Punjab-Haryana High Court
Randhir Singh And Ors. vs New Bank Of India And Ors. on 8 January, 2002
Equivalent citations: AIR2002P&H264, AIR 2002 PUNJAB AND HARYANA 264, (2003) 1 CIVILCOURTC 530, (2002) 3 PUN LR 840, (2003) 1 ICC 699
Author: M.L. Singhal
Bench: M.L. Singhal
JUDGMENT M.L. Singhal, J.
1. New Bank of India, Dasuya Branch obtained decree in Civil Suit No. 222 of 19-7-1989 for the recovery of Rs. 1,39,096/- against Randhir Singh and others on 28-7-90. Decretal amount was recoverable by the sale of the mortgaged land measuring 76 kanal, 17 marla and by the sale of tractor hypothecated with the Bank. Decree-holder Bank, filed execution for the recovery of the decretal amount i.e. Rs. 1,39,090/- (sic) + Rs. 21,776/- as interest up to 17-10-90 plus costs and legal fee. In execution of the decree, land measuring 44 kanal was auctioned for a sum of Rs. 1,42,500/- i.e. @ Rs. 3200/- per kanal. Land was purchased by Darshan Singh and Jit Singh sons of Rattan Singh at an auction sale. Sale certificate was issued to them in respect of land measuring 44 kanal, 17 marla on 6-3-95 by Subordinate Judge, First Class, Dasuya.
2. Gurnam Singh and others filed objections to the execution sale under Order 21, Rule 90, CPC. It was alleged in the objections that one of the objectors named Rajwant Kaur was not party to the suit but her share was also sold in the auction. Value of the property involved in this execution was not less than Rs. 1.50 lacs per acre. Land was sold at a very low price which can be said to be highly inadequate and unfair. Before issuing warrant of sale, the Court should have assessed how much land would be sufficient enough to satisfy the decree which was not done by the Court in this case. Suit property was attached illegally and unlawfully in violation of the established provisions of law. Said auction/sale dated 13-3-92 came to the notice of the JD objectors on 9-5-92 when the Court received the re-
port of the alleged illegal auction/sale. It was further alleged that as per the report, sale was effected by Tehsildar, Dasuya who was not competent to effect sale. No munadi or publication was affected in the village and report to this effect is false and got made by the concerned person in connivance with the alleged Chowkidar and attesting witness at the instance and instigation of the official of the DH-Bank and the person who purchased the suit property. It was kept a guarded secret as to when the sale would take place. There should have been munadi or publication in the village as to the date when sale was to take place so that maximum purchasers could be attracted who could participate in the auction proceedings. The person who conducted the sale on 13-3-92 committed material irregularities, illegality and fraud in publishing or conducting the sale. Sale was to be effected on 4-3-92 but sale was effected on 13-3-92. No munadi or publication was made as to the changed date when sale was to take place. Tehsildar, Dasuya was not at all competent to effect the sale on any other date or time except 4-3-92. It is settled law that when sale is held on a day different from that on which it was notified to be held earlier and as to the date when sale was held JD could have had no notice, such type of sale is illegal. Similarly, where the Court ordered the sale to be held at a particular place but it was notified to be held and it was actually held at a different place, the sale would be illegal. In fact, no sale was done on 13-3-92 as mentioned in the report and the officer conducting the sale in connivance with purchaser, official of the DH Bank and some persons inimical to the JDs had prepared fake and false record. It was also alleged that they filed objections under Order 21, Rules 58 and 59, CPC against attachment. Without deciding those objections, sale was held. Sale could not be held without deciding those objections.
3. Auction purchasers put in reply contesting these objections. It was urged that they have not been impleaded as party to the objections. Objections are not within time. No substantial loss was suffered by the judgment-debtor. Objectors had knowledge of the sale. Sale was conducted legally and by duly authorised person and the land sold fetched market price. Auction sale took place after all the formalities prescribed by law had been complied with. It was denied that the sale was the result of fraud.
