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PETITIONER: GAJADHAR PRASAD & ORS.

       Vs.

RESPONDENT: BABU BHAKTA RATAN & ORS.

DATE OF JUDGMENT14/08/1973

BENCH: BEG, M. HAMEEDULLAH BENCH: BEG, M. HAMEEDULLAH MATHEW, KUTTYIL KURIEN

CITATION:  1973 AIR 2593            1974 SCR  (1) 372  1973 SCC  (2) 629

ACT: Code  of Civil Procedure (Act 5 of 1898), O.21,  r.66(2)(e)- Scope of.

HEADNOTE: In execution of a decree, six houses of the judgment debtors were sold. in the sale proclamation, 3 houses were shown  as one item, two bungalows as one item and the remaining  house as  another  item.   The  valuation  of  each  item  in  the proclamation  was  practically  that given  by  the  decree- holders.  The Amin put up for sale the 3 houses comprised in one  item as separate houses and the total  amount  realised from the sale of the 3 houses was 2-1/2 times the amount  in the sale proclamation.  The two bungalows were however  sold as a single unit and purchased by the decree holders.  After the  sales, the judgment debtors applied for  setting  aside the  sales on the ground of fraud and material  irregularity in  conducting  them,  and also  complained  of  substantial injury.  The execution court and the High Court, in  appeal, dismissed the applications. In appeal to this Court, HELD  :  The  2  bungalows  should  be  sold  afresh   after judicially  considering  and deciding the  question  whether they  can be sold separately and what particulars should  be inserted in the sale proclamation. [380C-D] (a)The  object  of  O.21,  r.66(2)(e),  C.P.C.,  is   that essential facts having a bearing on the question of value of the property and which would assist the purchaser in forming his  own opinion on the value must be stated by  the  Court. The Court should normally state the valuation given by  both the 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 the-rights in it,  municipal assessment, actual rents realised, which could reasonably be expected to affect the valuation.  What could be  reasonably and usefully slated succinctly in a sale proclamation has to be  determined on the facts of each particular case.  it  is not  necessary  for  the execution court to  state  its  own estimate;  nor  is it necessary for the execution  court  to order  the  insertion of a, judicially passed order  in  the sale  proclamation  itself,  but, it should  pass  an  order

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showing  that  it  had  applied its mind  to  the  need  for determining  all  the  essential  particulars,  which  would reasonably be looked for by a purchaser and which should  be inserted  in the sale proclamation.  The order  should  show that the Court had considered the objection, if any, of  the decree-holder or the judgment-debtor as the case may be, and the  Court  should not merely accept the ipse dixit  of  one side. [378C-H] In  the present case, the judgment-debtors bad  given  their valuation  and  even  applied  for  the  appointment  of   a commissioner at their expense to report on matters affecting the  value  of the property, but, the  execution  court  had practically   accepted,  as  its  own   valuation,   without indicating reasonable grounds for this preference,  whatever the  decree-holder  had  asserted about  the  value  of  the property.   The  area  of  the compound  in  which  the  two bungalows  were  situated  was not  mentioned  in  the  sale proclamation, and though this land was nuzool leasehold land neither  the  unexpired  period  of  lease  nor  rent   were mentioned.   It was ’not slated whether the bungalows  would be sold as one or two items of property, though the judgment debtors  asserted that they would fetch a much higher  value if  sold  separately.   The  Court  rejected  the   judgment debtors’   figures  by  merely  observing  that   they   are exaggerated and practically accepted without hesitation, the figures  of  the  decree-holders.  But,  the  valuation  was proved  to  be incorrect judged by the results  of  all  the auction sales taken as a whole. [379D-H] Therefore,  the execution court had not performed  its  duty fairly   and  reasonably.  Hence.  there  was   a   material irregularity in conducting the sale.[1379 G] 373 Case law considered. [Whether  decree-holders’ conduct amounted to  actual  fraud practised on the Court, not decided]. [379D-F] (b)The  result  of  the separate sales  of  the  3  houses comprised  in  one item was that when the sale  prices  were added up, they fetched a considerably higher price than that put  upon  the properties when lumped together in  one  lot. The  High  Court found that the sale of  the  two  bungalows separately  would probably have similarly fetched  a  higher price.  Therefore, there is enough evidence to indicate that the  judgment-debtors had suffered substantial injury in  so far as the sale of the 2 bungalows is concerned. [380A-D]

