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Sivathi Ammal Vs. Arulayee Ammal and ors. - Court Judgment

LegalCrystal Citation
SubjectCommercial
CourtChennai High Court
Decided On
Case NumberCivil Revn. Petn. No. 2124 of 1972
Judge
Reported inAIR1974Mad34
ActsCode of Civil Procedure (CPC), 1908 - Order 21, Rules 72, 72(1) and 199
AppellantSivathi Ammal
RespondentArulayee Ammal and ors.
Cases ReferredSusila v. Saraswathi Ammal
Excerpt:
.....to bid and set-off as there were no bidders - appellant contended permission can be granted to decree holder only if there were no bidders in prior two sales - appeal - no bidders on first occasion - leave granted on second occasion after taking into account adequacy of upset price fixed - upset price reduced without notice to petitioner - validity of grant of leave to bid to decree holder shaken by reducing upset price - appeal allowed as sale found illegal. - - ..it will be seen that order xxi rule 72, as well as rule 199 of the civil rules of practice safeguards the interests of the judgment-debtor. in doing so, the court will have to be satisfied that unless by granting permission to the decree-holder, an advantageous sale cannot otherwise be had. the two safeguards insisted..........secured by him in the court below can bid and set off the decree amount as against that ultimate sale price.'the above direction was in respect of the particular case. it is difficult to construe the passage as laying down the law. there is no authority either in the civil procedure code, or in the civil rules of practice or in the decision in : air1950mad392 , for the proposition that leave to bid can only be granted on the third occasion, if there were no bidders on the earlier two occasions. all that is required in law is that the court should be extremely cautious in granting permission and that it should be satisfied that an advantageous sale cannot otherwise be had than by granting leave to the decree-holder. the conditions that are not laid down in the civil procedure code or in.....
Judgment:
ORDER

1. This petition is filed by the judgment-debtor against the order of the learned District Munsif of Paramakudi in E.A. 366 of 1972 in E.P. 27 of 1972 in O.S. No. 163 of 1963. E.A. 366 of 1972 was filed by the respondents herein for permission to bid and set off. The suit is one for partition and the decree-holders are entitled to certain shares and as the judgment-debtor committed default in payment of certain money which she was directed to pay to equalise her shares, the execution petition was taken. In granting leave to the respondents herein to bid and set off, the Court considered the upset price. In the counter to the execution petition the judgment-debtor stated that the property in worth Rs. 10,000. In the application for permission to bid and set off, the judgment-debtor stated that the property was worth Rs. 12,000. The Court declined to accept that there was any increase in the value. It observed that 'it has been ordered in the execution petition that the bid has to be begun from the defendants' value viz. Rs. 10,000.' The lower Court held that as there were no bidders on the first occasion, the judgment-debtor would not be prejudiced by granting permission to the decree-holder to bid and set off.

2. The learned counsel for the petitioner judgment-debtor submitted that it has been the established practice to grant permission to the decree-holder to bid and set off only if there were no bidders in the prior two sales. Order XXI, Rule 72(1) provides-

'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.'

Sub-rule (2) provides that where a decree-holder purchases with such permission the purchase money and the amount due on the decree may be set off. Sub-rule (3) provides that where the decree-holder purchases by himself or through another, without such permission, the court may set aside the sale and direct the costs of the application and any deficiency of price which may happen on the resale and all expenses to be paid by the decree-holder. Rule 199(1) of the Civil Rule of Practice provides-

'An application for leave to bid at the sale shall be supported by an affidavit setting forth any facts showing that an advantageous sale cannot otherwise be had...........'

It will be seen that Order XXI Rule 72, as well as Rule 199 of the Civil Rules of Practice safeguards the interests of the judgment-debtor. The Court itself is bound to consider the facts of the case and grant permission to the decree-holder to bid or purchase the property. In doing so, the Court will have to be satisfied that unless by granting permission to the decree-holder, an advantageous sale cannot otherwise be had. It has been held that though Order XXI, Rule 72, C.P.C. and Rule 199 of the Civil Rules of practice do not provide for notice to the judgment-debtor, it is necessary that the judgment-debtor, it is necessary that the judgment-debtor should be given notice in order to enable to the Court to satisfy itself that an advantageous sale cannot otherwise be had and to decide whether permission should be granted to the decree-holder or not. It is expected that great caution should be exercised by the Court before leave is granted to the decree-holder to bid and set off.

3. In Seonath Doss v. Janki Prosad Singh, ILR (1889) Cal 132, it was held that permission to mortgagee to bid should be very cautiously granted and, only when it is found, after proceedings with a sale that he purchased at an adequate price can be found, and even then, only after some enquiry as to whether the sale proclamation has been duly published. The two safeguards insisted upon by the Calcutta High Court are that the Court should be satisfied that no purchaser at an adequate price can be found and that the sale proclamation has been duly published. The decision was considered by the Privy Council in Md. Mira Ravuthar v. Savvasi Vijaya Raghunatha Gopalar, ILR (1900) Mad 227. It observed 'Indeed it laid down such conditions as would make the granting of leave a very rate thing instead of being, as their Lordships believe it is, a very common thing.' The conditions laid down by the Calcutta High Court were not accepted by the Madras High Court. In Varadharajulu Pillai v. Chendapodi Nanniar : AIR1950Mad392 , Krishnaswami Nayudu J. observed as follows:--

'Though I am not in entire agreement with the conditions laid down by the learned Judges in the Calcutta case......... I am however of opinion that the power to grant leave to bid must be cautiously exercise and unless the Court is satisfied from the circumstances shown in the affidavit that otherwise in advantageous sale could not be obtained, no such leave should be granted.'

