Andhra HC (Pre-Telangana)
Leburu Sudhakara Reddy vs Gandavaram Rama Subbamma And Ors. on 16 September, 1997
Equivalent citations: 1997(6)ALT15
Author: B.S. Raikote
Bench: B.S. Raikote
ORDER B.S. Raikote, J.
1. Though the matter is posted on 01-07-1997 for admission, the learned Counsel on both sides submitted that the matter itself could be finally disposed of at the stage of admission itself. The case is posted for admission today.
2. This petition is filed by the third party in an execution petition in E.P. No. 5 of 1989 arising in O.S.No. 27 of 1987. The petitioner himself is the decree holder in O.S.No. 138 of 1985. It is a decree for money. He filed E.P. No. 1/89 for the execution of the said decree before the Court. In that the present petitioner filed E.A.No. 83 of 1993 to set aside the sale dated 20-4-1993. That application has been dismissed by the impugned order. Hence he has approached this Court by way of this Revision Petition (sic, A.A.O.).
3. Heard the learned Counsel on both sides. The learned Counsel for the petitioner submitted that the impugned sale in favour of the present R1 dated 20-04-1993 is illegal and the same is liable to be set aside. It is stated that there are number of defects in the sale proceedings and they are all material irregularities and thereby the petitioner is put to injury, therefore, the sale is liable to be set aside. He elaborated his argument by contending that the paper notification issued and published in the paper 'Lawyer' on 9-4-1993 suffers from various defects:
(1) In the cause title the name of Judgment-Debtor was shown as Pelleti Venkata Krishna Reddy (died) but the names of the L.Rs. are not mentioned.
(2) The date of auction was shown as 20-04-1992; in fact the date of auction fixed by the Court is 20-04-1993, (3) The notification does not show the place where the property is situated. The property is situated in Gudur but that name is not mentioned.
(4) He further points out that the extent to be sold in auction is shown as Ac. 15-48 cents, in fact what ultimately was sold was only 1/3rd of it i.e., Ac. 5-16 cents, to which only the Judgment-debtors had title and interest in the property.
(5) He further pointed out that the said paper publication shows the decree holder's valuation at Rs. 7,500/-; in fact the actual market value of the property is more than five lakhs. Therefore, showing Rs. 7,500/- was inadequate. On this point the learned Counsel for the respondent pointed that the Amin of the Court valued at Rs. 1,10,000/- in the cause list of the paper publication. Therefore, this is not material.
(6) Lastly, the learned Counsel for the petitioner submitted that the Court below dismissed the petition mainly on the ground that the petitioner is claiming to be a G.P. A. holder of his brother-decree holder in another decree and could not maintain this petition. In fact, the petitioner him self is a decree holder, though he was also holding G.P. A. on behalf of his brother who is also a decree holder in other suit. Thus, he contended that the entire approach of the Court is totally erroneous. On the basis of these irregularities found in the paper publication, it is clear that the sale is materially affected and he has sustained substantial injury.
4. On the other hand, the learned Counsel for the respondents supported the impugned order under appeal. He contended that as pointed out by the Court below the irregularities that are noticed in the paper publication are not material irregularities. Presuming for the sake of the argument that such irregularities are there, the petitioner has not proved that he sustained a substantial injury. The burden is on him to prove the same. He further contended that he did not lead any evidence to show what exactly would be the value of the property now sold and how he sustained any injury. Nextly, he contended that he has no locus standi to maintain the present petition because E.P.No. 1 of 1989 in which he is a decree-holder, he has filed E.P. only for the purpose of attachment of monthly rents from M.N. Narayana, Managing Partner, Modern Hotel, Gudur, as a garnishee and he did not file any execution petition for attachment and sale of the present property. Therefore, the present E.P. is not maintainable in view of Section 73 of C.P.C. He elaborated his contention by stating that unless he files an application for attachment of (sic. and) sale of this property in question, he would not be entitled for any rateable distribution in terms of the said section. Therefore, he has no locus standi to maintain this petition. Secondly, he contended that, at any rate he has not shown before the Court, by leading cogent evidence that the market value is more than for what it was sold to the Respondent No. 1 (auction purchaser) and unless that is demonstrated he cannot be said to have suffered any injury, as held by the Hon'ble Supreme Court in . Hence, he submitted that there are no merits in the petition and the petition is accordingly liable to be dismissed.
