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BhasIn Film Corporation Vs. Shalimar Cinema Etc. and anr. - Court Judgment

LegalCrystal Citation
SubjectCivil
CourtDelhi High Court
Decided On
Case NumberE.A. No. 269/77 in Execution No. 76/73
Judge
Reported inAIR1983Delhi317; 23(1983)DLT299
ActsCode of Civil Procedure (CPC) , 1908 - Order 21, Rules 66, 69 and 90
AppellantBhasIn Film Corporation
RespondentShalimar Cinema Etc. and anr.
Appellant Advocate Lalit Kumar Gupta, Adv
Respondent Advocate Madan Bhatia, ; Mukul Rohatgi and ; K.K. Mehra, Advs.
DispositionObjections dismissed
Cases ReferredNavalkha and Sons v. Sri Ramanyti Dass and Ors.
Excerpt:
.....ruled that under order 21 rule 69 of the civil procedure code, 1908, the officer conducting the auction sale, at his discretion, can adjourn the sale after recording reasons for such adjournment - thereforee, in the instant case, the auctioneer had the authority to adjourn sale provided that he assigned the reasons for the same - - it was also directed that the proclamation of sale be published in the newspapers indian express, times of india and nav bharat times as well as by affixation at the conspicuous part of the property to be 'old on the notice board of the high court and the district court. (2) no sale shall be set aside on the ground of irregularity or fraud in publishing or conducting it unless, upon the facts proved, the court is satisfied that the applicant has sustained..........is under order 21 rule 90 read with section 151, c.p.c. (in short code) for setting aside the sale by auction held on september 1, 1977 on 28/48 shares in an immoveable property known as shalimar cinema, bhogal, new delhi. the aforesaid sale was held in execution of a decree for rs. 1,44,973/- passed in favor of m/s. bhasin film corporation, (hereinafter referred to as the decree-holder) against s/shri shamimuddin and nasimuddin (hereinafter referred to as the judgment debtors) each of whom hold a share to the extent of 14/48 in the shalimar cinema.2. the sum and substance of the grounds on which the sale is sought to be set aside are as under :(a) the sale proclamation was neither prepared nor drawn in accordance with the provisions of order 21, rule 66 of the code. (b) the auction.....
Judgment:

G.R. Lutbra, J.

1. The present application is under Order 21 Rule 90 read with Section 151, C.P.C. (in short Code) for setting aside the sale by auction held on September 1, 1977 on 28/48 shares in an immoveable property known as Shalimar Cinema, Bhogal, New Delhi. The aforesaid sale was held in execution of a decree for Rs. 1,44,973/- passed in favor of M/s. Bhasin Film Corporation, (hereinafter referred to as the decree-holder) against S/Shri Shamimuddin and Nasimuddin (hereinafter referred to as the judgment debtors) each of whom hold a share to the extent of 14/48 in the Shalimar Cinema.

2. The sum and substance of the grounds on which the sale is sought to be set aside are as under :

(a) The sale proclamation was neither prepared nor drawn in accordance with the provisions of Order 21, Rule 66 of the Code.

(b) The auction was ordinarily fixed for 29th August, 1977 from which date it wag adjourned to 1st September, 1977, without obtaining any leave from the court for the purpose and without announcing on the spot that the auction was so being adjourned.

(c) The value of the property is more than Rs. 20,00,000/- (the value of the shares of the judgment debtors being about Rs. 10,00,000/-) yet the shares of the judgment debtors were sold at a throw away price of Rs. 4,37,000/-.

(d) There was no proper publication and publicity at the spot to attract the bidders. thereforee, the intending bidders could not take part in the auction.

(e) Shri Siraj-ul-Haq, General Attorney of the other co-sharer was not allowed to bid at the auction on both the dates i.e. 29th August, 1977 and 1st September, 1977. Similarly, other persons were not allowed to bid with the result that the shares of the judgment debtors valuing Rs. 10,00,000/- could not attract a bid of Rs. 4,37,000/- only.