4. DH Bank also put in reply to these objections. It was urged that the land which was sold was mortgaged with the decree-holder Bank as collateral security. Decree was passed for the recovery of the amount by the sale of the mortgaged land. It was urged that the objections are without any basis and have no legs to stand upon. On the pleadings of the parties, the following issues were framed by the executing Court:--
1. Whether the judgment-debtors have suffered material loss by auction ? OP-Objectors
2. Whether the auction conducted by the Tehsildar is illegal, null and void ? OPO
3. What is the effect of non-impleading of auction purchasers as party in objection petitions ? OPR
4. Relief.
5. Vide order dated 23-2-95, Sub-Judge, First Class, Dasuya dismissed these objections in view of his findings that the land measuring 44 kanal, 17 marla which was sold in this case fetched price of Rs. 1,42,500/- on 13-3-92 i.e. about 25,000/- per acre. This price if compared to the price prevailing in the year 1990-91 cannot be said to be very low. It was found that even otherwise also, inadequacy of consideration could not be a ground for setting aside sale, moreso, when no substantial injury was caused to the JD. It was also found that the objections are not within limitation. Auction sale was held on 13-3-92. Objections were filed on 20-5-92 i.e. after more than 60 days had elapsed. It was held that auction sale could be challenged within 60 days of the date it took place.
6. Judgment-debtors appeal against this order was dismissed by Additional District Judge, Hoshiarpur vide order dated 5-11-99. Still not satisfied JDs have come up in revision to this Court.
7. I have heard the learned Counsel for the JD-objectors-petitioners and the learned Counsel for the auction, purchasers and have gone through the record.
8. It was submitted by the learned Counsel for the petitioners/JD-Objectors that Gurnam Singh and Arjan Singh took a loan of Rs. 70,000/- for the purchase of tractor from the New Bank of India which became merged with the Punjab National Bank on 31-10-84. They mortgaged their land measuring 75 kanal, 17 marlas with the Bank and also hypothecated tractor which was purchased by them with the said loan amount. Gurnam Singh and Arjan Singh could not repay the amount together with interest. Bank filed suit for the recovery of Rs. 1,39,096/- with interest and costs of the suit. It was prayed that the decretal amount be got recovered by the sale of mortgaged land and the hypothecated tractor against Gurnam Singh and the heirs of Arjan Singh. Suit was decreed on 20-7-90. It was submitted that there was no compliance with the provisions of Order 21, Rule 66, CPC before the auction sale was held. Amount sought to be recovered was Rs. 1,60,866/-set out in the proclamation of sale which was drawn up under Order 21, Rule 66, CPC. In the proclamation of sale, the entire land measuring 44 kanal, 17 marla minus 6 kanal, 8 marla pertaining to the share of Paramjit Kaur minor daughter of Arjan Singh was set out. Land measuring 44 kanal, 17 marla minus 6 kanal, 8 marla was put to sale on 13-3-92. It fetched Rs. 1,42,500/-. Darshan Singh and Jit Singh sons of Rattan Singh were the highest bidders and their bid was accepted by the Tehsildar who conducted the sale. While drawing up proclamation of sale, no effort was made by the Court to determine how much land would suffice for satisfying the decretal amount. It was submitted that the Court should have determined how much land would suffice to satisfy the decretal amount. It was submitted that Court should have further set out reserve price below which land could not at all be put to sale. In support of this submission, he drew my attention to Aman Industries v. Punjab Financial Corporation, 1992 Civil Court C 97 (Punj & Har), where it was held that in case of sale of valuable property, the Court is required to make its valuation and enter it in the sale proclamation. In Shalimar Cinema v. Bhasin Film Corporation, 1988 Civil Court C 27 : (AIR 1987 SC 2081), while dealing with the question of fulfilling the requirements of Rule 66 of Order 21, the Hon'ble Supreme Court observed as follows (Para 3) :--
"But we do wish to say that the Court has a duty to see that the requirements of Order 21, Rule 66 are properly complied with. In the words of the Judicial Committee, "In sale under the direction of the Court, it is incumbent on the Court to be scrupulous in the extreme". Though it may not be necessary for the Court to make valuation and enter it in the sale proclamation in every case, it is desirable at least in cases of sale of valuable property that the Court make its valuation and enter it in the sale proclamation. We think it necessary to add that no action of the court or its officer should be such as to give rise to the criticism that it was done in an indifferent or casual way. We are constrained to make these observations because it was found by the learned single Judge in the present case that there actually was no application under Order 21, Rule 66 and that the sale proclamation was prepared in a routine fashion."
