IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE K.M.JOSEPH & THE HONOURABLE MR. JUSTICE M.L.JOSEPH FRANCIS WEDNESDAY, THE 2ND DECEMBER 2009 / 11TH AGRAHAYANA 1931 FAO.No. 284 of 2009 ------------------------------------- AGAINST THE ORDER DATED 09/10/2009 IN EA 278/09 IN EP 33/2004 IN OS.93/1999 of SUB COURT,NEYYATTINKARA .................... APPELLANT(S)/PETITIONER ---------------------------------------- M.RADHAKRISHNAN, VALIYAMEDAYIL VEEDU, FORT WARD, NEYYATTINKARA. BY ADV. SRI.K.P.SREEKUMAR RESPONDENT(S): RESPONDENTS ------------------------------------------------- 1. KANAKAKUMARI SREE RAJANI, (DECREE HOLDER IN O.S.93/99), MADHAVA VILASOM VEEDU, VAIKALLOOR, KANJAMPURAM, KANYAKUMARI DISTRICT, TAMIL NADU. 2. P.MADHAVAN NAIR, (DECREE HOLDER IN O.S.70/97), S/O.PARAMESWARAN PILLAI, MADHAVAM, EEZHAKKULAM, ARASUMMOODU WARD, KADAVATTARAM, NEYYATTINKARA, THIRUVANANTHAPURAM, PIN-695 121. ADV. SRI.G.S.REGHUNATH FOR R1 THIS FIRST APPEAL FROM ORDERS HAVING BEEN FINALLY HEARD ON 19.11.2009 ALONG WITH FAO. NO.285/09 & OTHER CONNECTED CASES, THE COURT ON 02.12.2009 DELIVERED THE FOLLOWING: K. M. JOSEPH & M. L. JOSEPH FRANCIS, JJ. -------------------------------------------------- F.A.O. NOS. 284/09, 285/09, 286/09, 287/09, 288/09, 290/09, 291/09, 293/09, 294/09, 295/09 & 296/09 --------------------------------------------------- Dated this the 2nd December, 2009 JUDGMENT K.M. Joseph, J. Since common questions arose for consideration in these Appeals, they are disposed of by a common Judgment. 2. The appellant in all these cases is the Judgment Debtor. He is the applicant under Order 21 Rule 90 of the Code of Civil Procedure in respect of all the eleven cases in question. His Applications stand dismissed by a common order. 3. We heard Shri K.P. Sreekumar, learned counsel appearing on behalf of the appellant in all the cases, Shri G.S. Reghunath who appears for the respondents in all the Appeals as also Shri George Varghese who appears for the first respondent in F.A.O.No.288/09. 4. The property in question is 19 cents with a building FAO.284/09 & CONN. CASES 2 which is described as a huge building by the appellant. It is common case that the Execution Petitions filed in various money Suits by the respondents came to be consolidated. The amount sought to be realised was Rs.32,97,389/=. The Court fixed the upset price as Rs.32 Lakhs. On the strength of a power of attorney executed by all the other decree holders, the decree holder in OS No.70/97, Shri Madhavan Nair (second respondent in FAO.284/09) bid at the auction and he purchased the property for Rs.32,01,000/=. Learned counsel for the appellants, Shri K.P. Sreekumar raised the following contentions before us: The property in question is situated in an important locality at Neyyattinkara town. It is worth over one Crore of rupees. The property had been purchased earlier by the Federal Bank which is the decree holder in one of the Suits. Applications were filed by the other decree holders to set aside the sale. Therein, they contended that the property is very valuable. It is pointed out that in one of the Applications, it is stated that the property is FAO.284/09 & CONN. CASES 3 worth more than Rs.40 Lakhs. It is pointed out that the value of the land was shown as Rs.1.5 Lakhs/2 Lakhs per cent. It is further contended that the Applications filed by the decree holders were accepted and the sale in favour of the Federal Bank was set aside. Subsequently, fresh sale proclamation was issued. Therein, it is pointed out that on the basis of the Certificate issued by a Tahsildar, the value of the property is shown as Rs.32 Lakhs only. It is contended that this has to be contrasted with the admitted value of the property going by the statements contained in the Application filed to set aside the sale by the decree holders earlier, when the property was sold in favour of one of the decree holders, namely the Federal Bank. Learned counsel would contend that it is true that the appellant did not participate at the stage of the preparation of the proclamation under Order 21 Rule 66 CPC. But, according to him, he had filed a review petition pointing out the fact that the value shown is very low. It was pointed out that it was not necessary to bring the entire nineteen cents which also had a FAO.284/09 & CONN. CASES 4 huge building thereon to sale for realising the decree amount in question. He would submit that in the Review Petitions, it was specifically stated that a Commission may be issued to ascertain the actual value of the property. However, the Execution Court dismissed the Review Petitions and the property