Allowed

Smt.Prabha Choubey v. Devi Prasad and Others

Chhattisgarh HC2 Aug 2012MA/440/1993

Case brief

AI extract

What is this about?

High Court allowed appeals by an auction purchaser against the execution court refusing to confirm a judicial sale. The Court held that mere inadequacy of price does not justify refusing confirmation under Order 21 Rule 92 CPC when objections under Rules 89-91 were not filed by judgment-debtor or decree-holder.

What did the court decide?

Impugned orders set aside; sale confirmed in favour of the appellant auction purchaser under Order 21 Rule 92 CPC.

Smt.Prabha Choubey Vs Devi Prasad and Others — Execution and Attachment | Chhattisgarh HC (2012)

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HIGH COURT^{OFCHHATTIS/GARHgATBILASPUR} Misc. Appeal^No.440of $93

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'Prabha APPELLANT - Smt. Choubey VERSUS i

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VERSUS

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RESPONDENTS Devi Prasad &^others

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Misc. Apgeal^{No.441of 1993}

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APPELLANT Smt. Prabha^Choubey

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VERSUS

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RESPONDTSEN Trilckchand^{Barmecha‘,&others}

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-2. 3)^//2 080 1 V [TX n Sd/. v; K- Agarwal \ rN' i’ Judge //f 1i 1 AL /h

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Post for pronouncement^{of orderon}

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fEE.

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HIGH COURT OF CHI-IATTISGARH AT BILASPUR

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Misc. Appeal No. 440 of 1993

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APPELLANT Smt. Prabha Choubey W/o late Shri Auction Purchaser Chandrashekhar Choubey, R/o Brahman Para, Durg, Tehsil & Distt. Durg (CG).

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VERSUS

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RESPONDENTS 1. Devi Prasad S/o Gulab Chand Soni, Decree-holder aged about 47 years. 2. Tarachand, ;S/o Gulab Chand Soni, aged about 42 years.

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1. Nandkishore, S/o Gulab Chand Soni, aged about 38 years. _

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1. Gopichand, S/o Gulab Chand Soni, aged about 34 years.

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5 . Vishnu Prasad, S/o Gulab Chand Soni, aged about 33 years.

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A11 resident of Sadar Bazar, Durg (CG).

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Judgment-debtor 6. Bhopal Prasad, son of Yaduvanshi Lal Agrawal, aged about 50 years, resident of Mahavi Nagar, Durg.

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Objector 7. Rajesh Bajaj, S/o Brihmohan Bajaj, aged about 35 years.

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1. Ajay BajajJ S/o Brijmohan Bajaj, aged about 3:3 years. i

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Both resident df Sanichari Bazar, Durg (CG). I

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Judgment-debtor

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Objector

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Present : Shri PR Patankar, Advocate for the appellant. Shri Yashwant Tiwari, Advocate^lfor respondent N0. 1 to 5/Decree holder.

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Shri Malay Shrivastava, Advocate for respondent N0. 7 & 8/0bjector.

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& Misc. Appeal N0. 441 of 1993

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APPELLANT Smt. Prabhal Choubeyw/o 1ate Shri Auction Purchaser Chandrasheklhar Choubey, R/o Brahman Paia, Durg, Tehsil & Distt. Durg (CG).

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VERSUS

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RESPONDENTS 1. Trilokchand Barmecha, son of late Decree-holder Shri Roop Chand Barmecha, aged about 45 years, resident of Mahavir Colony, Durg.

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Judgment-debtors 2. Bhopal Prasad Agrawal, son of Yaduvanshi Lal Agrawal, aged about 50 years, resident of Mahavi Nagar, Durg.

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1. Agrawal Typing Institute, through Ms. Laxniibai Agrawal wife of Bhopal Prasad Agrawal aged about 45 years res1dent of Mahav1r Nagar Durg

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Objectors 4. Rajesh Bajfaj, S/o Brihmohan Bajaj, aged about 35 years

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1. Ajay BaJaJ, S/o BnJmohan Bajaj, aged about 33 years

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Both resident of Sanlchari Bazar, Durg (CG).

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(APPEAL^{UNDER ORDER41RULEl} (fl)^{OFCODEOFCIVIL} " PROCEDURE)

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SB: Hon’ble Shri N.K. Agarvilal, J.

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’Shri Present : PR Patankar Advocate for appellant the Shri Yashwant T1war1 Advocate for respondent No l /Decree holder Shrr Malay Shrlvastava, Advocate for respondent No 4 & 5/objector l l ORDER ’2) (Delivered^on /08/‘>2012)

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Both the appeals i.e. MA Nos. 440/93 & 441/93 have been filed by the auction purchaser against the order dated 14.08.1993 passed^{byIllrdAdditionalDistrictJudge,Durg,inexecution} l case Nos. 8B/9l and 9B/91 whereLby the executing court has l reliised to confirm the sale. v l l l l

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Since common question of law and facts are involved in both the appeals, they are being disposed of by this common order leading case of which is MA No. 440 of 1993.

