THE HON’BLE MR JUSTICE L. NARASIMHA REDDY + C.M.A.No.2073 of 2001 % 03-11-2009 Between: Chirravuri Veerabhadra Rao …Appellant And State Bank of India, Rep. by its Branch Manager, Seetanagaram, Rajahmundry and others …Respondents ! Counsel for appellant : Sri N. Subba Reddy ^ Counsel for Respondents : Sri Challa Danamjaya for R-1 Sri T.V.S. Prabhakar Rao, for RR2 & 3 < Gist: > Head Note: ? CITATIONS: 1) AIR (32) 1945 Privy Council 2) (1994) 1 SCC 131 3) AIR 1954 Madras 1024 4) 2005 (2) ALT 439 5) (2000) 3 SCC 87 THE HON’BLE SRI JUSTICE L.NARASIMHA REDDY C.M.A.No.2073 of 2001 JUDGMENT: The 1st respondent filed O.S.No.79 of 1988 in the Court of I Additional District Judge, Rajahmundry, against the appellant and another, for recovery of amount. The suit was decreed. After the decree became final, the 1st respondent filed E.P.No.57 of 1993. Attachment was obtained against plaint-‘A’ to ‘E’ schedule properties. ‘B’ and ‘C’ schedule properties are owned by the appellant. The judgment-debtor is said to be a firm, and that it owned ‘D’ and ‘E’ schedule properties that were offered as security for repayment of the debt. The ‘B’ and ‘C’ schedule properties were brought to sale on 26.11.1998, and respondents 2 and 3 emerged as highest bidders for the two items of property. The appellant filed E.A.No.3 of 1999 under Rule 90 of Order XXI, read with Section 47 C.P.C. The grounds pleaded by him are broadly that, (a) though plaint ‘D’ and ‘E’ schedule properties were offered as security, the 1st respondent did not proceed against the same, on account of collusion between some of the parties; (b) the value of plaint ‘B’ and ‘C’ schedule properties was put at an incredibly low figure, without following the procedure prescribed under the relevant Rules of Order XXI, for determination of the value; and (c) the publicity, as provided for under Rule 67 of Order XXI, was not given, before the sale was conducted. Other ancillary contentions were urged. The application was mainly opposed by respondents 2 and 3. The Executing Court dismissed E.A.No.3 of 1999, through its order dated 08.03.2001. Hence, this appeal, under Order XLIII Rule 1 C.P.C. On behalf of appellant, Sri N.Subba Reddy, learned counsel, advanced arguments. He submits that the determination of the market value of the property is an important step in the execution proceedings and the same was observed in breach. He contends that the Basic Value Register of the relevant time, stipulated the value of plaint ‘B’ and ‘C’ schedule properties around Rs.50,000/- and 2,00,000/-, respectively, whereas the executant has mentioned the same at Rs.10,000/- and Rs.10,500/-, without any basis. He further contends that Rule 67 makes it obligatory on the part of the Executing Court to ensure that the sale proclamation is given adequate publicity and insists that the publication be made in the locality, in which the property is situated. Learned counsel submits that the record clearly demonstrates that no publicity whatever was given in the Seetanagaram Village, where the properties situate. He has placed reliance upon certain decided cases. Sri Challa Danamjaya, learned counsel for respondent No.1 and Sri T.V.S.Prabhakar Rao, learned counsel for respondents 2 and 3 – auction purchasers, on the other hand, submit that the appellant did not raise any objection before the sale took place. They contend that though an attempt was made to assail the market value mentioned in the sale proclamation, the same was negatived by the executing Court and the said order has become final. It is also their case that Rule 90 disables the judgment debtor from challenging the sale, in case the concerned objections were not raised at the relevant point of time. They too have relied upon some precedents. The suit filed by the 1st respondent against the appellant and another, for recovery of amount was decreed, and after the decree became final, execution petition was filed. Various items of properties were got attached. Schedule ‘B’ and ‘C’ properties were proposed to be sold. The appellant raised objections of different kinds, at various stages. Ultimately, the sale came to be held and respondents 2 and 3 emerged as the successful bidders. The amount offered by them was deposited. The appellant filed an application under Rule 90 of Order XXI, read with Section 47 C.P.C., to set aside the sale. As observed earlier, several grounds were urged. Out of them, emphasis was on the method of fixation of market value of the properties, and nature of publicity, given to the sale proceedings. The Executing Court dismissed the application. Almost same grounds are urged before this Court also. On behalf of the respondents 2 and 3, an objection is raised, as to the maintainability of the application, based upon the prohibition contained in sub-rule (3) of Rule 90 of C.P.C. This Court is of the view that the following points arise for consideration in this appeal, viz., a) Whether the Executing Court committed any illegality in the matter of fixation of market value of the properties, that were sold in the