Silvi vs Iritty Chits Finance And ...
2021 Latest Caselaw 13988 Ker

                                                           C.R.
              IN THE HIGH COURT OF KERALA AT ERNAKULAM
                              PRESENT
               THE HONOURABLE MRS. JUSTICE M.R.ANITHA
    WEDNESDAY, THE 7TH DAY OF JULY 2021 / 16TH ASHADHA, 1943
                       OP(C) NO. 586 OF 2020
             OS 100/2014 OF SUB COURT, PAYYANNUR, KANNUR
PETITIONER

             SILVI
             AGED 38 YEARS
             W/O. SHAJI V.D, VELLARAMKUNNEL HOUSE, P.O
             KOOTUMUGHAM, THALIPARAMBA, KANNUR DISTRICT.
             BY ADV T.V.JAYAKUMAR NAMBOODIRI


RESPONDENT

             IRITTY CHITS FINANCE AND INVESTMENTS (PRIVATE)
             LIMITED
             HAVING ITS REGISTERED OFFICE AT KCP-XIII/722,
             KEEZHOOR CHAVASSERY GRAMA PANCHAYATH, WARD -13, MAIN
             ROAD, IRITTY 670 703 AND HAVING BRANCHES INCLUDING
             ONE AT EMERALD SHOPPING CENTRE, KAKKAD ROAD, SOUTH
             BAZAR, KANNUR-2 REPRESENTED BY ITS MANAGING DIRECTOR,
             K.T MATHEW, S/O. K.T THOMAS, AVILAM VILAKODE DESOM,
             THALASSERY TALUK, KANNUR DISTRICT, PIN 670 594
             BY ADVS.
             SRI.ABDUL RAOOF PALLIPATH
             SRI.K.R.AVINASH (KUNNATH)



     THIS OP (CIVIL) HAVING BEEN FINALLY HEARD ON 30.6.2021,
THE COURT ON 07.07.2021 DELIVERED THE FOLLOWING:
 OPC 586/2020
                                        2

                                                                  C.R.
                                     JUDGMENT

Dated : 7th July, 2021

1. Petitioner is the respondent/judgment-debtor in

E.P.24/2017 in O.S.100/2014 of Sub Court, Payyannur.

The Original Petition has been filed against the

impugned order fixing upset price by the execution

Court.

2. The Suit was one for realization of amount and it was

decreed against the petitioner/Judgment-debtor

(hereinafter referred as 'petitioner'). Since the

payment was not made, E.P.24/2017 was filed by the

respondent /decree holder(here in after be referred as

respondent) for executing the decree by attachment and

sale of 34.5 cents of land owned by the petitioner.

According to the petitioner, the value of the property

shown as 22 lakhs in the sale proclamation is far below

the actual value of the property prevailing in the

area. Petitioner filed detailed counter to the

valuations shown in the sale proclamation and copy of

which is produced as Ext.P1. Petitioner claims that

the property would fetch a value of Rs. 1,03,50,000/-

(1 Crore 3 lakhs 50 thousand). The building in the

property is having a plinth area of 2900 sq. feet. It OPC 586/2020

would worth more than Rs.50 Lakhs. The market value of

the property in the locality is Rs.25 lakhs per cent.

An Advocate commissioner was appointed in E.P.171/2016

pending before the Munsiff Court, Thaliparamba for

valuation of the very same property and the

Commissioner valued the property at Rs. 1,35,50,000/-.

The copy of the report of the Advocate Commissioner is

produced as Ext.P2. The decree amount can be realized

by selling a portion of the property. The property is

situated on the side of the public road at Perikulam

which is a fast developing area. But without

considering any of those factors the learned Sub Judge

fixed the upset price as Rs.25 Lakhs by the impugned

order.

3. Notice was issued to the respondent and respondent

appeared through Counsel. Both sides were heard. Though

it was submitted that the objection has been filed with

bench mark and it was directed to be incorporated with

the file, it is reported from the office that objection

is not received.

4. The main argument of the petitioner is that, though

detailed counter was filed by the petitioner to the

sale proclamation, without considering any of the

contentions in the objection, upset price of the OPC 586/2020

property has been fixed as Rs.25 lakhs by the execution

court.

5. Order XXI Rule 66 of the Code of Civil Procedure, 1908,

(hereinafter referred as 'the Code') deals with

proclamation of sale by public auction. It declares the

procedure to be followed by the Court when a property

is ordered to be sold in execution of decree by public

auction. Sub-rule (2) of Rule 66 provides how the

proclamation to be drawn up, what are the matters to be

specified etc., of course after due notice to the

judgment debtor. Clause (e) of Sub-rule (2), which is

relevant for the disposal of this matter, reads thus:

"(e) every other thing which the Court considers material for a purchaser to know in order to judge the nature and value of the property ".