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Facts necessary for disposal of these appeals are that : in execution of the decree passed in Civil Suit Nos. 8B/91 and 9B/91 amounting to Rs. 1,37,09191, the judgment debtor’s house situated at Mohan Nagar, Durg, was put to auction. The trial court, Vide order dated 01.07.1992 permitted the decree holder to purchase the property in auction; sale proclamation was issued in accordance with provisions contained in Order 21 Rule 66 & 67‘of CPC; auction notice was published^{indailynewspaper;reserve} price^{wasfixedatRs.} 1,50,000/— and after completing the formalities the auction was held on 05.07.1993 at Mohan Na‘gar, Durg, in presence of l decree holder Gulab Chand Soni. 1 Auction purchaser Chandrashekharl‘ Choubey was the highest l bidder and the bid was knocked down in his favour at Rs. 1,77,000/-; he deposited 1/4th amodnt of Rs. 44,250/— on the same day and remaining amount of Rs. 1,32,750/on 19.07.1993 i.e. within 15 days from the date of auction. Objection in terms of Order 21 Rule 89, 90 & 91 were not raised by the persons entitled to raide such objection, however, the objection was raised by a stranger i.e. Brijmohan Bajaj

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(VQ‘D

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saying the amount on which the bid was knocked down in favour of auction purchaser is shockingly inadequate and arbitrary, as according to him valuation of house in question was Rs. 5 Lakhs. He had also shown his readiness to purchase the property in question for consideration of Rs. 3 Lakhs.

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The court below Vide order dated 14.08.1993 refused to confirm the sale and directed for^{‘re—auction'of} the house in question. 8. Feeling aggrieved and dissatisfied With the above orders, the instant appeals have been filed by the auction purchaser ~ Chandrashekhar Choubey. 9. This court Vide order dated 14.09.1993 stayed the order impugned. 10. During pendency of appeal, auction—ipurchaser/Chandrashekhar Choubey, decree holder/ Gul§ab Chand Soni and objector/Brijmohan Bajaj died and their legal representatives were brought on record. ll. Shri PR Patankar, learned counsel appearing for the auction purchaser/appellant,^by placing reliance upon the judgments passed^{incasesof PanditSriudatV.} Singh and another], Mohar Gordhandas Ranchhoddas V. Ishvarbhai Chhanalal and

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1 AIR 1932 Allahabad 403

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anotherz, Ambujammal V. P. Thangavelu Chettiar and another3 and Rajender Singh V. Ramdhar Singh and others4, contended, if a sale cannot be set aside under the provisions of Order 21 Rule 89 to 91, sale in favour of purchaser must be confirmed under Order 21 rule 92 and mere inadequacy'of price is not a ground^{tosetasidethesameandthetrialcourthas} committed manifest error in not confirming the Sale.

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On the other hand, Shri Malay Shrivastava, learned counsel appearing for the respondent/objector supported the order impugned and submitted, even thOugh the objector was not entitled to raise objections under Order 21 Rule 89-91, but, it is the duty of the court to see that the price fetched at the auction I is an adequate price even though :there is no suggestion of irregularity or fraud. In support of contention, reliance has been l placed^uponthe judgments passed^incases of M/s Navalkha and Sons v. Sri Ramanya Das andlotherss and Desh Bandhu l 6 Gupta v. N.L. Anand & Rajinder Singh . l

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Shri Yashwant Tiwari, learned codnsel appearing for decree ’ holder also supported the order.

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I have heard the counsel appearing for the parties and perused l

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the orders impugned including records of both the appeals.

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1 AIR (29) 1942 Bombay 306 3 AIR 1941 Madras 399 4 2001 (6) scc 213 5 1969 (3) scc 537 5 1994 (1) scc 131

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The trial court, observing, the fmal bid has bean illegally knocked down by the sale Amin; the bid price is inadequate^as the decree holder himself had shown the^valueof propertyⁱⁿ queStion^{as3Lakhs,refusedtoconfirmthesale.}

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l6. The auction warrant shows, the house in question was auctioned at Mohan Nagar, Durg in; presence of^decreeholder by fixing reserved price as Rs. 1,5Q,000/—. The decree holder did not object the reserved price fixed in the matter. The judgment^{debtorwasexparte.} The tinal bid was knocked down at Rs. 1,77,000/-. Even aher permission^{of thecourttoofferthe} bid, the decree holder did not participate in the auction On the contrary, he also challenged the order proceeding. impugned by filing Misc. Appeals which have been subsequently withdrawn. On^{anapplicationfiledbythedecree} holder, this court vide order dated 09.02.2004, permitted^him to withdraw the decreetal amount. The objector himself has stated in the application, the price of the property^as5Lakhs, but offered only 3 Lakhs that too^{hehasnotdepositedinthe} court despite permission granted^{videorderdated09.02.2004.}

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l7.

