PETITIONER:
LAL CHAND
Vs.
RESPONDENT:
VIIITH ADDL. DISTRICT JUDGE & ORS.
DATE OF JUDGMENT: 21/02/1997
BENCH:
K. RAMASWAMY, S. SAGHIR AHMAD
ACT
HEADNOTE
JUDGMENT
ORDER
Leave granted. We have heard learned counsel on both sides.
This appeal by special leave arises from the judgment of the High Court of Allahabad, made on November 9, 1995 in Civil Miscellaneous Writ Petition No.2680/89.
The admitted position is that the plaintiff-respondent had entered into an agreement with the appellant to purchase 43 decimals of land in plot No.389/2 situated in Umraha, District Varanasi for a sum of Rs.6625/-. A sum of Rs.2000/- was paid as earnest amount while the balance amount has already been paid in the form of loan. The respondent filed the suit seeking specific performance of the agreement, which relief ultimately was refused; but a decree for refund of the earnest money was granted. Since the amount was not paid, the respondent had brought the properties of the appellant, to the extent of one acre, 52-1/2 decimals to sale. The same came to be questioned by filing of an objection under Order XXI, Rule 90, CPC which was dismissed by the court below and upheld by the High Court. Thus, this appeal by special leave.
Two question have arisen in this case, namely, whether the auction was properly conducted by the executing court and whether the respondent-decree holder was entitled to participate in the auction to bid and had the sale confirmed in that behalf? It is not in dispute that the land, viz., plot Nos.24 and 25 of admeasuring 33 decimals totalling 1 acre 52-1/2 decimals was brought to sale to realise the decreetal amount of Rs.10,921-50. The court fixed the valuation at Rs.11,000/-. On a sale conducted by Amin of the court, the bid was knocked down on April 30, 1983 in favour of the respondent-decree holder for a sum of Rs.12,000/-. As stated earlier, the question has arisen whether the sale conducted in execution of the decree is valid in law? Order XXI, Rule 72, CPC envisage as under:
"72. Decree-holder not to bid for
or buy property without permission
-- (1) No holder of a decree in
execution of which property is sold
shall, without the express
permission of the court, bid for or
purchase the property.
Where decree-holder purchases,
amount of decree may be taken as
payment -- (2) where a decree-
holder purchases with such
permission, the purchases-money and
the amount due on the decree may,
subject to the provisions of
Section 73, be set off against one
another, and the Court executing
the decree shall enter up
satisfaction of the decree in whole
or in Part accordingly.
(3) Where a decree-holder
purchases, by himself or through
another person, without such
permission, the Court may, if it
thinks fit, on the application of
the judgment-debtor or any other
person whose interests are affected
by the sale, by order set aside the
sale; and the costs of price which
may happen on the re-sale and all
expenses attending it, shall be
paid by the decree-holder."
A reading thereof clearly indicates that no holder of a decree in execution of which property is sold shall, without the express permission of the Court, bid for or purchase the property. In the event of such a purchase, on an application by the judgment-debtor or any other person whose interests are affected by such a sale, set aside such a sale. In paragraph 13 of the petition, the appellant has stated, among others, thus:
"After the said auction sale, the
judgment-debtor filed and objection
under Order XXI. Rule 90. CPC
mainly on the following grounds in
the Court of Munsif Havali,
Varanasi :-
(i) The decree-holder purchased
the said land through auction
without the permission of the Court
:"
In the counter-affidavit filed by the respondent, he has not specifically denied in that behalf except stating that it is a matter of record. The proceedings of the auction do indicate that if he was really the person permitted to participate in the bid, one would necessarily expect an active participation in the auction. But the proceedings do show that after one Bali Ram Prasad, had bid, earlier, for Rs.10,000/- but later offered Rs.11,500/- and one Srinath had offered a sum Rs.11,000/-, as a last bid, the respondent offered Rs.12,000/- so as to be within the outer limit of valuation fixed by the Court to ward off future onslaught on court sale. Since there was no further offer made by anybody thereafter out of the five participants in the bid, the bid was knocked down in favour of the decree-holder-respondent. Under the teeth of the mandatory language of Order XXI, Rule 72, CPC, he has no right to bid in the auction without obtaining prior permission of the Court. As a consequence, the sale conducted was clearly in flagrant violation of Order XXI, Rule 72, CPC.
