IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE K.M.JOSEPH & THE HONOURABLE MR. JUSTICE M.L.JOSEPH FRANCIS FRIDAY, THE 18TH DECEMBER 2009 / 27TH AGRAHAYANA 1931 FAO.No. 274 of 2008() --------------------- AGAINST THE ORDER DATED 04/10/2008 IN EA 298/08 IN EP 186/06 IN OS.230/1998 of ADDL. SUB COURT, THALASSERY .................... APPELLANT/PETITIONER/JUDGMENT DEBTOR ------------------------------------------------------------------- K.VELAYUDHAN S/O. KANARI, MANAS, KODIYERI AMSOM VAYALALAM DESOM, TELLICHERRY TALUK, KANNUR DISTRICT. BY ADV. SRI.K.V.SOHAN SMT.SREEJA SOHAN.K. RESPONDENTS/DECREE HOLDER & AUCTION PURCHASER: -------------------------------------------------------------------------------------- 1. KADAVATH PURAYIL JAYADEVAN S/O. AMBOOTTY, AZHIKODE AMSOM DESOM, KANNUR DISTRICT. 2. P.P.RAGHAVAN, S/O.KANNAN PATHODY HOUSE, P.O.CHALAD, PALLIKUNNU AMSOM, CHALAD DESOM,KANNUR-14. ADV. SRI.N.NAGARESH FOR R2 SRI.K.BABU FOR R2 ADV.SRI.T.V.VINU FOR R1 THIS FIRST APPEAL FROM ORDERS HAVING BEEN FINALLY HEARD ON 08/12/2009, THE COURT ON 18/12/2009 PASSED THE FOLLOWING: ORDER ON I.A.NO.4622/08 IN F.A.O.NO. 274 OF 2008 DISMISSED SD/- K.M.JOSEPH, JUDGE SD/- M.L.JOSEPH FRANCIS, JUDGE 18.12.2009 /TRUE COPY/ K. M. JOSEPH & M.L. JOSEPH FRANCIS, JJ. - - - - - - - - - - - - - - - - - - - - - - - - - - F.A.O.No. 274 of 2008 - - - - - - - - - - - - - - - - - - - - - - - - - - Dated this the 18th day of December, 2009 JUDGMENT Joseph Francis, J. This appeal is filed by the petitioner/judgment debtor in E.A.No. 298 of 2008 in E.P.No. 186 of 2006 in O.S.No. 230 of 1998 on the file of the Sub Court, Thalassery. The first respondent herein is the respondent/decree holder in that petition, which was filed under Order 21 Rule 90 C.P.C. to set aside the sale. The second respondent herein is the auction purchaser in the sale conducted on 12.2.2008. 2. The facts of the case as narrated in the appeal memorandum is as follows. The appellant is the judgment debtor in O.S. No. 230 of 1998 on the file of the Sub Court, Thalassery and respondent in E.P.186 of 2006. The first respondent is the decree holder in the said suit. The second F.A.O.No. 274 of 2008 2 respondent is the auction purchaser in the sale conducted on 12.2.2008. 3. The suit was decreed as compromised on 13.1.2004. As per the terms of the compromise the judgment debtor was liable to pay a sum of Rs.5,75,000/- with 12% interest from the date of the decree. During the pendency of the suit, a sum of Rs.1 lakh was paid. In the Execution petition another sum of Rs.1,60,000/- was also paid. Thus a total amount of Rs.2,60,000/- was discharged. In the Execution petition the total amount claimed was Rs.6,37,761/- Deducting Rs.2,60,000/- the balance principal amount due was only Rs.3,77,761/-. 4. The property was put up for sale for realisation of the balance amount, which was calculated at Rs.7,58,280/- The upset price was fixed at Rs.7 lakhs. The judgment debtor submitted objection pointing out that showing of encumbrance over the property which are already discharged is wrong and motivated. It F.A.O.No. 274 of 2008 3 was also pointed out that the value of the property shown is very low. The property was valued by the Commissioner in the suit at Rs.51,37,500/-. It was also contended that the actual extent of the property is 34 cents, whereas in the sale proclamation a lessor extent of 30.5 cents alone is shown. 5. The judgment debtor contended that the centage value of the proclaimed property is more than Rs.2 lakhs and by sale of a small portion of the property, the entire decree amount can be realised. The market value of the property along with the residential house is more than Rs.50 lakhs and showing of Rs.7 lakhs as the value of the property is with ulterior motive of knocking down the property for a meagre value. 6. He also pointed out that the commission report in the suit would show that the value of the plaint schedule property with the residential house was Rs.51,37,500/- in June 2003. In such circumstance, the entire property should not be put up for sale F.A.O.No. 274 of 2008 4 showing Rs.7 lakhs. Only a convenient portion necessary for realisation of the decree debt need be sold. 7. The respondent filed counter stating that the petition is not maintainable, as most of the facts stated in the affidavit are not at all sufficient to satisfy the grounds under Rule 90 Order 21 C.P.C. The second respondent herein is an auction purchaser who participated in the court auction and purchased the property for valuable consideration. He deposited the amount before the court as the sale consideration fixed by the court. It is not correct to say that some bidders kept away from the court auction due to higher liability of the property. So there is no material illegality in auctioning the property. 8. The auction purchaser/second respondent is not a party to the proceedings and is not aware of the court process. The decree sought to be executed is a compromise decree and on failure the petitioner/decree holder was compelled to file the E.P. F.A.O.No. 274 of 2008 5 The encumbrance certificate shows the liabilities of the judgment debtor, which is incorporated in the draft sale paper as per the procedure followed by the court. There is no need for incorporating any additional liability or added liability in the draft sale paper. After considering the counter statement and objections, the court below has fixed the upset price. The objection as to the valuation, extent of property etc. are not at all legally acceptable grounds to set aside the sale. 9. Moreover, no positive steps are taken by the judgment debtor to convince the executing court regarding the objection raised to the draft sale paper. There is absolutely no legally acceptable ground of irregularity so as to set aside the sale. The intention of the petitioner is some how to protract the procedure and thereby retain the execution petition without confirming the same. Therefore, the 2nd respondent has requested to dismiss the application. F.A.O.No. 274 of 2008 6 10. The learned Sub Judge, on considering the matter, dismissed E.A.No.298 of 2008. Against that order the petitioner/judgment debtor filed this appeal. 