Dismissed

Gude Seshu Kumari v. S.V. Appala Swamy (Died)

Andhra Pradesh HC29 Jan 2024CMA/515/2007

Case brief

AI extract

What is this about?

Judgment-debtor challenged dismissal of her Order XXI Rule 90 application to set aside a court auction sale as fraudulent and materially irregular due to undervaluation. The High Court held no material irregularity or substantial injury was established; adjournment without fresh proclamation was valid under Rule 69(2); appeal dismissed.

What the court decided

AI extract

Gude Seshu Kumari Vs S.V. Appala Swamy (Died) — Execution and Attachment | Andhra Pradesh HC (2024)

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IN THE HIGH COURT OF ANDHRA PRADESH: AMARAVATI

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C.M.A. No. 515 of 2007

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Between : Gude Seshu Kumari W/o.Surendra Babu, Hindu, aged about 47 years, House wife, R/o.Amaravathi, Guntur District. .....Appellant AND S.V.Appala Swamy S/o.Veeraswamy, Hindu Aged about 65 years, R/o.Vijayawada, Krishna District (died) and another. .....Respondents DATE OF JUDGMENT PRONOUNCED : 30.01.2024 SUBMITTED FOR APPROVAL

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HON'BLE SMT. JUSTICE VENKATA JYOTHIRMAI PRATAPA

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1. Whether Reporters of Local Newspapers may be allowed to see the Judgments ?	Yes/No
2. Whether copies of Judgment may be
marked to Law Reporters/Journals ?	Yes/No
3. Whether Your Lordships wish to see the
fair copy of the Judgment ?	Yes/No

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_____________________________________ VENKATA JYOTHIRMAI PRATAPA, J

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*** HON'BLE SMT. JUSTICE VENKATA JYOTHIRMAI PRATAPA**

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C.M.A. No. 515 of 2007

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% 30.01.2024

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Between :

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Gude Seshu Kumari W/o.Surendra Babu, Hindu, aged about 47 years, House wife, R/o.Amaravathi, Guntur District.

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.....Appellant

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Versus

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$ S.V.Appala Swamy S/o.Veeraswamy, Hindu Aged about 65 years, R/o.Vijayawada, Krishna District (died) and another. .....Respondents

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! Counsel for the Petitioner : Sri T.V.Jaggi Reddy

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^ Counsel for the Respondents : Sri G.V.S.Mehar Kumar

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< Gist :

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Head Note:

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? Cases Referred:

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1973 SC 2593 = 1973 2 SCC 629

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(2001) 5 ALT 657 = 2001 SCC OnLine AP 391

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1951 SCC OnLine Mad 293

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(1889) 12 Mad 19

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(1974) 2 SCC 213

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1997(5) ALT 265

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2006(4) SCC 476

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2022 SCC OnLine SC 1144

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(1973)2 Supreme Court Cases 629

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10.(1994) 1 SCC 131

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(1997) 4 SCC 356

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2000(2) ALD 269

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MANU/AP/0148/2023

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2015(4) ALD 693

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APHC010123772007

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IN THE HIGH COURT OF ANDHRA PRADESH AT AMARAVATI [3396] (Special Original Jurisdiction)

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TUESDAY ,THE THIRTIETH DAY OF JANUARY TWO THOUSAND AND TWENTY FOUR

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PRESENT

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HONOURABLE SMT JUSTICE VENKATA JYOTHIRMAI PRATAPA

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CIVIL MISCELLANEOUS APPEAL No. 515 of 2007

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Between: Gude Seshu Kumari

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...APPELLANT

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AND S V Appala Swamy Died and Others ...RESPONDENT(S) Counsel for the Appellant:

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1.T V JAGGI REDDY

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Counsel for the Respondent(S):

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1.7873/G V S MEHAR KUMAR

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2.G V S MEHAR KUMAR

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The Court made the following:

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JUDGMENT:

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Impugning the Order dated 28.02.2007 in E.A.No.221 of 2006 in E.P.No.53 of 2004 in O.S.No.157 of 2002 on the file of the Court of Principal Senior Civil Judge, Narasaraopet,¹ the judgment-debtor² (J.Dr), preferred the present appeal.

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2. A petition under Rule 90 of Order-XXI read with Section 151 of the

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Code of Civil Procedure,1908³ came to be filed in E.P. No.53 of 2004 by the

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1 In Short, the learned Senior Civil Judge

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2 In short, “J.Dr”

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3 In short ‘the Code”

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Judgment Debtor seeking to set aside sale held on 03.03.2006 on the ground of fraud and misrepresentation, contending that the sale was not properly held and schedule property was sold at a lesser price. The said application was dismissed by the Executing Court on the ground that the J.Dr. failed to prove fraud or material irregularity alleged in conducting the sale of EP schedule properties.

