Case: Radhy Shyam Vs. Shyam Behari Singh

85 (FB)), the High Court of Delhi also has held that the expression judgment in Cl. 10 of the Letters Patent of the Lahore High Court not only meant a judgment having the effect of a decree, but any Order which affected the merits of a controversy between the parties by determining some disputed right or liability. 6. In Shankarlal Aggarwal v. Shankarlal Poddar, (1964) 1 SCR 717 = (AIR 1965 SC 507 ), the question was whether an order passed by a single Judge of the High Court confirming an auction sale during the winding up proceedings of the company was appealable. Since the Court held that such an order was appealable under Section 202 of the Indian Companies Act, 1913, it did not go into the question whether it was a judgment within the meaning of Cl. 15 of the Letters Patent. The decision, therefore, does not help. Similarly, Mohan Lal Magan Lal Thacker v. State of Gujarat, (1968) 2 SCR 685 = (AIR 1968 SC 733 ) and Tarapore and Co. v. M/s. V/o. Tractors Export, Moscow, (1969) 2 SCR 699 = (AIR 1970 SC 1168 ) also are strictly not relevant as they were decisions on the meaning of the expression final order in Articles 133 and 134 (1) (e) of the Constitution and nut on the interpretation of the term judgment in the Letters Patent of the High Courts. 7. There can be no doubt that an application under O. XXI, Rule 90 to set aside an auction sale concerns the rights of a person declared to be the purchaser. If the application is allowed, the sale is set aside and the purchaser is deprived of his right to have the sale confirmed by the Court under Rule 92. Such a right is a valuable right, in that, upon such confirmation the sale becomes absolute and the rights of ownership in the property so sold become vested in him. A decision in such a proceeding, therefore, must be said to be one determining the right of the auction purchaser to have the sale confirmed and made absolute and of the judgment-debtor conferred by Rule 90 to have it set aside and a resale ordered. In our view an order in a proceeding under Order XXI, Rule 90 is a judgment inasmuch as such a proceeding raises a controversy between the parties therein affecting their valuable rights and the order allowing the application certainly deprives the purchaser of rights accrued to him as a result of the auction-sale. We, therefore, agree with the High Court that a Letters Patent appeal lay against the order of the learned single Judge. 8. Rule 90 of U. XXI of the Code, as amended by the Allahabad High Court, inter alia, provides that no sale shall be set aside on the ground of irregularity or even fraud unless upon the facts proved the Court is satisfied that the applicant has sustained injury by reason of such gularity or fraud. Mere proof of a material irregularity such as the one under Rule 69 and inadequacy of price realised in such a sale, in other words injury, is, therefore, not sufficient. What has to be established is there was not only inadequacy of the price but that that inadequacy was caused by reason of the material irregularity or fraud. A connection has thus to be established between the inadequacy of the price and the material irregularity. 9. The learned single Judge found that the appellant had been prejudiced inasmuch as the said sale realised only Rs. 8000/- though the value of the appellants share was Rs. 20,000/-. This view was founded upon a report made by the Amin of the Executive Court in which that officer had valued the said share at Rs. 20,000/-. The Division Bench, however, held, and in our view rightly, that the learned single Judge was in error in relying upon that report. The record clearly shows that no notice was given to the respondent of the appellants application to have a commissioner appointed to value the property. The trial Court appointed the Amin as commissioner without any such notice and behind the back of the respondent. The Amin made his valuation without giving an opportunity to the respondent to be heard. No opportunity was ever given to the respondent to raise any objection to the said valuation. The report was filed in the trial Court without any notice to the respondent. Indeed no reference was made to the report in the trial court so that the trial court could not give any chance to the respondent to raise any contention against it. It was for the first time brought out before the learned single Judge who accepted if and held on the strength of it that the price realised at the sale was grossly inadequate. In these circumstances the Division Bench rightly held that the learned single Judge erred in relying on such a report. 10. Barring the report no evidence whatsoever was led by the appellant to show that his share in the said property was worth Rs. 20,000/-, and that therefore the price realised at the auction was inadequate. The Division Bench was, in our view, right in holding that the appellant had failed to show inadequacy of the price or that such inadequacy was occasioned by the said material irregularity. 11. When it was realised that the contention as to the inadequacy of price cannot be sustained, counsel tried to argue that the said sale fetched Rs. 8000/- only as the proclamation for sale had set out the value of the appellants share at that amount only. No such grievance was made before the trial court, nor was such a grievance incorporated in the memorandum of appeal before the High Court. Also, no such ground has been taken in the special leave petition before this Court. Obviously, the appellant could not raise such a contention before the High Court, much less before this Court.

