JUDGMENT
R. Bhaskaran, J.
1. These two appeals are filed by the judgment-debtors in Arbitration O.P. Nos. 2 of 1995 and 38 of 1994 respectively. The Awards were passed by the City Civil Judge of Udupi in Karnataka State and they were transferred for execution to the Subordinate Judge’s Court, Ernakulam. The appellants are the same in both the appeals. There were four arbitration original petitions against the appellants in which awards were passed and in two of them (Arb. O.P. Nos. 26 of 1993 and 12 of 1994) full satisfaction was recorded and attachments were lifted. The validity of the sale in execution proceedings in the remaining two cases, is the question to be considered in these two appeals.
F.A.O. No. 17 of 2005
2. This appeal arises out of the order in E.A. No. 185 of 2001 in E.P. No. 271 of 1997 in Arb. O.P. No. 2 of 1995 on the file of the Principal Sub-Court, Ernakulam. The execution petition was filed for realising an amount of Rs. 37,17.274/- by sale of seven items of properties. Though these items were shown separately, it is not in dispute that they formed portions of a land called “Silver Sand Island” near Vyttila in Ernakulam City. Out of the seven items sold on 2-12-2000, sales of items 1, 3, 4 and 7 were already set aside at the instance of the auction purchasers in petitions filed under Order 21, Rule 90 of the Code of Civil Procedure on the ground of fraud and irregularity by orders dated 22-2-2003 and 2-9-2003. Sale of item No. 5 was also set aside since the auction purchaser was the decree-holder and on payment of the entire decree amount and interest, the decree-holder agreed for setting aside the sale. Therefore the appeal concerns only with regard to the sale of items 2 and 6 in the E.P. Schedule. All the items were sold on 2-12-2000. In E.A. No. 185 of 2001 filed under Order 21, Rule 90, the sales were sought to be set aside on the following grounds.
1. Material irregularity and fraud in publishing and conducting the sale. There was no proper publication for sale and there was collusion between the decree-holder and the auction-purchaser. The proclamation schedule is incorrect.
2. The properties were sold for grossly inadequate price. Item 2 is having an extent of 27 cents, the market value of which was more than 54 lakhs. It was sold for Rs. 2,45,000/-. Item 4 is having an extent of 1.1875 acres having market value of 35 lakhs and it was sold for Rs. 3,25,000/-. Item 6 is having an extent of 1.55 acres. The value of the property is 3 crores and it was sold for Rs. 10,60,000/-.
3. The judgment-debtors have suffered substantial injuries by reason of the sale.
3. In the objection filed by the auction purchasers these allegations were denied. It is contended that there was no fraud or irregularity in publishing or conducting the sale. All the items were sold for amounts far in excess of the upset price fixed by the Court. The upset price fixed for item No. 2 was Rs. 1 lakh and it was sold for Rs. 2,45,000/-. Similarly, the upset price fixed for item No. 6 was Rs. 3,50,000/- and it was sold for Rs. 10,60,000/-. There is no collusion between the decree-holder and auction-purchaser as alleged in the petition.
4. The execution Court found that the allegation of material irregularity and fraud were accepted by Court in respect of Items 1, 3 and 7 and the sales were set aside by orders dated 2-9-2003 and the sale of item No. 4 was set aside by order dated 22-3-2003. With regard to the remaining items, i.e., items 2 and 6 the execution Court found that the judgment-debtors have not succeeded in establishing fraud and material irregularity in publishing and conducting the sale though items were also sold as per the same sale proclamation on the same date and since the properties were sold for amounts in excess of the upset price it was not possible to find that the amounts realised were not the proper price and no prejudice was caused to the judgment-debtors. The execution Court did not believe the evidence of P.W. 2 who affixed the notice with regard to the manner of affixing notice and identifying the property stating that he gave evidence after four years and his report was more acceptable than his evidence.
5. In this appeal, the learned Counsel for the appellants put forward the following contentions.
1. The finding that there was no fraud or material irregularity in publishing and conducting the sale is incorrect.
2. The judgment-debtors have suffered substantial injury by reason of such fraud or material irregularity in publishing and conducting the sale.
Therefore these are the points to be considered in the appeal. During the course of arguments, it has also been argued that there cannot be piecemeal setting aside of sales conducted as per order in a single E.P.
Point No. 1
6. In the forefront of the arguments, the learned Counsel for the appellants-Mr. Prem, placed reliance on the fact that the sale of four items were already set aside at the instance of the auction-purchasers themselves on the ground of fraud and material irregularity and one of the respondents now contesting this appeal Sri Shahul Hameed himself got the sale of item 4 set aside on that ground. It is therefore argued that no further argument is required to hold that the sale of other 2 items also is liable to be set aside on the same ground as there was only one sale proclamation and one publication and all the items were sold on the same day. The learned Counsel Sri V. Giri appearing for Sri Shahul Hameed, the 4th respondent, on the other hand contended that though his client filed the application under Order 21, Rule 90 and there was allegation of fraud and irregularity in the conduct of the sale, the real reason for filing such application was that item No. 4 was already sold by the judgment-debtor and he had no valid title at the time of auction sale and, therefore, the application should have been filed under Order 21, Rule 91 and other allegations and findings of the execution Court were only to be ignored. Though there is some force in this contention the fact remains that the 4th respondent himself filed an application under Order 21, Rule 90 to set aside the sale of item No. 4 of the E.P. Schedule on the ground of fraud and irregularity and it was set aside finding fraud and irregularity. But we do not want to rest this judgment merely on such finding and we will consider the question whether there was any material irregularity in the publishing or conducting the sale.
