BRD Finance Limited v. K.B. Noushad and Sabeera

# **IN THE HIGH COURT OF KERALA AT ERNAKULAM** # **PRESENT** **THE HONOURABLE MR. JUSTICE ANIL K.NARENDRAN** **&** **THE HONOURABLE MR.JUSTICE P.G. AJITHKUMAR** **MONDAY, THE 5[TH] DAY OF JUNE 2023 / 15TH JYAISHTA, 1945** **FAO NO.23 OF 2023** **AGAINST THE ORDER 23.09.2022 E.A NO.188 OF 2022 IN EP NO.150 OF 2018 IN O.S NO.115 OF 2015 OF ADDITIONAL SUB JUDGE II, THRISSUR** ## **APPELLANTS/PETITIONERS/JUDGMENT DEBTORS/DEFENDANTS:** **1 K.B.NOUSHAD AGED 50 YEARS S/O.KOTTAYIL BAVA, "KOTTAYIL" KURA DESOM, OLLUKKARA VILLAGE, THRISSUR TALUK., PIN - 680655** **2 SABEERA AGED 48 YEARS W/O.KOTTAYIL K.B.NOUSHAD, "KOTTAYIL" KURA DESOM, OLLUKKARA VILLAGE, THRISSUR TALUK., PIN - 680655** **BY ADVS.** **LINDONS C.DAVIS E.U.DHANYA SWATHY A.P. N.S.SHAMILA** ## **RESPONDENT/RESPNDENT/DECREE HOLDER/PLAINTIFF:** **BRD FINANCE LIMITED KUNNAMKULAM VILLAGE & DESOM, THALAPPILLY TALUK, THRISSUR DISTRICT,PIN - 680503 REPRESENTED BY LITIGATION CLERK MANI, AGED 56 YEARS, S/O.SANKARAN, MULANKUNNATHUKAVU VEETTIL & DESOM, KILLANNUR VILLAGE,** 2 F.A.O.NO.23 of 2023 ## **THRISSUR TALUK** **BY ADVS. SANTHOSH P.PODUVAL R.RAJITHA(K/870/2005) CHITHRA S.BABU(K/376/2012)** **THIS FIRST APPEAL FROM ORDERS HAVING COME UP FOR ADMISSION ON 05.06.2023, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:** 3 F.A.O.NO.23 of 2023 ## **J U D G M E N T** ## P.G.Ajithkumar, J. This is an appeal filed under Section 104 read with Order XLIII Rule 1(j) of the Code of Civil Procedure, 1908. The appellants are the judgment debtors. Respondent is the decree holder. In E.P.No.150 of 2018, filed by the respondent for execution of the decree in O.S.No.115 of 2015, the Additional Sub Court, Thrissur sold in auction the property of the appellants on 07.02.2022. The appellants filed E.A.No.188 of 2022 under Order XXI Rule 90 of the Code seeking to set aside the sale. That application was dismissed as per the order dated 23.09.2022. The said order is under challenge in this appeal. 2. On 07.03.2023, this appeal was admitted. Further proceedings in E.P. No.150 of 2018 was ordered to be stayed. Despite receipt of notice, the respondent did not choose to appear before this court. 3. Heard the learned counsel appearing for the appellants. 4 F.A.O.NO.23 of 2023 4. Three items of property belonging to the appellants were attached. Out of the same, two items namely, 1.1 Ares of land comprised in Survey no.834/2 of Ollukkara village and 8.83 Ares of property comprised in Survey No.834/2 of Ollukkara village were sold in auction on 07.02.2022 for an amount of Rs.27,00,100/-. The respondent bid the property. Contention of the appellants is that the property would worth more than Rs.99,30,000/- and despite the appellants setting forth such a contention, the execution court did not take that into account while fixing the upset price. Property is one abutting the public road, situated in the local limits of the Thrissur corporation and the price fetched in the auction sale is totally inadequate. Price suggested by the appellants was not stated in the proclamation schedule. Accordingly, the appellants would contend that the sale was vitiated by illegality and fraud. The appellants would submit that by selling the property for such a law price, they were put to substantial injury and therefore the sale is liable to be set aside. 5 F.A.O.NO.23 of 2023 5. In **Ambati Narasayya v. Subba Rao [AIR 1990 SC 119]** , the Apex Court held that in all execution proceedings, the Court has to first decide whether it is necessary to bring the entire attached property to sale or such portion thereof as may seem necessary to satisfy the decree. If the property is large and the decree to be satisfied is small, the Court must bring only such portion of the property, the proceeds of which would be sufficient to satisfy the claim of the decree holder. It is immaterial whether the property is one or several. Even if the property is one, if a separate portion could be sold without violating any provision of law only such portion of the property should be sold. The Apex Court emphasized that the same was not just a discretion, but an obligation imposed on the Court. 