(1) In what circumstances irregularity in the publishing and conducting of auction sale vitiates the sale is the short question for determination in this appeal against the order dated July 25, 1978 of M. S. Joshi J whereby sale of property bearing Municipal No. XV4392 (now) 5494 (old) Katra Rai Ji, Pahar Ganj, New Delhi was set aside.
(2) Facts relevant for the purpose are that Kaushalya Devi and Keshav Dass purchased the property in question inequal shares for Rs. 30,000 on January 15, 1963 in a negotiated sale. Keshav Dass died on September 12. 1967 leaving behind Atam Parkash. Ved Parkash and Chetan Dass, sons; Sudesh Kumari and Promila Kumari, daughters, and Kaushalya, widow as heirs and legal representatives, On August 23, 1968, Kaushalya Devi instituted suit for partition and obtained preliminary decree on March 21. 1972-. Local Commissioner appointed to suggest mode of partition reported that partition by metes and bounds was not feasible. Accordingly, sale by public auction was ordered with a view to distributing the proceeds amongst the co-sharers. Sudesh Kumar, tenant in occupation of a part of the property gave the highest bid in the sum of Rs. 24,500 on February 20, 1973. Sudesh Kumari, who had been proceeded against ex parte on January 10, 1973 moved two applications 1.A. No. 684 of 1973 and I.A. 685 of 1973. The first application was directed against the order for proceeding ex parte. In the other application it was stated that there were grave irregularities and illegalities in the publishing and conducting of the sale but without entering into that controversy she was prepared to pay 5 per cent of the auction money for payment as solarium to the auction purchaser. The prayer was that 5 percent of the auction money be received and the sale he set aside.
(3) T. P. S. Chawla J.. before whom both these applications came up, took the view that there was no sufficient ground for setting aside the ex parte order and dismissed I.A. 684 of 1973. He further took the view that the sale could be set aside under Order 21 Rule 89 (1) (a) Civil Procedure Code . if 5 per cent of the sale price was deposited for payment to the auction purchaser within 30 days and inasmuch .as no such deposit had been made, and it was not within the power of the Court to enlarge the time, the request made by Sudesh Kumari could not be entertained. The result was that I.A. 685 of 1973 also met the same fate, as a necessary sequel the sale was confirmed vide order dated May 7,1974.
(4) Feeling aggrieved, Sudesh Kumari preferred an appeal which came up before V. S. Deshpande and B. C. Misra, JJ. Misra J., who spoke for the Court, found that there was no merit in the contention that application under Order 21 Rule 89 Civil Procedure Code had been wrongly rejected nor there was any merit in the contention that ex parte order ought to have been set aside. He, however, discovered that an application dated March 21, 1973 filed by Ved Parkash. Promila Kumari and Atam Parkash was lying on the record unattended and that application contained allegations in regard to serious irregularities and illegalities in publishing and conducting the sale. Accordingly, the case was remanded with the observation that the said objection be heard and decided. In the course of hearing it was brought to notice that the parties to the decree had in the meantime come to certain terms. Accordingly, it was observed that that development also be taken into consideration.
(5) The matter came up before M. S. Joshi, J. who found that the sale being under the Partition Act, 1893 it ought to have been subject to reserve bidding and inasmuch as amount of such bidding had not been fixed, there was material irregularity in publishing the sale. He further found that out of the four shops on the ground floor, two were in occupation of tenants but the proclamation of sale carried no mention that the other two shops were in self-occupation of the parties, and so there was mis-statement in that behalf. In the circumstances the learned Judge took the view that the property which was purchased for Rs. 30,000 in the year 1963 had appreciated in value by the time it was put to sale and, thereforee, the highest bid in the sum of Rs. 24,500 was inadequate and the objectors had thus suffered substantial injury. As a result the objections were allowed and the sale was set aside
(6) The principal contention urged by Mr. B. R. Malik learned counsel for the auction purchaser, is that omission in regard to the amount of reserve bidding and non-mention of the fact that one of the shops was in self-occupation of the parties to the decree are, at the highest, defects in publishing the sale and thereforee, objection thereto could be taken before the sale was held and inasmuch as the objectors had not objected before the sale was held, they were precluded from urging this objection. Reliance is on the further proviso added by Punjab High Court to Order 21 Rule 90 of the Code of Civil Procedure in exercise of its rule making powers. It may be mentioned that Rule 90 provides that a sale can be set aside on the ground of material irregularity or fraud in publishing or conducting the sale. The proviso, however, says that no sale shall be set aside on ground of irregularity or fraud unless upon the facts proved the Court is satisfied that the objector has sustained substantial injury by reason of such irregu- larity or fraud. The further proviso that was added reads:
'PROVIDEDfurther that no such sale shall be set aside on any ground which the applicant could have put forward before the sale was conducted.'
