is drawn-up to fix the amount of the recovery for which the sale is ordered and also to specify such other particulars as are necessary in that behalf to be material for the property of conducting the sale. The value of the property given by the decree-holder-Judgment-debtor and the upset price is to be fixed under the residue clause relating to writ rules made by the High Court." 15. He also relied on a decision reported in Elumalai Naicker v. Kishtmbal Ammal, AIR 1997 SC 938 , wherein it was held thus: "As observed above, when the Court fixed the upset price that fixation is only for facilitating the conduct of the sale and to safeguard the interests of the judgment debtor by fixing a reserve price. The object of fixing the upset price is to fix the lowest sum for which the property which is being auctioned will be sold or in other words, it is the sum from which the bidding may start. The upset price, therefore has some relation to the price which the property intended to be sold in the auction is expected to fetch." 16. He also relied on a decision reported in Somishetty Ganga Ram v. Dr. P. Ramalingam; 2007(3) ALD 517 : 2007 (4) alt 529 : (AIR 2007 ANDHRA PRADESH 198) wherein it was held thus: "In fact in the second proviso to Order XXI, Rule 66 of the Code, it is clearly stated that the said proclamation shall also include the estimation, if any given by either or both of the parties. P. Ramalingam; 2007(3) ALD 517 : 2007 (4) alt 529 : (AIR 2007 ANDHRA PRADESH 198) wherein it was held thus: "In fact in the second proviso to Order XXI, Rule 66 of the Code, it is clearly stated that the said proclamation shall also include the estimation, if any given by either or both of the parties. It is thus clear that in any case, when a proclamation is made, the Court shall make a mention of the valuation of the property as declared by the decree holder as well as the judgment debtor." 17. He also relied on a decision reported in Dr. N. Prabhakar Naidu v. Nellore Finance Corporation, Rep. by its managing Director, J.H. Reddy, 2008(6) ALD 689 : 2008(6) ALT 432 , wherein it was held thus: "It may be true that the decree-holder may not be able to realize the amount at all, but however at the same time the interest of the judgment-debtor also equally to be protected. The object underlying is to see that the property sold in the Court auction not be sold away for unreasonable price." 18. He also relied on a decision reported in A.C. Nagaraju v. N. Sreenivasa Reddy, 2004(4) ALD 468 : 2004(5) ALT 149 : (AIR 2004 ANDHRA PRADESH 465), wherein it was held thus: "When the Executing Court thought it appropriate to get he valuation, furnished by the appellant herein, cross-verified through proper sources, the easiest and most reliable method for the Court is to ascertain the same from the concerned Sub-Registrar. Such a step was not taken." From the above decisions, it is clear that the upset price of the property should be fixed basing on the valuation that may be fixed basing on the valuation that may be furnished either by the J.Dr. or D.Hr. which were given by the concerned authority. It is not the case that at the time of fixing upset price, no material with regard to value of the property was available. Therefore, the Court while fixing the upset price ought to have followed either the valuation of property given by the J.Dr. or, D.Hr." 19. Observations of Hon'ble Supreme Court in Elumalai Naicker v. Kishtmbal Ammal, AIR 1997 SC 938 : (1997 AIR SCW 839) extracted above, do point out the imperative necessity of fixing up of upset price while conducting sale in Court auction. or, D.Hr." 19. Observations of Hon'ble Supreme Court in Elumalai Naicker v. Kishtmbal Ammal, AIR 1997 SC 938 : (1997 AIR SCW 839) extracted above, do point out the imperative necessity of fixing up of upset price while conducting sale in Court auction. Thus, it is mandatory in nature. Failure to fix upset price, shall be one of the grounds to vitiate the sale and the J.Dr. can rely on the same, to set aside the sale under Order-21, Rule-90 CPC. 20. As seen from the record in this case, though the bid-list prepared by the concerned Amin of the Court clearly provided for settling and fixing up the upset price, for the reasons best known it was not so fixed. It is desirable to place a copy of this bid-list (scanned) for facility and reference, to have a clear grasp as to how the auction was conducted in the Executing Court. 21. Unfortunately, in the order of the Executing Court it is observed that the Court need not fix the upset price at the time of Court sale. The learned appellate Judge also attempted to defend such inaction on the part of the Executing Court observing in para-13 of its order that the Executing Court proceeded with the sale recognizing the value of the property at Rs. 4,85,000/-. It did not specifically consider to such serious omission in fixing up the upset price with required attention. 22. In para-12 of the Order of the Appellate Court, the learned I Additional District Judge, Anantapuramu mentioned M.L. Mubarak Basha and others v. Muni Naidu as if it is a reported judgment of Hon'ble Supreme Court in, AIR 1997 SC 938 . In fact reference to Elumalai Naicker, AIR 1997 SC 938 as already stated is made in C. Rayan Babu case referred to above, where the importance of Fixing up an upset price by the Court, was considered. Apparently the appellate Judge did not bestow attention in the matter and it unnecessarily misunderstood the scope of the ruling of the Hon'ble Supreme Court. In fact, M.K. Mubarak Basha and others v. Muni Naidu is a judgment of Madras High Court referred to above. 