was brought to sale on 13.7.2009 as already mentioned. Challenging the orders passed in the Review Petitions and the Applications to set aside the sale, the appellant preferred a Writ Petition. However, the same was rejected as not maintainable, in view of the availability of the right of appeal against the order passed in the Applications to set aside the sale. Learned counsel would contend that the court below was not correct in taking the view that it was not open to the appellant to maintain the contentions in view of Order 21 Rule 90 sub-rule (3). He relied on the following case law to contend that in view of the jurisdictional infirmity involved under Order 21 Rule 64, it is open to the party who did not object to the matter, to raise the contentions: 1) Muthuraj (Minor), rep. by next friend v. Ramaswamy Kounder and Others (ILR 2006 (1) Ker. 466). FAO.284/09 & CONN. CASES 5 2) Thomas v. Devassy (1998 (2) KLT 1078). 3) Regi George v. Bhaskaran Nair (1998 (2) KLT 640). He would further rely on the Judgment of this Court in Penta Properties v. Official Liquidator (1995 (2) KLT 376) to explain the meaning of the words “substantial injury” in Order 21 Rule 90 Sub-rule (2). He would contend that the Court has not correctly understood the decision of a learned Single Judge of this Court in Bahuleyan P. v. Moosa E.P. & Another (2006 (3) KLJ 372). He would further contend that the Court may not overlook the fact that the decree holder himself is the auction purchaser and while there may be a distinction between the decree holder/auction purchaser, and stranger/auction purchaser, and the Court may be reluctant to grant relief where the auction purchaser is a stranger in the facts of these cases, in view of the vitiating circumstances, the Court may not refuse relief to the appellant. He would further contend that in the facts of these cases, the Court may at any rate permit a private sale of the FAO.284/09 & CONN. CASES 6 property and to allow the decree debts to be satisfied from out of the proceeds of private sale. He would further contend that the plaint schedule property may be allowed to be sold in lots. 5. Per contra, Shri G. S. Reghunath, learned counsel for the contesting respondents would contend as follows: Admittedly, the appellant did not give any value for the properties when the proclamation was issued under Order 21 Rule 66 CPC. The Execution Court issued a Certificate calling upon the decree holders to produce valuation by the Tahsildar. It is submitted that this procedure is in keeping with the practice obtaining in the Courts in the Travancore Region. Accordingly, the tahsildar proceeded to get the valuation done. It is pointed out that it was not an arbitrary exercise. The Tahsildar got the valuation of the building done through the Superintending Engineer, PWD (Building & Local works), South Circle. A copy of the letter issued by the Tahsildar in this regard is produced in this Court. The building stands valued at Rs.16,05,701/=. The land was valued at Rs.1,80,000/= per Are. FAO.284/09 & CONN. CASES 7 The value of the land was done on the basis of enquiry conducted through the Village Officer, Neyyattinkara. This is what is stated in the Certificate issued by the Tahsildar. It is pointed out that contrary to the contention of the appellant, the Execution Court was satisfied about the valuation as is evident from the order passed in the Review Petitions. It is further pointed out that the Decrees have been pending execution for a long time. They were in different Courts. The execution was called over and consolidated and an order for ratable distribution was passed, which is not challenged by the appellant. It is further pointed out that the conduct of the appellant in not applying to set aside the sale of the property at the instance of one of the decree holders, namely Federal Bank, may be borne in mind. It is submitted that the sale was held for an amount of Rs.2,73,460/=. It is submitted that the Federal Bank and the appellant were colluding. It is further submitted that the assertions made by some of the decree holders, when the Applications were made to set aside the sale, may be evaluated FAO.284/09 & CONN. CASES 8 in the actual context. It is further submitted that it did involve some measure of guess work. It is further contended that when there was evidence in the form of the Certificate of the Tahsildar which was based on the enquiry conducted by the Village Officer in regard to the land and the input by the Superintending Engineer in regard to the building, it would prevail over the estimation of value by certain decree