5. By way of reply, the learned Counsel for the petitioner submitted that though garnishee proceedings might have been taken, but No. 1 of 1989 is still pending on the file of the Sub-Court, Gudur, as it is stated, in paragraph 2 of the petition filed by him under Order 21' Rule 90 C.P.C. in the Court below. Therefore, the contention of the learned Counsel for the 1st respondent that the said E.P. is already closed may not be accepted. He further submitted that since the entire sale is defective, the impugned order may be set aside and the matter may be remitted back.
6. Before I proceed to consider the matter on merits, I now first consider the arguments of the 1st respondent's Counsel regarding the locus standi of the petitioner. It is the argument of the learned Counsel for the respondent that since the petitioner had not sought for execution of the decree by sale of the property in question, he could not maintain the present petition. He further submitted that unless the petitioner files an application for attachment and sale of this particular property, he would not be entitled for any rateable distribution in terms of Section 73 of C.P.C. Therefore, the petitioner has no locus standi to challenge the auction sale held on 20-4-1993. In order to appreciate this contention, I immediately refer to Section 73 of C.P.C. which reads as under:
"Section 73. Proceeds of execution sale to be rateably distributed among decree- holders: (1) Where assets are held by Court and more persons than one have, before the receipt of such assets, made application to the Court for the execution of decrees for the payment of money passed against the same judgment-debtor and have not obtained satisfaction thereof, the assets, after deducting the costs of realization, shall be rateably distributed among all such persons: Provided as follows:-
(a) where any property is sold subject to a mortgage or charge, the mortgagee or incumbrancer shall not be entitled to share in any surplus arising from such sale;
(b) where any property liable to be sold in execution of a decree is subject to a mortgage or charge, the Court may, with the consent of the mortgagee or incumbrancer, order that the property be sold free from the mortgage or charge, giving to the mortgagee or incumbrancer the same interest in the proceeds of the sale as he has in the property sold;
(c) where any immovable property is sold in execution of a decree ordering its sale for the discharge of an incumbrance thereon, the proceeds of sale shall be applied-
first, in defraying the expenses of the sale;
secondly, in discharging the amount due under the decree;
thirdly, in discharging the interest and principal moneys due on subsequent incumbrances (if any); and fourthly, rateably among the holders of decrees for the payment of money against the judgment-debtor, who have, prior to the sale of the property- applied to the Court which passed the decree ordering such sale for execution of such decrees, and have not obtained satisfaction thereof.
(2) where all or any of the assets liable to be rateably distributed under this section are paid to a person not entitled to receive the same, any person so entitled may sue such person to compel him to refund the assets.
(3) Nothing in this section affects any right of the Government."
From Section 73 (1) C.P.C., it is clear that where the assets are held by the Court and where more than one person have made an application to the Court for the execution of a decree for payment of money passed against the same judgment-debtor and where such persons have not obtained satisfaction of their decrees, the assets shall be rateably distributed among all such persons. In the instant case, the petitioner himself is a decree-holder having obtained the decree in O.S.No. 138 of 1985 against the very judgment-debtors and he has filed E.P.No. 1 of 1989 and the same is pending. It is necessary to note here itself that the petitioner's brother also had obtained a decree for money in O.S.No. 91 of 1985 and his execution petition is pending in E.P.No. 17 of 1989. The impugned proceedings arise in E.P.No. 5 of 1989 in execution of a decree in O.S.No. 27 of 1987 in which R-1 is the auction purchaser. It is the case of the petitioner that the petitioner also should have been given an opportunity to participate in the auction in E.P.No. 5 of 1989. At any rate, the auction is bad for number of irregularities which he has pointed out. The Court below in the impugned order proceeded on the assumption that the petitioner has filed the present petition in E.A.No. 83 of 1993 to set aside the auction sale in E.P.No, 5 of 1989 on behalf of his brother as a General Power of Attorney holder. In fact, as noticed in para 22 of the judgment itself, the petitioner filed this application in his individual capacity as a decree-holder but not as a G.P.A. holder of his brother Sri L. Kiran Reddy, even though his brother also is a decree-holder whose execution proceedings also are pending in E.P.No. 17 of 1989. From this fact, it is clear that the petitioner being himself a decree holder, his decree is not yet satisfied, and accordingly he is entitled for rateable distribution. Thus, he has locus standi. However, the learned Counsel for the respondent submitted that under Section 73 (c) of C.P.C. and Order 21 Rule 90 of C.P.C. the petitioner should have applied for the attachment