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The Allied Industries Corporation Through Its Proprietrix P.G. Sivakami and anr. Vs. the Syndicate Bank, Through Its Agent - Court Judgment

LegalCrystal Citation
SubjectCommercial
CourtChennai High Court
Decided On
Reported in(1972)1MLJ172
AppellantThe Allied Industries Corporation Through Its Proprietrix P.G. Sivakami and anr.
RespondentThe Syndicate Bank, Through Its Agent
Cases ReferredRamathal v. Nagarathinammal
Excerpt:
- .....the decree-holder-bank. e.a. no. 1118 of 1969 was filed on 2nd december, 1969, under order 21, rule 90, civil procedure code, to set aside the sale held on 3rd november, 1969. e.a. no. 1117 of 1969 was filed to dispense with the security contemplated by the proviso to order 21, rule 90, civil procedure code, on the ground that the hypotheca constituted sufficient security. e.a. no. 401 of 1970 was filed on 31st march, 1970 under order 21, rule 90, civil procedure code, to set aside the sale of items which had taken place on 16th february, 1970. e.a. no. 400 of 1970 was filed to dispense with the security envisaged under the proviso to order 21. rule 90, the ground of the application again being that the hypotheca constituted sufficient security. in passing, it should be mentioned.....
Judgment:

K.S. Venkataraman, J.

1. These appeals are against orders of dismissal of the applications filed by the judgment-debtors under Order 21, Rule 9o, Civil Procedure Code, to set aside two Court auction sales of different portions of the hypotheca held on 3rd November, 1969 and 16th February, 1970. The hypotheca consists of eight items. Three of them, items 1, 2 and 8 Were sold on 3rd November, 1969, for the upset price fixed by Court, namely, Rs. 9,550 and the decree-holder the Syndicate Bank was itself the auction-purchaser. It may be taken at present that the Syndicate Bank obtained leave to bid. The other sale was of items 3 to 7. They were sold on 16th December, 1970 for Rs. 2,750 the upset price. The purchaser was again the decree-holder-Bank. E.A. No. 1118 of 1969 was filed on 2nd December, 1969, under Order 21, Rule 90, Civil Procedure Code, to set aside the sale held on 3rd November, 1969. E.A. No. 1117 of 1969 was filed to dispense with the security contemplated by the proviso to Order 21, Rule 90, Civil Procedure Code, on the ground that the hypotheca constituted sufficient security. E.A. No. 401 of 1970 was filed on 31st March, 1970 under Order 21, Rule 90, Civil Procedure Code, to set aside the sale of items which had taken place on 16th February, 1970. E.A. No. 400 of 1970 Was filed to dispense with the security envisaged under the proviso to Order 21. Rule 90, the ground of the application again being that the hypotheca constituted sufficient security. In passing, it should be mentioned that items 1, 2 and 8 are punja lands of an extent 10 acres 2 cents and it is urged on behalf of the judgment-debtors that they are adjoining the site of the Aerodrome in Madurai, that they are fit for being converted into house sites and that, therefore, they are very valuable. Item 3 to 7 are single crop wet lands of an extent of 2 acres 87 cents. The main grievance of the judgment-debtors is that the properties are much more valuable than the sums for which they were sold to the decree-holder. Of course, they also allege some irregularities in the conduct of the sales.

2. It is seen that in E.A. No. 1117 of 1970 the following order was passed on nth August, 1970:

Heard. Rs. 80,000 and odd is due to the decree-holder. The mortgage was for Rs. 62,000 in 1966. The properties have been sold for Rs. 25,790. The petitioner is directed to furnish security for Rs. 25,000 in this petition by 3-9.

In E.A. No. 1117 of 1969 the following further order was passed on 3rd September, 1970.

Security not furnished. Dismissed.

A consequential order dismissing E.A. No. 1118 of 1969 was passed on the same date.

In E.A. No. 400 of 1970 the following order was passed on nth August, 1970:

Heard. The petitioner is directed to furnish security for Rs. 25,000 in this petition by 3-9.

The following further order was passed in E.A. No. 400 of 1970 on 3rd September, 1970;

Security not furnished Dismissed

A consequential order dismissing E.A. No. 4oi of 1970 was passed on the same date. CM.A. No. 393 of 1970 is against the order dismissing E.A. No. n 18 of 1969 and CM.A. No. 394 of 1970, against the order dismissing E.A. No. 401 of 1970.

