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Saheb Khan v. Mohd. Yousufuddin And Others
Factual and Procedural Background
The suit property, found to be non-partible in a partition suit among the respondents or their predecessors-in-interest, was ordered by the trial court to be sold. An Advocate Commissioner was appointed with directions “to sell the suit property in auction between the parties to the suit or in public auction, if the parties are not coming forward, after following the due procedure like giving wide publicity”.
Notice of auction dated 25-6-2002 was circulated to the parties through their lawyers, pasted on the property and pamphlets were distributed locally. On 30-6-2002, the auction was held; the appellant emerged the highest bidder at Rs 12 lakhs (upset price Rs 10 lakhs) and deposited one-fourth of the bid immediately, later paying the balance.
Respondent 1 moved an application under Order 21 Rule 90 CPC alleging irregularities and proposing a third-party purchaser (Azhar Quyum Sidhique) willing to pay Rs 18 lakhs. Despite three opportunities granted by the District Judge, the proposed purchaser never appeared or deposited any money. The trial court confirmed the sale in favour of the appellant, finding no irregularity or fraud.
On appeal, the High Court set aside the sale, holding that (i) Respondent 1 had not been given notice under Sections 2-3 of the Partition Act, 1893, (ii) it was doubtful whether he received the auction notice, and (iii) Order 21 Rules 66-67 CPC were violated because the sale lacked adequate publicity (no newspaper advertisement). The High Court also relied on the alleged higher offer of Rs 18 lakhs.
The appellant challenged the High Court’s order before the Supreme Court.
Legal Issues Presented
- Whether the auction sale complied with the procedural requirements of Order 21 Rules 54(2) and 67(1) CPC and the trial court’s directive for “wide publicity”.
- Whether any “material irregularity or fraud” occurred in publishing or conducting the sale, and if so, whether Respondent 1 sustained “substantial injury” as mandated by Order 21 Rule 90(2) CPC.
- Whether an unsubstantiated higher offer after the auction justified setting aside the confirmed sale.
Arguments of the Parties
Appellant's Arguments
- “Wide publicity” did not oblige a newspaper advertisement; the Commissioner had complied with Order 21 Rules 54(2) and 67(1) CPC.
- No material irregularity or fraud was shown; therefore the High Court had no jurisdiction to annul the sale under Order 21 Rule 90.
- The alleged offer of Rs 18 lakhs was never supported by a deposit; reliance on it to term the auction undervalued was unfounded.
Respondent 1's Arguments
- The phrase “wide publicity” implied a mandatory newspaper advertisement, which was not done.
- No notice of sale was served on Respondent 1; the notice was sent to an advocate who did not represent him.
- The auction was collusive and at an undervalue, evidenced by the third-party offer of Rs 18 lakhs.
Table of Precedents Cited
| Precedent | Rule or Principle Cited For | Application by the Court |
|---|---|---|
| Dhirendra Nath Gorai v. Sudhir Chandra Ghosh (1964) 6 SCR 1001; AIR 1964 SC 1300 | A sale can be set aside under Order 21 Rule 90 only when (a) there is material irregularity or fraud and (b) the applicant suffers substantial injury because of it. | Used to underscore that both elements are cumulative; Respondent 1 failed to prove either. |
| Jaswantlal Natvarlal Thakkar v. Sushilaben Manilal Dangarwala 1991 Supp (2) SCC 691 | Reiteration of the dual requirement of irregularity/fraud plus substantial injury. | Cited to reinforce the threshold Respondent 1 had to meet for setting aside the sale. |
| Kadiyala Rama Rao v. Gutala Kahna Rao (2000) 3 SCC 87 | Same principle regarding Order 21 Rule 90 and necessity of proving substantial injury caused by irregularity. | Supported the Supreme Court’s conclusion that the High Court erred in disregarding this prerequisite. |
Court's Reasoning and Analysis
The Supreme Court emphasized the statutory framework of Order 21 Rule 90 CPC. A sale may be annulled only when the applicant establishes both (i) material irregularity or fraud in publishing or conducting the sale and (ii) resultant substantial injury. Mere allegation of one without the other is insufficient.
Regarding alleged irregularities, the Court found:
- The trial court’s directive for “wide publicity” did not inherently require newspaper publication; under Order 21 Rule 67, such a step demands an explicit order, which was absent.
- The Advocate Commissioner followed Rule 67(1) read with Rule 54(2): notices were pasted on the property and pamphlets distributed locally, satisfying statutory publication methods.
