Full Judgment Text
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PETITIONER:
M/S. MOTORS & INVESTMENTS LTD.
Vs.
RESPONDENT:
THE NEW BANK OF INDIA & ORS.
DATE OF JUDGMENT: 29/10/1996
BENCH:
K. RAMASWAMY, G.B. PATTANAIK
ACT:
HEADNOTE:
JUDGMENT:
THE 29TH DAY OF OCTOBER, 1996
Present:
Hon’ble Mr.Justice K.Ramaswamy
Hon’ble Mr.Justice G.B.Pattanaik
A.K.Ganguli, Sr.Adv. and V.Balachandran, Advs. with him
for the appellant
A.T.M.Sampath, Parmanand Gaur, M.A.Chinnaswamy, Advs.
for the Respondents.
O R D E R
The following Order of the Court was delivered:
Leave granted.
This appeal by special leave arises from the judgment
and decree of the Division Bench of the Madras High Court
made on October 24,1990 in OSA No.148/82. The first
respondent Bank laid the suit for the recovery of mortgage
amount by sale of 44 acres of land out of 80 acres belonging
to respondents 2, 3 and 7 in this appeal. Pending suit,
respondents 2 and 3 were adjudged as insolvents in
I.P.No.15/1978. In consequence, their right, title and
interest held in the land stood vested in the official
assignee, the 4th respondent in this Court by order dated
July 18,1979 directed the official assignee to sell their
interest in 44 acres of land by public auction. Since no one
was coming forward to purchase the land in the auction, the
appellant had offered Rs.67,500/- and by order of the Court
dated July 26,1982, the Court accepted the appellant’s offer
of Rs.77,500/-. By proceeding dated August 18,1982, the
learned Single Judge confirmed the sale. Feeling aggrieved,
on appeal, the 7th respondent, in this Court respondent
No.9, had offered a sum of Rs. 16,28,000/- and respondent
No.8 had offered a sum of Rs.1,50,000/- which was later
raised to Rs.2,50,000/- respectively. Treating it as offer,
the Division Bench directed the 9th respondent to deposit
10% of the upset price but he did not deposit the same; the
official assignee was also asked to file a report before the
Division Bench on the value of the land prevailing in the
neighbourhood varies between Rs.4,000/- and Rs.5,000/- per
acre and the lands in question would fetch as on December
10, 1990, a sum of Rs.3,35,000/- which was worked out at the
rate of Rs.7.600/- per acre. The High Court has set aside
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the sale and directed re-auction of the land, fixing the
upset price offered by the 8th respondent and directed the
sale in open auction accordingly.
Pending proceedings in this court, 7th respondent had
also offered to deposit a sum of Rs.20,00,000/- and as per
the direction of this Court the order was revoked. When the
appeal was dismissed by a short order, on being mentioned by
the learned counsel for the respondents to hear the matter
on merits, order was passed on July 24,1995 recalling the
order dated July 17,1995 and setting out the matter for
disposal. Thus, this appeal by special leave is being heard.
Shri Ganguli, learned senior counsel for the appellant
, contended that while the appellant had offered the
consolidated sum of Rs.67,500/- since no one was coming
forward to bid at higher amount, the appellant offered the
highest bid of Rs.77,500/-. The learned single Judge, in
view of the fact that the sale was postponed on more than
one occasion, considered it appropriate to confirm the sale.
The Division Bench, having noticed that respondent No.9 had
failed to deposit 10% of his offer, was not justified in
setting aside the sale and directing resale of the property.
Even in this Court, the respondents have not complied with
the offer of depositing the amount within the time and it
indicated that the respondents are only intending to prolong
the sale but they were not sincere to bid the highest price,
as offered by the appellant. Shri Sampath, learned counsel
for the respondents, contended that the report of the
official assignee is self-evident that the price of the
lands in the neighbourhood varies between Rs.4,000/- and
Rs.15,000/- per acre. Therefore, the price fetched by the
sale of 44 acres, i.e., Rs.77,500/- is too meagre and
inadequate. Accordingly, the Division Bench was right in
directing re-auction of the property fixing upset price
offered by the 8th respondent. Though the 7th respondent’s
conduct is not worthy of credence, the fact remains that 44
acres of the land were sold for inadequate consideration;
therefore, this court is not inclined to interfere with the
order passed by the Division Bench.
Having regard to the facts and circumstance of the
case, the question is: whether the confirmed action of sale
by the learned single Judge is valid in law. It is now well
settled legal position that when the Court was inclined to
bring the property to sale, the endeavour of the Court
should be to sustain the Court sale. Equally though Court
sale is compulsive sale, equal endeavour should be made to
fetch adequate price for the property sold so that the
decree debt would get satisfied and surplus, if any, could
be paid over to the judgment debtor. In this case, in the
suit for redemption of the mortgage, decree has yet to be
passed. Since respondent Nos.3 and 4 have been declared
insolvents, the right, title and interest had by them in the
property stood vested in the official assignee and the
official assignee was directed to put the properties to
sale. Resultantly, the properties have been brought to sale.
Sri Sampath says that insolvency order was anulled but the
same was disputed by Shri Ganguli. Be it as it may, it is
seen that 44 acres of land situated in Vadakkupattu in
Chhangulput District near about Chennai were brought to
sale for a price Rs.77,500/-. It appears to be highly
inadequate and the learned single Judge, therefore, was not
right in confirming the same. The Division Bench has taken
note of the offer made by the 8th respondent at
Rs.1,50,000/- which was subsequently raised to
Rs.2,50,000/- and directed to conduct the open auction. The
Division Bench also has taken into consideration the report
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submitted by the official assignee that the market value in
the neighbourhood lands ranges between Rs.4,000/ and
Rs.15,000/- per acre and the lands in question would be
worked out at the rate of Rs.7,600/- per acre, as in the
years 1990. This circumstance would also indicate that the
sale of the land made in 1982 was too inadequate. Therefore,
an attempt should have been made by the learned single Judge
to have the property sold by public auction by inviting
either tenders or open auction. The Division Bench,
therefore, was right in its conclusion in setting aside the
sale.
Shri Ganguli may be right in his contention that the
appellant having deposited the money, should be suitably
compensated and no direction has been given by the Division
Bench in that behalf. In the event of any subsisting
liability against the estate of the respondents 2 and 3, to
discharge any debts, it may be open to the official assignee
to bring such part of the properties which may be sufficient
to discharge the liability, to sale by public auction
either by inviting tenders or through appropriate procedure
under Order XXI of the CPC and then to conduct the sale in
accordance therewith. In case the official assignee has kept
Rs.77,500/- in any interest earning secruity, the principal
amount together with interest is directed to
be refunded to the appellant. In case the amount was not
kept in any deposit and was used to discharge outstanding
debt due by respondent Nos.2 and 3, the appellant is
entitled to get interest at 18% per annum on the amount
deposited by the appellant and the sale should be so
conducted keeping in view the interest liability. From the
amount secured by sale, apart from discharging the
liabilities fastened on the lands, the interest also should
be repaid to the appellant from the date of the deposit till
date of repayment to the appellant.
The appeal is accordingly disposed of but in the
circumstances without costs. It may be open to the appellant
to participate in the auction that may be conducted by
official consignee. In that event, it may be open to the
appellant to withdraw the amount.