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3. Appellant herein was the Petitioner/judgment-debtor; respondent No.1 herein was the respondent decree- holder before the Executing Court. For the sake of convenience, the appellant and Respondent No.1 would be referred to as Judgment Debtor (J.Dr) and Decree Holder⁴ (D.Hr) respectively, in this judgment. During the pendency of the present appeal, the D. Hr-cum-auction purchaser died, Respondent No.2, who is his legal representative, was added, vide order in I.A.No.2 of 2022 dated 12.04.2022.

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Grounds for Appeal

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4. Being aggrieved by the Order of dismissal, the J.Dr. preferred the appeal on the following grounds:

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a. The Executing Court failed to follow the procedure contemplated under law by allowing the D.Hr to participate in auction without any permission.

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4 In short, “D.Hr”

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b. The Court shall take the valuation of the D.Hr. as well as the J.Dr., vide Order–XXI Rule 66 (e) of the Code. In the similar circumstances, Hon‘ble Apex court held that if proclamation does not contain the valuation furnished by the J.Dr. and no reasons are assigned by the Executing Court to ignore such valuation, it is a material irregularity as reported in Gajadhar Prasad & Ors v.

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Babu Bhakta Ratan & Ors⁵

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c. Vide the judgment reported in 1976 (1) APLJ 57 (SN), noninclusion of the value given by the J.Dr., is a material irregularity.

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d. The Executing Court simply ignored valuation furnished by the J.Dr., on the ground that it does not contain the seal of the Office, though it contains seal of the Sub Registrar‘s Office.

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Arguments Advanced at the Bar

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5. Heard Sri T.V.Jaggi Reddy, learned counsel for the Appellant/J.Dr

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and Sri G.V.S.Mehar Kumar, learned counsel for the Respondent/D.Hr.

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6. Learned counsel for the J.Dr., in elaboration to the Grounds taken in the Memorandum of Appeal, would submit that the sale conducted in the present case is purely hit by fraud and material irregularity. It is stated that though the J.Dr., filed a copy of valuation of the property obtained from the Sub Registrar‘s Office showing the value of the property as Rs.9,11,655/-,

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5 1973 SC 2593 =1973 2 SCC 629

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but the learned Senior Civil Judge simply ignored the said document on the premise that it was not affixed with the stamp of the Sub Registrar‘s Office and the sale was knocked down in favour of the D.Hr. for a lesser price without considering the value of the property as furnished by the J.Dr. Ultimately, he urges to set aside the impugned order and the sale.

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7. Contrasting the same, learned counsel for the Respondent/ D.Hr.,

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would submit that the sale certificate has been issued on dismissal of the petition filed by the J.Dr. under O-XXI Rule-90 of the Code. At the time of conducting sale, the judgment-debtor along with her husband present. He would also submit that the present petition under Order-XXI Rule-90 of the Code is not maintainable, after confirmation of the sale. It is also submitted that the learned Senior Civil Judge has conducted the sale in a proper manner and knocked down the sale in favour of highest bidder. The D.Hr. has obtained permission from the Court and participated in the auction. He would also submit that when the sale got postponed, the D.Hr. paid continuation batta and hence, fresh proclamation is not required. Learned counsel further submits that the J.Dr., did not participate in the E.P. till steps have been taken by way of publication, and only then, they entered appearance. Ultimately it is submitted that there are no grounds to set aside the sale.

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Point for Determination

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8. Perused the material on record. Having heard the submissions of

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both the counsels referred to above, the point that would emerge for determination in this appeal is:

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Whether the impugned order is liable to be set aside on the ground of fraud and material irregularity as claimed by the J.Dr. in conducting the sale ?

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Determination by the Court

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9. It is relevant to look at the facts referred in E.A. that drove the

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Executing Court to decide the impugned order.

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Version of J.Dr. in the E.A.

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10. The version of the J.Dr. as projected in the E.A. contains the

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following claims in a nutshell;

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i) J.Dr. sustained heavy loss and injury in view of the fraud, as the D.Hr. to grab the property, got the sale in his favour.

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ii) Sale is a collusive one. D.Hr got postponed the sale intentionally to avoid the bidders who came to the Court to participate in the bid on 23.02.2006. The alleged bidders are close friends and associates of the D.Hr. Hence, their participation is nominal.

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iii) There is no proper publication of sale. There is inadequacy of sale price. There was no proclamation as contemplated under law and sale was not held properly. The value of the scheduled property is

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about Rs.13 to 15 lakhs as per the market rate since it is situated in the heart of Amaravati. The Property would have fetched about Rs.13 to 15 lakhs if it is sold in a public auction by giving proper publicity.

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iv) The D.Hr, played fraud and obtained the valuation certificate for lesser price with old date. Even as per the registration, value of the scheduled property is Rs.9,11,655/- which is less than the market value.