7. The learned Counsel for the decree-holder has submitted that the entire decree debts due from the judgment-debtors are paid by the judgment-debtors separately and he has no objection in setting aside the sale. That by itself will not take away the right of the auction-purchasers to defend the validity of the sale as they got the right to get delivery of the property once the petition to set aside the sale is dismissed. Before proceeding further it will be necessary to bear in mind the importance of the property with reference to its location. As mentioned in the proof affidavit of P.W. 1, the properties are situated in a very important locality which is less than 500 metres from Vyttila Junction and the National Highway 47 and it is directly connected to Vyttila – Thripunithura Road leading to the State Highway. It is known as “Silver Sand Island” which abuts the National Waterway No. 3. In the sale proclamation, it was not revealed that it was situated in such an important locality.
8. Before discussing the facts of the case, it is necessary to bear in mind the authoritative pronouncement of the Apex Court in various cases where the question as to when a sale can be set aside under Order 21, Rule 90, C.P.C. is discussed. The leading case often relied on by the judgment-debtors for getting the sale set aside on the ground of irregularity in the publishing and conducting the sale is Desh Bandhu Gupta v. N.L. Anand and Rajinder Singh . In that case it was held that the auction-purchaser would get a right only on confirmation of sale and till then his right was nebulous and his right was only for consideration for confirmation of sale. If the sale is set aside, apart from the auction-purchaser, the decree-holder is affected since the realisation of his decree debt is put off and he would be obliged to initiate execution proceedings afresh to recover the decree debt. Therefore, in the proceedings under Section 47 or Order 21, Rule 90, the decree-holder is the affected party. It is also held in that decision that the proclamation for sale is an important part of proceedings and the details should be ascertained and noted with care. This will remove the basis for many a belated objections to the sale at a later date. The proclamation should include the estimate, if any, given either by Judgment-debtor or decree-holder or both the parties. Service of notice on judgment-debtor is a fundamental step in the procedure of the Court in execution. The estimate of the value of the property is a material fact to enable the purchaser to know its value, It must be verified as accurately and fairly as possible so that the intending bidders are not misled. The Court should normally state the valuation given by the decree-holder as well as the judgment-debtor where they both have valued the property and does not appear fantastic. It may also state the other material facts such as the area of land, nature of rights in it etc. The compulsory sale of immovable property under Order 21 divests right, title and interest of the judgment-debtor and confers those rights in favour of the purchaser. This question did not really arise for consideration in Desh Bandhu Gupta’s case . Justice P.K. Balasubramanyan distinguished this decision in Jolly Tharian v. Kuruvilla 1999 (1) KLT 380 and the Full Bench decision in Govinda Menon v. Varkey holding that sale without notice is only voidable was accepted. There should be application of judicial mind and no abdication of judicial duty. In that case also, originally, the judgment-debtor had not given his valuation but the Court found that he was not given notice. It was a mandatory requirement under Order 21, Rule 66. It was also held that the order for sale of more land than necessary also showed non-application of mind. Following the decision in Ambati Narasayya v. M. Subba Rao , it was held that the duty of the Court was to sell only such property or a portion thereof as may be necessary to satisfy the decree and total lack of judicial application of mind renders the sale a nullity and the sale was set aside. In Lal Chand v. VIIIth Addl. District Judge , it was held that the sale conducted without proper notice and publicity was illegal. The decision in Desh Bandhu Gupta’s case was followed for the purpose of holding that the execution Court had to consider whether the entire property was required to be sold or only a portion of it was necessary for discharging the debt.
9. In Ambati Narasayya v. M. Subba Rao , the Supreme Court noticed the usual feature in many execution cases and deprecated the tendency where the Court orders sale of the entire property instead of selling only such property or a portion thereof as necessary to satisfy the decree. It was held that it was a mandate of the legislature which could not be ignored. In spite of the strong remarks made by the Apex Court, we also find that in many cases the execution Court mechanically and as a matter of course put the property for sale without examining the question whether the entire property is required to be sold and even when there are several items put up for sale, whether all the items should be sold on the same day or whether sale of some items should be postponed by selling only a few items. When the sale proclamation is settled as in this case, no attempt is made to give the details of the land in such a way as to identify the same by the public especially with reference to the importance of the locality or the nearness to the National Highway or important junction in the city.
10. In Shalimar Cinema v. Bhasin Film Corporation , the Supreme Court emphasised the duty of the Court to see that the requirements of Order 21, Rule 66 are properly complied with. It was observed that it was not 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 makes its valuation and enter it in the sale proclamation. 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. Where there is illegality committed in conducting Court sale, it was held by the Supreme Court in Nani Gopal Paul v. Prasad Singh that the appellate Court could not remain a mere spectator to obvious and manifest illegality. The learned Counsel for the auction-purchasers relied on the decision of the Supreme Court in Rajender Singh v. Ramdhar Singh and contended that mere inadequacy of price is not a sufficient reason to set aside the sale. That was a case where there was no allegation with regard to fraud or material irregularity in publishing or conducting the sale and hence that decision will not help the auction-purchasers.
