Skip to content


Dr. A. U. Natarajan and anr. Vs. Indian Bank - Court Judgment

LegalCrystal Citation
SubjectCivil
CourtChennai High Court
Decided On
Reported in(1981)1MLJ286
AppellantDr. A. U. Natarajan and anr.
RespondentIndian Bank
Cases ReferredK. A. Raju v. N. Sivaprakasam and Ors. C.R.P. No.
Excerpt:
- - whether an executing court has no power to fix the upset price for the sale of property and consequently, no power as well to reduce the same? when the decree-holder and the judgment-debtor differ hopelessly as to the probable value of the property, a statement as to the value by the court is at best a guess and the court, may, in the circumstances of a particular case, consider it better to abstain from such guess. where the court, without its determining the market value of the property to be sold and stating it in the sale proclamation ordered that the valuations of the decree-holder and of the judgment-debtor as well as that of the commissioner appointed in the case, should be mentioned in the sale proclamation, held, that there was no irregularity. even in such cases, where.....ordernatarajan, j.1. this civil revision petition has come before as pursuant to a reference made by ratnam, j., that the matter may be dealt with by a bench for having an authoritative pronouncement on the question enunciated below:whether an executing court has no power to fix the upset price for the sale of property and consequently, no power as well to reduce the same?2. the contention of the revision petitioners is that the executing court has no power to fix the upset price and hence it has no power also to reduce the same. ratnam, j., noticed that such a contention has been upheld by sathiadev, j. in kannaiyan and anr. v. chidambaram finance corporation, chidabaram c. b. p. no. 2791 of 1979, dated 9th january 1980. (1980) tlnj 33. betha goundar v. k. k. dharmasubramania iyer c.r.p......
Judgment:
ORDER

Natarajan, J.

1. This Civil Revision Petition has come before as pursuant to a reference made by Ratnam, J., that the matter may be dealt with by a Bench for having an authoritative pronouncement on the question enunciated below:

Whether an executing Court has no power to fix the upset price for the sale of property and consequently, no power as well to reduce the same?

2. The contention of the revision petitioners is that the executing Court has no power to fix the upset price and hence it has no power also to reduce the same. Ratnam, J., noticed that such a contention has been upheld by Sathiadev, J. in Kannaiyan and Anr. v. Chidambaram Finance Corporation, Chidabaram C. B. P. No. 2791 of 1979, dated 9th January 1980. (1980) TLNJ 33. Betha Goundar v. K. K. Dharmasubramania Iyer C.R.P. No. 1277 of 1977, dated 22nd June, 1978. and Kamadhenu Bailings end another v. Secretary, Guruvayur Temple Renovation Committee, Kerala C.R.P. No. 1127 of 1968, dated 27th July, 1978. The referring Judge also noticed that Ramanujam, J. in M. Ramaswami Gounder and Ors. v. R. K. Subramania Iyer C.R.P. No. 1637 of 1979 dated, 12th February, 1979. and Nainar Sundaram, J, K. A. Raju v. N. Sivaprakasam and Ors. C. R. P. No. 1536 of 1979, dated 31st August, 1979. have taken a contrary view and held that the fixation of upset price would not automatically invalidate the order directing the sale of the property and that even after the amendment of Order 21, Rule 66 of the Code of Civil Procedure, by Act CIV of 1976, the power of the executing Court to fix the upset price, in appropriate cases, is not taken away. It is with regard to the diversity of views expressed in the decisions referred to above, the learned single Judge directed the papers to be placed before the Hon'ble Chief Justice for referring the matter to a Bench and that is how the matter is before us.

3. Mr. V. Natarajan, learned Counsel for the petitioners besides bringing to our notice the orders of Sathiadev, J., and certain other decisions, also laid emphasis on the amendment made to Order 21, Rule 66, Civil Procedure Code by Act CIV of 1976. Mr. G. Venkataraman, learned Counsel for the respondents, countered the arguments of Mr. Natarajan by relying on a catena of decisions including those of Ramanujam, J. and Nainar Sundaram, J., referred to above, in which a different view has been taken.

For a proper understanding of the controversy, it is necessary to refer to Order 21, Rule 66(2) of Code as it originally stood and the changes made by several amendments besides the pronouncements of Courts from time to time, Originally, Rule 66(2) of Order 21, read as follows:

(2) Such proclamation shall be drawn up after notice to the decree-holder and the judgment-debtor and shall state the time and place of sale and specify as fairly and accurately as possible:

(a) the property to be sold (or where a part of the property would be sufficient to satisfy the decree, such part);

(b) the revenue assessed upon the estate or part of the estate where the property to be sold is an interest in an estate or any part of an estate paying revenue to the Government;

(c) any incumbrance to which the property is liable;

(d) the amount for the recovery of which the sale is ordered; and

(e) every other thing which the Court considers material for a purchaser to knew in order to judge of the nature and value of the property.