We find a considerable force in this submission. The case of the objectors is that the sale being under the Partition Act. it was subject to a reserve bidding and the amount of such bidding was to be fixed by the Court in such manner as it thought fit. Admittedly, there was no such fixation. The provision being directory, the violation results into a material irregularity. Mr. Sabharwal. learned counsel for the objectors, has not urged before us that proviso is mandatory in the sense that its violation renders the sale void and rightly so as that is settled law. We may mention that same view was taken by V. S. Deshpande and B. C. Misra, JJ. in the appeal against the order dated 7th May, 1974 of T. P. S. Chawla. J. It is further their case that there was mis-statement in publishing sale inasmuch as there was no mention that two shops were in self-occupation of the parties. The implication is that so far as the shops in occupation of the tenants are .concerned, there was a statutory protection afforded to occupants by Delhi Rent Control Act, 1958 but there is none in regard toothers and thereforee, it had bearing on the value of the property and ought to have been mentioned. As to whether there were three or four shops on the ground floor, the position is not very clear. Plan of the property prepared in connection with the suit proceedings. Ex. P/1, shows three shops all in occupation of tenants. Kaushalya Devi, Plaintiff has, however, spoken of four shops on the ground floor but has stated that all the four shops were in occupation of tenants. This statement was made by her on Novermber 11, 1970 during the trial of the suit. No challenge was given to her in cross-examination. The perusal of the sale deed shows that two shops were in occupation of Om Parkash and one shop was in occupation of Rajwasit Dev. These three shops looklike proper shops in the sense that these are roomy. The fourth shop appears to be an improvised one and is stated to be a small one towards the north near the staircase. The objectors have not clarified the position at any Stage and have not taken any definite stance. In the circumstances no capital can be allowed to be made out of the fact that the proclamation failed to mention that one shop was in self-occupation and that the auction purchaser would have the advantage of getting possession thereof. Anyhow, it cannot be gainsaid that the omission in regard to amount of reserve bidding and the small shop being in self-occupation, even if it be taken as a fact established, were not defects in publishing the sale. The objectors did not raise their little finger before the property was actually put to sale. They are now precluded from pressing these objections at this stage when auction purchaser has intervened.
(7) In the facts were that auction sale was sought to be declared void on the ground that Bihar Money-Lenders Act (Act 3 of 1938) had come into force prior to the date of sale and Section 16 enjoined the Court in execution proceedings to hear the parties and to estimate the value of the property attached or of that portion of such property the proceeds of the sale of which the Court considered would be sufficient to satisfy the decree but no application was made in this behalf and no valuation had been fixed by the Court and thus there was an irregularity or illegality in the publishing and conducting of sale. Repelling this contention, it was observed
'THEobjection that the property should have been valued and the value inserted in fresh proclamation of sale was one which could have been taken and should have been taken before the sale took place and by an amendment of Order 21 Rule 90, made by this Court it is expressly provided that no application to set aside a sale shall be admitted unless, it discloses a ground which could not have been put forward by the applicant before the sale was concluded.'
