1. This civil miscellaneous second appeal arises out of the judgment passed by the Principal Senior Civil Judge, Tenali in AS No.25 of 1997 confirming the order passed by the Principal District Munsif, Tenali in EA No.80 of 1997 in EP 46 of 1997, dated 26-3-1997, whereby the application of the appellants under Order 21 Rule 58 of the Code of Civil Procedure has been dismissed.
2. It is no longer in dispute before me that the first respondent had filed a suit in OS No.255 of 1995 against the second respondent for money decree and the disputed property had been attached before Judgment on 4-8-1995. The first respondent had sent a notice to the appellants after the suit has been decreed intimating about the order of attachment as also of the passing of the money decree. Thereafter, the appellants had filed a suit on the file of the Additional Subordinate Judge, Tenali, in OS 100 of 1995 for specific performance of the contract dated 14-11-1994 against both the respondents and the suit is pending. The first respondent had filed an application for execution in EP 46 of 1996 and the property already attached had been put to sale. Thereafter, the appellants filed EA 80 of 1997 under Order 21 Rule 58 for releasing the disputed property from attachment on the strength of the agreement of sale dated 14-11-1994 alleging that the second respondent had agreed to self the suit property for a sum of Rs.1,60,000/-and had received an amount of Rs.50,000/- and thereafter Rs.70,000/- total Rs.1,20,000/- and had handed over the possession of the disputed property to them and the balance amount of consideration of Rs.40,000/- remains to be paid at the time of execution and registration of the sale deed. Therefore, the disputed property should be released from the attachment. The first respondent through his counter has denied the claim of the appellants. He has alleged that the alleged contract of sale is bogus and has been brought into existence to defeat and delay the realisation of the decretal amount. He has denied that the appellants were in possession of the disputed property. The appellants had knowledge about the attachment before judgment of the disputed property before filing the suit and, therefore, they were estopped from filing objection under Order 21 Rule 58 of the Code of Civil Procedure. It is also alleged that this objection has been filed only to delay the execution proceedings and, therefore, it is liable to be dismissed.
3. The second respondent did not make any appearance in spite of notice and remained absent and, therefore, was set ex parte.
4. It is a mater of record that evidence has not been recorded in this case and after the rejection of the application on 26-3-1997, the attached property had been sold on the same day and the sale has been confirmed in favour of the auction purchaser on 31-8-1998 but the order of confirmation has been suspended by this Court in CMP 15600 of 1998 on 3-9-1998.
5. The executing Court has dismissed the objection on the ground that in spite of knowledge of attachment before judgment, the appellants had not taken any steps for releasing the properly till it has been put to sale and no plausible explanation has been given in the petition though the appellants had alleged to have purchased the disputed property and to have paid substantial amount of consideration and had the sale being genuine, the appellants should have taken steps for raising the attachment of the disputed property earlier.
6. The appellant have challenged the order in appeal but without success. The appellate Court, agreeing with the executing Court, has dismissed the appeal observing that the decree passed in favour of the first respondent cannot be said to be a collusive decree and the second respondent had
participated in the auction of the disputed property after the rejection of the objection which is indicative of the fact that had the agreement been real and genuine, the appellants would have obtained stay order in OS 100 of 1995.
7. After hearing the learned Counsel of the appellants and of the contesting respondent No. 1 and after perusing the record, I am of the opinion that the appeal deserves to be allowed for the reasons stated in the subsequent paragraphs.
8. It would be beneficial to extract Rule 58 of Order 21 of the Code of Civil Procedure.
“(1) Where any claim is preferred to or any objection is made to the attachment of, any property attached in execution of a decree on the ground that such property is not liable to such attachment, the Court shall proceed to adjudicate upon the claim or objection in accordance with the provisions herein contained:
Provided that no such claim or objection shall be entertained –
(a) where, before the claim is preferred or objection is made, the property attached has already been sold; or
(b) where the Court considers that the claim or objections was designedly or unnecessarily delayed.
(2) All questions (including questions relating to right, title or interest in the property attached) arising between the parties to a proceedings or their representatives under this rule and relevant to the adjudication of the claim or objection, shall be determined by the Court dealing with the claim or objection and not by a separate suit.