holders. He would further contend that actually Order 21 Rule 90(3) would bar the argument raised by the appellant. According to him, the case law emanating from the Apex Court related to a stage where Order 21 Rule 90(3) had not been inserted. He would further contend that the appellant had filed Applications seeking to review the decision taken as regards the sale proclamation on the grounds of under-valuation and Order 21 Rule 64. He would point out that these are the very grounds which are seen taken again in the Application under Order 21 Rule 90. He would, therefore, contend that there is a bar of res judicata in the matter. Next, he would submit that in view of the fact that the decree FAO.284/09 & CONN. CASES 9 debt in the light of the consolidation of the various Execution Petitions is nearly Rs.33 Lakhs and the value of the property is shown as Rs.32 Lakhs, there is nothing illegal in the Execution Court, not finding that a portion of the property should be sold under Order 21 Rule 64 CPC, to realise the decree amount. He, therefore, contended that there is no merit in the contention that the property could be ordered to be sold in lots. He would further contend that in an Application under Order 21 Rule 90, there must be materials to prove that there was a material irregularity or fraud in the context of the sale. It is pointed out that there is no evidence by the appellant to establish that there was any material irregularity or fraud vitiating the same. He relied on the decision in Immanuel v. Rajappan (2003 (3) KLT 113) in this regard. He would then contend that there is no material to show that the sale was held for a grossly inadequate consideration. He would refer to the proclamation of the schedule of the property and point out that the property is situated in an interior area and on the north of the property, was FAO.284/09 & CONN. CASES 10 the road going to the Krishna Swamy Temple and on the east, it is bounded by a bylane. He would point out that a property which is encumbered (charged money decrees), it would not fetch a high price in a market sale. It is contended that there was no one to bid at a higher price and that is how the power of attorney holder of the decree holders, Shri Madhavan Nair proceeded to bid for the property successfully at Rs.32,01,000/=. 6. Shri K. P. Sreekumar would contend that the fact that there was consolidation order and that there was an order for ratable distribution would not mean that the Execution Court is not to sell the property in accordance with law. He would further contend that the fact that the appellant did not object to the sale in favour of the Federal Bank is of no moment, as an Application was filed to set aside the sale and when the sale is set aside, the title would revert back to the judgment debtor. Shri George Varghese appearing on behalf of the Federal Bank would support the appellant and he would also pray that the sale may be set aside. According to him, further amounts will FAO.284/09 & CONN. CASES 11 remain due to the Bank, if the sale is allowed to stand. 7. The appellant did not apply to set aside the sale held earlier for a sum of Rs.2,73,460/=. On the other hand, some of the decree holders applied to have the sale set aside. They alleged that the property was much more valuable and they stated the value as above Rs.40 Lakhs, (Rs.1.5 Lakhs per cent/ Rs.2 Lakhs per cent). The sale in favour of the Federal Bank was set aside. The Federal Bank was directed to file a fresh proclamation. The Federal Bank apparently did not proceed further. It is the other decree holders who took steps to bring the property to sale. The appellant again did not choose to participate in the said proceedings. He did not state his version of the value of the property. The Execution Court proceeded to issue a Certificate so that a valuation may be done by the Tahsildar. As already noted, the Tahsildar issued the Certificate produced along with the Counter Affidavit as Annexure B4 at Rs.16,05,701/= for the building and Rs.1,80,000/= per Are for the land. Thus, the value of the property was assessed at Rs.32 FAO.284/09 & CONN. CASES 12 Lakhs. The decree amount came to Rs.32,97,389/=. The upset price came to be fixed as Rs.32 Lakhs. 8. The Appellant challenged both the order passed in the Review Petitions and also the order passed dismissing the petitions filed to set aside the sale by filing a Writ Petition before this Court. The Writ Petition was not numbered. It was sent up before a learned Single Judge. He upheld the objection of the Office and took the view that the order rejecting an application to set aside the sale being appealable, the Writ Petition is not maintainable. It was accordingly that these Appeals came to be filed. 