6. It is a settled position that the value of the property

to be put up for sale is a material fact within the

meaning of clause(e). Commentaries on the Code of Civil

Procedure by Dinshah Fardunji Mulla, 18 th Edition, page

2605, relevant portion is extracted thus, as observed

by the Privy Council [Saadatmand Khan v. Phul Khan

(1898 20 All. 412)].

OPC 586/2020

"Whatever material fact is stated in the proclamation (and the value of the property is a material fact) must be considered as one of those things 'which the Court considers material for a purchaser to know' and it is enacted in terms (though express enactment is hardly necessary for such an object) that those things shall be stated as fairly and accurately as possible."

7. With regard to the duty of the Court in fixing the fair

value there had been divergent views of different High

Courts that the Court should not make a valuation and

also that Court has a duty to make a valuation and

enter in the sale proclamation. In Ban Behari Chatterji

v. Bhukhan Lal Chaudhuri (AIR 1933 Calcutta 511) it has

been held that it is the duty of the Court to make a

valuation and the result of which has to be included in

the sale proclamation. Further that the court has to

make its own valuation and arrive at a single figure

and if at all by reason of any exceptional

circumstances the Court found it impracticable, such

circumstances could be clearly set out in the order.

Bombay High Court in Charan Das v. Dossadhoy (AIR 1939

Bombay 182) took a view that it was not necessary in

every case to value the property to be sold and to OPC 586/2020

state the value in the proclamation.

8. Apex Court in Gajadhar Prasad v. Bbakti Ratan AIR 1973

SC 2593) while dealing with a case challenging the act

of the Execution Court in accepting the valuation shown

by the decree holder without indicating any reasonable

grounds, it was held to be a material irregularity when

judgment debtor suffered substantial injury by the

same. It has been made clear by the Apex Court that the

execution court must apply its mind and should give

consideration to the objections of the Judgment debtor

and if not, it would be a material irregularity

committed by the Execution Court. It is also made

specific that the Execution Court need not pass any

judicial order in the sale proclamation itself but it

should pass an order showing that it applies its mind

to the need for determining all the essential

particulars which would reasonably be looked for by a

purchaser and which should be inserted in the sale

proclamation. It is also held that the order should

show that it considered the objections if any, of the

decree holders, or the Judgment debtors as the case may

be and it should not accept unhesitatingly the ipse

dixit of one side. Ultimately in the said circumstance

it was found that the Execution Court has not performed OPC 586/2020

its duty fairly and reasonably by merely rejecting the

judgment debtors figures by a mere observation that

they are exaggerated and practically accepted without

hesitation whatever the decree holders submitted and

the valuation was proved to be incorrect judged by the

results of auction sale takes as a whole.

9. Subsequently the Code was amended by the Amendment Act,

1976 by inserting two Provisos to clause (e); the

second one is relevant in this context which reads

thus:

"Provided further that nothing in this rule shall be construed as requiring the Court to enter in the proclamation of sale its own estimate of the value of the property, but the proclamation shall include the estimate, if any, given by either or both of the parties."

10. By the insertion of the above proviso, it was made

rather explicit that nothing in the Rule can be

construed as requiring the Court to enter in the

proclamation its estimation of value of the property

but further specify that proclamation shall include the

estimated value, if any, given by either or both of the

parties.

OPC 586/2020

11. In Shalimar Cinema v. Bhasin Film Corporation

[1987 (4) SCC 717] it has been held by the Hon'ble

Supreme Court that though it may not be necessary for

the Court to make a valuation and enter it in the sale

proclamation in every case, it is desirable at least in

cases of sale of valuable property that the court make

its valuation and enter it in the sale proclamation. It

is also held that no action of the court or its

officers should be such as to give rise to the

criticism that it was done in an indifferent or casual

way.

12. In Desh Bandhu Gupta v. N.L.Anand and Rajinder

Singh (1994 (1) SCC 131 = 1994 KHC 1083) it was held

that Court should apply its mind to the need for

furnishing relevant and material particulars in the

sale proclamation. In that case the execution Court

simply accepted the low valuation shown in the E.P as

Rs.1,00,000/- whereas in a complaint given by the

decree holder to the Income Tax department he has got

the site value with an approved valuer at Rs.3,32,333/-

per cent. In the said circumstances it was held that it

is a case of non-application of judicial mind and

application of judicial duty. It was also held that the

order passed by the Court should show that it OPC 586/2020

considered the objection if any of the decree holders

or the judgment debtors and it should not merely accept

unhesitatingly ipse dixit of one or either side or

both.