11. A reading of Order 21, Rule 67 will show that application of mind by the Court is required while making the proclamation especially when there are more items than one for sale. Sub-rule (3) of Rule 67 makes it clear that where property is divided into lots for the purpose of being sold separately it shall not be necessary to make separate proclamation for each lot unless proper notice of the sale cannot in the opinion of the Court otherwise be given. In this case, P.W. 2 who effected notice of the proclamation has admitted that he himself has not understood as to which were the items scheduled for sale. To quote his own words, he said as follows:
(Vernacular text omitted… .Ed.)
In the light of the above evidence, it is clear that even the person who affixed the notice has not understood the properties put up for sale separately and since it was lying as a contiguous area as per the document and the same was produced in the sale proclamation, the publication of notice was not made in such a way as to help the intending purchasers to identify the property properly. That is clear from the evidence of P.W. 1 wherein he has stated that the roads and open spaces are also included in the sale proclamation regarding the property to be sold and were sold without specifically stating such particulars in the sale proclamation and, therefore the intending purchasers were prevented from identifying the property.
12. There is no necessity for much argument to come to the conclusion that the properties were put up for sale without any application of mind. That is evident from the fact that the properties already sold and properties over which attachments were lifted were also included in the sale proclamation and then the auction-purchasers themselves were compelled to file petitions to set aside the sale alleging fraud and material irregularity in publishing and conducting the sale. In fact out of seven items, sales were already set aside with respect to five items. It may be noticed that there was no separate sale proclamation with respect to each item. The sale was conducted on 2-12-2000. In the petition, it was wrongly typed as 12-2-2000 which is one of the reasons given by the Court below to dismiss the application.
13. The learned Counsel for the auction-purchaser, Sri V. Giri, relied on the decision of the Supreme Court in Kadiyala Rama Rao v. Gutala Kahna Rao (2000) 3 SCC 87 and argued that as per Sub-rule (3) of Order 21, Rule 90, no application to set aside a sale could be entertained on a ground which the applicant could have taken on or before the drawing of the proclamation of sale and in case he failed to take such objection at the appropriate time, he would be debarred from raising it in an application to set aside the sale. How far the decision of the Supreme Court in Kadiyala Ram Rao’s ((2000) 3 SCC 87) will apply to the facts of this case can be considered only after discussing the facts of this case in detail.
14. The execution petition was filed on 31-5-1997 and the Court ordered notice under Rule 22 of Order 21 on 11-6-1997 and posted the case to 26-9-1997. On that day it was adjourned for objections to 26-11-1997. It was again adjourned to 27-1-1998 and to 30-5-1998. On that day, since no objection was filed, the names of judgment-debtors were called and they were absent and the case was posted for further steps to 30-7-1998. The execution petition was adjourned to cure the defects to 3-10-1998 and then to 4-12-1998. On 4-12-1998 notice under Order 21, Rule 66 was ordered. After adjournments, awaiting return of notice, the case was called on 8-9-1999 on which day the Judgment-debtors prayed for time for objection and since objection was not filed on that day, the case was posted for settlement of proclamation to 19-1-2000. On 19-1-2000 objection was filed with a petition to receive the same as E.A. No. 83 of 2000. That petition was allowed and objection was received. On 18-9-2000, the execution Court passed the following order.
Heard. I find no merit in the objection. Hence the objection is hereby rejected. Proclamation and sale to 2-12-2000.
Objections raised included the following objections also. “Upset price shown is incorrect. Value of the property is more than 15 crores. The schedule property is more than 5 acres of land. Only a portion of the property is required to satisfy the decree.
No doubt, the objections were very brief. But objections were weighty and valid which the execution Court was bound to take into account while a proclamation for sale was settled. Unfortunately, the execution Court did not consider the objections seriously and ignored them in toto. The result was that the sale proclamation did not even contain the value suggested by the judgment-debtors which is a mandatory requirement under the second proviso to Order 21, Rule 66. The learned Counsel for the auction-purchaser pointed out that the value suggested by the judgment-debtors as 15 crores was for the entire items included in the sale proclamation and when the upset price fixed in the draft sale proclamation submitted by the decree-holder shows separate amounts for each item the judgment-debtors should have suggested the valuation for each item in the objection and should not have given the total valuation for the entire items. It is, no doubt, true that the judgment-debtors could have separately shown the value of each item in the objection. But the absence of such objection for each item was not sufficient for the execution Court to ignore the objection as a whole. Order 21, Rule 67(3) states that where property is divided into lots for the purpose of being sold separately, it shall not be necessary to make a separate proclamation for each lot unless proper notice of the sale cannot, in the opinion of the Court, otherwise be given. Therefore, if one proclamation is sufficient for all the lots, the judgment-debtors could not be found fault with for suggesting the value of all the plots together. In the order dated 18-9-2000, overruling the objection, a mistake has crept in on two aspects. Firstly, the Court did not incorporate the value of the property as suggested by the judgment-debtors in the sale proclamation and secondly the execution Court did not consider the question whether the entire properties were required to be sold at a time and whether it was sufficient to sell a portion of the property to realise the decree debt. It is evident from the subsequent events that the amounts realised by sale was much more than the amount claimed in execution petition and when there were admittedly several plots to be sold, it was necessary for the execution Court to consider whether it was necessary to sell all the plots together on the same day or not. Though the amount for which the execution petition was filed was Rs. 37,17,274/-, the amount realised by sale of seven items on a single day is Rs. 49,50,000/-. When the judgment-debtors pointed out that the property was worth Rs. 15 crores and was having 5 acres in extent it was unnecessary to sell the entire property. The execution Court did not consider this aspect at all while ordering sale. This is indicative of the fact that there was no proper application of mind by the execution Court when sale was ordered.