JUDGMENT: CIVIL  APPELLATE  JURISDSCTION : Civil Appeal  No.  1649  of 1967. Appeal  by special leave from the judgment and decree  dated the 9th day of January 1964 of the High Court of  Judicature at Allahabad in First Appeal No. 81 of 1957. J. N. Chatterjee and E. C. Aggarwala for the appellant. The Judgment of the Court was delivered by- BEG,  J.-This is a judgment debtors’ appeal, by  Certificate of  fitness of the case for appeal to this Court granted  by the  High Court of Allahabad, arising out of an  application filed under Order 21, Rule 90, Civil Procedure Code. The  Respondent  decree-holders had obtained  a  decree  for about  Rs.  76,000/- against the appellants  in  a  mortgage suit.   In execution of that decree sales of three items  of property, shown as houses belonging to the Judgment  debtors took  place  on  5-5-1955  and  7-5-1955.   The  items  were described as follows in the sale proclamation

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                   "Boundaries ------------------------------------------------------------                                East  West     North   South ------------------------------------------------------------ 1.   pucca build house bearing pre-             University Lane and House of  Colonel vious No. 8 and Present No. 5      Road temple of  Marium   Ganj situate in Colonelgunj, city of                                Kaliji  B’bi &   Road Allahabad, together with site      ohd.                             mohd. and building materials entire                   Raza. 16 anna share value it  Rs. 10,350/- 2.   Entire house bearing previous                        House orLane House of  Way No, 805 situate in Mohatta                          Gajadhas        Gajadhar Katra,  pasiyana city       of                   Prasad,    Houseof  Prasad, Allababad, valued at Rs. 5040/-.                                 Mahesh-                                              wary                                              Prasa                                              Vakil. I    Bungallows bearing Nos, 8 and                       Lyal Road   Bungalow  Thon- Club I    Road 10, situate on Club Road, City     No.12      hill Road.Road of Allahabad with compound plot No. 129 together with trees. four walls and out houses etc. all things right, and interests. 374 appertaining to bungalows the site land whereof    has been acquired on lease dated 20-11-1948 and which lies within the same boundary.  Bungalow No. 8 valued at Rs. 24000/- Bungalow No. 10 valued at Rs. 31200/-. ------------------------------------------------------ There is no encumbrance". The  main objection of the  judgement-debtors-appellants  to this proclamation is that the execution Court had, in giving the  valuation  of  the  properties  in  the   proclamation, practically  accepted the statements made on behalf  of  the decree-holders, and, without assigning any reason, failed to mention  the  values put by the  judgment-debtors  on  these properties.  The respective valuations of the properties  by the two sides were : "1.  No.  10  T. B. Sapru Road       Valuation  put  by  the Valuation  put  by  the D. H, Rs. 40,000/-.      J.  D.  Rs. 100,000 2.     No. 8 T. B. Sapru Road 3.     No.           5 Colonelgunj Rs. 10,0001/- Rs. 60,000/4. No. 805 Katra.   Rs. 1,000/- Rs. 25,000/-" On 18-5-1948, long before the proclamation of sale was drawn up  on  31-3-1955,  the  judgment  debtors  had  put  in  an objection  to  the  execution  CDurt’s  order  of  14-2-1948 relating   to   the  framing  of  the   sale   proclamation, particularly  with regard to the two bungalows  situated  in the  heart of the Civil Lines, the best residential area  of Allahabad’.   They had stated that the area of land  in  the compound in which the two bungalows were situated was  three acres  and that the whole property was not worth  less  than

