IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE S.S.SATHEESACHANDRAN WEDNESDAY, THE 8TH JULY 2009 / 17TH ASHADHA 1931 WP(C).No. 33920 of 2008(K) -------------------------------------- O.S.112/2001 OF SUB COURT, THIRUVALLA. ............... PETITIONER(S): ---------------------- 1. M/S JASGO CONSTRUCTIONS COMPANY (P) LTD., A COMPANY HAVING ITS REGISTERED OFFICE AT SREE BHAVAN NO.4, MATHILBHAGAM, THIRUVALLA, PATHANAMTHITTA DISTRICT.REPRESENTED BY ITS MANAGING DIRECTOR N.GANGADHARAN NAIR, S/O.LATE NARAYANA PILLAI, RESIDING AT ARCHANA VRINDAVAN GARDENS, VG4,CHALAI, THIRUVANANTHAPURAM. 2. N. GANGADHARAN NAIR, S/O.LATE NARAYANA PILLAI, MANAGING DIRECTOR, M/S.JASGO CONSTRUCTIONS COMPANY (P) LTD.,RESIDING AT ARCHANA VRINDAVAN GARDENS, VG4, CHALAI, THIRUVANANTHAPURAM. 3. JALAJA GANGADHARAN NAIR, W/O.N.GANGADHARAN NAIR, RESIDING AT ARCHANA VRINDAVAN GARDENS, VG4, CHALAI, THIRUVANANTHAPURAM. BY ADV. MR.V.AJAKUMAR MR.T.M. CHANDRAN RESPONDENT(S): ------------------------- M/S. CANFIN HOMES LTD., A COMPANY HAVING ITS REGISTERED OFFICE AT NO.29/1, M.N.KRISHNA RAO ROAD, BASAVANGUDI, BANGALORE AND A BRANCH OFFICE AT NO.28/2454, GROUND FLOOR, M.G.ROAD, THIRUVANANTHAPURAM, REPRESENTED BY ITS CHIEF MANAGER. BY ADV. MR.C.AJITH KUMAR THIS WRIT PETITION (CIVIL) HAVING BEEN FINALLY HEARD ON 23/06/2009, THE COURT ON 08/07/2009 DELIVERED THE FOLLOWING: WP(C) NO. 33920/2008-K APPENDIX PETITIONER'S EXHIBITS: EXT.P1: COPY OF THE JUDGMENT IN O.S. NO.112/2001 OF SUB COURT, THIRUVALLA. EXT.P2: COPY OF THE E.A.33/2007 IN E.P.34/2005 IN O.S.NO.112.2001. EXT.P3: COPY OF THE ORDER DATED 12/03/2007 IN E.A.33/2007 IN E.P.34/2005 IN O.S.112/2001. EXT.P4: COPY OF THE TREATMENT CERTIFICATE OF THE 3RD PETITIONER. EXT.P5: COPY OF THE B DIARY IN E.P.34/2007 CONTAINING THE ORDER DATED 25/03/2007. EXT.P6: COPY OF THE PROCLAMATION SCHEDULE IN E.P.34/2007. EXT.P7: COPY OF THE OCCUPANCY CERTIFICATE. EXT.P8: COPY OF THE BUILDING TAX RECEIPT. EXT.P9: COPY OF THE VALUATION REPORT DATED 26/07/2007. EXT.P10: COPY OF THE VALUATION CERTIFICATE DATED 24/09/2007. RESPONDENT'S EXHIBITS: EXT.R1(a): COPY OF THE DECREE PASSED IN O.S. NO.112/2001 ON THE FILES OF SUB COURT, THIRUVALLA. EXT.R1(b): COPY OF THE E.P.NO.34/2005 IN O.S. NO.112/2001 FILED BEFORE THE SUB COURT, THIRUVALLA. EXT.R1(c): COPY OF THE VALUATION REPORT DATED 19/01/2008 GIVEN BY M.A.ASHOK KUMAR. //TRUE COPY// P.S. TO JUDGE rs. S.S.SATHEESACHANDRAN, J. ------------------------------- W.P.(C).NO.33920 OF 2008 (K) ----------------------------------- Dated this the 8th day of July, 2009 J U D G M E N T The judgment debtors in E.P.No.34/2005 in O.S.No.112/2001 on the file of the Sub Court, Thiruvalla, are the petitioners, and the decree holder is the respondent. The 1st judgment debtor is a construction company and the 2nd and 3rd judgment debtors are its Directors. Towards construction of a project envisaging residential apartments, the petitioners availed a loan of Rs.25 lakhs from the decree holder, a company, providing housing finance subject to the guidelines of the National Housing Bank, a wholly owned subsidiary of the Reserve Bank of India. 2. The loan of Rs.25 lakhs was availed by the petitioners on the security of an equitable mortgage of its property, wherein the proposed construction was envisaged. Repayment under the loan was defaulted, and therefore, the WPC.33920/08 2 above suit was instituted. It was decreed allowing realisation of the decreetal amount by sale of the mortgage property and also personally from the judgment debtors. When the decree was executed by filing the above mentioned execution petition, it was resisted by the judgment debtors and also by some strangers moving claim petitions. The claim petitions were dismissed and, later, proclamation was settled for sale of the property showing the price suggested by both the decree holder as well as the judgment debtors. There was no bidders for the upset price fixed, and, therefore, the sale did not materialise. The decree holder later sought for reduction of the upset price and the execution court refixed it at Rs.70 lakhs. The judgment debtors have contended that the property will fetch a much higher price and they also wanted the sale of the property by separate lot. Previously, an application was moved by the judgment debtors to review the order passed by the court to sell the property in a single lot, seeking sale of the flats separately, which are stated to have been completed. That application was dismissed by the court. Ext.P3 is the copy of that order. The present petition has been WPC.33920/08 3 filed by the judgment debtors to quash Ext.P3 order with direction to the court below to conduct sale by apartment vise and also to set aside the order of that court, fixing an upset price at Rs.70 lakhs. 3. Notice being given, the respondent has entered appearance and filed a counter affidavit contending that there is no merit in the relief claimed by the judgment debtors in the petition invoking the supervisory jurisdiction vested with this Court under Article 227 of the Constitution of India. 