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1984 Supreme(AP) 311
Andhra Pradesh High Court
Judges : P.KODANDA RAMAYYA
Penmatsa Janikamma - Appellant
Versus
Atchanata Bulleyya - Respondent
Decided On : 08-24-84
A court sale can be set aside if it is conducted with fraud or mistake, or if there is a gross material irregularity in the conduct of the sale.
Headnote:
AUCTION SALE - FRAUD AND MISTAKE - SALE PROCLAMATION - SALE LIST - UPSET PRICE - ACTUS CURIAE NEMINEM GRAVABIT - COURT'S MISTAKE - SETTING ASIDE SALE - LIMITATION - S. 17, LIMITATION ACT - S. 47, C. P. C. - MAINTAINABILITY OF SUIT - INTEREST - COURT'S POWER TO CORRECT MISTAKE - COURT'S DUTY TO BE SCRUPULOUS IN CONDUCTING SALES.
Fact of the Case:
Plaintiff purchased a property in a court auction. The sale proclamation mentioned the value of the property subject to mortgages at Rs. 100. However, the sale list showed the value of the property at Rs. 15,000 and the bid was started at that amount. The plaintiff was misled into thinking that the property was sold free of encumbrances and participated in the bid. He purchased the property for Rs. 16,500. Later, he came to know that the property was sold subject to mortgages and filed a suit to set aside the sale.
Finding of the Court:
The court found that the sale was conducted with fraud and mistake. The court officer did not announce the encumbrances at the time of auction and the sale list was prepared contrary to the sale proclamation. The court held that the plaintiff was misled into participating in the bid and that the sale was vitiated due to the gross material irregularity. The court also held that the suit was maintainable under S. 47, C. P. C. and that the plaintiff was entitled to interest from the date of the order setting aside the sale.
Issues: 1. Whether the sale was conducted with fraud and mistake? 2. Whether the plaintiff was misled into participating in the bid? 3. Whether the sale was vitiated due to the gross material irregularity? 4. Whether the suit was maintainable under S. 47, C. P. C.? 5. Whether the plaintiff was entitled to interest from the date of the suit?
Ratio Decidendi: 1. The court relied on the evidence of the plaintiff's witnesses and the sale list to conclude that the sale was conducted with fraud and mistake. 2. The court held that the plaintiff was misled into participating in the bid by the court officer's failure to announce the encumbrances and the sale list prepared contrary to the sale proclamation. 3. The court held that the sale was vitiated due to the gross material irregularity of starting the bid at Rs. 15,000 instead of Rs. 100. 4. The court held that the suit was maintainable under S. 47, C. P. C. as the plaintiff was a party to the suit and the claim for possession was a question relating to the execution of the decree. 5. The court held that the plaintiff was entitled to interest from the date of the order setting aside the sale as he was not entitled to the refund of the amount till the sale was set aside.
Final Decision: The court set aside the sale and directed the defendants to refund the amount paid by the plaintiff. The court also awarded interest to the plaintiff from the date of the order setting aside the sale.
( 1 ) DEFENDANTS 1 and 2 are the appellants in this appeal. This suit is laid by the respondent herein, the sole plaintiff for a declaration that the sale held by the court in E. P. No. 35/69 O. S. No. 127/66 on 21-7-70 is null and void or to set aside the sale and direct defendants 1 and 2 to pay the amounts withdrawn by them and also refund the amount in deposit in the court.
( 2 ) THE Plaintiff also filed along with the suit two applications E. A. No. 164/73 in O. S. No. 127/66 under S. 17 of the Limitation Act and also E. A. No. 165/73 under Ss. 47 and 151, C. P. C. praying alternatively to set aside the sale explaining the delay in filing the said application if the suit is held to be not maintainable.
( 3 ) THE plaint allegations in brief are: Defendants 1and 2 obtained money decrees against defendants 3 to 7 and the1st defendant brought the property to sale in execution of his decree subject to three mortgages dated 6-5-60, 7-5-60 and 14-8-63 valued at Rs. 12, 000. 00. Rs. 6, 000. 00 and Rs. 2, 500. 00 respectively and the sale proclamation itself mentioned the value of the property subject to those mortgages at Rs. 100. 00 and the same valuation was shown in the sale affidavit Ex. A-3 also but contrary to that the sale list at the time of auction showed the value of the property at Rs. 15, 000. 00 and hence the bid was started at Rs. 15, 000. 00 and the plaintiff was misled in thinking that the property was sold free of enumbrances as at the time of the auction the encumbrances were not announced and consequently the plaintiff participated in the bid and purchased the property at Rs. 16,500. 00. It is also urged that one M. Jagannadharaju who is related to the 2nd defendant present at the time of the auction encouraged the plaintiff to participate in the bid without disclosing that the property was encumbered and thus the proceedings of sale are vitiated by mistake and fraud and the same is liable to beset aside. The plaintiff also urged that this fact that the property was sold subject to mortgage came to his knowledge only when the plaint filed by one of the mortgagees was served on him, and consequently the delay in filing the application to set aside the sale is liable to be ignored as per the provisions of S. 17 of the Limitation Act if it is found that the suit is not maintainable.
( 4 ) DEFENDANTS 1 and 2 the decree-holders alone contested the suit and the other defendant remained ex parte. They contended that the sale was held in accordance with law and the same is not liable to beset aside.
( 5 ) THE trial court on the relevant issues found that the plaintiff has established fraud and mistake in conducting the sale as the sale was conducted as the court called for bids free of encumbrances and the property was sold disregarding the sale proclamation which fixed the value of the property at Rs. 100. 00 and the plaintiff came to know of this fact that the property was sold subject to the mortgage only when the plaint in O. S. No. 89/72 (the suit filed by one of the mortgagees subject to whose rights the property was sold) was served on him. The court also held that in view of the fraud committed in conducting the sale S. 17 of the Limitation Act was attracted and consequently there is no bar of limitation and the suit is maintainable and consequently decreed the suit as prayed for. Against the said judgment and decree the present appeal is filed by defendants 1and 2.
( 6 ) THE learned counsel for the appellants Sri Prathapa Reddy argued that the sale proclamation Ex. C-2 clearly mentioned all the encumbrances and there is no requirement of law that the officer who conducted the sale must announce that the property is being sold subject to mortgage and the finding of the court below that the court officer while conducting the sale did not announce that the property was being sold subject to the mortgage is not correct and the mistake in the sale list is not fatal, and the part played by Jag