13. In M.L.Mubarak Basha and others v. Muni Naidu

[1997 (4) SCC 153 = 1997 KHC 821], Apex Court held that

fixation of sale and upset price is the duty of

Execution Court and not that of Commissioner. But in

that case, taking into account the fact that Court has

issued directions to the Commissioner not only to

conduct the sale but also to fix the upset price and

since the upset price has been fixed as per the

direction of the Court sale conducted was upheld.

14. This Court in K.V. Thomas v. Malabar Industrial

Co.Ltd. [1962 KLT 315] has held that while proceeding

against the property of a judgment-debtor for

compulsory sale in execution, law and fairness require

the Court to ensure that the judgment-debtor is not

unduly harassed in his misfortune and to adopt all

reasonable means to secure a reasonable price for the

property at the Court sale.

15. In Chandradas K.P. v. A. Nizar and Ors. [2009 (3)

KHC 841 : ILR 2009 (3) Ker.763] it has been held that

it is the obligation of the Court to ensure that the OPC 586/2020

judgment-debtor whose property is being sold is

entitled to a fairly accurate description of his

property so as to secure the presence of such class of

bidders who would make fair bids of the property having

regard to the size, location and other features of the

property.

16. When valuable property has been sold for a low

price it would amount to failure to exercise judicial

function properly and it would be a material

irregularity in the settlement of proclamation and

publication of the proclamation of sale (Harishankar v.

Syndicate Bank Of India [1996 KHC 559 : ILR 1996 (1)

Ker. 756 (DB) )

17. So from the above settled position it can be

deducted that though it is not necessary that the Court

should make a valuation and enter it in the sale

proclamation in every case, it is desirable in cases

where sale of valuable property is involved that the

Court should make its valuation and enter it in the

sale proclamation.

18. The petitioner has also raised serious objection

in ordering the sale of the whole extent of property

inspite of the fact that only a part of the property

would be sufficient to satisfy the decree debt. In S. OPC 586/2020

Mariyappa (Dead) By Lrs. and Ors. v. Siddappa and Anr

[(2005) 10 SCC 235] it has been laid down that it is

the duty of the Executing Court to consider whether a

sale of only a part of the property would be sufficient

to meet the decretal debt.

19. In Balakrishnan v. Malaiyandi Konar [(2006) 3 SCC

49 : 2006 KHC 277 : AIR 2006 SC 1458], it has been held

that the use of the word expression necessary to

satisfy the decree in Order XXI Rule 64 of the Code

indicates the legislative intent that no sale can be

allowed beyond decretal amount mentioned in the

proclamation.

20. In Ambati Narasayya v. M. Subba Rao & Anr. [1990

KHC 221 : AIR 1990 SC 119] the Apex Court held that in

execution sale the Court should ensure that only the

property sufficient to satisfy the decree should be

sold and it is a mandate of legislation and it is not a

mere discretion of the court.

21. In K.A. Sukumaran v. Kerala Permanent Benefit Fund

Ltd. [2011 (2) KHC 955 : 2011 (3) KLT 53] a learned

Single Judge of this Court held that Court should

ensure that only the property sufficient to satisfy the

decree alone should be sold.

22. The respondent has also got a contention that the OPC 586/2020

impugned order is not a speaking one and has been

passed without considering any of the objections raised

by the petitioner. In Unni Madhavan Nair v.

Sreenarayana Investment [2009 (3) KLT 855] this Court

has held that the order passed under Order XXI Rule 66

need not be a reasoned order but should reflect that

the Court has applied its minds to the essential facts

which have a bearing on the very material question of

the value of the property. A mere statement of fixing

the upset price and then an omnibus order proclaim and

sale is far from satisfactory. In P.Bhuliya v Moosa and

Another (2006KHC 1134 : ILR 2006 (4) Ker.118), this

Court went to the extent of holding that Court should

pass judicially considered order incorporating or

declining to incorporate objections of judgment-debtor

regarding value of property and value of improvements

in the property.

