S R DAYANANDA Vs. K S NAGESH RAO

JUDGEMENT

(1.) THIS is one more of the several proceedings that have ultimately come to this court wherein a furious legal debate has ensued all of which hinges around the question as to whether an auction sale that has taken place several years back should be interfered with by the court. It is difficult to draw a parallel between any two of these cases on facts and even though the principles in relation to the various provisions of law are reasonably well defined, it still becomes necessary to individually decide each of these cases on merits wherein occasions do arise for the courts to either modify slightly or even in the interest of Justice innovate on those guidelines. The real issue before me is as to whether an auction sale that took place as long back as on 18-12-1978 i. e. 18 years back should be interfered with. The undisputed facts are that a decree passed in a suit against the judgment-debtor came up for execution in case No. 493 of 1977. The decree in question was for recovery of an amount of approximately Rs. 3,500/- and the decree-holder applied for attachment of the judgment-debtor's property. A statement has been made on behalf of the respondent 2, who is the original judgment-debtor that she was a school teacher who had incurred certain debts with the decree-holder who was a moneylender. However these aspects of the matter are irrelevant because the learned advocates have canvassed certain pure points of law which alone are material particularly since this is a revision petition and the jurisdiction of this court is limited to decide or interfere purely on the basis of law points. The attachment came to be levied by the executing court against a house property belonging to the judgment-debtor. Ultimately that house was put up for auction sale and the petitioner who is the auction purchaser was the successful bidder and he had offered a sum of Rs. 67,000/ -. I need to mention here that there was some dispute with regard to the fair value of that property at the relevant time, the judgment-debtor having valued it at about Rs. 75,000/- and the court having considered various aspects of the matter, had before it a valuation of Rs. 85,000/ -. The limited reason for my referring to this aspect of the matter is because learned Advocate on both sides have advanced very weighty arguments in relation to this particular facet of the case. Petitioner's learned Advocate submitted that the appeal court among other things has also upheld the view that the auction sale did not realise the best possible price which was in consonance with the market value. Petitioner's learned Advocate has demonstrated to me that the learned judge has totally overlooked the fact that the property was subjected to two other encumbrances which relate to two other loans which would aggregate to almost Rs. 17,000/- and that therefore the auction purchaser had taken on this liability along with the property and that if this amount were to be added on to the purchase price, it would fully match with what the market value of the property stood at. Learned Advocate who represents respondent 2 has vehemently disputed this but in any event, on a consideration of the material before me I do not think that this was any ground on which the auction sale could have been interfered with. The court needs to take cognizance of the fact that if it comes to the notice of the court at any stage that the price realised was hopelessly inadequate and that it is very clear that a valuable property has been disposed of virtually for a throw-away price, it is a valid ground on which interference with the sale would be necessary or for that matter the sale itself ought not to be confirmed. The courts have to take note of the fact that the so-called market price that is referred to is invariably an approximate figure and the judgment-debtor is bound to pitch his case higher than necessary. Also, auction sales are not the best avenues for realising a good value for a property because these sales are not too well attended and if persons who are really keen on the property are not present there, then the bidding would not go very high and the property may not fetch the best price. As long as it bears some reasonable relationship with what the court considers fair in consonance with the existing market rate, it would be sufficient for a court to hold that no interference with the auction sale is competent on this ground.