and sale of the property of the judgment-debtor and he has filed E.P. to attach certain moneys in the hands of the garnishee and vide order of the Court of the Additional Subordinate Judge, Gudur dt. 7-2-1996 garnishee is directed to deposit the monthly rents payable to the principal-debtor to E.P. He further submitted that since he has not prayed for the sale and execution of the property in question, he cannot maintain the present petition. But, I am of the opinion that when Section 73 itself enables the petitioner for rateable distribution of the assets in the hands of the Court, neither Section 73 (c) nor Order 21, Rule 90 of C.P.C. would have the effect of restricting such relief only because he has not sought for sale of judgment-debtor's property. Attachment and sale of judgment-debtor's property is one such mode to satisfy the decree and garnishee proceedings is the other mode. The intendment of Clause 4 of Section 73 (1) (c) is also to the same effect and the decree-holders need not have applied for sale of such property. Even if they applied to the Court for any other mode for satisfying their decree, they would be entitled to rateable distribution. The phrase "ordering such sale" found in Clause 4 of Section 73 (1) (c) is an adjective to the Court to which the holders of decree have applied and the same shall not be read as "holders of decrees applying to the Court for sale" as interpreted by the learned Counsel for Respondent No. 1. If "ordering sale" were to be used in relation to the holders of decree applying to the Court, the phrase would have been "for ordering such sale for execution of such decrees". The absence of the word 'for' would lead to only conclusion that 'ordering such sale' found in that clause is adjective to the Court to which the holders of decree have applied. In other words, it simply means that holders of decrees for payment of money against the judgment- debtor, who have applied to the Court prior to the sale of property, the Court ordering such sale for execution of such decrees, may apply the proceeds rateably amongst the holders of such decrees, who have not obtained satisfaction thereof. Therefore, the contention of the learned Counsel for Respondent No. 1 urged in this behalf is hereby rejected.
7. The fact remains that the execution petition of the petitioner is still pending, notwithstanding the fact that certain amount in the hands of garnishee is directed to be deposited in the execution petition. Admittedly, it is a money decree. Until the decree is satisfied, it is open to the decree- holder to pray the Court for the appropriate modes for satisfying his decree. Therefore, only on the ground that, in the E.P. there is no further prayer for attachment and sale of the land in question does not disentitle the decree holder to claim the rateable distribution of the assets in the hands of the Court. In these circumstances, in my considered opinion, it cannot be said that the petitioner has no locus standi to challenge the auction proceedings. Hence, I hold that the present E.A.No. 83 of 1993 filed before the Court below was maintainable and accordingly the present C.M.A. also is maintainable.
8. The next question would be whether the irregularities alleged are material irregularities, so as to hold that the petitioner sustained substantial injury by reason of such irregularity or fraud in terms of Order 21 Rule 90 C.P.C. It is necessary for me to extract Order 21 Rule 90 of the Civil Procedure Code as under:
"Order 21 Rule 90 CPC: Application to set aside sale on ground of irregularity or fraud:-
(1) Where any immovable property has been sold in execution of a decree, the decree-holder, or the purchaser, or any other person entitled to share in a rateable distribution of assets, or whose interests are affected by the sale, may apply to the Court to set aside the sale on the ground of a material irregularity or fraud in publishing or conducting it.
(2) No sale shall be set aside on the ground of irregularity or fraud in publishing or conducting it unless, upon the facts proved, the Court is satisfied that the applicant has sustained substantial injury by reason of such irregularity or fraud.
(3) No application to set aside a sale under this rule shall be entertained upon any ground which the applicant could have taken on or before the date on which the proclamation of sale was drawn up.
Explanation: The mere absence of, or defect in, attachment of the property sold shall not, by itself, be a ground for setting aside a sale under this rule."
From the above provision, it is clear that where an immovable property has been sold in execution of a decree, the decree holder or the purchaser or any person entitled to share in the rateable distribution of assets or their (sic. whose) interests are affected, by such sale may apply to the Court to set aside the same on the ground of material irregularity, in publishing such proceedings and conducting it, but, such an applicant, seeking to set aside the sale, should have sustained substantial injury by reason of such irregularity or fraud. The explanation added to the said order states that the mere absence of, or defect in, attachment of the property sold shall not be a ground by itself for setting aside the sale under this Rule. In the light of this Rule, now I proceed to examine the sale proceedings conducted by the Court below.