23. Thus, both the Courts below did not consider the significance of fixing up upset price in a Court auction and effect it bears upon Court sale. In fact, M.K. Mubarak Basha and others v. Muni Naidu is a judgment of Madras High Court referred to above. 23. Thus, both the Courts below did not consider the significance of fixing up upset price in a Court auction and effect it bears upon Court sale. A procedure, which has attained the status of law by convention and practice, cannot be overlooked in the manner as is done by the courts below in the present case for certain invented reasons. 24. In the light of what is stated above, while accepting the contentions of the learned counsel for the revision petitioner, the contentions advanced on behalf of the 2nd respondent relying on Edara Pattabhi Srirama v. T. Veerabhadra Appala China Rajanna and others, 1972(2) ALT 52 , cannot be accepted. In Edara Pattabhi Srirama, erstwhile High Court at Hyderabad observed that the Court is not permitted to fix the upset price under the provisions of CPC. It was further observed that it would be unworkable and leads to anomalies, while deprecating such practice. This ruling, in view of the importance this question of upset price bears particularly relying on the observations of Hon'ble supreme Court in Elumalai Naicker referred to supra cannot hold the field and is not correct proposition of law. 25. Another ruling in this context relied on for the 2nd respondent is E. Sahadeva Reddy v. DJP Finance and Chits, Tirupati rep. By its Manager/Foreman and others, 2006 (5) ALT 501 : (AIR 2006 ANDHRA PRADESH 232). In this ruling the effect of Edara Pattabhi Srirama referred to above was considered and thus it was held that the question of fixing the upset price did not arise. It is not the correct legal position. 26. Added to it, another objection raised on behalf of the petitioner in respect of the manner in which the sale was conducted, has to be considered. The bid-list and the observations recorded by the learned appellate Judge in the order referred to above show out of four bidders present, the bid was offered by only three bidders, who participated in the auction. Thus, it is clear that one of the bidders viz., Sri M. Gopal, Son of Sri M. Sanjappa, a resident of Jesus Nagar, Ananthapuram did not participate in the auction. The first bid was offered by Sri G. Kula Sekhar for Rs. Thus, it is clear that one of the bidders viz., Sri M. Gopal, Son of Sri M. Sanjappa, a resident of Jesus Nagar, Ananthapuram did not participate in the auction. The first bid was offered by Sri G. Kula Sekhar for Rs. 4,90,000/- followed by Sri G. Venkateswarlu for Rs. 4,95,000/- and ultimately, by the 2nd respondent for Rs. 5,00,000/-. The way in which the bid went on as per this bid-list, is a clear indication that there was a farce as an auction. It did not reflect any competitive bidding among the bidders. 27. The contention of the petitioner that the 2nd respondent being none other than the father-in-law of the 1st respondent got this property for a song in the Court auction, indeed justified, once we look at the manner by which this show of auction in Court went on. 28. This circumstance coupled with the ground referred to above is sufficient to hold that the sale so conducted by the Executing Court was nothing but a pretentious affair of an ostentatious sale. It can never be termed as a sale in public auction by the Court. Whenever a sale is conducted in open Court, it imbibes the character and nature of regularity in its conduct in as much as a presumption has to be raised in orderly conduct of such activity. But, the material on record painfully leaves such an impression that there was no auction nor there was a proper sale in terms of Order-XXI, Rules 66 and 64 CPC. 29. Another ground urged is with reference to bringing the entire extent of the land for sale. In this respect, the learned counsel for the petitioner relied on Ambati Narasayya v. M. Subba Rao and another, 1989 Supp (2) SCC 693 : AIR 1990 SC 119 ). In view of what is stated above holding that the sale is highly irregular on the verge of illegality, since the sale so held has to be set aside, this ground need not be considered now. It is well open for the revision petitioner to rely on this ground, if so advised, at an appropriate stage. 30. Therefore, accepting the objections of the revision petitioner in respect of the sale in question, setting aside the orders of both the Courts below, this revision petition has to be allowed. 31. It is well open for the revision petitioner to rely on this ground, if so advised, at an appropriate stage. 30. Therefore, accepting the objections of the revision petitioner in respect of the sale in question, setting aside the orders of both the Courts below, this revision petition has to be allowed. 31. In the result, this Civil Revision Petition is allowed setting aside the sale and consequently orders of both the courts below stand set aside. The Executing Court shall hold fresh sale of the E.P. schedule property meticulously following the due procedure and shall also consider if entire extent of E.P. schedule land is required to be sold to satisfy the sale warrant amount. The costs of the sale now set aside shall be borne by the 1st respondent (D.Hr.). The 2nd respondent is entitled for sale amount and if stamps are purchased to engross sale certificate if any, they shall be presented to the authority under the Stamp Act, for refund subject to such limitations as applicable. There shall be no order as to costs. As sequel thereto, all miscellaneous petitions, if any, shall stand closed. Interim Orders, if any, shall stand vacated.