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Rupees  one lac.  They had objected to the sale of  the  two bungalows  in  one  lot.  They had also  asserted  that  the latest  municipal  assessment  of 1944  had  displaced the municipal  assessment  of 1934 relied upon  by  the  decree- holder.    According  to  the  judgment-debtors,   the   two bungalows  Nos.  8  &  10 on Tej  Bahadur  Sapru  Road  were assessed  at annual rents of Rs. 1500/- and Rs.  1200/-  per year.  In an affidavit of 19-4-1947 they had asserted that a bungalow situated nearby, assessed at an annual rent of  Rs. 1500/-, was sold for Rs. 50,000/on 23-4-45 when prices  were lower.   On 18-5-1948, the judgmentdebtors had  also  prayed for the issue of a commission, at their expense,  presumably to  view  the property and give a report on  relevant  facts before  actually framing a sale proclamation  in  accordance with  the court’s order of 14-2-1948 directing insertion  of the value made by it. On  5-5-1955, the Court Amin had himself put up house No.  5 situated in Colonelgunj, Allahabad, separately for sale  and sold  it for Rs. 10,500/-.  On the same date, the Amin  sold house  No. 5-A in Colonelgunj for Rs. 8500/- and also  house No. 5-B separately for Rs. 7,000/-.  Thus, a total amount of Rs. 26,000/- was realised from 375 the sale of the three houses in one, compound at Colonelgunj described as one item of property in the sale  proclamation. They  had been valued at Rs. 10,000/. by  the  decree-holder and  Rs.  60,000/- by the judgment-debtor.   The  court  had valued  the  whole  property  at  Rs.  10,350/-,  and   thus practically  assented to the decree-holder’s  valuation  and rejected the judgment-debtor’s without assigning any  reason beyond expressing the opinion that it was exaggerated.   The property in Katra was sold for Rs. 3,750/- on 5-5-1955. After  the sale, the judgment-debtors applied to  set  aside the  sales on the ground of fraud and material  irregularity in  conducting  them and complained of  substantial  injury. They  relied  on  uncontroverted assertions  made  in  their affidavit of 19-4-1974 as well as on the assertions made  in an application dated 18-5-1948 where it was stated               "That the judgment debtor is informed that the               whole   game  of  the  decree  holder  is   to               undervalue the property get the auction for  a               song and purchase the property himself.   This               underhand  game may be stopped and justice  be               done". The learned Counsel for the judgment-debtors submitted that, on  the uncontroverted assertions of the  judgment  debtors, the  conclusion is irresistible that the  decree-holder  had deliberately misled the Court and had committed a fraud upon it.   It  was  urged  that  the  decree  holders’  game  had succeeded  because  they  had  themselves  bought  the   two bungalows  on  Tej  Bahadur Sapru  Road  for  Rs.  56,000/-. According to the judgment-debtors, Bungalow No. 8, in  which they carried on the business of cabinet making, could be let for Rs. 250/- per month and was itself worth that much. The  Execution Court had relied upon the Amin’s  report  for holding  that the two bungalows could be properly sold as  a single  unit  because  the servants’ quarters  for  the  two bungalows,  which  were situated in one compound,  were  the same.  The judgment debtors’ application had been  dismissed for  absence of material irregularity or fraud and  want  of proof  of substantial injury as- a result of  these  auction sales.   A  Division Bench of the High  Court  had  affirmed these  findings, but had certified the case, under Art.  133 of  the Constitution of India, as fit one for an  appeal  to this Court.

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Two  questions  arise before us for decision.   They  are  : firstly,  whether there was either fraud upon the  court  or material irregularity in conducting the auction sales;  and; secondly, whether substantial injury to the  judgment-debtor had been proved have resulted from the auction sales. It  may be mentioned here that no one has put in  appearance on  behalf  of  the decree-holders respondents,  Mr.  J.  N. Chatterjee,  appearing  on behalf of  the  judgment-debtors- appellants,  stated that he did not want to press  objection to sales of Colonelguni and Katra properties.  Indeed, their auction  purchasers were not impleaded.  Therefore, we  will refrain  from deciding any question relating to  Colonelgunj and Katra properties. 376 We  will now consider the question of material  irregularity in  ordering  and  conducting the auction sale  of  the  two bungalows  on Sir Tej Bahadur Sapru Road (formerly known  as Club  Road).   The  provision which was said  to  have  been infringed is Order 21, Rule 66(2). The whole of Rule 66 reads as follows               "R. 66(1) Where any property is ordered to  be               sold  by  public  auction in  execution  of  a               decree, the court ’shall cause a  proclamation               of the intended sale to be made in the  langu-               age of such Court.               (2)Such  proclamation  shall  be  drawn  up               after  notice  to the  decree-holder  and  the               judgment-debtor  and shall state the time  and               place  of  sale,  and specify  as  fairly  and               accurately as possible-               (a)   the property to be sold;               (b)   the revenue assessed upon the estate  or               part  of the estate, where the property to  be               sold is an interest in an estate or in part of               an estate paying revenue to the Government;               (c)   any incumbrance to which the property is               liable;               (d)   the amount for the recovery of which the               sale is ordered; and               (e)   every   other  thing  which  the   Court               considers material for a purchaser to know  in               order to judge of the nature and value of  the               property.               (3)Every application for an order for  sale               under  this  rule shall be  accompanied  by  a               statement  signed and verified in  the  manner               hereinbefore  prescribed for the  signing  and               verification  of pleadings and  containing  so               far as they are known to or can be ascertained               by  the  person making the  verification,  the               matters   required  by  sub-rule  (2)  to   be               specified in the proclamation.               (4)For  the  purpose  of  ascertaining  the               matters  to be specified in the  proclamation,               the Court may summon any person whom it thinks               necessary  to  summon and may examine  him  in               respect to any such matters and require him to               produce  any  document in  his  possession  or               power relating thereto". It was submitted that the Court should not have put its  own valuation  on the property, as such a procedure was  certain to prejudice the minds of prospective purchasers with regard to the value of the property to be auctioned.  We find  that there is some conflict of opinion in the High Courts on this question.  The Madras High Court, in S. K. Veeraswami Pillai