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v) She never mortgaged the property to the D.Hr. but the D.Hr. obtained promissory notes from her and also obtained the document, by threat. If the property was really mortgaged, D.Hr. should have got the property registered.

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Version of the D.Hr. in the E.A.

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11. To the claims put forward by the J.Dr., the response of the D.Hr. is in the following lines;

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i) The E.P. Schedule property is a RCC building which is situated in Amaravati with Door No.2-71 in an extent of 1385 square yards.

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ii) The petition is filed with an intention to harass the decree-holder, who brought the property for sale with great difficulty. During the course of enquiry, the J.Dr. was examined as P.W.1 and D.Hr. as R.W.1.

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iii) The plea of J.Dr.that she never mortgaged the property, but, her husband obtained her signatures on blank papers, was negated by the trial court.

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iv) In E.P., J.Dr. avoided to take notices for one year and ultimately, the notice was served on the J.Dr. by way of publication at the stage of Order-21 Rule 66 of the Code.

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v) The objections raised by the J.Dr. were over-ruled by the Executing Court and the matter was posted for settlement of terms on 30.12.2005.

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vi) Sale proclamation was made in ‗Eenadu‘ Daily newspaper, which is largely circulated in Andhra Pradesh.

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vii) The J.Dr. also filed valuation certificate obtained from the SubRegistrar‘s Office, Amaravati, regarding the value of the property. The Sub-Registrar valued the property at Rs.7,00,000/- and odd. The Executing Court fixed the upset price at Rs.7,25,000/- and sale was knocked down at Rs.7,65,000/- in favour of the D.Hr. There are no irregularities in conducting the sale. The sale price is reasonable.

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viii) The J.Dr and her husband also attended the Court and they also got some bidders, but they never participated as the upset price is fixed above Rs.7,00,000/-.

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ix) If the Judgment-debtor intends to get bidders, he may be directed to deposit the entire amount with exemplary costs to the decree-holder.

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12. As seen from the document filed by the J.Dr., the value of the land is Rs.4,19,655/-, whereas, the value of the construction is about Rs.4,92,000/-. Hence, the market value is shown as Rs.9,11,655/-. This document does not contain the seal of the office of the Sub Registrar, but it is with the signature of the Sub-Registrar along with his stamp. The contention of the J.Dr. is that the sale which was held on 03.03.2006 is suffering from the vices of fraud and material irregularity. The main contention is on the point that the sale was knocked down for a lower price. The valuation certificate filed by the J.Dr was rejected on the ground that it does not contain the office seal.

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13. It is not in dispute that the executing Court proposed to

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conduct the sale on 26.02.2006 and sale ‗isthehar‘ on 07.02.2006. The proclamation of the sale of scheduled property was issued in Eenadu Telugu daily Guntur District edition. Admittedly, the said paper has got wide circulation in the District. The sale was not conducted on 26.02.2006 because, no bidders came forward and it was adjourned to 03.03.2006, on payment of continuation batta.

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14. The argument that fresh proclamation needs to be published when the sale is adjourned holds no water, as it got adjourned on payment of continuous batta, within one month from the date of the original sale proclamation. On this point, it is relevant to refer Rule 69 (2) of Order XXI of the Code and the decision of the then Composite High Court of Andhra Pradesh in S.V. Rama-krishna v. R. Subbamma⁶ , wherein it was held that where the adjournment of sale is for less than thirty days duration, no fresh sale proclamation is necessary, in the following terms;

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28. The contention of the appellant that the sale was

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adjourned on a number of occasions and so far each and every time of sale, a notification has to be issued cannot be accepted. Even according to the evidence of the appellant himself, the sale was adjourned from time to time and on all the adjourned dates of sale, the same was adjourned at his request. The evidence on record further discloses that the interval between one adjournment and the other is of less than thirty days' duration. As per the provisions of Order 21, Rule 69(2) CPC if the sale is adjourned by more than thirty days then only a fresh sale publication has to be made, and if the adjournment of sale is of less than thirty days' duration, no such fresh publication is necessary . On this point it is useful to quote the following observations of Jaggannadha Rao, J., (as His Lordship then was) in T.

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6 (2001) 5 ALT 657=2001 SCC OnLine AP 391

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Rambabu v. V. Ramavathi, 1988 (1) ALT 987; (paragraphs 13 and 14):

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―It is true that the sale was initially posted to 21-8-1979 and was subsequently adjourned on account of the various petitions that were being filed by the petitioner. The sale was ultimately held on 15-7-1980. In between, there were several adjournments of the sale, but admittedly each adjournment is within thirty days. A reading of the provisions of Order 21, Rule 69(2) CPC will disclose that ―what is important is the interval between each adjournment of sale. It is not permissible to take the aggregate of all the adjournments.