- Beat of drum announcement is optional; its absence is not fatal where other prescribed modes are followed.
The charge of fraud or collusion was unsubstantiated; no concrete particulars were pleaded or proved.
As to substantial injury, Respondent 1 never intended to purchase the property himself, nor did he question the upset price (supported by the Sub-Registrar’s market-value certificate). The only evidence of higher value—the affidavit of Sidhique—was discredited when the alleged purchaser failed to appear despite repeated opportunities. Conversely, the appellant had deposited the full bid amount.
Therefore, Respondent 1 proved neither irregularity nor injury. The High Court’s reliance on an unverified higher offer and its interpretation of “wide publicity” were held to be erroneous.
Holding and Implications
Appeal Allowed; High Court judgment set aside; sale in favour of the appellant confirmed with costs.
Immediate effect: the appellant’s purchase stands validated and Respondent 1’s objections are dismissed. Broader implication: the decision reaffirms that courts cannot annul an execution sale unless both statutory prerequisites under Order 21 Rule 90 CPC—material irregularity (or fraud) and resulting substantial injury—are strictly proved; “wide publicity” does not automatically necessitate newspaper advertisement absent a specific court order.
Ruma Pal, J.— Leave granted.
2. The appellant had purchased certain property in a court sale. The High Court has set aside the sale. The decision of the High Court has been impugned in this appeal.
3. The disputed property was the subject-matter of a suit for partition between the respondents or their predecessors-in-interest. The property was not partible. The trial court accordingly directed sale of the suit property. An Advocate Commissioner was appointed to sell the suit property. The order directing sale required the Advocate Commissioner “to sell the suit property in auction between the parties to the suit or in public auction, if the parties are not coming forward after following the due procedure like giving wide publicity”.
4. The Advocate Commissioner issued notice to the parties to the suit through their respective advocates on 25-6-2002. The notice said that the warrant of commission would be executed by the sale of the property on 30-6-2002 by auction and that the parties were at liberty to participate in the auction if they desired to. The Commissioner also pasted notices on the wall of the suit property and distributed pamphlets advertising the sale in the locality.
5. On 30-6-2002, four of the parties were present and, according to the report of the Commissioner about “20-30 general public offers were made as against the fixed upset price of Rs 10 lakhs”. The highest bid was given by the appellant of Rs 12 lakhs. He deposited three lakhs being 1/4th of the bid amount. A report was submitted to the court by the Advocate Commissioner enclosing, inter alia, a copy of the minutes of the proceedings held by the Commissioner signed by the parties as well as a list of the bidders and their names and addresses.
6. On 12-8-2002, Respondent 1, herein (who was Defendant 4 in the suit) filed an application under Order 21 Rule 90 read with Section 151 of the Code of Civil Procedure praying that the auction should be set aside and that the sale should be made in favour of one Azhar Quyum Sidhique for 18 lakhs. The application was accompanied by an affidavit affirmed by the said Sidhique in which he said that he was ready to purchase the suit premises and would deposit Rs One lakh within two days and pay the balance “within any period at the time of registration”.
7. Although by this time, the appellant had deposited the offered price of Rs 12 lakhs, the District Judge gave an opportunity to Respondent 1 to bring the said Sidhique to the court to deposit the sum of Rs 18 lakhs. Respondent 1, however, failed to produce the alleged purchaser. Three such opportunities were given by the District Judge. On all three occasions, the said Sidhique did not present himself in the court.
8. The District Judge then passed an order holding that adequate notice had been given by the Advocate Commissioner for publishing the sale. Respondent 1's contention that the sale should have been published in the newspaper was rejected on the ground that no such direction had been given by the court. The trial court also noted that Respondent 1 was not interested to purchase the property himself and had failed to substantiate his claim that he had found a purchaser of the property for Rs 18 lakhs despite repeated opportunities. The trial court held that the legally prescribed procedure had been followed by the Advocate Commissioner to sell the property and the sale did not suffer from any irregularities or fraud. The sale was accordingly confirmed in favour of the appellant.
9. Impugning the decision of the District Judge, Respondent 1 preferred an appeal before the High Court. The High Court set aside the sale holding that no notice was given to Respondent 1 to purchase the property in terms of Sections 2 and 3 of the Partition Act, 1893 before selling the property by public auction. It was also held that it was unclear whether notice was served on Respondent 1 as the signatures on the notice were not legible. In any event, the Court was of the view that the provisions of Order 21 Rules 66 and 67 of the Code of Civil Procedure had been violated by not giving adequate publicity to the sale. It was also noted that Respondent 1 had brought to the notice of the Court the offer of the said Sidhique for Rs 18 lakhs. The High Court said that there was no valid or legal reason for not accepting or acting upon the offer so brought forward by Respondent 1. In the circumstances, the appeal was allowed and the sale was set aside.