11. Heard the learned counsel for the appellant and the learned counsel for the respondents. 12. The learned counsel for the appellant invited our attention to the decision of the Apex Court reported in Desh Bandhu Gupta v. N.L. Anand and Rajinder Singh (1994 KHC 1083), in which it was held that the judgment debtor is not required to submit his valuation of the property and therefore failure to submit the valuation would not preclude him from raising objection after sale and non-compliance of Order 21 Rule 66(2) of the C.P.C. renders the sale void ab initio. In that decision it was further held that the extent of the property to be sold in execution should be such as to satisfy the decree and F.A.O.No. 274 of 2008 7 non-application of mind is a material irregularity which vitiates the sale. 13. In the decision reported in P.K. Kuruvilla v. Corporation Bank (2008 (1) KHC 258), it was held that: “The proclamation of sale is intended to assist the intending bidders in ascertaining the nature and real value of the property. The procedure prescribed in the Code of Civil Procedure in setting the sale proclamation and in publishing the same would disclose the importance of the existence of a proper proclamation of sale in Court auction sale. If the Court fixes an upset price which does not reflect at least an approximately real value of the property, the intending bidder would be misled by the same. This would, sometimes, result in fetching a low price at the court auction sale. Fixing upset price in a mechanical manner, F.A.O.No. 274 of 2008 8 taking an average of what is stated by the decree holder and the judgment debtor, a practice prevalent in executing courts, would be against the mandate of R.66 of O.21 CPC. Both the decree holder and the judgment debtor would be put to prejudice if a stranger purchases immovable property in Court auction for a low price. If the decree holder purchases the property for a low value, which does not even wipe off the decree debt, the judgment debtor would be put to great prejudice. A stranger auction purchaser runs the risk of the sale being setting aside if a proper price is not fetched in Court auction due to the procedural violation in drawing up the proclamation. Drawing up of a proper proclamation of sale would be to protect the interests of the decree holder, judgment debtor and stranger auction purchaser. We are of the view that the decree holder bank was not all fair to the Court and to the judgment debtor. The decree holder in this case is not a private F.A.O.No. 274 of 2008 9 individual: it is a bank. By showing a ridiculously low valuation, the bank really misled the Court. Great injustice was hence caused to the appellant in selling his properties in Court auction for a song.” 14. On perusing the order under challenge, it is seen that the lower court directed the judgment debtor to prepare a plan of the portion of the property, which would be sufficient to realise the decree amount. Though sufficient opportunity was given to the judgment debtor, no steps were taken by the judgment debtor. Subsequently, on 17.12.2007 the entire petition schedule property was proclaimed and sold on 12.2.2008 for a total sum of Rs.7,01,000/- In that order it was further observed that the judgment debtor has not taken any steps to show the present value of the property. F.A.O.No. 274 of 2008 10 15. The learned counsel for the appellant submitted that in the suit itself there was a commission report dt. 7.6.2003 showing that the value of the petition schedule property was Rs.95,000/- per cent and the value of the residential building was Rs.22,40,000/- and the total value of the property was Rs.51,37,500/- The records would show that the property having an extent of 31.5 cents with a residential house valued in 2003 in the suit at Rs.51,37,500/- was sold in the year 2008 for Rs.7,01,000/- The value, according to the appellant, was not shown in the proclamation. 16. On a perusal of the order under challenge, it is evident that the court below was convinced that selling a portion of the property was sufficient to satisfy the decree. But the entire property was sold, as the judgment debtor failed to produce the sketch of the portion of the property. Since the entire property is sold for a meagre amount, it is a material irregularity, which F.A.O.No. 274 of 2008 11 vitiates the sale. Therefore, we are of the view that the learned Sub Judge was not justified in dismissing the petition to set aside the sale. But the auction purchaser, who is not the decree holder, and who had deposited the purchase money in Court, which remained there for a few months, should be compensated. Keeping in mind the amount deposited and the time elapsed, we are of the view that fixing of amount of compensation as Rs.60,000/- would be just and reasonable. 17. Accordingly the appeal is allowed, on condition of the appellant depositing an amount of Rs.60,000/- in the Execution Court for payment of compensation to the auction purchaser within six weeks from this date. If the appellant deposits that amount within the stipulated time, the order dismissing E.A. No. 298 of 2008 will be set aside and that E.A. will be allowed and the sale will be set aside. The auction purchaser will be allowed to get back the amount deposited by him in the Execution F.A.O.No. 274 of 2008 12 Court and the compensation of Rs.60,000/- If the appellant fails to comply with the above conditions, this appeal will stand dismissed confirming the order in E.A.No. 298 of 2008. There is no order as to cost. (K. M. JOSEPH) Judge (M.L. JOSEPH FRANCIS) tm Judge