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Judgment
A.N. Venugopala Gowda, J.—MFA 1658/08 is by the 3rd party / cross objectors, questioning the conditions imposed in an order dated 28.11.07 passed on I.A.10 in E.P. No. 1.505/00 by the XIX Addl. City Civil Judge, Bangalore City. MFA 4410/08 is by an auction purchaser questioning the aforesaid order.
Since both the appeals are directed against one and the same order, the appeals were heard together. For convenience, the parties would be referred to with reference to their rank in the execution proceedings.
Brief facts of the case which have lead to the filing of these appeals are:
One Mr. Noel F.C. Pinto S/o late Willian Pinto instituted Order Section 113/94 in the Court of Prl. Civil Judge (Sr. Dn), Mangalore against Smt. S. Nagalakshmi Ammal, W/o late E.M. Srinivasan and Smt. Kasturi Rangan, for recovery of a sum of Rs. 3,80,469/- with interests and costs. The suit was decreed on 9.9.96.
The Plaintiff / decree holder filed E.P.1505/00 against the Defendants / judgment debtors in City Civil Court, Bangalore by obtaining transfer of the said decree. Property bearing No. 246, 24th Main, 5th Cross, N.G.E.F. Layout, Sadananda Nagar, Bangalore-38 which stood in the name of judgment debtor-2 was attached by the Execution Court on 30.6.03. Notice to judgment debtor-1 was not taken and the Execution Petition was dismissed on 19.11.03. Decree holder questioned the order dated 19.11.03 dismissing the Execution Petition in CRP 3524/03. The said petition was dismissed on 20.8.04, with liberty to the decree holder to apply for setting aside the. order dated 19.11.03 before the Execution Court. I.A.1 was filed by the decree holder in E.P. 1505/00. The application was allowed and the order dated 19.11.05 was recalled and the Execution Petition was restored to its original file by an order dated 5.10.04.
The 3rd party / objectors (Appellants in MFA 1658/08) purchased the aforesaid property under a registered sale deed dated 23.12.03 for sale consideration amount of Rs. 25,50,000/- from judgment debtor-2. According to them, there was no attachment of the property sold in their favour by the judgment debtor-2 and that they are bona fide purchasers having had no knowledge about any of the proceedings which had taken place against their vendors and in respect of the property purchased by them.
After the execution petition was restored to file, pursuant to the order dated 5.10.04, the aforesaid property which had been attached prior to the order of dismissal of the Execution Petition on 19.11.03, was put to auction by issuing a sale proclamation and sale warrant. The auction having been conducted on spot as well as in the Court, the highest bidder i.e., the Appellant in MFA 4410/08 offered the bid amount of Rs. 23,00,00/- and purchased the property in Court auction, in terms of an order dated 21.9.05. The bid amount was deposited on 19.11.05. The Execution Court passed an order to issue sale certificate in favour of the auction purchaser and thereafter, a warrant was issued to deliver possession of the auction property.
On 31.10.06, the objectors / 3rd party i.e., Appellants in MFA 1658/08 filed I.A. 8 u/s 151 CPC to stay the disbursement of sale proceeds. On the same day, they filed I.A. 9 under Order 21 Rule 97 read with Section 151 CPC to recall the delivery warrant and note their objections. On 23.2.06, they filed applications under Order 21 Rule 90 CPC to set aside the auction sale conducted by the Court. They also filed I.A. 11 u/s 5 read with Section 18 of the Limitation Act to condone the delay in filing the applications to set aside the auction sale. The decree holder filed statement of objections on 23.12.06 to I.As. 8 and 9. The auction purchaser filed the objections statements on 24.8.06 to the applications. The Execution Court having heard the Learned Counsel appearing for the parties, passed orders on I.As. 10 & 11 on 28.11.07, upholding the objections filed by the objectors and declaring that the safe certificate issued by the Court has to be withdrawn, subject to the condition that, the objector should deposit decretal amount within a period of 3 months, along with damages at 10% i.e., Rs. 2,30,000/- and interest at the rate of 12% from the date of depositing of the. auction amount till he deposits the amount i.e., Rs. 2,30,000/- damages and Rs. 10,73,814/- decretal amount and interest at the rate of 12% p.a. on Rs. 10,73,814/-. Upon such deposit, the objector was held entitled to recover the deposit amount from judgment debtor-2 in the Execution Petition.
3rd party objectors i.e., applicants in I.As. 8 to 11 have filed MFA 1658/2008 questioning the conditions imposed in the said order. MFA 4410/08 is by the auction purchaser, questioning the order holding the sale as not done properly and directing the taking back of the bid amount with certain amount of compensation,
Sri M.A. Sebastian, Learned Counsel appearing for the Appellants in MFA 1658/2008 contended that, the Execution Court having found merit in I.A. 10 filed by the 3rd party/objectors and having held that, the sale has not been done properly and that the sale certificate issued has to be withdrawn, has erred m imposing the condition on the applicants/3rd party/objectors to pay the decretal amount along with damages and interest. Learned Counsel contended that, the conditions imposed is without application of mind and support of law. Learned Counsel further contedned that, the 3rd party/objectors are bona fide purchasers for valuable consideration and there is no liability on their part to pay the decretal amount or any amount whatsoever to the decree holder and the Execution Court has wrongly applied the principles of equity in directing the applicants/3rd party/objectors to pay the decretal amount and the damages. Learned Counsel submitted that, in the facts and circumstances of the case, the conditions imposed in the impugned order on the objectors being unjustified and illegal, is liable to be set aside.
