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Ukaippaligal Munnai (Firm) and ors. Vs. V. Ganesan and ors. - Court Judgment

LegalCrystal Citation
SubjectCivil
CourtChennai High Court
Decided On
Reported in(1966)2MLJ90
AppellantUkaippaligal Munnai (Firm) and ors.
RespondentV. Ganesan and ors.
Excerpt:
- - 4,000. the appellants complain that it was the gross undervaluation of the properties in the sale proclamation that mislead the intending bidders and. there should be irregularity in the procedure to be followed for putting up the properties for safe material irregularity complained of must be one on the part of the court or its officers......of the sale,, on the ground that the description of the properties were not properly given in the sale proclamation, that the sale proclamation itself was not properly published and. that the properties sold in the public auction were grossly undervalued with a deliberate intention to mislead the bidders. the court below held that there was no-fraud or material irregularity in the conduct of the sale. hence the appeals.2. the facts of the case reveal that lot 1 consists of a small house and shops and lot 2 consists of shops in madurai town. the terms of the proclamation were settled on 18th march, 1961, lot 1 being valued at rs. 7,000 and lot 2 at rs. 6,000. the properties were proclaimed to be sold on 26th june, 1961. after several adjournments, lot 1 was sold for rs. 11,600 and lot 2.....
Judgment:
ORDER

T. Venkatadri, J.

1. These two appeals arise out of execution proceedings in O.S. No. 10 of 1959. The appellants herein filed applications to set aside the sale in respect of two properties. The appellant in C.M.A. No. 94 of 1962 is the petitioner in E.A. No. 635 of 1961 and she is a third party interested in lot 2, and the appellants in. C.M.A. No. 95 of 1962 are the petitioners in E.A. No. 637 of 1961. They are defendants 1, 3 and 4 who are interested in lot 1. They alleged in the applications that the sale was vitiated by fraud and material irregularities in the conduct of the sale,, on the ground that the description of the properties were not properly given in the sale proclamation, that the sale proclamation itself was not properly published and. that the properties sold in the public auction were grossly undervalued with a deliberate intention to mislead the bidders. The Court below held that there was no-fraud or material irregularity in the conduct of the sale. Hence the appeals.

2. The facts of the case reveal that lot 1 consists of a small house and shops and lot 2 consists of shops in Madurai Town. The terms of the proclamation were settled on 18th March, 1961, lot 1 being valued at Rs. 7,000 and lot 2 at Rs. 6,000. The properties were proclaimed to be sold on 26th June, 1961. After several adjournments, lot 1 was sold for Rs. 11,600 and lot 2 was sold for Rs. 40,000 subject to a mortgage for Rs. 4,000. The appellants complain that it was the gross undervaluation of the properties in the sale proclamation that mislead the intending bidders and. therefore the sale was vitiated with material irregularities in the conduct of the sale. Though the sale began on 10th July, 1961, it was continued from day to day and finally closed on 17th July, 1961. The sale was confirmed on 22nd November, 1961. The purchaser took symbolical possession in the month of December, 1961 and took physical possession in the month of June, 1962. The purchaser immediately put up a huge structure worth about Rs. 1,50,000-00. It is true that the judgment-debtors (appellants) have filed appeals. But they did not obtain stay of delivery of possession. Even though their application was dismissed on 28th March, 1962, they did not take any proceeding for stay of further construction by the purchaser. Now these appeals come up for final disposal after a period of four years.

3. The only question for consideration is whether the sale has been vitiated by-fraud and material irregularities. According to the appellants, lot 1 was grossly undervalued at Rs. 7,000 though as a matter of fact, it was sold for Rs. 11,600. Similarly, according to the appellants, lot 2 was grossly undervalued at Rs. 6,000 though, as a matter of fact, it was sold for Rs. 40,000. On the facts of this case, it is clear that the judgment-debtors were not put to any loss and they were not also prejudiced, because the properties were sold for more than what they themselves expected. At the time of settling the proclamation, the appellants did not help the Court in giving a correct estimate or value of the properties to be sold. It was only the decree-holder who gave valuation of the properties, and the Court, on an approximate valuation, fixed the upset price. During the pendency of the Court-sale proceedings, one of the appellants filed an affidavit stating that he had entered into an agreement of sale with a private party in respect of lot 2 for Rs. 35,000 and requested the Court to adjourn the sale. But the Court refused to adjourn the sale, and ultimately due to keen competition this item was sold for Rs. 40,000 subject to a mortgage, and lot 2 was sold for Rs. 11,000. In the circumstances it is not possible for me to say that the judgment-debtors are seriously prejudiced by the Court sale.