(8) In similar situation arose on account of Section 35 of the Bengal Money-Lenders Act which provides that notwithstanding anything contained in any other law for the time being in force, the proclamation of the intended sale of property in execution of a decree passed in respect of a loan shall specify only so much of the- property of the judgment debtor as the Court considers to be saleable at a price sufficient to satisfy the decree, and the property so specified shall not be sold at a price which is less than the price specified in such proclamation. The argument raised was that the provision was mandatory and the violation rendered the sale a nullity. Their Lordships observed that the argument had been raised and met by a Division Bench of the Calcutta High Court in Manindra Chandra v. Jagdish Chandra, 50 Calcutta Weekly Notes 266(3) and gave approval to the following observations made there in :
'IT(S. 35 of the Act) is a provision relating to the contents of the sale proclamation and its effect, to my mind. is to amend or supplement Or. 21 R. 66(2)(a) which directs the Court to specify in the sale proclamation 'the property to be sold'. Any objection regarding non-compliance with Section 35 in specifying the property to be sold is in my view, a defect in the sale proclamation within the meaning of second proviso to Or. 21 R. 90 Civil Procedure Code It follows that an objection that the sale proclamation did not conform to Section 35 of the Bengal Money-Lenders Act cannot avail a judgment-debtor in an application under Order 21 Rule 90, if he was present at the drawing up of the sale proclamation and did not raise any such objection at the time, nor can it avail a judgment-debtor who after receiving notice did not attend at the drawing up of the sale proclamation at all.'
(9) Mr. Sabharwal in a bid to off set the objection has contended that this argument is not open in view of the- Division Bench judgment between the parties by which the case was remanded for fresh decision. It is submitted that the Division Bench held that there was material, irregularity in publishing the sale and the scope of the remand order was limited in that the learned Single Judge was required to determine whether it was a case where it could be said that the objectors had suffered substantial injury'. It is argued that in case the auction purchaser felt that the amendment of Rule 90 on which reliance has been placed precluded the .objectors from urging the objection, he should have challenged the judgment and inasmuch as he failed to do so, finality attaches to the same. The matter requires examination in some detail.
(10) Before T. P. S.Chawla, J. there was a composite application under Order 9 Rules 7 and 13 read with Section 151 of the Code of Civil Procedure and also under Sections 2 and 3 of the Partition Act. The learned Single Judge found that the application was barred by time and was devoid of merit. Inasmuch as sale had not yet been confirmed submission was made on behalf of the objectors that the sale may not be confirmed inasmuch as there was no reserye bidding price. The learned Judge noted that there was no application containing statements of grounds and prayer of 'the kind made by the counsel in his address. However, disregarding this fact for a while he observed that the sale could not be set aside merely on the ground of failure to comply with it unless there is substantial injury caused by the material irregularity, complained against. He relied upon He went onto observe that there was no evidence on record indicating that the price received for the property was inadequate and, supposing there was, that in itself was not sufficient justification to set the sale aside. It was, in these circumstances, that the following conclusion was reached :
'THUS,assuming that the sale was held under the Partition Act, and that there was a material irregularity in that a reserve bidding price was not fixed, I would yet hold that the sale cannot be set aside or confirmation refused, as it is not alleged or proved that any substantial injury has resulted there from'. None of the objections sought to be raised to the confirmation of the sale can, in my opinion, be accepted.'
