Markose @ Baiju and Sara Paul v. KMLM Chits India Ltd.

## **IN THE HIGH COURT OF KERALA AT ERNAKULAM** ## **PRESENT** ## **THE HONOURABLE MR. JUSTICE ANIL K.NARENDRAN** **&** **THE HONOURABLE MR.JUSTICE P.G. AJITHKUMAR FRIDAY, THE 26[TH] DAY OF NOVEMBER 2021 / 5TH AGRAHAYANA,** **1943** **EX.FA NO. 16 OF 2021** **AGAINST THE ORDER DATED 02.07.2021 IN E.A.No.53 OF 2021 IN** **O.S NO.68 OF 2014 OF SUB COURT, MUVATTUPUZHA** ## **APPELLANTS/JUDGMENT DEBTORS/DEFENDANTS:** **1 MARKOSE @ BAIJU AGED ABOUT 36 YEARS S/O.ABRAHAM, KUZHALANATTU HOUSE, MANNATHOOR KARA, THIRUMARADY VILLAGE, MUVATTUPUZHA TALUK, ERNAKULAM, PIN 686 662.** **2 SARA PAUL AGED ABOUT 34 YEARS W/O.MARKOSE @ BAIJU, KUZHALANATTU HOUSE, MANNATHOOR KARA, THIRUMARADY VILLAGE, MUVATTUPUZHA TALUK, ERNAKULAM, PIN - 686 662. BY ADVS. G.HARIHARAN PRAVEEN.H. K.S.SMITHA T.T.SHANIBA M.V.VIPINDAS AMAL DEV D** ## **RESPONDENTS/DECREE HOLDER/PLAINTIFFS:** **KMLM CHITS INDIA LTD., KOTHAMANGALAM BRANCH,REPRESENTED BY ITS POWER OF ATTORNEY HOLDER RAJESHKUMAR R, AGED 37 YEARS, S/O.A.K.VASUDEVAN NAIR, PRANAVOM HOUSE, KUNNAMANGALAM P.O., CALICUT, PIN - 673 570. BY ADV. PEEYUS A.KOTTAM** **THIS EXECUTION FIRST APPEAL HAVING FINALLY HEARD ON 08.11.2021, THE COURT ON 26.11.2021 DELIVERED THE FOLLOWING:** 2 **Ex.F.A.No.16 of 2021** ## **JUDGMENT** ## Ajithkumar, J. The judgment debtors are the appellants. The respondentdecree holder filed E.P.No.30 of 2016 for executing the decree for realization of money in O.S.No.68 of 2014 on the file of the Sub Court, Muvattupuzha. In execution the property belonging to the appellants was sold in auction on 26.02.2021. The respondent bid the property. Execution application, E.A.No.53 of 2021 filed by the appellants under Order XXI, Rule 90 of the Code of Civil Procedure, 1908 was dismissed as per the order dated 02.07.2021 which is under challenge in this appeal. 2. Heard the learned counsel for the appellants and the learned counsel for the respondent. 3. The appellants raised two grounds essentially; the respondent-decree holder bid the property for which the court granted permission under Order XXI, Rule 72 of the Code, but without serving a copy of the application on the appellants and, the auction price was much less than the market value of the property. The learned counsel appearing for the appellants explained further 3 **Ex.F.A.No.16 of 2021** that a low upset price was fixed without taking into account the valuation of the property made by the Tahsildar or market value. The sale was made without taking into account the actual decree debt due, resulting in much loss to the appellants. For the said reasons, the learned counsel would argue, there occurred material irregularity in the conduct of sale, resulting in substantial injury to the appellants, and therefore, the sale dated 26.02.2021 is liable to be set aside. 4. The appellants produced ten documents, Annexures A1 to A10, which being copies of the documents forming part of the records in E.P.No.30 of 2016, are received on file for the purpose of perusal as per the order in Interlocutory Application No.2 of 2021. 5. With regard to the allegation that no copy of the petition filed by the respondent requesting permission to bid the property was given to the appellant, the recitals in Annexure A2 execution petition and the observations of the learned Sub Judge in Annexure A8 order are relevant. Annexure A7 is a copy of the application filed by the respondent before the executing court under Order XXI, Rule 72(1) read with Section 151 of the Code seeking permission to 4 **Ex.F.A.No.16 of 2021** participate in the auction. It is true that there is no endorsement on it that a copy was served on the Appellants. It may be noted that one of the prayers in the execution petition was to grant permission to the respondent to participate in the auction, if there would be an auction sale. Ext.A8 is a copy of the order granting permission to the respondent under Order XXI, Rule 72(1) of the Code. It is noticed in it that both sides were heard before passing that order. In view of those matters, it is not possible to say that the permission to participate in the auction was granted to the respondent without notice to or hearing the appellants. 6. Almost a similar question was considered by the Apex Court in **Jaswantlal Natvarlalthe Thakkar v. Sushilaben Manilal Dangarwala and others [AIR 1991 SC 770]** . The following was the fact situation in that case: property had been purchased at the court auction by the decree holders. For effecting the purchase, the decree holders had applied to the court for permission under Order XXI, Rule 72 of the Code. The executing court gave the decree holders permission not only to bid the auction but also to bid at a price equivalent to 80 per cent of the upset price 5 **Ex.F.A.No.16 of 2021** that had been fixed earlier for the auction and this had been done without any notice to the judgment debtor. The Apex Court held that a notice to the judgment debtor is necessary before permission is granted under Order XXI, Rule 72, particularly when the upset price is proposed to be reduced. The position of law was reiterated in **Lal Chand v. Additional District Judge [(1997) 4 SCC 356].