15. It is in the above background that the question whether the decision in Kadiyala Rama Rao’s case (2000) 3 SCC 87 will help the auction-purchasers to sustain the auction in their favour. That was a case where the High Court in revision has set aside the sale in a case where before the execution Court there was no objection raised with regard to the sale of the property and therefore there was a bar under Sub-rule (3) of Rule 90 of Order 21. If the objection was not taken at the appropriate time, sale cannot be set aside on such objections subsequently. But in this case objection was taken and since it was not considered properly and sale was ordered Sub-rule (3) of Rule 90 of Order 21 had no application and it would not stand in the way of the judgment-debtors filing an application to set aside the sale on the ground of fraud or material irregularity in publishing or conducting sale. Therefore, the decision relied on by the learned Counsel for the auction-purchaser has no application to the facts of the case.
16. There is also a contention that the proclamation was not affixed in the office of the District Collector. It is admitted by P.W. 2 that no such notice was affixed in the office of the District Collector. According to the learned Counsel for the auction purchaser the same is not required under the rules available in Kerala. A Division Bench of this Court has considered this question in Harishankar v. Syndicate Bank of India ILR 1996 (1) Kerala 756 and held that publication of notice in the Collector’s Office is mandatory after the amendment of Order 21, Rule 54(2) of the Code of Civil Procedure in 1976. According to the learned Counsel for the auction-purchaser, there was no amendment of Order 21, Rule 54(2) of the Code of Civil Procedure with respect to the publication of notice in the Collectorate in 1976 amendment and therefore this decision requires reconsideration. According to us, this point is no longer res integra as the controversy is set at rest by the authoritative pronouncement of the Supreme Court in Ganpat Giri v. IInd Addl. District Judge, Balia AIR 1986 SC 589 where the Supreme Court has held as follows:
11. Now reverting to Section 97(1) of the Amending Act, the High Court was in error in holding that because no amendment had been made to Rule 72 by the Amending Act, Section 97(1) had no effect on the Rule was it as in force in the State of Uttar Pradesh before the commencement of the Amending Act. As observed earlier, the effect of Section 97(1) is that all local amendments made to any of the provisions of the Code either by the State Legislature or by a High Court which were inconsistent with the Code as amended by the Amending Act stood repealed irrespective of the fact whether the corresponding provision in the Code had been amended or modified by the Amending Act and that was subject only to what was found in Sub-section (2) of Section 97. Sub-section (3) of Section 97 provides that save as otherwise provided in Sub-section (2) the provisions of the Code as amended by the Amending Act shall apply to every suit, proceeding, appeal or application pending at the commencement of the Amending Act or instituted or filed after such commencement notwithstanding the fact that the right or cause of action in pursuance of which such suit, proceeding, appeal or application is instituted or filed has been acquired or had accrued before such commencement. Sub-section (3) of Section 97 sets at rest doubts, if any, by making the Code as amended by the Amending Act applicable to all proceedings referred to therein subject to Sub-section (2) of Section 97.
12. The High Court was therefore in error in holding that the amended Rule 72 of Order 21 prior to February, 1977 continued to be in force after that date and that the Court sale held in which the decree-holder had purchased the property without the express permission of the executing Court was unassailable under Sub-rule (3) of R. 72.
It may be true that even if there is some such irregularity it may not be sufficient to set aside the sale unless serious prejudice is caused to the judgment-debtors by such irregularity. This aspect will be discussed while considering point No. 2.
