Smt. P Prathiba vs M/S. Avenue Super Chits (P) Ltd
2023 Latest Caselaw 4445 Kant

                              1



      IN THE HIGH COURT OF KARNATAKA AT BENGALURU

           DATED THIS THE 14TH DAY OF JULY, 2023           R
                          BEFORE

           THE HON'BLE MR. JUSTICE H.P. SANDESH

                 M.F.A. NO.834/2018 (CPC)
BETWEEN:

1.    SMT. P. PRATHIBA
      SINCE DEAD BY HER LRS

1(a) SWETHA C
     D/O LATE P. PRATHIBA
     AGED ABOUT 40 YEARS

1(b) SWATHI C. PRAKASH
     D/O LATE P. PRATHIBA
     AGED ABOUT 36 YEARS

1(c) SACHIN PRAKASH
     S/O LATE P. PRATHIBA
     AGED ABOUT 32 YEARS

      ALL ARE RESIDING AT
      NO.81/1, 3RD FLOOR
      4TH MAIN ROAD, MALLESHWARAM
      BENGALURU - 560 003.

2.    R. CHAYPRAKASH
      S/O RAMAKRISHNAPPA
      AGED ABOUT 55 YEARS
      R/AT NO.81/1, 3RD FLOOR
      4TH MAIN ROAD, MALLESHWARAM
      BENGALURU -560 003.                   ... APPELLANTS

     (BY SRI PADMANABHA MAHALE, SENIOR COUNSEL A/W.
               SRI G.B.MANJUNATHA, ADVOCATE)
                                 2




AND:

1.     M/S. AVENUE SUPER CHITS (P) LTD.
       BY ITS MANAGER,
       K. VEERABHADRAPPA
       NO.21, 1ST FLOOR
       NEAR MENAKA THEATRE
       HOSPITAL ROAD
       BENGALURU - 560 053.

2.     M K SHIVAKUMAR
       S/O LATE KARIYANNA GOWDA
       R/AT No.102, 3RD MAIN ROAD
       10TH BLOCK, 2ND STAGE
       NAGARABHAVI
       BENGALURU - 560 075

                                                ... RESPONDENTS

       (BY SRI DAYANAND HIREMATH, ADVOCATE FOR R1;
             SRI SRIHARI A.V., ADVOCATE FOR R2)


       THIS M.F.A. IS FILED U/O 4 RULE 1(j) OF CPC, AGAINST

THE    ORDER    DT.16.12.2017       PASSED    ON    I.A.NO.3   IN

EX.C.NO.1221/2012 ON THE FILE OF THE XLII ADDITIONAL CITY

CIVIL & SESSIONS JUDGE, BENGALURU AND ETC.


       THIS M.F.A. HAVING BEEN HEARD AND RESERVED FOR

JUDGMENT       ON   03.07.2023,     THIS     DAY,   THE   COURT

PRONOUNCED THE FOLLOWING:
                                   3



                            JUDGMENT

This miscellaneous first appeal is filed challenging the

order dated 16.12.2017 passed on I.A.No.3 filed under Order

XXI Rule 90 read with Section 151 of CPC in Ex.No.1221/2012

on the file of the XLII Additional City Civil and Sessions Judge,

Bengaluru.

2. Heard the learned counsel appearing for the

respective parties.

3. The factual matrix of the case of the appellants is

that the appellants have subscribed the chit for an amount of

Rs.6,00,000/- from respondent No.1-chit fund and had paid

certain installments in the chit subscribed and the appellants

have bid a chit for the amount of Rs.1,80,000/- and balance of

Rs.4,20,000/- was paid after deducting the foreman commission

and subsequently the appellants have also paid the amount to

respondent No.1 and respondent No.1 under the Karnataka Chit

Fund Act had initiated proceedings before the arbitrator and

respondent No.1 has not been served with any notice and an

exparte order came to be passed on 31.10.2008 against the

appellants directing them to pay a sum of Rs.5,10,000/- with

interest at 21% per annum along with penal interest at the rate

of 3% and the said order was not communicated to the

appellants at any point of time.

