Full Judgment Text
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PETITIONER:
GAJADHAR PRASAD & ORS.
Vs.
RESPONDENT:
BABU BHAKTA RATAN & ORS.
DATE OF JUDGMENT14/08/1973
BENCH:
BEG, M. HAMEEDULLAH
BENCH:
BEG, M. HAMEEDULLAH
MATHEW, KUTTYIL KURIEN
CITATION:
1973 AIR 2593 1974 SCR (1) 372
1973 SCC (2) 629
ACT:
Code of Civil Procedure (Act 5 of 1898), O.21, r.66(2)(e)-
Scope of.
HEADNOTE:
In execution of a decree, six houses of the judgment debtors
were sold. in the sale proclamation, 3 houses were shown as
one item, two bungalows as one item and the remaining house
as another item. The valuation of each item in the
proclamation was practically that given by the decree-
holders. The Amin put up for sale the 3 houses comprised in
one item as separate houses and the total amount realised
from the sale of the 3 houses was 2-1/2 times the amount in
the sale proclamation. The two bungalows were however sold
as a single unit and purchased by the decree holders. After
the sales, the judgment debtors applied for setting aside
the sales on the ground of fraud and material irregularity
in conducting them, and also complained of substantial
injury. The execution court and the High Court, in appeal,
dismissed the applications.
In appeal to this Court,
HELD : The 2 bungalows should be sold afresh after
judicially considering and deciding the question whether
they can be sold separately and what particulars should be
inserted in the sale proclamation. [380C-D]
(a)The object of O.21, r.66(2)(e), C.P.C., is that
essential facts having a bearing on the question of value of
the property and which would assist the purchaser in forming
his own opinion on the value must be stated by the Court.
The Court should normally state the valuation given by both
the decree-holder as well as the judgment debtor where they
have both valued the property and these do not appear
fantastic. It may usefully state other material facts, such
as the area of land, nature of the-rights in it, municipal
assessment, actual rents realised, which could reasonably be
expected to affect the valuation. What could be reasonably
and usefully slated succinctly in a sale proclamation has to
be determined on the facts of each particular case. it is
not necessary for the execution court to state its own
estimate; nor is it necessary for the execution court to
order the insertion of a, judicially passed order in the
sale proclamation itself, but, it should pass an order
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showing that it had applied its mind to the need for
determining all the essential particulars, which would
reasonably be looked for by a purchaser and which should be
inserted in the sale proclamation. The order should show
that the Court had considered the objection, if any, of the
decree-holder or the judgment-debtor as the case may be, and
the Court should not merely accept the ipse dixit of one
side. [378C-H]
In the present case, the judgment-debtors bad given their
valuation and even applied for the appointment of a
commissioner at their expense to report on matters affecting
the value of the property, but, the execution court had
practically accepted, as its own valuation, without
indicating reasonable grounds for this preference, whatever
the decree-holder had asserted about the value of the
property. The area of the compound in which the two
bungalows were situated was not mentioned in the sale
proclamation, and though this land was nuzool leasehold land
neither the unexpired period of lease nor rent were
mentioned. It was ’not slated whether the bungalows would
be sold as one or two items of property, though the judgment
debtors asserted that they would fetch a much higher value
if sold separately. The Court rejected the judgment
debtors’ figures by merely observing that they are
exaggerated and practically accepted without hesitation, the
figures of the decree-holders. But, the valuation was
proved to be incorrect judged by the results of all the
auction sales taken as a whole. [379D-H]
Therefore, the execution court had not performed its duty
fairly and reasonably. Hence. there was a material
irregularity in conducting the sale.[1379 G]
373
Case law considered.
[Whether decree-holders’ conduct amounted to actual fraud
practised on the Court, not decided]. [379D-F]
(b)The result of the separate sales of the 3 houses
comprised in one item was that when the sale prices were
added up, they fetched a considerably higher price than that
put upon the properties when lumped together in one lot.
The High Court found that the sale of the two bungalows
separately would probably have similarly fetched a higher
price. Therefore, there is enough evidence to indicate that
the judgment-debtors had suffered substantial injury in so
far as the sale of the 2 bungalows is concerned. [380A-D]
JUDGMENT:
CIVIL APPELLATE JURISDSCTION : Civil Appeal No. 1649 of
1967.
Appeal by special leave from the judgment and decree dated
the 9th day of January 1964 of the High Court of Judicature
at Allahabad in First Appeal No. 81 of 1957.