17. The learned Counsel for the contesting respondents pointed out that the auction purchasers purchased the property at a much higher value than the value fixed by the Court and that will show that the sale was conducted properly. In fact the execution Court has accepted this argument and found the sales to be proper. According to us, the reasoning of the execution Court is not correct. The fact that the properties were purchased for a value several times higher than that of the upset price fixed by the Court, itself is evidence of the fact that the execution Court did not apply its mind while adopting the valuation given by the decree-holder in the sale proclamation. While the upset price for item No. 6 was fixed by the Court at Rs. 3,50,000/-, the property was sold for Rs. 10,60,000/-. Item No. 6 is having an extent of 1 acre and 13 cents. Item No. 2 is having an extent of 27 cents and it is sold for Rs. 2, 45,000/- and the upset price fixed was Rs. 1,00,000/-. The vide disparity between the upset price shown in the sale proclamation schedule and the real value of the property shows that there was no proper application of mind while settling the proclamation. In Muthuraj (Minor) v. Ramaswamy Kounder ILR 2006 (1) Kerala 466, a learned single Judge of this Court has taken note of the previous decisions of the Supreme Court on this point and has held that the Court has a duty to consider whether it is necessary to bring to sale the whole of the attached property or to sell such portion thereof as to be sufficient to satisfy the decree debt. It is unnecessary to multiply decisions on this point as it is well settled that the Court has to apply it’s mind while settling the proclamation to see that the property put up for sale is identifiable with reference to it’s special features and the price fixed is a proper price and even if the Court does not fix it’s own price to include the price suggested by the judgment-debtor in the sale proclamation and also to see whether the entire property is required to be sold for satisfying the decree or whether only a portion of the property is sufficient to be sold for such satisfaction. It is especially so in cases where there are several items to be sold, the Court has to decide whether it is necessary to put all the items for sale on a single day consecutively or whether a few items can be sold first to see whether the decree satisfies with such sale. All these would require application of mind by Court and it should not be done mechanically. On the facts of this case, we have no doubt in our mind that such application of mind was not made by the execution Court before approving the sale proclamation and directing the sale of the properties. On this ground, we are of opinion that there is serious irregularity in publishing the sale proclamation and effecting the sale. This point is therefore found in favour of the appellants.
Point No. 2
18. It is true that even if there is violation of some of the conditions in publishing and conducting the sale, the sale cannot be set aside unless substantial injury is caused to the judgment-debtor. The judgment-debtor has given evidence in this case and also produced Exts. A1 to A6. The evidence of P.W. 1 would show that even according to the decree-holder’s own lowest estimate, the value of the property was Rs. 40,000/- per cent. Ext. A3 is the agreement dated 30-3-1996 agreeing to sell 2.43 acres for one crore of rupees which will work out to approximately Rs. 40,000/- per cent. As per Ext. A4 agreement, as early as in 1990, the judgment-debtor was permitted to sell the property at a rate not less than Rs. 20,000/- per cent. Ext. A5 is a notice by the Sub Registrar stating that the real market value of the property sold by the appellants in Sy. No. 498 is Rs. 9,00,000/- for 6.07 acres and balance stamp duty is to be paid by the purchaser. It also shows that the value of the property was Rs. 60,000/- per cent. The judgment-debtor has also given evidence to show that if there was vide publicity the property would have fetched Rs. 1.60 lakhs per cent since the properties are situated in a very important locality in Ernakulam City. Ext. A6 is an agreement for sale of 40.280 cents of land on 16-1-1998 at the rate of Rs. 1.25 lakhs per cent. It is also stated in the proof affidavit of P.W. 1 that out of this, the judgment-debtor got released 38.980 cents from attachment by Court as per the order dated 27-1-1998 in E.A. No. 90 of 1996 and handed over possession of the property to the purchaser on receipt of Rs. 42,15,000/-. That will show that the property was worth more than 1.2 lakhs per cent. The auction purchasers have met this argument in two ways. First, they contend that these agreements are time barred agreements and the agreements are not properly proved by producing the originals. The agreements produced are the agreements between the judgment-debtor and the decree-holder. The learned Counsel for the decree-holder did not dispute the genuineness of these agreements. In fact it is admitted in the affidavit filed in the execution Court. Therefore there is no necessity to doubt its genuineness. When the property was released by the order of Court and sold to the purchaser and substantial portion of the decree debt is wiped out, there is no necessity to doubt the claim of the judgment-debtors that the properties were sold at a very high price and the entire decree debt was wiped out. The properties which are the subject-matter of Exts. A1 to A4 and A6 are properties in the same Silver Sand Island. Moreover, the agreements produced are attested by a Notary Public and the auction purchasers, who are total strangers cannot question them. Mr. Jacob Varghese, the learned Advocate appearing for the 2nd respondent in F.A.O. No. 14 of 2005 has argued that even if Ext. A1 is relied on it will show only the land value at Rs. 7,000/- per cent and the properties were sold for price above it. But it has to be remembered that Ext. A1 is dated 20-9-1990 and the sale in Court auction is in 2000. The private bridge connecting the Island with the main road has come into existence only after Ext. A1 and the attraction for the property was realised only thereafter. Ext. A2 is also between the judgment-debtors and decree-holder and it is dated 31-10-1991. It also shows the value shown is Rs. 7,000/- per cent. It also speaks about the proposal for construction of the bridge mentioned earlier in this paragraph. The subsequent development of land into housing plots cannot be ignored in this context.
