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Venkitammal and anr. Vs. Janaki Ammal - Court Judgment

LegalCrystal Citation
SubjectCivil
CourtChennai High Court
Decided On
Reported in(1971)1MLJ366
AppellantVenkitammal and anr.
RespondentJanaki Ammal
Cases ReferredIn Laxmi Devi v. MukandKanwar
Excerpt:
.....the application for leave to bid was made for the very first sale and even for the first sale the decree-holder without any material that he could place before the court, apprehends that the properties may not fetch a good price. though i am not in entire agreement with the conditions laid down by the learned judges in the calcutta case to enable a decree-holder to obtain permission to bid i am however of opinion that the power to grant leave to bid must be cautiously exercised and unless the court is satisfied from the circumstances shown in the affidavit that otherwise an advantageous sale could not be obtained, no such leave should be granted. laid down that where the permission to bid and set-off is sought by a mortgagee, that discretion should be exercised with considerable care,..........sought to be set aside mainly on three grounds : (1) that the court had given permission to the decree-holder under order 21, rule 72, civil procedure code, to bid and set-off without notice to the petitioners, (2) that such leave to bid and set-off had been given even at the first sale, and (3) that there has been a gross inadequacy in the price when the decree-holder purchased the properties at rs. 2,100 while the properties are alleged to be worth more than a rs. 40,000. as regards the first and second grounds, the first court overruled them and held that the provisions of the code of civil procedure, do not contemplate that a notice to the judgment-debtor should be given before leave to bid and set-off is given to the decree-holder and that such leave to bid and set-off can be.....
Judgment:

G. Ramanujam, J.

1. The Judgment-debtors, whose properties have been sold in execution of the mortgage decree in O.S. No. 79 of 1967 on the file of the District Munsif, Sattur and whose application for setting aside the sale had been dismissed, are the petitioners herein. The execution sale was sought to be set aside mainly on three grounds : (1) that the Court had given permission to the decree-holder under Order 21, Rule 72, Civil Procedure Code, to bid and set-off without notice to the petitioners, (2) that such leave to bid and set-off had been given even at the first sale, and (3) that there has been a gross inadequacy in the price when the decree-holder purchased the properties at Rs. 2,100 while the properties are alleged to be worth more than a Rs. 40,000. As regards the first and second grounds, the first Court overruled them and held that the provisions of the Code of Civil Procedure, do not contemplate that a notice to the judgment-debtor should be given before leave to bid and set-off is given to the decree-holder and that such leave to bid and set-off can be given only in respect of second and subsequent sales and not in the first sale, and that as such the purchase by the decree-holder on the basis of the leave to bid and set-off granted by the Court cannot be said to be illegal or void. As regards the third ground relating to the allegation of gross undervalue and the inadequacy of the price, it took the view that the value of the properties cannot be as large as claimed by the petitioners and that the prices for which the properties have been purchased by the decree-holder were fair and reasonable. It rejected the two documents, filed by the petitioners judgment-debtors; Exhibit A-1, an earlier proclamation in E.P. No. 271 of 1961 in O.S. No. 171 of 1960 on the file of the same Court, and Exhibit A-2, another proclamation issued on 10th October, 1967 in E.P. No. 196 of 1967 in O.S. No. 320 of 1967 on the file of the same Court, to show that the houses in question were valued for more than Rs. 10,000 in 1962 and for more than Rs. 8,000 in 1967 on the ground that the fact that the properties were not sold when proclaimed earlier showed that the properties were not worth the price mentioned in the proclamation and that there is no reason given as to why the properties were not sold for the prices previously fixed. Ultimately the first Court held that there was no irregularity in the conduct of the sale.

2. The Appellate Court had also expressed the view that the permission granted under Order 21, Rule 72 without notice to the judgment-debtors was valid as no notice to the judgment-debtor is contemplated under that Rule, and that there is also no prohibition for the Court granting the permission under Order 21, Rule 72 even in the first sale. As regards the value also, the appellate Court held that the price fetched was fair and reasonable. Regarding Exhibits A-1 and A-2 the Appellate Court expressed the view, that though they show that the upset price for the suit properties was fixed at a larger amount in the earlier orders, it was not known whether there were any bidders for such prices and as such those documents might not be of any help to find out the true value of the property. Both the Courts below have also expressed that the petitioners having remained ex parte after service of notice in the E P. and having allowed the properties to be sold should not be heard to say that the prices fetched were too low.

3. In this revision the learned Counsel for the petitioners contends that the mere fact that the petitioners remained ex parte after service of the notice in the E P does not debar them from questioning the 'sale if it has been held contrary to the provisions of the statute or if the sale is vitiated by any irregularity. The learned Counsel contends that the executing Court is in error in granting leave to bid and set-off even in the first sale and that too without notice to the judgment-debtors. Reliance is placed on the following decisions.