10, Sri Pradeep Naik, Learned Counsel for the Appellants in MFA 4410/2008 i.e., the auction purchaser, contended that, there is collusion between the judgment debtors and the 3"'' party/objectors, to defeat the rights of the auction purchaser of the property, who having participated in the auction held, deposited the entire bid amount of Rs. 23,00,000/- within the stipulated period, after which, the sale certificate was issued and the auction purchaser being a bona fide purchaser, his interest ought to have been protected. Learned Counsel contended that, the Execution Court has erred In setting aside the auction sale without the 3rd party/objectors being permitted to be come on record. Learned Counsel further contended that, without any orders being passed on I.As. 8 and 9, the impugned order passed on I.As. 10 and 11 is wholly erroneous. Learned Counsel submitted that, the Execution Court despite noticing the collusive acts between the judgment debtor 2 and the 3rd party/objectors, has erred in interfering with the auction sale held by it and if the impugned order is sustained, the same would cause irreparable loss and injury to the bonafide auction purchaser.
Sri Ramesh, Learned Counsel for the decree holder, contended, that, the Execution Court despite noticing the coliusive acts between the judgment debtor 2 and the 3rd party/objectors has erred in upholding the claim of the 3rd party/objectors and declaring the sale certificate issued as liable to be withdrawn. Learned Counsel submitted that, the Execution Court has not conducted the proceedings in accordance with law and the impugned order is vitiated.
I have perused the record.
In view of the rival contentions and the record, the point for consideration is:
Whether the impugned order is sustainable?
On 05.07.2005, the Execution Court ordered to issue sale warrant and proclamation. The sale at the spot was fixed on 14.09.2005 and sale at the Court was fixed on 21.09.2005. Sale having been conducted at the spot, safe proclamation alongwith sale warrant issued was returned. In the sale held at the spot on 14.09.2005, P.D. Kishore Pal was the highest bidder, having offered the bid of Rs. 19,50,000/-. The property was subject to auction in the Court on 21.09 2005. P.D. Kishore Pal and one Doddaiah participated in the bid. The highest bid was that of P.D. Kishore Pal at Rs. 23,00,000/-. The highest bid was accepted and the bidder was permitted to deposit 1/4th of the bid amount in the office. Cheque for Rs. 5,75,000/- was deposited. Auction purchaser filed the memo and reported the deposit of entire balance bid amount within the time allowed. Noticing the deposit of entire bid amount within the stipulated time, by an order dated 08.11.2005, the safe in favour of the auction purchaser was confirmed and sale certificate was ordered to be issued to the auction purchaser. The auction purchaser having filed the documentation sheets, it was ordered to prepare the sale certificate and report by 29.11.2005. The sale certificate was signed and sent to the Sub-Registrar, K.R. Puram, Bangalore and was registered on 08.12.2005.
I.A. 5 was filed on 17.12.2005 by the auction purchaser under Order 21 Rule 95 of CPC alongwith copy of court sale certificate. The decree holder filed I.A. 6 u/s 151 of CPC I.A. 5 was allowed on 20.12.2005 and delivery warrant as against judgment debtor No. 2 for delivery of possession of the property to the auction purchaser was ordered. With regard to I.A. 6 office was directed to verify and report regarding the claim of the decree holder. Office having verified, prepared the report. I.A. 7 was filed by the decree holder for advancing of the case from 31.01.2006 to 17.01.2006. The case having been advanced. I.A. 8 was filed u/s 151 of C.P.C on 17.01.2006 and was adjourned to hear I.A. 8 by 21.01.2006. On 21.01.2006, the case was adjourned to 14.02.2006. However, the case has been called on 31.01.2006, on which date, the auction purchaser filed objections to I.A. 8. The third party - objectors filed I.A. 9 under Order 21 Rule 97 r/w Section 151 C.P.C with list of 5 documents. Case was adjourned for filing the objections to I. As 8 & 9 by 06.02,2006. The matter was adjourned from 06.02.2006 to 23.02.2006, on which day, decree holder filed objections to I.A. 8 and the third party-objector filed I.A. 10 under Order 21 Rule 90 r/w Section 151 C.P.C and I.A. 11 u/s 5 r/w Section 18 of Limitation Act. The case was adjourned to 24.03.2006 to file objections to I. As 10 & 11. Objections to I. As 10 & 11 were filed by the auction purchaser on 29.06.2006. The case was adjourned to hear I. As 8 to 11. Matter having been adjourned thereafter, was ordered to be posted for enquiry on I. As 8 to 11 by 16.01.2007. Evidence of the third party-objector was recorded and Exs.P-1 to P-14 were marked on 16.01.2007. Decree holder filed 2 applications on 03.03,2007 and the same were allowed subject to payment of cost. PW-1''s cross-examination was completed on 24.03.2007. For the decree holder, affidavit of DW-1 by way of evidence was filed on 24.03.2007 and Exs.D-1 to D-6 were marked. Affidavit evidence of auction purchaser was filed and was examined as PW-2. Case was adjourned for cross-examination of D Ws 1 & 2 and the cross-examination having been completed on 27.06.2007 the case was posted for arguments. The Execution Court without passing any orders on I. As 8 & 9, passed the order on I. As 10 & 11 on 28.11.2007.