3. The aforesaid application was contested by the decree-holder. He denied the existence of any of the grounds. It was denied that any of the persons or Siraj-ul-Haq Pracha was prevented from bidding at the auction. It is also denied that the adjournment of the auction from 29th August, 1977 to 1st September, 1977 was not announced at the spot.

4. The auction purchaser M/s. Malhotra Brother Exhibitors Pvt. Ltd. contested the application on similar grounds and it is contended by them that the price offerred is more than reasonable because the property is situated in a most dirty backward and undeveloped locality and is surrounded by the huts of the labourers.

5. Following issues were framed on April 17, 1979 :

(1) Whether the objections are not maintainable in the present form ?

O.P.D.H.

(2) Whether the objectors are estopped to raise any objection in viewof their conduct in the proceedings ?

O.P.D.H.

(3) Whether the sale is liable to be set aside on the grounds of materialirregularities/fraud in publishing and conducting the sale and onthe grounds taken in the objection petition ?

O.P.D.H.

(4) Relief.

I heard the learned counsel for the parties at length and the findings on the issues are as under :--

ISSUE NO. 3

6. Although a number of objections were raised some of the pressed at the time of arguments. I am dealing with only objections which were really pressed.

7. The first objection on which stress was laid at the time of arguments were that no notice under Order 21, Rule 66 of the Code for the settlement of draft of proclamation of sale was issued to the judgment debtor on account of which they were debarred from taking part and that there was no application of mind by the Registrar of the High Court in respect of the preparation of the said proclamation.

8. In this respect, the facts as they appear from the record may be stated. There was attachment of both movable and immovable properties of the judgment debtors. The decree-holder filed an application which was registered as is 1112/74 praying that the properties mentioned in the said application be sold. The properties which were detailed in the said application were movable ones. The application was labelled as Order 21 Rule 66 and 49 read with Section 151 of the Code. Another application was made which was registered as is 1113/74, inter alia, to the effect that immovable property known as Shalimar Cinema, Bhogal be attached. On account of that application attachment of Shalimar Cinema was made. Then some proceedings were taken. Following order was made by Mr. M.L. Jain, Registrar of the High Court :

'Notice of the application under Order 21, Rule 66 on judgment debtor has also been served. No objections have been filed. Let office put up draft proclamation sale on 11-7-77.'

9. The case was not taken up on 11th July, 1977 and was taken up on 20th July, 1977. Vide order dated 20th July, 1977, passed by the Registrar, Shalimar Cinema was directed to be auctioned on 29th August, 1977 from 10 A.M. to 1 P.M. It was also directed that the proclamation of sale be published in the newspapers Indian Express, Times of India and Nav Bharat Times as well as by affixation at the conspicuous part of the property to be 'old on the notice board of the High Court and the District Court.

10. It appears from the aforesaid proceedings that actually no application under Order 21 Rule 66 of the Code was ever filed in respect of Shalimar Cinema, It also appears that it was in a routine only that a proclamation of sale was prepared. But the question that arises is whether such a objection of the judgment debtors is tenable or not In this respect we have to go through the provisions of Order 21 Rule 90 of the Code which reads as under :

'(90)(1) Where any immovable property has been sold in execution of a decree, the decree-holder or the purchaser or any other person entitled to share in a rateable distribution of assets or whose interests are effected by the sale, may apply to the court to set aside the sale on the ground of a material irregularity or fraud in publishing or conducting it.

(2) No sale shall be set aside on the ground of irregularity or fraud in publishing or conducting it unless, upon the facts proved, the Court is satisfied that the applicant has sustained substantial injury by reason of such irregularity or fraud.

(3) No application to set aside a sale under this rule shall be entertained upon any ground which the applicant could have taken on or before the date on which the proclamation of sale was drawn up.