J. N. Chatterjee and E. C. Aggarwala for the appellant.
The Judgment of the Court was delivered by-
BEG, J.-This is a judgment debtors’ appeal, by Certificate
of fitness of the case for appeal to this Court granted by
the High Court of Allahabad, arising out of an application
filed under Order 21, Rule 90, Civil Procedure Code.
The Respondent decree-holders had obtained a decree for
about Rs. 76,000/- against the appellants in a mortgage
suit. In execution of that decree sales of three items of
property, shown as houses belonging to the Judgment debtors
took place on 5-5-1955 and 7-5-1955. The items were
described as follows in the sale proclamation
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"Boundaries
------------------------------------------------------------
East West North South
------------------------------------------------------------
1. pucca build house
bearing pre- University Lane and House of Colonel
vious No.
8 and Present No. 5 Road temple of Marium Ganj
situate in Colonelgunj,
city of Kaliji B’bi & Road
Allahabad, together
with site ohd. mohd.
and building materials entire Raza.
16 anna share value it Rs. 10,350/-
2. Entire house bearing
previous House orLane House of Way
No, 805 situate in
Mohatta Gajadhas Gajadhar
Katra, pasiyana
city of Prasad, Houseof Prasad,
Allababad, valued at
Rs. 5040/-. Mahesh-
wary
Prasa
Vakil.
I Bungallows bearing
Nos, 8 and Lyal Road Bungalow Thon-
Club I Road
10, situate on Club Road, City No.12 hill Road.Road
of Allahabad with compound
plot No. 129 together with trees.
four walls and out houses etc.
all things right, and interests.
374
appertaining to bungalows the
site land whereof has been
acquired on lease dated 20-11-1948
and which lies within the same
boundary. Bungalow No. 8
valued at Rs. 24000/- Bungalow
No. 10 valued at Rs. 31200/-.
------------------------------------------------------
There is no encumbrance".
The main objection of the judgement-debtors-appellants to
this proclamation is that the execution Court had, in giving
the valuation of the properties in the proclamation,
practically accepted the statements made on behalf of the
decree-holders, and, without assigning any reason, failed to
mention the values put by the judgment-debtors on these
properties. The respective valuations of the properties by
the two sides were :
"1. No. 10 T. B. Sapru Road Valuation put by the
Valuation put by the D. H, Rs. 40,000/-. J. D. Rs.
100,000 2. No. 8 T. B. Sapru Road 3. No. 5
Colonelgunj Rs. 10,0001/- Rs. 60,000/4. No. 805 Katra. Rs.
1,000/- Rs. 25,000/-"
On 18-5-1948, long before the proclamation of sale was drawn
up on 31-3-1955, the judgment debtors had put in an
objection to the execution CDurt’s order of 14-2-1948
relating to the framing of the sale proclamation,
particularly with regard to the two bungalows situated in
the heart of the Civil Lines, the best residential area of
Allahabad’. They had stated that the area of land in the
compound in which the two bungalows were situated was three
acres and that the whole property was not worth less than
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Rupees one lac. They had objected to the sale of the two
bungalows in one lot. They had also asserted that the
latest municipal assessment of 1944 had displaced the
municipal assessment of 1934 relied upon by the decree-
holder. According to the judgment-debtors, the two
bungalows Nos. 8 & 10 on Tej Bahadur Sapru Road were
assessed at annual rents of Rs. 1500/- and Rs. 1200/- per
year. In an affidavit of 19-4-1947 they had asserted that a
bungalow situated nearby, assessed at an annual rent of Rs.
1500/-, was sold for Rs. 50,000/on 23-4-45 when prices were
lower. On 18-5-1948, the judgmentdebtors had also prayed
for the issue of a commission, at their expense, presumably
to view the property and give a report on relevant facts
before actually framing a sale proclamation in accordance
with the court’s order of 14-2-1948 directing insertion of
the value made by it.
On 5-5-1955, the Court Amin had himself put up house No. 5
situated in Colonelgunj, Allahabad, separately for sale and
sold it for Rs. 10,500/-. On the same date, the Amin sold
house No. 5-A in Colonelgunj for Rs. 8500/- and also house
No. 5-B separately for Rs. 7,000/-. Thus, a total amount of
Rs. 26,000/- was realised from
375
the sale of the three houses in one, compound at Colonelgunj
described as one item of property in the sale proclamation.
They had been valued at Rs. 10,000/. by the decree-holder
and Rs. 60,000/- by the judgment-debtor. The court had
valued the whole property at Rs. 10,350/-, and thus
practically assented to the decree-holder’s valuation and
rejected the judgment-debtor’s without assigning any reason
beyond expressing the opinion that it was exaggerated. The
property in Katra was sold for Rs. 3,750/- on 5-5-1955.
