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IN THE HIGH COURT OF ANDHRA PRADESH AT AMARAVATI
RAVI NATH TILHARI, NYAPATHY VIJAY, JJ.
Pothuraju Hymavathi and Others - Appellants
Versus
Raghu Babu Bandi – Respondent
Civil Miscellaneous Appeal No. 561 Of 2023
Decided On : 12-07-2024
(A) Code of Civil Procedure, 1976 - Order 21 Rule 90 - Civil Miscellaneous Appeal challenging the dismissal of an application to set aside auction sale on grounds of material irregularity and fraud - The court held that mere typographical error in auction date did not constitute material irregularity or fraud, especially when sufficient bidders participated and the auction was public - The court emphasized that substantial injury must be proven alongside material irregularity for setting aside a sale. (Paras 14, 17, 20, 22)
(B) Auction Sale - Requirements for setting aside - The court reiterated that both material irregularity and substantial injury must co-exist for an application under Order 21 Rule 90 to succeed - The appellants failed to demonstrate substantial injury resulting from the alleged irregularities. (Paras 16, 24)
Facts of the case:
The appellants challenged the auction sale of property conducted under E.P.No.738 of 2022, claiming fraud due to incorrect auction date publication and undervaluation of property. The auction was held successfully with multiple bidders participating.
Findings of Court:
The court found no substantial injury to the appellants and upheld the auction sale, dismissing the appeal.
Issues: The main issues were whether the incorrect auction date constituted a material irregularity and whether the appellants suffered substantial injury as a result.
Ratio Decidendi: The court ruled that a mere typographical error does not amount to material irregularity, and substantial injury must be established alongside any claim of irregularity for a sale to be set aside.
Result: Civil Miscellaneous Appeal dismissed.
JUDGMENT :
(Ravi Nath Tilhari, J.)
Heard Ms.K.Pallavi, learned counsel for the appellant through virtual mode and Sri Siva Prasad Reddy Venati, leaned counsel for the respondent.
2. This Civil Miscellaneous Appeal under Order 43 Rule 1 Code of Civil Procedure, 1976 (CPC) has been filed by the appellants challenging the order dated 16.08.2023 passed by the learned VI Additional District Judge, Nellore in EA.NO.44 of 2023 in E.P.No.738 of 2022 in OS.No.103 of 2016.
3. The appellants are the defendants/J.Drs and the respondent is the plaintiff/D.Hr/auction purchaser.
4. The respondent filed O.S.No.103 of 2016 interalia for recovery of the suit amount with interest and costs. The suit was decreed on 13.12.2018. The respondent filed E.P.No.738 of 2022. In the Execution proceedings, the auction scheduled property was sold in public auction on 16.03.2023, after publication in daily newspaper-Eenadu. In the publication, the date for auction was mentioned as 16.03.2022. The auction took place on 16.03.2023. The plaintiff/decree holder also participated in the auction with the permission of the Court and was a successful bidder.
5. The appellants filed application under Order 21 Rule 90 CPC vide E.A.No.44 of 2023. They raised objections, viz; the property was grossly undervalued as Rs.40,00,000/- only, in the sale proclamation, though its value was more than a crore, there was no sufficient description of the property and that in the publication, the date of auction was wrongly mentioned as 16.03.2022 though the sale was conducted on 16.03.2023. Thus there was fraud in publishing and conducting the sale.
6. The respondent filed counter affidavit submitting inter-alia that the petition was without any merits and requested to dismiss the petition.
7. E.A.No.44 of 2023 has been dismissed by the Execution Court vide order dated 16.08.2023 under challenge in appeal.
8. The Execution Court held that the market value as per the Court Amin was Rs.42,00,000/-. The Execution Court fixed the upset price at Rs.45,00,000/-. Finally the property was sold at Rs.62,50,000/- in the public auction. The Execution Court further observed that the publication was made in Eenadu Daily Newspaper, a widely circulated newspaper. The property particulars were correctly made. 12 bidders participated in the auction. The bidders/prospective purchasers were not ignorant of property particulars or time and place of sale. Sufficient bidders participated. It was not a secret sale but public auction. It further observed that all the other objections that had been raised by the appellants herein, which could have been raised but were not raised at the proper time, those objections were not maintainable under Order 21 Rule 90 CPC in view of Sub Rule (3) of Rule 90.
9. Learned counsel for the appellants submits that in the newspaper publication the date of auction was incorrectly mentioned as 16.03.2022 and this is the material irregularity in conducting auction on 16.03.2023 which has caused substantial injury to the appellants.
10. Learned counsel for the appellant further submits that on the point of market value the appellant was not permitted to lead evidence.
11. Learned counsel for the respondent submits that the time and place of sale were clearly mentioned in the publication but the year was mistakenly typed as 2022 instead of 2023. Since, year 2022 had already passed and publication itself was made in the year 2023, the bidders understood the correct year 2023. Such printing mistake was not material irregularity or fraud in the conduct of the auction. He submits that 12 bidders participated in the auction. The publication was in the daily newspaper having a wide circulation. It did not cause the substantial injury to the appellants.
12. Learned counsel for the respondent placed reliance in the case of Chilamkurti Bala Subrahmanyam v. Samanthapudi Vijaya Lakshmi, (2017) 6 SCC 770.
13. We have considered the submissions advanced by the learned counsels for the parties
Material irregularity in auction sale requires proof of substantial injury; mere typographical errors do not suffice.
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.
Unless there is material irregularity, which has resulted in causing substantial injury to judgment-debtor in conducting sale, question of interference by setting aside sale which was conducted by co....
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 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 ....
Confirmed auction sales cannot be set aside for alleged inadequacy of price or lack of publicity without proof of fraud or substantial injury.
Court sales affected by irregularities in publication do not invalidate the sale but render it voidable, allowing for remedies under Rule 90 of the CPC.
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.
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