JUDGMENT
Ramakrishnan, J.
1. This appeal is against the order dismissing an application, E.A. 674 of 1993, filed under Order XXI, Rule 90 read along with Section 151 of the Code of Civil Procedure for setting aside the sale of two items of immovable properties effected on 15-6-1993 in E.P. 652 of 1991 in O.S. No. 666 of 1988 on the
file of the Pri. Sub Judge, Ernakularn. Appellant is the second judgment-debtor. Respondent, the South Indian Bank Limited is the decree-holder and auction-purchaser of the properties.
2. The main question arising for consideration is whether the sale in question is liable to be set aside or not which has to be considered in the backdrop of the following facts and circumstances,
3. The suit was filed by the respondent-Bank for realisation of money by the sale of mortgaged properties described in the plaint schedule. Suit was decreed for recovery of an amount of Rs. 90,71,727.23 together with 15% interest from the date of suit and costs amounting to Rs. 10,31,148.00 by the sale of the mortgaged properties and also from the defendants personally. Since the liability was not discharged within the time allowed by the decree, E.P. 652 of 1991 was filed on 12-7-1991 claiming a total amount of Rs. 1,37,30,901.03. A draft sale proclamation was also filed along with the E.P. for sale of the two items of properties described in the schedule to the E.P. The upset price fixed for item No. 1 in the draft proclamation was Rs. 95 lakhs and that of item 2 was Rs. 5 lakhs. Notice under Order XXI, Rule 66, C.P.C. was issued on 27-3-1991. Order sheet in the E.P. would show that the appellant was served with notice before 16-10-1991. Service of notice was ultimately completed by effecting substituted service by publication as regards some of the respondents, only in the month of October, 1992. The decree-holder filed E.A. 1123 of 1992 on 14-10-1992 specifically under Order XXI, Rule 72A(2), C.P.C. praying for fixing reserve price for items 1 and 2 as Rs. 95 lakhs and Rs. 5 lakhs respectively. On 15-10-1992 the appellant along with the legal representatives of the 5th defendant (5th judgment-debtor) filed objections in the matter of settlement of proclamation. Apart from pointing out certain illegalities and irregularities in the decree passed, it was contended that no notice was served on them under Order XXI, Rule 66. It was further submitted that boundaries of the properties shown in the proclamation are not correct and that the value of the unfinished building standing in item No. 1 has not been shown separately in the proclamation. It was also contended that the upset price shown for item 1 property is very much less than its market value. According to the objectors the properties would be worth at least Rs. 3 crores as it is one
situated by the side of M. G. Road, Ernakulam, near Deepa Theatre Extent of item No. 1 property is nearly 32 cents and the plinth area of the unfinished building situated therein which is almost completed is 30000 sq. ft. The building itself will cost more than Rs. 1 crore. It was thus submitted that all the material particulars shown in the proclamation are incorrect and the sale on the basis of the proclamation will cause substantial prejudice to the judgment-debtors. Taking note of the objections raised regarding the value of the properties shown by the decree-holder in the draft proclamation, the Court has directed amendment of the proclamation by incorporating the value of the properties as shown in the objection. The proclamation was accordingly amended by indicating the value of the properties as Rs. 3 crores and the value of the unfinished building as more than Rs. 1 crore. After the proclamation was amended as directed by the Court, on 10-2-1993 the Court has passed the following order on E.A. 1123 of 1992.
“Amended draft produced. Upset price fixed for item No. 1 as Rs. 95 lakhs and item No. 2 Rs. 5 lakhs. Proclaim and sell on 27-5-1993.”
Later, on 31-3-1993 the decree-holder filed E.A. 483 of 1993 for permission to bid. The provision quoted in the above application was Order XXI, Rule 72(2), C.P.C. It is significant to note that there was no prayer to fix a reserve price in E.A. 483 of 1993 evidently because there was a separate application filed as early as on 14-10-
1992 for fixing a reserve price. On 27-5-1993 the date on which sale was fixed E.A. 483 of 1993 was allowed recording the submission of the learned Counsel for the judgment-debtors that the judgment-debtors have no objection in allowing the E.A. The sale, was however, adjourned on the basis of E.A. 538 of 1993 filed by the judgment-debtors for adjournment, to 15-6-1993. On 15-6-
1993 again the counsel for the judgment-debtors prayed for time. However, the prayer was proposed by the decree-holder. As there was no application for adjournment, properties were ordered to be sold at 1.30 p.m. on that day itself. Accordingly item No. 1 was sold for an amount of Rupees 95,01,000/- and item No. 2 for Rs. 5,01,000/- and purchased by the learned Counsel for the decree-holder on its behalf. The E.P. was posted to 16-8-1993 for confirmation of the sale. Thereafter appellant filed E.A. 674 of 1993 to set aside the sale on 26-6-1993.