Explanation : The mere absence of defect in attachment of the property sold shall not by itself be a ground for setting aside a sale under this Rule'.

Shri K.K. Mehra, Counsel for the auction purchaser relied upon the proviso added by Punjab and Haryana High Court to the aforesaid rule which reads as under :

'Provided further that no such sale shall be set aside on any ground which an applicant could have put forward before the sale was conducted.'

11. According to the learned counsel, objections now raised in respect of not giving notice under Order 21 Rule 66 of the Code and the Registrar not applying his mind in respect of drafting of proclamation of sale could have been raised before the conduct of the sale itself and that thereforee the said objections cannot be brought.

However, it was not shown at the time of arguments if the aforesaid proviso added by the Punjab and Haryana High Court had been enforced in the Union Territory of Delhi also. thereforee, I am not relying upon that proviso.

12. It it apparent from Sub-rule (2) reproduced above that no sale can be set aside unless applicant has suffered substantially injury on account of some irregularity. In the present case, it has not been shown that it was on account of irregularity (by way of not issuing notice to the Judgment Debtors) in themaking of the proclamation, that injury was sustained by the JDs. According to the judgment debtors the price fetched was inadequate. For the purpose of this objection, even if inadequacy of the price is presumed, the same could not be linked to the irregularity in the making of the proclamation. No evidence has been brought that any injury was suffered by the judgment debtors on account of defect in the drafting of the sale proclamation. As far as publicity of sale is concerned, no complaint was made at the time of arguments.

13. Learned counsel for the JDs, however, contended that absence of a notice to JDs. under the provisions of Order 21 Rule 66 of the Code made the sale without jurisdiction and a nullity and that that being so, the same must be set aside as soon as the aforesaid defect is brought to the notice of the court and that there is no necessity of showing any injury. According to the learned counsel, the objections regarding the want of notice under the provisions of Order 21 Rule 66 of the Code are not under Order 21 Rule 90 of the Code, but are under Section 47 of the Code and that such a plea can be entertained at any time and at any stage by the court. In support of his contention, learned counsel relied upon judgments in Naranjan Purushottam Bansod v. Ram Chandra Mudgalji Choudharkar and Ors. , Dada Narayan Thakre v. Jaichand Nagorao and Anr. A.I.R. 1959 Bom 278 and Balwant Rai Kumar v. Smt. Amrit Kaur .

14. But a different view was taken by this court in Uma Dutt v. R.K. Sardana and Another, : AIR1970Delhi56 . It is laid down that a sale cannot be set aside unless irregularity and fraud is shown to have related in substantial injury to judgment debtors, that normally mere inadequacy of price is no ground to set aside the sale and that any objection as to the non-compliance of Order 21, Rule 66 of the Code, which could have been taken, before the sale, cannot be a good ground for setting aside the sale. In Radhey Shyam v. Shyam Bihar Singh, : [1971]1SCR783 , following was held by the Supreme Court which occurs in para 8 of the judgment:

'Mere proof of a material irregularity such as the one under Rule 69 and inadequacy of price realised in such a sale, in other words, injury is thereforee not sufficient. What has to be established is that there was not only inadequacy of the price, but that that inadequacy was caused by reason of the material irregularity or fraud. The connection has thus to be established between the inadequacy of the price and the material irregularity.'

15. That judgment clearly indicates that mere non-compliance of any provision of the Code does not make a sale illegal or liable to be set aside and there should be a further proof that the said non-compliance had resulted in substantial injury to the objector. That also thereforee supports the view that mere non-compliance of the provisions of Order 21 Rule 66 of the Code in not giving notice to the JDs and not properly forming the sale proclamation does not make the sale a nullity or without jurisdiction.

