OP(C) No. 4389 of 2012 (O)

## **IN THE HIGH COURT OF KERALA AT ERNAKULAM** ## **PRESENT:** **THE HONOURABLE MR.JUSTICE THOMAS P.JOSEPH** **FRIDAY, THE 11TH DAY OF JANUARY 2013/21ST POUSHA 1934** ## **OP(C).NO. 4389 OF 2012 (O)** ## **-----------------------------------** ## **E.A.NOS.1902 & 1903 OF 2012 IN E.P. NO.28 OF 2010 O.S. NO.462 OF 1995, SECOND ADDITIONAL SUB COURT, THRISSUR** ## **PETITIONER(S):** **----------------------** **1. JAMES AGED 48 YEARS S/O. PORINCHU,PULIKKOTTIL HOUSE,PROPRIETOR PULIKKOTTIL OIL MILLS,ILAMTHURUTHY P.O.,KUTTANELLOOR THRISSUR.** **2. T.C.MARY W/O. PULIKKOTTIL PORINCHU,ILAMTHURUTHY P.O. KUTTANELLOOR,THRISSUR.** ## **BY ADVS.SRI.ASP.KURUP SRI.SADCHITH.P.KURUP** **RESPONDENT(S): -------------------------** **1. SHAJU P JOSE PULIKKAL HOUSE,YOUNG SHINE ROAD,CHELLAMKOTTUKARA THRISSUR-680005.** **2. STAE BANK OF INDIA KURIACHIRA BRANCH THRISSUR REP. BY ITS MANAGER-680006.** **BY ADV. SRI.S.K.BALACHANDRAN ) BY ADV. SMT.N.D.DEEPA )R1 BY SENIOR ADVOCATE SHRI K.K.CHANDRAN PILLAI R2 BY ADV. SRI.ARUN ANTONY R2** **THIS OP (CIVIL) HAVING BEEN FINALLY HEARD ON 11-01-2013, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:** ## **O.P(C) NO.4389 OF 2012** ## **APPENDIX** ## **PETITIONER(S)' EXHIBITS:** **EXHIBIT P1- TRUE COPY OF EP NO. 288/200 IN OS.NO. 402/1995 OF THE II ADDITIONAL SUB COURT, THRISSUR.** **EXHIBIT P2- TRUE COPY OF THE COMMON JUDGMENT DATED FAO 185/2010 & AS NO. 286/2000 PASSED BY THIS HONOURABLE COURT.** **EXHIBIT P3- TRUE COPY OF E.A.NO. 1902/2012 IN E.P. NO. 288/2000 IN OS.NO. 402/95 DT. 7-11-2012.** **EXHIBIT P4- TRUE COPY OF OBJECTION DATED 29-11-2012 FILED BY 2ND RESPONDENT INI IA 1902/2012.** **EXHIBIT P5- TRUE COPY OF E.A.NO. 1903/2012 IN EP NO. 288/2000 IN OS.NO.402/95 DT. 6-11-2012.** **EXHIBIT P6- TRUE COPY OF OBJECTION DATED 1-12-2012 FILED BY 1ST RESPONDENT IN I.A. 1903/2012.** **EXHIBIT P7- TRUE COPY OF OBJECTION DATED 29-11-2012 FILED BY 2ND RESPONDENT IN I.A. 1903/2012.** **EXHIBIT P8- TRUE COPY OF ORDER DATED 4-12-2012 PASSED BY II ADDL. SUB JUDGE IN IA 1902/2012.** **EXHIBIT P9- TRUE COPY OF ORDER DATED 4-12-2012 PASSED BY II ADDL. SUB JUDGE IN IA 1903/2012.** **RESPONDENT(S)' EXHIBITS:** **NIL** **TRUE COPY** ## **THOMAS P.JOSEPH, J.** **==================================== O.P(C) No.4389 of 2012 ==================================== Dated this the 11[th] day of January, 2013** ## **J U D G M E N T** Exhibits P8 and P9 orders dated 04.12.2012 on E.A. Nos.1902 and 1903 of 2012 in E.P. No.288 of 2000 in O.S. No.462 of 1995 of the Second Additional Sub Court, Thrissur are under challenge at the instance of the judgment debtors. 2. The petitioners availed loan from the 2[nd] respondent in the year, 1987 and as the learned Senior Advocate for the 2[nd] respondent would say, since the petitioners did not pay any amount the 2[nd] respondent filed O.S. No.402 of 1995 for realization of the amount by sale of property. A decree was passed in favour of the 2[nd] respondent on 30.07.1999 directing the petitioners to pay Rs.1,68,124/- with interest at the rate of 15.5% per annum failing which the mortgaged property was to be sold and the amount realized. 3. Petitioners filed A.S. No.286 of 2000 in this Court on 20.05.2000 challenging judgment and decree of the trial court. There was as an order of stay granted by this Court against execution of the decree of the trial court subject to certain **O.P(C) No.4389 of 2012** -: 2 :- conditions which the petitioners were not able to comply. Consequently, there was no stay in force. 4. The 2[nd] respondent filed E.P. No.288 of 2000 for realization of the amount due as per judgment and decree of the trial court. The 2[nd] respondent proceeded against the mortgaged property belonging to the petitioners. After various hurdles, the property was sold on 08.04.2008 and purchased by the 1[st] respondent for Rs.5,10,000/-. The petitioners filed E.A. No.486 of 2008 under Rule 90 of Order XXI of the Code of Civil Procedure (for short, “the Code”) to set aside the sale on various grounds. That application was dismissed and the sale was confirmed in favour of the 1[st] respondent on 23.09.2009. Certificate of sale was issued to the 1[st] respondent on 09.04.2010. The petitioners challenged the order on E.A. No.486 of 2008 in F.A.O. No.185 of 2010. That appeal was disposed of along with A.S. No.286 of 2000 by Ext.P2, common judgment. The judgment and decree of the trial court was modified to the extent that rate of interest was fixed as 6% per annum from 30.07.1999. In all other respects the judgment and decree of the trial court were confirmed. F.A.O. No.185 of 2010 was dismissed. 