(11) When the matter came up before the Division Bench, four contentions were raised. The first was that the application underorder 21 Rule 89 of the Code of Civil Procedure had been wrongly rejected. The second was that the order refusing to set aside the ex parte order was invalid. Both these contentions were rejected summarily. The third contention Was that objections filed by Atam Parkash and others were lying on the record and had not been gone into and, thereforee, the case should be remanded. This submission found favor with their Lordships. However, inasmuch as there were some observations in regard to the provision of Section 6 of the Partition Act, the learned Judges started examining the matter to discover if a distress sale to which Order 21 Rule 90 was attracted differed from a sale ordered under the Partition Act. It was in that' context that they observed that in asale held under the Partition Act it was essential for the Court to fix the amount of reserve bidding as provided by Section 6 and a material irregularity had been commit- ted by non-compliance With the statutory mandate. They, however, made it clear that the provision was directory and its non-compliance rendered the sale only voidable at the instance of the aggrieved party who is able to show prejudice. They, however, found fault with the Single Judge holding that substantial injury had not resulted in the instant case and so the sale could not be set aside. What led to these observations was the fact that the finding had been recorded in the absence of evidence. They also found fault with another observation that people were reluctant to purchase the property in dispute as it involved persons of unsound mind. The learned Judges, however, made it clear at the end that whatever had been observed in the Judgment had been occasioned by the facts noted and findings recorded about the material irregularity in the sale and the resultant substantial injury and, thereforee, they had to displace the findings and added that they had not recorded their positive findings on the material on record finally. There was justification for doing so inasmuch as no objections under Order 21 Rule 90 of the Code of Civil Procedure had been filed by alleging material irregularity or fraud in publishing and conducting the sale and oral arguments had been raised on the basis of the provision contained in Section 6(1) of the Partition Act. The learned Single Judge, it would appear, was dealing with the point hypothetically. However, inasmuch as it had been dealt with in the absence of pleadings as well as evidence- and the learned Judges had been apprised of objections under Order 21 Rule 90 filed by other objectors which were lying unattended, thought of displacing them to avoid any misgiving during the proceedings after remand. The entire exercise was, thereforee, occasioned by findings recorded in the case of an objector who had not pleaded and had not led any evidence to show material irregularity or substantial injury in publishing and conducting of sale so that objections under Order 21 Rule 90 Civil Procedure Code supplemented by any further provision such as Section 6(1) of the Partition Act may be gone- into fairly and no attempt be made by relying on technicalities. The observations of Division Bench were thus in the nature of guidelines and in fact they pertained to the true interpretation of the provisions of Order 21 Rule 90 of the Code of Civil Procedure and Section 6(1) of the Partition Act. They did not thus result into any finding inter se the parties and it is futile to urge that any finality attaches to it.
(12) Occasion for dealing with the objections under Order 21 Rule 90 arose for the first time before M. S. Joshi. J. The auction purchaser could, thereforee, legitimately urge whatever was permissible to him. The amendment of Order 21 Rule 90 by the Punjab High Court provided a plea which was fatal to the ground urged for seeking setting aside of the sale. No exception can, thereforee, be taken to this objection.
(13) It is pointed out by Mr. Sabharwal that aforementioned defects apart, there is another that concerns the conduct of sale. He has referred to the circumstances that Om Parkash gave 'a bid in the sum of Rs. 13,000 and another bid in the sum of Rs. 20,000 without there being any intervening bid from some one else. The argument is that if Om Parkash could have the property for Rs. 13,000 it does not stand to reason why he should enhance his own bid to Rs. 20,000. It is submitted that the inference is that the bid sheet is a fake document and that in fact no auction was held, in fact. If it were the case that Om Parkash happened to be the highest bidder, it might have been possible to urge that enhancement of bid excited-some suspicion in the mind. The bid sheet. however, shows that there are four further bids, the last being, the highest bid in the sum of Rs. 24,500. Om Parkash who appeared as RW8 has stated that after giving the bid- for Rs. 13,000 he went away and as he came back after an hour and a half, he found that other bidders were planning to give bids of Rs. 17,000 and Rs. 17,500 and, thereforee, he raised his own bid to Rs. 20,000. It is in evidence that auction proceedings commenced at 10 a.m. with publication of sale by beat of drum for about an hour and actual bidding started at 11 a.m. and went on till 3 p.m. In the circumstances, we find nothing suspicious about Om Parkash giving a bid in the sum of Rs. 13,000 at one time and giving a higher bid of Rs. 20,000 at another time. The learned Single Judge thought that it was unusual for a bidder to enhance his own bid. With respect, we do not agree with this observation. It is to be remembered that the stand , the objector in fact was that there was no fair bidding and that genuine bidders were prevented by a couple of bad characters who had been procured at the spot but they miserably failed in establishing it. Promilla Kumari has admitted her presence as well as of Kaushalya Devi at the time of auction sale. Two bidders 0m Parkash (RW8) and