3. Three similar points have been raised in each appeal by Mr. T.R. Mani, the teamed Counsel for the appellants. The Points raised in CM. A. No. 393 of 1970 are; (1) Because the hypotheca constituted sufficient security, the executing Court should have exercised its discretion dispensing, with security (2) If the executing Court still wanted to demand security, the security under the proviso should have been the lesser of the amount mentioned in the sale warrant (about Rs. 80,000) and the amount realised by the sale, namely, Rs. 9,500. (3) The executing Court should have called upon the judgment-debtors to furnish security only before admitting the application. Here the executing Court took the application on file and ordered notice on 15th December, 1969. The order calling upon the judgment-debtors to furnish security was passed on a later date after the application was admitted and after the notice was served on the auction-purchaser.

4. In my opinion, all the three contentions are sound so far as this case is concerned. On the first point Mr. T.R. Mani relies on an unreported judgment of Ramachandra Iyer, C.J. and Ananta-narayanan, J., the relevant portion of which has been extracted by Ismail, J. in Saradambal v. Arunachalam : AIR1969Mad324 . The extract runs thus:

We are satisfied that on the merits of the case the lower Court should not have demanded security from the appellant. The decree was on the basis of the mortgage. There was; therefore ample security for the amount due thereunder, to require the judgment-debtor or his representative to-give security once over for the amount covered by the decree. In our opinion,, the terms of the proviso to Order 21,. Rule 90, Civil Procedure Code, which requires security to be furnished either in respect of the amount mentioned in the sale proclamation, or in respect of the sale amount would be inappropriate in the case of a mortgage decree, as there is already a subsisting security for the decree amount. It may be that in certain cases on account of the delaying tactics adopted by the judgment-debtor, the existing security might depreciate and in such event it might be considered equitable that there should be a power in Court to demand security for the deficiency viz., between the amount realised at the sale and the present value of the property. But there is no provision in Order 21, Rule 90, Civil Procedure Code, to cover a case of such deficiency in security. In the case of a mortgage decree it will be apparent from the above discussion that a Court can be said to be exercising its jurisdiction, wisely if it does not demand security under the proviso to Order 21, Rule 90, Civil Procedure Code.

Prima facie it seems that the punja lands of an extent of 10 acres 2 cents being near the Aerodrome, are themselves sufficient to cover the decretal amount, though it is true that in spite of three months time being granted to enable the judgment-debtors to raise money before the sale took place, no purchasers could be, found. That is explained away by Mr. T.R. Mani by stating that the intending purchasers apprehended that the site might be acquired for extending the Aerodrome. He submits that the apprehension has now vanished.

5. On the second pointy the provison, itself is clear that it is only for the lesser of the two amounts, namely, the amount; mentioned in the sale warrant and the: sale amount realised, the security can be asked. There is, therefore, no jurisdiction for the learned Subordinate Judge to demand security for Rs. 25,000 in each of the two cases.

6. There is also substance in the third point as is clear from the proviso itself. See also the decisions Chidambaram Pandaram v. Lakshminarayana Chettiar : AIR1941Mad652 , and Vaidyanatha Ayyar v. The Indian Bank Ltd. (1955) ii M.L.J. 99. The orders dismissing E.A. Nos. 1118 of 1969 and 401 of 1970 are only consequential and are liable to be and are hereby set aside. The executing Court is directed to restore the two applications in E.A. Nos. 1118 of 1969 and 401 of 1970 to its file and dispose of them according to law. It follows that the order of confirmation which has been passed by the lower Court will automatically stand vacated--see Ramathal v. Nagarathinammal (1967) 1 M.L.J. 260 : I.L.R. (1968) Mad. 42 : 80 L.W. 124. The civil miscellaneous appeals are allowed. There will be no order as to costs.

7. Mr. Nayak, the learned Counsel for the respondent, submits that pending disposal of the appeals, the appellants obtained stay of further proceedings on furnishing security for Rs. 12,000. Mr. Nayak is not sure whether the amount was deposited or only security for the amount has been furnished. He wants that, if the amount has been deposited, the decree-holder Bank should be given liberty to withdraw the amount and appropriate the same towards the decree amount, because it was on that condition the possession could not be taken by the Bank. The Bank is given liberty to withdraw the amount and adjust it towards the decree amount in case the amount has been deposited. But if security has been furnished, no such question arises.


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