4. In Sheonath Doss v. Janki Prosad Singh I.L.R.(1899) Cal. 132, it has been held that leave to bid and setoff should be given very cautiously and the relevant observations are as follows:

It should, in our opinion, be given only when it is found, after proceeding with the sale, that no purchaser at an adequate price can be found, and even then it should be given only after some enquiry, that the sale proclamation has been duly published.

In Raghavachariar v. Murugesa Mudali : AIR1923Mad635 Schwabe, C.J., dealing with the consideration to be taken into account while acting under Order 21, Rule 72 observed as follows:

The main question for the Court to consider is whether it is to the advantage or disadvantage of every one concerned in order to obtain the highest price that the plaintiff should be allowed to bid or not.

In Varadaraju Pillai v. Gandapodi Nanniar (1950) M.W.N. 111 : (1950) 1 M.L.J. 680 Krishnaswami Nayudu, J., after referring to the decision in Sheonath Doss v. Janki Prosad Singh I.L.R.(1899) Cal. 132, and the observations in Raghavachariar v. Murugesa Mudali I.L.R.(1923) Mad. 583 : 44 Mad. 680, expressed as follows:

I respectfully agree with the learned Judges in this decision, Raghavachari's case I.L.R.(1923) Mad. 583 : 44 Mad. 680, that the question to be considered is whether it will be to the advantage of every one concerned that leave to bid ought to be given on the application of the decree-holder. I could also observe that in this case the application for leave to bid was made for the very first sale and even for the first sale the decree-holder without any material that he could place before the Court, apprehends that the properties may not fetch a good price. Though I am not in entire agreement with the conditions laid down by the learned Judges in the Calcutta case to enable a decree-holder to obtain permission to bid I am however of opinion that the power to grant leave to bid must be cautiously exercised and unless the Court is satisfied from the circumstances shown in the affidavit that otherwise an advantageous sale could not be obtained, no such leave should be granted.

In Mohammed Mustafa Maracayar v. Udaianachi Ammal (1966) 79 L.W. 187 : (1966) 1 M.L.J. 373, Ananthanarayanan, C.J. laid down that where the permission to bid and set-off is sought by a mortgagee, that discretion should be exercised with considerable care, that instances of that kind should be scarce and not liberal, that only where attempts to bring the property to sale has become unsuccessful on a prior occasion and the mortgagee has become unable to realise the debt which is very old, leave can be granted in such cases, that the discretion of the Court in granting leave should be judicially exercised and that it is desirable that the order granting permission should specify the grounds on which it is granted, particularly where the objections thereto have been overruled. The above decisions indicate that the Court, while considering the grant of permission under Order 2i, Rule 72, should take into account certain objective matters and that the discretion should be exercised on judicial lines and not arbitrarily. Though Order 21, Rule 72, does not provide for any notice to the judgment-debtor or any reasoned order being given by the Court, it is desirable for the Court to give notice to the judgment-debtor to show cause as to why the permission should not be granted under Order 21, Rule 72 and to pass a reasoned order if objections are raised. Though the statute does not provide for any notice, it is well established that the Court, exercising judicial functions, should normally give notice to the patty who is likely to be affected by that order and cannot pass an order behind the back of the party, offending the principles of natural justice.

5. Reliance is placed by the respondent's Counsel on the decision of Ismail, J. in B. Susila v. Saraswathi Ammal : AIR1970Mad357 , wherein the learned Judge has 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 that the failure to give such notice does not constitute a material irregularity or fraud within the meaning of Order 21, Rule 90. According to the learned Judge the fixation of upset price by the Court does not affect the rights of parties and that it is not a judicial act but merely an administrative one. But the rationale of that decision cannot be applied to the facts of this case where the decree-holder has been given permission to bid even in the first sale contrary to the established practice as seen above, and such an order naturally affects the interests of the judgment-debtors in that the decree-holder had been enabled to purchase the property on the basis of the upset price fixed by the Court even in the first sale.