auction, b) Whether the publicity given to the sale proceedings accords with Rule 67 of Order XXI of C.P.C., and c) Whether the application filed by the appellant is hit by sub- rule (3) of Rule 90 of Order XXI C.P.C. Sale of properties in execution of decree is a comprehensive exercise. Substantial part of Order XXI C.P.C. is devoted to it. After an item of property is attached, steps for sale thereof are to be initiated. Rule 66 prescribes the manner in which the proclamation of sale is to be caused. The proclamation is, in effect, a statement, depicting the various aspects of the property, that is sought to be sold. Sub-rule (2) thereof enlists the particulars, that are required to be furnished. In addition to that, the amendment of the Rule, in its application to the State of Andhra Pradesh, requires that the settlement or finalization of proclamation must be done after issuing notice, not only to the decree- holder, but also to the judgment-debtor. The Rule, in so far as it applies to the State of Andhra Pradesh, reads as follows: “O.XXI, R.66: Proclamation of sales by public auction.— (1) Where any property is ordered to be sold by public auction in execution of a decree, the Court shall cause proclamation of the intended sale to be made in the language of such Court. (2) The terms of such proclamation shall be settled in Court after notice to the decree-holder and judgment-debtor except in cases where notices have already been served under Order 21, rule 64, and such proclamation shall state the time and place of sale and specify as accurately as possible. (a) the property to be sold or, where a part of the property would be sufficient to satisfy the decree, such part; (b) the revenue assessed upon the estate or part of the state, where the property to be sold is an interest in an estate or in part of an estate paying revenue to the Government; (c) any encumbrance to which the property is liable; (d) the amount for the recovery of which the sale is ordered; and (e) every other thing which the Court considers material for a purchaser to know in order to judge of the nature and value of the property: Provided that where notice of the date for settling the terms of the proclamation has been given to the judgment-debtor by means of an order under rule 54, it shall not be necessary to give notice under this rule to the judgment-debtor unless the Court otherwise directs: Provided further that nothing in this rule shall be construed as requiring the Court to enter in the proclamation of sale its own estimate of the value of the property, but the proclamation shall include the estimate, if any, given by either or both of the parties. (3) Every application for an order for sale under this rule shall be accompanied by a statement signed and verified in the manner hereinbefore prescribed for the signing and verification of pleadings and containing, so far as they are known to or can be ascertained by the person making the verification, the matters required by sub-rule (2) to be specified in the proclamation. (4) For the purpose of ascertaining the matters to be specified in the proclamation, the Court may summon any person whom it thinks necessary to summon and may examine him in respect to any such matters and require him to produce any document in his possession or power relating thereto”. The second proviso to sub-rule (2) signifies the importance of the participation of the judgment-debtor and the decree-holder, in the matter of furnishing the estimate of the value of the property. The emphasis is on the value, that is furnished by the parties. In a way, that provision relieves the Court, of its burden to evaluate the property by itself, and it is to be guided mostly, by the value furnished by the parties. In as much as the property of the judgment-debtor is proposed to be sold, his views as to the value assume significance. In the instant case, the Executing Court valued the property on its own accord. Not even a single step contemplated under Rule 66 was followed. Neither the parties were issued notice, nor the figures were collected from any authenticated and recognized source. An objection in this regard raised by the appellant, at the threshold itself, was rejected, through order dated 23-02-1996. In the course of hearing of E.A.No.3 of 1999, one of the grounds pleaded was non-compliance with the procedure for fixing the value. The Executing Court addressed that question, with reference to the oral and documentary evidence. However, it was rejected on the ground that the order dated 23-02-1996 has become final. The evidence in this regard comprised of the deposition of PWs 1 and 2, and Exs.A-1 to A-3. The market value certificate, issued by the Sub-Registrar, is marked as Ex.A-1. Ex.A-2 is the blue print of the plan, for construction of rice mill over the schedule property, and Ex.A- 3 is the photograph. Ex.A-1 was not taken into consideration, by the Executing Court, on the ground that it was issued one year after the sale. The oral evidence was not believed on the ground that it was not supported