DHANALAKSHMI BANK LTD Vs. DIVAKARAN

JUDGEMENT

(1.) This appeal is by the decree holder auction purchaser. The appeal challenges the order of the executing Court setting aside the sale held in execution of the decree on a petition filed under O.21 R.90 of the Code of Civil Procedure by the judgment debtors.

(2.) The decree holder on obtaining the decree filed E. P. 126 of 1985 on 30.9.1985 for realisation of a sum of Rs. 4,28,436.85 by the sale of the properties. Notice under O.21 R.66 was issued to the judgment debtors accompanied by a draft proclamation for sale. The judgment debtors filed objections on 18.12.1986 contending that the upset price for the properties shown in the schedule was very low, that the description of the buildings given was not correct, that the five items together were worth Rs. 46 lakhs. No attempt was made by the judgment debtors to substantiate executing Court directed the decree holder to incorporate the value shown by the judgment debtors in the sale proclamation and to produce an amended draft sale proclamation. The decree holder produced an amended draft proclamation. It may be noted that the judgment debtors did not raise an objection that all the items of properties need not be sold as proposed by the decree holder. The executing court approved the draft proclamation, fixed the upset price and ordered the sale of the properties after due proclamation. Thereafter by another order passed after hearing both sides, the executing court permitted the decree holder to bid at the auction and also fixed the reserve price in terms of O.21, R.72A of the Code of Civil Procedure. The judgment debtors did not pursue their objections to the settlement of the amended proclamation. The judgment debtors paid some paltry amounts towards the decree debt and got the sale adjourned obviously on waiving fresh proclamation. The executing court finally granted time to the judgment debtors to review the order directing them to pay one fourth of the decree amount. The executing court dismissed that petition. The judgment debtors thereupon filed CRP 1472 of 1987 before this Court. In that revision, the judgment debtors prayed for a stay of further proceedings in execution. As per order on CMP 22796 of 1987 this court granted an interim stay for one month on condition that before the expiry of that period a sum of Rs. 1 lakh will be paid by the judgment debtors towards the liability. The judgment debtors did not comply. Hence the interim order of stay stood vacated. The properties were sold in auction on 5.10.1987. The decree holder bank purchased the properties for the amount due under the decree, the reserve price.

(3.) The judgment debtors filed E. A. 556 of 1987 under O.21 R.90 of the Code of Civil Procedure for setting aside the sale on the ground that the sale was vitiated by irregularity and fraud in the publication and conduct of the sale. The decree holder filed objections repudiating the allegations. The judgment debtors took out a commission for reporting on the value of the properties. The Commissioner filed a report showing a value of Rs. 20,90,256. The decree holder filed objections to the Commission report challenging the method of valuation and questioning the percentage of depreciation adopted by the Commissioner. Serious objection was taken also to the value for the trees fixed by the Commissioner. No other evidence was adduced by the judgment debtors in support of their case. The decree holder also adduced no evidence. The execution court could not find that there was any material irregularity or fraud in the publication and conduct of sale as established. It merely referred to the Commissioner's report without scrutinising the acceptability of the same. It propounded a proposition that there was an obligation on the court to see that only items or portion of the property to satisfy the decree be sold. Though it noticed the argument on behalf of the decree holder that mere undervaluation, even if it was established, was not a ground to set aside the sale unless the other elements under O.21, R.90 of the Code were also satisfied, and apparently accepted the same, it did not give any reason or finding that in the case on hand there was any material irregularity or fraud in the publication and conduct of the sale. The executing court then stated that the meagre value fetched at the sale is sufficient to hold that there was fraud on the part of the decree holder in getting the property sold. The court did not consider what was the effect of its adjudication on the objections filed by the judgment debtors to the notice under O.21 R.66 of the Code of Civil Procedure or the scope and effect of O.21 R.90(3) of the Code of Civil Procedure. It did not also notice that it was for the judgment debtors to clearly establish before the court that there was such gross undervaluation as to shock the conscience of the Court and that there was also material irregularity and fraud in the proclamation and conduct of the sale. By an order which can be taken to be one passed without reference to the relevant requirements of law before a sale held in execution of a decree can be set aside, the executing court proceeded to set aside the sale.