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Pran Singh and ors. Vs. Janardan Singh and ors. - Court Judgment

LegalCrystal Citation
Decided On
Reported in13Ind.Cas.337
AppellantPran Singh and ors.
RespondentJanardan Singh and ors.
Cases ReferredVenkatasubbaraya v. Zemindar of Karvetenagar
civil procedure code (act v of 1908), order xxi, rules 66, 90 - notice to judgment-debtor to settle details in sale proclamation--effect of non-objection by judgment-debtor--judicial sale not to be assailed on technical grounds--sale to be conducted by fair methods--civil procedure code (act xiv of 1882), section 291--hour of sale to be inserted in sale proclamation--non-insertion, material irregularity. - held in march 1909. the objection of the judgment-debtors was, however, not heeded, and the sale-proclamation was ordered to issue with the statement of values as suggested by the decree-holder on the basis of the road-cess returns. an appeal to this court against that order was dismissed on the 13th december 1909. the sale took place on the 21st and 22nd february 1910. the decree-holder was granted leave to bid at the sale 'on fair price'. at the sale, the decree-holder offered bids through his pleader, and his principal contestant was one ram charan bajpai. in the case of the first property, the pleader for the decree-holder does not appear to have offered any bid, and the contest was limited to ram charan and four other persons. in the case of the fourth property, one dilkeswar.....

1. This appeal is directed against an order by which the Court below has dismissed an application of the judgment-debtor to set aside a sale of six properties in execution of a mortgage-decree. The decree was made by this Court on the 2nd December 1908, in affirmance of the decree of the original Court, dated the 29th June 1907. The first application for execution was made on the 28th March 1908, on the basis of the decree of the Court of first instance, even before it had been confirmed by this Court. That application was dismissed for default on the 15th September 1908. The second application was presented on the 6th February 1909. The sale was proclaimed and for five of the properties the decree-holder was the highest bidder at the sale which took place from the 15th to the 18th March 1909. Before the sale could be completed, however, the decree-holder withdrew on the ground recorded in the bid-sheet and signed by his Pleader that 'the decree-holder does not want to get the properties sold fearing irregularity'. The execution proceeding consequently fell through. On the 21st September 1909, the decree-holder made the third application for execution. In the course of the proceedings so instituted, the Subordinate Judge, on the 11th October 1909, determined the upset values of the six properties under Order XXI, Rule 66, Sub-rule 2(e), of the Code of 1908. The judgment-debtors were represented at this summary inquiry and protested against the values suggested by the decree-holder as too low; in fact, they were in some cases lower than the prices offered by the decree-holder himself at the sale held in March 1909. The objection of the judgment-debtors was, however, not heeded, and the sale-proclamation was ordered to issue with the statement of values as suggested by the decree-holder on the basis of the Road-Cess Returns. An appeal to this Court against that order was dismissed on the 13th December 1909. The sale took place on the 21st and 22nd February 1910. The decree-holder was granted leave to bid at the sale 'on fair price'. At the sale, the decree-holder offered bids through his Pleader, and his principal contestant was one Ram Charan Bajpai. In the case of the first property, the Pleader for the decree-holder does not appear to have offered any bid, and the contest was limited to Ram Charan and four other persons. In the case of the fourth property, one Dilkeswar Singh appears to have offered two bids at an early stage, but he retired from the contest later on. On the face of the papers, therefore, excepting the case of the first property, the contest was between the decree-holder and Ram Charn, Ram Charn succeeded in purchasing all the properties, and on the 25th February 1910, his bids were accepted and the payment of the balance of the purchase-money sanctioned. On the 8th March 1910, however, Ram Charn appeared and stated that he had made the purchase for one Askaran Baid who also appeared and prayed for leave to deposit the balance of the purchase-money. The application was granted, and certificate of sale was directed to be delivered to Askaran Baid. On the 2lst March 1910, the judgment-debtors applied to have the sale set aside under Rule 90 of Order XXI of the Code of 1908. Various objections were taken to the validity of the sale, the substance of which was that the decree-holder had himself purchased the properties benami for a grossly inadequate price, and, with a view to enable him to do so, had committed fraud and various irregularities. One of the irregularities mentioned was that the decree-holder had deliberately undervalued the properties for the purposes of the execution-sale: another was that the sale proclamation had not been duly served, and a third objection was that the sale had been irregularly adjourned without specification of the hour at which the sale was to take place. The Subordinate Judge, on the 18th August 1910, overruled all the objections urged before him and confirmed the sale. The present appeal was lodged by the judgment-debtors on the 21st September 1910, and has been contested by the decree-holder who has on the 4th November 1910, taken a conveyance from Askaran Baid; the conveyance states, we are informed, that the consideration is Rs. 1,500 in excess of the price paid at the sale. On behalf of the appellants, the validity of the sale has been impeached on several grounds, of which two may be considered as specially important, namely, first, that the properties were deliberately undervalued by the decree-holder for the purposes of the sale proclamation, that he himself has thereby succeeded in purchasing the properties for a grossly inadequate sum, and that he misled the Court by setting up a fictitious bidder to indicate that there was a keen contest and the purchase was made by a stranger, whereas there was, as a matter of fact, no contest at all, and the properties were taken by the decree-holder in the name of the fictitious bidder; and secondly, that the adjournment of the sale on the 21st February, without specification of the hour at which the sale was to take place the next day, was a material irregularity calculated to mislead intending bidders.