4. Briefly stated the main contentions raised in the E.A. are thus : The sale has been effected without fixing reserve price for the properties in accordance with the mandatory provisions contained in Order XXI, Rule 72A, C.P.C. The sale thus effected is in gross violation of the provisions contained in Order XXI, Rule 72A. The two items of properties will be worth at least Rs. 5 crores. Item No. 1 property is a property having an extent of more than 30 cents lying by the side of M. G. Road, Emakulam, in an important locality. There is an unfinished building having a plinth area of 30000 sq. ft. and worth about Rs. 1 crore situate in the said property. The upset price fixed and price for which the properties were sold are ludicously low when compared to the actual worth of the properties. If a commission is issued to ascertain the market value of the properties, it will be seen that the market value of the properties will be more than Rs. 5 crores. By the sale of the Properties for a paltry amount of Rupees 1,00,02,000/- substantial injury has been caused to the judgment-debtors. The price for which the properties have been sold is unconscionably low. As such the sale effected is liable to be set aside treating it as ab initio void.
5. After filing of the above application for setting aside the sale, the decree-holder has paid the amount required for purchase of stamp papers for issuing sale certificate.
6. The decree-holder has filed a detailed objection to E.A. 674 of 1993 raising various contentions and praying for dismissal of the E.A. puring the trial of the E.P. and E.A. 674 of 1993 the appellant has filed on different occasions three commission applications for the purpose of getting a report regarding the value of the properties in question. The applications were numbered as E.A. 1299 of 1993, E.A. 1123 of 1994 and E.A. 1251 of 1995.The legal representatives of the 4th respondent who died during the pendency of the E.P. has filed two applications, E.As. 515 and 516 of 1994. E.A. 516 of 1994 was for impleading them as legal heirs of the deceased 4th respondent. The said application was allowed on 19-9-1994. E.A. 515 of 1994 was an application filed by the 3rd defendant and three others for setting aside the sale. On 24-2-1995 the order sheet would show that the judgment-debtors have sought for a period of one month to deposit the entire debt with interest, cost and commission and the E.P. was
posted for 10-3-1995 noting the above request made by the judgment-debtors. After several adjournments granted for several reasons, the execution Court ultimately dismissed E.A. 674 of 1993 and E.A. 515 of 1994, the two applications filed for setting aside the sale, on 5-3-1996. On the same day, the last of the applications filed for issuing a commission was also closed in view of the dismissal of E.A. 674 of 1993 and 515 of 1994. On the two other applications for issue of commission, E.A. 1229 of 1993 and 1123 of 1994 no orders were passed on 5-2-1996.
7. The execution Court has dismised E.A. 674 of 1993 as per the impugned order. A reading of the order would show that the learned Judge has proceeded to dispose of the application as if the main contention of the appellant is that the upset price fixed is too low. The learned Judge found no merit in the said contention on the ground that the Court has directed to amend the proclamation and to show the value as estimated by the judgment-debtors also and the proclamation was accordingly amended showing Rs. 4 crores as the value of item No. 1 property and the incomplete building situated therein. The learned Judge has further found that the appellant has not substantiated the contention that sale is vitiated by material irregularity, fraud and illegality in the conduct of sale. The judgment-debtors’ contention that the decree-holder has prevented intending bidders from participating in the auction held was also found to be a baseless and false allegation in view of the fact that auction was in the presence of the counsel for the appellant also. Similarly, the contention of the appellant that he was not served with notice under Order XXI, Rule 66 was also found against pointing out that on receipt of notice the appellant has in fact filed a written objection to the draft proclamation. Regarding the objection raised about the illegality of fixing a reserve price below the full amount covered by the decree, the learned Judge rejected the same observing that “it is open to the Court to fix the reserve price”. Further it was observed thus :
“…..if the property is more valuable the judgment-debtors ought to have bring bidders to purchase the property for higher price….”
The learned Judge also found that value of the properties at the time of consideration of the application for setting aside the sale is not relevant and as such the applications filed for issue of
commission by the appellant and others are not substantial in law. Cryptically in one sentence the learned Judge also observed that “I am also of the view that no injury also caused to the judgment-debtors in the conduct of the sale on 15-6-1993”. The learned Judge also found that the offer made by the appellant to pay the entire debt together with interest at 5% commission cannot be accepted as the same was conditional on the decree-holder executing the sale deed in respect of the properties in favour of the nominee of the appellant and the Court cannot approve such a condition as legal. It was on the basis of the above finding that the Court has dismissed the E. A. as per the impugned order.
8. The specific provision under which the application for setting aside the sale, namely E. A. 674 of 1993 has been filed is Order XXI, Rule 90. C.P.C. While arguing the appeal, learned Senior Counsel for the appellant Shri TRG Warriyar has submitted that the application is liable to be treated as one filed under Order XXI, Rule 72 A(3) read along with Sub-rule (3) of Rule 72 of Order XXI also. In the light of the above submission, we may consider the substantially and merit of the application treating it as one filed under Order XXI, Rule 90 and Order XXI, Rule 72A(3) read with Rule 72(3) of Order XXI, C.P.C.