4. On the terms of the rule as set out above, the following judgments were rendered:

A Court undertaking to give valuation, which would be a real guide to a bidder even if it did not inspect the property itself, would, at any rate, have to accumulate copious data and hold an elaborate enquiry. The law requires that the Court, as fairly and accurately as possible, shall state anything which the Court considers material for a purchaser to know. If it considers a fair and accurate report of the value given by three persons material for the purchaser and nothing more in that particular respect, the Court will not have erred.

Thiruvengadaswami v. Govindaswami 1. AIR 927 Mad 943.:

The omission to state the value of the property is not a material irregularity. When the decree-holder and the judgment-debtor differ hopelessly as to the probable value of the property, a statement as to the value by the Court is at best a guess and the Court, may, in the circumstances of a particular case, consider it better to abstain from such guess.

S. K. Veeraswami Pillai v. Kalyanasundaram and Ors. : AIR1927Mad1009 .:

Under Order 21, Rule 66 of the Civil Procedure Code, the Court is under no obligation whatever to fix, and state in the proclamation of sale, its own valuation of the property to be sold.

Where the Court, without its determining the market value of the property to be sold and stating it in the sale proclamation ordered that the valuations of the decree-holder and of the judgment-debtor as well as that of the Commissioner appointed in the case, should be mentioned in the sale proclamation,

Held, that there was no irregularity.

Vide Thiruvengadaswami Ayyangar v. Govindaswami Udayar (1928) ILR 51 Mad 655 : 55 MLJ 363 : .

5. The Ratio decidendi in these cases was to the following effect : A Court's valuation may be a reaAIR 1928 Mad 503l guide to a bidder, but such valuation should be fair and accurate as far as possible; even in such cases, where the valuations of the decree-holder and the judgment-debtor differed from each other hopelessly, the Court was not bound to state its valuation of the property, since such a statement would at best be a guess and, depending upon the circumstances of a case, the Court any prefer to abstain from making a guess; the Court was under no obligation to fix its own valuation of the property and state it in the proclamation of sale.

6. By Dis. No. 691 of 1935 a change was made in this State to the Rule and Sub-rule (2) (a) was added. Consequent on that, the old Clause (a) became Clause (f). Clauses (e) and (f) of Sub-rule (2), which alone require mention, read as follows:

(e) the value of the property as stated:

(i) by the decree-holder; and

(ii) by the judgment-debtor; and

(f) every other thing which the Court considers material for a purchaser to know in order to judge of the nature and value of the property.

There was again an amendment by means of P. Dis. 152 of 1963 to Sub-rule (2) of Rule 66. But, as the amendment has no relevance for the debate on hand, we refrain from extracting it.

7. As a consequence of the newly added Clause (e) it became incumbent on Courts to set out in the proclamation of sale the value of the property as stated (i) by the decree-holder and (ii) by the judgment-debtor.

8. The position of law, after amendment in 1936, was construed in the following cases:

9. In Srinivasan v. Andhra Bank Limited : (1948)2MLJ569 . Govinda Menon, J., held that it was not incumbent upon the Court to undertake an enquiry and take evidence about the value of the property and insert the value in the proclamation of sale, bat even so, the Rule did not prevent the Court, if it thought necessary, from including the market value of the property as decided by it.

10. In Rajarathinammal v. P. Kanakasabapathi Pillai : AIR1955Mad720 , Mack, J. held, on the facts of that case having regard to the wide divergence between the decree-holder's valuation and the judgment-debtor's valuation, it was desirable that the executing Court had the property valued by an a min and had the valuation inserted in the sale proclamation.

11. In Kuppammal v. Devendra Iyer : (1957)2MLJ134 . the Subordinate Judge had committed the error of fixing the upset price of the properties to be sold at Rs, 52,000 given by the defendants as well as at Rs. 5,000 given by the plaintiff. While setting aside the order of the Court below. Ramaswami Gounder, J., relied on Srinivasan v. Andhra Bank Ltd. : (1948)2MLJ569 , and held that under Order 21, Rule 66(2) (e), Civil Procedure Code, it was enough if the Subordinate fudge had mentioned both the figures in the sale proclamation without fixing any upset price.

