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1962 Supreme(Ker) 13

Judges : T.C.RAGHAVAN
Sankaranarayanan Nair - Appellant
Versus
Paravoor Central Chitty Fund Ltd. - Respondent
Case No : C. M. A. No. 190 of 1961
Decided On : 01/15/1962
Advocates Appeared :
K. S. Paripoornan; N. Ananthakrishna Iyer; T. N. Subramania Iyer; For Appellant P. N. Sankaranarayana Pillai; P. S. Venkiteswara Iyer; For Respondent

The main legal point established in the judgment is the requirement to prove material irregularity or fraud in publishing or conducting a sale, and the resulting substantial injury, to set aside a court sale under 0.21 R.90. The court also emphasized the court's discretion to include every other thing, including the market value, in the sale proclamation to enable the intending purchasers to judge the nature and value of the property.

Headnote:

Court Sale - Irregularity and Fraud - Code of Civil Procedure - 0.21 R.90 - 0.21 R.66 (2) (e) - 0.21 R.66 (2) (f) - Ismail Sheriff Sahib v. Sankara Panicker,1960 KLJ. 833 - Sri Raja Bommadevara Naganna Naidu Bahadur Zamindar Gara v. Sri Raja Bommadevara Venkatrayulu Naidu Bahadur Zamindar Gara, AIR. 1945 P.C.178 - Arunachalathammal v. T. Karagasabapathi Pillai, (AIR. 1955 Mad. 720) - Kuppammal v. Devendra Iyer, (1957 KLT. 783) - R. Srinivasan v. The Andhra Bank Ltd. (AIR. 1949 Mad. 398) - Kangal Chandra Mondal v. Sir Bejoy Chand Mahatab (42 C.W.N. 661 at 663)

Fact of the Case:

The judgment-debtor filed for setting aside the Court sale under 0.21 R.90 of the Code of Civil Procedure on the ground of irregularity and fraud in the publication and conduct of the sale and resultant substantial injury by reason of such irregularity and fraud. The property was sold for a significantly lower price than its actual value.

Finding of the Court:

The court found that substantial injury resulted from the gross under-valuation of the property in the sale proclamation, and that the irregularity in fixing the upset price at a grossly low figure led to the low price fetched at the sale.

Issues: The issues revolved around the compliance with 0.21 R.66 (2) (e) and (f), the disparity between the values given by the decree-holder and the judgment-debtor, and the court's obligation to make an independent enquiry and fix a valuation in such cases.

Ratio Decidendi: The court held that to set aside a sale under 0.21 R.90, it must be proved that there was material irregularity or fraud in publishing or conducting the sale and that the applicant had sustained substantial injury by reason of such irregularity or fraud. The court also emphasized the importance of the court's discretion to include every other thing, including the market value, in the sale proclamation to enable the intending purchasers to judge the nature and value of the property.

Final Decision: The judgment-debtor was directed to deposit the sale amount with interest, and if the deposit was not made by a specified date, the sale would stand.

Judgment :-

1. The judgment-debtor in O.S. No. 26 of 1953 filed C.M.P. No. 3465 of 1960 for setting aside the Court sale under 0.21 R.90 of the Code of Civil Procedure on the ground of irregularity and fraud in the publication and conduct of the sale and resultant substantial injury by reason of such irregularity and fraud. The lower court dismissed the application and hence this Civil Miscellaneous Appeal by the judgment-debtor.

2. For setting aside the court sale either fraud or material irregularity or both either in the publication or conduct or both of the sale and substantial injury by reason of such irregularity or fraud have both to be established. In this case the property having an extent of 90 cents situated about three furlongs east to the Mahatma Gandhi College in Trivandrum was sold for Rs. 5,505-91 nP. on 30th July 1960. In the proceeding for setting aside the court sale a Commissioner was appointed, who has been examined as Dw. 2. He has filed Exts. D1 to D3, being sale deeds of neighbouring properties, and on the basis of the prices paid under those documents, he has fixed the price of the property in dispute at Rs. 170/- per cent, whereas the price fetched at the court sale was only Rs. 61/- per cent. In the sale proclamation the value of the property stated under 0.21 R.66 (2) (e) was Rs. 2000/- as stated by the decree-holder and Rs. 30,000/-as stated by the judgment-debtor. The property, as I have already indicated, was sold for Rs. 5,505/-.

3. Basing on these facts Mr. T.N. Subramonia Iyer, the learned advocate of the appellant, contends that substantial injury has resulted as a consequence of the gross under-valuation of the property in the sale proclamation. It may be mentioned that no other irregularity or fraud has been substantiated. It is settled law that, if as a result of gross under valuation the property proclaimed was sold at a grossly inadequate price, the substantial injury resulting from such low price is the result of the material irregularity of fixing the upset price at a grossly low figure (vide Ismail Sheriff Sahib v. Sankara Panicker,1960 KLJ. 833 and Sri Raja Bommadevara Naganna Naidu Bahadur Zamindar Gara v. Sri Raja Bommadevara Venkatrayulu Naidu Bahadur Zamindar Gara, AIR. 1945 P.C.178). In the Privy Council decision referred to above Sir Madhavan Nair observed that in order to set aside a sale under 0.21 R.90 it should be proved (1) that there was material irregularity or fraud in publishing or conducting the sale and (2) that the applicant had sustained substantial injury by reason of such irregularity or fraud. His Lordship further held that mere irregularity or fraud in publishing or conducting the sale would not entitle the court to set it aside, unless upon the facts proved the court was satisfied that the applicant had sustained substantial injury by reason of such irregularity or fraud. Sir Madhavan Nair observed further that the burden of proof of substantial injury might be discharged not only by direct evidence connecting the material irregularity or fraud with the substantial injury, but also by circumstantial evidence, that is evidence from which a reasonable inference might be drawn that the substantial injury was the result of the material irregularity or fraud. Therefore, if the upset price is grossly low in comparison with the value of the property, it can be safely presumed that the low price fetched at the sale is as a consequence of the grossly low upset price.

4. But in this case the contention on the side of the respondent is that there was no material irregularity, because R.66 (2) was strictly complied with. R.66 (2) (e) is to the effect that the proclamation shall state the value of the property as stated (i) by the decree-holder and (ii) by the judgment-debtor, and clause (f) of the same sub-rule lays down that the proclamation should also contain every other thing which the court considers material for a purchaser to know in order to judge of the nature and v


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