ISMAIL SHERIFF SAHIB Vs. SANKARA PANICKER

JUDGEMENT

(1.) THIS is an appeal by the decree holder auction purchaser against the order passed on an application under O.21 R.90,C.P.C .,setting aside a court sale,on the ground,that the property sold was grossly under valued in the sale proclamation,and that the sale was held without a fresh proclamation on the date to which it was adjourned,resulting in substantial loss.The applicant was the fifth defendant in the case,and was a subsequent encumbrancer of the property in question,which consisted of land,buildings,equipments and a running cinema business.The valuation in the proclamation was only Rs.1,071 -4 -0,but the purchase by the decree holder was for a sum of Rs.20,000/ -,On this circumstance alone,we agree with the learned Judge in holding,that there was gross under -valuation in the sale proclamation.It was not disputed before us,that the sale was held on the date in question without a fresh proclamation,and that this constituted a material irregularity.Though the account books adduced in evidence by the fifth defendant to establish that the property was more valuable,were not acted upon by the learned Judge,the circumstance that the property fetched an annual rent of Rs.2,400/ -,shows indubitably,that it was really of much greater value than what the decree holder had paid for it.We cannot accept the argument of the learned counsel,that in the case of a building and a running business,the ascertainment of their market value must be upon capitalization of the rental for a period of ten years,as in the case of cocoanut gardens formerly in the Travancore area.We therefore agree with the learned Judge in holding,that the sale had resulted in substantial loss.In this view,it is unnecessary to consider Bhagavathi Pillai v.Sankara Pillai,1953 KLT 557 and Alikunju Pathummal Kunju v.Alyappan Sanku Panicker,1956 KLT 954,which have laid down,that in order to set aside a court sale,there should not only be material irregularity,but also substantial loss.

(2.) ONE possible result of gross under -valuation in the sale proclamation is,as observed by the Madras High Court in Rangaswami Iyengar v.K.Marudanayagam Pillai(AIR 1938 Madras 720 ),that: "any likely bidder who looks at the sale proclamation would consider that having regard to the smallness of the value fixed for the several items of property,they are really of very inferior quality and not worth going in for,at high prices." The learned Judge below has inferred,that the under -valuation in the sale proclamation had the effect of scaring away intending bidders.There were competing bidders on prior occasions when the sale came on,but on the date on which it was actually held,the decree holder was the only bidder.It is only a reasonable inference to make,that the two irregularities had operated to keep away intending bidders at the sale.The connection between material irregularity and resulting loss is not always capable of direct proof,nor do we think such proof is always necessary,for,as observed by the Privy Council in Sri Raja Bommadevara Naganna Naidu Bahadur Zamindar Garu v.Sri Raja Bommadevara Venkatrayulu Naidu Bahadur Zamindar Garu(AIR 1945 P.C.178 ): "this burden may be discharged not only by direct evidence connecting the material irregularity or fraud with the substantial injury,but also by circumstantial evidence,that is,evidence from which a reasonable inference may be drawn that the substantial injury was the result of the material irregularity or fraud." We hold,that the order passed by the learned Judge is proper,and must be affirmed.