9. OW1 Balwinder Singh stated that no sale was conducted in the village regarding this land. No proclamation/munadi ever took place in the village. Market value of the land which was sold was Rs. 1.5 lacs per acre. OW2 Prem Lal deposed that his father was Chowkidar of the village. After the death of his father, he is Chowkidar. No proclamation was ever effected in the village and no sale took place in the village. PW3 Gurnam Singh deposed that sale not conducted in the village. No proclamation/ munadl was effected in the village. Date for conducting the sale was fixed by the Court as 4-3-1992. Tehsildar was not legally competent to conduct the sale on 13-3-92.
10. APW1 Gurdas Ram Tehsildar deposed that on 14-3-92 he was posted as Tehsildar, Dasuya. On 13-3-92, he conducted the sale in the village. On 4-3-92, he could not conduct the sale. He conducted sale on 13-3-92 after obtaining permission of the Court. Ex. APW1/1 is the list of the bidders which is signed by him. List of the persons who were present at the spot is Ex. APW1/2. It was signed/thumb marked by those persons. His report is Ex. APW1/3. APW2 Swaran Singh stated that on 13-3-92, land in suit was auctioned by Tehsildar, Dasuya in his presence. Bid sheet Ex. APW1/1 bears his signatures as bidder at Sr. No. 1. He also stated that munadi was conducted in the village 3-4 days prior to the auction and also on the date of auction by Shri Girdhari Lal, Chowkidar. Market value of the land was not less than at which it was sold. He had purchased about 10 acres of land out of Rect. No. 37 situated in village Ghogra vide different sale deeds dated 12-9-90, 13-6-90, 10-10-91 and 12-9-90. Photostat copies of the sale deeds are Ex. APW2/1 to APW2/4. APW3 Balwinder Singh deposed that he was present when the land in dispute was auctioned on 13-3-92 by Tehsildar, Dasuya. He was also one of the bidders. Original bid sheet Ex. APW1/1 was thumb marked by him. He was bidder for Rs. 90,000/- and Rs. 1,17,000/-. On 10-3-92, he was informed by the Chowkidar about the auction of the land. APW4 Darshan Singh who is one of the auction-purchasers stated that he was the highest bidder in the auction conducted on 13-3-92 by Tehsildar. He had given two bids -- one for Rs. 1 lac and the other for Rupees 1,42,500/- which was the highest. He came to know about auction through the Chowkidar of village who was carrying out proclamation. He had deposited the entire sale consideration. Objectors also knew about the auction on 13-3-92. Bid sheet Ex. APW1/1 bears his signatures.
11. Sale was to take place on 4-3-92 as shown in the proclamation of sale at its foot. In the body of this proclamation "15-2-92" is mentioned as the date of sale. In the proclamation which is said to have been proclaimed by beat of drum by the Chowkidar, it was not specifically set out as to when the auction sale would take place. There was no fresh proclamation after the adjourned date of sale. It was submitted that if prospective bidders had notice of the date of sale, they would have gathered at the spot and participated in the auction and thus the land would have fetched much more price. In this case, there was no compliance with the provisions of Order 31, Rule 67. If the provisions of Order 21, Rule 67 had been complied with, there could have been many more bidders at the spot and not a few bidders and land could fetch a better price. Order 21, Rule 67 lays down as follows :--
67. Mode of making proclamation-- (1) Every proclamation shall be made and published, as nearly as may be, in the manner prescribed by Rule 54, Sub-rule (2).
(2) Where the Court so directs, such proclamation shall also be published in the Official Gazette or in a local newspaper, or in both, and the costs of such publication shall be deemed to be costs of the sale.
(3) xxxxx xxxxx xxxxxxxxx
12. Order 21, Rule 54, CPC lays down as follows :--
54. Attachment of immovable property--(1) Where the property is immovable, the attachment shall be made by an order prohibiting the judgment-debtor from transferring or charging the property in any way, and all persons from taking any benefit from such transfer or charge.
(1-A) The order shall also require the judgment-debtor to attend Court on a specific date to take notice of the date to be fixed for settling the terms of the proclamation of sale.