4. It is also the case of the appellants that the

respondents have filed the execution petition in

Ex.No.1927/2009 and the same was dismissed for default and

again the respondents have filed the execution petition in

Ex.P.No.1221/2012 and claimed an amount of Rs.14,99,127/- as

on 28.05.2012. It is also the contention of the appellants that

they have entered their appearance and paid the amount of

Rs.25,000/- in cash before the Court and had also paid a sum of

Rs.1,00,000/- through a cheque bearing No.184130 dated

27.02.2013 and the decree holders have filed the petition

calculating the wrong amount and erroneously claimed

exorbitant amount from the appellants. It is also the contention

of the appellants that the appellants were in turn about to pay

the amount to the respondents, at that time, the respondents

obtained the order of attachment of the property bearing

Sy.No.1 situated at Erigenahalli village, Kasaba Hobli,

Nelamangala taluk measuring 2 acres 27 guntas and had also

auctioned the property in public without notice to the appellants

and the sale was conducted at the spot without any paper

publication and no reserve price was fixed by the Trial Court and

in the spot auction, one Rajesh had bid for Rs.61,00,000/- but

he being the highest bidder, not deposited the statutory deposit

in the spot and also failed to appear in the Court and

subsequently, without any further paper publication or

notification on re-sale as provided under Order 21 Rule 87 of

CPC and without issuing fresh proclamation, the Court sale was

conducted at 4.15 p.m. and the persons who were colluded with

the decree holder was present before the Court and the Court

auction was conducted and the auction was closed at

Rs.63,25,000/-. Hence, the appellants had filed the application

under Order XXI Rule 90 read with Section 151 of CPC for

setting aside the said sale on the ground of irregularities in

conducting public auction and the said application came to be

dismissed without any reasoning and without considering the

objections raised by the appellants. Hence, the present appeal

is filed.

5. The main contention urged in the appeal that though

an order was passed in the year 2008, an execution petition in

Ex.No.1927/2009 was filed by the decree holder and the same

was dismissed for default and again without restoring the said

execution petition, the decree holder again filed the present

execution petition in the year 2012 hence, the second execution

petition is not maintainable in law and the said fact has not been

brought to the notice of this Court. It is also contended that the

Court has passed the order of attachment in respect of

Sy.No.1/2 measuring 2 acres 29 guntas and the Court has

ordered for spot sale without fixing the reserve price and the

sale cannot be held without fixing the reserve price and no

opportunity was offered to the judgment-debtor in fixing the

reserve price since the property value is more than 2 crore and

the liability is only Rs.5,10,000/- along with interest at 21% as

on 2008 hence, there is a irregularity in fixing the reserve price

and the sale was conducted without fixing the reserve price

which is bad in law. It is also contended that the decree holder

had not made any paper publication in the local newspaper nor

in the Courthouse nor in the Government Taluk office where the

jurisdiction of the property is situated and also in the office of

Gram Panchayath having jurisdiction over the village in

accordance with Order XXI Rule 54(2) of CPC along with Order

21 Rule 67(2) of CPC hence, without which, the proclamation of

sale is vitiated, thus, the decree holder had manipulated to bid in

collusion with the auction purchaser for the lower price as the

records of the execution proceeding and also the proceedings of

the spot sale conducted does not show that the sale was given

wide publicity. It is contended that the sale proclamation was

drawn in English as the language of he Court is in Kannada, the

Court has to issue proclamation in accordance with Order XXI

Rule 66(1) in Kannada without which, the sale has to be set

aside for non-publication in Kannada which goes to show that

the sale proclamation was not conducted in accordance with the

Rules of CPC.

6. The counsel also vehemently contend that the

decreetal amount is Rs.5,10,000/- along with interest and the

proclamation issued for spot sale is for realization of

Rs.14,99,127/- as on 30.06.2017 but the spot sale was held for

an amount of Rs.61,00,000/- and the Court sale at

Rs.63,25,000/- which is more than 4 times the amount to be

recovered and no reserve price has been fixed by the Court and

the property is worth Rs.2 crore and the Court has to follow the

procedure in accordance with Order XXI Rule 64 of CPC and

hence, the very sale is bad in law. It is also contended that the

Court sale was conducted at 4.15 p.m., and the Court auction

was not known to any person neither the sale was published in

newspaper nor in the Court premises and the sale was conducted

at the last hour without the knowledge of the persons who are

ready to bid in the auction without fixing the time, the said

auction cannot be conducted and the sale has been made for

lesser price in collusion with the decree holder who was the

highest bidder at spot sale and he was absent before the Court

who had participated in the spot auction nor he has deposited

the statutory deposit and the same goes to show that the spot

auction was not conducted on the spot and even the bailiff was

not examined regarding the value of the property and hence, the

Trial Court failed to take note of all these facts into

consideration.