19. Secondly, the respondents also relied on Exts. B1 to B4 sale deeds relating to adjacent properties where the properties were sold at very low price. According to them, these documents would show that the properties purchased by them are not at all valuable properties as contended by the judgment-debtors. Apart from producing these documents, nobody is examined to prove the documents. The mere production of these documents itself will not be proof of their contentions. It is only when either the executant or executee is examined that it could be brought out whether the consideration shown was the real consideration of the property or whether there was distress sale etc. In the case of Exts. A1 to A4 and A6, the judgment-debtor has been examined and he is a party to the agreement and he is competent to prove the same. The decree-holder did not dispute the genuineness of these agreements. Therefore, the evidentiary value to be given to Exts. A1 to A4 and A6 is more than the evidentiary value which can be given to Exts, B1 to B4. In fact, Exts. B1 to B4 are not proved at all and we find no reason to rely on them. It can thus be seen that the properties which are purchased by the auction purchasers are very valuable properties and the price fetched in the sale for item No. 6 is only Rs. 9, 380/- per cent and for item No. 2, 9074 per cent which has no comparison with the real value of the property as is clear from Exts. A1 to A4 and A6 agreements and the evidence of P.W. 1, Therefore, we have no doubt in our mind to hold that substantial and serious prejudice has been caused to the judgment-debtors by the sale of the property in Court auction and that such prejudice was on account of the irregularity in publishing and conducting the sales as held while discussing point No. 1. It is therefore a fit case where the sales have to be set aside. The decision of the execution Court to the contra is only to be set aside and we allow E.A. No. 185 of 2001 and hold that the auction purchasers did not get any right under the sale conducted on 2-12-2000. Though we hold that the sales are liable to be set aside, we are aware that the auction-purchasers have been put to serious prejudice by setting aside the sale and we propose to compensate the auction-purchasers properly and the same can be discussed at the end of this judgment after considering F.A.O. No. 14 of 2005 which is also relating to sale of the properties of the same judgment-debtor by execution of the award in Arb. O.P. No. 38 of 1994.
F.A.O. No. 14 of 2005.
20. In this appeal also, the same judgment-debtors as in F.A.O. No. 17 of 2005 are the appellants. The properties involved are also situated in the same Silver Sand Island. The reasons for setting aside the sales are also mainly as discussed in that case and therefore we do not want to repeat the same in this case. We adopt all the relevant discussions of that case for this case also. But there are some differences in the date of sale, confirmation etc. and the properties sold and hence we will deal only with those aspects in this part of the judgment. This appeal is filed against the order in E.A. No. 427 of 2000 in E.P. No. 372 of 1995 in Arb. O.P. No. 38 of 1994. In this case also, the judgment-debtors have fully discharged their debt to the decree-holder by settlement and the decree-holder is not interested in getting the sale made absolute as the decree was satisfied otherwise than by sale of the properties and full satisfaction recorded. But as already stated, it is not a sufficient reason to set aside the sale so long as the interests of the auction-purchasers are concerned.
21. In this case, the sale was conducted on 23-3-2000 of five items. The 2nd respondent was the successful bidder in respect of items 1 and 3 and 3rd respondent was the successful bidder in respect of item No. 2. 4th respondent purchased item No. 4 in Court auction and decree-holder purchased item No. 5. With respect to item No. 5, the decree-holder submitted that there was no objection for setting aside the sale and it was set aside.
22. The judgment-debtors filed E.A. No. 427 of 2000 to set aside the sale on the ground of fraud and material irregularity in publishing and conducting the sale. The E.A. was dismissed for default on 26-9-2000 and sale was confirmed and E.P. closed. Thereafter the petitioners filed E.A. 930 of 2000 to review and restore the E.A. which was dismissed for default since the property was directed to be delivered. In the meanwhile, the petitioners filed O.P. No. 22567 of 2002 and this Court directed E.A. No. 930 of 2000 to be disposed of before effecting delivery. After hearing the parties on both sides, the execution Court allowed E.A. No. 930 of 2000 and restored E.A. No. 427 of 2000. According to the learned Counsel for the appellants, the legal effect of restoration of the E.A. is that the order of confirmation of sale will stand set aside. A Division Bench decision of this Court in State Bank of Travancore v. Mastan Kunju is also relied on for this purpose. In view of the above decision of the Division Bench, It should be taken that the confirmation of sale effected on 26-9-2000 stood vacated when the application to set aside the sale was restored. It is contended that the officer of the Court did not affix the sale proclamation in the properties or in the public offices. The properties were situated in a very important locality which is less than 500 metres away from Vyttila Junction.
23. In E.P. No. 372 of 1995, the petitioners had filed E.A. No. 90 of 1996 for lifting the attachment of certain properties situated in Sy. No. 499 of Nadama Village which are enumerated in page 2 of the affidavit in support of E.A. No. 427 of 2000. Attachment of 9 items was lifted. According to the petitioners, without further attachment and modification of the order dated 27-1-1998 in E.A. No. 90 of 1996 portions of the properties in respect of which attachment was lifted are brought to sale. In items 1 and 2, situated in Sy. No. 499 an extent of 8.44 cents is set apart for roads and open space and was being used as road since 1989. The decree-holder was very well aware of the existence of the road and open spaces which were part of the development scheme. The properties sold included the properties released by decree-holder under registered documents. The sale proclamation did not show any of the details as mentioned above. Portions of the properties were already sold to strangers. The properties were not shown adequate price and there was no proper publication of sale. The various items were incapable of separate identification and sale proclamation was effected without identification. Notice was not affixed in the property or in public office. The valuation given in the sale proclamation was very low and one item alone was sufficient to be sold for the entire debt. The sale has not even fetched 10 per cent of the market value of the properties.