9. Order 21 rule 64, undoubtedly, casts a solemn duty on the Execution Court to apply its mind, whenever execution is sought by a sale of the property as to whether the decree could be satisfied by sale of the portion of the property. There is a large body of case law in this regard. It suffices to refer to the following decisions: FAO.284/09 & CONN. CASES 13 1) Muthuraj (Minor) represented by next friend v. Ramaswamy Kounder and Others (ILR 2006(1) Ker.466). 2) Gnan Das v. Paulin Moraes (1998 (2) KLT 88). 3) Thomas v. Devassy (1998 (2) KLT 1078). It is pertinent to notice that in Mathuraj (Minor) rep. by next friend v. Ramaswamy Kounder and Others (ILR 2006 (1) Ker. 466), nearly nine acres of land was sold at what was found to be shockingly low price of Rs.1,65,000/= in one Suit and Rs.1,55,000/= in another Suit. The decree to be satisfied in the first Suit was only Rs.51,688/= and Rs.78,292/= in the other suit. It was found also that the six items of properties were lying well within boundaries and are severable from each other. In this context, the learned Single Judge of this Court held as follows: “Even if the property is lying as a single compact plot, it does not in any manner lessen the legal obligation of the Court as we will presently FAO.284/09 & CONN. CASES 14 see. In all execution proceedings, the court has to first decide whether it is necessary to bring the whole of the attached property to sale or whether such portion thereof as may be necessary to satisfy the decree would alone be sufficient. If the property is large and the decree to be satisfied is small, the court must bring to sale only such property, the proceedings of which would be sufficient to satisfy the claim of the decree holder. It is immaterial whether the property is one or several. Even if the property is one, if a separate portion could be sold without violating any provision of law, only such portion of the property should be sold. The choice regarding the specificity of the property to be sold is not one within the pure discretion of the court, but is an obligation imposed on the court. Care must, therefore, be taken to put up only such portion of the property for sale as would meet the claim made in the execution petition. A court sale held without considering this aspect of the matter will not be one in conformity with the requirement of law and would be considered as illegal and without jurisdiction. Ambati Narasayya v. M. Subbarao. This is a mandatory requirement under O.21, Rule FAO.284/09 & CONN. CASES 15 64 and O.21, R.66(2)(a) read with Form 27 of Appendix E to the Code of Civil Procedure (see also M/s. Shalimar Cinema v. Basin Film Corporation, Ambati Narasaiah v. M. Subha Rao, Desh Bhandu Gupta v. N.L. Anand and Rajinder singh and Lalchand v. VIII Addl. District Judge). Since it is a mandatory duty of the executing court to comply with the above provision, any omission on the part of the Judgment-debtor to raise a plea in that behalf in response to the notice under Order XXI, Rule 66 C.P.C. will not be a bar under O.XXI, R.90(3) C.P.C., precluding him from raising that contention (See Gnan Das v. Paulin Moraes). The aforementioned decisions also show that gross under-valuation of the property will constitute material irregularity within the meaning of O.21, R.90 C.P.C. The executing court was, therefore, not justified in dismissing the applications filed by the minor under O.21, R.90 C.P.c. without an adjudication of the question.” In Gnan Das v. Paulin Moraes (1998 (2) KLT 88), the decree amount was Rs.60,000/=. There were two items of properties. FAO.284/09 & CONN. CASES 16 The first item was forty cents of land with building. The second item was three cents with building. It was in this context that the Court found that the sale of the property is bad. In Thomas v. Devassy (1998 (2) KLT 1078), a learned Single Judge of this Court after referring to various case law including Gnan Das v. Paulin Moraes (1998 (2) KLT 88) was considering a case where a property having a total extent of 59 cents was sold for Rs.5,134/=. That was a case also where the Court found discrepancy between the value stated in the proclamation and the real value was so great as to shock the Court's conscience. It was by itself valuable evidence of the fraud by the decree holder. It was noticed that the properties were lying as two properties, but the decree holder included those properties as one item. 10. The main plank of attack of the