The legislative requirement in 0. 21, R.72-A(2) of the Code of Civil Procedure is mandatory, and the court has to fix the reserve price as regards the mortgage when a decree holder is granted leave to bid in auction.

Thomas, J.

Decree holder-bank brought the property of the appellant to sale in execution of a mortgage decree. Sale was conducted on 15-1-1989. The decree holder purchased the property, in the absence of other bidders, for the decree debt due then. Appellant moved for setting aside the sale, but the execution court dismissed it as per the impugned order.

2. Among the grounds taken up by the appellant he pressed two of them into service here. First is that there was gross under-valuation of the properties sold. Second is that the sale is illegal inasmuch as the court did not fix a reserve price as regards the mortgage as provided in 0. 21, R.72-A(2) of the Code of Civil Procedure (for short'the Code').

3. Regarding the first ground, appellant has not adduced any evidence. There is no material to show that the value of the property would have been substantially higher than the bid amount as on the date of sale.

4. For considering the second contention it has to be mentioned that the sale was duly proclaimed and on earlier occasions when sale was to take place it was postponed at the instance of the appellant and on all such occasions he signified in writing his consent to waive the requirement for fresh proclamation. Decree holder applied for leave to bid in auction and such leave was granted on 5-8-1989.

5. Order 21 Rule 72-A of the Code reads thus:

72-A. Mortgagee not to bid at the sale without the leave of the Court. - (I)

Notwithstanding anything contained in R.72, a mortgagee of immovable property shall not bid for or purchase property sold in execution of a decree on the mortgage unless the Court grants him leave to bid for or purchase the property.

(2) If leave to bid is granted to such mortgage, then the Court shall fix a reserve price as regards the mortgagee, and unless the Court otherwise directs, the reserve price shall be -

(a) not less than the amount then due for principal, interest and costs in respect of the mortgage if the property is sold in one lot; and

(b) in the case of any property sold in lots, not less than such sum as shall appear to the Court to be properly attributable to each lot in relation to the amount then due for principal, interest and costs. on the mortgage.

(3) In other respects, the provisions of sub-rules (2) and (3) of R.72 shall apply in relation to purchase by the decree holder under that rule."

6. The backdrop of this new rule may throw some light, and hence we would have a glimpse on it. The preceding rule i.e. R.72 of the Code, contains an interdict against a decree holder that he shall not bid or purchase the property "without express permission of the court". It also provides for the situation where decree holder bids or purchases the property with such permission. In such a situation the purchase money and the amount due on the decree would be set off against each other. The court would then enter up satisfaction of the decree. If a decree holder happened to purchase the property without such permission sub-rule (3) confers a discretion on the court to set aside the sale on an application filed in that behalf.

7. When R.72 remained like it, Law Commission pointed out in its 54th Report that "the decree holder, if interested in purchasing the property himself, can, conceivably, keep back or discourage (or even mislead) prospective purchasers and though, ordinarily, the fetching of a higher purchase price would be in his interest, it should not be forgotten that when he is the purchaser this consideration takes leave and he would like the price to be low". Law Commission thereupon recommended mat a provision like R.72-A may be added. A similar provision was earlier inserted by the High Court of Bombay in exercise of its rule making powers. A Division Bench of the Bombay High Court then held that sale of the property under R.72-A for an amount smaller than the amount due under the mortgage in contravention of R.72-A is a material irregularity vitiating the sale (vide, Mohammed Abdullav