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CASE NO.: Appeal (civil)  2598 of 2005

PETITIONER: M/s. Mahakal Automobiles & Anr

RESPONDENT: Kishan Swaroop Sharma

DATE OF JUDGMENT: 02/04/2008

BENCH: Dr. ARIJIT PASAYAT & S.H. KAPADIA

JUDGMENT: J U D G M E N T REPORTABLE

CIVIL APPEAL NO. 2598 OF 2005

Dr. ARIJIT PASAYAT, J.

1.      Challenge in this appeal is to the judgment of learned  Single Judge of the Madhya Pradesh High Court, Indore  Bench.

2.      Background facts in a nutshell are as follows:

Respondent had sold 7200 sq.ft. land with some  construction on 15/11/1986 for Rs.7.20 lacs to the  JDs/appellants and was paid only Rs.1.60 lacs. He had  agreed to accept the remaining amount of Rs.5.60 lacs in 4  installments in 3 years with interest @ 1.50% per month. A  charge was created on this property. Respondent had later  filed a Civil Suit No. 13-A/89 (New No. 6-A/1991) for recovery  of amount of Rs.6,31,750/- by sale of such property.

JDs/appellants in their written statements had admitted  liability to pay Rs.5 lacs as principal and Rs.65,000/- as  interest and pendentelite interest @ 1% per month. They  disputed that Babulal was the partner of M/s Mahakal  Automobiles. Thus, the ADJ on 24/9/1 991 gave a judgment  and decree under Order XII Rule 6 of the Code, relevant  portion of which reads follows:  

"As a result application of plaintiff is partly  allowed and it is hereby ordered that  defendants Nos. I and 3 shall pay within 6  months from today Rs.5,65,00/- and interest  @1% per month on Rs.5 lacs from the date of  institution of suit i.e. 16/6/1989, otherwise  the plaintiff would be entitled to get a final  decree for recovery of his amount by sale of  charged property. Order as to cost would be  given at the time of disposal of other points. A  preliminary decree be framed accordingly.  Description of charged property be also given  in preliminary decree."  

A preliminary decree was accordingly drawn up.  However, it was not drawn in prescribed form No.5-A or 7-C of  Schedule of Appendix-D to the Code of Civil Procedure, 1908

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(in short ’the Code’). Admittedly, no accounts were to be  taken. Simple arithmetical calculation of interest would have  specified the actual amount payable.

On 28/4/1992 respondent filed an application for  execution. Notices to all JDs/appellants under Order XXI Rule  22 of the Code were issued. On 8/6/1992, JDs/2 appeared  through Shri L.P. Bhargava, Advocate while JD/1 appeared  through Shri P.K. Modi, advocate. All JDs continued to appear  regularly till 16/11/1993. In the meantime two applications;  one under Order XXI Rule 58 read with Section 151 of the  Code was filed on 8/6/1 992 and the second under order XXI  rule 50 read with Section 151 of the Code was filed on  2/11/1992 by the JDs which were disposed of on  16/12/1992 and 2/11/1992 respectively. No question as to  non-executability of the decree had been raised by the JDs  according to the High Court.

On 16/10/1992 the court below directed that name of  Babulal Gupta be deleted from the execution application as  there had been no decree against him. A question was also  raised suo motu by the court whether the decree in its terms  being preliminary decree could be executed as it is, or the DH- respondent be directed to obtain a final decree. The executing  court granted several adjournments for arguments on this  question. On 12/2/1993 the executing court stayed the  proceedings of the execution to await the result of proceedings  under Order I Rule 10 and Section 151 of the Code before the  trial court in the original case which was also pending in the  same court. On 8/3/1994 order of the High Court was  received in the original case and the execution proceedings  were ordered to be restarted.  The execution proceedings as  well as the civil suit were transferred from court to court and  none appeared for the JDs in the execution case, till  14/7/1997.