6. In P. Achamma v. T. Bavanna : AIR1969AP196 , it has been held that the grant of-permission under Order 21, Rule 72 is an administrative act and the non-issue of a notice to the judgment--debtor does not vitiate the sale. The learned Judges in that case have, however, recognised the fact that the executing. Courts generallydirect notice; to the judgment-debtors in an application under Order 21, Rule 72, and that it is a salutary practice to do so. However, having regard to the ' earlier decisions referred to above seating out the considerations to be taken by the Court while granting permission under Order 21, Rule 2, I feel that notice should have been issued to the judgment-debtors before the permission to bid and set-off was granted to the decree-holder, and the decree-holder should not have been granted the permission to bid and set-off even in the first sale without there being any special circumstances in this case. Such a view has also been taken by my learned brother, Ramaprasada Rao, J., in C.R.P. No. 239 of 1969. In that case the decree-holder sought permission to bid and set-off even in the first sale and that was opposed by the judgment-debtor. The Court granted permission sought for overruling those objections. In revision, this Court, following the decision of Krishnaswami Nayudu, J., in Varadarajulu Pillai v. Gendapodi Naneniar (1950) M.W.N. 111 : (1950) 1 M.L.J. 111, set aside the order of the lower Court granting the permission holding that the leave obtained could not enure to the decree-holder even on the first occasion of sale, and that he can avail of the leave granted by the lower Court only on the third occasion if there are no bidders on two consecutive sales. With respect, I am in entire agreement with the view expressed therein and following that decision I hold that the order of the lower Court granting leave to bid in favour of the decree-holder even I in the first sale and without notice to the [ judgment-debtors is erroneous.

7. The further question is whether the irregularity in the Court giving leave to bid even at the first sale has led to any substantial injury and has resulted in the properties being sold for a low price. In this case the petitioners have shown that the upset price for the properties in question had been fixed in the earlier orders Exhibits A-1 and A-2 at more than Rs. 7,000. The decree-holder having been permitted to bid and set-off in the first sale, he was able to purchase the properties at a price of Rs. 2,100. According to the petitioner the value of the properties is more than Rs. 40,000. In Laxmi Devi v. MukandKanwar : [1965]1SCR726 it has been observed:

It is true that before an application made under Order 21, Rule 90 can succeed, the applicant has to show that the impugned sale was vitiated by a material irregularity or fraud in publishing or conducting it, and as required by the proviso, it is also necessary that he should show that in consequence of the said irregularity or fraud, he had sustained substantial injury.... But, in our opinion, in a case like the present where substantial injury is alleged to be implicit in the material irregularity set out in the application, it would be too technical to hold that the application should be dismissed on the preliminary ground that no specific or express averment has been made as to substantial injury.

In this case the Courts below have expressed that the petitioners though served in the execution petition had not chosen to appear and give their value of the properties and that as such they are not entitled to canvass the sale held in execution. It is not possible to accept the said observations as correct for, even if the judgment-debtors are absent the Court must follow the correct procedure in conducting the sale and if the decree-holder obtained leave to bid and set-off, in the, first sale resulting in his purchase of the properties for a low price the judgment1 debtors are entitled to question the sale-In this case there is prima facie material adduced by the petitioners that the properties were brought to sale on the earlier occasions by the same Court in other proceedings at a price considerably higher than the price for which the properties were sold and the Courts below were not correct in ignoring Exhibits A-1 and A-12 which show that the Court fixed the upset price for the suit properties at a higher sum on earlier occasions, merely on the grounds, that there was no evidence that anybody-bid for the property at that price. I am not also inclined to agree with the learned Counsel for the respondent that the irregularity which can be taken into-account in setting aside the sale under Order 21, Rule 90, can only relate to the non-compliance with the rules. According to the learned Counsel non-compliance even with an established procedure may not be an irregularity so as to enable the judgment-debtor to seek the aid of Order 21, Rule 90. In this case, it has not been, shown that the provisions of Rule 199, of the Civil Rules of Practice have been, complied with and under what circumstances leave to bid and set-off was given, to the decree-holder even in the first sale without notice to the judgment-debtors. There has thus been a material irregularity in the grant of permission which has resulted in the decree-holder purchasing-the properties for a low price. Further, the conduct of the decree-holder in obtaining leave to bid even on the first occasion of sale without any ostensible or justifiable reason and in purchasing the property amounts to a fraud in the conduct of sale. The view I have taken is also in accord with a very recent decision rendered in C.M.A. No. 237 of 197 and C.R.P. No. 1521 of 1970, wherein a division of Bench, of this Court has approved the view of Krishnaswami Naidu, J., in M. Varadarajulu Pillai's case (1950) 1 M.L.J. 111 : (1950) M.W.N. 111, and has set aside the grant of leave holding that in order to get leave to bid the decree-holder must allege and prove very strong reasons in support of his claim, that the main question for consideration should be whether the grant of permission would secure a fair price for the property and that the affidavit filed by the decree-holder in that case in support of his application for leave did not disclose any satisfactory reason for grant of leave.

8. In the result, the civil revision petition is allowed and the sale impugned in these proceedings is set aside. The lower Court should proclaim and sell the properties afresh and the respondent-- decree-holder will be entitled to bid and set-off on the basis of the leave already obtained only on the third and subsequent occasions of sale in the event of there being no bidders in the first two sales. There will be no order as to costs.


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