16. In Dhirendra Nath Gorai v. Sudhir Chandra Ghosh and Ors. : [1964]6SCR1001 , it was held that Section 35 of the Bengal Money Lenders Act, 1940 is a provision relating to the contents of a sale proclamation, that its effect is to amend or supplement the provisions of Order 21; Rule 66 of the Code which, inter alia, directs the court to specify the sale proclamation of 'the property to be sold', that an objection regarding non-compliance of Section 35 in specifying the property to be sold is a defect inthe sale proclamation, that in case the objector did not raise any objection regarding the sale defect, such an objection cannot be maintained in a petition under Order 21, Rule 90 of the Code. The ratio thereforee is that non-compliance of the provisions of Order 21, Rule 66 of the Code does not per se make a sale illegal, without jurisdiction and a nullity and in case an objection regarding such non-compliance is not made at a proper time i.e. before the sale, the same cannot be maintained.

17. On the next contention of the judgment debtors/objectors is that the auctioneer could not adjourn the auction, that even if he had the jurisdiction to do so, he did not announce at the spot, that he was adjourning the auction to 1st September, 1977, that on the other hand he announced that date of auction would be notified and published later which was never done on account of which the intending bidders who were likely to bid much higher could not participate in the auction.

18. According to Rule 69 of Order 21 of the Code, officer conducting any sale may in his discretion, adjourn the sale for a period not longer than 30 days after recording his reasons for such adjournment. thereforee, the auctioneer in the present case could adjourn the sale from 29th August, 1977 to 1st September, 1977 provided, recorded the reasons for doing so. The reasons recorded were that time of the sale which was up to 1 P.M. was over and that thereforee, the adjournment was necessary. It may be mentioned that vide order dated 20th July, 1977 of the Registrar, the time of the sale was fixed from 10 A.M. to 1 P.M. So when the time of the sale was over, it had to be adjourned.

19. The next question is if the adjourned date was announced at the spot or not. It is mentioned in the bid sheet that adjourned date was announced at the spot. The contention of the counsel for the JDs was that the contents of the bid sheet did not stand proved, that the auctioneer should have been examined for proving the bid sheet and that the adjourned date was announced and that thereforee it must be taken for granted that the adjourned date was not announced at the spot. Counsel further urged that it was true that Swaranjit Singh, OW-1, a witness by the objector proved that he had signed the bid sheet dated 29th August 1977 at the points A, B and C, but that by itself did not prove the correctness of the contents of the bid sheet. In support of the contention that independent evidence should be produced to prove the contents of a document, reliance of the counsel is on a judgment of the Supreme Court in Ramjit Dayawala and Sons Pvt. Ltd. v. Invest Import, : [1981]1SCR899 to the effect that mere proof of the hand writing of a document would not tentamount to proof of all the content* or facts stated in the said document, if the truth of the fact so stated is in issue. Reliance of the learned counsel is also on two judgments of the Bombay High Court in Sir Mohd. Yusuf and Anr. v. D. and Anr., : AIR1968Bom112 and Madholal Sindhu v. Asian Assurances Co. Ltd. and Ors. A.I.R. 1954 Bom 305.

20. The authorities relied upon by the counsel for the objectors have no application in the present case. Those authorities related to ordinary documents which are produced by any of the parties in the court. In the present case, we must not forget that the auctione acts as an officers of the court. He goes to the spot with the authority of the court for doing a particular job of auctioning of a property. Whatever report he submits is to be taken as correct and is to be acted upon unless proved otherwise. The fact that a report of an auctioneer is to be acted upon is shown from a telling illustration. Suppose, no objections are filed against such a report, the courtcan act upon that report and even confirm the sale without calling for any proof of the report or the bid sheets prepared by the auctioneer. When there is a presumption of correctness attached to the contents of bid sheet, there is a presumption to the writing of the court auctioneer to the effect that bid had been done up to 1 P.M. and that thinking that perhaps highest bid might be received. Auction was adjourned to 1st September 1977 from 10 A.M. to 1 P.M.