The High Court by the impugned order set aside the  order of the trial court holding that the I.As. filed by the  judgment debtors, respondents in the appeal, before High  Court were to be dismissed. Auction sale in favour of the  respondent-DH was valid and order of its confirmation was  upheld.

3.      In support of the appeal learned counsel for the  appellant submitted as follows:

(i)     Records reveal that no Process Fee was paid by the  Decree Holder as per Order dated 4.10.1997. (ii)    Attachment of Warrant was not as per Order 21 Rule 54  (1A) CPC. (iii) No Notice was given to the appellants when execution  proceedings got delinked from the suit and got transferred  from one court to another. (iv)    Attachment proceedings were carried out in the absence  of the Judgment Debtor.  (v)     No notice was given to the appellant under Order 21  Rules 54 and 66(2). The procedure under Order 21 Rule 54  (1A) and 66(2) is mandatory. Hence, the objections taken by  way of IA Nos. 1, 2 and 6 should have been accepted  (vi) The Court found total absence of drawing up of the  proclamation of sale and its terms by judicial application of  mind. (vii) It was held that the executing court did not follow the  mandatory procedure as provided under the Code.

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4.      It was submitted that the High Court by the impugned  order erroneously reversed the judgment on the ground that  the appellant could be presumed to have known of the  proceeding and it is not a case of complete non issue of service  of attachment of warrant and that ratio of the decision in  Deshbandhu Gupta v. N.L. Anand @ Rajinder Singh [1994(1)  SCC 131] does not apply.

5.      Learned counsel for the respondent on the other hand  submitted that the High Court has analysed the factual  position in the background of legal position as set out by this  court.   

6.      When a property is put up for auction to satisfy a decree  of the Court, it is mandatory for the Court executing the  Decree, to comply with the following stages before a property  is sold in execution of a particular decree: (a)     Attachment of the Immoveable Property: (b)     Proclamation of Sale by Public Auction; (c)     Sale by Public Auction

7.      Each stage of the sale is governed by the provisions of  the Code. For the purposes of the present case, the relevant  provisions are Order 21 Rule 54 and Order 21 Rule 66. At  each stage of the execution of the decree, when a property is  sold, it is mandatory that notice shall be served upon the  person whose property is being sold in execution of the decree,  and any property which is sold, without notice to the person  whose property is being sold is a nullity, and all actions  pursuant thereto are liable to be struck down/quashed.  

8.      The admitted position that has emerged is that:

(i)     There was no notice served upon the Judgment-Debtor  under Order 21 Rule 54 (1-A). (ii)    There was no valuation of the property carried out; (iii)   There was no proclamation of sale as per the statutory  provisions of the M.P. Civil Court Rules, 1961 read with Order  21 Rule 66. (iv)    There was no publication of the sale.  

9.      In Deshbandhu Gupta’s case (supra) it was held as  follows:

"The Proclamation should include the  estimate, if any, given by either judgment- debtor or decree holder or both the parties.  Service of Notice on judgment-debtor under  Order 21 Rule 66 (2) unless waive by  appellants or remained ex-parte, is a  fundamental step in the procedure of the  Court in execution, judgment-debtor should  have an opportunity to give his estimate of the  property. The estimate of the value of the  property is a material fact to enable the  purchaser to know its value. It must be verify  as accurately and fairly as possible so that  the intending bidders are not mislead or to  prevent them from offering inadequate price  or to enable them to make a decision in  offering adequate price. In Gajadhar Prasad  Vs. Babu Bhakta Ratan, this Court after  noticing the conflict of judicial opinion among  the High Courts, said that a review of the  authorities as well as amendments to Rule 66

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(2) (e) make it abundantly clear that the  Court, when stating the estimated value of the  property to be sold, must not accept the ipse  dixit of one side. It is certainly not necessary  for it to state its own estimate

But, the essential facts which had a  bearing on the very material question of value  of the property and which could assist the  purchaser in forming his own opinion must  be stated, i.e. the value of the property, that  is, after all, the whole object of Order XXI,  Rule 66 (2) (e) CPC. The Court has only to  decide what are allthese material particular in  each case. We think that this is an obligation  imposed by Rule 66 (2) (e). In discharging it,  the Court normally state the valuation given  by both the Decree Holder as well as the  Judgment Debtor where they both have  valued the property, and it does not appear  fantastic."