It is also to be seen that the sale was conducted without there being any proper notice and publicity as is evident from the report submitted by the Court Amin. After the bid was started, sale was notified in the village by beat of drum and thereafter people started coming and five persons including the respondent participated in the bid. This part of the procedure adopted is clearly illegal and caused great prejudice to the interest of the appellant. In Desh Bandhu Gupta vs. N.L. Anand & Rajinder Singh [(1994) 1 SCC 131], this Court had pointed out the mandatory requirements of the procedure, as indicated therein, thus:
"The contentions of S/Shri Madhava
Reddy and Gujral that the appellant
had not given hes valuation and
that, therefore, it is not open to
him to raise the objections after
the sale is unacceptable. Since the
court has not given any notice to
the appellant which is mandatory,
the need to submit his valuation
did not arise. Order 21 Rule 54,
sub-rule (1-A) brought in by 1976
Amendment Act mandates that the
Court should require the judgment-
debtor to attend the court on a
specified date to take notice of
the date to be proclamation of
sale. Form 24 of Appendix ‘E’
second para and the court Rule also
envisage the mandate. It is are
reminder to the court that it has a
statutory duty to issue notice to
the judgment-debtor before
settlement of the terms of
proclamation of sale. Then only the
proviso to Rule 66(2) comes into
play dispensing with multiplicity
of notice and not dispensation of
mandatory compliance of notice to
the judgment-debtor. Had it been a
case where notice was served and
the appellant lay be, without
objecting to the valuation given
would be put against the appellant
to impugn the irregularities after
the sale or the under - valuation
settled by the court in the
proclamation of sale. The further
contention of both the counsel that
merely because there is no order
under Order 21 Rule 66(2), it
cannot be construed that the
Execution Court had not applied its
mind in settling the terms of the
proclamation of sale, is one of
desperation./ Except giving a
schedule of dates for conducting
the sale the Execution Court
totally abdication its duty to
scrupulously comply with the
mandatory procedure and did not
apply its mind to the mandatory
duty cast on it by Order 21 Rule 66
To settle the terms of proclamation
of sale, and proper publication
under Rule 67. After April 20,
1979, the court has merely ensured
its publication on the court notice
board and on the site at the
respective dates and no further.
This Court is Shalimar Cinema vs.
Bhasin Film Corpn. [(1987) 4 SCC
717] held that the court has a duty
to see that the requirements of
Order 21 Rule 66 are properly
complied with. It is incumbent on
the court to be scrupulous in the
extreme. No action of the court or
its officer should be such as to
give rise to the criticism that it
was done in a casual way.
Therefore, a proclamation of sale
drawn casually without compliance
of the mandatory requirement and a
sale held in furtherance thereof is
not a sale in the eye of law. We
are of the considered view that the
procedure adopted by the court in
non-compliance of Order 21 Rules 66
and 67 is in flagrant breach of the
mandatory provision, it is a
nullity ab initio."
There is yet another infirmity which goes to the root of the matter. It is seen that the respondent, in fact, had a contract to purchase 43 decimals of land and in the execution, managed to give the list of all other lands totalling 1 acre 52-1/2 decimals and the decree for Rs. 10,000/- and odd was sought to be put to execution, and purchased the land for Rs.12,000/-. In other words, he has over-reached his original agreement which he failed in the suit itself by participating and getting sale in his favour. There is no attempt made for sale of a reasonable portion of the property for realisation of the decree debt. Order XXI, Rule 64 expressly mandates as under :
"64. Power to order property
attached to be sold and proceeds to
be paid to person entitled. -- Any
court executing a decree may order
that any property attached by it
and liable to sale, or such portion
thereof as may seem necessary to
satisfy the decree, shall be sold,
and that the proceeds of such sale,
or a sufficient portion thereof,
shall be paid to the party entitled
under the decree to receive the
same."
This part of the case was also considered in Desh Bandhu Gupta’s case (supra) thus :
"Yet another contention of Mr.