The view of the learned Judge is strictly in accordance with the requirements of O. XXI R. 72, C.P.C. and Rule 199 of the Civil Rules of Practice. The condition is that before granting leave to bid the Court must be satisfied from the circumstances stated in the affidavit that otherwise an advantageous sale could not be obtained. It must be noted that the learned Judge has not laid down that leave to bid should not be granted on the first occasion itself.

4. In C.R.P. No. 239 of 1969 (Mad) NTP Muthusami Mudaliar v. Family Manager Palanivelu, Ramaprasada Rao J. referring to the above decision of Krishnaswami Nayudu J. observed-

'I, however, make it clear that such leave granted to him shall be availed of by him if there are no bidders on two consecutive sales held in respect of the attached property; on the third occasion, and if there were no bidders on the two prior times, then the respondent pursuant to the leave secured by him in the Court below can bid and set off the decree amount as against that ultimate sale price.'

The above direction was in respect of the particular case. It is difficult to construe the passage as laying down the law. There is no authority either in the Civil Procedure Code, or in the Civil Rules of Practice or in the decision in : AIR1950Mad392 , for the proposition that leave to bid can only be granted on the third occasion, if there were no bidders on the earlier two occasions. All that is required in law is that the Court should be extremely cautious in granting permission and that it should be satisfied that an advantageous sale cannot otherwise be had than by granting leave to the decree-holder. The conditions that are not laid down in the Civil Procedure Code or in the Civil Rules of Practice, cannot be insisted upon, when the requirements of the law are satisfied. In fact, this was the view held by the Privy Council in ILR (1900) Mad 227. It observed that the conditions laid down in ILR (1889) Cal 132 are drawn from English practice, partly from cases in which the applicant was a trustee or solicitor for the debtor and they are applicable to a system under which the decree-holder has the conduct of the sale. The Privy Council observed that the Civil Procedure Code clearly throws on the Court the whole responsibility of conducting the sale. In conducting the sale, the responsibility of the Court is to see that the requirements of the law are satisfied.

5. The learned counsel for the petitioner also brought to may notice a recent decision of this Court in Venkatammal v. Janakiammal, (1971) 84 MLW 189, where Ramanujam, J. referred to the decision in Susila v. Saraswathi Ammal : AIR1970Mad357 , where it was held that a Court fixing an upset price is not under an obligation to issue notice of fixation of upset price or of alteration thereof to the judgment debtor and observed that the rationale of the decision cannot be applied to the case where the decree-holder has been given permission to bid in the first place contrary to the established practice. The learned Judge proceeded to observe that the decree-holder should not have been granted permission to bid and set off even in the first sale, without there being any special circumstance in the case. The learned Judge does not rule out permission being granted on the first occasion itself if there are special circumstances. It is a rule of caution that normally leave should not be granted on the first occasion because the Court will have an opportunity to know the facts about the nature of the bid, the value of the property etc., which would enable it to decide whether it should grant permission to the decree-holder to bid and set off, or not. But this decision cannot be understood as laying down that if a Court, after having exercised caution and satisfied itself that it would be advantageous to the judgment-debtor to grant permission to the decree-holder to bid and set off, a sale should be found to be illegal, as the decree-holder had been given permission to bid and set off on the first occasion itself.

6. In this case, on the first occasion, there were no bidders and leave was granted on the second occasion, after taking into account the adequacy of the upset price fixed and after giving notice to the judgment-debtor and hearing him. In law, therefore, there is nothing illegal in the lower Court granting leave to bid and set off.

7. Still, the sale cannot be upheld. In the first paragraph of its judgment, the lower Court has stated that it has been ordered in the execution petition that the bid has to be begun from the defendants' value viz. Rupees 10,000/-. This amount is in accordance with the valuation given by the judgment-debtor herself in her counter to the execution petition. But the property was sold with the upset price fixed at Rs. 8,000/- and the property was knocked down for Rs. 8,000/- in favour of the decree-holders. From the affidavit of the petitioner, it appears that the upset price was reduced to Rs. 8,000/- on 25-7-1972 without notice to the petitioner. It is difficult to perceive under what circumstances, the upset price which was confirmed at Rs. 10,000/- was reduced to Rs. 8,000/- on 25-7-1972. No sale was held in the meantime and the validity of the grant of leave to bid to the decree-holder fixing the upset price at Rs. 10,000 is shaken by the upset price being reduced to Rs. 8,000/-. In these circumstances, this petition is allowed and the sale is set aside. There will be no order as to costs.

8. Revision allowed.


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