4. I heard the counsel on both sides. The decree that is being executed is a mortgage decree. That being so, if at all the judgment debtors had any case that sale of only a portion of the property would be sufficient to discharge the liability under the loan availed for construction of the building, it should have been agitated in the trial before the passing of the decree. Once a mortgage decree is passed directing the sale of the mortgage property for satisfaction of the decree, the executing court has no power to go behind that direction of WPC.33920/08 4 the decree under the sale order or to consider whether anything less than what is ordered to be sold under the decree would be sufficient for discharging a decree debt. That being so, the relief sought for by the judgment debtors for sale of the mortgage property by lots, apartment vise, which was correctly and rightly repelled by the execution court, cannot at all be entertained. However, the refixation of the upset price at Rs.70 lakhs for sale, after the auction once fixed for sale fell through on account of the absence of willing bidders, on the basis of a request made by the decree holder, appears to have been made without application of mind by the execution court. Suit was decreed as early on 30.3.2005 upholding the plaint claim of Rs.53,30,344/- with costs and interest at 10% per annum on the principal sum of Rs.43,57,862/- from the date of decree till realisation. The amount claimed under the execution petition filed on 18.7.2005, a copy of which is produced as Ext.R1 (b), is Rs.73,57,333/-. Needless to point out, subsequent interest on the principal sum and also execution expenses also have to be taken note of in considering the extent of liability of the judgment debtors WPC.33920/08 5 under the decree. Evidently, if the sale is allowed to be conducted refixing the upset price at Rs.70 lakhs, it would not be sufficient to satisfy the mortgage decree by sale of the mortgage property alone and for the balance amount under the decree, proceedings have to continue against the judgment debtors, against them personally and also their movable and immovable assets. 5. It is not clear whether the decree holder has applied for leave under Order XXI Rule 72A of CPC to bid for purchase the property on sale. When such leave is asked for and granted by the court, then, necessarily, reserve price has to be fixed which shall not be less than the amount due for principal interest and costs in respect to the mortgage property. What is seen from the copy of the order sheet of the execution petition, produced as Ext.P5, the court has mechanically refixed the upset price at Rs.70 lakhs as the sum fixed earlier fell through for the absence of the bidders, and, then, ordered for settling a fresh proclamation with the refixed upset price for sale. True, after the amendment of WPC.33920/08 6 Order XXI Rule 66 CPC with the introduction of the second proviso to sub clause (2) thereunder, the execution court is not bound to make an estimate of its own on the upset price to be fixed for sale, but at the same time, it has the duty to see that the requirements of Order XXI Rule 66 CPC are properly complied with. In this context, it may be appropriate to refer to the decision Bahuleyan v. Moosa (2006 (4) KLT 882), wherein, following the principles laid down by the apex court, it has been held that it may not be necessary for the court to make a valuation and enter in the sale proclamation in every case, but “it is desirable in cases of sale of valuable property, that the court makes its valuation and enter it in the sale proclamation.” 6. Where the refixation of the upset price for the sale is found essential, in view of the absence of willing bidders when the property was placed for sale earlier, in fixing the upset price for sale to realise the decree amount due under the mortgage decree, it may be proper and appropriate for the court to make an estimate of its own especially when the WPC.33920/08 7 judgment debtors have raised objections that the property would fetch more than Rs.3 crores. After making its own estimate on the basis of the materials relevant thereto, it may be advisable to have the sale complying with all formalities of settling the proclamation with publication in one or two dailies having circulation atleast through out the State, so that the proposed sale get due attention and publication. The mortgage property involved is valuable and construction of the building project has reached considerable level, even if it is not completed, deserve to be taken note of in examining the question whether the court has to fix an estimate of its own on the upset price for sale of that property. Failure of the execution court to comply with the mandatory requirements under the Code and mechanical fixation of the upset price, which is found far less than the decree debt, and, thus, not sufficient even by sale of the mortgage property on that price may amount to a material irregularity. The court below shall apply its mind as to whether an estimate of its own has to be made for sale of the mortgage property in the refixtion of the upset price after having such enquiry as found necessary, WPC.33920/08 8 taking note of the observations made above. All the same, no question of sale of the mortgage building by apartment vise as desired by the judgment debtors is entertainable. It is desirable that an Advocate Commissioner be appointed to conduct a local inspection of the mortgage building and file a report on matters, which may help the court in assessing its potential value. Both the decree holder as well as the judgment debtors can also place relevant materials enabling the court to form an estimate of its own to fix the upset price. Sale of the property may then be proceeded fixing the upset price on the estimate of the court, if so found to advance the ends of justice, with the sum suggested by the judgment debtors also included, after settling of proclamation in consonance with Order XXI Rule 66 of CPC. The court below is directed to take expeditious steps for speedy disposal of the execution petition, since the execution petition filed in 2005 is still continuing with the sale of the mortgage property yet to be conducted. Settling the proclamation for sale refixing the upset price has to be completed within a reasonable time, at any rate, within a period of three months from the date of WPC.33920/08 9 receipt of a copy of this judgment. Writ petition is disposed of with the above directions. S.S.SATHEESACHANDRAN JUDGE prp S.S.SATHEESACHANDRAN, J. -------------------------------------------------------- CRL.R.P.NO. OF 2006 () --------------------------------------------------------- O R D E R --------------------------------------------------------- 23rd March, 2009