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v. Kalvanasundaram Mudaliar & Ors.,(1) R.    Srinivasan    & Os. v. the Andhra Bank Ltd.,(2) Y. A. S. Yellappa (1) AIR 1927 Mad. 1009. (2) AIR 1949 Mad, 398. 377 Naidu  V.  G.  Venugopal Naidu,(1) and  the  Allahabad  High Court, in Md.  Said Khan v. Md.  Abdus Sami Khan & Anr., (2) Dwarka  Dass v. Bhawani Prasad & Ors.,(3) have held that  it is unnecessary for the Court to give its own estimate.   The Calcutta High Court in Rajah Ramessur Proshadnarain Singh v. Rai Sham Krissen & Ors.,(4) Saurendra Mohan Tagore v. Rurruk Chand & Ors.,(5) Bejoy Singh Dadhulla v. Ashutosh-Gossami  & Ors.,(6)  Lachira  v.’ Rameshwar Singh &  Ors.(7)  Pashupati Nath  Maliah & Anr., v. Bank of Behar,(") New  Birbhum  Coal Co.  Ltd.  v. Surendra Nath Laik & Ors.,(9) the  Patna  High Court, in Raghunath Singh v. Hazari Sahu & Ors.,(10) and Mt. Golab  Kuer  & Anr. v. Mt.  Bibi Saira & Ors.,(11)  and  the Rangoon High Court, in A.M.K.M. Firm V. Baishmaw,,(12)  have expressed  opinions  favouring  giving of  the  Court’s  own estimate  of the value of the property to be sold.   But,  a mere acceptance of the valuation given by the  decree-holder has  been held to be material irregularity in A.M.K.M.  Firm v. Baishmaw (Supra).  The High,Court of Bombay, in Charandas Vasanji  &  Anr. v Dossabhoy Maganlal &  Ors.,(13)  Premaraj Pannalal Shop v. Sadabai & Ors.(14) has held that, although, it  is  not necessary for the execution Court to  value  the property to be sold, yet, it may do so if it thinks fit.  In Sitabai  Rambhau  Marathe  v. Gangadhar  Dhanram  Marwadi  & Anr.,(15) however, the Bombay High Court held that the Court is bound to hold an enquiry as to the value of the  property and  to  state it in the sale  proclamation.   Although  the Madras High Court had held that it is not necessary for  the Court  to give its own valuation, it expressed  the  opinion that  it  is  desirable, where there is  a  wide  divergence between the valuation of the decree-holder and of the  judg- ment debtor, to have property valued through an Amin and  to state it in the proclamation.  The Calcutta view, in some of the cases mentioned above, was that, although the Court need not  give  its  own valuation of the property  in  the  sale proclamation, it would be justified in stating the valuation given by the parties. It  may be noticed here that there have been  amendments  of Order 21, Rule 66 by different High Courts from 1929 onwards dealing  with the question of valuation.  The  Calcutta  and the Punjab High Courts have made it clear that "it shall not be  necessary for the Court itself to give its own  estimate of  the  value of the property but  the  proclamation  shall include  the estimate, if any, given by either or  both  the parties".   In Andhra Pradesh, Order 21 Rule 66(2)  (e)  has been amended to make it obligatory to give the value of  the property  as stated : (i) by the decree-holder; (ii) by  the judgment-debtor.  The (1) AIR 1958 Mad. 423. (2)  AIR 1932 All 664. (3) AIR 1960 All. 510. (4)  VIII Calcutta Weekly Notes 257. (5)  XII Calcutta Weekly Notes 542. (6)  AIR 1924 Cal. 589. (7)  AIR 1930 Cal. 78 1. (8)  AIR 1932 Cal. 141. (9)  AIR 1934 Cal. 205. (10)AIR 1917 Pat. 381. (11)AIR 1919 Pat. 372. (12) AIR 1937 Rangoon 137. (13)AIR 1939 Bom. 182.