"The absence of Notice causes  irremediable injury to the judgment debtor.  Equally publication of the proclamation of  sale under Rule 67 and specifying the date  and place of sale of the property under Rule  66 (2) are intended so that the prospective  bidders would know the value so as to make  up their mind to offer the price and to attempt  that sale of the property and to secure  competitive bidders and fair price to the  property sold. Absence of Not to the  Judgment Debtor disables him to offer his  estimate of the value who better know its  value and to publicise on his part, canvassing  and bringing the intended bidders at the time  of sale. Absence of notice prevents him to do  the above and also disables him to know  fraud committed in the publication and  conduct of sale or other material irregularities  in the conduct of sale. It would be broached  from yet another angle. The compulsory sale  of immovable property under Order 21 divests  right, title and interest of the judgment debtor  and confers those rights, in favour of the  purchaser. It thereby deals with the rights  and disabilities either of the judgment debtor  or the decree holder. A sale made, therefore,  without notice to the judgment debtor is a  nullity since it divests the judgment debtor of  his right, title and interest in his property  without an opportunity. The jurisdiction to  sell the property would arise in a Court only  where the owner is given notice of the  execution for attachment and sale of his  property. It is very salutary that a person’s  property cannot be sold without his being told  that it is being so sold and given an  opportunity to offer his estimate as he is the  person who intimately knew the value of his  property and prevailing in the locality,  exaggeration at time be possible."

10.     In M/s. Shalimar Cinema v. Bhasin Film Corporation

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and Another [1987(4) SCC 717] it was held that the court has  a duty to ensure that the requirement of order 21 Rule 66 has  properly applied.  It is incumbent on the court to be  scrupulous in the extreme.

11.     The records do not reveal that the appellant-judgment  debtor was served with a notice as required under Order 21  Rule 54(1)(A)  of the Code in the appendix B Forms 23, 24 and  29.  It  is to be noted that the records reveal that the address  of the appellant as contained in the sale deed was different  from the address at which the process server purportedly  affixed the notice on the door and in open court and at the  chorah only.  It has also to be noted that under Order 21 Rule  66(2) the service of the notice has to be personally affected on  the judgment debtor. That also does not appear to have been  done. Interestingly, the valuation of the property as required  to be done under the proviso to sub-rule (2) of Rule 66 of  Order 21 of the Code has not been done.  The same appears to  have been valued on the spot at Rs.9,00,000/- and it was not  done by the Court. There are admittedly other non-compliance  with certain requirements. We do not think it necessary to  deal with those aspects in detail in view of the order proposed  to be passed. From the records it is revealed that  Rs.14,38,893/- and Rs.4,46,926/- have been deposited by the  appellant purportedly for satisfaction of the Execution Court  Ujjain and Indore respectively. The appellant shall further  deposit a sum of Rs.15,00,000/- within 4 months from today.   The respondent No.1 shall be entitled to withdraw the amount  deposited in the bank with accrued interest. The appellant  shall be responsible for payment of the property tax of the  property from the date of execution of sale deed i.e. 5.12.1986  till date and the same shall be paid deposited with the  concerned authority within the aforesaid period of four  months.  On payment of the amounts, the title to the property  described in the registered sale deed will vest free of all  encumbrances on the appellant.

12.     If any property of the respondent No.1 is there in the  property in question, the same shall vest to respondent No.1  with liberty to remove them as soon as the payment is made.  

13.     The appeal is disposed of accordingly.  No costs.