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Sai Enterprises v. Bhimreddy Laxmaiah And Another
Factual and Procedural Background
The appellant (plaintiff in OS No. 57 of 1996) obtained a money decree for Rs 4,49,500 against Respondent 2, while Respondent 1 secured a mortgage foreclosure decree for Rs 1,00,000 in OS No. 65 of 1996, both before the Senior Civil Judge, Suryapet. Attachment before judgment was granted on 7-10-1996. Respondent 1 initiated execution (EP No. 1 of 1999) and eventually purchased the mortgaged property at auction for Rs 3,12,000 after newspaper proclamations.
Claiming inadequate publicity and undervaluation, the appellant filed EA No. 42 of 2002 under Order 21 Rule 90 to set aside the sale; it was dismissed and the sale confirmed on 24-1-2002. A further application (EA No. 107 of 2003) to introduce a valuation report was also dismissed. The High Court, in CRP proceedings, rejected the appellant’s objections as “general in nature.” The present appeal challenges that High Court order.
Legal Issues Presented
- Whether the auction sale was vitiated by inadequate publication and improper valuation of the property.
- Whether the executing court failed to comply with its mandatory duty under Order 21 Rule 64 of the Code of Civil Procedure to consider whether only a portion of the property should be sold to satisfy the decree.
Arguments of the Parties
Appellant's Arguments
- The auction was advertised in a newspaper lacking wide circulation, thereby violating the requirement of adequate publicity.
- The sale price of Rs 3,12,000 was grossly below the property’s true value (asserted to be at least Rs 6–8 lakhs).
- The executing court ignored the mandate of Order 21 Rule 64 by failing to examine whether sale of only a part of the property would satisfy the decretal amount.
Respondent's Arguments
- The High Court correctly found that earlier proclamations appeared in “Eenadu,” a widely circulated newspaper, satisfying publicity requirements.
- The objections raised were vague and non-specific; hence, dismissal by the High Court was justified.
Table of Precedents Cited
| Precedent | Rule or Principle Cited For | Application by the Court |
|---|---|---|
| Takkaseela Pedda Subba Reddi v. Pujari Padmavathamma (1977) 3 SCC 337 | Sale cannot extend beyond the amount “necessary to satisfy the decree.” | Quoted to underline that courts must restrict the sale to what is needed for decree satisfaction. |
| Ambati Narasayya v. M. Subba Rao 1989 Supp (2) SCC 693 | Failure to examine whether the whole property must be sold renders the sale illegal. | Relied on to characterise non-compliance with Order 21 Rule 64 as a jurisdictional error. |
| S. Mariyappa v. Siddappa (2005) 10 SCC 253 | Reaffirmed the mandatory nature of the duty under Order 21 Rule 64. | Cited to reinforce the obligation placed upon executing courts. |
| Balakrishnan v. Malaiyandi Konar (2006) 3 SCC 49 | Emphasised legislative intent behind limiting the extent of sale. | Used to support the conclusion that the grievance under Order 21 Rule 64 was well-founded. |
Court's Reasoning and Analysis
The Supreme Court upheld the High Court’s finding that adequate publicity had been given because earlier notices had appeared twice in “Eenadu,” a newspaper of wide circulation. It therefore rejected the appellant’s challenge based on Order 21 Rule 54 and Rule 69.
However, the Court found merit in the appellant’s contention that the executing court ignored the mandatory requirement of Order 21 Rule 64. Citing multiple precedents, the Court reiterated that an executing court must consider whether selling only a portion of the attached property would suffice to meet the decretal amount; failure to do so renders the sale illegal and without jurisdiction.
Given the long lapse of time and the peculiar circumstances, instead of remitting the matter, the Court crafted an equitable solution balancing the parties’ interests.
Holding and Implications
Appeal disposed of with modified directions.
Respondent 1 must pay the appellant Rs 1,00,000 within three months. If payment is not made, the appellant may tender Rs 3,12,000 plus 9% interest from the auction date to Respondent 1 and obtain conveyance of the property under court supervision. No order as to costs was made.
The decision reaffirms the mandatory nature of Order 21 Rule 64 but, on the facts, provides only case-specific relief and does not create new precedent beyond reinforcing existing jurisprudence.
Dr. Arijit Pasayat, J.— Challenge in this appeal is to the judgment passed by a learned Single Judge of the Andhra Pradesh High Court dismissing the civil revision petition filed under Article 227 of the Constitution of India (in short “the Constitution”) read with Section 115 of the Code of Civil Procedure, 1908 (in short “the Code”).