9. As already noted, the learned Senior Counsel Shri TRG Warriyar has contended on behalf of the appellant that the sale in this case was held in gross violation of the provisions contained in Rule 72A and as such is liable to be set aside as illegal and void treating the application as one under Sub-rule (3) of Rule 72A itself read along with Sub-rule (3) of Rule 72. Alternatively it was contended that the sale effected in violation of the mandatory provisions contained in Rule 72A is liable to be set aside under Rule 90 of Order XXI on the ground of material irregularity in conducting the sale and that the appellant has sustained substantial injury by reason of such irregularities. Learned Counsel has elaborately argued the points highlighting all the relevant facts and circumstances and referring and relying upon almost all decisions of the Supreme Court and other High Courts including this Court on the points involved in the case. It was also submitted that during the pendency of the application for setting aside the sale itself, the appellant has offered to deposit the entire decree amount, commission and costs in Court with a view to discharge the liability and save the properties. Even now the appellant is ready to discharge the entire liability under the decree and to comply with any other condition this Court may impose as a condition for setting aside the sale. The decree-holder-auction-purchaser being a scheduled Bank need only be keen on realising the money due and the loss incurred in prosecuting the matter and need not be interested in keping on to immovable properties for making profits out of the dealings with properties purchased in court-auction sales.
10. Learned Counsel for the respondent-Bank Shri A. M. Shaffique, on the other hand, has strongly supported the order impugned pointing out that the appellant has not made out any sufficient ground to set aside the sale either under Order XXI, Rule 90 or under Order XXI, Rule 72A read with Sub-rule (3) of Rule 72, C.P.C. Learned Counsel has submitted that though the Court has while passing the orders in E.A. 1123 of 1992 used the word ‘upset price’, the price fixed as per the order must be treated as ‘reserve price’ fixed under Rule 72A itself. The application was one filed specifically under Rule 72A of Order XXI. The prayer was also to fix ‘reserve price’ for the two Stems of the properties to be sold. The words ‘upset price’ and ‘reserve price’ are really synonymous. At any rate, in this ease at least, the Court must he deemed to have used the words ‘upset price’ as synonymous with the word ‘reserve price’ since that was the prayer in E.A. 1123 of 1992 swhich was allowed by the Court. Under Sub-rule (2), Rule 72A Court has ample discretion in fixing ‘reserve price’ in appropriate cases even below the amount due as per the decree on the date on which the reserve price is determined and fixed by the Court. In this case notice was given to the appellant in E.A. 1123 of 1992. The application was posted for counter of the appellant on three occasions. In spite of three opportunities being given for filing counter, the appellant has not filed any counter raising objections in the matter. It was in the circumstances that the Court has fixed the amount mentioned in the application as the ‘upset price’ proceeding on the basis that the appellant had no objection in fixing the amount mentioned in the application as reserve price. The appellant must be deemed to have consented to the prayer made in the application and waived his objections in the matter of fixing reserve price as
prayed for by the decree-holder. It was further submitted that under Sub-rule (3) of Rule 72A the Court has a discretion to set aside the sale or confirm the same as the Court thinks fit. Since the reserve price was fixed as not objected to by the judgment-debtors, the Court must be deemed to have exercised its discretion on justifiable grounds to confirm the sale while dismissing the application for setting aside the sale even if there is any technical violation of the provisions in Rule 72A. There is no merit in the contention that the judgment-debtors have suffered substantial injury since the appellant and other judgment-debtors have not adduced any evidence cither oral or documentary to substantiate their contentions to that effect in spite of the fact that the application filed in 1992 was disposed of only on 5-3-1996. Except filing successive applications for issuance of commission and permission to adduce oral evidence, in fact no orders were obtained from the Court by the appellant or the other judgment-debtors. No reason whatsoever has been stated by the appellant and other judgment-debtors as to why they have not adduced any documentary evidence or oral evidence to substantiate their contention that the properties were worth Rs. 5 crores and the sale was for unconscionably low price as contended by them. If there was any bona fides in the claim of the appellant and the other judgment-debtors that they are ready and willing to discharge the entire liability by depositing the decree amount with interest, costs and commission, the same could have been done during the pendency of the application for setting aside the sale. No such attempt was made. The belated offer made during the course of the arguments can be treated only as an attempt to protract the matter made without any bona fides. It was thus submitted that no ground has been made out to set aside the sale either under Order XXI, Rule 90 or under Order XXI, Rule 72A(3) of the Code.
11. Rule 72A incorporated in the Code as per the Amendment Act 104 of 1976 and Sub-rule (3) of Rule 72 of order XXI,C.P.C. are in the following terms :
“72 A. Mortgagee not to bid at the sale without the leave of the Court– (1) Notwithstanding anything contained in Rule 72, a mortgagee of immovable property shall not bid for or purchase property sold in execution of a decree on the
mortgage unless the Court grants him leave to bid
for or purchase the property.
(2) If leave to bid is granted to such mortgagee. then the Court shall fix a reserve price as regards the mortgage, and unless the Court otherwise directs, the reserve price shall be-
(a) not less than me amount then due for principal, interest and costs in respect of the mortgage if the property is sold in one lot; and
(b) in the case of any property sold in lots, not less than such sum as shall appear to the Court to be properly attributable to each lot in relation to the amount then due for principal, interest and costs on the mortgage.
(3) In other respects, the provisions of Sub-rules (2) and (3) of Rule 72 shall apply in relation to purchase by the decree-holder under that rule.
72(3). Where a decree-holder purchases, by himself or through another person, without such permission, the Court may, if it thinks fit, on the application of the judgment-debtor or any other person whose interests are affected by the sale, by order set aside the sale; and the costs of such application and order and any deficiency of price which may happen on the re-sale and all expenses attending it, shall be paid by the decree-holder.”