Labh Singh (RW 5) besides the auction purchaser whose bid was, of course, the highest have come into the witness box and have denied the allegation that bidders wer,e stopped by bad characters. Endorsement on bid sheet. Ex. Rw 31 contains the statement of Kaushalya Devi, plaintiff that she had no desire to give bid higher than Rs. 24,500 although she was entitled to do so. It bears her signature as well as of a witness. We are, thereforee, wholly satisfied that no irregularity what to talk of material irregularity in the conduct of sale has been established on the record. Vague allegations of fake bid sheet having been prepared, absence of auctioneer from the spot etc. are nothing but vain attempts for avoiding the sale, as obviously in the mean time, price of the property has gone up. It is significant to note that Promilla Kumari, who was the first witness to examine, has not spoken about the bidders being intimidated or deterred from making bids. Another witness Harbans Lal (CW 3) has, instead of helping the objectors, stated' that he was attracted to the auction on hearing the drum beating. On being .asked as to whether any poster was displayed, he stated that he could not say as he was illiterate. On the other hand, Daya Shanker (RW 1), process server, spoke about the pasting of pro- clamation and proved reports Ex. Rw 1/1 and Ex. Rw 1/2. Hira Lal (RW 2) Drum Beater spoke about the proclamation of sale as well as regular conduct of the auction. Only one witness, namely, Pritam Dass (CW 4) stated that he wanted to give a bid but there were people there who did not allow him to bid. A serious objection was raised that such a plea had not been taken in the objections and the statement was recorded subject to that objection. In our opinion, such evidence should not have been allowed in the absence of plea raised in the objections. So far as the conduct of sale is concerned, neither there was any plea raised in the objections nor there is any evidence worth the name to point to such inference.
(14) The next contention is that price fetched is inadequate. Promila Kumari who has stated that the property was worth Rs. 80,000 at the time of sale stands belied by her admission in the written statement filed in the year 1968 that the property was not more than Rs. 30,000 in value. Sat Prakash Jaggi (CW 2) has stated that his son-in-law was interested to purchase this property for Rs. 70,000 in 1973 and was willing to purchase it for 80,000 at the time when he made statement (October 11, 1977). This assertion is hardly of any worth. In Navalkha and Sons v. Sri Ramanya Das and others, : 3SCR1 it was observed that once the court comes to the conclusion that the price fetched is adequate, no subsequent higher offer can constitute a valid ground for refusing confirmation. Pritam Dass (GW 4) has also stated that he could purchase this property for anything between Rs. 50,000 and Rs. 60,000. These witnesses did not participate in the sale and, thereforee, what they have now stated in Court is of no avail. In the absence of cogent evidence to show that the -price fetched is inadequate, all that remains is the argument that the price of immoveable properties in Delhi has always been on the increase anc?, thereforee, the sale price of Rs. 24.500 fetched in January, 1973 as against the purchase price of Rs. 30,000 in the year 1963 should be taken as inadequate. It is well-known that Court sales bring less price. The reason is obvious, In a sale which is brought about by negotiations vacant possession of the whole or part of the property, as the case may be, is handed over at the time of registration, if not earlier, and that is the end of the matter.. In the case of court sale, there is only a right to get possession in execution proceedings which can be prolonged to the detriment, of the auction purchaser. The instant case is in itself a glaring example. The auction purchaser paid 25 per cent of the bid offered by him at the fall of the hammer and the remaining 75 per cent within 30 days. We are at the fall of the year 1980 and dispute persists. We are, thereforee, of the opinion that in the absence of cogent evidence it is not possible to hold that the price fetched in this case is inadequate. Observation in regard to steady rise of price of immoveable property in Delhi are of a general character. These have important bearing in cases where valuation has to be fixed by making reasonable guess. No advantage can, however, be had by the objectors from these observations particularly when they did not bid although they were entitled to do so nor any of them tried to get the property at the price fixed by the Court. We have already noted that at the time of sale nobody- represented that the bid was inadequate or that there was any irregularity.
(15) The third and last contention is that mere inadequacy of price even. if assumed, is of no avail unless it is proved by cogent and legal evidence that it is a case of substantial injury which has been caused on account of material irreguarity in publishing or conducing the .sale In Uma Datt's case (supra) it was held that it is well- settled that material irregularity and substantial inury must be correlated with each other as cause and effect. In it was observed that mere inadequacy of price is not enough and what is re- quired to be established is the causal connection between inadequacy of price and' material irregularity or fraud by direct or circumstantial evidence. The instant case is one under the Partition Act and the property was scheduled for sale inasmuch as 'it was found that partition by motos and' bounds was not feasible. The plaintiff and one of the defendants were admittedly present at the time of auction sale. No objection was taken by them to any irregularity in publishing or conducting the sale before the auctioneer. On final analysis, there is absence of proof of inadequacy in price and, thereforee, absence of substantial injury. Moreover, there is absence of causal relationship between material irregularity and substantial injury.