10. Before us the appellant has contended that the High Court did not construe the provisions of Order 21 Rule 54(2) read with Rule 67(1) correctly. Although wide publicity had been directed to be given by the trial court, there was no direction to publish the advertisement in any newspaper. It was further said that there was no material irregularity in the conduct of the sale which could justify the High Court in setting it aside. It was further contended that the alleged offer brought forward by Respondent 1 was not followed up by any actual deposit and could not form the basis of the High Court coming to the conclusion that the property has been sold for at an undervalue to the appellant.
11. According to the learned counsel appearing on behalf of Respondent 1, by using the words “wide publicity”, the trial court had intended that the sale should be advertised in the newspaper. It was also submitted that no notice was given to Respondent 1 at any stage. The Advocate Commissioner's notice of sale had been addressed to a lawyer, who did not in fact represent Respondent 1. It was further submitted that the sale had been held in collusion between the other parties and the purchaser and that the sale had been made at an undervalue.
12. We are unable to sustain the reasoning of the High Court. Order 21 Rule 90 of the Code of Civil Procedure allows, inter alia, any person whose interests are affected by the sale to apply to the court to set aside a sale of immovable property sold in execution of a decree on the ground of “a material irregularity or fraud in publishing or conducting” the sale. Sub-rule (2) of Order 21 Rule 90 however places a further condition on the setting aside of a court sale in the following language:
“90. (2) 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.”
13. Therefore before the sale can be set aside merely establishing a material irregularity or fraud will not do. The applicant must go further and establish to the satisfaction of the court that the material irregularity or fraud has resulted in substantial injury to the applicant. Conversely even if the applicant has suffered substantial injury by reason of the sale, this would not be sufficient to set the sale aside unless substantial injury has been occasioned by a material irregularity or fraud in publishing or conducting the sale. (See Dhirendra Nath Gorai v. Sudhir Chandra Ghosh (1964) 6 SCR 1001, AIR 1964 SC 1300; Jaswantlal Natvarlal Thakkar v. Sushilaben Manilal Dangarwala 1991 Supp (2) SCC 691 and Kadiyala Rama Rao v. Gutala Kahna Rao (2000) 3 SCC 87.)
14. A charge of fraud or material irregularity under Order 21 Rule 90 must be specifically made with sufficient particulars. Bald allegations would not do. The facts must be established which could reasonably sustain such a charge. In the case before us, no such particulars have been given by the respondent of the alleged collusion between the other respondents and the auction-purchaser. There is also no material irregularity in publishing or conducting the sale. There was sufficient compliance with Order 21 Rule 67(1) read with Order 21 Rule 54(2). 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. The provisions of Order 21 Rule 67 clearly provide 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 21 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 and 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.”
15. The proclamation of the sale by beat of drum was not mandatory, so long as the sale notice was proclaimed at or adjacent to the property. Admittedly, the Advocate Commissioner distributed the pamphlets advertising the sale in the locality several days prior to holding of the sale and also affixed a copy of the sale notice on the property itself.
16. In any event Respondent 1 has been unable to establish that he had suffered substantial injury by reason of any irregularity or fraud. The lack of notice under the Partition Act, 1893 to Respondent 1 was immaterial as it was not the respondent's case that he would have purchased the property. No such intention has ever been expressed. Respondent 1's only grievance is that the property could have fetched a higher value. Apart from the alleged affidavit of the said Sidhique, no other material has been produced by him in support of such submission. On the other hand in fixing the upset price, the Advocate Commissioner had taken into account the certificate of market value in respect of the property issued by the Sub-Registrar, Golkunda dated 13-5-2005 at Rs 10 lakhs. Respondent 1 has never complained that the upset price had been wrongly fixed. The appellant's offer was above the market value. Additionally, Respondent 1 was given several opportunities to produce the purchaser, who was allegedly willing to pay a higher price. The purchaser was never produced. As against this, the appellant has duly deposited the entire amount of Rs 12 lakhs in the court. The District Judge, was in the circumstances correct in rejecting the so-called offer of the said Sidhique.
17. In the circumstances, the High Court erred in setting aside the sale in favour of the appellant. The decision of the High Court is unsustainable both in fact and in law. It is accordingly set aside and the appeal is allowed with costs.
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