12. The first question to be considered is whether the sale effected was in violation of the mandatory provisions contained in Rule 72A, C.P.C. as contended by the appellant and if so whether the sale is liable to be set aside under Sub-rule (3)of that Rule. It is clear from the proceedings in the E.P. that the decree-holder has filed E.A. 1123 of 1992 under Rule 72A of Order XXI on 14-10-1992 to fix reserve price for item No. 1 property as Rs. 95 lakhs and Rs. 5 lakhs for item No. 2 property. Though the E.A. was posted for counter and hearing on two or three dates, no counter was filed. Ultimately the Court has fixed Rs. 95 lakhs and Rs. 5 lakhs for items 1 and 2 respectively as ‘upset price’ on 10-2-1993. It is also clear from the proceedings that the decree-holder has filed E.A. 483 of 1993 under Rule 72(2) on 3-4-1993 for permission to bid for the properties in auction and the permission was granted on 27-5-1993 recording the submission made on behalf of the judgment-debtors that they have no objection in allowing the application.
13. With respect to the orders passed by the execution Court fixing the upset price and granting
permission to bid, the learned Counsel for the appellant has submitted that they are orders passed mechanically without any application of mind. The sequence in which the orders are passed and the contents of the orders would establish the same was the submission of the learned Counsel for the appellant. In this connection it was submitted that though the prayer of the decree-holder was to fix a reserve price, what was fixed was ‘upset price’. As such the amount fixed as upset price cannot be treated as reserve price for the purpose of Rule 72A. Normally, it was mandatory on the part of the Court to fix the reserve price at an amount not less than the amount then due for principal, interest and costs as per the decree. For fixing reserve price at an amount lesser than the total amount as indicated in the rule, the Court was bound to give reasons for effecting such deduction. The fact that while passing orders in E. A. 1123 of 1992 the Court has used the words ‘upset price’ would clearly indicate that the Court has neither referred to the prayer made in the application nor to the relevant provisions contained in Sub-rule (2) of Rule 72A. Using of the words ‘upset price’ is a clear indication of the fact that while passing orders on E.A. 1123 of 1992 the Court has not borne in mind the requirements of Rule 72A(2). Further, the fact that the Court has not given any reason for fixing the upset price at Rs. 95 lakhs and Rs. 5 lakhs for items I and 2 an amount far below the total amount due as per the decree towards principal, interest and costs would clearly indicate that while passing the orders in E.A. 1123 of 1992 the execution Court was acting contrary to the provisions contained in Order XXI, Rule 72A(2) or without bearing in mind the provisions contained in that rule. According to the learned Counsel non-application of the mind is writ large on the face of the order. The Court was only adopting the value staled by the decree-holder in the application forgetting its responsibility to fix a reserve price in accordance with the provisions contained in Sub-rule (2) of Rule 72A of Order XXI. Such a mechanical or literal compliance cannot be treated as a proper compliance of the provisions at all. Even assuming that there is literal compliance with the requirements of the provision, it had not been complied with in spirit. Further, it was submitted that the scheme of the provisions contained in Rule 72A would show
that the Court is bound to fix the reserve price either at the time of giving permission to the mortgagee-decree-holder to bid for the properties at the auction or at least simultaneously after granting such permission. In this case the sequence of the orders passed would show that at the time when upset price was fixed there was not even a prayer for permission to bid and such a prayer was made only long after the upset price was fixed. The question of fixing a reserve price would arise only at the time of giving permission for the mortgagee-decree-holder to bid or thereafter and not earlier. All these aspects stressed according to the learned Counsel for the appellant would establish his contention that the executing Court has acted in a casual manner without applying its mind and without bearing in mind its obligation to take extreme care in complying with the mandatory requirements of the provisions contained in Rule 72A while ordering sale of the properties in execution.
14. We do not find much force in the contention of the learned Counsel for the appellant that there is no fixation of reserve price. The only reason for taking such a contention is that the word used is ‘upset price’ and not ‘reserve price’ as it ought to be as per Rule 72 A. Upset price is not a word used in any of the provisions in the CPC. It is not a word defined either in the CPC or in the General Clauses Act. As per Rule 72A what is to be fixed is the reserve price of the properties sought to be sold. According to the learned Counsel for the respondent the word upset price is synonymous with reserve price and the fact that the Court has used the word upset price instead of reserve price may not be a reason for holding that the Court has not fixed a ‘reserve price’. In this connection learned Counsel for the respondent has strongly relied upon the decision reported in Dr. A. U. L. Natarajan v. Indian Bank, Madras. AIR 1981 Mad 151, where a Division Bench of the Madras High Court has held thus :
“…..the term ‘upset price1 means last selling
price or reserve price.”
Having due regard to the fact that the Court has fixed the amount while passing orders in E.A. 1123 of 1992 wherein the decree-holder has prayed for fixing a reserve price for the two items of properties sought to be sold, we are of the view that it may not be reasonable to proceed on the basis that the Court has not fixed any reserve price
for properties in this case solely for the reason that the word used is ‘upset price1 and not reserve price.
