Judgment

KRISHNA IYER, J.:- The appellant in this appeal, by certificate, is the auction purchaser whose sale has been set aside by the High Court in reversal of the decision of the Executing Court which dismissed the application of the judgment-debtor (first respondent herein) under Order XXI, Rule 90, Civil P. C. Although many point were urged and considerable time was taken in the arguments, attention was principally focussed on one issue which we will mainly deal with. Of course, a brief but sufficient reference will also be made to the other points.

2. The Maharashtra State Finance Corporation (for short "the Corporation") plays the role of decree-holder in the present case. It had lent a sum of Rs. 10 lakhs to the first respondent, which is a drum manufacturing private limited company, in May 1961 on the security by way of mortgage of its land, factory buildings plant and machinery situate at Kalwa, District Thana. Respondents 2 and 3 had guaranteed the repayment of the said loan. It is also seen from the facts that in or about 1964 the Dena Bank, now a nationalised institution but not a party to these proceedings, had also advanced to the first respondent a sum of Rs. 20 lakhs presumably on the security of its plant and machinery and raw material stocks, although this aspect is not quite clear from the record and is not perhaps very relevant for the, disposal of this appeal. We would only like to make it clear that the rights and remedies of the said Bank, whatever they are against the appellant or the other respondents, are not dealt with in this appeal.

3. The first respondent which had taken the loan for an industrial purpose defaulted in making repayment and so a notice was issued to it by the fourth respondent, the Corporation, under Section 30 of the State Financial Corporation Act, 1951 (hereinafter referred to as the Act) demanding prompt discharge of the liability under the mortgage and indicating that in default of payment legal proceedings under Section 31 of the Act to realise the dues would be undertaken. No fruitful response was forthcoming and the Corporation, therefore, made an application, Miscellaneous Application No. 75 of 1965, in the District Court against respondents 1, 2 and 3 under Section 31 of the Act, seeking to levy by attachment and sale of the properties covered by the mortgage, the amounts due to it. The total amount recoverable was stated to be a little over Rs. 16 lakhs, but we are not concerned with the figure as it is not in dispute before us.

4. In June 1966 the Corporation moved the Court for the appointment of a receiver to take charge of the properties which had been by then attached and to sell them by Court auction. A receiver was duly appointed, who entered on his duties and took steps for conducting the sale. A proclamation of sale was settled after notice to the parties, on December 5, 1967, and the sale was fixed to take place on January 8, 1968. However, the sale did not take place that day and the happenings thereafter culminating in the sale on September 3, 1969 wherein the present appellant was the highest bidder, and consequent purchases, are the subject-matter of the present appeal.

5. We will take a close-up of certain pivotal events on which the fate of the appeal depends. With the consent of both parties, the Court decided to sell in two lots, presumably because that would fetch a better price, one lot being made up of the land and what was permanently fixed thereon, and the other the plant and machinery. There is no doubt that the items sold are of considerable value, land in that industrial area escalating in price as time passed, the machinery being imported and costly, and the industry for which they were needed being of growing importance for the country. Even so, let us look at the panorama of forensic events as they unfolded from stage to stage. On January 11, 1966 the order for sale was made. Later, the judgment debtor applied for time to negotiate a private sale