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Silvi v/s Iritty Chits Finance & Investments (Private) Limited, Kannur, Represented by Its Managing Director, K.T. Mathew

    OP(C). No. 586 of 2020

    Decided On, 07 July 2021

    At, High Court of Kerala

    By, THE HONOURABLE MRS. JUSTICE M.R. ANITHA

    For the Petitioner: T.V. Jayakumar Namboodiri, Advocate. For the Respondent: Abdul Raoof Pallipath, K.R. Avinash (Kunnath), Advocates.



Judgment Text

1. Petitioner is the respondent/judgment-debtor in E.P.24/2017 in O.S.100/2014 of Sub Court, Payyannur. The Original Petition has been filed against the impugned order fixing upset price by the execution Court.

2. The Suit was one for realization of amount and it was decreed against the petitioner/Judgment-debtor (hereinafter referred as 'petitioner'). Since the payment was not made, E.P.24/2017 was filed by the respondent /decree holder(here in after be referred as respondent) for executing the decree by attachment and sale of 34.5 cents of land owned by the petitioner. According to the petitioner, the value of the property shown as 22 lakhs in the sale proclamation is far below the actual value of the property prevailing in the area. Petitioner filed detailed counter to the valuations shown in the sale proclamation and copy of which is produced as Ext.P1. Petitioner claims that the property would fetch a value of Rs. 1,03,50,000/- (1 Crore 3 lakhs 50 thousand). The building in the property is having a plinth area of 2900 sq. feet. It would worth more than Rs.50 Lakhs. The market value of the property in the locality is Rs.25 lakhs per cent. An Advocate commissioner was appointed in E.P.171/2016 pending before the Munsiff Court, Thaliparamba for valuation of the very same property and the Commissioner valued the property at Rs. 1,35,50,000/-. The copy of the report of the Advocate Commissioner is produced as Ext.P2. The decree amount can be realized by selling a portion of the property. The property is situated on the side of the public road at Perikulam which is a fast developing area. But without considering any of those factors the learned Sub Judge fixed the upset price as Rs.25 Lakhs by the impugned order.

3. Notice was issued to the respondent and respondent appeared through Counsel. Both sides were heard. Though it was submitted that the objection has been filed with bench mark and it was directed to be incorporated with the file, it is reported from the office that objection is not received.

4. The main argument of the petitioner is that, though detailed counter was filed by the petitioner to the sale proclamation, without considering any of the contentions in the objection, upset price of the property has been fixed as Rs.25 lakhs by the execution court.

5. Order XXI Rule 66 of the Code of Civil Procedure, 1908, (hereinafter referred as 'the Code') deals with proclamation of sale by public auction. It declares the procedure to be followed by the Court when a property is ordered to be sold in execution of decree by public auction. Sub-rule (2) of Rule 66 provides how the proclamation to be drawn up, what are the matters to be specified etc., of course after due notice to the judgment debtor. Clause (e) of Sub-rule (2), which is relevant for the disposal of this matter, reads thus:

“(e) every other thing which the Court considers material for a purchaser to know in order to judge the nature and value of the property “.

6. It is a settled position that the value of the property to be put up for sale is a material fact within the meaning of clause(e). Commentaries on the Code of Civil Procedure by Dinshah Fardunji Mulla, 18th Edition, page 2605, relevant portion is extracted thus, as observed by the Privy Council [Saadatmand Khan v. Phul Khan (1898 20 All. 412)].

“Whatever material fact is stated in the proclamation (and the value of the property is a material fact) must be considered as one of those things 'which the Court considers material for a purchaser to know' and it is enacted in terms (though express enactment is hardly necessary for such an object) that those things shall be stated as fairly and accurately as possible.”

7. With regard to the duty of the Court in fixing the fair value there had been divergent views of different High Courts that the Court should not make a valuation and also that Court has a duty to make a valuation and enter in the sale proclamation. In Ban Behari Chatterji v. Bhukhan Lal Chaudhuri (AIR 1933 Calcutta 511) it has been held that it is the duty of the Court to make a valuation and the result of which has to be included in the sale proclamation. Further that the court has to make its own valuation and arrive at a single figure and if at all by reason of any exceptional circumstances the Court found it impracticable, such circumstances could be clearly set out in the order. Bombay High Court in Charan Das v. Dossadhoy (AIR 1939 Bombay 182) took a view that it was not necessary in every case to value the property to be sold and to state the value in the proclamation.

8. Apex Court in Gajadhar Prasad v. Bbakti Ratan AIR 1973 SC 2593) while dealing with a case challenging the act of the Execution Court in accepting the valuation shown by the decree holder without indicating any reasonable grounds, it was held to be a material irregularity when judgment debtor suffered substantial injury by the same. It has been made clear by the Apex Court that the execution court must apply its mind and should give consideration to the objections of the Judgment debtor and if not, it would be a material irregularity committed by the Execution Court. It is also made specific that the Execution Court need not pass any judicial order in the sale proclamation itself but it should pass an order showing that it applies 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. It is also held that the order should show that it considered the objections if any, of the decree holders, or the Judgment debtors as the case may be and it should not accept unhesitatingly the ipse dixit of one side. Ultimately in the said circumstance it was found that the Execution Court has not performed its duty fairly and reasonably by merely rejecting the judgment debtors figures by a mere observation that they are exaggerated and practically accepted without hesitation whatever the decree holders submitted and the valuation was proved to be incorrect judged by the results of auction sale takes as a whole.