12. Again, the matter was considered by P. N. Ramaswami, J., in Vellappa Naidu v. Venugopal Naidu (1957) 70 LW 815 : AIR 195g Mad 423. and the learned Judge, after referring to the several cases decided earlier, summed up as follows:

17. To sum up, after the amendment of Order 21, Rule 66, Civil Procedure Code, it is now settled law that the Court is under no obligation to notify an upset price of its own. In fact, in many cases, it would not even be desirable for the Court to do so. The obligation of the Court is to state the valuations given by the decree-holder and the judgment-debtor. But, they must not be notified as upset prices. The Court when ordering the sale with two valuations noted which are discrepant, must adopt one of two courses. If it is desirable in the circumstances of the case for the Court to fix in a rough and ready way the upset price of its own, it can do so, because the amended provision does not prohibit the Court from fixing its own upset price. But, where the Court does not desire to fix even in a rough and ready way its own valuation, it will be perfectly within its lights in refraining from doing so, and this cannot be canvassed either by way of appeal or revision. But, it will instruct the selling officer, either in general or in each case, to begin the sale with the higher of the two valuations as upset price and, if no bidders are forthcoming to go on lowering the upset price and when the lower of the two valuations, is reached, to start again with the lower valuation, as otherwise, our not incorruptible Nazirs deputed as selling officers will have to evolve an upset price of their own and which is most undesirable.

13. In Subbiah v. Ramanathan 1957 70 LW 989. Panchapakesa Ayyar, J. held independently, without referring to the earlier decisions, that there is no illegality as such in a Court fixing its own upset price, but nevertheless, it would be desirable for the Court to fix the upset price where widely divergent upset prices as given by the two sides.

14. In Kamalam Paul v. Rama Rao Alagiriswami : (1969)1MLJ344 . J. held as below:

There is no doubt that no auction can be held without an upset price being fixed. Otherwise, it will only become a Dutch auction.........Without an upset price being fixed, it is not possible to hold an auction at all. Otherwise, only the judgment-debtor will suffer......... After all, upset price only represents the price below which the Court is not prepared to accept offers for the property. Even though the upset price may be fixed at Rs. 20,000 there is no objection to any purchaser buying the property for Rs. 50,000 which is the value given by the judgment-debtor or even for more.

15. The question came up in a slightly different form for consideration before Ismail, J. (as he then was), in B. Susila v. Saraswathi Ammal : AIR1970Mad357 . The contention put forward was that the executing Court was under a bounden duty to give notice to the judgment-debtor before any reduction in the upset price was made. While repelling this contention, the learned Judge held as follows:

I may straightaway point out that under Order 21, Rule 66, Civil Procedure Code, as amended by this Court, there is absolutely no provision for the Court to fix any upset price and all that the Rule requires the Court to do is to mention the valuation of the property as given by the decree-holder as well as by the judgment-debtor. It is open to the Court, if the circumstances of the case justify, to arrive at its own valuation and fix the upset price, but the Court is under no obligation under the statute to fix the upset price. Therefore, when the Court fixes the upset price or modifies either by way of enhancement or reduction of the upset price originally fixed, it cannot be said that the Court is acting pursuant to the obligation imposed upon it under Order 21, Rule 66 Civil Procedure Code.............

When the Court fixed the upset price in a sale proclamation, the Court is not determining the rights of any of the parties before it sad the fixation of upset price may be an indication of the probable price which the property may fetch from the point of view of the intending bidders; but it is not binding either on the decree-holder or the judgment-debtor or even on the Court. Notwithstanding the fixation of the upset price and notwithstanding the fact that a bidder has offered an amount higher than the upset price, it is still open to the judgment-debtor to go before the Court and allege that the property has not fetched the proper price; and he can have the sale set aside, if he can establish that the inadequacy of the price is the result of material irregularity or fraud in the publication or the conduct of the sale. Consequently, the fixation of the upset price by the Court, does not affect the rights of any of the parties, and it is not, therefore, open to the judgment-debtors to contend that, independent of Order 21, Rule 66, Civil Procedure Code, they are entitled to notice to an application filed by the decree-holder for reducing the upset price.

16. In Srirama v. T. V. A. China Rajanna : AIR1973AP24 . A Division Bench of the Andhra Pradesh High Court relied on the dictum contained in Srinivasan v. Andhra Bank Ltd : (1948)2MLJ569 . Rajarathinammal v. P. Kanakasabapathi Pillai : AIR1955Mad720 . and Kuppammal v. Devendra Iyer : (1957)2MLJ134 . (1). and held that the executing Court is not bound to fix an upset price even when there is a wide disparity between the value given by the judgment-debtor and the decree-holder, but nevertheless, the Court is not prevented, in appropriate cases, from indicating the approximate value of the property; that where there is wide disparity in the value given by the decree-holder and the judgement-debtor it is cot only desirable, but fair and proper for the executing Court to ascertain the approximate value of the property through a Commissioner or an amin and incorporate the same in the sale proclamation and that the fixation of two upset prices by the Court is not permissible.