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In any event, as pointed out by a Division Bench of Madras High Court in Subbamma v. Satyanarayanamurthy, AIR 1943 Mad. 739, even if the sum total of the adjournments exceed thirty days the sale cannot be treated as illegal or as a nullity. It would, at the most, amount to a mere irregularity. It is necessary for the applicant to show substantial injury and that too the said injury flowed from the material irregularity‖.

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(emphasis supplied) 15. As such, the sale has been conducted on 03.03.2006. Admittedly, sale was conducted in the public court in the presence of both the counsels on record. There is also no dispute that the valuation certificate filed by the D.Hr. obtained from the Sub-Registrar‘s Office, Amaravati shows the value of the E.P. schedule property as on 10.06.2005 was Rs.7,11,675/-. The impugned Order would reveal that J.Dr. filed

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another valuation certificate which shows the value of the property as on 02.03.2006 was Rs.9,11,655/-.

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16. Learned Senior Civil Judge based on the valuation certificate filed by the D.Hr fixed the upset price at Rs.7,50,000/-. The D.Hr contends that the sale was held in the presence of the J.Dr., her husband and their counsel on 03.03.2006. It is also not in dispute that though the sale is proposed to be held on 23.02.2006, for want of bidders as nobody was available, it was postponed. As seen from the material document, i.e., the copy of the valuation certificate as stated by the J.Dr., the date would show as 03.03.2006. It does not contain the seal of the office of the SubRegistrar.

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17. Be that as it may, admittedly, none represented before the Executing Court to purchase the said property on 23.02.2006. That is the reason for the executing court to fix the upset price at Rs.7,50,000/-. In addition to that, if the property is worth Rs.9,00,000/- it does not preclude any person to participate in the public auction and purchase the said property with that amount. The interest of the J.Dr. over the property is being well secured through an Advocate, who represented her case before the executing court. As no bidders were coming forward, the sale was adjourned.

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18. The J.Dr. had ample opportunity to bring any prospective bidder who can participate in the auction and purchase the property for the price above Rs.9,00,000/-. Nothing was done by the J.Dr, despite having ample opportunity. Admittedly, J.Dr. has not filed any petition Order 21 Rule 89 of the Code to set aside the sale, along with the deposit of the amount as contemplated under the said Rule. Admittedly, the sale has been knocked down in favour of the D.Hr. for a sum of Rs.7,65,000/-, as the value of the property was shown around Rs.7,15,000/- as on 10.06.2005. and the upset price has been fixed at Rs.7,50,000/-. The D.Hr. can participate in the auction. At last, the sale was knocked down for Rs.7,65,000/-. If the version of the J.Dr., that the property is worth above Rs.15,00,000/- is true, they should come forward to deposit the said amount under Rule 89 of Order XXI of the Code within the period of 60 days, from the date of sale by introducing a new buyer. As reiterated in various decisions of the Hon‘ble Apex Court and this Court, the object of the Rule 89 of Order XXI of the Code is to provide the J.Dr., ―last chance‖ of getting the sale set aside.

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19. It is profitable to recollect that the impugned order in the instant case, arises out of an application made under Rule 90 of Order XXII of the Code. A bare reading of the same reveals that the following conditions are to be satisfied to set aside the sale, i.e.,

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i) Material irregularity and fraud in publishing or conducting the sale (Rule 90(1));

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ii) The court is satisfied that the applicant has sustained substantial injury by reason of such irregularity or fraud; (Rule 90(2)) and;

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iii) No application would be entertained upon a ground which the applicant could have taken on or before the date of drawing up of the proclamation of sale. (Rule 90(3))

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20. The provision addresses the cases of material irregularity and fraud in the ―publishing‖ or ―conducting‖ of the sale. A Division Bench of the Madras High Court in Kandaswami Mudali v. K.R. Narasimha Aiyar ,⁷ held as follows;

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―Mahmood, J. in Bamchaibar Misir v. Bechu Bhagat and another observes that the word ―conducting‖ in S. 311 of the old Code, equivalent to O. 21, R. 90 together with the word ―conducted‖ in the old S. 286 makes it clear that it would refer only to the action of the officer who makes the sale. Anything done antecedent to the order of sale has nothing to do with ―conducting‖ the sale. Again, it is observed by him that the word ―publishing‖ also refers only to what is done antecedent to the actual conduct of the sale but subsequent to the order directing the sale. This is also the view taken in Gauri v. Ude, as well as by Yahya Ali, J. in Earamalla Sanjamma v. Anna Sayanna. We are inclined to think that there is considerable force in the argument of learned Counsel for the appellant that the more correct view is that adumbrated in Bamohibar Misir v. Bechu Bhagat and the other two cases referred to above. ―

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Emphasis supplied

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21. It is necessary to bear in mind that material irregularity or fraud does

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not make a sale ipso facto void. The sale is liable to be set aside under