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The Supreme Court in case of^Desh Gupta (Supra),^has ;Bandhu 'is a material fact held: the estimate of the value^{of thé} property to enable the purchaser to know^itsyialue. It must be verified as l accurately and fairly as possible^{soithattheintendingbidders}

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are not misled or to prevent them from offering inadequate price^{ortoenablethemtomakeadecisioninofferingadequate} prlce‘

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The Supreme court in case of M/s Navalakha'& Sons (Supra), While dealing with Rule 273 of Company’s Court Rules, 1959, and terms and conditions imposed by the company Judge and having found serious procedural lapse, has observed in para 5 & 6 as under :

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“5 Rule 273 of Compames (Court) Rules 1959 1s to the followmg effect

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“Procedure at sale. Every sale shall be held by the Official Liquidator, or, if the Judge shall so direct, by? an agent or an auctioneer approved by éthe Court, and subject to such terms and conditions, if any, as may be approved by the Court. All sales shall be made by public auction or by inviting sealed tenders or in such manner as the Judge may direc .”

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The principles which should overn confirmation of sales are well-established. Where the acceptance of the offer by the Commissioners is subject to confinnation 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 confirmanon by the Court operates as a safeguard agamst the property bemg sold at inadequate price whether or not 1t 1s a consequence of any irregularity or fraud 1n the conduct of the sale In every case 1t is the duty of the Court to satisfy itself that having regard to the market value of the prope the price offered is reasonable. Unless the Court i‘s satisfied about the adequacy of the price the act of cfmfirmation of the sale

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would not be a proper exercise ofjudicial discretion. In Gordhan Das Chuni Lal v. S. Sriman Kanthz’mathinatha Pillai it was observed that where the property is authorised to be sold by private contract^{orotherwiseit} is the duty of the Court to satisfy itself that the price fixed is the best that could be expected to be offered. That is because the Court is the custodian of the interests of the Company and its creditors and the sanction^{of the} Court required under the Companies Act has to be exercised with judicial discretion regard being^hadtothe interests of the Company and^its creditors as well.^This princ1ple was followed in Rathnaswami Pillai v Sadapathz Pillaz and S Soundarajan v Roshan &^Co In A Subbaraya Mudallar v K Sundarajan^1twas po1nted out that the condltlon of confirmation by the^Courtbeing a safeguard agamst the property be1ng sald at an inadequate price, it will be not only proper but necessary that the Court in exercising the discretion which it undoubtedly has of accepting or^{refusingthehighestbid} at the auction held in pursuance of its orders,^shouldsee that the price fetched at the auction is^anadequate price even though there is no suggestion of irregularity or fraud. It is well to bear in mind thef other principle^which is equally well settled namely that once the Court comes to the conclusron that the price offered is adequate no subsequent hlgher offer can constltute a valid ground^for refusmg confirmanon of the sale or offer already recerved (See^{thedec1310nof theMadrasHlghCourtm} Roshan & Co case)

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The Supreme Court in case of Janak Raj V. Gurdial Singh & Another7, while dealing with Order 21^{Rule89to92,hasheld:} ordinarily, if no application for setting aside a sale is made l l under any of the prov1s10ns of Rule‘ 89 to 91 of Order 21,^or when any application under any^oftheseRules is made and disallowed, the court has no choice m^{thematterofconfirming} the sale and the sale must be madeiabsolute,^{andobservedin}