14A. Similarly, we do not find much force in the contention of the learned Counsel for the appellant that the fixation of the upset price or reserve price was prior to the granting of permission for bidding the properties in auction and that would violate the provisions contained in Rule 72A of Order XXI. If at all it is a violation it can only be considered as a technical violation of the requirements which cannot be taken note of seriously.
15. However, we find force in the submission of the learned Counsel for the appellant that while fixing reserve price the executing Court has acted casually without any application of mind and that there is gross violation of the mandatory provisions contained in the Rule at least in spirit if not in its letter. As is evident from Sub-rule (2) of Rule 72A normally Court should fix the reserve price at an amount not less than the amount covered by the decree towards the principal, interest and costs decreed as regards the mortgagee-decree-holder unless the Court finds reasons to direct otherwise. The mandatory duty of the Court to state reasons while fixing ‘reserve price’ below the amount due as per the decree has been highlighted in the decisions of this Court reported in Abdulla v. Syndicate Bank, 1996(1) Ker LT 9; Sreedharan v. Federal Bank Ltd., 1996 (1) Ker LJ 20 and the decision of the Bombay High Court reported in Mahomed Abdulla v. Sakharam, AIR 1930 Bom 290. In this case the order passed in E. A. 1123 of 1992 on 10-2-1993 is only to this effect:
“Upset price fixed”.
Admittedly the amount in the E.P. itself is Rs. 1,37,30,901.03 and the amount actually due as per the decree on the date when the Court passed the above order is about Rs. 1,63,00,000/- which is much more than the total amount of Rs. 1 crore fixed as upset price for the two items of the properties. The order passed does not state any reason for fixing an amount which is much lesser than the amount actually due under the decree as on that day as ‘upset price’. The words ‘unless the Court directs’ would in our view indicate that it is mandatory on the part of the Court to indicate its
reasons for fixing the reserve price at an amount
lesser than the amount covered by the decree as on the date of fixing the reserve price departing from the normal rule of fixing it at an amount not less than the amount covered by the decree. The fact that the amount of Rs. 95 lakhs and Rs. 5 lakhs suggested by the decree-holder was fixed as ‘upset price’ and not as ‘reserve price’ and that too without giving any reasons for adopting such an amount which is very much less than the amount due as per the decree as on that date would clearly indicate that the Court was only adopting mechanically the value suggested by the decree-holder in the application without keeping in mind the mandatory requirements of Sub-rule (2) of Rule 72A of Order XXI and without reference to the wide disparity between the value suggested by the decree-holder and the judgment-debtors in their objection filed with reference to the details contained in the proclamation. It is relevant in this connection to note that Rs. 95 lakhs and Rs. 5 lakhs were the estimated value of the properties given by the decree-holder in the proclamation and it was the same figure which was requested to be fixed as the reserve price of the properties as per E.A. 1123 of 1992. The appellant has seriously disputed the correctness of the value of the properties shown by the decree-holder in the proclamation and has asserted that the value of item No. 1 property would be more than Rs. 4 crores including the value of the incomplete building estimated to be worth Rs. 1 crore. We would in the circumstances agree with the contention of the learned Counsel for the appellant that non-application of mind is writ large on the face of the order fixing the reserve price and that even accepting the price fixed as reserve price it cannot be treated as one fixed legally in compliance with the requirements of the provisions contained in Rule 72A.
15A. In this connection it is necessary to advert to one of the contentions raised by the learned Counsel for the respondents. Learned Counsel has submitted that since the appellant has failed to file a counter raising objections in E.A. 1123 of 1992 even after granting three adjournments, the appellant should be deemed to have agreed to an order being passed as prayed for in EA 1123 of 1992. As such even though the amount suggested by the decree-holder to be fixed as reserve price was lesser than the amount actually due under the decree it cannot be stated
that the order is one passed without application of mind and that the Court has acted in a casual manner while passing the order. We do not think that it is a fit case where the Court was justified in fixing the reserve price at the amount suggested by the decree-holder in the manner in which it was fixed in this case. Even in the absence of a counter the Court was bound to fix the reserve price keeping in mind the requirements of the provisions contained in Sub-rule (2) of Rule 72A and the fundamental duty of an executing Court to realise the proper value for the properties sold. As such the Court should have either fixe the reserve price at an amount not less than the amount covered by the decree or must have stated the reasons for fixing a reduced amount as reserve price. Even in the absence of a written objection filed against E.A. 1123 of 1992 the Court should have taken note of the disparity between the value shown by the decree-holder and the judgment-debtors in the amended proclamation and should have fixed the ‘reserve price’ at least at the amount actually due as on the date of fixing the price or should have given sufficient reasons for fixing a reduced amount. Since the Court has not given any reasons for fixing the price below the amount covered by the decree, it is difficult to hold that the Court has acted in accordance with the provisions contained in Sub-rule (2) of Rule 72A applying its mind to all the relevant facts and circumstances of the case in discharge of its obligation as an executing Court. We are of the definite view that the manner and sequence in which the orders have been passed in this case would clearly show the non-application of judicial mind and abdication of judicial duty on the part of the executing Court while ordering and effecting sale of the properties in question.