appellant is based on the case set up by Shri Madhavan Nair in his Affidavit in support of his Application to set aside the sale in favour of Federal Bank. What is stated in paragraph 19 of Annexure A FAO.284/09 & CONN. CASES 17 Affidavit in support of the Application to set aside the sale, filed by Shri Madhavan Nair, the auction purchaser, is as follows: The property is situated nearby to the Neyyattinkara Krishna Swami Temple and the National Highway. It is situated 100 metres away from the Neyyattinkara Court Complex. It is situated 150 metres away from the Neyyattinkara Bus Stand junction and within 75 metres from the Allummoodu Junction. The property is situated within 150 metres of the Civil Station, Taluk Office and Taluk Hospital. It is situated near the Neyyattinkara Swadeshabhimani Ground. It is further stated that it is near the Catholic Syrian Bank and the multi-storeyed building housing cammercial activities. The value of the property is above Rs.2 Lakhs per cent. It is further stated that the building was valued by one Shri Kamaluddeen who was also an Engineer, at Rs.25,43,440/=. The auction purchaser, Shri Madhavan Nair also stated in paragraph 15 of Annexure A that only a portion of the schedule property need be sold to realise the decree debt. FAO.284/09 & CONN. CASES 18 11. Two essential questions which arise are as follows: 1) Whether there is violation of Order 21 Rule 64 CPC? 2) Whether the sale was for grossly inadequate price? As far as the first question is concerned the principle which has been established by the Courts is whether the property is large and the decree amount is small. The Court has to find whether the sale of the entire property is necessary or it suffices if portion or portions of the property is sold to realise the decretal debt. Even if there is only one property, depending on the question as to whether the value of the property is such that a portion of it could be sold to realise the decretal debt, the Court may have to consider the question. Applying the test to the facts of these cases, let us examine the effect. The property was originally knocked down for Rs.2,73,460/=. On the application of some of the decree holders the said sale in favour of the Bank was set aside. It is very pertinent to note that very strangely the appellant did not choose to challenge the sale which was held. We do not overlook the argument of the contesting respondents that there was some collusion between FAO.284/09 & CONN. CASES 19 the appellant and the Federal Bank. In fact, if the sale had become final, the appellant would have lost the property apparently for less than Rs.3 Lakhs and what is more, the rights of all the other decree holders impaired. Thereafter, when the property was brought to sale, the appellant chose to remain as silent spectator. He did not offer what he thought was the value of the property. Of course, the Execution Court is not bound to put a value on the property as such. But, if the value of the property is indicated by the decree holder and the judgment debtor, the Court is to enter such value in the proclamation. The Execution Court also has to incorporate any other relevant aspects. No doubt, the appellant filed Review Petitions. There is some merit in the contention of the contesting respondents that in the facts of the case, it could not be open to the appellant to seek review of the order. It is to be noted that it is not as the Execution Court without anything more accepted a value as suggested by the decree holders. On the other hand, in keeping with the practice it had, issued a certificate calling upon the FAO.284/09 & CONN. CASES 20 decree holders to produce valuation certificate by the Tahsildar. The Tahsildar got the property valued by the Village Officer in respect of the land. Likewise, in regard to the building, the building was valued by the Superintending Engineer. It is this valuation which the Execution Court incorporated in the proclamation. The value was Rs.32 Lakhs. The decretal amount was nearly Rs.33 Lakhs. If this valuation is found acceptable, we do not see how the appellant is justified in invoking the principle underlined in Order 21 Rule 64 or demanding that the property should be ordered to be sold in lots. When the application under Order 21 Rule 90 was filed, it is indisputable that the applicant has a duty to satisfy the Court that there is material irregularity or fraud and that he has suffered loss consequently. Learned counsel for the appellant would contend that there is no basis for the said certificate of the Tahsildar and that it should not have been accepted.