24. Separate objections were filed by the auction purchasers. It is pointed out that these objections should have been taken while settling proclamation and the petitioners/judgment-debtors cannot raise these objections after the sale is over. It is also alleged that there is collusion between the petitioners and the decree-holder. After confirmation of sale is made substantial amount has been spent for purchase of stamp paper and other matters and the reasons stated by the petitioners are not sufficient to set aside the sale. The third respondent also filed objections denying material irregularity and fraud as alleged by the petitioners.
25. The proceeding paper in E.A. No. 427 of 2000 shows that the parties at one stage agreed for setting aside the sale subject to fixing of actual amount to be paid and finally the parties could not agree on the rate of interest and the matter was heard and disposed of.
26. In this case also, there is specific contention in the objection to Rule 66 notice which reads as follows:
The total decree amount including interest is Rs. 36,14,950/-. The properties sought to be proclaimed for sale is 3 acres 81 cents and 460 square links and 1/10 undivided share in 22.28 cents in Sy. No. 486 together with a flat bearing No. 1A of Silver Nest Apartment. The upset price shown by the decree-holder is Rs. 23 lakhs. The market value of schedule No. 5 is 25 lakhs. The market value of 1 cent of land in the locality is Rs. 3 lakhs. The upset price quoted by the decree-holder is grossly inadequate. The sale of the entire property is not required for satisfying the decree. The sale of item No. 5 in the schedule is enough to wipe off the entire decree amount.
The objection is dated 13-12-1999. The execution Court had ordered on 29-10-1999 that proclamation was settled. The properties were proclaimed for sale on 14-12-1999. Since there were no bidders, sale did not take place. The appellants filed E.A. Nos. 1331 of 1999 and 1332 of 1999 to receive objections and to review the order directing the properties to be sold. Those petitions were dismissed. The Court ordered “proclaim again and sell on 23-3-2000 and report on 27-3-2000”. There was no opportunity granted to file objection for the fresh proclamation. Though the earlier objections which was refused to be accepted was there, it was not looked into. Has the judgment-debtor got a right to file objection as and when fresh proclamation is ordered ? The first proviso to Order 21, Rule 66 gives an indication that it is not. But if there is any change in the sale proclamation then it may have to be allowed afresh after hearing objections. But this will not stand in the way of the judgment-debtor in contending that there was no proper publication and if it is found that the property did not fetch the real value, it will be a ground to set aside the sale. P.W. 1 has given evidence that the notices of attachment was not effected in the property.
27. In the application filed under Order 21, Rule 90, CPC, it is specifically contended that the attachment of certain items was already lifted by order dated 27-1-1998 in E.A. No. 90 of 1996.
28. The learned Counsel for the auction-purchasers contended that there was no specific pleading in the application with regard to the non-affixure of the notice of sale proclamation in the property as well as in the public offices. It is true that in the application the contention was that there was no proper publication of sale proclamation. In what way it was improper was not stated in the application but only in evidence. The petitioners in fact filed E.A. No. 380 of 2003 seeking permission to take additional grounds in E.A. No. 427 of 2000 and In the affidavit in support of that petition, it was stated that there was no publication of the sale proclamation in the village office or the Municipal Office and the Court. The witnesses who attested the papers had not in fact seen the officer affixing the sale papers. In that affidavit it was also stated that even the decree-holder had entered into an agreement on 30-3-1996 for purchase of the property at Rs. 40,000/- per cent and therefore the price fetched was very low. A counter-affidavit was filed opposing the application for taking additional grounds for setting aside the sale. Since the application to review the order passed in E.A. 427 of 2000 was not disposed of, in fact the petitioners had approached this Court by filing O.P. No. 22567 of 2002 and this Court directed the application to be considered and appropriate orders passed. It was thereafter that the execution Court passed the order on 7-12-2002 and the execution Court allowed E.A. No. 930 of 2000 and E.A. 427 of 2000 was restored to file for deciding the case on merit on payment of Rs. 1,000/- each to respondents 1 to 4 as costs. When the E.A. came up for hearing, the execution Court passed another order on 24-6-2003 directing all the contesting parties to report as to whether they were amenable for the suggestions made by the decree-holder for a settlement. It was thereafter that the judgment-debtors and the decree-holder arrived at a compromise and the same was recorded by the execution Court as per order dated 4-9-2003. On 12-11-2003, the judgment-debtors filed E.A. No. 1963 of 2003 for appointment of an Advocate-Commissioner for examination of a witness and recording evidence in E.A. No. 427 of 2000. After that it was stated that some of the auction-purchasers have settled their disputes with the judgment-debtors by accepting interest at the rate of 6% on the auction amount if paid within 9 months or at 12% in case the amount was not paid within that period. Respondents 2 and 4 have however claimed large amounts by way of compensation which are unreasonable and judgment-debtors cannot pay such huge amounts. Objections have been filed by Alphonse Joseph one of the auction-purchasers stating that he claimed only 14% interest. It is in this background that the Court has to consider whether there has been a proper publication of the sale proclamation and whether the property sold has fetched a reasonable price. P.W. 2, the process server has admitted that he did not affix the notice of sale proclamation in the office of the District Collector. He also admitted that he could not identify the properties with reference to the survey number and there was nobody from the Village Office to assist him for such identification. Though he stated that it was the decree-holder who helped him to identify the property, he could not say as to who came from the side of the decree-holder to assist him and how he showed the property intended for sale. He did not remember the name of the person who helped him to identify the property. Though there were five items for sale he did not know as to which item was shown to him and notice was affixed in which item. There were no boundaries visible for each item. With regard to the publication in the Village Office as well as in the Municipal Office, he gave evidence to the effect that notices were served to the concerned officers. According to the learned Counsel for the auction purchasers, that was the usual practice as the concerned officer has to affix the same in the notice board and the Court Amin cannot do it. There may be some merit in that contention. But admittedly, he has not properly affixed notice of sale proclamation either in the property or in the office of the District Collector. His evidence has to be read along with the evidence of P.W. 1, the judgment-debtor to the effect that the boundaries shown in the sale proclamation were wrong, misleading and incorrect and affixing of the sale proclamation in the properties was impossible without identifying the properties. The importance of the property was not discernible from the sale proclamation. There was gross under valuation of the property put up for sale and the execution Court also did not consider the question whether all the items were required to be sold for the decree debt.