(2) The order shall be proclaimed at some place on or adjacent to such property by beat of drum or other customary mode, and a copy of the order shall be affixed on a conspicuous part of the property and then upon a conspicuous part of the Court house, and also, where the property is land paying revenue to the Government, in the office of the Collector of the district in which the land is situate and, where the property is land situate in a village, also in the office of the Gram Panchayat, if any, having jurisdiction over that village.
13. It was submitted that in this case, there was no notice to the JDs before the proclamation of sale was settled. If the notice had been given to the JD before settling the proclamation of sale, JD would have suggested the price at which the land should be sold. They could suggest as to how much land could suffice to meet the decretal amount. It was held in Farid Paper Mills (P) Ltd. v. Punjab Financial Corporation, Chandigarh, (1994) 3 Rec Rev Rep 169, that the provisions of Order 21, Rule 66 are based on the principle that no order to the detriment of a party can be passed against him unless he be heard. Sale is liable to be challenged even after confirmation in the event that notice of auction sale had not been given to the JD. In Desh Bandhu Gupta v. N. L. Anand and Rajinder Singh, (1993) 4 Land LR 486 : (1993 AIR SCW 3458), it was held that while settling proclamation of sale, if notice was not given to the JD and he was not involved in the settlement of the proclamation of the sale, his non-involvement in the proclamation of sale is a material irregularity. Property valued at over Rs. 3 lac was purchased by the auction-purchaser which is just for a lac of rupees when no notice had been issued to the JD before settling proclamation of sale, such auction sale has to be set aside and is not binding on the judgment-debtor. JD sustained substantial injury by reason of such irregularity or fraud or collusion between the parties. Non-application of mind by the Court whether sale of the part of the property would satisfy it is another irregularity attracting Rule 90 of Order 21, CPC. At page 493 of the report, the Hon'ble Supreme Court has observed that the absence of notice causes irremediable injury to the JD. Equally publication of the proclamation of the sale under Order 21, Rule 67 and specifying the place and date of the auction under Rule 66(2) are intended that the prospective bidders would know the value so as to make up their mind to offer the price and to attend at sale of the property and to secure competitive bidders and fair price to the property sold. Absence of notice to the JD disables him to offer his estimate of the value who is better known of its value and to publicise on his part canvassing and bringing the intending bidders at the time of sale. Absence of notice prevents him to do the above and also disables him to know fraud committed in the publication, conduct of sale or other material irregularities in the conduct of sale. It would be broached from yet another angle. The compulsory sale of immovable property under Order 21 divests right, title and interest of the judgment-debtor and confers those rights in favour of the purchaser. It thereby deals with the rights and disabilities either of the judgment-debtor or the decree-holder. A sale made, therefore, without notice to the judgment-debtor is a nullity since it divests the judgment-debtor of his right, title and interest in his property without an opportunity. The jurisdiction to sell the right would arise in a Court only where the owner is given notice of the execution for attachment and sale of his property. It is very salutary that a person's property cannot be sold without his being told that it is being so sold and gives an opportunity to offer his estimate as he is the person who intimately knew the value of his property and prevailing in the locality, exaggeration may at time be possible. In Rajagopal Iyer v. Ramachandra Iyer, (1924) ILR 47 Mad 288 : (AIR 1924 Mad 431), the Full Bench held that a sale without notice is void and it has got to be set aside. If an application to set aside a void sale made, it would fall under Section 47, CPC. Service of notice of JD is a fundamental part of the procedure touching upon the execution of the Court to sell his immovable property.
14. In this case, there were only 5 bidders namely Sarwan Singh, Sukhbir Singh, Balwinder Singh, Darshan Singh and Bahadur Singh. Initial bid was only for Rs. 50,000/-. How could land fetch market price when there were fewer bidders for the land. Fact that the sale took place on 13-3-92 of which date nobody had the notice also contributed to lesser price being fetched by the land put to sale.