7. It is also contended that the Court ought to have

been seen that as per the Government guidelines the value fixed

is Rs.16,00,000/- for one acre and for two acres twenty nine

guntas, the guideline fixed is Rs.43,60,000/- but the property

has been auctioned for Rs.63,25,000/- and the market value is 4

times double the guidelines value and worth 2 crore and without

fixing the reserve price, the Court cannot auction for lesser price

which is an irregularity in conducting the sale and hence, it

requires interference.

8. The senior counsel Sri Padmanabha Mahale in his

arguments, vehemently contend that the very decree is also

beyond the limitation and the same was not taken into note of

by the Trial Court and the public auction was without the

publication and reiterated the grounds urged in the appeal

memo. The counsel also would vehemently contend that portion

of the property ought to have been sold since the decree is only

for an amount of Rs.5,10,000/-.

9. The counsel for the respondents would vehemently

contend that earlier, execution petition was filed and the same

was dismissed and the same is not a bar and the counsel

brought to notice of this Court that the appellant was arrested on

15.09.2016 and he was produced before the Court and he

himself given the property details and the said property was

attached and the appellants have not filed any application to set

aside the attachment order and sale warrant was also issued and

reserve price is fixed as Rs.55,00,000/- and the same is evident

in the auction itself and the spot sale conducted on 30.06.2017,

reserve price is quoted as Rs.55,00,000/- and which was

auctioned for Rs.61,00,000/- but only in the Court auction, it

was auctioned for Rs.63,25,000/-. The counsel also vehemently

contend that before attachment, all procedure was followed and

also the counsel would submits that the appellant has given six

post dated cheques and all are dishonoured and then only

warrant was issued and he was arrested and hence, now he

cannot contend that there is a irregularity and fraud in selling

the property.

10. The counsel for respondent No.2 would vehemently

contend that respondent No.2 is an auction purchaser and he

has purchased the property in the Court auction and he is the

highest bidder and he has paid the entire amount and the Trial

Court also answered all the grounds which have been urged in

the application. The counsel further contend that though the

property is worth more than 2 crore, no document is produced to

show the same and the same is also observed by the Trial Court

in the order. The counsel also would vehemently contend that in

order to show the material irregularity also, no material is placed

before the Court and for the first time, he cannot raise the same

before this Court. The decree is executable within a period of 12

years and not as three years as contended by the counsel for the

appellants. The counsel also vehemently contends that another

application was filed under Order XXI Rule 97 and in order to

prove the fraud on the Court, no material is placed before the

Court.

11. The counsel in support of his arguments relied upon

the judgment of the Apex Court reported in (2017)6 SCC 770

in the case of CHILAMURTI BALA SUBRAHMANYAM vs

SAMANTHAPUDI VIJAYA LAKSHMI AND ANOTHER and

brought to notice of this Court paragraph 14 wherein the Apex

Court discussed with regard to scope of Order XXI Rule 90 of the

Code and under 90(2) it is held that 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 is satisfied that the

applicant has sustained substantial injury by reason of such

irregularity or fraud. The counsel also brought to notice of this

Court to the judgments reported in (2006)4 SCC 476, (1964)

6 SCR 1001 and 1991 SUPP.(2) SCC 691 and extracted

paragraph 14 of the said judgment wherein discussed with

regard to Order XXI Rule 67(1) read with Order XXI Rule 54(2)

and the Apex Court observed that the Trial Court has said that

the sale should be given wide publicity but that does not

necessarily mean by publication in the newspapers. The

provisions of Order XXI Rule 67 clearly provides that if the sale is

to be advertised in the local newspaper, there must be specific

direction of the Court to that effect. In the absence of such

direction, the proclamation of sale has to be made under Order

XXI Rule 67(1) as nearly as may be in the manner prescribed by

Rule 54 sub-rule (2). Rule 54 sub-rule (2) provides for the

method of publication of notice which reads as follows:

54.(2): The order shall be proclaimed at some

place on or adjacent to such property by beat of

drum or other customary mode, and a copy of the

order shall be affixed on a conspicuous part of the

property and then upon a conspicuous part of the

courthouse, and also, where the property is land

paying revenue to the Government, in the office of

the Collector of the district in which the land is

situate and, where the property is land situate in a

village, also in the office of the Gram Panchayat, if

any, having jurisdiction over that village.