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para^4asunder— . .1 i

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7 AIR 1967 SC 608

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"4.Before referring to the various decisions cited at the Bar and noted in the judgment appealed hem, it may be useful to take into consideration the relevant provisions of the Code of Civil Procedure. So far as sales of immovable property are concerned, there are some special provisions in Order 21 beginning with Rule 82 and ending with Rule 103. If a sale had been validly held, an application for setting the same aside can only be made under the provisions of Rules 89 to 91 of Order 21. As is well known, Rule 89 gives a judgment-debtor the right to have the sale set aside on his depositing in court a sum equal to five per cent of the purchase money fetched at the sale besides the arhount specified in the proclamation^{ofsaleasthatfortherecoveryofwhich} the sale was ordered less any amount which may, smce the date of sale have been received by the decreeholder Under sub—rule (2) of Rule 92 the court 1s obliged to make an order setting aside the sale if a proper^{applicationunderRule89Iismadeaccompanied} by a deposit within 30 days from the date of sale Apart from the prov1s1on of Rule 89 the Judgment-debtor has the right to apply to the court to set as1de the sale on the ground^{ofamaterlal1rregular1tyorhaud1n} publishmg or conductlng 1t prov1ded he can satisfy the court that he has sustamed substantial 1nJury by reason of such 1rregu1ar1ty or fraud Under Rule 91 1t 1s open to the purchaser^{toapplytothecourttosetas1dethesaleon} the ground that the Judgment-debtor had no saleable 1nterest 1n the property sold Rule 92 prov1des that where ’ no application is made under any lof the Rules just now or where such application is made and mentioned disallowed the court shall make an order confirming the sale and thereupon the sale shall become absolute Rule 94 prov1des that where the sale of immovable property has become absolute the court must grant a certificate spec1fying the property sold and the name of the person who at the time of sale was declared to be the purchaser Such certificate is to bear date of} the day on which the sale becomes absolute Section 65 of the Code of C1v11 Procedure lays down that where immovable property is sold in execution of a decree and^‘such sale has become absolute the property shall be deemed to have vested in the purchaser from the time when it is sold and not from the time when the sale becomes absolute The result is that the purchasers title relates back to the date of sale and not the confirmation of sale There is no prOViSion in the Code of C1v11 Procedure of 1908 either under Order 21 or elsewhere which prov1des that the sale is not to be confirmed if it be found that the decree under which the sale was ordered has been reversed before the

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confirmation of sale. It does not seem ever to have been doubted that once the sale is con- firmed the judgmentdebtor is not entitled to get back the property even if he succeeds thereafter in having the decree against him reversed. The question is, whether the same result ought to follow when the reversal of the decree takes place before the confirmation of sale.”

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The Supreme Court in case of Rajender Singh (Supra), while considering the provisions of Order 21 Rule 90, has held: mere inadequacy of price is not a ground for setting aside the court sale.

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The ratio of law laid down by the:Supreme Court in cases of Janak Raj (Supra) and Rajender Singh (Supra) are squarely applicable to the facts and circumstances of the present case. Further, the respondents have failed to establish the price fetched at the auction was an inadequate price, and therefore, the ratio of law laid down by the ESupreme Court in cases of Desh Bandhu Gupat (Supra) and M/s Navalakha & Sons (Supra)^{renderedconsideringthe} provisions^{of Rule273of the} Company Rules, are not applicable to the facts and circumstances of the present case and are of no help to the respondents. 22. There may be cases in which, apt/tit from the provisions of l Rules 89 to 91, the court may refuse to confirm a sale, as, for i instance, where a sale is held without giving^notice to the judgment-debtor, or where the cotlért is misled in fixing the

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reserve price or when there was no decree in existence at the time when the sale was held. Leaving aside cases like these, a sale can only be set aside when'an application under Rule 89 or Rule 90 or Rule 91 of Order 21 has been successfully made.

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The case on hand is neither a case where the judgment debtor was not summoned nor is a case where without giving notice to the judgment debtor, reserved pride was fixed, therefore, the trial court was not correct in not confirming the sale only unproved ground of inadequacy of the price. 24. The court below was also not correct in holding: sale Amin not empowered to knock down the bidi Indisputably, the property was auctioned at Mohan Nagar, Durg and not at court premises. As per MP Amendment in Order 321 Rule 65, which is also applicable in the State of Chhattisgarh, the officer appointed by l the court for auction is competent t10 declare the highest bidder as purchaser at the sale, provided that, where the sale is made in, or within the precincts of he Court-house, no such declaration shall be made without the leave of the court. 25. Here, indisputably, the sale is made outside the precincts of the Court—house i.e. at Mohan Nagar, The auction warrant iDurg. i and auction notice also reveal the cdurt itself authorized the sale Amin under Order 21 Rule 66lto knock down the bid. l Therefore, the ground^takenby the trial court for refusing i l i l i l

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confirmation of sale that sale Amin was not authorized to knock down the bid is also on the face incorrect.

Considering the facts and circumstances ofthe case, I am ofthe View that the court below has committed gross error in not confirming the sale on the grounds stated in the orders impugned and the same are not sustainable in law.

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For the reasons mentioned hereinabove, the appeals are allowed, the orders impugned, being not sustainable in law, deserve to be and are hereby set aside. The sale in favour of appellants stand confirmed under Order 21 Rule 92 of CPC. The trial court is directed to issue appropriate certificate in favour of appellants. No order as to costs.

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A copy of this order be placed on recOrd of MA No. 441/93.

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‘
Sd/-
N. K. Agarwal
<’77/
H Judge

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sahu

Smt.Prabha Choubey v. Devi Prasad and Others

Case brief

What is this about?

What did the court decide?

Smt.Prabha Choubey v. Devi Prasad and Others

Case brief

What is this about?

What did the court decide?

What the court decided

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