9. Subsequently the Code was amended by the Amendment Act, 1976 by inserting two Provisos to clause (e); the second one is relevant in this context which reads thus:

“Provided further that nothing in this rule shall be construed as requiring the Court to enter in the proclamation of sale its own estimate of the value of the property, but the proclamation shall include the estimate, if any, given by either or both of the parties.”

10. By the insertion of the above proviso, it was made rather explicit that nothing in the Rule can be construed as requiring the Court to enter in the proclamation its estimation of value of the property but further specify that proclamation shall include the estimated value, if any, given by either or both of the parties.

11. In Shalimar Cinema v. Bhasin Film Corporation [1987 (4) SCC 717] it has been held by the Hon'ble Supreme Court that though it may not be necessary for the Court to make a valuation and enter it in the sale proclamation in every case, it is desirable at least in cases of sale of valuable property that the court make its valuation and enter it in the sale proclamation. It is also held that no action of the court or its officers should be such as to give rise to the criticism that it was done in an indifferent or casual way.

12. In Desh Bandhu Gupta v. N.L.Anand and Rajinder Singh (1994 (1) SCC 131 = 1994 KHC 1083) it was held that Court should apply its mind to the need for furnishing relevant and material particulars in the sale proclamation. In that case the execution Court simply accepted the low valuation shown in the E.P as Rs.1,00,000/- whereas in a complaint given by the decree holder to the Income Tax department he has got the site value with an approved valuer at Rs.3,32,333/- per cent. In the said circumstances it was held that it is a case of non-application of judicial mind and application of judicial duty. It was also held that the order passed by the Court should show that it considered the objection if any of the decree holders or the judgment debtors and it should not merely accept unhesitatingly ipse dixit of one or either side or both.13. In M.L.Mubarak Basha and others v. Muni Naidu [1997 (4) SCC 153 = 1997 KHC 821], Apex Court held that fixation of sale and upset price is the duty of Execution Court and not that of Commissioner. But in that case, taking into account the fact that Court has issued directions to the Commissioner not only to conduct the sale but also to fix the upset price and since the upset price has been fixed as per the direction of the Court sale conducted was upheld.

14. This Court in K.V. Thomas v. Malabar Industrial Co.Ltd. [1962 KLT 315] has held that while proceeding against the property of a judgment-debtor for compulsory sale in execution, law and fairness require the Court to ensure that the judgment-debtor is not unduly harassed in his misfortune and to adopt all reasonable means to secure a reasonable price for the property at the Court sale.

15. In Chandradas K.P. v. A. Nizar and Ors. [2009 (3) KHC 841 : ILR 2009 (3) Ker.763] it has been held that it is the obligation of the Court to ensure that the judgment-debtor whose property is being sold is entitled to a fairly accurate description of his property so as to secure the presence of such class of bidders who would make fair bids of the property having regard to the size, location and other features of the property.

16. When valuable property has been sold for a low price it would amount to failure to exercise judicial function properly and it would be a material irregularity in the settlement of proclamation and publication of the proclamation of sale (Harishankar v. Syndicate Bank Of India [1996 KHC 559 : ILR 1996 (1) Ker. 756 (DB) )

17. So from the above settled position it can be deducted that though it is not necessary that the Court should make a valuation and enter it in the sale proclamation in every case, it is desirable in cases where sale of valuable property is involved that the Court should make its valuation and enter it in the sale proclamation.

18. The petitioner has also raised serious objection in ordering the sale of the whole extent of property inspite of the fact that only a part of the property would be sufficient to satisfy the decree debt. In S. Mariyappa (Dead) By Lrs. and Ors. v. Siddappa and Anr [(2005) 10 SCC 235] it has been laid down that it is the duty of the Executing Court to consider whether a sale of only a part of the property would be sufficient to meet the decretal debt.

19. In Balakrishnan v. Malaiyandi Konar [(2006) 3 SCC 49 : 2006 KHC 277 : AIR 2006 SC 1458], it has been held that the use of the word expression necessary to satisfy the decree in Order XXI Rule 64 of the Code indicates the legislative intent that no sale can be allowed beyond decretal amount mentioned in the proclamation.

20. In Ambati Narasayya v. M. Subba Rao & Anr. [1990 KHC 221 : AIR 1990 SC 119] the Apex Court held that in execution sale the Court should ensure that only the property sufficient to satisfy the decree should be sold and it is a mandate of legislation and it is not a mere discretion of the court.