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7 1951 SCC OnLine Mad 293

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Order XXI Rule 90 of the Code, upon satisfaction of the court as to substantial injury sustained by reason of the material irregularity or fraud in publishing or conduct of the sale. The third limb in the ingredients referred supra, in the form of Order XXI Rule 90 (3) of the Code is to put a check on the party (usually the J.Dr) who knew of the irregularity or fraud and allowed the sale to proceed without objection. Such party will be estopped from impeaching the sale on the ground of irregularity or fraud, though substantial injury has been caused. In Arunachellam v. Arunachellam ,⁸ the Privy Council held thus;

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―It would be very difficult indeed to conduct proceedings in execution of decrees by attachment and sale of property if the judgment-debtor could lie by and afterwards take advantage of any misdescription of the property attached, and about to be sold, which he knew well, but of which the execution-creditor or decree-holder might be perfectly ignorant—that they should take no notice of that, allow the sale to proceed, and then come forward and say the whole proceedings were vitiated.‖

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Emphasis supplied 22. In a decision of a three-Judge Bench of the Hon‘ble Supreme Court in Kayjay Industries (P) Ltd. v. Asnew Drums (P) Ltd.,⁹ auction purchaser appealed against allowing an application filed by the J.Dr under Rule 90 of Order XXI of the Code. Their Lordships expounded the peculiarity in a court sale and observed as follows;

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8 (1889) 12 Mad 19

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9 (1974) 2 SCC 213

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“ 7. Certain salient facts may be highlighted in this context. A court sale is a forced sale and, notwithstanding the competitive element of a public auction, the best price is not often forthcoming. The judge must make a certain margin for this factor . A valuer's report, good as a basis, is not as good as an actual offer and variations within limits between such an estimate, however careful, and real bids by seasoned businessmen before the auctioneer are quite on the cards. More so, when the subject-matter is a specialised industrial plant, which has been out of commission for a few years, as in this case, and buyers for cash are bound to be limited. The brooding fear of something out of the imported machinery going out of gear, the vague apprehensions of possible claims by the Dena Bank which had a huge claim and was not a party, and the litigious sequel at the judgment-debtor's instance, have ―scare‖ value in inhibiting intending buyers from coming forward with the best offers. Businessmen make uncanny calculations before striking a bargain and that circumstance must enter the judicial verdict before deciding whether a better price could be had by a postponement of the sale.

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If Court sales are too frequently adjourned with a view to obtaining a still higher price it may prove a self-defeating exercise, for industrialists will lose faith in the actual sale taking place and may not care to travel up to the place of auction being uncertain that the sale would at all go through. The judgment-debtor's plea for postponement in the expectation of a higher price in the future may strain the credibility of the Court sale itself and may yield diminishing returns as was proved in this very case.‖

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23. Further, their Lordships while explaining the ―material

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irregularity‖ as envisaged in Rule 90 of Order XXI of the Code, held thus;

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―Form 29 prescribed in Appendix E to the Code contains Condition 3 which is in like terms The Court's activist obligation to exercise a

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discretion to make a fair sale out of a court auction — and avert a distress sale — is underscored by this provision. In all public sales the authority must protect the interests of the parties and the rule is stated by this Court in Neyalkha and Sons v. Ramanya Das [(1969) 3 SCC 537 : (1970) 3 SCR 1] thus: (at p. 5)

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―The principles which should govern confirmation of sales are well established. Where the acceptance of the offer by the Commissioners is subject to confirmation of the Court the offerer does not by mere acceptance get any vested right in the property so that he may demand automatic confirmation of his offer. The condition of confirmation by the Court operates as a safeguard against the property being sold at inadequate price whether or not it is a consequence of any irregularity or fraud in the conduct of the sale. In every case it is the duty of the Court to satisfy itself that having regard to the market value of the property the price offered is reasonable. Unless the Court is satisfied about the adequacy of the price the act of confirmation of the sale would not be a proper exercise of judicial discretion.‖

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Be it by a receiver, commissioner, liquidator or court this principle must govern. This proposition has been propounded in many ruling cited before us and summed up by the High Courts. The expression ―material irregularity in the conduct of the sale‖ must be benignantly construed to cover the climax act of the Court accepting the highest bid. Indeed, under the Civil Procedure Code, it is the Court which conducts the sale and its duty to apply its mind to the material factors bearing on the reasonableness of the price offered is part of the process of obtaining a proper price in the course of the sale. Therefore, failure to apply its mind to this aspect of the conduct of the sale may amount to material irregularity. Here, substantial injury without material irregularity is not enough even as material irregularity not linked directly to inadequacy of the price is insufficient. And where a Court mechanically conducts the sale or routinely signs assent to the sale papers, not bothering to see if the offer is too low and a better price could have been obtained, and in fact the price is