17. In the year 1972, Sub-rule (2) of Rule 66 of Order 21, was amended in this State by P. Dis. No. 349 of 1972 and Clause (D-1) was inserted in Sub-rule (2) and the amended Rule read as follows : '(d-1) the upset price fixed by the Court,' As a result of this amendment, the petition was that, so far as this State is concerned, the executing Court had to incorporate in the proclamation of sale, not only the value of the property as given by the decree-holder and the judgment-debtor, but also the upset price fixed by it. Obviously the amendments had been made to give effect to the pronouncements by this Court in several cases that though the statute did not impose any obligation on the Court to give its own value of the property in the sale proclamation, the Court was nevertheless free to exercise its powers, in appropriate cases, and make its own estimate of the value of the property and have that figure incorporated in the sale proclamation in addition to the figures given by the decree-holder and the judgment-debtor, and, further more, such an exercise appeared to be indispensable when the estimates given by the decree-holder and the judgment-debtor disclosed a case too bewildering to be comprehended by the intending bidders. Thus, the Courts were enjoined to fix the upset price and mention it in the sale proclamation besides setting out the values given by the parties themselves, the decree-holder and the judgment-debtor.

18. After the introduction of Clause (d-1), Ismail, J. (as he then was) had to consider in S. N. Shamsuddin v. M. K. Poyyamani C. R. P. No. 1484 of 1973 dated 24th August,1973. whether the execution, Court, while executing its powers under Clause (d-1), was under an obligation to give notice to the judgment-debtor before reducing the upset price originally fixed by it. The learned Judge held that inasmuch as the fixation of upset price was a statutory performance, the Court had perforce to give notice to the judgment-debtor before making any reduction in the upset price.

19. When matters stood thus, Central Act (CIV of 1976) brought about further amendments to Rule 66 by introducing the following provision:

Provided that where notice of the date for settling the terms of the proclamation has been given to the judgement-debtor by means of an order under Rule 34, it shall not be necessary to give notice under this rule to the judgment debtor unless the Court otherwise directs:

Provided further that nothing in this rule shall be construed as requiring the Court to enter in the proclamation of sale its own estimate of the value of the property, but the proclamation shall include the estimate, if any, given by either or both of the parties.

20. We are concerned, in these proceedings, only with the second proviso, since it Is with reference to its terms, the petitioners herein contend that not only has Clause (d-1) been superseded, but an interdict has also been placed on the executing Court to fix the upset price for properties brought for sale in Court auction.

21. The argument of Mr. Natarajan, counsel for the petitioners, ran thus : Order 21, Rule 66, Civil Procedure Code provides how a proclamation of sale should be made and what essential particulars the proclamation of sale should contain. Clauses (a) to (') of the rule enunciate the particulars that should necessarily be incorporated in the proclamation of sale. The second proviso, newly introduced by Act CIV of 1976 expressly provides that nothing in the rule shall be construed as requiring the Court to enter in the proclamation of sale Its own estimate of the value of the property. The proviso, should, therefore, be construed in one of the following manners, namely : (1) it must be taken as a proviso specifically carving out the provision from the earlier Clauses (a) to (e); or (2) the proviso should be taken as a separate and independent rule by itself as there is no repugnancy between it and Clauses (a) to (e) of Rule 66(2); or (3) the proviso has to be of taken as an explanation of the scope of Clauses (a) to (e) and, in that sense, the proviso contains a mandate forbidding the Court from entering its own estimate of the value of the property in the sale proclamation.

22. The repeated contention of the petitioners' counsel was that the words, 'provided further that nothing in this rule shall be construed as requiring the Court to enter in the proclamation of sale its own estimate of the value of the property' should be construed to mean that the Court had no discretion or power in the matter and the Court stood completely deprived of its power to enter its own estimate of the value of the property even if the estimates given by the decree-holder and the judgment-debtor were poles apart and the officer of the Court conducting the auction sale had no guidance whatever about the price at which the auction should be commenced, except the widely divergent prices given by the decree-holder and the judgment-debtor. By way of support for his argument, reliance was placed by the learned Counsel on the second limb of the proviso which places on the Court an inescapable obligation to set out in the sale proclamation the estimates given by either or both of the parties, the relevant words in the proviso running as under:

but the proclamation shall include the estimate, if any, given, by either or both of the parties.

23. The rule should be construed, according to learned Counsel, in conformity with the principles evolved by Courts of law and jurists which have found universal acceptance. The rules are as follows:

The golden rule for the interpretation of Acts is to consider the plain meaning of the words used..... The Court cannot proceed on the assumption that the Legislature has made a mistake. Even it' there is a defect, it is not for the Court to add or amend the words of a Statute or to supply when the language is clear, it is the duty of the Court to give effect to it without calling in aid outside considerations to ascertain the intentions of the Legislature ... Statutory provisions cannot be whittled down by general principles of equity, justice and good conscience. Nor can they be avoided on ground of hardship or inconvenience when the meaning is clear on the face of the statute, nor is the Court concerned with the motive of Parliament in enacting the statute or its wisdom..... In interpreting the provisions of the Statute, that construction should be adopted which would be given effect to all parts thereof and would not render any of them meaningless or inoperative.' Vide : Mulla on the Code of Civil Procedure, 13th Edn., pages 2 and 3.

