IN THE HIGH COURT OF ANDHRA PRADESH AT AMARAVATI
V. GOPALA KRISHNA RAO, J.
K. Rishikesava Nageswara Gupta – Appellant
Versus
Bank of India and Ors. – Respondents
I.A. No. 1 of 2024 in Appeal Suit No. 1893 of 2004
Decided On : 22-04-2024
(A) Civil Procedure Code, 1908 - Sections 9, 47, and Order XXI Rules 89 to 92 - Appeal against dismissal of suit to set aside court sale on grounds of fraud - The court held that the suit was not maintainable as the issues raised were to be determined by the executing court under Section 47, and the plaintiff failed to prove fraud. (Paras 23, 30, 31)
(B) Fraud - Allegations of collusion and fraud in court auction proceedings - The court found no evidence to substantiate claims of fraud or collusion between the bank officials and the auction purchaser, affirming the trial court's dismissal of the suit. (Paras 16, 30)
Facts of the case:
The appellant/plaintiff challenged the court sale of property conducted in 1996, alleging fraud by the defendants, who were involved in the mortgage and auction process. The trial court dismissed the suit, leading to this appeal.
Findings of Court:
The court upheld the trial court's decision, stating that the plaintiff's claims of fraud were unproven and the suit was not maintainable under the Civil Procedure Code.
Issues: The main issues were whether the court sale was vitiated by fraud and whether the suit was maintainable under the Civil Procedure Code.
Ratio Decidendi: The court ruled that all disputes regarding execution and satisfaction of the decree must be resolved by the executing court, and the plaintiff failed to provide evidence of fraud.
Result: Appeals dismissed.
JUDGMENT :
V. Gopala Krishna Rao, J.
1. This Appeal, under Section 96 of the Code of Civil Procedure [for short 'the C.P.C.'], is filed by the Appellant/plaintiff challenging the Decree and Judgment, dated 21.02.2004, in O.S. No.22 of 1997 passed by the learned Senior Civil Judge, Gudur [for short 'the trial Court']. The Respondents herein are the defendants in the said Suit.
2. The Appellant/Plaintiff filed the above said suit praying the Court to set aside the Court sale dated 12.03.1996 conducted by the I Additional District Judge, Nellore in E.P.No.8 of 1988 in O.S.No.104 of 1975 on the ground of fraud played by the defendants and for consequential permanent injunction restraining the 5th defendant from interfering with the peaceful possession and enjoyment of the plaintiff to the plaint schedule property and for costs.
3. Both the parties in the Appeal will be referred to as they are arrayed before the trial Court.
4. The brief averments of the plaint, in O.S. No.22 of 1997, are as under:
The first defendant herein filed a suit in O.S.No.104 of 1975 on the file of the I Additional District Judge, Nellore against the defendants 2 and 3 for recovery of a sum of Rs.43,542.38 ps. on a mortgage of the plaint schedule property and obtained a decree. Subsequently the third defendant sold the same property to the plaintiff under a registered sale deed dated 14.04.1982 for a consideration of Rs.85,000/- and she also agreed to deposit the debt in O.S.No.104 of 1975. Relying upon the representation of the third defendant, the plaintiff developed the building, as it was originally in an extent of 29 ankanas into 48 ankanas. The third defendant has conceived an idea to deceive the plaintiff, she did not raise proper defense in the suit in O.S.No.104 of 1975 for compound interest with quarterly rests instead of for simple interest at 10.5% p.a. and she did not even defend the petition to amend the decree filed on 25.02.1985 claiming for quarterly compounding interest and she colluded with the bank officials. After the development made by the plaintiff, the value of the property was increased to a worth of more than Rs.10,00,000/-. The suit property was not tested before it was actually brought for sale nor retested. The decree holder in collusion with the J.Dr. and in collusion with the intended auction purchaser valued at Rs.1,00,000/- and the Court Amin valued at Rs.2,50,000/- in collusion with the bank officials though it is actually worth is at Rs.10,00,000/-. By the time of auction on 12.03.1996 by undervaluing the bank officials played a fraud on the bank itself and in collusion with the intended purchaser enabling him to knock down the property for a sum of Rs.2,75,000/- as such the entire Court sale is vitiated by fraud. The plaintiff herein also filed claim petition in E.A.No.7 of 1996 and it was dismissed on the ground that there was no attachment and the remedy is by way of a separate suit and the same was also confirmed by the High Court.
5. The first defendant filed a written statement denying the contents of the plaint and further contended as under: -
6. The third defendant filed a written statement admitting the plaint schedule property was mortgaged to the first defendant bank and subsequently it was sold to the plaintiff under a sale deed dated 14.04.1982 for a sum of Rs.85,00
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Ambati Narasayya vs. M.Subbarao and another 1989:INSC:309 : 1989 Supp2 SCC 693
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J. Marret vs. Md. K.Shirazi and Sons
Merla Ramanna vs. Nallaparaju and others (1955) 2 SCR 938
Naseeb Khatoon vs. Syed Abdul Aziz and others 2014 (3) ALD 297
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 under Order XXI Rule 90 can only be set aside if the applicant proves both material irregularity and substantial injury resulting from it.
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.
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