5. Following Ext.P2, common judgment modifying the ## **O.P(C) No.4389 of 2012** ## -: 3 :- judgment and decree of the trial court as above stated, the petitioners filed E.A. No.1902 of 2012 (Ext.P3) to set aside the execution proceeding in view of the modified judgment and decree in A.S. No.286 of 2000. The petitioners also filed E.A. No.1903 of 2012 seeking permission to deposit the decree amount as per the modified decree under Rule 2 of Order XXI of the Code. In the affidavit in support of the applications the petitioners stated that the 1[st] respondent was aware of pendency of A.S. No.286 of 2000, that he is an account holder with the 2[nd] respondent and colluded with the 2[nd] respondent. 6. The applications were opposed by the respondents on various grounds. The executing court passed Exts.P8 and P9, orders dismissing E.A. Nos.1902 and 1903 of 2012. In Ext.P8, order dismissing E.A. No.1902 of 2012 the executing court observed that it had already dismissed E.A. No.486 of 2008 which has become final by the dismissal of F.A.O. No.185 of 2010 and that though the judgment and decree of the trial court was modified by this Court in A.S. No.286 of 2000, modification was only to the extent of interest payable. In all other respects, judgment and decree of the trial court stood and therefore, the execution proceeding could not be challenged. Consequently by **O.P(C) No.4389 of 2012** -: 4 :- Ext.P9, order, E.A. No.1903 of 2012 was also dismissed. The challenge in this Original Petition is to Exts.P8 and P9, orders. 7. The learned counsel for petitioners contends that the property sold is valued at more than Rs.10 lakhs but it was sold for Rs.5,10,000/-. It is contended that the 2[nd] respondent had filed E.P. No.288 of 2000 at a time when A.S. No.286 of 2000 was pending, stating that there was no appeal. Though there happened to be no stay from A.S. No.286 of 2010 since petitioners were not able to comply with the condition, since the appeal is continuation of the suit, the 2[nd] respondent was bound to await until decision in A.S. No.286 of 2000 to initiate execution proceeding. It is submitted that the judgment and decree of the trial court has merged in Ext.P2, judgment and decree in A.S. No.286 of 2000 though the modification is only as regards interest payable by the petitioners. The only decree that could be executed was the decree of the appellate court in A.S. No.286 of 2000. The execution proceedings based on the judgment and decree of the trial court is a non-est and liable to be set aside. The learned counsel placed reliance on the decisions in **Chandi Prasad v. Jagdish Prasad** (2004 [3] KLT 654 (SC) and **Philip v. Zacharia** (2009 [1] KLT 375) **.** ## **O.P(C) No.4389 of 2012** -: 5 :- 8. The learned counsel submits that if the 1[st] respondent was aware of pendency of A.S. No.286 of 2000, he is bound by the modified judgment and decree in that appeal and consequently, the sale in execution would go as the judgment and decree of the trial court have merged in the judgment and decree in A.S. No.286 of 2000. In support of that, the learned counsel has placed reliance on the decision in **Chinnammal v.** **Arumugham** (AIR 1990 SC 1828). The learned counsel requested that since the executing court has not given ample opportunity to the petitioners to adduce evidence to show that the 1[st] respondent had knowledge about pendency of A.S. No.286 of 2000, petitioners may be given an opportunity to adduce evidence. 