In this connection, the Petitioners' counsel also invited our attention to the following passage occurring in Suibn Raut v. Baban Raut (1908) ILR 35 Cal 353.

Lord Davey further observed that the essence of a Code is to be exhaustive on the matters in respect of which it declares the law, and it is not the province of a judge to disregard or go outside the letter of the enactment according to its true construction.

24. On the assumption that the proposition of law propounded by him was the correct one and that no other interpretation can be given. Mr. Natarajan, built up his further arguments to say that the Court below had committed an illegality in exercising jurisdiction not vested in it and such wrongful assumption and exercise of jurisdiction vitiated the impugned order and consequently, this Court should exercise its powers under Section 115, Code of Civil Procedure, and revise the impugned order. We may usefully set out, at this juncture, what the order of the Court below is. It reads as follows:

Upset price reduced in E. A. No. 201 of 1980 to Rs. 3,00,000 for Lot I and Rs. 75,000 for Lot II. proclaim and sell 30th April, 1980.

Further hearing 16th June, 1980(Batta and copies in a week).'

By way of authority for the latter argument, the petitioners' counsel placed reliance on he following cases : Khun Khun Chauba v. Mahabir Chaubal AIR 3948 All 281. Ram Pratan v. Mohan Lal : AIR1967All161 . Dulish Prasad v. Rajeswari Bibi : AIR1977All151 and D. I. F. Housing Co. v. Sarup Singh : [1970]2SCR368 . The dictum in these cases is to the following effect : 'The words, 'illegally' and 'with material irregularity' as used in this clause (Clause (e) of Section 115, Civil Procedure Code), do not cover either errors of fact or of law.....The errors contemplated by this clause may, in our view, relate either to breach of some provision of law or to material defects of procedure affecting the ultimate decision.'

25. Having set out the case law on the subject prior to the change brought about by Act CIV of 1976 to rule 66 as well as the contentions of the petitioners' counsel as to how the second proviso to Clause (e) should be construed and that the action of the Subordinate Judge in fixing the upset prices for the two lots of properties and subsequently to bring reduction in the upset prices amounted to exercise of powers without jurisdiction, we will now examine the matter in its full perspective. Rule 66(2) as it originally stood did not contain any clause relating to the setting out of the value of the property either as given by the parties or as estimated by the Court. Not-withstanding the absence of any such provision, it was held in Thiruvengadaswami Ayyangar v. Govindaswami Udayar ILR 41 Mad 655. which was considered a leading authority, that since the reserve price is also generally fixed by the Court, there was no obligation for the Court to fix its own valuation of the property and incorporate it in the sale proclamation. After the amendment in 1936, when a new clause was introduced numbered as Clause (a), the Court was enjoined to set out the value of the property as stated by the decree-holder and the judgment-debtor. But no reference was made to the powers of Court to set out its own value of the property or its powers to fix the upset price. It was held in one set of cases, viz,; Srinivasan v. Andhra Bank Ltd : (1948)2MLJ569 . and Kuppammal v. Devendra Iyer : (1957)2MLJ134 . that the Court was not obliged to estimate the value of the property and mention it in the sale proclamation, but the rule did not inhibit the Court from exercising its powers in those cases where it considered such a course was necessary, and in another line of cases, viz.; Rajarathinammal v. P. Kanakasabapathi Pillai : AIR1955Mad720 . Yellappa Naidu v. Venugopal Naidu (1955) 70 LW 815 : AIR 1958 Mad 423. Subbiah v. Ramanathan (1957) 70 LW 989. and Kamalam v. Rama Rao : (1969)1MLJ344 . that notwithstanding the Court being under no obligation to estimate the value of the property it would be desirable, and even necessary, for the Court to make its own valuation of the property and fix the upset price as, otherwise, the auction may turn out to be a Dutch auction and the judgment-debtor would be the loser in the bargain. As making an estimate of the value of the property by the Court was a matter of discretion for the Court, Ismail, J., (as he then was), held in B Susila v. Saraswathi Ammal : AIR1970Mad357 . that the fixation of the upset price and any redaction of it subsequently, was in the nature of an administrative action and therefore, notice need not be given to the judgment-debtor before the Court reduced the upset price. Then came to be Incorporated, Clause (d-1) in this State, and a duty was cast on the Court to fix the upset price and mention that also in the proclamation of sale besides the valuations given by the decree-holder and the judgment-debtor. The fixation of upset price, therefore, became a judicial act and consequently, the requisite formalities had to be observed by the Court before reducing the upset price, viz., it had to give notice to the judgment-debtor and hear him, if be cared to appear, before reducing the upset price. Thus, it may be seen that even before the introduction of Clause (d-1) this Court had never doubted the powers of an executing Court to make its own estimate of the value of the property if deemed fit and include it in the sale proclamation. What has now to be looked into is whether by reason of the amendment brought about to Rule 66 by Act CIV of 1976, particularly by the introduction of the second proviso, the power of the executing Court 'to enter in the proclamation of sale its own estimate of the value of the property' has been taken away.

