OP(C) NO. 2433 OF 2022

# **`IN THE HIGH COURT OF KERALA AT ERNAKULAM`** ## **`PRESENT`** ``` THE HONOURABLE MR.JUSTICE C.S.DIAS ``` ``` WEDNESDAY, THE 14[TH] DAY OF DECEMBER 2022 / 23RD AGRAHAYANA, 1944 ``` ## **`OP(C) NO. 2433 OF 2022`** ## **`EP 132/2017 OF PRINCIPAL SUB COURT,NORTH PARAVUR`** ## **`PETITIONER/JUDGMENT DEBTOR/DEFENDANT:`** ``` DEVASSYKUTTY AGED 50 YEARS S/O DEVASSY, MAZHUVANCHERY HOUSE EDANAD KARA,CHOWARA VILLAGE ALUVA TALUK, PIN - 683571 ``` ``` BY ADVS. DEEPAK JOY.K. AJAI JOHN SANDHYA RAMAN ``` ## **`RESPONDENT/DECREE HOLDER/PLAINTIFF:`** ``` DAISY JOSE, AGED 47 YEARS W/O JOSE, NARIKULAM HOUSE, KANJOOR KIZHAKKUMBHAGAM VILLAGE ALUVA, PIN - 683575 ``` ``` BY ADVS. AJITH VISWANATHAN SHIBU JOSEPH(S-410) ``` ``` THIS OP (CIVIL) HAVING COME UP FOR ADMISSION ON 14.12.2022, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: ``` ## **`OP(C) NO. 2433 OF 2022 2`** **Dated this the 14[th] day of December, 2022** ## **JUDGMENT** Aggrieved and displeased with Ext.P7 order passed in E.P No.132/2017 in O.S No.350/2013 by the Court of the Principal Subordinate Judge, North Paravur, the judgment debtor has filed the original petition. The respondent is the decree holder. 2. The concise case of the petitioner leading to Ext.P7 order, is: the respondent had filed O.S. No.350/2013 before the court below for a decree for recovery of money. The dispute between the parties was settled as per the award passed by the Lok Adalath on 12.11.2015. The petitioner failed to comply with the conditions of the award. The respondent laid the award to execution by filing E.P. No.132/2017, by proceeding against the property of the petitioner having an extent of 15.50 cents in Chowara Village. The petitioner has filed ``` OP(C) NO. 2433 OF 2022 3 ``` Ext.P3 objection to the attachment petition, inter alia, contending that the property has a market value of Rs.5,00,000/- per cent and the building situated therein is worth more than Rs.60,00,000/-. The petitioner also filed Ext.P4 objection to the valuation made by the Village Officer. An Advocate Commissioner also valued the property, with the help of an approved valuer, and Ext.P5 report has been placed on record. The petitioner has filed Ext.P6 objection to the draft sale proclamation, inter alia, contending that only a portion of the property need to be sold to realise the award debt. The valuation report unambiguously substantiates that the property is surrounded by roads on three sides and is situated in a commercially important locality. Nonetheless, the court below has proclaimed the whole property for sale as per Ext.P7 order, without fixing the upset price. Ext.P7 is exfacie illegal and manifestly wrong. Hence, the original petition. 3. Heard; Sri. Deepak Joy K, the learned counsel ## **`OP(C) NO. 2433 OF 2022 4`** appearing for the petitioner and Sri. Shibu Joseph, the learned counsel appearing for the respondent. 4. The question is whether there is any illegality in Ext.P7 order. 5. The bone of contention of the petitioner is two fold (i) the court below had failed to fix the upset price and (ii) the court below has not rendered any finding/reasons for putting the whole property for sale, despite the objection of the petitioner. 6. It is the specific case of the petitioner in Exts.P3 and P6 objections that, the property has an extent of 15.50 cents and has market value of Rs.5,00,000/- per cent with a building worth Rs.60,00,000/-. Therefore, only a portion of the property need be sold to realise the award debt. 7. The court below, without adverting to Exts.P3 and P6 objections, by a laconic order has directed the property to be sold after fixing the market value at Rs.1/Crore. ``` OP(C) NO. 2433 OF 2022 5 ``` 8. The obligation of the courts to consider whether only a portion of the property need be sold as per the mandate under Order 21 Rule 64 of the Code of Civil Procedure (in short, ‘Code’) is no longer res integra, in view of the exposition of law by a Division Bench of this Court in **Fathima Beevi v. Joly John** [2022 (2) KHC 479]. It is emphatically declared that, no sale shall be allowed beyond the decretal amount mentioned in the sale proclamation and the courts have to consider whether only a portion of the property need be sold to satisfy the decree, if not it will vitiate the process and the sale would become illegal. 9. In the case at hand, although the petitioner has specifically averred the valuation of the property and that only a portion of the property needs to be sold, the court below has not adverted to the objections but has passed Ext.P7 order in cryptic manner. Therefore, I hold there is clear infraction of the mandate of Order 21 Rule 64 of the Code, which warrants to be interfered by this ``` OP(C) NO. 2433 OF 2022 6 ``` Court. 10. Now, coming to the question whether there is any requirement to fix the upset price of the property before proceeding with the sale. 11. This Court in **Nedungadi Bank Ltd. V. Ezhimala Agrl. Products** [2003 KHC 1229] has succinctly held as follows:- 11. The expression upset price is more one of language than of law. The said expression though very much in use in the context of sales does not figure even once in the Code nor has the same been defined in the General Clauses Act. But law and language dictionaries give sufficient cue as to what the term means. According to Blacks Law Dictionary, Fifth Edn., upset price means The price below which property exposed to sale is not to be sold. According to the Seventh Edition of the same dictionary, upset price means The lowest amount that a seller is willing to accept for property or goods sold at auction. The