9. The learned Senior Advocate for the 2[nd] respondent argued that the transaction between the petitioners and the 2[nd] respondent was in the year, 1987 and since the petitioners did not pay any amount to the 2[nd] respondent, the latter was constrained to file the suit in the year 1995. It obtained a decree on 30.07.1999. Since there was no stay from A.S. No.286 of 2000 there was no bar to the 2[nd] respondent proceeding with execution based on the judgment and decree of the trial court and the **O.P(C) No.4389 of 2012** ## -: 6 :- question of merger would arise only after disposal of A.S. No.286 of 2000. It is pointed out that even before this Court disposed of A.S. No.286 of 2000 by Ext.P2, judgment on 25.06.2012, the execution proceeding based on the judgment and decree of the trial court had reached culmination by sale of the property on 08.04.2008, its confirmation on 23.09.1999 and issue of sale certificate to the 1[st] respondent on 09.04.2010. Hence the modification of the judgment and decree of the trial court by the judgment of this Court as per Ext.P2, judgment dated 25.06.2012 will not affect the sale in execution since the purchase is made by a third party - auction purchase (1[st] respondent) who was not aware of the pendency of A.S. No.286 of 2000. The learned Senior Advocate submits that there is nothing on record to show, even if it is assumed that the 1[st] respondent is an account holder with the 2[nd] respondent that the former was aware of pendency of the appeal. At no point of time the petitioners had requested the executing court for an opportunity to adduce evidence as is clear from the fact that not even a witness schedule was filed in the executing court in E.A. No.1903 of 2012. Therefore the belated attempt to get a remand of the case cannot be permitted. ## **O.P(C) No.4389 of 2012** -: 7 :- 10. The learned counsel for the 1[st] respondent while supplementing the argument advanced by the Senior Advocate for the 2[nd] respondent has contended that there is no material to show that the 1[st] respondent was aware of pendency of A.S. No.286 of 2000. The 1[st] respondent is a bona fide purchaser in court auction. The sale in his favour is protected. Section 144 of the Code will not apply to the 1[st] respondent even if judgment and decree of the trial court based on which the sale was effected, was later modified. 11. The law on the point is covered by Sec.144 of the Code which deals with restitution based on a decree being varied or reversed in any appeal, revision or other proceeding or set aside or modified in any suit instituted for the purpose. In such situation the benefit obtained by the party against whom such decree is reversed, varied, set aside or modified is bound to restore such benefit to the party entitled to it. 12. A decree holder-auction purchaser is bound by Sec.144 of the Code when the decree of the trial court based on which the auction sale is conducted is varied, reversed, modified or set aside in appeal, revision or other proceeding is the position of an assignee from the decree holder as such assignee steps **O.P(C) No.4389 of 2012** ## -: 8 :- into the shoes of the decree holder. 13. But the position is different in the case of bona fide auction purchaser who is not aware of pendency of the appeal, revision or other proceeding from the judgment and decree of the trial court based on which the auction sale was conducted. This position is clear from the decisions in **Padanathil Ruqmini Amma v. P.K. Abdulla** ([1996] 7 SCC 668) and **Woods Beach Hotels Ltd. v. Mapusa Urban Co-op.** **Bank of Goa** (2009 [4] Supreme 59). The same principle is laid down in **Chinnammal v. Arumugham** (supra) relied on by the learned counsel for the petitioners also. Therefore if the 1[st] respondent is a bona fide purchaser in count auction, the auction sale in his favour is protected notwithstanding that the judgment and decree of the trial court based on which the auction sale was conducted, was later modified by this Court in A.S. No.286 of 2000. 14. No doubt, an appeal is a continuation of the suit as held in **Chandi Prasad v. Jagdish Prasad** (supra) and **Philip v. Zacharia.