26. Before we go into that question, we must point out the difference between the value of a property and the upset price for a property brought for sale in Court auction. The word 'value' means as follows : 'to estimate or appraise as being worth a specified sum or amount; to estimate the value of goods, property etc; to appraise in respect of value, to estimate or regard as having a certain value or worth.' (Vide Shorter Oxford Dictionary (IIIustrative), Volume 2). On the other hand, the term 'upset', in relation to price, means as follows : 'stated as the lowest sum for which property exposed to auction will be sold : named as the sum from which bidding may start.' (Vide : Shorter Oxford Dictionary, (IIIustrative), Vol, 2). The same term means' according to the Concise Oxford Dictionary (III Edn.), 'lowest selling price of property in auction; reserve price' and, according to the Chamber's Twentieth Century Dictionary, 'the lowest that will be accepted, at which bidding is started.' From the meanings given above, it may be seen that the words, 'value' and 'upset price' are not synonymous, but have entirely different meanings. Un fortunately, this distinction has not been noticed, and in several cases, the word 'value' has been used with reference to upset price. The misuse of the word has afforded scope for the decree-holders in certain cases to contend that the Court must exercise its powers and give its own value of the property, meaning there by that the Court must fix an upset price for the property, and the judgment-debtors in certain cases, to contend that the Court had no power to fix the upset price meaning thereby that the Court had no authority to make its estimate of the value of the property and include it in the sale proclamation.

27. The word, 'upset price' means reserve price. Auction sales could be of two kinds, i. e, without reserve or subject to a reserve price, In the olden days in England, puffers were employed in order to prevent a sale at an undervalue. The common law did not approve the engagement of puffers while the Courts of equity gave limited recognition to the employment of puffers. But, eventually by enacting the Sale of Land by Auction Act, 1867, the system of employing puffers was done away with. The following passage occurring in Williams on Title (Third Edition), at page 101, throws light on the matter:

Reserve price : A sale by auction may be either 'without reserve' or subject to a reserve price; but it must be clearly stated in the particulars or the conditions whether or not the sale is subject to a reserve price. If it is subject to a reserve price, it will also be necessary to reserve a right to bid, but that is better reserved as a separate right. The common law appears to have been a little severe on auctions, and did not allow the employment of a puffer i. e., a person to bid in order to prevent a sale at an undervalue. Equity, on the other hand, allowed the employment of one puffer unless the sale was expressly stated to be without reserve; but a dispute arising as to the precise rule in equity, the Sale of Land by Auction Act, 1867, was passed, and the common law rule prevailed in all cases. The result is that now the particulars or the conditions must state whether or not the sale is without reserve or whether a right to bid is reserved.

28. Bearing in mind this distinction between the value of a property and the fixation of upset or reserve price for a property brought for sale in Court auction, lot us examine the contention of the petitioners that the second proviso to Rule (e) contains an express prohibition on the Court from estimating the value of the property and including it as a relevant particular in the proclamation of sale.

29. In the objects and reasons given for enacting Act CIV of 1976, Clause 75, Sub-clause (xxvi) relating to the amendment to Rule 66 of Order 21 reads as follows:

Certain difficulties have been caused on account of the mistake occurring in the estimated value of the property as stated in the proclamation of sale. Rule 66 is being amended to provide that the Court should state merely the value estimated by the parties and should not vouch for the accuracy of such value.

We are not taking into aid the statement of objects and reasons for construing the words found in the second proviso, but are only referring to it to set out the back-drop in which the amendment was made. In this connection, we may refer to the ratio in two cases setting out the circumstances in which a reference could be made with advantage to the statement of objects and reasons appended to a Bill. The first is Subramanian v. Raman ILR (1967) 2 Mad 177, 195 : (1967)2 MLJ 99 : ALR 1987 Mad 232. where it is stated as follows:

The objects and reasons may or may not correspond to the objective which the majority of members had in view when they passed it into law. But the statement of objects and reasons set out the circumstances prevalent at the time of the introduction of the Bill, a back-drop that could high-light ambiguous expressions in the Act.

The other case is Sale Trustee, Loka Sikshana Trust v. Commissioner of Income-tax : [1975]101ITR234(SC) . wherein the following observations of the Supreme Court in Anandji Haridas and Co. (Pvt.) Limited v. Engineering Mazdoor Sangh : (1975)IILLJ12SC . have been extracted:

As a general principle of interpretation where the words of a statute are plain precise and unambiguous, the intention of the Legislature is to be gathered from the language of the statute itself and no external evidence such as Parliamentary Debates, Reports of the Committees of the Legislature or even the statement made by the Minister on the introduction of a measure or by the framers of the Act is admissible to construe those words. It is only where a statute is not exhaustive or where its language is ambiguous, uncertain, clouded or susceptible of more than one meaning or shades of meaning, that external evidence as to the evils, if any, which the statute was intended to remedy, or of the circumstances which led to the passing of the statute may be looked into for the purpose of ascertaining the object which the Legislature had in view in using the words in question.