(2.) THE petitioner who is the auction purchaser, as indicated by me, was the successful bidder and in keeping with the rules he deposited the amount of Rs. 67,000/- within the prescribed time. The petitioner's learned Advocate submits that the sale came to be confirmed and the sale certificate was also issued to the petitioner but unfortunately he was unable to take possession of the property only because on 19-1-1979 an application was filed for setting aside the auction sale. Various contentions were raised in the application which mainly centre around the fact that according to the applicant there were some irregularities in the conduct of the sale. They can briefly be summarised in so far as firstly it was contended that the auction sale had not been duly published. Secondly, it was contended that the proclamation was not properly published. Also, the contention was that there were several other irregularities in the conduct of the sale all of which according to the judgment-debtor were sufficient to vitiate the entire sale. The learned trial judge who was presiding over the executing court heard the parties and through a speaking order overruled everyone of the objections. Basically, the judge held that the sale conducted under the directions of the couart was a valid, legal and binding sale and that no interference was called for. Under the circumstances the application filed under Order 21, rule 90 for setting aside the sale was dismissed. The matter was however carried in appeal and the appeal court upheld almost all the objections that were canvassed and set aside the sale on the ground that each of the irregularities that had been alleged had been established and furthermore that some of them were material and were sufficient to void the transaction. The original auction purchaser who had, as indicated by me, deposited the purchase price but who could not obtain possession because of the pendency of the proceedings has filed the present revision petition which assails the correctness of the appellate Order dated 16-8-1990. The amount deposited by him has been lying in the court since the year 1978 and the appeal court had finally disposed of the matter only in august 1980, the decision going against the auction purchaser. It is against this Order that he has preferred the present civil revision petition. This being a hotly contested litigation, the Order sheet indicates that the matter did come up from time to time before the court for hearing but for one reason or the other it did not get disposed of which is why it has finally been taken up by me for final disposal only in june 1996. Among the various arguments canvassed was the one advanced by the petitioners' learned Advocate who stated that as the auction purchaser, he is a compete stranger to the dispute and that he was a bidder at an auction sale conducted under the directions of a court, that he was the highest bidder and that he had offered a price which was fair and reasonable in relation to the existing market price. He contends that having done this and having deposited the money, that he has been subjected to 18 years of litigation and a strong grievance was made about the fact that this is not a case in which this court should show any sympathy to the judgment-debtor who is principally responsible for this State of affairs. Learned Advocate drew my attention to the fact that the appeal court even though it decided in favour of the appellant who was the judgment-debtor and who is the second respondent before me, took a serious view of the fact that it is the judgment-debtor who is litigating over the years and therefore while allowing her appeal directed the payment of compensatory costs of Rs. 15,000/ -. Learned Advocate submitted that this amount has not been paid and that the second respondent is therefore disqualified from even making any submissions before this court. The crux of the matter is that there are three contesting parties before me, the first one being the petitioner who is the auction purchaser, the second one being respondent 1, the decree-holder represented by his legal heirs and the third one being respondent 2 who is the original judgment-debtor. Conflicting claims and submissions have been made on behalf of these three parties and it will therefore be necessary to carefully evaluate the various contentions raised for purposes of finally deciding as to whether the appeal court was justified in setting aside the auction sale in question.

(3.) PETITIONER's learned Advocate has confined his submissions to a pure challenge of points of law. He adverts to two aspects of the law in this regard, the first of them being that the principles embodied under Order 21, rule 90 and the allied provisions very clearly stipulate that an auction sale would only be interfered with by court if it is demonstrated that is suffers from material irregularities. What the learned Advocate has submitted is that several procedures are required to be complied with in the course of the conduct of these sales and that merely because there may be some minor procedural non-compliance either of a trivial or of a non-consequential nature, that it can never be argued that the auction sale should be interfered with. What he basically submits is that an auction sale is invariably preceded by an attachment and that certain amount of time elapses before the court ultimately takes the final step of ordering the property to be auctioned. Various procedures are involved in this procedure and it is a step of the last resort because there are no other means of satisfying the decree. The auction purchaser is invariably a third party and a stranger to the entire dispute. He is required to deposit substantial amounts of money immediately on his bid being accepted and, the learned Advocate submits that rights accrue in favour of the auction purchaser subject however to the sale being confirmed by the court. He submits that once that process is over, merely because the judgment-debtor or some other party starts raising procedural objections, that no court is obliged to take cognizance of them unless the irregularities that are pleaded are so substantial and so grave as to materially affect the legality of the sale. One of these could always be a situation where, as indicated by me earlier, there exists a serious doubt as to whether the price realised even if it has been confirmed by the court is at all fair or whether the property has virtually gone for a throw-away price. Also, instances do come up where serious malpractices take place in the course of the auction sale and if these are demonstrated, they would go to the very root of the matter and affect its validity. Learned Advocate has emphasised at some length that the irregularity must be demonstrated to be a material one and everyone of the grounds on which the appeal court has interfered in this case are, in his submission, not of any consequence and, certainly not material. In support of his arguments, learned Advocate has drawn my attention to two decisions of the Supreme Court, the first in the case of Radhy Shyam v Shy am Behari Singh, wherein the Supreme Court upheld the setting aside of a sale on the ground that the inadequacy of the price was so very material that it virtually resulted in a fraud. The second decision in the case of M/s. Kay Jay industries (p) ltd. V M/s. Asnew Drums (p) ltd. And others, wherein the Supreme Court had occasion to hold that in a given circumstance a relatively low price alone would not be sufficient to interfere with the sale if it was demonstrated that the conduct of the judgment-debtor was such that it had deterred several likely purchasers from touching the property.