expression reserve price though not defined in the Code appears at 0.21 R.72A. Blacks Law Dictionary, Seventh Edn. has defined reserve price as The price announced at an auction as the lowest that will be entertained. It would appear at first blush that the terms upset price and reserve price are synonymous. In fact, a Division Bench of the Madras High Court in A.U. Natarajan v. Indian Bank, Madras (AIR 1981 Mad. 151) did define the term upset price as the lowest selling price or ## **`OP(C) NO. 2433 OF 2022 7`** reserve price and thus indicated that the two terms are synonymous. A Division Bench of this Court in Anto Nitto v. South Indian Bank Ltd. (AIR 1998 Kerala 219) virtually approved the said view of the Madras High Court by taking the view that simply because the executing court had employed the words upset price in place of reserve price it is not possible to contend that reserve price has not been fixed. We however are of the view that the terms reserve price and upset price though analogous and almost homologous are not synonymous. While understood in the context in which the expression is employed in the code, reserve price means a price reserved at an auction as the minimum amount realisable by sale of the property so as to realise the entire mortgage debt or a proportionate portion of the mortgage debt - a price which will remain static during the sale unless the court on grounds of genuine diffidence on the side of the decree holder chooses to reduce the same. Fixation of reserve price is peculiar to situations where court grants permission to mortgagee - decree holders to bid in the auction. **Upset price and reserve price are certainly the lowest prices for which the properties will be sold in auction. But the term reserve price is exclusive to mortgagee - purchasers. The term upset price is used generally in respect of purchases by all others including third parties. When upset price has been fixed, the bid should commence with that price and the sale will ultimately be held for an amount higher than that price.** But in the case of reserve price, the bid can commence with the upset price which may be an amount below the reserve price. But the moment the mortgage - decree holder avails the leave granted to him by the court, ## **`OP(C) NO. 2433 OF 2022 8`** the sale will be knocked down in his favour for the reserve price, though nothing prevents a conscientious decree holder from bidding and purchasing for a higher amount. 12. In the case at hand, the court below has only fixed the market value of the property at Rs.1/- Crore. 13. Going by the law laid down in **Nedungadi Bank (supra),** and the fact that the property is put up for public sale, I am of the definite view that the court below has to fix the upset price of the property. If the said course is not adopted, the property may be sold for a which would cause substantial and song, prejudice pecuniary loss to the petitioner/judgment debtor. 14. As the court below has not adverted to the objections of the petitioner, has failed to decide the extent of the property to be sold, and has also not fixed the upset price, I am constrained to interfere with the impugned order in exercise of the powers of superintendence of this Court under Article 227 of the Constitution of India. ## **`OP(C) NO. 2433 OF 2022 9`** 15. Sri. Shibu Joseph drew the attention of this Court to the decision of the Honourable Supreme Court in **Rahul S Shah v. Jinendra Kumar Gandhi and Others** [2021 (4) KHC 148], wherein the Honourable Supreme Court has directed that in all execution proceeding relating to delivery of the property, it is imperative for the parties to disclose and produce documents upon oath, pertaining to the third party interest in such property. 16. Sri. Shibu Joseph contended that the petitioner has created a mortgage in respect of the property in favour of a financial institution. Therefore, if the said third party is not brought on record, it would further protract the determination of the execution petition. I completely endorse and agree with the above submission. In the result, I dispose of the original petition as follows:- (i) Ext.P7 order is set aside. (ii) The court below shall advert to Exts.P3 and P6 objections filed by the petitioner and decide the extent of ``` OP(C) NO. 2433 OF 2022 10 ``` the property that needs be sold to realise the award debt and then fix the upset price of the property, before proceeding with the sale. (iii) The petitioner shall file his declaration as specified in paragraph 42 (1) of **Rahul S Shah (Supra),** as to whether any third party’s interest is involved in the property. (iv) As the execution petition is of the year, 2016, the court below shall complete the entire exercise in accordance with law, as expeditiously as possible, at any rate, on or before 31.01.2023. **Sd/-** **C.S.DIAS, JUDGE** rmm14/12/2022 ## **`OP(C) NO. 2433 OF 2022 11`** ## **`APPENDIX OF OP(C) 2433/2022`** ``` PETITIONER EXHIBITS ``` - `Exhibit P1` ``` THE EP NO. 132/2017 IN OS NO. 350/2013 FILED ON 08.11.2017 ``` ``` Exhibit P2THE NOTICE RECEIVED BY THE PETITIONER/ JUDGMENT DEBTOR DATED 27.12.2018 ``` ``` Exhibit P3THE OBJECTION FILED BY PETITIONER IN THE ATTACHMENT PETITION DATED 24.11.2018 ``` ``` Exhibit P4THE OBJECTION FILED BY THE PETITIONER DATED 28.03.2019 AGAINST THE VALUATION MADE BY THE VILLAGE OFFICER ``` ``` Exhibit P5THE COMMISSIONER REPORT ALONG WITH VALUATION REPORT DATED 17.12.2019 ``` ``` Exhibit P6THE OBJECTION FILED BY THE PETITIONER DATED 02.03.2020 ``` ``` Exhibit P7THE ORDER DATED 02.11.2022 IN EP NO. 132/2017 OF PRINCIPAL SUB-COURT NORTH PARAVUR ```