After the sale, the judgment-debtors applied to set aside
the sales on the ground of fraud and material irregularity
in conducting them and complained of substantial injury.
They relied on uncontroverted assertions made in their
affidavit of 19-4-1974 as well as on the assertions made in
an application dated 18-5-1948 where it was stated
"That the judgment debtor is informed that the
whole game of the decree holder is to
undervalue the property get the auction for a
song and purchase the property himself. This
underhand game may be stopped and justice be
done".
The learned Counsel for the judgment-debtors submitted that,
on the uncontroverted assertions of the judgment debtors,
the conclusion is irresistible that the decree-holder had
deliberately misled the Court and had committed a fraud upon
it. It was urged that the decree holders’ game had
succeeded because they had themselves bought the two
bungalows on Tej Bahadur Sapru Road for Rs. 56,000/-.
According to the judgment-debtors, Bungalow No. 8, in which
they carried on the business of cabinet making, could be let
for Rs. 250/- per month and was itself worth that much.
The Execution Court had relied upon the Amin’s report for
holding that the two bungalows could be properly sold as a
single unit because the servants’ quarters for the two
bungalows, which were situated in one compound, were the
same. The judgment debtors’ application had been dismissed
for absence of material irregularity or fraud and want of
proof of substantial injury as- a result of these auction
sales. A Division Bench of the High Court had affirmed
these findings, but had certified the case, under Art. 133
of the Constitution of India, as fit one for an appeal to
this Court.
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Two questions arise before us for decision. They are :
firstly, whether there was either fraud upon the court or
material irregularity in conducting the auction sales; and;
secondly, whether substantial injury to the judgment-debtor
had been proved have resulted from the auction sales.
It may be mentioned here that no one has put in appearance
on behalf of the decree-holders respondents, Mr. J. N.
Chatterjee, appearing on behalf of the judgment-debtors-
appellants, stated that he did not want to press objection
to sales of Colonelguni and Katra properties. Indeed, their
auction purchasers were not impleaded. Therefore, we will
refrain from deciding any question relating to Colonelgunj
and Katra properties.
376
We will now consider the question of material irregularity
in ordering and conducting the auction sale of the two
bungalows on Sir Tej Bahadur Sapru Road (formerly known as
Club Road). The provision which was said to have been
infringed is Order 21, Rule 66(2).
The whole of Rule 66 reads as follows
"R. 66(1) Where any property is ordered to be
sold by public auction in execution of a
decree, the court ’shall cause a proclamation
of the intended sale to be made in the langu-
age of such Court.
(2)Such proclamation shall be drawn up
after notice to the decree-holder and the
judgment-debtor and shall state the time and
place of sale, and specify as fairly and
accurately as possible-
(a) the property to be sold;
(b) the revenue assessed upon the estate or
part of the estate, where the property to be
sold is an interest in an estate or in part of
an estate paying revenue to the Government;
(c) any incumbrance to which the property is
liable;
(d) the amount for the recovery of which the
sale is ordered; and
(e) every other thing which the Court
considers material for a purchaser to know in
order to judge of the nature and value of the
property.
(3)Every application for an order for sale
under this rule shall be accompanied by a
statement signed and verified in the manner
hereinbefore prescribed for the signing and
verification of pleadings and containing so
far as they are known to or can be ascertained
by the person making the verification, the
matters required by sub-rule (2) to be
specified in the proclamation.
(4)For the purpose of ascertaining the
matters to be specified in the proclamation,
the Court may summon any person whom it thinks
necessary to summon and may examine him in
respect to any such matters and require him to
produce any document in his possession or
power relating thereto".
It was submitted that the Court should not have put its own
valuation on the property, as such a procedure was certain
to prejudice the minds of prospective purchasers with regard
to the value of the property to be auctioned. We find that
there is some conflict of opinion in the High Courts on this
question. The Madras High Court, in S. K. Veeraswami Pillai
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v. Kalvanasundaram Mudaliar & Ors.,(1) R. Srinivasan &
Os. v. the Andhra Bank Ltd.,(2) Y. A. S. Yellappa
(1) AIR 1927 Mad. 1009.
(2) AIR 1949 Mad, 398.
377
Naidu V. G. Venugopal Naidu,(1) and the Allahabad High
Court, in Md. Said Khan v. Md. Abdus Sami Khan & Anr., (2)
Dwarka Dass v. Bhawani Prasad & Ors.,(3) have held that it
is unnecessary for the Court to give its own estimate. The
Calcutta High Court in Rajah Ramessur Proshadnarain Singh v.