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substantially inadequate, there is the presence of both the elements of irregularity and injury. But it is not as if the Court should go on adjourning the sale till a good price is got, it being a notorious fact that court sales and market prices are distant neighbours. Otherwise, decree-holders can never get the property of the debtor sold. Nor is it right to judge the unfairness of the price by hindsight wisdom. Maybe, subsequent events, not within the ken of the executing Court when holding the sale, may prove that had the sale been adjourned a better price could have been had. What is expected of the judge is not to be a prophet but a pragmatist and merely to make a realistic appraisal of the factors, and, if satisfied that, in the given circumstances, the bid is acceptable, conclude the sale. The Court may consider the fair value of the property, the general economic trends, the large sum required to be produced by the bidder, the formation of a syndicate, the futility of postponements and the possibility of litigation, and several other factors dependent on the facts of each case. Once that is done, the matter ends there. No speaking order is called for and no meticulous post mortem is proper. If the Court has fairly, even if silently, applied its mind to the relevant considerations before it while accepting the final bid, no probe in retrospect is permissible. Otherwise, a new threat to certainty of court sales will be introduced.‖

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Emphasis supplied

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24. On the aspect of sale, it is essential to recollect the observation made

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in D.Kondaiah Vs.G.Rama Subbaiah and another¹⁰ , by a bench of the

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composite High Court of Andhra Pradesh as under:

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―…. Court sale is a forced sale under best price not often

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forthcoming and certain margin has to be given by Judge in determining whether the price fixed is inadequate or not; The Court has to see whether the price is unfair. Price fetched cannot be said

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101997(5) ALT 265

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to be substantially inadequate and unfair in the circumstances of the case….‖

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Emphasis supplied 25. In Saheb Khan v. Mohd. Yusufuddin and Ors .,¹¹ while ruling that compliance of the dual conditions of material irregularity or fraud and satisfaction of the court as to the substantial injury caused as result, as essential to succeed in an application under Rule 90 Order XXI application, the Hon‘ble Apex Court held:

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―13. Therefore before the sale can be set aside merely establishing a material irregularity or fraud will not do. The applicant must go further and establish to the satisfaction of the court that the material irregularity or fraud has resulted in substantial injury to the applicant. Conversely even if the applicant has suffered substantial injury by reason of the sale, this would not be sufficient to set the sale aside unless substantial injury has been occasioned by a material irregularity or fraud in publishing or conducting the sale. (See Dhirendra Nath Gorai v. Sudhir Chandra Ghosh, (1994 (6) SCR 1001); Jaswantlal Natvarlal Thakkar v. Sushilaben Manilal Dangarwala, (1991 Supp. (2) SCC 691) and Kadiyala Rama Rao v. Gutala Kahna Rao, (2000 (3) SCC 87).

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14. A charge of fraud or material irregularity under Order 21 Rule 90 must be specifically made with sufficient particulars. Bald allegations would not do. The facts must be established which could reasonably sustain such a charge.‖

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(emphasis supplied) 26. Once again, explaining the pertinence of satisfaction of

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ingredients essential in Rule 90 of Order XXII, a three-Judge Bench of the

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11 2006 (4) SCC 476

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Hon‘ble Apex Court in M/s. Jagan Singh & Co. v. Ludhiana Improvement Trust & Ors .¹² held thus;

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― 38. The mandatory nature of the twin conditions to be satisfied before an auction sale can be set aside as provided under Order XXI Rule 90(3) of the said Code which has been discussed by this Court in various judicial pronouncements. We may refer to two of them as under:

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i. In Saheb Khan case, it was observed that satisfaction of only one of the two conditions was not sufficient. It was also observed that a charge of fraud or material irregularity must be specifically made with sufficient particulars and bald allegations would not do.

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ii. In Chilamkurti Bala Subrahmanyam v. Samanthapudi Vijaya Lakshmi, the aforesaid judgment was referred to with approval.

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39. We must note in the end that Order XXI of the said Code is exhaustive and in the nature of a complete Code as to how the execution proceedings should take place. This is the second stage after the success of the party in the civil proceedings. It is often said in our country that another legal battle, more prolonged, starts in execution proceedings defeating the right of the party which has succeeded in establishing its claim in civil proceedings. This is exactly what has happened in the present case. The various stages of Order XXI of the said Code when violated cannot given right to some extra indulgence merely because the Respondent Trust is an Improvement Trust. There cannot be a licence to prolong the litigation ad infinitum‖

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(emphasis supplied)

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27. In a given case, to identify material irregularity, fraud and the resultant substantial injury, it is essential to analyse the relevant facts.