21. In K.A. Sukumaran v. Kerala Permanent Benefit Fund Ltd. [2011 (2) KHC 955 : 2011 (3) KLT 53] a learned Single Judge of this Court held that Court should ensure that only the property sufficient to satisfy the decree alone should be sold.

22. The respondent has also got a contention that the impugned order is not a speaking one and has been passed without considering any of the objections raised by the petitioner. In Unni Madhavan Nair v. Sreenarayana Investment [2009 (3) KLT 855] this Court has held that the order passed under Order XXI Rule 66 need not be a reasoned order but should reflect that the Court has applied its minds to the essential facts which have a bearing on the very material question of the value of the property. A mere statement of fixing the upset price and then an omnibus order proclaim and sale is far from satisfactory. In P.Bhuliya v Moosa and Another (2006KHC 1134 : ILR 2006 (4) Ker.118), this Court went to the extent of holding that Court should pass judicially considered order incorporating or declining to incorporate objections of judgment-debtor regarding value of property and value of improvements in the property.

23. In the present case, the impugned order would reveal that it has been passed by the learned Sub Judge after hearing both sides. According to the petitioner, an extent of 34.5 cents of land with a double storied concrete building is proclaimed to be sold. It is the contention of the petitioner that the property would fetch a value of Rs.1,03,50,000/-. There is a concrete building worth Rs.50 lakhs in the property. By selling 7 cents of property excluding the building and appurtenant land, decree debt can be cleared. But the value of the property has been shown as Rs.22 Lakhs by the respondent. The Court has fixed upset price as Rs.25 lakhs. Petitioner also produced Ext.P2 copy of a commission report in E.P.No.171 of 2016 filed with respect to the same property in another case valuing the property with building as Rs.1,35,50,000/- by the commissioner. True, it is a question to be decided whether Ext.P2 as such can be relied upon. However, according to the petitioner, without considering any of the relavant aspects the learned Sub Judge straight away fixed the upset price as Rs.25 lakhs and that has caused great miscarriage of justice.

24. On a perusal of the impugned order it would reveal that the learned Sub Judge fixed the upset price as Rs.25 lakhs and further directed to incorporate the contention of J.D in DSP and ordered, 'proclaim and sell' . The impugned order does not reveal the criteria which led the learned Sub Judge for arriving at the figure of Rs.25 lakhs. The learned counsel for the respondent in this context would contend that there is further direction to incorporate the contention of the JD in the DSP. Whether that would suffice is the question ?

25. When a Court fixes the upset price of the property to be sold in the sale proclamation, normally purchasers will form an opinion on the basis of it. So also once the upset price is fixed, there is no purpose in incorporating the contentions of the JD in the proclamation because it is by evaluating the contentions of the JD that usually Court fixes the upset price.

26. So also there is some irregularity in the impugned order in directing to incorporate the contentions of the JD in the proclamation. What the second proviso to clause (e) provides is that nothing in the rule shall be construed as requiring the Court to enter on its own estimate of value of the property but estimate shall include if any estimated by either or both of parties. Here, the estimated value of the property assessed by the petitioner is Rs.1,53,50,000/- and hence the direction ought to have been to incorporate the estimated value of the property by the Judgment-debtor and not the contention of the JD. Various contentions are raised in the objection and which is the contention which was directed to be incorporated is also not made specific. Hence the impugned order is not in compliance with the stipulations contained in second proviso to clause (e) of sub rule 2 of Rule 66 also.

27. In Shalimar Cinema referred above, the law laid down by the Apex Court is that though it is not necessary for the Court to make valuation and enters it in the sale proclamation in every case, it is desirable in cases of sale of valuable property that the Court shall makes it valuation and enter i

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t in the proclamation. In the present case, in view of the vast difference in the valuation of property made by the respondent/decree holder and the petitioner/judgmentdebtor, the learned Sub Judge was on his right side in opting to fix the upset price. But the same does not appear to have been done fairly and reasonably. Though the law does not insist the court to pass a long and reasoned order as has been held in Unni Madhavan Nair's case, the order should have reflected the application of mind with respect to the material question of value of property. 28. Execution Court also seems to have failed in its duty in considering the objection of the petitioner that a portion of property excluding the building would have been sufficient for the satisfaction of the decree. If a part of the property is sufficient to meet the decree debt, there is a duty cast upon the Court to fix the extent of property to be sold with specifications like boundaries, survey number etc. for identification of the property to the auction purchasers. That aspect has not been considered at all by the execution court. 29. Upshot of the above discussion is that the impugned order passed by the Execution Court is illegal and irrational in fixing the upset price of Rs.25 lakhs in absolute disregard of the settled principles of law and caused miscarriage of justice and hence is not sustainable either in law or on facts. 30. In the result, Original Petition stands allowed and the impugned order is set aside. The learned Sub Judge is directed to conduct an enquiry with respect to the value of property, after giving opportunity to both sides and pass fresh orders after hearing both sides, within two months from the date of receipt of copy of this judgment.
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