2. In so far as the first of these contentions is concerned, there can, in our opinion, be no room for doubt that the decree-holder was the real purchaser at the execution-sale impeached by the judgment-debtors. It is not disputed that Ram Charan Bajpai, who was present at the sale, successfully offered the bids and deposited the earnest-money, was not the real purchaser; that is the common case of both the parties; who then was the real purchaser? The decree-holder asserts that it was Askaran Baid, who purchased the properties and paid for them. The judgment-debtors assert, on the other hand, that he is quite as much a shadow as Ram Charan Bajpai, and that both are persons set up by the decree-holder to enable him to seize properties of considerable value at the smallest possible price. This Askaran Baid, has not taken the remotest interest in the present proceedings, and has made no endeavour to sustain the validity of the sale; though he was a party to the proceedings, and though the judgment-debtors repeatedly asserted that he was not the real purchaser, he has not even come forward to pledge his oath in support of the allegation that he was the person beneficially interested. Nor has any plausible explanation been attempted as to why Askaran Baid, who had on the 22nd February 1910 purchased the properties for one lac, six hundred rupees after an apparently keen contest with the decree-holder, should on the 4th November 1910, transfer the properties to the decree-holder for a nominal profit of Rs. 1,500. This sum would not cover even a small fraction of interest on the purchase-money for the interval at the current rate, whether that rate be taken to be twelve per cent, or six per cent, per annum. In our opinion, the surrounding circumstances are conclusive that it is the decree-holder who was the real purchaser at the execution-sale, and this aspect of the matter has, indeed, not been seriously controverted in this Court. The position is materially strengthened, when we examine the antecedent proceedings. In the second execution, proceedings, as we have already stated, the decree-holder had openly offered the highest bid in the case of each of the five properties sold on that occasion. We tabulate below the values mentioned by the decree-holder in the sal6 proclamation then issued, and the bids offered by him at the sale. (The properties are numbered as in the present proceeding),-

---------------------------------------------------Value in sale pro- Bid of decree-No. clamation. holder.---------------------------------------------------1 7,000 7,0002 25,000 29,1003 5,000 32,1004 8,500 32,1005 8,000 17,000---------------------------------------------------

3. The bidder who principally entered into a contest with the decree-holder on that occasion, was one Dilkeswar Singh, who is said to be a relation of one of the judgment-debtors. On behalf of the respondents, it has been suggested in this Court that the decree-holder withdrew his bids when he discovered that Dilkeswar was a puffer set up by the judgment-debtors. There is no foundation whatever for this suggestion. In the first place, the ground then assigned by the decree-holder for not adhering to his bids in that proceeding was that he was afraid of irregularity. The suggestion now made that he had been misled by Dilkeswar is clearly an afterthought. In the second place, the decree-holder does not come into Court to pledge his oath in support of the theory he now sets up. In the third place, the theory itself is futile and will not bear examination for a moment. The decree-holder was not a stranger to the properties; he had accepted them as security for the money advanced by him, and when he did so, he may be assumed, like any reasonably prudent man, to have made an estimate of their value. He had deliberately caused to be inserted in the sale proclamation what, he thought, was the proper value of the properties. We are, therefore, not prepared to adopt the suggestion now made, but not supported by any evidence, that, because the decree-holder imagined Dilkeswar Singh to be a real bidder, be indiscreetly offered bids to the extent of Rs. 32, 100, Rs. 32,100 and Rs. 17,000 for properties valued by himself in the sale-proclamation at Rs. 5,000, Rs. 8,500, and Rs. 8,000 respectively. In our opinion, the bids offered by the decree-holder at the sale held from the 15th to the 18th March 1909, furnish strong evidence as against him as to the minimum value of the properties, and the presumption is not rebutted by an idle explanation, not 6ven remotely suggested at the time but invented subsequently. The learned Vakil for the appellants has suggested a possible explanation as to why the decree-holder withdrew from the bids before their acceptance. It is not necessary for us to speculate as to his real motives, but the theory looks plausible that if Dilkeswar had no money for purchase of i the properties, and if the decree-holder discovered it before the acceptance of his bids, he may have repented that he had offered such high bids and have at once decided to withdraw, with a view to take his chance and capture the properties on more favourable terms on a future occasion. But, as we have said, it is needless to find out the true motive which guided the conduct of the decree-holder on that occasion. The fact temains that he deliberately offered to take the properties at certain prices and that the explanation he has now suggested with a view to nullify the effect of this evidence, is wholly inadequate.