Gupta is that the sale of the plot
of 550 sq. yards is in excess of
the execution and the order to sell
it is the result of non-application
of mind touching the jurisdiction
of the court rendering the sale
void or manifestly illegal.
Therefore, the need to invoke Order
21 Rule 90 does not arise and it
can be set aside under Section 47,
CPC.
Proviso to sub-rule (4) of
Rule 17 of Order 21 provides the
procedure to receive the
application for execution of the
decree. In the case of a decree for
payment of money, the value of the
property attached shall, as nearly
as may be , correspond with the
amount due under the decree. Rule;
64 of Order 21 charges the
Executing Court that it may order
attaching of any property to the
extent that such portion thereof as
may seem necessary to satisfy the
decree would be sold". It is also
enjoined under subrule (2)(a) of
Rule 66 of Order 21 that where a
part of the property would be
sufficient to satisfy the decree,
the same be sold by public auction.
Form 27 of Appendix E of the
schedule also directs the court
auctioneer to sell so much of the
said property as shall realise the
sum in the said decree and costs.
The Code, therefore, has taken
special care charging the duty on
the Executing Court and it has a
salutary 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 sufficient for payment to
the decree-holder or the person
entitled under decree to receive
the amount and so much that
property alone should be ordered to
be sold in execution. In Ambati
Narasayya vs. M. Subba Rao, [1989
Supp. (2) SCC 693] this Court held
that it is the duty cast upon the
court under Order 21 Rule 64 to
sell only such properly or a
portion thereof as may be necessary
to satisfy the decree, it is a
mandate of the legislature which
cannot be ignored. Therein for
execution of a decree of a sum of
Rs. 2000/- and costs, the
appellant’s 10 acres land was
brought to sale which was purchased
for a sum of Rs.17,000/- subject to
discharge of a prior mortgage of
Rs.2,000/-. This Court held that
without the court’s examining
whether a property could be sold,
the sale held was not in conformity
with the requirement of Order 21
Rule 64 and it was held to be
illegal and without jurisdiction.
The sale was set aside and the
court was directed to put the
judgment-debtor in possession of
the land and to refund the sale
amount to the auction-purchaser.
Further direction was given to
execute the decree in accordance
with law. In Mangal prasad vs.
Krishna Kumar Maheshwar [1992)
Supp.. (3) SCC 31] a shop was sold
to realise a decree debt of about
Rs.29,000/- and the sale price at
the auction was Rs. one lakh and
odd. This Court finding that it is
excessive execution, set aside the
sale and directed return of the
sale amount to the auction-
purchaser with interest @ 12%. In
Takaseela Pedda Subba Reddy vs.
Pujari Padmavathamma [(1977) 3 SCC
337] to recover the decree debt in
two decrees the properties situated
in two different villages were
brought to sale. In the first
instance the property in ‘D’
village fetched a sum of Rs.
16,880, which was sufficient to
satisfy the decretal amount. The
property in ‘G; village was also
sold which fetched a sum of
Rs.12,000. This Court set aside the
sale of G‘’ village. Admittedly the
site in sale is to the extent of
550 sq. yards, situated in a
commercial ares around which the
petroleum installations are
established. Though, as contented
by Shri Madhava Reddy, that there
may be building regulation for
division of the property, may be
100 yards or 150 yards out of its,
or whether undivided portion
thereof would have satisfied the
decree debt. it could be
legitimately concluded that the
court did not apply its mind at all
to this aspect as well."
In Ambati Narasavya vs. M. Subba Rao [1989 Supp. (2) 693 at 695, this court had pointed out as under:
"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 properly is
one, if a separate portion could be
sold without violating any
provisions 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."
Similar view was taken in Takaseela Pedda Subba Reddy vs. Pujari Padmavathamma [(1977) 3 SCC 337 at 340].
Thus , we hold that the sale of the property of the appellant conducted by the executing court is clearly illegal. However, the appellant is directed to pay the decreetal amount, interest on the principal earnest amount of Rs.3,000/- @ 12% per annum from the date of deposit and the costs of execution as well as impounding fee @ 5% on the sale amount of Rs.12,000/-.
The appeal is accordingly allowed. No costs.