6. Therefore, it is the obligation of the court to ensure that only such portion of the property which is sufficient to meet the claim in the execution petition alone is sold. The words 'necessary to satisfy the decree' in Rule 64 clearly indicate that no sale can be allowed beyond the decretal 6 F.A.O.NO.23 of 2023 amount mentioned in the sale proclamation. It follows that the issue as to whether the property brought on sale is sufficient portion or excess is a matter touching jurisdiction of the court and not merely one of propriety or regularity. Any violation of the Rule therefore will vitiate the process and the sale would be illegal and coram non judice. 7. The learned counsel appearing for the appellant contends that the property would fetch more than Rs.99 lakhs, whereas it was sold for a paltry sum of Rs. 27 lakhs. It is alleged that the property happened to be sold for such a low price since the upset price was fixed as Rs. 27 lakh only. An auction sale always is in the nature of a distress sale. So, it is unlikely to get its exact market price in a court auction. Whether or not the sale was for a sufficient price, may not always be a decisive factor while deciding a petition under Rule 90 Order XXI of the Code. It was held by a three-Judge Bench of the Apex Court in **Kayjay Industries (P) Ltd. v. Asnew Drums (P) Ltd. and others [(1974) 2 SCC 213]** that inadequacy of price in an auction sale cannot demolish 7 F.A.O.NO.23 of 2023 every court sale. Therefore, the fact that the property was sold for a comparatively low price alone cannot be a reason to set aside the sale. But the question is whether the court exercised its jurisdiction legally while settling the proclamation since the invariable rule is that the Court can sell such portion of the property which is sufficient to meet the claim in the execution petition alone. 8. The execution court took the view that when the value of the properties sold in auction as per the fair value statements was Rs.30,50,000/-. upset price fixed as Rs.30,00,000/- was quite commensurate. When the property was put in auction, there was no bidder and on the application of the respondent the upset price was reduced to Rs.27,00,000/-. The decree holder then had bid the property at a price of Rs.27,00,100/- The question is whether the procedural requirements were complied with while auctioning the property. It is true that objections which could be raised by the appellants prior to the sale may not be a reason for setting aside the sale. Similarly, inadequacy of price is not 8 F.A.O.NO.23 of 2023 always a reason for setting aside the sale. But when the irregularities pointed out are very fundamental resulting in substantial injury to the owner of the property, the sale becomes vitiated. 9. The appellants indisputably raised a contention that the properties in question was worth Rs.99,30,000/-. That valuation by the judgment debtors cannot be taken as the correct one. However, when the judgment debtors suggested such a valuation, there should have been a meaningful enquiry by the execution court to decide whether both items of the properties should have been sold in auction. At any rate, the price suggested by the appellants also, besides the valuation by the decree holder should have been stated in the proclamation schedule. From the facts discernible from the materials on record, it is evident that the proclamation was settled without having a proper valuation of the property and without deciding what portion of the properties would be required to be sold to satisfy the decree. Thus there occurred irregularity of substantial nature in the settlement of 9 F.A.O.NO.23 of 2023 proclamation and sale of the properties. That had undoubtedly resulted in substantial injury to the appellants. In such circumstances, we are of the view that this is a case where the principle laid down in **Desh Bandhu Gupta** (supra) has application. The sale is illegal and liable to be set aside. The order dated 23.09.2022 of the Additional Sub Court, Thrissur is unsustainable in law or on facts. Accordingly, this appeal is allowed. E.A.No.188 of 2022 in E.P. No.150 of 2018 in O.S.No.115 of 2015 stands allowed. Sale dated 07.02.2022 is set aside. The Additional Sub Court II, Thrissur will proceed with E.P.No.150 of 2018 for execution of the decree in O.S.No.115 of 2015. Sd/- ## **ANIL K. NARENDRAN, JUDGE** Sd/- **P.G. AJITHKUMAR, JUDGE** PV