ANDHRA PRADESH HIGH COURT AT AMARAVATI
Tarlada Rajasekhar Rao, J.
V. S. Rao, Krishna Dist And Other – Appellant
Versus
M/s J Finance Company, Krishna Dist And Other – Respondent
Civil Miscellaneous Appeal No. 160 of 2016
Decided On : 16-02-2023
EXECUTION OF DECREE - ORDER 21 RULE 89 AND 90 OF CPC - SALE OF PROPERTY - SETTING ASIDE SALE - LIMITATION - SUBSTANTIAL INJURY - MATERIAL IRREGULARITY OR FRAUD - NOTICE TO JUDGMENT DEBTOR - REASONS FOR CONCLUSION BY COURTS - JUDICIAL ORDERS MUST BE SUPPORTED BY REASONS RECORDED IN IT - FAILURE TO ASSIGN REASONS OR ASSIGNING INVALID REASONS - REMAND FOR FRESH ADJUDICATION.
Fact of the Case:
Judgment debtor filed an application to set aside the sale of property conducted under Order 21 Rule 54 of CPC, alleging fraud and irregularities in the sale process. The executing court dismissed the application on the ground that the judgment debtor failed to raise objections before the proclamation of sale and did not suffer substantial injury due to the alleged irregularities.
Finding of the Court:
The court held that the executing court erred in dismissing the application without assigning proper reasons and without considering the appellant's contention that the sale was conducted in contravention of the law and procedure, resulting in substantial injury to the appellant.
Issues: 1. Whether the judgment debtor can set aside the sale of property under Order 21 Rule 89 of CPC after the limitation period prescribed under Article 127 of the Limitation Act? 2. Whether the judgment debtor must prove substantial injury to set aside the sale under Order 21 Rule 90 of CPC? 3. Whether the executing court is required to assign reasons for its conclusion in an order?
Ratio Decidendi: 1. The court held that the application to set aside the sale under Order 21 Rule 89 of CPC must be filed within the limitation period prescribed under Article 127 of the Limitation Act. However, the court noted that the appellant had complied with clause (a) of Rule 89 of Order 21 CPC by depositing the sale proceeds in a fixed deposit as directed by the Supreme Court. 2. The court held that the judgment debtor must prove substantial injury to set aside the sale under Order 21 Rule 90 of CPC. The court noted that the appellant had not filed an application to set aside the sale within the stipulated time and had not deposited the amount as contemplated under clause (a) of Rule 89 of Order 21 CPC. 3. The court held that the executing court is required to assign reasons for its conclusion in an order. The court noted that the impugned order did not contain any discussion on the issues raised by the appellant and that the reason assigned by the executing court was not a valid reason for disposal of the application.
Final Decision: The court allowed the appeal, set aside the impugned order, and remanded the matter back to the executing court for fresh adjudication without being influenced by the observations made in the order.
JUDGMENT
Tarlada Rajasekhar Rao, J. - The 1st respondent herein is the plaintiff in the Suit O.S. No.446 of 2009 filed suit for recovery of money basing upon the promissory note and the said suit was decreed exparte. Later, the 1st respondent herein filed Execution Petition No.80 of 2011 for realization of amount and got attached property of the appellants herein who are the defendants in the suit under Order 21 Rule 54 of CPC. Later, the 1st respondent herein also filed an application under Rule 64 and 66 respectively to Order the property attached to be sold and sale proceeds to be paid to the decree holder and for proclamation of sale by public auction. In the said petitions, the appellants herein were given notices. Accordingly, the execution Court has sold the property by conducting auction on 06.06.2013, the same was confirmed on 15.09.2015 and sale certificate was issued on 18.02.2016.
2. While the things stood thus, the appellants herein who are the judgment debtors in Execution Petition filed an application vide E.A. No.118 of 2015 with a prayer to permit to deposit the warrant amount due as on 06.06.2013 and 5% of the bid amount and appellant herein also filed EA No.131 of 2013 for setting aside the sale under Order 21 Rule 89 of CPC instead of under Order 21 Rule 90 of CPC. The said EA 131 of 2013 came to be dismissed.
3. Aggrieved by the said order in E.A. No. 131 of 2013 dated 24.08.2015, the present Civil Miscellaneous Appeal came to be filed and the appellant herein filed miscellaneous petition No.369 of 2016 in C.M.A. No.160 of 2016 for stay of all further proceedings in E.P. No.80 of 2011 in O.S. No.446 of 2009 on the file of the II Additional Senior Civil Judge, Vijayawada and the same was discussed at para Nos. 13 and 14.
4. The EA No.131 of 2013 was dismissed on the ground 'that the petitioner was served with Rule 54 (1-A) notice but at no time, any objection was raised till the sale was held and when the sale was about to confirm only he came up with the present application', on the said ground, the E.A. No.131 of 2013 in E.P. No.80 of 2011 was dismissed.
5. Assailing the said order, the present Civil Miscellaneous Appeal came to be filed on the ground that the Court below has not passed a reasoned order and the description of the boundaries of west and north are wrongly mentioned which amounts to defraud the appellant herein and there are certain irregularities in publishing sale proclamation and property value was shown less, and he relied on the Judgment in S.P. Changalvaraya Naidu (dead) by Lrs. v. Jagannath (dead) by Lrs. and others (1994) 1 SCC 1 for the proposition non disclosure of relevant and material documents with a view to obtain advantage amounts to fraud. Without considering the above said facts, the learned Executing Court has dismissed the application, hence, prayed to set aside the order in E.A. No.131 of 2013.
6. It is the contention of the appellant herein that the approach of the executing court has resulted in securing a very low price and the facts reluctantly proclaiming that prejudice was caused to the judgment debtor who are appellants before this court, these facts are not to be heeded and the sale held in contravention of the law and procedure stated above is confirmed that there would be a patent failure of justice and it is the duty cast upon this court to prevent such failure of justice by annulling the same.
7. That the contention of the 1st respondent Decree Holder is that under Order 21 Rule 90 no sale shall be set aside on the ground of irregularity or fraud in publishing or conducting it unless, upon the facts proved, the court should be satisfied that the applicant has sustained substantial injury by reason of such irregularity or fraud. And the appellant must go further and establish to the situation to the court that the material irregularity or fraud as a resultant and substantial injury to the appellant even if the appellant has suffered substantial injury by reason of the
Dhirendra Nath Gorai v. Sudhir Chandra Ghosh & others AIR 1964 SC 1300
Jagati Timmaraju v. Uppuluri Brahmmanna 1998 (3) ALD 404
Mahakal Auto Mobiles & others v. Kishan Swaroop Sharma (2008) 13 SCC 113
Ravi Yashwanth Bohir v. District Collector
S.P. Changalvaraya Naidu (dead) by Lrs. v. Jagannath (dead) by Lrs. and others (1994) 1 SCC 1
AI
The executing court is required to assign reasons for its conclusion in an order, and failure to do so may result in the order being set aside.
The court upheld the validity of the execution sale, ruling that the appellant failed to prove material irregularities or substantial injury, affirming the finality of the trial court's decree.
The court affirmed that disputes regarding execution of decrees must be resolved by the executing court, and allegations of fraud must be substantiated with evidence.
A sale in execution of a decree cannot be set aside unless the judgment debtor proves material irregularity, fraud, or substantial injury.
The main legal point established is that an auction sale can be set aside if there are substantial irregularities and fraud, and the application to set aside the sale was filed within the limitation ....
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