15. Learned Counsel for the auction-purchasers, on the other hand submitted that there is no evidence to show that there was any loss and injury to the objectors. 44 kanals of land was sold on 14-3-92 for an amount of Rs. 1,44,500/- i.e. @ Rupees 25,906/- per killa. In the sale deed dated 10-10-91 Ex. AW2/1, 1 kanal, 5 marlas of land was sold for Rs. 3,500/- and its average rate comes to Rs. 22,400/- per killa. In the sale deed Ex. AW2/2 dated 12-9-90, 3 kanals, 5 marlas of land was sold for Rs. 8,000/- and its average value comes to Rs. 13,000/- per killa. In sale deed dated 13-6-90, Ex. AW3/3, 1 kanal, 5 marlas was sold for Rs. 4,500/- and its average price comes to Rs. 20,640/- per killa. In sale deed Ex. AW2/4, 4 marlas of land was sold for Rs. 10,500/- and its average value comes to Rs. 21,000/- per killa. It was submitted that thus land sold fetched more than market price and there was no question of any injury to them what to talk of substantial injury. It was submitted that inadequacy of price is not sufficient for setting aside sale. It is true that mere inadequacy of price is no ground to set aside auction sale but it is equally true that if there is material irregularity in conducting the sale leading to substantial injury to the judgment-debtor, sale has to be set aside. In Kayjay Industries (P) Ltd. v. Asnew Drums (P) Ltd., AIR 1974 SC 1331, the Hon'ble Supreme Court did not feel influenced by the mere inadequacy of price fetched at Court sale. Hon'ble Supreme Court felt that the Court had exercised a conscientious and lively discretion in concluding the sale at Rs. 11.50 lacs and tried its best, time after time, to raise the price. Well-known industrialists in the public and private sectors knew about it and turned up. Offers reached a stationary level. Nor could the Corporation decree-
holder be put off indefinitely in recovering its dues on baseless expectations and distant prospects. The sale proceedings had been pending too long and the judgment-debtor could not even when given the opportunity, produce buyers by private negotiations. Hence the executing Court had committed no material irregularity in conducting the sale and in accepting the highest offer of the auction bidder on September 3, 1969.
16. It was next submitted that limitation is 60 days from the date of sale for its setting aside. In support of this submission, he drew my attention to Jagati Thimmaraju v. Uppuluri Brahmanna, (1998) 2 Civil Court C 706, where sale took place in June 1987 and the application was filed in June 1990 for its setting aside. The application was stated to be barred by time. It was also submitted that objections to proclamation of sale can only be raised before auction sale. They are not tenable after the sale. In support of this submission, he drew my attention to H. P. Financial Corporation v. Narinder Industrial Corporation, 1990 Civil Court C 227.
17. In my opinion, in this case, there was no sale and sale was nullity. As such, there is no question of 60 days' limitation in making application for setting aside of this sale. It is true that before a sale can be set aside under Order 21, Rule 90, it is incumbent upon the JD that there was material irregularity or fraud in conducting or publishing the sale and that he had sustained irreparable injury. Mere irregularity in publishing or conducting sale will not entitle the Court to set it aside. "Notice on the facts proved the JD had sustained injury by reason of such irregularity or fraud", was the view taken in Ram Krishna Kapoor v. Purshottam Dass Poddar, AIR 1981 All 21. In this case, however, the JDs suffered substantial injury by this auction sale as no notice was given to them so that they could be involved in the drawing up of the proclamation of sale. Court did not apply its mind to see how much land would suffice to meet the decretal amount and further how much should be the reserve price for one killa of land. There was no notice to the prospective bidders as to the postponement of sale from 4-3-92 to 13-3-92. There was no proclamation of sale in a local newspaper. If there had been proclamation of sale in the local newspaper, there would have been many more bidders at the spot and there was prospect of more price being fetched. It was the duty of the Court to have taken the matter seriously. Court took the matter casually and accepted the sale of 44 kanals of land for Rs. 1,44,500/-. Court should have aimed at securing the maximum price for the land of the judgment-debtor. Sale price entered in the sale deed 19 not true index of the market value of the land as with a view to evade the payment of the stamp duty the value of the land is understated in the sale deeds.
18. For the reasons given above, this revision is allowed. Auction sale is set aside. JDs are, however, directed to repay Rs. 1,42.500/- to the auction, purchasers with interest @ 12% per annum on this amount payable with effect from 13-3-92 till the amount together with interest is paid by the JDs to the auction, prurchasers.