4. But what learned Counsel for the appellants represents to me is that, if these properties were properly valued in the sale proclamation, any one of the properties would have been enough to satisfy the decree amount which was only Rs. 24,000 and therefore one of the properties could have been saved. But the appellants did. not take any steps or take appropriate proceedings for stopping the sale. On the other hand, they allowed the properties to be sold. They did not obtain any stay of confirmation of the sale. They allowed the purchaser to construct a huge structure worth about Rs. 1,50,000. Now they contend that the sale is vitiated by fraud and material irregularities.

5. True, in the law of execution, a sale will be and should be set aside, if there is fraud or any material irregularity in the conduct of sale. Substantial injury should have been sustained by reason of such fraud or irregularity. The term ' irregularity means not being in conformity to some recognised rule. There should be irregularity in the procedure to be followed for putting up the properties for safe Material irregularity complained of must be one on the part of the Court or its officers. In determining what is illegal or irregular, it may be remarked that the distinction is one of degree. In order to establish illegality, there must be shown some disregard of positive provision of law. It is true that the duty of the Court is to make a valuation the result of which has to be included in the sale proclamation. Such duty is not discharged by merely stating the values respectively put up by the parties. Even assuming that such a duty has not been observed by the Court, the sale cannot be set aside, unless it is established that as a result of such irregularity, substantial loss or injury has been caused to the judgment-debtor. Mere omission to state in the proclamation the estimated value of the properties to be sold will not be a material-irregularity. The authorities are not uniform as to the duty of the Court in all cases or in normal cases to make the valuation, of the properties put up for sale. But if the Court includes its valuation, the value must be fairly and accurately stated. In this case, the decree-holder gave the valuation according to his opinion. But the appellants did not help the Court by giving their valuation of the properties. It has been held that the Amin of the Court should not be sent to value the properties. The Court may fix the upset price. But now the law seems to be that even the Court should not fix the upset price but only state the valuation of the property as given by the decree-holder and judgment-debtor and allow the property to be sold in public auction. In this case, the sale as regards lot 2 was continued for 7 days. After keen competition, this item was sold for Rs. 40,000 subject to a mortgage. In such a case, it is not possible for me to say that the appellants suffered any loss. Before a sale could be set aside on the ground of material irregularity, the judgment-debtor should establish a connection between the irregularity and the loss to the judgment-debtor on account of the property being sold for that price. In the instant case, I cannot say that there was a deliberate mis-statement of the description of the properties calculated to mislead the possible bidders and thereby prevent them from offering adequate price or from bidding at all. The properties in this case have not been sold for grossly inadequate price. On the other hand, they have been sold for a substantial price which would represent the market value of the properties. One of the judgment-debtors, during the pendency of the sale proceedings, requested the Court to adjourn the sale in order to enable him to sell lot 2 for Rs. 35,000 at a private sale. Though the Court refused to adjourn the sale, in Court auction the particular item was sold for Rs. 40,000. I do not therefore, see how the appellants have sustained any substantial injury in the conduct of the sale. On the other hand, they have been substantially benefited by Court sale on account of the keen competition evidenced by bidders at the sale. Further the appellants themselves allowed the purchaser to put up a huge structure worth Rs. 1,50,000. There is also no allegation of any fraud or mala fides on the part of the purchaser. Nor did the appellants rush to Court when they came to know that the purchaser was putting up a huge building so as to prevent him from putting up the construction. It was also brought to my notice that in connection with some other proceeding between the appellants and the respondents in some other suit, they have entered into a compromise to the effect that whatever surplus remained in the sale proceeds to the credit of O.S. No. 10 of 1959, that would be availed of by the decree-holders in the suit. In effect, that would mean that the appellants did not have any objection for the sale being confirmed in respect of these properties. Even without taking into consideration this aspect of the matter, I am of opinion that it is too late for the appellants to come to Court and ask for the properties sold in Court auction, as a huge structure has been erected on the properties. Further the sale is not vitiated by any fraud or material irregularity and the appellants are not put to substantial injury in the conduct of the sale. Under those circumstances, I do not see any reason to interfere with the order of the Court below.

6. The appeals are accordingly dismissed. There will be no order as to costs.


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