12. The counsel referring this judgment would

vehemently contend that the judgment is aptly applicable to the

case on hand and also brought to notice of this Court paragraph

24 wherein observed that the law on the question involved

herein is clear. It is not the material irregularity that alone is

sufficient for setting aside of the sale. The judgment-debtor has

to go further and establish to the satisfaction of the Court that

the material irregularity or fraud, as the case may be, has

resulted in causing substantial injury to the judgment-debtor in

conducting the sale. It is only then the sale so conducted could

be set aside under Order XXI Rule 90(2) of the Code. Such is not

the case here. The counsel referring this judgment would

vehemently contend that the judgment-debtor did not pay the

decreetal amount and he himself furnished the documents after

his arrest and thereafter only the property was attached and the

sale was conducted at the spot and also at the Court and no

procedure irregularity or fraud and hence, the same cannot be

accepted.

13. Having heard the learned counsel appearing for the

respective parties and also on perusal of the grounds urged in

the appeal memo as well as the impugned order, the question

arise for the consideration of this Court that:

Whether the Trial Court committed an error in dismissing the application filed under Order XXI Rule 90 read with Section 151 of CPC and whether it requires interference for non-compliance of Order XXI Rule 54(2) of CPC along with Order XXI Rule 67(1) of CPC?

14. Having heard the learned counsel appearing for the

respective parties, the main contention that the appellants were

a subscribers of the chit and the same is not in dispute and also

not in dispute that chit amount was Rs.6,00,000/- and the same

was bided for an amount of Rs.1,80,000/- and the remaining

amount payable was Rs.4,20,000/- and the same was paid and

no dispute to that effect. It is also the contention that an

exparte order was passed but on perusal of the order it shows

that notice was issued, he has not claimed and an order was

passed and no dispute that earlier also execution petition in

Ex.P.No.1927/2009 was filed and the same was also dismissed

for default. It is also not in dispute that second execution

petition was filed on 25.05.2012 and the very contention that

the same is beyond limitation.

15. The counsel for the appellants brought to notice of

this Court Section 71 of the Chit Funds Act, 1982 wherein it is

clear that every order passed by the Registrar or the nominee

under Section 68 or Section 69 and every order passed by the

State Government in appeal under Section 70 for payment of

any money shall, if not carried out on a certificate issued by the

Registrar, be deemed to be a decree of a civil Court, and shall be

executed in the same manner as a decree of such Court, or be

executed in accordance with the provisions of any law for the

time being in force for the recovery of amounts as arrears of

land revenue. Provided that no application for execution under

clause (b) shall be made after expiry of three years from the

date fixed in the order, and if no such date is fixed, from the

date of the order. Though the counsel would vehemently contend

that no such certificate was issued but the said certificate was

also issued by the Registrar and hence, it is clear that it is a

decree of a civil Court and shall be executed in the same manner

as a decree of such Court and hence, Section 71(a) is applicable

and not Section 71(b) as contended by the counsel for the

appellants. Hence, the very contention that time period is within

three years and execution ought to have been filed within three

years cannot be accepted. Once a certificate is issued, it is

deems to be a decree of civil Court and hence, execution petition

can be filed within 12 years of the decree and validity of the

decree is also if it is a decree passed by the civil Court, the

period of limitation is 12 years and not three years as contended

and Section 71(b) is not applicable as contended by the counsel

for the appellants.