23. In the present case, the impugned order would

reveal that it has been passed by the learned Sub Judge

after hearing both sides. According to the petitioner,

an extent of 34.5 cents of land with a double storied

concrete building is proclaimed to be sold. It is the

contention of the petitioner that the property would

fetch a value of Rs.1,03,50,000/-. There is a concrete OPC 586/2020

building worth Rs.50 lakhs in the property. By selling

7 cents of property excluding the building and

appurtenant land, decree debt can be cleared. But the

value of the property has been shown as Rs.22 Lakhs by

the respondent. The Court has fixed upset price as

Rs.25 lakhs. Petitioner also produced Ext.P2 copy of a

commission report in E.P.No.171 of 2016 filed with

respect to the same property in another case valuing

the property with building as Rs.1,35,50,000/- by the

commissioner. True, it is a question to be decided

whether Ext.P2 as such can be relied upon. However,

according to the petitioner, without considering any of

the relavant aspects the learned Sub Judge straight

away fixed the upset price as Rs.25 lakhs and that has

caused great miscarriage of justice.

24. On a perusal of the impugned order it would reveal

that the learned Sub Judge fixed the upset price as

Rs.25 lakhs and further directed to incorporate the

contention of J.D in DSP and ordered, 'proclaim and

sell' . The impugned order does not reveal the criteria

which led the learned Sub Judge for arriving at the

figure of Rs.25 lakhs. The learned counsel for the

respondent in this context would contend that there is

further direction to incorporate the contention of the OPC 586/2020

JD in the DSP. Whether that would suffice is the

question ?

25. When a Court fixes the upset price of the property

to be sold in the sale proclamation, normally

purchasers will form an opinion on the basis of it. So

also once the upset price is fixed, there is no purpose

in incorporating the contentions of the JD in the

proclamation because it is by evaluating the

contentions of the JD that usually Court fixes the

upset price.

26. So also there is some irregularity in the impugned

order in directing to incorporate the contentions of

the JD in the proclamation. What the second proviso to

clause (e) provides is that nothing in the rule shall

be construed as requiring the Court to enter on its own

estimate of value of the property but estimate shall

include if any estimated by either or both of parties.

Here, the estimated value of the property assessed by

the petitioner is Rs.1,53,50,000/- and hence the

direction ought to have been to incorporate the

estimated value of the property by the Judgment-debtor

and not the contention of the JD. Various contentions

are raised in the objection and which is the contention

which was directed to be incorporated is also not made OPC 586/2020

specific. Hence the impugned order is not in compliance

with the stipulations contained in second proviso to

clause (e) of sub rule 2 of Rule 66 also.

27. In Shalimar Cinema referred above, the law laid

down by the Apex Court is that though it is not

necessary for the Court to make valuation and enters

it in the sale proclamation in every case, it is

desirable in cases of sale of valuable property that

the Court shall makes it valuation and enter it in the

proclamation. In the present case, in view of the vast

difference in the valuation of property made by the

respondent/decree holder and the petitioner/judgment-

debtor, the learned Sub Judge was on his right side in

opting to fix the upset price. But the same does not

appear to have been done fairly and reasonably. Though

the law does not insist the court to pass a long and

reasoned order as has been held in Unni Madhavan Nair's

case, the order should have reflected the application

of mind with respect to the material question of value

of property.

28. Execution Court also seems to have failed in its

duty in considering the objection of the petitioner

that a portion of property excluding the building would

have been sufficient for the satisfaction of the OPC 586/2020

decree. If a part of the property is sufficient to meet

the decree debt, there is a duty cast upon the Court to

fix the extent of property to be sold with

specifications like boundaries, survey number etc. for

identification of the property to the auction

purchasers. That aspect has not been considered at all

by the execution court.

29. Upshot of the above discussion is that the

impugned order passed by the Execution Court is

illegal and irrational in fixing the upset price of

Rs.25 lakhs in absolute disregard of the settled

principles of law and caused miscarriage of justice and

hence is not sustainable either in law or on facts.

30. In the result, Original Petition stands allowed

and the impugned order is set aside. The learned Sub

Judge is directed to conduct an enquiry with respect to

the value of property, after giving opportunity to both

sides and pass fresh orders after hearing both sides,

within two months from the date of receipt of copy of

this judgment.

M.R.ANITHA, Judge

Mrcs/Shg/2.7.

OPC 586/2020

APPENDIX

EXHIBITS EXHIBIT P1 TRUE COPY OF THE COUNTER FILED BY THE PETITIONER TO THE DRAFT SALE PROCLAMATION EXHIBIT P2 TRUE COPY OF REPORT DATED 03-08-2019 SUBMITTED BY THE ADVOCATE COMMISSIONER IN E.P 171/2016 EXHIBIT P3 TRUE COPY OF THE ORDER DATED 28/1/2020 OF SUB COURT, PAYYANNUR IN EP 24/17