Decision (1 = appeal accepted, 0 = rejected): 0

Explanation:
0[ds]Some of these decisions, however, are under Sections 109 and 110 of theCode of Civil Procedure and Articles 133 and 134 of the Constitution which would have no bearing on the construction of Clause 10 of the Letters Patent. But before we enter into the controversy as to the meaning of the term judgment in Cl. 10 it would be necessary to remember that the respondent having been declared as the highest bidder became the purchaser of the appellants one fourth share in the said property. No doubt the sale had to be confirmed by the Court under Rule 92 of Order XXI before it could become absolute and in the meantime the appellant could apply under Rule 90 to have it set aside. If the Court, on such an application, were to pass an order setting aside the sale, such an order would clearly affect the rights accrued to by the respondent as a result of the sale. On the other hand, if the application were to be dismissed, such dismissal affects the right of the judgment-debtor under Rule 90. The application under that Rule and the order made thereon, therefore, are not merely procedural matters but are matters affecting the rights of both the auction purchaser and the judgment-debtor7. There can be no doubt that an application under O. XXI, Rule 90 to set aside an auction sale concerns the rights of a person declared to be the purchaser. If the application is allowed, the sale is set aside and the purchaser is deprived of his right to have the sale confirmed by the Court under Rule 92. Such a right is a valuable right, in that, upon such confirmation the sale becomes absolute and the rights of ownership in the property so sold become vested in him. A decision in such a proceeding, therefore, must be said to be one determining the right of the auction purchaser to have the sale confirmed and made absolute and of the judgment-debtor conferred by Rule 90 to have it set aside and a resale ordered. In our view an order in a proceeding under Order XXI, Rule 90 is a judgment inasmuch as such a proceeding raises a controversy between the parties therein affecting their valuable rights and the order allowing the application certainly deprives the purchaser of rights accrued to him as a result of the auction-sale. We, therefore, agree with the High Court that a Letters Patent appeal lay against the order of the learned single Judge8. Rule 90 of U. XXI of the Code, as amended by the Allahabad High Court, inter alia, provides that no sale shall be set aside on the ground of irregularity or even fraud unless upon the facts proved the Court is satisfied that the applicant has sustained injury by reason of such gularity or fraud. Mere proof of a material irregularity such as the one under Rule 69 and inadequacy of price realised in such a sale, in other words injury, is, therefore, not sufficient. What has to be established is there was not only inadequacy of the price but that that inadequacy was caused by reason of the material irregularity or fraud. A connection has thus to be established between the inadequacy of the price and the material irregularity9. The learned single Judge found that the appellant had been prejudiced inasmuch as the said sale realised only Rs. 8000/- though the value of the appellants share was Rs. 20,000/-. This view was founded upon a report made by the Amin of the Executive Court in which that officer had valued the said share at Rs. 20,000/-. The Division Bench, however, held, and in our view rightly, that the learned single Judge was in error in relying upon that report. The record clearly shows that no notice was given to the respondent of the appellants application to have a commissioner appointed to value the property. The trial Court appointed the Amin as commissioner without any such notice and behind the back of the respondent. The Amin made his valuation without giving an opportunity to the respondent to be heard. No opportunity was ever given to the respondent to raise any objection to the said valuation. The report was filed in the trial Court without any notice to the respondent. Indeed no reference was made to the report in the trial court so that the trial court could not give any chance to the respondent to raise any contention against it. It was for the first time brought out before the learned single Judge who accepted if and held on the strength of it that the price realised at the sale was grossly inadequate. In these circumstances the Division Bench rightly held that the learned single Judge erred in relying on such a report10. Barring the report no evidence whatsoever was led by the appellant to show that his share in the said property was worth Rs. 20,000/-, and that therefore the price realised at the auction was inadequate. The Division Bench was, in our view, right in holding that the appellant had failed to show inadequacy of the price or that such inadequacy was occasioned by the said material irregularity11. When it was realised that the contention as to the inadequacy of price cannot be sustained, counsel tried to argue that the said sale fetched Rs. 8000/- only as the proclamation for sale had set out the value of the appellants share at that amount only. No such grievance was made before the trial court, nor was such a grievance incorporated in the memorandum of appeal before the High Court. Also, no such ground has been taken in the special leave petition before this Court. Obviously, the appellant could not raise such a contention before the High Court, much less before this Court.