21. That it is very important to note that the genuiness of the bid sheet stands proved from the statement of Swaranjit Singh, OW-1 who was produced as a witness by the JDs/objectors themselves. He was one of the bidders. He stated that he signed the bid sheets dated 29th August 1977 at places marked A, B and G. That means that bid sheets were prepared at the spot. That being so, it must be presumed that it was announced at the spot, that the auction would be continued on 1st September 1977 from 10 A.M. to 1 P.M.

22. Then the reliance of the learned counsel for the JDs is on the oral evidence produced by the JDs. Swaranjit Singh, OW-1 stated that he gave a bid of Rs. 2,90,000/- on 29th August 1977, that he was prepared to buy the shares of the judgment debtors in the cinema for about Rs. 12,00,000/- that when he gave the aforesaid bid of Rs. 2,90,000/- (which was the last but one on that day) he was informed that as the time was over, auction would be re-held after publishing the notice of the date and time etc. of the auction in the newspaper, but that no such notice appeared in the newspapers. The contention of the learned counsel for the JDs was that that statement shows that adjourned date and time of auction was never intimated or announced at the spot. But the statement of that witness is not very definite when he himself added the words 'I do not remember whether the date for the next auction was announced on that day or not'. Hence the statement of OW-1 does not render any help to the case of the judgment debtors/objectors.

23. Shri Lalit Kumar Bhargava, OW-2 states that he is doing paper business under the name and style of M/s. Kishori Lal and Sons in Ghawri Bazar, Delhi, that a date for auction of Shalimar Cinema was fixed in August 1977, that he went to bid in the auction because he was interested in purchasing the shares in that cinema which were being auctioned, that he was going to bid, but was informed that the time for auction was over and that the auction was adjourned with an announcement of the auctioneer that the next date of the auction would be published in newspapers. On cross-examination, by Shri S.P. Manga, counsel for the decree-holder, he stated that he carried about Rs. 2,25,000/- in cash and that he was maintaining a regular account. At the request of Shri K.K Mehra, counsel for the auction purchaser, an order was made on 27th January 1981 (which order is between the statement of the witness itself) that the said witness shall produce true copies of the account maintained for 27th and 29th August, 1977 by the 12th February 1981. The idea was that it was to be checked from his accounts as to how much was the cash in hand with him and if he could carry Rs. 2,25,000/- on that day. However, that witness did not produce any copy of the accounts which clearly indicates that he made a wrong statement that he was carrying that money and intended to bid at the auction. Under such circumstances, the witness is obviously not reliable.

24. The last witness produced by the judgment debtors/objectors is Shamimuddin, judgment debtor/objector as OW-3. He supported his objections and stated that the adjourned date of auction was not announced on 29th August 1977. However, he admitted in cross-examination by Mr K.K.Mehra, Advocate for the auction purchaser, that he was not present at the time of auction held on 29th August 1977. When he was not present on the date of auction, he could not possibly depose as to what happened at that time. thereforee, his statement has either been wrongly made or it is based on hear-say and that being so, in both the eventualities his statement has no value.

25. The fact established thereforee is that the auction was adjourned from 29th August 1977 to 1st September 1977 and it was so announced at the spot. There was, thereforee, no such irregularity in the conduct of the auction.

26. The next contention of the judgment debtors/objectors is that the price fetched is inadequate and that thereforee this itself is good ground for setting aside the sale. Reliance of the objectors first of all is on the statement of OW-1 Swaranjit Singh according to whom the price of the shares of the objectors in Shalimar Cinema was Rs. 12,00,000/-, the total value being Rs. 20,00,000/- According to OW-2, he was interested in purchasing the shares which being auctioned and that he was ready to bid for Rs. 8,00,000/-to Rs. 9,00,000/-. Shamimuddin objector (OW-3) assessed the value of the shares which were to be auctioned at about Rs. 14,00,000/- to Rs. 15,00,000/-.