(3) Upon the determination of the questions referred to in sub-rule (2), the
Court shall in accordance with such determination, –
(a) allow the claim or objection and release the property from attachment either wholly or to such extent as it thinks fit; or
(b) disallow the claim or objection; or
(c) continue the attachment subject to any mortgage, charge or other interest in favour of any person; or
(d) pass such order as in the circumstances
of the case it deem fit.
(4) Where any claim or objection has been adjudicated upon under this rule, the order made thereon shall have the same force and be subject to the same conditions as to appeal or otherwise as if it were a decree.
(5) Where a claim or an objection is preferred and the Court, under the proviso to sub-rule (1), refuses to entertain it, the party against whom such order is made may institute a suit to establish the right which he claims to the property in dispute; but, subject to the result of such suit, if any, an order so refusing to entertain the claim or objection shall be conclusive.”
9. The executing Court is competent to dismiss the objection in limine where it considers that the objection or claim is designedly or unnecessarily delayed, exercising its powers under Clause (b) of proviso to sub-rule (1) of Rule 58 of Order 21 of the Code of Civil Procedure and on that count, refuse to investigate the claim; but if the Court does not exercise the said power, at its inception, in terms of the above provisions, then, under sub-rule (2) of Order 21 Rule 58 of the Code, the executing Court is bound to decide all questions including
the questions relating to right, title or interest in the property attached arising between the parties to the proceeding and relevant to the adjudication of the claim or objection after giving opportunity of enquiry to the rival parties to the objection.
10. In the case of K. Venkarayappa v. Ellen Industries, , a learned single Judge of this Court has held that the Legislature intended that it is a mandatory duty cast on the Court to hold an enquiry. The enquiry thereby posits that an opportunity to be given to the parties to adduce all necessary evidence in support of the claim or to resist such a claim by the opposite party and thereafter to give finality to the objection by that court, subject to a right of appeal provided under sub-rule (4) thereof treating the order thereunder as a decree. The order thus becomes conclusive. Thereby the Legislature has manifested that holding an enquiry in adjudicating the right, title and interest of the objector in dealing with the claim or objection is mandatory and the order passed thereon shall be conclusive.
11. As noted above, it does not appear that the executing Court had given opportunity to both the sides to lead evidence in support of their rival claims. On perusal of Para 5 of the order passed by the executing Court, it appears that the objection has been dismissed on the ground that the appellants had not taken any steps for raising the attachment before the disputed property was put to sale though they had notice about the order of attachment before Judgment before they had instituted the suit in OS 100 of 1995 against both the respondents on the file of the Additional Subordinate Judge, Tenali, for the relief of specific performance, that the agreement of sale in question was not genuine and no reliance can be placed on it, and that the petition has been filed only with a view to drag the execution
proceedings. The appellate Court has found in Paras 10 and 11 of its judgment that the agreement of sale in question is not genuine. Had it been genuine, the appellants would have definitely obtained stay order from the concerned Court in the civil suit OS 100 of 1995.
12. From what is stated above, it does not appear that the executing Court had dismissed the objection under Clause (b) of proviso to sub-rule (1) of Rule 58 of Order 21 of the Code, that is to say only on the ground that the claim was designedly or unnecessarily delayed. Because a finding has been recorded that the agreement of sale in question is not genuine, the order passed must be held to have been passed under sub-rule (2) of Order 21 Rule 58 of the Code of Civil Procedure without holding an enquiry and without giving opportunity to the parties to the objection, but it has straightaway passed the order on merits which, on the face of it, is contrary to the mandatory provisions stated above. Under these circumstances, the impugned order suffers from material irregularity in exercise of its jurisdiction.
13. In the result, the appeal is allowed. The orders passed by the Courts below are set aside. The case is remanded to the executing Court with the direction to hold an enquiry and after giving reasonable opportunity to both the parties to the claim petition, dispose of the same according to law. However, in the circumstances of the case, I leave the parties to bear their own costs. The sale held would be subject to the result of the objection.