4. We shall now proceed to examine the conduct of the decree-holder in the present proceedings, which have been rendered necessary by the withdrawal of his bids on the former occasion, In spite of the protest of the judgment-debtors, he insists upon the insertion of certain figures in the sale proclamation, as representing the value of the several properties. These sums are calculated on the basis of the assets in the Road-Cess Returns, on which much reliance is placed, because the judgment-debtors admit that the Cess Returns were filed on behalf of some amongst themselves or their pre decessors. That the Road-Cess Returns are not always a reliable guide in such matters, is well known; that they have proved very misleading in the present case, is beyond dispute. The decree-holder, who relied upon the Cess Returns, has himself offered much higher values than those deducible from the figures in the Road-Cess Returns. The truth is that the inquiry into the question of value before the Subordinate Judge was of a very summary character, and he too readily accepted the explanation offered by the decree-holder with a view to minimise the effect of the evidence of his previous bids. We tabulate below the values of the several properties as fixed by the Court at the instance of the decree-holder, and the bids as offered by the decree-holder himself through his benamdars Ram Charan Bajpai or Askaran Baid.

---------------------------------------------------Value in sale pro- No. clamation Price at the sale.---------------------------------------------------1 7,000 2,7002 25,000 27,5003 8,000 20,1004 17,000 29,5005 4,000 4,7006 13,000 16,100---------------------------------------------------

5. The net result is that the five properties, for which the decree-holder, on the 15th March 1909, offered one lac, seventeen thousand, three hundred rupees, are valued as his instance by the Court at Rs. 70,000 and are purchased by him benami, on the 22nd February 1910, for Rs. 95,900. The case of the third property is remarkable. In 1909, it is valued by the decree-holder in the said proclamation at Rs. 5,000, He offers a bid for Rs. 32,100. In 1910 he gets the Court to value it for the sale proclamation at Rs. 8,000, and in the sale which follows, purchases it for Rs. 20,100. The case of the fourth property is only a little less striking. In the sale proclamation of 1909, it is valued at Rs. 8,500, though the decree-holder is able to offer a bid of Rs. 32,100. For the sale proclamation of 1910, he successfully insists that it should be valued at only Rs. 17,000. At the sale which follows, he purchases it benami for Rs. 29,500. In the case of two other properties, the second and sixth, there is similar divergence, but not of an equally pronounced character. As regards the first property, it is to be observed that it was valued for the purposes of the sale proclamation at Rs. 7,000 both in 1909 and in 1910. But, while on the former occasion the decree-holder offered a bid of Rs. 7.000, on the present occasion, he acquires it benami for Rs. 2,700. Upon a careful scrutiny of the proceedings, two facts, therefore, emerge as firmly established, namely, first, that the value of the properties in the sale proclamation has been grossly and deliberately understated by the decree-holder, and secondly, that he has set up a fictitious bidder to create the impression that the several properties have been knocked down to a stranger to the proceedings after a keen contest in which he has been defeated; the truth is that all this is a blind, elaborately devised and successfully carried out; except in the case of the first property, the history of the antecedents of the bidders whereof is not known, in every other instance, the decree-holder himself has purchased the property without any contest, and for such sum as he has chosen to offer; the sum, in five in stances, has been less than what he had offered on the previous occasion; in two of the instances, the price paid is remarkably inadequate in comparison with the price previously offered. The question now arises whether the decree-holder is entitled to invite the Court to confirm the sale under these circumstances.