It is apposite to mention here that before Act CIV of 1976 was passed, some of the High Courts in India, such as the Orissa High Court and the Patna High Court, had incorporated a proviso as under to Sub-Clause (e) of Sub-rule (2) of Rule 66:

Provided that no estimate of the value of the property, other than those, if any, made by the decree-holder and judgment-debtor respectively together with a statement that the Court does not vouch for the accuracy of either, shall be inserted in the sale proclamation.

(Italics supplied).

Viewed in this background, it may be perceived that the Legislature only wanted to ensure that the Court did not vouch for the accuracy of any value of the property entered in the sale proclamation, and not that the Court should not fix an upset price of reserve price at which the auction should commence for the sale of the property.

30. In the course of his arguments, Mr. Natarajan invited our attention to the pronouncement of the Supreme Court in Gajadhar Prasad v. Bhakta Ratan : [1974]1SCR372 . and argued that the dictum in that case lends force to his contentions. The relevant portion referred to by the counsel reads as follows:

A review of the authorities as well on the amendments to Rule 66(2) (c) make it abundantly clear that the Court, when stating the estimated value of the property to be sold, must not accept merely the ipsodixit of one side. It is certainly not necessary for it to state its own estimate. If this were required, it may, to be fair, necessitate insertion of something like a summary of a judicially considered order, giving its grounds, in the sale proclamation, which may confuse biddars. It may also be quite misleading if the Court's estimate is erroneous. Moreover, Rule 66(2) (e) requires the Court to state only the facts it considers material for a purchaser to Judge the value and nature of the property himself. Hence, the purchaser should be left to Judge the value for himself.

We do not find any support for the petitioners' contention in the decision referred to above. That was a case where the Court had failed to perform its duty under Order 21, Rule 66(2) (e) viz, giving the material and relevant particulars about the property. Even the area of the compound in which the two bungalows brought for sale in that case were situated, was not mentioned in the sale proclamation. There was also no mention whether the bungalows which were separately valued were to be sold as one or two items of property. The sale proclamation contained several such irregularities. Moreover, the executing Court had practically accepted, as its own valuation, without indicating reasonable grounds for its preference, whatever the decree-holders had asserted about the value of the property. The Court did not even bother to consider the objections raised by the judgment-debtors. It was in such circumstances, the Supreme Court laid down how a Court should fulfil its obligation under Clause (a) of Rule 66(2). The decision does not lay down that the Court is debarred from making its own estimate of the value of the property or fixing the upset price at which the property should be sold.

31. We have already pointed out the difference in meaning between the words 'value' and 'upset price or reserve price'. What the proviso in question lays down is that in a proclamation of sale the estimate of the property, as given by either or both the parties, should necessarily find a place, But, no duty was cast on the Court to enter in the sale proclamation its own estimate of the value of the property. The reason for the Legislature having worded the proviso in the manner done is not far off to see. The Court making an estimate of the value of the property and entering it is the proclamation of sale would become necessary only when an upset price has to be fixed for the property. Since the Legislature has now made it obligatory that the estimate of the value of the property, as given by either or both the parties, should necessarily find a place in the proclamation of sale, the need for the Court to fix an upset price may not arise in all cases. The procedure indicated by P. N. Ramaswami, J., in Yellappa Naidu v. Venugopal Naidu (1957) 70 L.W. 815 : A.I.R. 1958 Mad. 423. can be resorted to, i.e., the sale will have to commence at the higher price given by the judgment-debtor and, in the absence of bidders, the price will have to be progressively brought down till it teaches the figure given by the decree-holder and again raised up, depending upon the availability of bidders. If, in spite of such a procedure, the sale does not take place for want of bidders, then it is open to the Court, on the application of the decree-holder, to fix as upset price for the property at a rate as near as the property would be worth in the estimation of the Court. If, even then, the sale does not take place, the decree-holder can move the executing Court to reduce the upset price. It will be open to the executing Court to reduce the upset price or not, depending upon the circumstances of the case, and, if a reduction is to be made, to decide the extent to which the upset price should be reduced. It is only for these reasons, the Legislature should have enacted the proviso in two parts, the first part relating to the discretionary power of the Court to give its own estimate of the value of the property in the sale proclamation and the second part relating to the obligation of the Court to include in the sale proclamation the estimate, if any, given by either or both the parties. The first part of the proviso is in the negative and the second part, in the affirmative. The significance of the manner of drafting cannot be missed. The affirmative is used to give a mandate and the negative is used only to emphasize that the Court is not under a duty to enter its own estimate in the proclamation of sale. If it was the intention of the Legislature that the Court should, in no circumstances, give its own estimate of the value of the property, then the wording of the first part of the proviso would have been entirely different. The Legislature would have clearly mentioned that the Court was precluded from making its own estimate of the value of the property and that the proclamation shall not include the estimate, if any, made by Court.