** But I am absolutely not impressed by the argument that since A.S. No.286 of 2000 was pending, the 2[nd] respondent **O.P(C) No.4389 of 2012** ## -: 9 :- was bound to await the decision in that appeal to initiate execution proceeding. The learned counsel was not able to point out any provision of law or binding precedent which says that even when there is no stay of execution proceeding, merely for the reason of the appeal being pending, be it a continuation of the suit, the decree holder was bound to wait until disposal of the appeal. Such a view, if adopted would only put the decree holder in a dangerous position. Assuming that there was no stay of execution and the decree holder waits for a decision in the appeal, it is open to the appellant/defendant, after the time prescribed for execution of the decree expired, either to withdraw the appeal or get it dismissed for default in which case there will be no merger and the decree holder will be disabled from executing the decree of the trial court. So far as there was no stay of execution, the decree holder was entitled to execute the decree of the trial court may be, subject to Sec.144 of the Code so far as the decree holder and his assignee (if any) is concerned in case of variation, reversal, modification or setting aside of the decree. 15. In this case as aforesaid, the execution proceeding was initiated by the 2[nd] respondent in the year, 2000. A.S. ## **O.P(C) No.4389 of 2012** ## -: 10 :- No.286 of 2000 was preferred on 20.05.2000 auction sale in favour of the 1[st] respondent was held on 08.04.2008, its confirmation was on 23.09.2009 and the sale certificate was issued on 09.04.2010. A.S. No.286 of 2000 was disposed of only 25.06.2012. Therefore if the 1[st] respondent is a bona fide purchaser in the court auction, the sale in his favour is protected notwithstanding Ext.P2, judgment and decree in A.S. No.286 of 2000 modifying the judgment and decree of the trial court. Section 144 of the Code would not apply in that situation. 16. What remained is whether, on the question whether the 1[st] respondent is a bona fide auction purchaser, the petitioners should be given opportunity to adduce evidence in support of their contention that the 1[st] respondent was aware of pendency of A.S. No.286 of 2000? 17. Merely for the reason even if it is so, that the 1[st] respondent is an account holder with the 2[nd] respondent I am unable to attribute knowledge of pendency of A.S. No.286 of 2000 with the 2[nd] respondent. Though petitioners have a case that notwithstanding the pendency of A.S. No.286 of 2000, the 2[nd] respondent stated in the execution petition filed in the year, 2000 that there was no appeal, there is no case or evidence that ## **O.P(C) No.4389 of 2012** ## -: 11 :- before filing the execution petition, notice of A.S. No.286 of 2000 was served on the 2[nd] respondent. At any rate the 1[st] respondent is not concerned with that and comes to the petitioner only on the date of auction sale. 18. Petitioners filed E.A. No.486 of 2008 only after the auction sale was held on 08.04.2008. There, challenge to the execution sale was on grounds enumerated under Rule 90 of Order XXI of the Code. That application was dismissed against which the petitioners filed F.A.O. No.185 of 2010. In that appeal, the 1[st] respondent was a party. That appeal was disposed of along with A.S. No.286 of 2000 by Ext.P2, common judgment only on 25.06.2012. 19. It is revealed from the submission of the learned Senior Advocate for the 2[nd] respondent which is not very much in dispute also, that in F.A.O. No.185 of 2010 the petitioners and 1[st] respondent were referred to the Mediation Centre of this Court to ascertain the possibility of a settlement, there was some sort of settlement but that did not fructify. This is revealed from the order dated 12.04.2012 on I.A. No.1321 in F.A.O. No.185 of 2010. In other words, the opportunity petitioners had, to settle the dispute with the 1[st] respondent was not made use of by them for **O.P(C) No.4389 of 2012** ## -: 12 :- whatever reason it be. 20. Then the question is whether