16. Of course, while taking the above view, we arc not ignoring the fact that it is a case where the appellant has failed to file any written objection to the prayer made in EA 1123 of 1992 even after the grant of two or three opportunities for filing counter. We would also add that we have also considered the forceful arguments advanced by the learned Counsel for the respondent that the appellant must be deemed to have waived the necessity of strictly complying with the requirements of Rule 72A and agreed for fixing the reserve price at the amount suggested by the decree-holder as per EA 1123 of 1992. In the facts
and circumstances of the case especially in the light of the detailed objections filed regarding the particulars shown in the unamended proclamation schedule it will be unreasonable and irrational to hold that the appellant and other judgment-debtors have waived all their objections to the amount suggested by the decree-holder in EA 1123 of 1992 or that they have consented for fixing the amount suggested by the decree-holder as reserve price of the properties. At the worst it can only be considered as negligence shown by the judgment-debtors in the conduct of the case. The essential element of waiver as held in Provash Chandra Dalul v. Bishwanath Banerjee, AIR 1989 SC 1834, is actual intent to abandon or surrender a known right or such conduct as warrants the inference of the relinquishment of such right. Except the fact that the appellant has omitted to file an objection in E.A. 1123 of 1992 there is no other clinching circumstance to show that the appellant has voluntarily and intentionally agreed to the course suggested by the decree-holder and it is for that reasons he has not filed any written objection in EA 1123 of 1992. In our view the mere omission to file written objection in EA 1123 of 1992 cannot be construed as an act of waiver or conduct warranting the inference of relinquishment of his right to get the reserve price fixed strictly in accordance with the mandatory provisions of Rule 72A or of his agreement in the matter of fixing the reserve price at the amount mentioned in EA. 1123 of 1992.
17. In the above view which we have taken in the matter it has to hold that fixation of the reserve price in this case is not in accordance with the provisions contained in Rule 72A of Order XXI and that it has been fixed in violation of the mandatory requirements of the said provision. It is also difficult to accept the contention of the learned Counsel for the respondent that the appellant has waived his right to object to the validity of the proceedings on the ground of failure to fix a reserve price as provided in Rule 72A(2) of Order XXI, CPC or that he has knowingly agreed to waive all his objections in fixing the amounts suggested by the decree-holder in E.A. 1123 of 1992 as the reserve price of the properties.
18. The next question to be consideredis what exactly is the legal consequence or impact of non-
compliance with the requirements of Section 72A(2) as has happened in this case on the sale effected when its validity is challenged by a judgment-debtor in an application filed under Rule 72A(3) or under Rule 90 of Order XXI or both.
19. Before considering the above question, we may deal with one of the submissions forcefully made by the learned Counsel for the respondent relying upon a Division Bench decision of this Court reported in Antony v. Catholic Syrian Bank, 1994 (2) Ker LT 341. Learned Counsel has submitted that the decisions rendered by the Division Bench in that case is squarely applicable to the facts and circumstances of the case on hand and that the decision is an answer to many of the contentions raised on behalf of the appellant in this case. Antony’s case (supra) was also a case where a mortgagee-decree-holder has purchased the mortgaged property in Court-auction. It is important to note that purchase by the decree-holder in that case was for the decree amount. After the sale the judgment-debtor has applied for setting aside the sale under Order XXI, Rule 90. The executing Court has dismissed the application and the judgment-debtor has preferred the appeal against the dismissal order which was disposed of by the Division Bench as per the above decision. In the appeal decided by the Division Bench only two grounds were pressed by the appellant. First was that there was gross under-valuation and the second ground was that no reserve price was fixed as provided in Order XXI, Rule 72 A. The Division Bench found that the appellant has not made out any ground to hold that there was gross under valuation as contended. As regards the second ground it was found that though the appellant was participating in the execution proceedings from the beginning itself he has not raised any objection at any time prior to the sale, that no reserve price as provided in Rule 72A(2) was fixed for the properties. In fact the learned Judges have noted that sale was duly proclaimed and on several occasions when sale was to take place it was postponed at the instance of the appellant and on all such occasions the appellant has signified in writing his consent to waive the requirement of fresh proclamation. In the circumstances the learned Judges specifically found as a finding of fact that judgment-debtor must be deemed to have waived his objections. The learned Judges have
also found that the appellant has not established any injury suffered by him much less any substantial injury as a result of the omission to fix the reserve price. It is on the basis of the above factual findings that the learned Judges have found that the dismissal of the application in that case was justifiable though no upset price seems to have been fixed in the case. It is also relevant to note that no contention based upon the provisions in Order XXI, Rule 72A(3) read along with Rule 72A was advanced in that case. Further, it is also important to note that in the light of the finding of waiver it was not strictly necessary for the Division Bench to refer to all other general principles which had no direct application to the case. Taking note, of the above factual findings, nature of the contentions raised and the very important circumstance that the sale in that case was for the decree amount itself, we are of the view that the above decision should be confined to the facts of that case and cannot be applied to the case on hand.
20. As regards the other propositions of law referred to in the above case there cannot be any dispute as they are all propositions laid down in the decisions of the Supreme Court rendered till then. In fact the learned Counsel for the appellant has also relied upon such principles. As such we are not inclined to accept the submission that the decision in Antony’s case (supra) is squarely applicable to the case on hand and the dismissal of the application for setting aside the sale in this case is also liable to be confirmed holding that no interference with the impunged order is warranted.
