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PETITIONER: M/S. MOTORS & INVESTMENTS LTD.

       Vs.

RESPONDENT: THE NEW BANK OF INDIA & ORS.

DATE OF JUDGMENT:       29/10/1996

BENCH: K. RAMASWAMY, G.B. PATTANAIK

ACT:

HEADNOTE:

JUDGMENT:                THE 29TH DAY OF OCTOBER, 1996 Present:                Hon’ble Mr.Justice K.Ramaswamy                Hon’ble Mr.Justice G.B.Pattanaik      A.K.Ganguli, Sr.Adv. and V.Balachandran, Advs. with him for the appellant      A.T.M.Sampath, Parmanand  Gaur, M.A.Chinnaswamy,  Advs. for the Respondents.                          O R D E R      The following Order of the Court was delivered:      Leave granted.      This appeal  by special  leave arises from the judgment and decree  of the  Division Bench of the Madras  High Court made  on   October  24,1990  in  OSA  No.148/82.  The  first respondent Bank  laid the  suit for the recovery of mortgage amount by sale of 44 acres of land out of 80 acres belonging to respondents  2, 3  and 7  in this  appeal. Pending  suit, respondents  2   and  3   were  adjudged  as  insolvents  in I.P.No.15/1978.  In  consequence,  their  right,  title  and interest held  in the  land stood  vested  in  the  official assignee, the  4th respondent  in this  Court by order dated July 18,1979  directed the  official assignee  to sell their interest in 44 acres of land by public auction. Since no one was coming  forward to purchase the land in the auction, the appellant had  offered Rs.67,500/- and by order of the Court dated July 26,1982, the Court accepted the appellant’s offer of Rs.77,500/-.  By proceeding  dated  August  18,1982,  the learned Single Judge confirmed the  sale. Feeling aggrieved, on appeal,  the 7th  respondent, in  this  Court  respondent No.9, had  offered a  sum of  Rs. 16,28,000/- and respondent No.8 had  offered a  sum of  Rs.1,50,000/- which  was  later raised to  Rs.2,50,000/- respectively. Treating it as offer, the Division  Bench directed  the 9th  respondent to deposit 10% of the upset  price but he did not deposit the same; the official assignee was also asked to file a report before the Division Bench  on the  value of  the land prevailing in the neighbourhood varies  between Rs.4,000/-  and Rs.5,000/- per acre and  the lands  in question  would fetch as on December 10, 1990, a sum of Rs.3,35,000/- which was worked out at the rate of  Rs.7.600/- per  acre. The  High Court has set aside