by other documents. The Executing Court did indirectly admit that the value assigned by it to the properties was far below, than the market value. However, it gave a curious reasoning, while rejecting the contention of the appellant. It observed; “…Generally, no one comes forward to purchase any property, in Court sale, for market value, because of the uncertainty till the sale is confirmed and the property is delivered to the auction purchaser…” This clearly suggests that the property was undervalued to attract and encourage the purchaser. On the face of it, such an approach is contrary to the letter and spirit of Rule 66 of Order XXI C.P.C., and it can not be countenanced. The question as to whether the appellant is precluded from raising the objection as to adequacy of market value, on the ground that it was repelled at an earlier point of time, would be dealt with, under the discussion in relation to point No.3. However, a serious lapse on the part of the Executing Court in determination of the market value cannot be condoned. When Rule 66 in categorical terms mandates that the market value must be determined by issuing notice to the parties and by summoning the person, whom it thinks necessary, in this regard, the value fixed by it, without taking such steps cannot be treated as proper. Fixation of the market value happens to be one of the important steps in an execution sale. Any procedural lapse in it, would have its own impact upon the sale itself. The importance of the valuation of the property sought to be sold in execution was emphasized, from time to time, by various Courts. In Marudanayagam Pillai v. Manickavasakam Chettiar[1], it was held that the valuation of the property in a sale proclamation, on the basis of misstatement by the decree-holder, or other reasons, would certainly be a ground to set aside the sale. As regards the plea of waiver or acquiescence, that can be attributed to the judgment- debtor, it was held that, much would depend upon the ability of the decree-holder to prove, that the former knew the true facts, but still has chosen to waive it. The relevant paragraph reads as under: “Order 21, R.66 imposes upon the Court the duty of causing a proclamation of the intended sale to be made and requires the proclamation to be drawn up after notice to the decree-holder and the judgment-debtor and such proclamation must specify, as fairly and accurately as possible, amongst other things, any encumbrance to which the property is liable. In most cases no doubt the Court has no means of checking the information supplied by the parties but the Court ought, as far as practicable, to bring its mind to bear upon the contents of the proclamation; and where material is readily available to check the information supplied by the parties the Court ought to avail itself of such material…” “ …The efficacy of a plea of waiver by the appellant depends on the ability of the respondent to prove that the appellant knew the true facts from which an intention on his part to waive his right to object to a misstatement in the proclamation can be inferred…” In the present case, the appellant raised objection as to the accuracy of the value at every possible stage. It has already been pointed out that the Executing Court brushed it aside and reeled under the impression that it can fix the value, at its discretion. Hence this point deserves to be answered in favour of the appellant. Coming to the second point. Rule 67 of Order XXI, that deals with the mode of making proclamation becomes relevant. This, in turn, makes reference to Rule 54 of Order XXI C.P.C. This Rule mandates that the proclamation must be made at some place, in, or, adjacent to the property sought to be sold, by beat of drum, or other customary mode, and that a copy of the order shall be affixed on conspicuous part of the property. This is in addition to the display of the notice at a conspicuous part of the Court house, and the office of the District Collector, office of the Gram Panchayat etc. The property which was sold in the auction is situated at a village near Rajahmundry town. The record placed before this Court discloses that it was caused in the Rajahmundry town itself. It is just ununderstandable as to how publicity can be given in a large town like, Rajahmundry, in respect of property that is situated at a nearby village. It is not as if the publicity given at Rajahmundry was in addition to the display of notices, or proclamation, by beat of drum in the concerned village. In Desh Bandhu Gupta v. N.L. Anand & Rajinder Singh[2], the Supreme Court considered the purport of the Rules referred to above. It was held that the proclamation, as prescribed under Order XXI of C.P.C., is mandatory, and any deviation from it, would have the effect of nullifying the sale itself. I n Srikakula Chinna Venkatanarayana v. Pannapati Elias[3], the Madras High Court held that, in case the execution sale was defective or was contrary to the mandatory provisions of Order XXI, the validity of the sale can be determined in a subsequent suit also. Authorities on this aspect can be multiplied. This Court is of the view that the second point also deserves to be answered in favour of the appellant. The respondents raised the plea of waiver, estoppel and other related principles against the appellant and pleaded that it is not open to him to raise any objection about the validity of the sale. They place reliance upon sub-rule (3) of Rule 90 and judgments in Kotamreddy Balarami Reddy v. Kondandaramaswamy Temple[4], and Kadiyala Rama Rao v. Gutala Kahna Rao[5]. In this regard, it is relevant to refer to Rule 90 of Order XXI C.P.C. It reads, “O.XXI R.90: Application to set aside sale on ground of irregularity or fraud.