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12 2022 SCC OnLine SC 1144

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28. Learned counsel for the J.Dr, in support of his contention, placed reliance on Gajadhar Prasad and others v. Babu Bhakta Ratan and

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others¹³ wherein, it was observed that vide Order-21 Rule 66 (2)(e) of the Code, Court should normally state the valuation given by both the D.Hr as well as the J.Dr. where they have both valued the property. It is relevant to extract para-15 of the Judgment and it reads as under:

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―15. A review of the authorities as well as the amendments to rule 66(2) (e) makes it abundantly clear that the Court, when stating the estimated value of the property to be sold, must not accept merely the ipse dixit of one side. It is certainly not necessary for, it to state its own estimate. If this were required, it may, to be fair, necessitate insertion of something like a summary of a judicially considered order, giving its grounds, in the sale proclamation, which may confuse bidders. It may also be quite misleading if the Court's estimate is erroneous. Moreover, Rule 66(2) (e) requires the, Court to state only the facts it considers material for a purchaser to judge the value and nature of the property himself. Hence, the purchaser should be left to judge the value for himself. But, essential facts which have a bearing on the very material question of value of the property and which would assist the purchaser in forming his own opinion must be stated That is, after all, the whole object of Order 21, Rule 66(2) (e), Civil Procedure Code. The Court has only to decide what all these material particulars are in each case. We think that this is an obligation imposed by Rule 66 (2)(e). In discharging it, the Court should normally state the valuation given by both the

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(1973) 2 Supreme Court Cases 629

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decree-holder as well as the judgment debtor where they have both valued the property, and these do not appear fantastic. It may usefully state other material facts, such as the area of land, nature of rights in it, municipal assessment, actual rents realised, which could reasonably be expected to affect valuation. What could be reasonably and usefully stated succinctly in a sale proclamation has to be determined on the facts of each particular case. Inflexible rules are not desirable on such a question.‖

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29. Further, in Desh Bandhu Gupta v. N.L. Anand & Rajinder

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Singh¹⁴ , wherein it was held that a sale made without notice to the J.Dr. is a nullity as it divests the J.Dr. of his right, title and interest without an opportunity. It was also held that the estimate value of the property is a material fact to enable the purchaser to know its value, which must be verified as accurately and fairly as possible so that the intending bidders are not misled or to prevent them from offering inadequate price or to enable them to make a decision in offering adequate price.

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30. In Lal Chand v. VIIIth Additional District Judge and

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others¹⁵ , wherein it was observed that any sale conducted in noncompliance of Order 21 Rules 66 and 67 of the Code is nullity ab initio. It was also opined that the court has a duty to see to it that all the mandatory

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(1994) 1 SCC 131

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15.(1997) 4 SCC 356

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requirements as essential under Order 21 of the Code are complied with, so as to not invite any criticism.

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31. The reliance placed by the learned counsel on the decisions are not helpful in the instant case, in view of the discussion made on requirements for an application under Order 21 Rule 90.

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32. To cement strength to this view, it is relevant to discuss few decisions on the similar lines. In N. Mohana Kumar v. Bayani Lakshmi Narasimhaiah¹⁶ a learned single Judge of the composite High Court of Andhra Pradesh at paragraphs-27 and 28 held as under:

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―27. Another contention which is raised by the learned Counsel for Petitioner also is equally important. He submits that when the judgment-debtor failed to take these grounds before the settlement of proclamation and proposed sale he is estopped from urging the said grounds in the application filed under Rule 90 of Order 21 CPC. He submits that under sub-rule (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. Further, mere absence or defect in attachment of property sold in auction shall not be a ground for setting aside the sale under this rule, He submits that all these grounds which are urged in application filed under Rule 90 ought to have been urged under Rule 66 of Order 21. He failed to do so, even in spite of notice. He is estopped from taking those grounds after the sale was effected. The learned Counsel relied on the

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162000(2) ALD 269

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decision of the learned single Judge of this Court reported in J. Thimmaraju v. Uppuluri Brahmanna, . The learned Judge while dealing with Order 21, Rules 90, 64 and 66(2)(a) CPC held that: "Entire property attached put to sale for realisation of decretal amount as judgment-debtor remained absent and did not raise objection for sale of the entire attached property on the grounds of illegality, irregularity or fraud under Order 21, Rule 90 CPC when notice of attachment was served on him and when proclamation of sale was settled. He cannot, thereafter challenge the sale on the ground that a portion of the property would have been sufficient to satisfy the decretal amount. The sale was not liable to be set aside."

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In the case of V. Satyanarayana v. B. Balakishore, the teamed single Judge of this Court observed that an opportunity in matters relating to Court auction under Order 21, Rule 90 CPC, the judgment-debtor cannot object to Court sale when sufficient opportunity was given. Valuation in sales statistics cannot be a basis for Court sales.‖

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(emphasis supplied) 33. A learned Single Judge of this Court in Shaik Shahida v. Shaik Moulali and Ors.¹⁷ reiterated the position of law laid down in Nerella China Venkata Subba Rao v. Gunda Anka Rao and Ors.¹⁸ and held as follows;

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― 14 . In Nerella China Venkata Subba Rao Vs. Gunda Anka Rao and Ors., learned single Judge of the composite High Court held thus:

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MANU/AP/0148/2023

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18 2015 (4) ALD 693

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―As seen from the above provision, it is clear that the sale of property in execution of the decree can be set aside only on the ground of a material irregularity or fraud in publishing or conducting the sale.