Rai Sham Krissen & Ors.,(4) Saurendra Mohan Tagore v. Rurruk
Chand & Ors.,(5) Bejoy Singh Dadhulla v. Ashutosh-Gossami &
Ors.,(6) Lachira v.’ Rameshwar Singh & Ors.(7) Pashupati
Nath Maliah & Anr., v. Bank of Behar,(") New Birbhum Coal
Co. Ltd. v. Surendra Nath Laik & Ors.,(9) the Patna High
Court, in Raghunath Singh v. Hazari Sahu & Ors.,(10) and Mt.
Golab Kuer & Anr. v. Mt. Bibi Saira & Ors.,(11) and the
Rangoon High Court, in A.M.K.M. Firm V. Baishmaw,,(12) have
expressed opinions favouring giving of the Court’s own
estimate of the value of the property to be sold. But, a
mere acceptance of the valuation given by the decree-holder
has been held to be material irregularity in A.M.K.M. Firm
v. Baishmaw (Supra). The High,Court of Bombay, in Charandas
Vasanji & Anr. v Dossabhoy Maganlal & Ors.,(13) Premaraj
Pannalal Shop v. Sadabai & Ors.(14) has held that, although,
it is not necessary for the execution Court to value the
property to be sold, yet, it may do so if it thinks fit. In
Sitabai Rambhau Marathe v. Gangadhar Dhanram Marwadi &
Anr.,(15) however, the Bombay High Court held that the Court
is bound to hold an enquiry as to the value of the property
and to state it in the sale proclamation. Although the
Madras High Court had held that it is not necessary for the
Court to give its own valuation, it expressed the opinion
that it is desirable, where there is a wide divergence
between the valuation of the decree-holder and of the judg-
ment debtor, to have property valued through an Amin and to
state it in the proclamation. The Calcutta view, in some of
the cases mentioned above, was that, although the Court need
not give its own valuation of the property in the sale
proclamation, it would be justified in stating the valuation
given by the parties.
It may be noticed here that there have been amendments of
Order 21, Rule 66 by different High Courts from 1929 onwards
dealing with the question of valuation. The Calcutta and
the Punjab High Courts have made it clear that "it shall not
be necessary for the Court itself to give its own estimate
of the value of the property but the proclamation shall
include the estimate, if any, given by either or both the
parties". In Andhra Pradesh, Order 21 Rule 66(2) (e) has
been amended to make it obligatory to give the value of the
property as stated : (i) by the decree-holder; (ii) by the
judgment-debtor. The
(1) AIR 1958 Mad. 423.
(2) AIR 1932 All 664.
(3) AIR 1960 All. 510.
(4) VIII Calcutta Weekly Notes 257.
(5) XII Calcutta Weekly Notes 542.
(6) AIR 1924 Cal. 589.
(7) AIR 1930 Cal. 78 1.
(8) AIR 1932 Cal. 141.
(9) AIR 1934 Cal. 205.
(10)AIR 1917 Pat. 381.
(11)AIR 1919 Pat. 372.
(12) AIR 1937 Rangoon 137.
(13)AIR 1939 Bom. 182.
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(14) AIR 1956 Bom. ’248.
(15) AIR 1935 Bom. 331.
378
Madras and Kerala High Courts have also, adopted the rule as
amended by the Andhra Pradesh High Court. The Madhya
Pradesh High Court amendment only mentions that the
particulars to be provided may include the decree-holder’s
estimate of the approximate market price. The Patna High
Court amendment provides :-
"that no estimate of the value of the
property, other than those, if any, made by
the decree-holder and judgmentdebtor
respectively together with a statement that
the Court does not vouch for the accuracy of
either, shall be inserted in the sale
proclamation".
A review of the authorities as well as the amendments to
rule 66(2) (e) makes it abundantly clear that the Court,
when stating the estimated value of the property to be sold,
must not accept merely the ipse dixit of one side. It is
certainly not necessary for, it to state its own estimate.
If this were required, it may, to be fair, necessitate
insertion of something like a summary of a judicially
considered order, giving its grounds, in the sale
proclamation, which may confuse bidders. It may also be
quite misleading if the Court’s estimate is erroneous.
Moreover, Rule 66(2) (e) requires the, Court to state only
the facts it considers material for a purchaser to judge the
value and nature of the property himself. Hence, the
purchaser should be left to judge the value for himself.
But, essential facts which have a bearing on the very
material question of value of the property and which would
assist the purchaser in forming his own opinion must be
stated That is, after all, the whole object of Order 21,
Rule 66(2) (e), Civil Procedure Code. The Court has only to
decide what all these material particulars are in each case.