32. In some cases, the Court may feel called upon, in the interest of justice, to enter in the proclamation of sale its own estimate of the value of the property. Take for example, a case where the judgment-debtor, for some reason, has not given his value of the property and only the decree holder has given his value and that value is grossly low, The proclamation of sale would then contain only the value as given by the decree-holder, and if the property is brought for sale, the bidding at the auction can start only at the rate given by the decree holder and the property may be knocked off at the value given by the decree-holder or for a slightly higher amount. The result will be that the property may get sold for a very low price and the judgment-debtor would be the loser in the bargain. To avoid such a situation, the Court can certainly exercise its discretionary power under the first limb of the proviso and give its own estimate of the value of the property in the sale proclamation.

33. When property is sold in Court-auction the Court does not merely act as an auctioneer, but has also a duty to protect the interests of the judgment-debtor as well as the decree-holder. It is with reference to this peculiar role, Rule 199(2) of the Civil Rules of Practice has been framed. The said rule is in the following terms:

Upset price : --In cases in which the Court may consider that the applicant (decree-holder) should not be allowed to bid for less than a sum to be fixed, it shall be competent to the Court to give leave to bid at the sale, only on condition that the applicant (decree holder's) bid shall not be less than the amount so fixed by the Court, which amount shall, as far as practicable be determined with reference to the probable market value of the property, or of the lot or lots into which the property is divided for sale.

When the decree-holder seeks leave of Court to bid at the auction, the Court may deem it necessary to fix the upset price of the property with reference to the probable market value of the property or the lots into which it may be divided for sale. It would be strange logic to say that the Court should step in to safeguard the interests of the judgment debtor only in those cases where the decree-holder seeks leave of Court to bid at the auction and at other times, the Court need not concern itself with fixing an upset price for the property. If such a narrow view is taken, then the decree-holder can defeat the object underlying the rule by putting up a benamidar as the purchaser. Even as in the case of judgment-debtor, the Court has also to safeguard the right of the decree-holder by seeing to it that execution proceedings do not become abortive for want of bidders for purchasing the property at the highly boosted up rate given by the judgment-debtor.

34. We are therefore of opinion that the Court's power to fix an upset price for the property, which includes within it a right to reduce the upset price whenever necessary, has not only been available to the Court all through, but such a right is an irremovable one, and the said right has not been impinged in the least by the second proviso introduced by Act CIV of 1976. Of course, as pointed out in B. Susila v. Saraswathi Ammal : AIR1970Mad357 . when the Court fixes an upset price, the Court is not determining the rights of any of the parties before it, and the fixation of the upset price is only for facilitating the conduct of the sale and, at the same time, safeguarding the interests of the judgment-debtor by fixing a reserve price. Notwithstanding the fixation of the upset price and notwithstanding the fact that a bidder has offered an amount higher than the upset price it will still be open to the judgment-debtor to approach the executing Court and adduce proof that the property has been sold for a low price on account of some material irregularity or fraud in the publication or conduct of the sale and have the sale set aside.

35. The reference will stand answered accordingly,, In the light of our conclusion, it follows that the view taken by Sathiadev, J., in Kannaiyan and Anr. v. Chidambaram Finance Corporation, Chidambaram C.R.P. No. 2791 of 1979 dated 9th January, 1980(1980) T.N.L.J. 33. Bathe Gounder v. K. R. R. Sharmasubramania Iyer C.R.P. No. 1277 of 1978 dated 27th June 1878. and Kamadhenu Buildings and Anr. v. Secretary, Guruvayvur Temple Renovation Committee, Kerala C.R.P. No. 1127 of 1978 dated 27th July.1978 cannot be held a sustainable one, and therefore, it will stand overruled. The view taken by Ramanujam, J., in M. Ramaswami Gounder and Ors. v. R. K. Subramania Iyer C.R.P. No. 163 of 1979 dated 12th February,1979 and Nainar Sundaram, J, in K. A. Raju v. N. Sivaprakasam and Ors. C.R.P. No. 1536 of 1976 dated 31st August,1979 will stand approved.

36. In the instant case, the Court had already fixed the upset price and since no bidders were available, it has reduced the upset price for lots I and II. As we have held that the executing Court has the power to fix the upset price for sale of property and such power will include within it the power to reduce the upset price as well, the Court below has not committed any error of exercising a jurisdiction not vested in it or committed any illegality or irregularity in the exercise of jurisdiction vested in it. The revision will, therefore, stand dismissed, but with no order as to costs.


Save Judgments// Add Notes // Store Search Result sets // Organizer Client Files //