21. Before parting with the consideration of Antony’s case (supra), we would like to refer to one important aspect having a bearing on the question of a party’s right to waive the strict compliance with the mandatory provisions of law like Rule 72A(2). In this connection we would refer to the avowed legislative purpose intended to be achieved by the incorporation of the provisions of Sub-rule (2) of Rule 72A. Justice K. Ramaswamy (as His Lordship then was) had pithily put it in the following words in P. Rami Reddy v. P. Sundara Rama Reddy, AIR 1986 AP 29 (at page 31):
“….From the language thus manifested by
the statute, it gives in unmistakable terms the legislative animation that it intended to relieve the mortgagor from all the liabilities incurred under
the mortgage. It also seems to eradicate or at least aimed to nip in the bud the incurable tendency on the part of the decree-holder to take undue advantage of the Court sale by purchasing the hypotheca at a lower price by procuring collusive bidders at a force of sale and to nock off the property at a minimal price and then to take recourse to recover the residue of the decree debt by other process available under the Code…..”
We are in full agreement with the above observations. It is clear that of the above two purposes one at least cannot be treated as something intended to benefit the judgment-debtor alone. While the one is exclusively to safeguard the interest of the judgment-debtors, the other is intended to serve a public purpose also, namely to nip in the bud itself an incurable and pernicious tendency on the part of the decree-holder to take undue advantage of the court sale and to practice fraud even in Court proceedings. We may also refer in this connection to the observations of Subba Rao, J. in Dhirendra Nath v. Sudhir Chandra, AIR 1964 SC 1300, where the learned Judge was dealing with the right of a party to waive strict compliance with certain provisions of law (at page 1305):
“….a mandatory provision can only be
waived if it is not conceived in the public interests, but in the interests of the party that waives it….”
In the light of the above principle regulating the right of a party to waive compliance with mandatory provisions of law, had it been necessary for us to take a final decision in the matter, we would have held that compliance with the requirements of Rule 72A(2) cannot be waived by the judgment-debtor since it is not a provision incorporated solely for his benefit. It is a provision intended to remove a social evil. However, we find that it is not necessary for us to pronounce finally upon the above point in this case as we have already held as a finding of fact that the judgment-debtor in this case has not waived his rights in that behalf.
22. We may now refer to the important decisions and legal principles relied upon by the learned Counsel for the appellant in support of his contention that the sale in this case is liable to be set aside as illegal. The Supreme Court in Desh Bandhu Gupta v. N.L. Anand and Rajinder Singh, 1994(1) SCC 131 : (1993 AIR SCW 3458), has
while dealing with the scheme of the provisions in Section 47, Order XXI, Rule 66 and Order XXI, Rule 90, C.P.C. observed thus (at page 3469 of AIR SCW):
“The Court has a duty to see that the requirements of Order 21, Rule 66 are properly complied with. It is incumbent on the Court to be scrupulous in the extreme. No action of the Court or its officer should be such as to give rise to the criticism that it was done in a casual way. Therefore a proclamation drawn casually without compliance with the mandatory requirements and a sale held in furtherance thereof is not a sale in the eye of law. A sale conducted in flagrant breach of the mandatory provisions is a nullity ab initio.”
While dealing with the procedure adopted by the executing Court in the above case it has been further observed thus :
“They are not only material irregularities causing substantial injustice but are in violation of the mandatory requirements of the rules.”
The above observation would indicate that the Supreme Court has made a clear distinction between cases of ‘material irregularities causing substantial injustice’ and that of ‘violation of mandatory requirements of the rules’. In Ambati Narasayya v. M. Subba Rao, AIR 1990 SC 119, the Supreme Court has held that “there is a duty cast upon the Court to sell only such property or a portion thereof as necessary to satisfy the decree” and “it is a mandate of the legislature which cannot be ignored”. The Court has in that case set aside the sale on finding that the statutory mandate to that effect contained in Rule 64 of Order XXI has been contravened under Order XXI, Rule 90 even without entering a separate finding regarding substantial injury. The above decision would also show that when a mandatory provision is violated sale can be set aside as illegal and without jurisdiction. Dealing with the provisions in Order XXI, Rule 72, the Supreme Court has held in Lal Chand v. VIIIth Addl. District Judge, JT 1997 (3) 367 : (AIR 1997 SC 2106), that the decree-holder has no right to bid in the auction without obtaining prior permission of the Court and a sale held in violation of the requirements of Rule 72 is illegal and lible to be set aside. Of course, the Court in that case has also found that there had been other material procedural irregularities which has caused substantial prejudice to the judgment-debtor. The
sale was ultimately set aside in that case utter directing the judgment-debtor to deposit the entire decree amount with interest, costs and compounding fee at the rate of 5% of the sale amount. It is again settled law that the provisions in Order XXI, Rules 84, 85 and 86 are mandatory and non-compliance with the above provisions would render the sale proceedings a complete nullity and there may not he any question of considering material irregularity in the conduct of sale (See Manilal Mohanlal v. Sayed Ahmed, AIR 1954 SC 349 and Nani Gopal v. T. Prasad Singh, AIR 1995 SC 1971 ; (1995 AIR SCW 3078)).