We think that this is an obligation imposed by Rule 66 (2)
(e). In discharging it, the Court should normally state the
valuation given by both the decree-holder as well as the
judgment debtor where they have both valued the property,
and these do not appear fantastic. It may usefully state
other material facts, such as the area of land, nature of
rights in it, municipal assessment, actual rents realised,
which could reasonably be expected to affect valuation.
What could be reasonably and usefully stated succinctly in a
sale proclamation has to be determined on the facts of each
particular case. Inflexible rules are not desirable on such
a question.
In the case before us, the execution Court had practically
accepted, as its own valuation, without indicating
reasonable grounds for this preference,’ whatever the decree
holders had asserted about the value of the property. It
did not bother to seriously even consider the objections of
the judgment-debtors. We think that the duty to consider
what particulars should be inserted in the sale proclamation
and how the sale ought to be conducted should be performed
judicially and reasonably. If the execution Court does not,
as it did not in the case before us, apply its mind or give
any consideration whatsoever to the objections of the
judgment-debtor, we think a material irregularity would be
committed by the execution Court. It is not necessary for-
the execution Court to order the insertion of a judicially
passed order in the sale proclamation itself, but, it should
pass an
379
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order showing that it applied its mind to the need for
determining all the essential particulars, which would
reasonably be looked for by a purchaser, and which should be
inserted in the sale proclamation. The order should show
that it considered the objections, if any, of the decree-
holders or the judgment debtors, as the case may be. It
should not merely accept unhesitatingly the ipse dixit of
one side. We think that the execution Court had not
performed its duty fairly and reasonably in this case-..
After embarking on the difficult task of valuation, it
rejected the judgment debtors’ figures by merely observing
that they are exaggerated and practically accepted without
hesitation whatever the decree holders submitted, but this
valuation was proved to be incorrect judged by the results
of auction sales taken as I a whole.
Mr. J. N. Chatterji relied upon the: following passage, in
Marudanayagam Pillai v. Manickavasakam Chettiar(1) :
"If the respondent knew the true facts, if he
purchased at what he knew was too low a figure
based on an upset price accepted by the Court
owing to his own initial misrepresentation and
subsequent suppression of material facts, his
conduct would amount to fraud on the Court as
the learned subordinate judge points out".
It is not necessary for us to decide whether the decree-
holders’ conduct in the case before us would amount to
actual fraud practised on the Court with regard to the
valuation. The judgment-debtors were there with their own
valuation and had even applied for the appointment of a
Commissioner at their expense to report about matters
affecting the value of the property. They had asserted that
the two bungalows at Tej Bahadur Sapru Road would fetch a
much higher value if sold separately. The execution court
should have at least performed the duty, of considering
whether these objections were wellfounded.
We find from a perusal of the sale proclamation in this case
that even the area of the compound in which the two
bungalows were situated was not there. The land in the
compound is evidently nuzool leasehold land but the
unexpired period of the lease or rent payable on it are not
mentioned. It was not stated whether the bungalows, which
were valued separately, would be sold as one or two items of
property. Probably, it was left to the Amin to exercise his
own discretion in this matter, as he had exercised it in the
case of Colonelgunj property. The cumulative effect of all
the features of the case mentioned above is that we think
that there was material irregularity here in the conduct of
the execution sale of the two bungalows.
We now turn to the question of substantial injury. The
result of the separate sales of the houses in Colonelgunj
was that, when sale prices were added up, they fetched a
considerably higher price than that put upon these
properties, lumped together in one lot, by the decree-
holders. The High Court had also found that sales of the
two bungalows on the Tej Bahadur Sapru Road separately would
probably
(1) AIR 1945 PC. 67 70.
380
similarly have fetched a higher price. The affidavit dated
19-7-1947 filed by the judgment-debtors, as stated above,
had not been controverted by any material put forward by the
decree-holders.
We, therefore, think that there is enough evidence to
indicate that the judgment-debtors had suffered substantial
injury so far as the sale of the two bungalows numbers 8 &
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10 on Tej Bahadur Sapru Road, Allahabad, is concerned.
The result is that we allow this appeal to the extent that
we set aside the judgments and orders of the High Court and
of the execution Court with regard to the sale of bungalows
Nos. 8 & 10, together with their compound, and dismiss it as
regards the other properties. We also set aside the
execution sale of 7-5-1955 of these two bungalows with all
the land in their compound. We order that these two
bungalows will be sold afresh after judicially considering
and deciding the question whether they can be sold
separately and what particulars should be inserted in the
sale proclamation. The parties will bear their own costs.
V.P.S. Appeal partly allowed
381