2021 Supreme(SC) 79

SUPREME COURT OF INDIA
ASHOK BHUSHAN, R. SUBHASH REDDY, M.R. SHAH, JJ.
H.S. Goutham – Appellant
Versus
Rama Murthy and Another – Respondents
Civil Appeal Nos. 1844, 1845 of 2010
Decided On : 12-02-2021

IMPORTANT POINTS
(1) When fraud is alleged same is required to be pleaded and established by leading evidence. Mere allegation that there was a fraud is not sufficient.
(2) Where any immovable property has been sold in execution of a decree, decree-holder, or purchaser, or any other person entitled to share in a rateable distribution of assets, or whose interests are affected by sale, may apply to Court to set aside sale on the ground of a material irregularity or fraud in publishing or conducting.

Headnote:

(A) Civil Procedure Code, 1908 – Order XXI read with Rule 90 and Order XXI read with Rule 47 and Section 151 – Execution of decree – Objection by judgment-debtor – Executing Court dismissed application preferred by judgment debtors under Order XXI Rule 90 read Section 47 C.P.C. praying for setting aside Court auction sale – All through-out there was a delay and negligence on part of judgment debtors in not initiating appropriate proceedings at appropriate stage – Order overruling objections submitted by judgment debtors to the effect that judgment was obtained by fraud and misrepresentation was not challenged by judgment debtors till mortgaged property was auctioned; sale of mortgaged property was confirmed in favour of auction purchaser and even sale certificate was issued in favour of auction purchaser and sale was registered with Sub-Registrar – As per Order XXI Rule 92 read with Order XXI Rule 94 of CPC, once sale is confirmed and sale certificate has been issued in favour of purchaser, same shall become final – Executing Court was justified in overruling the objection that decree was obtained by fraud and misrepresentation – When fraud is alleged same is required to be pleaded and established by leading evidence – Mere allegation that there was a fraud is not sufficient – Subsequent order passed by High Court calling for report from Principal City Civil Judge on the question whether decree was obtained by fraud or not, can be said to be giving an opportunity to judgment debtors to fill in lacuna – Course adopted by High Court calling for report from Principal City Civil Judge cannot be approved – Unless and until procedure under Order XLI Rules 27, 28 and 29 are followed, parties to appeal cannot be permitted to lead additional evidence and/or appellate court is not justified to direct court from whose decree appeal is preferred or any other subordinate court, to take such evidence and to send it when taken to Appellate Court – High Court has committed error in relying upon report submitted by Principal City Civil Judge holding that decree was obtained by fraud. (Paras 8, 9, 10 and 11)

(B) Civil Procedure Code, 1908 – Order XXI Rule 90 – Execution of decree – Objection by judgment-debtor – Auction sale of property – Where any immovable property has been sold in execution of a decree, decree-holder, or purchaser, or any other person entitled to share in a rateable distribution of assets, or whose interests are affected by sale, may apply to Court to set aside sale on the ground of a material irregularity or fraud in publishing or conducting it – As per Order XXI Rule 90, application to set aside sale on the ground of irregularity or fraud may be made by decree holder on the ground of material irregularity or fraud in publishing or conducting it – In present case, as such, it is not the case of judgment debtors that there was any material irregularity or fraud in publishing or conducting sale – No such submissions have been made before this Court – Their objection is that decree was obtained by fraud – Application submitted by original judgment debtors under Order XXI Rule 90 was required to be dismissed and was rightly dismissed by Executing Court – Even on merits also and factually, High Court is not correct in observing that auction purchaser was not a bona fide purchaser – Impugned common judgment and order passed by High Court in RFA and CRP quashed and set aside. (Paras 13, 15 and 16)

Facts of the case:

Feeling aggrieved and dissatisfied with the impugned judgment and order dated 16.09.2006 passed by the High Court of Karnataka at Bangalore in RFA No. 274 of 2001, MFA No. 3934 of 2000 and CRP No. 3297 of 2000, the original plaintiff and the subsequent auction purchaser who purchased the property in question in the Court auction in execution proceedings, have preferred the present appeals. Short question which is posed for consideration of this Court in the present appeals is whether in the facts and circumstances of the case, High Court is justified in quashing and setting aside the consent decree on the ground that the same was obtained by fraud, relying upon the report submitted by the Principal City Civil Judge which was called for in the appeal.

Findings of Court:

I.A. No. 4 of 1999 was not filed to set aside the sale on the aforesaid grounds. The said application was submitted on the ground that no proper publication was made to get the adequate market value. Therefore, the High Court has gone beyond the case of the judgment debtors in I.A. No. 4 of 1999. Even on merits also and factually, the High Court is not correct in observing that the auction purchaser was not a bona fide purchaser.

Result : Appeals allowed.