** It was held that under the teeth of the mandatory language of Order XXI, Rule 72 of the Code, the decree holder has no right to bid in the auction without obtaining prior permission of the Court. As a consequence, the sale conducted was clearly in flagrant violation of Order XXI, Rule 72 of the Code. 7. The Apex Court in **Jaswantlal Natvarlalthe Thakkar (supra)** further considered the question, whether on proving that the decree holder purchased the property without due permission of the court, which amounts to an illegality in the conduct of the sale, can the application for setting aside the sale be set aside? On that, it was held that not only that there was an illegality or irregularity in the conduct of the sale, but the applicant also should prove by adducing sufficient evidence that he suffered some substantial 6 **Ex.F.A.No.16 of 2021** injury as a result of the order under Order XXI, Rule 72 of the Code having been passed without such notice in order to get the sale set aside. In **Siddagangaiah (D) Thr. Lrs. v. N. K. Giriraja Shetty (D) Thr. Lrs.[(2018) 7 SCC 278]** the Apex Court reiterated the view that for setting aside a sale under the provisions of Order XXI, Rule 90 of the Code, it is necessary to prove substantial injury where fraud or material irregularity has taken place. 8. Learned Counsel for the Appellants contended that the property was sold for a paltry sum and that resulted in substantial injury to the appellants. The property, in the appellants’ view, worth more than Rs.2 crores, but it was sold for Rs.1,00,00,500/-. It is further contended that while the outstanding decree debt was shown in the proclamation schedule as Rs.1,29,82,762/-, the respondent bid the property for Rs.1,00,00,500/-, leaving the appellants to answer a further liability of more than Rs.29 lakhs. In that background it is further contended that the Court should have fixed the whole decree debt as the reserve price. These contentions of the appellants were denied by the respondent in Annexure A10 objection, which was filed by him in answer to Annexure A9 7 **Ex.F.A.No.16 of 2021** application under Order XXI, Rule 90 of the Code. 9. Reserve price is fixed as per Order XXI, Rule 72A(2) of the Code. Necessity to fix a reserve price by the executing court arises only when a mortgage decree is put in execution. Order XXI, Rule 72A(2) insists that the reserve price shall not be less than the amount due for the principle, interest and costs, if the property is sold in one lot. But on a perusal of Annexure A1 judgment and the recitals in Annexure A2 Execution Petition it is clear that the decree is not a mortgage decree. Therefore, we hold that the contention, the sale is vitiated for want of fixation of reserve price is not a sound one. 10. Annexure A4 is the land value certificate issued by the Tahsildar, Muvattupuzha in respect of the property sold in auction. The price assessed by the Tahsildar was Rs.58,993/- per Are. Value for the land having an area of 63.54 Are was thus computed as Rs.37,48,415/-. While that being the value shown by the revenue authorities, the land was bid by the respondent for an amount of Rs.1,00,00,500/-. In the absence of any other evidence or material on record it cannot be found that the land would have fetched more 8 **Ex.F.A.No.16 of 2021** value. ## 11. In **Desh Bandhu Gupta v. N. L. Anand and Rajinder Singh [(1994) 1 SCC 131]** the Apex court observed; “sale is a forced sale and notwithstanding the competitive element of a public auction, the best price is not always forthcoming. The valuer's report, though good as a basis, is not as good as an actual offer and there are bound to be variations within limits between such an estimate, however careful, and the real bids by the seasoned businessman. Mere inadequacy of price cannot demolish a court sale”. 12. Again in **Rajender Singh v. Ramdhar Singh and others, [(2001) 6 SCC 213]** the Apex Court reiterated that mere inadequacy of the price is not a ground for setting aside the Court sale. 13. In the light of the principle of law discussed above, we are of the view that if at all, it is taken that there occurred an irregularity in the conduct of sale inasmuch as, the decree holder failed to serve on the appellants an advance copy of his application seeking leave of the Court to participate in auction, that by itself is not enough to set aside the sale dated 17.03.2021. The sale can be 9 **Ex.F.A.No.16 of 2021** set aside only if the appellants further proved that they suffered substantial injury on account of such sale. Only ground urged to demonstrate that they suffered injury is that the land was sold for a low price. That being not a reason to set aside the sale in view of the decisions in **Desh Bandhu Gupta (supra)** and **Rajender Singh (supra)** we find no reason to interfere with the order of the Sub Court, Muvattupuzha dismissing E.A.No.53 of 2021 in E.P.No.30 of 2016 in O.S.No.68 of 2014. We accordingly dismiss the appeal. No order as to costs. **Sd/ANIL K. NARENDRAN, JUDGE** **Sd/-** **P.G. AJITHKUMAR, JUDGE** dkr/PV