(16) Mr. Sabharwal has endeavored to convass that inasmuch as there are certain duties imposed on the Court, an auction sale which fetches inadequate price should not be confirmed. There is divergence of views as to whether the Court has power to set aside a sale de-horse the fact that conditions of Order 21 Rule 90 are not fulfillled. We, however, feel that it is not necessary to go into this question as it does not arise in this case. However, the authorities on which Mr. Sabharwal relied may hurriedly be gone into. In Prabodh Chandra Mukherjee v. Pasupati Mukherjee and others, 71 Calcutta Weekly Notes 649 (11) sale was set aside by the Court suo moto as it was found that there was gross carelessness in the drawing up of proclamation and there was substantial injury sustained by the petitioner therein. Property 'of the value of Rs. 6,000 fetched a price of Rs 450 and this was described :as shoddngly low value. In Manmatha Nath Chakravarty and another v. Sachindra Kumar Chakravarty and another. : AIR1956Cal59 , it was found that there was fraudulent suppression or distortion of fact and that was the ground on which sale was set aside. These authorities can be of no assistance, firstly, for the reason that the facts were different and, secondly for the reason that Rule 90 speaks of material irregularity as fell as fraud. There can be cases where some material irregularity occurred in publishing or conducting the sale but the bona fides of the parties are not in question. There may also be cases where material irregularity is the result of deliberate fraud, misstatement or mis-representation. .The further proviso added by the Punjab High Court to Rule 90 would not be attracted in the latter type of cases but so far as the instant case goes, it is fully covered by that proviso.
(17) In Navalkha and Sons (supra) sale was under Companies (Court) Rules 1959. The relevant rule required that the sale could not be confirmed unless reasonable. For obvious reasons this authority has no bearing. In it was found that the decree holder knew the true value of the property but deliberately under-valued it in the sale proclamation and himself purchased the property for what he knew was too low a figure based on an upset price accepted by the Court owing to his own initial misrepresentation and subsequent suppression of material facts. It was for these reasons that the sale was set aside on the principle that no one should be allowed to take advantage of his own fraud.
(18) The last authority which has been relied upon . excessively is Dost Mahomed and others v. Mahomed Sharif and others, Air 1933 Sind 40(14). It was a case of auction sale held under the partition Act- The learned Additional Judicial Commissioner found that sale price was certainly inadequate. He further found that the interest of minors was involved. In view of the finding that as against the offer of Rs. 10,000 the highest bid in the sum of Rs. 7,000 was accepted and the price fetched was inadequate, this authority stands distinguished. It is observed that the question whether inadequacy of price was relatable to material irregularily in the publishing and conducting the sale was not gone into and if the argument is that in the absence of cause and effect relationship sale is liable to be set aside simply on the view that the price is inadequate, we would have no hesitation in holding that this authority does not lay down the law correctly.
(19) The last submission of Mr. Sabharwal is that according to Rule 19 appearing in Chapter Xxiv of Delhi High Court (Original Side) Rules, 1967, in- addition' to the particulars specified in sub-rule (2) of rule 66 of Order 21, the sale proclamation shall, whenever such information is available, also state in whose possession and occupation the property is and the tenancy or terms on which any person is in occupation or possession, and, thereforee, omission in this behalf amounts to a material irregularity. In our' opinion, this contention would not advance the case of the objectors any further as it amounts to a defect in publishing the sale and objection thereto could be. raised before the sale took place.
(20) For the forgoing reasons, the impugned order cannot be sustained. We, thereforee, allow this appeal and set aside the order dated July 24, 1978 of M.S. Joshi J. and restore the order dated May 7, 1974 by which the sale was confirmed. The appellant shall be entitled to costs throughout.
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