— (1) Where any immovable property has been sold in execution of a decree, the decree-holder, or the purchaser, or any other person entitled to share in a rateable distribution of assets or whose interests are affected by the sale, may apply to the Court to set aside the sale on the ground of a material irregularity or fraud in publishing or conducting it. (2) No sale shall be set aside on the ground of irregularity or fraud in publishing or conducting it unless, upon the facts proved, the Court is satisfied that the applicant has sustained substantial injury by reason of such irregularity or fraud. (3) No application to set aside a sale under this rule shall be entertained upon any ground which the applicant could have taken on or before the date on which the proclamation of sale was drawn up. Explanation.—The mere absence of, or defect in, attachment of the property sold shall not, by itself, be a ground for setting aside a sale under this rule”. While sub-rule (1) confers power upon the Executing Court to set-aside a sale, sub-rules (2) and (3) place restriction upon such power. Sub-rule (2) mandates that mere proof of irregularity is not sufficient and the aggrieved party has to establish “substantial injury” on account of the same. So far as sub-rule (3) is concerned, it reflects the concept or principle of waiver or estoppel, in relation to the defects, up to the stage of proclamation. If a party has not raised such objections, at the relevant point of time, he would be precluded from challenging the resultant sale. The prohibition contained in it can not be applied or extended to the stages of drawl of proclamation or subsequent thereto. While fixation of market value is a step at the stage of drawl of proclamation, publicity thereof is subsequent thereto. In Kotamreddy Balarami Reddy’s case (4 supra), this Court held, Para-8: “Rule 90 of Order 21 C.P.C., provides for setting aside the sale of immovable properties in the execution, if the sale is vitiated by any irregularity or fraud. The irregularity or fraud, which is said to have vitiated the sale, has to be specifically pleaded by the judgment-debtor, or any person entitled for share in the rateable distribution of assets. Sub-rule (2) thereof mandates that the sale shall not be set aside on the grounds referred to in sub-rule (1), unless the Court is satisfied that the applicant sustained substantial injury, on account of such irregularity or fraud. Sub-rule (3) is to the effect that no application to set aside the sale shall be entertained, on a ground if the applicant could have taken or pleaded the same before the proclamation of sale was drawn. The Rule is enacted to protect the interests of the judgment- debtors, where an immovable property is brought to sale by playing fraud on the Court, or where the entire proceedings suffer from any irregularity. It is never meant for the benefit of a judgment-debtor, who wants to obstruct the proceedings, on one pretext or the other. A reading of sub-rule (3) discloses that application under sub- rule (1) can be made only on such grounds, as were not available to the judgment-debtor, when the property was brought to sale. It clearly disables a judgment-debtor from seeking the relief of setting aside the sale, if he could have raised the objection pleaded in the application filed under Rule 90 of Order 21 C.P.C., before the sale was brought about. Even where the sale proceedings are vitiated by any irregularity, or fraud, and if the judgment-debtor was aware of it, before confirmation of the sale, he cannot be permitted to reserve those grounds to be pressed into service after the sale is confirmed, much less if the same ground was pleaded earlier and rejected by the Court”. The ratio of the judgment in Kadiyala Rama Rao’s case (5 supra) is similar. This cannot be applied to cases where the grievance is as to the manner in which the proclamation is drawn and about the stages subsequent thereto. Hence, this point is answered in favour of the appellant. For the foregoing reasons, the Civil Miscellaneous Appeal is allowed, and the sale, conducted by the Executing Court, is set aside. There shall be no order as to costs. _______________________ L.NARASIMHA REDDY, J. Dated:03-11-2009. Note: L.R copy to be marked. (B/O) KO* [1] AIR (32) 1945 Privy Council [2] (1994) 1 SCC 131 [3] AIR 1954 Madras 1024 [4] 2005 (2) ALT 439 [5] (2000) 3 SCC 87