6. In so far as the under-valuation of the properties is concerned, reliance has been placed by the appellants upon the decision of their Lordships of the Judicial Committee in Saadatmand Khan v. Phool Koer 25 I.A. 146 : 20 A. 412 : 2 C.W.N. 550 in support of the proposition that as the understatement was calculated to mislead bidders, and to prevent them from offering adequate prices or from bidding at all, and as the sale has resulted in an altogether inadequate price, it is liable to be set aside. The soundness of this contention cannot be disputed, though it may be conceded that the case mentioned on behalf of the respondents, Abdul Kashem v. Benode Lal Dhone 12 C.W.N. 757, appears to have overlooked the decision of the Judicial Committee which was probably not brought to the notice of the learned Judges; it may be added that this Court has, on more than one occasion, refused to follow the latter case as inconsistent with the exposition of the law on the subject by the Judicial Committee. Shivadurga v. Rai Mohan 15 C.W.N. 577 : 10 Ind. Cas. 475 and Rudranund v. Pirthi Chand 14 C.L.J. 346 : 11 Ind. Cas. 438. On behalf of the respondents, it has, however, been contended, that the principle of the decision in Saadatmand Khan v. Phool Koer 25 I.A. 146 : 20 A. 412 : 2 C.W.N. 550, can no longer be treated as good law, because, under Order XXI, Rule 66, Sub-rule (2) of the Code of 1908, the judgment-debtor is entitled to notice before the sale proclamation is drawn up. In our opinion, there is no substance in this contention. Notice to the judgment-debtor only enables him to put his case before the Court, but if, as here, the decree-holder insists that a much smaller valuation should be inserted in the sale proclamation than what is alleged by the judgment-debtor, and the Court accepts his view of the matter, the decree-holder proceeds to the sale at his own risk. The learned Vakil for the respondents warmly repudiated, the position that the entry of the valuation in the sale proclamation can, in any way, conclude the judgment-debtor in proceedings for reversal of the sale under Order XXI, Rule 90. The inquiry under Rule 66 is intended to be of the most summary character, and may possibly be described as 'a matter of administration ' in the words of Lord Macnaghten in Ko Tho v. Ma Hnin 14 C.L.J. 241 : 15 C.W.N. 862 : 2 M.W.N. 449 : 13 Bom. L.R. 694 : 38 C. 717 : 8 A.L.J. 1117 : 6 L.B.R. 26 : 4 Bur. L.T. 257 : 11 Ind. Cas. 545 the order of the Subordinate Judge is also not liable to be reviewed on appeal. Deoki Nandan v. Bansi Singh 14 C.L.J. 35 : 16 C.W.N. 124 : 10 Ind. Cas. 371. The true view of the matter is that, under the new Code, the judgment-debtor has notice of the proceeding: he has opportunity to take exception to the statements proposed to be entered in the sale proclamation, but if his objection as to under valuation is not heeded by the decree-holder the latter proceeds with execution, with full knowledge that if he purchases the properties for a small amount, the validity of the sale is sure to be challenged by the judgment-debtor. No doubt if the judgment-debtor, with notice of the proceedings, does not object to the entries in the sale proclamation at that stage, a subsequent objection by him on the ground of inaccuracy or insufficiency of description, is not likely to be entertained by the Court. As Sir Richard Conch observed in Arunachellam v. Arunachellam 15 I.A. 171 : 12 M. 19 it would be very difficult to conduct proceedings in execution by attachment and sale of property, if the judgment-debtor could lie by and afterwards take advantage of mis-description which he knew well, but of which the decree-holder might be perfectly ignorant; he cannot, with notice, allow the sale to proceed without objection and then come forward and say that the whole proceedings were vitiated. Olpherts v. Mahabir Pershad 10 I.A. 25 : 11 C.L.R. 494. This doctrine has obviously no application to a case of this description. The judgment-debtors did not lie by; they have strenuously protested throughout that their properties, which they were willing should be sold for a proper price, were deliberately undervalued, and that such under-statement of value was likely to prejudice them seriously. Their objection has been disregarded; the decree-holder, with full knowledge of the objection, has purchased the properties for prices smaller than those he had himself previously offered. Here, at any rate, we are not concerned with the position of a stranger to the proceedings who has bona fide purchased for value the properties exposed for sale. In our opinion, the proceedings show conclusively that the decree-holder has deliberately understated the values of the properties in the sale proclamation, and that substantial injury has been caused to the judgment-debtors by this material irregularity, whether we accept as 'the true values of the properties the sums previously offered by the decree-holder himself or the much higher figures suggested and sought to be proved on behalf of the judgment-debtors. That this result has been achieved by the decree-holder, not by accident, but by measures carefully pre-concerted becomes manifest when we examine the bearing of the second conclusion of fact mentioned above.

