Lal Chand
Vs. Viiith Addl. District Judge & Ors [1997] INSC 211 (21 February 1997)
K.
RAMASWAMY, S. SAGHIR AHMAD
ACT:
HEAD NOTE:
O R D E
R
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.
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