16. The other contention that no reserve price is fixed.

On perusal of the auction conducted at the spot, it is very clearly

mentioned that the Government rate is Rs.55,00,000/- and the

document also very clear that Government reserve price is fixed

as Rs.55,00,000/- and the spot sale was conducted and highest

bidder auctioned for Rs.61,00,000/- but he did not come forward

to pay the amount and when the Court auction was conducted,

the sale was conducted for higher price of Rs.63,25,000/- and

the amount was also deposited. It is also contention of the

appellants' counsel that there is an irregularity and no wide

publication was given and if publication was given, it would have

fetched more amount. The judgment relied upon by the counsel

for the respondents is CHILAMURTI's case wherein the Apex

Court in paragraph 14 discussed with regard to Order XXI Rule

90 referring several judgments of the Apex Court of the year AIR

1964 SC 1300, (2006) 4 SCC 476 and also 1991 Supp (2) SCC

691 and extracted the paragraphs 12, 13 and 14 of the said

judgments and other judgment reported in (2000) 3 SCC 87

wherein categorically held that there is no material irregularity in

publishing or conducting the sale. There was sufficient

compliance with Order XXI Rule 67(1) read with Order XXI Rule

54(2). It is also held that no doubt, the Trial Court has said that

the sale should be given wide publicity but that does not

necessarily mean by publication in the newspapers. Unless,

clearly provide that if the sale is to be advertised in the local

newspaper under the provisions of Order XXI Rule 67 and there

must be specific direction of the Court to that effect. No such

direction is found in the case on hand also and proclamation was

issued. When such being the case, the very contention of the

counsel that Order XXI Rule 67 and Rule 54(2) has not been

complied, cannot be accepted. The Apex Court also in detail

discussed by extracting Order XXI Rule 90 as well as 54(2).

When the spot sale and Court auction was conducted and also in

the spot sale, highest bid was Rs.61,00,000/- and in the Court

sale, it was Rs.63,25,000/- and accordingly, the amount was

deposited, the very contention that there is material irregularity,

cannot be accepted. The judgment is also clear that unless

there is material irregularity, which has resulted in causing

substantial injury to the judgment-debtor in conducting the sale,

the question of interference by setting aside the sale which was

conducted by conducting spot sale as well as Court sale does not

arise. It is also observed in the judgment that when the sale

was so conducted, could be set aside under Order XXI Rule

90(2) of the Code, when it has resulted in causing substantial

injury to the judgment-debtor hence, I do not find any such

circumstances warranted in the case on hand.

17. The other contention of the counsel that property is

worth more than Rs.2 crore and the final auction bid amount was

only Rs.63,25,000/- and the same is lesser amount. In order to

substantiate the said contention also no material is placed before

the Court by the appellants i.e., either before the Trial Court or

before this Court. On the other hand, the very decree holders

placed the material before the Court that guideline value is only

Rs.16,00,000/- at the time of conducting the sale per acre,

hence, it comes around Rs.43,00,000/- but it was sold for an

amount of Rs.63,25,000/-. When such being the case, the

contention that the property was auctioned for lesser price,

cannot be accepted.

18. The other contention of the appellants' counsel that

public auction was conducted without the proper publication.

Having perused the material on record it is not in dispute that

there was an award and though contend that the same was

passed exparte, the same was not challenged and apart from

that it is the contention of the counsel for the respondents that

six post dated cheques were given and the same were

dishonoured and thereafter the arrest warrant was issued and he

was arrested and brought before the Court and when he was

brought before the Court he only furnished the details of the

property and the said property was attached and the same was

auctioned only after attaching the property. The appellants also

even not challenged the attachment and only after conducting

the auction come up with an application under Order XXI Rule 90

on the ground that there is material irregularity but, no such

irregularity is also placed before the Trial Court. The Trial Court

also taken note of the grounds which have been urged before

dismissing the application. The Trial Court even extracted the

provisions of Order XXI Rule 90 of CPC and also taken note of

the proviso of sub-rule (2) of Rule 90 of CPC while considering

the application and also in paragraphs 9, 10 and 11, the Trial

Court taken note of the scope of Order XXI Rule 90 and so also

Order XXI Rule 54 for attachment of the property was considered

and also taken note of the fact that judgment-debtor also failed

to file any application to set aside the order of attachment and

also taken note of the fact that on 01.04.2017, at the instance

of the decree holder, the Trial Court has issued the sale warrant

and sale proclamation and fixed the date for spot sale and also

Court sale and bidders were also auctioned the property. When

such being the case, the question of irregularity does not arise

and nothing is found on record to show that fraud was

committed and I have already pointed out that base price was

fixed as Rs.55,00,000/- and thereafter auction was conducted

and the Trial Court also taken note of the fact that the land value

as on the sale was Rs.16,00,000/- per acre and auction amount

is more than that. Hence, I do not find any merit in the appeal

to set aside the order dated 16.12.2017 passed by the Trial

Court on I.A.No.3 filed under Order XXI Rule 90 read with

Section 151 of CPC thus, I answer the point as negative.

19. In view of the discussions made above, I pass the

following:

ORDER

The appeal is dismissed.

Sd/-

JUDGE

SN