29. After hearing the learned Counsel for the auction purchasers and the learned Counsel for the judgment-debtors, we are of the opinion that the execution Court did not apply its mind before selling the properties either with regard to the upset price fixed for each item of property or on the question whether there was any necessity to sell all the items together when the properties to be sold were having large extent. It is now clear that there was no necessity for such sale as the sale amount was more than 51.2 lakhs whereas the decree amount was only Rs. 28,94,950/-. There was not even an order to stop the sale as and when the decree amount was realised as there were five items to be sold.
30. With regard to the valuation of the property, the documents produced by both sides are more or less the same as those produced in Arbitration O.P. No. 2 of 1995 and we have discussed in detail about the real value of the property on the basis of the documents produced by the judgment-debtors and found that the contention of the judgment-debtors that the market value in 2000 for the properties sold was Rs. 1,25,000/- whereas the properties were sold for Rs. 19,389/-, Rs. 11,908/-, Rs. 6,302/- and Rs. 8,488/- per cent for items 1 to 4 respectively. At any rate, as we have found in F.A.O. No. 17 of 2005, as early as in 1996 the properties were agreed to be sold at the rate of Rs. 40,000/- per cent, it is not necessary to repeat the evidence again in this case and it is sufficient to note that the judgment-debtors have suffered serious prejudice on account of the material irregularity in publishing and conducting the sale and therefore the sales are liable to be set aside.
31. In view of the finding on the validity of the sale, we do not want to consider and decide the question whether the sale can be set aside in part only.
32. Though we have found that the judgment-debtors have made out a clear case for setting aside the sale under Order 21, Rule 90, we cannot ignore the fact that the money belonging to the auction-purchasers and deposited in Court pursuant to the Court auction did not carry interest and they have been deprived of the benefit of such amount ever since the date of sale. Therefore, they are entitled for suitable compensation in the event of the sale being set aside. In fact, when the matter was pending before the execution Court, they were also willing to settle the disputes and the parties could not agree on the rate of interest. If the properties are so much valuable properties and the judgment-debtors are to benefit by setting aside the sale they must also be prepared to compensate the auction purchasers suitably. The auction-purchasers are also entitled for getting the expenses incurred by way of stamp duty and other expenses. Therefore, we have to provide for such payment of interest and costs as a condition precedent for setting aside the sales. Having heard the learned Counsel on both sides, we feel that the interest of justice will be met if the judgment-debtors are directed to pay 18% interest on the amounts deposited by the auction-purchasers from the date of deposit till repayment. They will also be entitled for the value of the stamp paper, if any, purchased pursuant to the Court sale and other expenses. The cost in the execution application including the value of the stamp duty if any paid will be calculated and statements filed by the auction purchasers within one month of the posting of the case before the execution Court and the judgment-debtors will deposit the amount along with interest calculated at 18% of the purchase price within one month thereafter and on such deposit they will be refunded the amounts deposited by them as well as the interest and costs deposited by the judgment-debtors and then alone the sales will stand set aside.
In the result, both the appeals are allowed and the orders under challenge are set aside on condition that the appellants will deposit for payment to the auction-purchasers who are the contesting respondents in these appeals amounts calculated at 18% interest on auction amount in Court auction for each item along with the cost in the execution applications inclusive of the amount spent on stamp duty within one month of the filing of the statement by the auction-purchasers showing the amount of cost suffered by them. If there is any dispute with regard to the actual amount to be deposited by way of costs, stamp duty or interest the same has to be resolved by the execution Court, The execution applications are sent back to the execution Court only for the purpose of quantifying the amount of interest and cost. The appellants will have to deposit the interest portion within one month of the date for appearance in the execution Court and the balance amount of cost-within one month of the filing of the statement by the auction-purchasers or within one month of the Court deciding the correct amount of cost and other expenses spent by the auction-purchasers. Only if there is dispute with regard to the cost portion, correct amount may be fixed by the execution Court after hearing both sides. The parties shall bear their costs in these appeals. The parties shall appear in the execution Court on 25-5-2006.