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Admittedly, the case on hand does not fall under the second category viz., fraud in publishing or conducting the sale. The only ground available for setting aside the sale is material irregularity. Now, it has to be seen that when the decree holder has not shown the correct description of the property properly or the value is shown far less than the market value or the Sub-Registrar's value, whether it would amount a material irregularity. Sub-rule (3) of Rule 90 of Order XXI C.P.C. controls sub-rule (1) of Rule 90 C.P.C. Even if there is a material irregularity, sale cannot be set aside when such a plea has not been taken on or before the date on which the proclamation of sale was drawn up. Admittedly, the Petitioner has not taken up these two contentions raised on or before the proclamation of sale was drawn up. Therefore, even assuming for a moment that it amounts to a material irregularity, for that reason sale of the property in auction cannot be set aside unless those grounds have been specifically taken on or before the date on which the proclamation of sale has been drawn up. So, precisely for that reason, the Executing Court by invoking Order XXI Rule 90(3) C.P.C. has dismissed the application and that order needs no interference by this Court as there is no illegality in passing the said Order. ‖

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(emphasis supplied) 34. In the present case, there is no dispute that the property subject to mortgage on the sale date is initially fixed on 23.3.2006 and for want of bidders it is postponed. The contention that though the property is worth

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more than Rs.9,00,000/- it was sold out at Rs.7,65,000/- is not sufficient to establish the material irregularity or fraud in conducting the sale. There cannot be any dispute on the fact that the sale before a Court is involuntary sale. No one can expect best price in the public auction in any execution petition, the reason being, it is left open to the judgment-debtor to question the sale on different grounds at a later stage.

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35. As rightly stated in various judicial pronouncements, the difficulties of the decree-holder would start from the date of the decree, as it is very difficult for the decree holder to get the fruits of the decree that has been passed though in his favour. The endeavour of the executing court would be to see the fruits of the decree reaches the decree-holder. Sometimes, the litigation may take decades together. Such being the case, when a purchase of the property before the court involves the hurdles referred supra, no J.Dr would get best price like the market value of the property. One may purchase the very same property from any individual outside the Court by paying competitive price, but is not uncommon to see that though the property may fetch a little more amount in private transaction, which is not possible before the court in an involuntary sale.

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36. The present case is an example of delayed execution, wherein the D.Hr. obtained a decree in O.S. No.157 of 2012 which is a suit based on monetary transaction on promissory note coupled with the mortgage of the

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schedule property. The E.P. has been filed in the year 2004. EA has been filed in the year 2006. The present CMA which is of the year 2007 is pending before the Court for the last one and half decade.

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37. Further, needless to say, with the permission of the Court, D.Hr can participate in the auction and can purchase the property, vide Order XXI Rule 72 of the Code. No argument or iota of evidence is advanced to show that such permission is not obtained by the D.Hr. Moreover, the sale was held in the presence of J.Dr. Thus, there is no force in the argument that sale proclamation is not done in correct lines on this aspect. Viewed from any angle, the purchase of the property by the D.Hr would indicate that the bidders have not participated in the sale actively and only then for collection of the decretal amount, the decree holder would have purchased the property.

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38. In view of the foregoing discussion, it cannot be said that the upset price which has been fixed by the executing Court was ridiculously low and if the J.Dr. is really aggrieved by the low price, steps should have been taken to file an application under Rule-89 of the Code to set aside the sale on depositing the money by complying with the conditions mentioned therein.

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39. In addition to that, in the present case, though the J.Dr. was examined as P.W.1, no document has been marked during the course of

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enquiry. Had the version of J.Dr. been correct, nothing prevented her from placing such evidence before the Court to show that there is enormous difference in the actual valuation of the property and the price at which the sale was knocked down.

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40. Needless to say, mere irregularity in the sale in proclamation or in the process of conducting the sale, cannot be used to set aside under Rule 90 of Order XXI of the Code, unless such irregularity is a material one, which goes to the root of the matter causing substantial loss to the J.Dr. In the light of the facts of the case and in view of the legal position in the decisions cited supra, there are no merits in the appeal and deserves to be dismissed.

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41. In the result, the Civil Miscellaneous Appeal is dismissed. No order as to costs.

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As a sequel, pending applications, if any, shall stand closed.

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_________________________________ JUSTICE VENKATA JYOTHIRMAI PRATAPA

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30.01.2024 Mjl/*

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HON’BLE SMT. JUSTICE VENKATA JYOTHIRMAI PRATAPA

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