9. In order to appreciate the above contentions of the learned Counsel for the petitioner, I have to refer to the paper publication of the sale notification issued in this behalf. The sale notification is published in the newspaper by name 'Lawyer' on 9-4-1993 and the sale was conducted on 20-4-1993. The parties' names are noted as Gandavaram Ramasubbamma as the decree holder and Pelleti Venkata Krishna Reddy (died) J. Drs. The notification has not given the names of the L.Rs. of the deceased judgment-debtor. The said notification states that the auction sale was fixed on 20-4-1992. In fact, the notification itself is published on 9-4-1993. The date of auction fixed by the Court was 20-4-1993 but not 20-4-1992. Even though not showing the names of the L.Rs. of the judgment-debtor may not be material but showing a wrong date as 20-4-1992 instead of 20-4-1993 is material. Neither the petitioner nor any other person interested in the bid would know what exactly was the date of auction. We cannot expect an ordinary man to read it as 20-4-1993 instead of 20-4-1992 when such a notice is published under the authority of a Court. In addition to that, it is to be noted that the lands that were to be auctioned were noted as Sy.Nos. 809,810,812 (A) admeasuring in all 15 acres 48 guntas. The town or the village where the land is situated is not mentioned. In fact, regarding the other property sold in the same notification, the name of the village or town, where the lands were situated were mentioned. It is common knowledge that the valuation of a property would depend upon its location. A person, whoever wants to participate in an auction, so as to purchase the property, would like to know where the property is situated whether it is situated in a village or a town and if it is in town whether it is nearer to commercial area or in a remote part of the town. Regarding the other property sold m the same notification, Sy.Nos. are given as 605 (B) and A (1) situated in Gudur town. If that is so, the bidder regarding the lands in question would not know the location of the lands which were sold. Now, I am informed that these lands in question which were sold also are situated in Gudur town, if that were to be mentioned in the notification perhaps large number of persons would have participated in the auction and consequently it would have fetched more amount. The learned Counsel for the petitioner also argued that Gudur is a town and the value of real estate is very high, and if the location of the lands sold were to be correctly mentioned in the auction notification, the auction sale would have fetched the money not less than Rs. 5 lakhs and thereby even his decree also would have been satisfied. As I have noticed above, there is substance in this argument.
10. Nextly, the learned Counsel for the petitioner contended that the extent shown for sale is 15 acres and 48 guntas. In fact, the judgment-debtor, had the saleable interest regarding land to the extent of 5 acres 16 cents only (l/3rd of the property) and consequently it was only that 5 acres 16 cents, that was sold in auction but not 15 acres 48 cents. In fact, I also wonder how the entire 15 acres 48 cents was shown as land for sale when the judgment debtor's interest was only regarding 1 /3rd of it. If the auction purchasers were to know that the land was only 5 acres 16 guntas many other persons would have participated having regard to their financial capacity. The persons who can purchase 5 acres 16 guntas would be more than the persons who can purchase 15 acres 48 cents having regard to the financial capacity of the persons, and as a result there would be more competition to purchase 5 acres 16 guntas. If the lands were to be sold for higher amount more than the decretal amount, the decree would have been satisfied and thereby even the judgment- debtor's liability also would be reduced. Moreover, the said notification shows the approximate value at Rs. 7,500/- and the value according to Amin is shown as Rs. 1,10,000/- but the learned Counsel for the petitioner submits that the value is not less than Rs. 5.00 lakhs. There is substance in this argument also because as against the valuation done by the decree-holder at Rs. 7,500/-, the Amin himself has valued at Rs. 1,10,000/-, since it is a town there would be possibility of getting more money.
11. From all the above irregularities noticed above, it is clear that the auction notice did not show correct date 'of auction sale, it did not show the location of the property put to sale, it did not show the correct extent of the lands for sale and also the valuation of the property. In other words, the publication was defective in all respects and these are material irregularities in auction proceedings. The present petitioner sustains substantial injury being himself a decree-holder, since his decree would have been satisfied if there were to be proper auction sale. If there was an appropriate publication, he himself could have been one of the bidders for the property in question.
12. Having regard to these circumstances, I am of the opinion that the entire auction proceedings based on the impugned auction notification dated 20-4-1993 are liable to be set aside, Consequently C.M.A.No. 482 of 1996 is allowed and the order passed by the Principal Subordinate Judge, Gudur dated 6-3-1996 in E.A.No 83 of 1996 (sic. 1993) is hereby set aside and E.A.No. 83 of 1993 is allowed and accordingly the auction sale held on 20-4-1993 is set aside and the Court below is directed to conduct fresh auction regarding the suit schedule lands by issuing a fresh notification in accordance with law.
No Costs.