The undervaluation of property and violation of the SARFAESI Act, 2002 can be grounds for setting aside a sale.

ORDER :

Leave granted.

2. We have heard learned counsel for the parties finally.

3. The facts in brief which need to be noted for the purpose of disposal of this appeal are that the appellant is a judgment debtor against whom decree dated 31st January, 2001 was passed by the Court of Civil Judge, Senior Division, Amravati, Maharashtra. This decree was passed in favour of respondent No. 2 who was the plaintiff in the said suit. Respondent No. 2 had filed the suit on the ground that the appellant had taken a loan of Rs.1,00,000/- from him which was not returned. The suit was filed for the recovery of Rs.1,16,520/-. Decree for the aforesaid amount was passed along with interest at the rate of 6 per cent per annum from the date of decision of the suit till the realization of the said amount. However, the appellant did not pay the money and, therefore, respondent Nos. 2 was forced to file execution petition in the Civil Court. In the said execution petition, property belonging to the appellant, i.e., agricultural land bearing gut No. 53/2/A at Mouza Nimghora admeasuring 40 R, was attached. This property was ultimately auctioned by the Court. Respondent No. 1 was one of the bidders whose bid was highest in the sum of Rs.5,50,000/- which was accepted by the Court. We may note at this stage that the aforesaid execution proceedings were ex-parte as the appellant did not appear. However, in July 2009, application for setting aside of the sale was filed. As the appellant had approached the Court after five years, he gave the explanation for this delay by contending that he was under mental depression and, therefore, could not maintain any contact with his counsel and moreover his counsel had not informed him about the progress of the case and, therefore, he was not having any knowledge of sale of his land by public auction and the issuance of sale certificate by the trial Court in favour of respondent No. 1. He also submitted that the actual value of the land was Rs.64,60,000/- which was sold at a partly sum of Rs.5,50,000/- and therefore, it was an unconscionable sale. The Trial Court vide orders dated 30.07.2009 dismissed the said application. Aggrieved thereby, the appellant filed Miscellaneous Civil Appeal before the court of District Judge, Amravati. This appeal was allowed by the District Judge vide orders dated 27.06.2012 primarily on the following grounds:

(a) no public notice was issued inviting general public;

(b) the valuation report filed on record states that the value of the land is more than one crore whereas the same has been sold for Rs.5,50,000/-;

(c) the boundaries of the land has been altered in the sale certificate without even attaching the property;

(d) the sale certificate is not in the name of the highest bidder present at the bidding; and

(e) the sale certificate has been issued in name of a person who never participated in the auction proceedings.

4. This judgment of the District Judge was challenged by respondent No. 1 by filing Civil Revision Application in the High Court. The High Court has, by the impugned judgment dated 04.12.2013, allowed the revision application thereby setting aside the order of the District Judge and restoring the orders passed by the Executing Court. It is in this backdrop that this Court is concerned with the validity and correctness of the sale.

5. Though there may be some dispute as to what was the actual value of the property that was sold in auction at the time of sale, it could not be disputed at the Bar that actual value of the property in question was much more than Rs.5,50,000. We also find that no proper valuation was done of this property at the time of sale. In fact, the valuation report filed by the appellant shows that it is more than Rs.1 crore, as observed by the learned District Judge. This according to us, is sufficient ground to set aside the sale. While doing so, we are supported by the following observations of this Court in ‘J. Rajiv Subramaniyan and Anr. v. Pandiyas and O