23. We may now proceed to consider the legal consequence of the violation of the provisions under Rule 72A(2) on the sale in the light of the legal principles culled out from the decisions relied upon by the learned Counsel for the parties.
24. In view of our finding that the sale in this case is one held in violation of one of the mandatory requirements of Sub-rule (2) of Rule 72 A of Order XXI, we are inclined to take the view that it is a case where the validity of the sale can legitimately be challenged under Sub-rule (3) of Rule 72A read along with Sub-rule (3) of Rule 72, CPC and EA 674 of 1993 is liable to be considered as one filed under that Rule also. As a case where Sub-rule (3) of Rule 72A applies, it may not be necessary for the appellant to satisfy the requirements of Order XXI, Rule 90 for getting the sale set aside. It has been so held specifically by a Full Bench of the Madras High Court in K. Suresh Babu v. K. Balasubramaniam, AIR 1981 Mad 1 (FB). We are in respectful agreement with the view expressed by the Full Bench in the above decision and would follow the same in this case.
25. As held by the Division Bench in Antony’s case (supra), under Sub-rule (3) of Rule 72A read along with Rule 72 (3) the Court has wide discretion in setting aside the sale or confirming the same on finding that the sale held is in violation of the mandatory provisions of Rule 72A (2) of Order XXI. The only question to be considered by ” the Court under Sub-rule (3) is whether it is a fit case to order setting aside the sale or not in the facts and circumstances of the case. Having due regard to the entire facts and circumstances already referred to by us and bearing in mind the legal principles deducible from the decisions of the Supreme Court as indicated above, we are inclined
to take the view that it is a fit case where the sale is to be set aside imposing strict terms and conditions taking note of the serious omissions committed by the appellant in the matter of conducting the case before the executing Court and the consequential delay and protraction occurred in the matter. On a careful scrutiny of the entire steps taken on behalf of the appellant, we feel that the case was not conducted with the care which it deserved taking note of the stakes involved in the matter. If proper care was taken, the appellant could have specifically brought to the notice of the Court the necessity of fixing a reserve price not below the total amount due as per the decree as on the date of fixing the reserve price. We are indicating this only to show that the appellant is not entitled to get an unconditional order for setting aside the sale in the facts and circumstances of the case. While taking the above view we have, apart from the legal grounds made out for setting aside the sale taken note of the following facts and circumstances which according to us are not totally irrelevant and extraneous to the question arising for consideration in this case. The property sold is one having an extent of 32 cents with a substantial building therein having plinth area extending to 30000 sq.ft. and lying by the side of the most important road right in the heart of the city of Kochi. There is a wide disparity between the value as estimated by the decree-holder and the appellant. It was after rejecting a prayer for adjournment of sale, the property was sold on the very same day after the lunch period. Sale was for an amount far less than the amount due as per the decree. The purchaser is the decree-holder itself, namely a scheduled Bank which in the normal course ought to be interested only in realising the entire money due under the decree with all the costs and expenses and not to be very much keen on keeping the immovable property itself. In view of the offer made by the appellant to deposit the entire amount due as per the decree with costs, expenses and a reasonable amount to compensate the losses which might have occurred to the Bank, it was submitted that the insistance of the Bank to retain the property itself is really contrary to the directives issued by the Reserve Bank of India in the matter of owning non-banking assets like properties purchased in court auction. However, we may note that no evidence whatsoever has been produced by the appellant to establish that
scheduled banks are precluded from holding such assets as the one in question as per the directives from the Reserve Bank of India.
25.1 As such we would set aside the sale subject to the following conditions :
(a) the appellant shall deposit the entire amount due under the decree calculated as on the date of sale together with costs along with a further amount equal to 15% of the total amount for which sale was held as compensation for the losses likely to be caused to the decree-holder-Bank as a result of the setting aside of the sale within two months from today, before the executing Court.
(b) The appellant shall also deposit the cost of the stamp papers incurred by the decree-holder-Bank for getting the sale certificate issued.
(c) On such deposit, the sale will stand set aside and the executing Court will record full satisfaction of the decree.
(d) In default the dismissal of E. A. 674 of 1993 will stand confirmed and the appeal will stand dismissed with costs.
26. We may point out that as we have treated EA 674 of 1993 as one filed under Order XXI Rule 72A (3) read along with Rule 72 (3) and dispose of the same as such, it is not necessary for us to consider the EA as one filed under Order XXI, Rule 90 and to dispose of the same on merits. If for any reason it was necessary for us to consider the application as one filed under Order XXI, Rule 90, we would have set aside the order and directed the executing Court to consider the matter afresh after issuing a commission to get a report regarding the market value of the properties as on the date of sale and after giving the parties an opportunity to adduce fresh evidence, if any, on the question of market value of the properties with a view to ascertain whether the appellant has suffered substantial injury as a result of the sale effected without complying with the mandatory requirements of Sub-rule (2) of Rule 72A, CPC. We would in this connection point out the fact that altogether three applications were filed by the appellant for the purpose of issuing a commission to ascertain the market value of the properties and no orders were passed on such applications till the disposal of EA 674 of 1993 by the impugned order. All the applications were merely disposed of in the light of the dismissal of EA 674 of 1993.
Appeal is disposed of accordingly. Parties will bear their respective costs.