the petitioners should be given opportunity to adduce evidence in support of their contention that the 1[st] respondent was aware of pendency of A.S. No.286 of 2000? I am not inclined to think that the execution court has declined any opportunity to the petitioners in spite of their desiring to adduce evidence. Had they intended to adduce evidence, they would and should have filed at least a witness schedule citing the persons required to be examined. Even now, the learned counsel for the petitioners is not able to say what sort of evidence the petitioners intend to adduce (if a remand is ordered) to show that the 1[st] respondent was aware of pendency of A.S. No.286 of 2000, except saying that there was collusion between the 1[st] respondent-auction purchaser and the 2[nd] respondent with whom the 1[st] respondent was having an account, which is not sufficient to attribute knowledge of pendency of A.S. No.286 of 2000 with the 1[st] respondent. 21. The loan transaction was of the year, 1987. The petitioners did not discharge the liability. In the year, 1995, the 2[nd] respondent had to institute the suit. In that suit a decree was passed by the trial court on 30.07.1999. Even thereafter there ## **O.P(C) No.4389 of 2012** ## -: 13 :- was no attempt by the petitioners to pay even the admitted amount due to the 2[nd] respondent. At least in the course of execution, the petitioners should and could have discharged the liability of the 2[nd] respondent to save the property. On the other hand, at every point of time they were challenging the orders passed by the executing court. After the executing court fixed upset price for the mortgaged property for its sale and as there was no bidders to take the property for that price, the 2[nd] respondent requested the executing court to reduce the upset price. That ultimately ended in the dismissal of the execution petition. The 2[nd] respondent challenged that order in C.R.P. No.1573 of 2003. That revision was allowed and the execution petition was revived. Again the execution proceeding continued. The executing court then fixed upset price for the property. That, the petitioners challenged in W.P(C) No.910 of 2008. Their contention was that price of the property estimated by the petitioners and stated in their objection to the draft proclamation schedule (Rs.20 lakhs) should be incorporated in the proclamation schedule. The Writ Petition was allowed by judgment dated 08.01.2008 and accordingly, the price suggested by the petitioners was also incorporated in the sale ## **O.P(C) No.4389 of 2012** ## -: 14 :- proclamation. Even then, the petitioners did not think of discharging liability to the 2[nd] respondent and instead, was contesting the execution proceeding. That ultimately resulted in sale of the property to the 1[st] respondent for Rs.5.10,000/-. In spite of the several opportunities the petitioners had to discharge the liability, they were taking an obstinate stand. In the circumstances I am inclined to think that attempt of the petitioners in requesting for a remand of the case is only to protract the proceeding. In the circumstances above stated a remand would only be an empty formality which this Court cannot permit. Hence the request for remand cannot be accepted. 22. In the light of the above I have to hold that the 1[st] respondent being a bona fide auction purchaser of the property, the sale in his favour is protected notwithstanding that the judgment and decree of the trial court based on which the sale was effected was later modified by and got merged in Ext.P2, judgment. Hence the question of allowing the petitioner to deposit the amount under Rule 2 of Order XXI of the Code also does not arise. 23. The question whether, based on the modified decree ## **O.P(C) No.4389 of 2012** ## -: 15 :- as per Ext.P2, the 2[nd] respondent is liable to refund any amount to the petitioners is a matter which the executing court can decide if the petitioners move the executing court for that purpose as provided under the law. The Original Petition is dismissed. ## **THOMAS P. JOSEPH, JUDGE.** vsv