7. We have found that the decree-holder was the real purchaser at the sale, and that Ram Charan Bajpai and Askaran Baid were persons introduced by him to give the sale the appearance of a sale to a stranger after severe contest with the decree-holder. In truth, there was no competition. The object of the device is self-evident. The decree-holder was taking out execution for a very large sum nearly one lac of rupees. He had valued the properties for the purposes of the sale proclamation at only Rs. 74,000. The judgment-debtors had protested against this valuation, and had asserted that the value was over two lacs and seventy-five thousand rupees. If at a sale held, under these circumstances, of properties of considerable value, there were no bidders present, and the decree holder attempted to purchase the properties without any competition, suspicion would at once be aroused, and the Court might very well direct the issue of a fresh sale proclamation to make sure that the sale was duly proclaimed and possible bidders afforded an opportunity to bid at the sale. Recourse to the device of an apparently keen competition consequently became necessary. With respect to the fourth property, for instance, the record shows that Ram Charan Bajpai is supposed to have offered at least twenty successive bids against the decree-holder before the property was knocked down to him; we now know that this contest was all a fiction, and that Ram Charan Bajpai was no other than a representative of the decree-holder himself. It is plain that these fictitious bids, by the interposition of a benamdar, were intended to create the impression that there was a contested sale to a stranger; the device was sue-cessful and effectively misled the Court. Nanda Kumar Saha v. Gobinda Mohan Das 13 C.L.J. 312 : 6 Ind. Cas. 135. We feel no doubt whatever that a sale held under such circumstances ought not to be maintained. It may be conceded that it is of the utmost importance that the validity of judicial sales, properly conducted, should b% supported and should not be allowed to be assailed on technical grounds; at the same time, it is of at least equal importance that the purity of judicial proceedings in connection with execution-sales should be secured to at least a reasonable extent. It is intolerable that a decree-holder should be allowed, as in the case before us, to employ the machinery of the Court to secure for himself at a grossly inadequate price the properties of his judgment-debtors by methods which will not bear serious examination.

8. In the view we take of the first ground urged before us, it is not necessary to examine in detail the second ground mentioned by the learned Vakil for the appellants. We need only say that, as at present advised, we do not see any reason to question the correctness of the view adopted by Mr. Justice Ameer Ali in Bhikari Misra v. Rani Suria Moni 6 C.W.N. 48 namely, that when a sale is adjourned under Section 291 of the Civil Procedure Code of 1882, it is necessary to mention the hour of sale, and its non-specification is a material irregularity. See also Surno Moyee Debi v. Dakhina Ranjan 24 C. 291; Venkatasubbaraya v. Zemindar of Karvetenagar 20 M. 159. It is not necessary, however, to deal with this aspect of the case in further detail. It is also needless to discuss the other points taken in the memorandum of appeal and pressed before UP, or to examine in detail the evidence as to the service of the sale proclamation or the actual value of the properties. We need only say that the evidence upon these points cannot be summarily rejected, and in view of the fact that for five of the properties at least no real bidder was present, except the decree-holder himself, if it were necessary to consider the question of the service of the sale proclamation, the evidence in support of it would require very careful scrutiny.

9. The result, therefore, is that this appeal must be allowed and the order of the Subordinate Judge set aside. The execution proceedings will stand revived, and as soon as the records are received by the Court below, steps will be taken to issue a fresh sale proclamation. The Subordinate Judge will consider afresh the question of the values to be inserted in the sale proclamation, and he may very well act in the light of the bids offered at the two sales, and also of such evidence as may be adduced by the judgment-debtors. The Court will also carefully consider the entry to be made as to the amount of Government revenue: there appears to have been error in this respect in the last sale proclamation, which might have been avoided with a little care; after the sale proclamation has been settled, it will be served in accordance with law and the judgment-debtors will assist the Court in effecting a proper service, so that no question of due publication may hereafter arise.

10. The appellants are entitled to their costs both here and in the Court below. We assess the hearing fee in this Court at five gold mohurs.

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