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the sale  and directed  re-auction of  the land,  fixing the upset price  offered by  the 8th respondent and directed the sale in open auction accordingly.      Pending proceedings  in this  court, 7th respondent had also offered  to deposit  a sum of Rs.20,00,000/- and as per the direction  of this Court the order was revoked. When the appeal was dismissed by a short order, on being mentioned by the learned  counsel for  the respondents to hear the matter on merits,  order was  passed on  July 24,1995 recalling the order dated  July 17,1995  and setting  out the  matter  for disposal. Thus, this appeal by special leave is being heard.      Shri Ganguli,  learned senior counsel for the appellant , contended  that while  the  appellant  had    offered  the consolidated sum  of Rs.67,500/-  since no   one  was coming forward to  bid at  higher amount, the appellant offered the highest bid  of Rs.77,500/-.  The learned  single Judge,  in view of  the fact  that the  sale was postponed on more than one occasion, considered it appropriate to confirm the sale. The Division  Bench, having noticed that respondent No.9 had failed to  deposit 10%  of his  offer, was  not justified in setting aside the sale and directing resale of the property. Even in  this Court, the respondents have not complied  with the offer  of depositing  the amount  within the time and it indicated that the respondents are only intending to prolong the sale but they were not sincere to bid the highest price, as offered  by the  appellant. Shri Sampath, learned counsel for the  respondents,  contended  that  the  report  of  the official assignee     is self-evident  that the price of the lands in  the neighbourhood  varies between  Rs.4,000/-  and Rs.15,000/- per  acre. Therefore,  the price  fetched by the sale of  44 acres,  i.e.,  Rs.77,500/-  is  too  meagre  and inadequate. Accordingly,  the Division  Bench was  right  in directing   re-auction of  the property  fixing upset  price offered by  the 8th  respondent. Though the 7th respondent’s conduct is  not worthy of credence, the fact remains that 44 acres of  the land  were sold for inadequate  consideration; therefore, this court is not inclined to  interfere with the order passed by the Division Bench.      Having regard  to the  facts and  circumstance  of  the case, the  question is: whether the confirmed action of sale by the  learned single Judge is valid in law. It is now well settled legal  position  that when the Court was inclined to bring the  property to  sale, the  endeavour  of  the  Court should be  to sustain  the Court  sale. Equally though Court sale is  compulsive sale,  equal endeavour should be made to fetch adequate  price for  the property  sold  so  that  the decree debt  would get  satisfied and surplus, if any, could be paid  over to  the judgment  debtor. In this case, in the suit for  redemption of  the mortgage,  decree has yet to be passed. Since  respondent Nos.3  and 4  have  been  declared insolvents, the right, title and interest had by them in the property stood  vested in  the  official  assignee  and  the official assignee  was directed  to put  the  properties  to sale. Resultantly, the properties have been brought to sale. Sri Sampath  says that insolvency  order was anulled but the same was  disputed by  Shri Ganguli.  Be it as it may, it is seen that  44 acres  of land  situated  in  Vadakkupattu  in Chhangulput District   near  about   Chennai were brought to sale for  a price   Rs.77,500/-.  It appears  to  be  highly inadequate and  the learned single Judge, therefore, was not right  in confirming  the same. The Division Bench has taken note  of   the  offer   made  by   the  8th   respondent  at Rs.1,50,000/-       which   was   subsequently   raised   to Rs.2,50,000/- and  directed to conduct the open auction. The Division Bench  also has taken into consideration the report

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submitted by the official assignee that the  market value in the  neighbourhood    lands  ranges  between  Rs.4,000/  and Rs.15,000/- per  acre and  the lands  in question  would  be worked out  at the  rate of  Rs.7,600/- per  acre, as in the years 1990.  This circumstance  would also indicate that the sale of the land made in 1982 was too inadequate. Therefore, an attempt should have been made by the learned single Judge to have  the property  sold by  public auction  by  inviting either  tenders   or  open   auction.  The  Division  Bench, therefore, was  right in its conclusion in setting aside the sale.      Shri Ganguli  may be  right in  his contention that the appellant having  deposited the  money, should  be  suitably compensated and  no direction has been given by the Division Bench in  that  behalf.  In  the  event  of  any  subsisting liability against  the estate of the respondents 2 and 3, to discharge any debts, it may be open to the official assignee to bring such part of the properties which may be sufficient to discharge  the liability,  to sale  by  public    auction either by  inviting tenders or through appropriate procedure under Order  XXI of  the CPC and then to conduct the sale in accordance therewith. In case the official assignee has kept Rs.77,500/- in  any interest earning secruity, the principal amount together with interest is directed to be refunded  to the  appellant. In  case the  amount was not kept in  any deposit  and was  used to discharge outstanding debt due  by  respondent  Nos.2  and  3,  the  appellant  is entitled to  get interest  at 18%  per annum  on the  amount deposited by  the  appellant  and  the  sale  should  be  so conducted keeping  in view  the interest liability. From the amount  secured   by  sale,   apart  from   discharging  the liabilities fastened  on the lands, the interest also should be repaid to the appellant from the date of the deposit till date of repayment to the appellant.      The appeal  is  accordingly  disposed  of  but  in  the circumstances without costs. It may be open to the appellant to participate  in the  auction that  may  be  conducted  by official consignee.  In that  event, it  may be  open to the appellant to withdraw the amount.