I.A.8 is dated 31.01.2006 filed by third party-objectors u/s 151 C.P.C, to stay the disbursing of the sale proceeds. I.A. 9 dated 31.01.2006 was filed by third party objectors to note their objection and to recall the delivery warrant issued on 20.12.2005. I.A. 10 dated 23.02.2006 is an application under Order 21 Rule 90 r/w Section 151 C.P.C to set-aside the auction sale conducted on 21.09.2005. On the same day, I.A. 11 was filed u/s 5 r/w Section 18 of Limitation Act to condone the delay in filing I.A. 10. Decree holder had filed statement of objections to I.A. 11, wherein it was stated as follows:
The averments made in para 6 of the affidavit with regard to delay in filing the application is totally false. In fact the objectors have deliberately avoided to approach this Hon''ble Court well within the time and were watching the proceedings. It is further submitted that, the allegation of the objectors is that they are residing in the schedule premises, if definitely this fact is assumed to be true nothing prevented them from filing this application within time. It can be noticed that before filing this application they have filed other applications under Order XXI Rule 27 and Order XXI Rule 90 before this Hon''ble Court. That itself shows they are not diligent and genuine parties having interest of this property. On this ground alone the application deserved to be dismissed. It is further submitted that, there was an inordinate delay in filing this application and there is no proper and satisfactory explanation given by the objector to condone the same.
The auction purchaser in the statement of objections filed to I.A. 11 has stated as follows:
The averments made in para 6 of the affidavit with regard to delay in filing the application is totally false. In fact the objectors have deliberately avoided to approach this Hon''ble Court well within the time and were watching the proceedings. It is further submitted that, the allegation of the objectors is that they are residing in the schedule premises, if definitely this fact is assumed to be true nothing prevented them from filing this application within time. It can be noticed that before filing this application they have filed other applications under Order XXI Rule 27 and Order XXI Rule 90 before this Hon''ble Court. That itself shows they are not diligent and genuine parties having interest of this property. On this ground alone the application deserved to be dismissed. It is further submitted that, there was an inordinate delay in filing this application and there is no proper and satisfactory explanation given by the objector to condone the same.
The heading of the impugned order shows as if it is with reference to I. As 10 & 11 filed by the third party-objector. A perusal of the impugned order makes it clear that, there is neither consideration of I.A. 11 nor the objection filed to it, muchless any order having been passed with reference to the prayer on I.A. 11. The penultimate portion of the impugned order shows that, the application filed by the objector is upheld and it was declared that the sale certificate issued he withdrawn subject to the conditions indicated therein.
When an auction safe takes place under an order of Civil Court, the procedure laid down in the C.P.C is required to be complied with. Objections if any, to the validity of the sale at the instance of one party or the other, are required to be considered and determined in accordance with law. The impugned order is silent with regard to the prayer of third party-objectors made in I.A. 11. Objections having been filed to I.A. 11 by the decree holder as well as the auction purchaser, there is an obligation on the part of the Court below to first consider and pass order on I.A. 11 and thereafter or simultaneously consider and pass order on I.A. 10. The non-consideration of I.A. 11 and passing an order thereon has vitiated the impugned order. There is material error, irregularity and illegality committed by the Court below. In the circumstances, in my opinion, the matter should be directed to be considered afresh by the Court below.
In the result, the appeals are allowed. The order dated 28.11.2007, passed in Execution No. 1505/2000 by the learned 19th Addl. City Civil & Sessions Judge, Bangalore City, impugned herein, is hereby set-aside.
The matters stand remitted to the Court below for consideration and disposal, keeping in view the observations made supra and in accordance with law.
The LCR be returned immediately to the Court below. The parties are directed to appear before the Court below on 20.08.2011 and receive further orders.
The Court below to consider the matter and decide the same with utmost expedition and at any event, before 17.12.2011. Needless to state that the contentions of both parties are kept open for consideration.
Since the matter is directed to be re-considered, the Court below is directed not to disburse the amount deposited by the auction purchaser, in favour of the decree holder till I.A. Nos. 10 and 11 are decided.
In the circumstances of the case, the parties are directed to bear their respective costs.