27. Reliance of the learned counsel for the objectors is also on the statement of Mr. O.P. Malhotra, auction purchaser, APW-1 which reads as under:

'We purchased plot of Paras Cinema in 1969 for Rs. 10,15,000/-. Area of the plot on which construction is measures 2200 sq. yards. Surroundings are also used by the cinema. We started construction in December 1969 and completed in January 1971. Expenditure on the construction was about Rs. 50,00,000/-. Distance between Paras Cinema and Shalimar Cinema is 21/2 or 3 miles, but I must mention that Shalimar Cinema is situated in poor locality, was in shambles and eclipsed by flyover. Further Shalimar Cinema was not running when auction took place. This is correct that there has been upward trend of prices from 1969 and prices were more in 1977 then 1969. But comparison of the prices can be only if the location, situation and condition of the cinema is the same. One plot in Friends Colony was auctioned by the D.D.A. but I cannot tell the area in which the lame was sold. I was not interested in that auction. No cinema plot was sold at Kalka-ji. I know the area underneath Shalimar cinema, but I do not remember now. This is wrong to suggest that Shalimar Cinema is situated at the best road and finest colonies of South Delhi.'

Counsel for the objectors pointed out that Shri O.P. Malhotra indicated as to what price he had to pay for the purchase a plot and construction of Paras Cinema on the same and having regard to the huge amount spent by him on the Paras cinema, it is reasonable to believe the evidence of the objectors.

28. But the statement of Shri O.P. Malhotra shows that the situation as well as the condition of both the cinemas is not the same. Shalimar cinema is very old one. Statement of objector Shamimuddin itself shows that it was very old one and had been renovated in the year 1960-61. Paras cinema was constructed very recently. The new building has more price. Then, paras cinema is situated in a posh locality ; whereas as stated by Shri O.P. Malhotra, Shalimar Cinema is in shambles and eclipsed by flyover anddirty surroundings. Statements of the witnesses of the objectors and Shamimuddin objector himself have no value because they are merely opinions and run estimates or even guesses regarding the valuation of Shalimar Cinema. That estimate regarding shares to be sold was to be as Rs. 10,00,000/-. The same estimate was inflated and became between Rs. 12 to Rs. 14 lacs during evidence. When there can be such an inflation and variation, how can reliance be placed It is worthy of mentioning that on 29th August 1977 the highest bid received was only Rs. 30,000/-. The auctioneer did not deem it reasonable to finish the auction of that price and then on the adjourned date, the bid was increased to Rs. 4,37,000/-. That also is an indication that proper and adequate price was received in auction.

29. Further as already stated by me, it was held in : AIR1970Delhi56 and : [1971]1SCR783 that some inadequacy of the price is not a ground for setting aside the sale unless it is further shown that inadequacy was caused by reason of all the material irregularity or fraud. Hence even if it is presumed for the sake of arguments, although I have held otherwise, that the price fetched was inadequate, inadequacy not having been linked with any irregularity, the sale cannot be set aside.

30. The learned counsel placed reliance on a judgment of Supreme Court in Navalkha and Sons v. Sri Ramanyti Dass and Ors., : [1970]3SCR1 to the effect that a sale under the Companies Act is subject to confirmation, the sale should not be confirmed unless the court is satisfied with the price fetched is reasonable. But that authority related to the sale under the provisions of the Companies Act and not under the provisions of Order 21 of the Code. The authorities of the Delhi High Court as well as of the Supreme Court relied upon by me were on the provisions of Order 21 of the Code itself.

31. Under these circumstances, I decide the issue in favor of the decree-holder and the auction purchaser.

ISSUES 1 AND 2

32. At the time of arguments, the decree-holder and auction purchaser did not press these issues. Hence they are decided in favor of the judgment debtors.

RELIEF

33. In view of the findings on issue No. 3 above, I hereby dismissed the objection petition with costs and confirm the sale in favor of the auction purchaser namely M/s. Malhotra Bros. Exhibitors Pvt. Ltd.


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