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(14) AIR 1956 Bom.  ’248. (15) AIR 1935 Bom. 331. 378 Madras and Kerala High Courts have also, adopted the rule as amended  by  the  Andhra Pradesh  High  Court.   The  Madhya Pradesh   High  Court  amendment  only  mentions  that   the particulars  to be provided may include the  decree-holder’s estimate  of the approximate market price.  The  Patna  High Court amendment provides :-               "that   no  estimate  of  the  value  of   the               property,  other than those, if any,  made  by               the    decree-holder    and     judgmentdebtor               respectively  together with a  statement  that               the  Court does not vouch for the accuracy  of               either,   shall  be  inserted  in   the   sale               proclamation". 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 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. In  the case before us, the execution Court had  practically accepted,   as   its  own  valuation,   without   indicating reasonable grounds for this preference,’ whatever the decree holders  had asserted about the value of the  property.   It did not bother to seriously even consider the objections  of the  judgment-debtors.  We think that the duty  to  consider what particulars should be inserted in the sale proclamation and  how the sale ought to be conducted should be  performed judicially and reasonably.  If the execution Court does not, as it did not in the case before us, apply its mind or  give any  consideration  whatsoever  to  the  objections  of  the judgment-debtor,  we think a material irregularity would  be committed by the execution Court.  It is not necessary  for- the  execution Court to order the insertion of a  judicially passed order in the sale proclamation itself, but, it should pass an 379

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order  showing  that  it applied its mind to  the  need  for determining  all  the  essential  particulars,  which  would reasonably be looked for by a purchaser, and which should be inserted  in the sale proclamation.  The order  should  show that  it considered the objections, if any, of  the  decree- holders  or  the judgment debtors, as the case may  be.   It should  not merely accept unhesitatingly the ipse  dixit  of one  side.   We  think  that the  execution  Court  had  not performed  its  duty fairly and reasonably in  this  case-.. After  embarking  on  the difficult task  of  valuation,  it rejected the judgment debtors’ figures by merely  observing that  they are exaggerated and practically accepted  without hesitation  whatever the decree holders submitted, but  this valuation  was proved to be incorrect judged by the  results of auction sales taken as I a whole. Mr.  J. N. Chatterji relied upon the: following passage,  in Marudanayagam Pillai v. Manickavasakam Chettiar(1) :               "If the respondent knew the true facts, if  he               purchased at what he knew was too low a figure               based on an upset price accepted by the  Court               owing to his own initial misrepresentation and               subsequent suppression of material facts,  his               conduct would amount to fraud on the Court  as               the learned subordinate judge points out". It  is  not necessary for us to decide whether  the  decree- holders’  conduct  in  the case before us  would  amount  to actual  fraud  practised  on the Court with  regard  to  the valuation.   The judgment-debtors were there with their  own valuation  and  had even applied for the appointment  of  a Commissioner  at  their  expense  to  report  about  matters affecting the value of the property.  They had asserted that the  two bungalows at Tej Bahadur Sapru Road would  fetch  a much  higher value if sold separately.  The execution  court should  have  at least performed the  duty,  of  considering whether these objections were wellfounded. We find from a perusal of the sale proclamation in this case that  even  the  area  of the  compound  in  which  the  two bungalows  were  situated was not there.  The  land  in  the compound   is  evidently  nuzool  leasehold  land  but   the unexpired period of the lease or rent payable on it are  not mentioned.   It was not stated whether the bungalows,  which were valued separately, would be sold as one or two items of property.  Probably, it was left to the Amin to exercise his own discretion in this matter, as he had exercised it in the case of Colonelgunj property.  The cumulative effect of  all the  features of the case mentioned above is that  we  think that there was material irregularity here in the conduct  of the execution sale of the two bungalows. We  now  turn to the question of  substantial  injury.   The result  of the separate sales of the houses  in  Colonelgunj was  that,  when sale prices were added up, they  fetched  a considerably   higher  price  than  that  put   upon   these properties,  lumped  together  in one lot,  by  the  decree- holders.   The High Court had also found that sales  of  the two bungalows on the Tej Bahadur Sapru Road separately would probably (1) AIR 1945 PC. 67  70. 380 similarly have fetched a higher price.  The affidavit  dated 19-7-1947  filed by the judgment-debtors, as  stated  above, had not been controverted by any material put forward by the decree-holders. We,  therefore,  think  that there  is  enough  evidence  to indicate that the judgment-debtors had suffered  substantial injury  so far as the sale of the two bungalows numbers 8  &

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10 on Tej Bahadur Sapru Road, Allahabad, is concerned. The  result is that we allow this appeal to the extent  that we set aside the judgments and orders of the High Court  and of the execution Court with regard to the sale of  bungalows Nos. 8 & 10, together with their compound, and dismiss it as regards  the  other  properties.   We  also  set  aside  the execution  sale of 7-5-1955 of these two bungalows with  all the  land  in  their  compound.  We  order  that  these  two bungalows  will be sold afresh after judicially  considering and   deciding  the  question  whether  they  can  be   sold separately  and what particulars should be inserted  in  the sale proclamation.  The parties will bear their own costs. V.P.S.             Appeal partly allowed 381