2. Background facts in a nutshell are as follows:
The appellant filed a suit OS No. 57 of 1996 against Respondent 2 for recovery of Rs 4,49,500. Respondent 1 also filed a suit OS No. 65 of 1996 against Respondent 2 for foreclosure of the mortgage in his favour for a sum of Rs 1,00,000. Both the suits were pending on the file of the Senior Civil Judge, Suryapet. During the pendency of the suit the appellant filed IA No. 413 of 1996 for attachment before judgment and same was ordered in terms of order dated 7-10-1996. OS No. 65 of 1996 filed by Respondent 1 was decreed against Respondent 2. Respondent 1 filed an execution petition (EP No. 1 of 1999) and sought for sale of mortgaged property as Respondent 2 did not satisfy the decree. Respondent 1 indicated the value of the property to be rupees three lakhs. The bailiff after obtaining information from the Registrar and Municipal Office mentioned value of the property at Rs 2,55,490. The appellant's suit OS No. 57 of 1996 was decreed against Respondent 2. The said Respondent 2 judgment-debtor was set ex parte as he did not attend the EP proceedings i.e EP No. 1 of 1999. Proclamation was published in newspaper Eenadu. The matter was adjourned from time to time. The appellant filed execution petition EP No. 19 of 2001 seeking direction for sale of schedule property for realisation of the amount of Rs 5,69,816 due under the judgment and decree dated 16-2-2000 made in OS No. 57 of 1996.
3. Respondent 2 filed an application EA No. 90 of 2001 in EP No. 1 of 1999 under Order 21 Rule 69 read with Sections 47 and 151 of the Code seeking a direction to stop the auction to be held on 12-11-2001 and sought for adjournment of the matter for settlement of terms and conditions of sale. Fresh publication and proclamation of sale was made in newspaper, namely, Neti Manadesam. Learned Civil Judge dismissed the application EA No. 90 of 2001 in EP No. 1 of 1999 filed by Respondent 2. The said order was challenged before the High Court in CRP No. 6036 of 2001. Again proclamation of sale was published in Neti Manadesam and the decree-holder purchased the property for Rs 3,12,000 in OS No. 57 of 1996. Thereafter the appellant filed an application EA No. 42 of 2002 under Order 21 Rule 90 of the Code to set aside the sale and to re-auction the schedule property, as Respondent 1 had not taken proper steps for wide publicity of the auction. It was stated that the value of the property was not less than rupees six lakhs. Objection was filed by the respondents. The judgment-debtor categorically stated in the counter that the value of the property is more than rupees eight lakhs. The sale was confirmed on 24-1-2002. The High Court dismissed CRP filed by the judgment-debtor, Respondent 1. The appellant filed an application EA No. 107 of 2003 in EA No. 42 of 2002 in EP No. 1 of 1999 to receive the valuation report issued. Learned Civil Judge dismissed the application. The High Court was moved. As noted above the High Court dismissed the civil revision petition being of the view that allegations made in the petition are general in nature and the affidavit with the petition does not disclose whether objection relates to non-publication in the newspaper or places.
4. In support of the appeal learned counsel for the appellant submitted that the newspaper in which the publication was made is not a wide circulating newspaper. Further the valuation at which the decree-holder purchased is very low. Additionally, it is submitted that in terms of Order 21 Rule 64 of the Code the Court was required to find out whether a part of the property would have sufficed to meet the decretal amount, which was not done in the present case.
5. Learned counsel for the respondent supported the order.
6. It is to be noted that the High Court has categorically found that initially the auction was notified in newspaper Eenadu with wide circulation, and that was done on two occasions. The grievance about the publication in a newspaper with inadequate circulation would have been a factor provided the earlier notice was published in some newspaper not having wide circulation, but admittedly the publication was made in newspaper Eenadu having a wide circulation. Additionally, it was submitted that the stand regarding non-compliance with the requirements of Order 21 Rule 54 sub-rule (2) of the Code is of no consequence because the objection has to be specific and not to be general in nature. In the absence of specific allegations it would not be possible for either parties or the executing court to deal with the same. This conclusion of the High Court is in order.
7. However, the grievance of the appellant so far as non-compliance with the requirements of Order 21 Rule 64 of the Code is concerned is on sound footing.
8. Order 21 Rule 64 reads as follows:
“64. Power to order property attached to be sold and proceeds to be paid to person entitled.—Any court executing a decree may order that any property attached by it and liable to sale, or such portion thereof as may seem necessary to satisfy the decree, shall be sold, and that the proceeds of such sale, or a sufficient portion thereof, shall be paid to the party entitled under the decree to receive the same.”
9. The provision contains some significant words. They are “necessary to satisfy the decree”. Use of the said expression clearly indicates the legislative intent that no sale can be allowed beyond the decretal amount mentioned in the sale proclamation. (See Takkaseela Pedda Subba Reddi v. Pujari Padmavathamma (1977) 3 SCC 337, AIR 1977 SC 1789.) In all execution proceedings, court has to first decide whether it is necessary to bring the entire property to sale or such portion thereof as may seem necessary to satisfy the decree. If the property is large and the decree to be satisfied is small the court must bring only such portion of the property the proceeds of which would be sufficient to satisfy the claim of the decree-holder. It is immaterial whether the property is one or several. Even if the property is one, if a separate portion could be sold without violating any provision of law only such portion of the property should be sold. This is not just a discretion but an obligation imposed on the court. The sale held without examining this aspect and not in conformity with this mandatory requirement would be illegal and without jurisdiction. (See Ambati Narasayya v. M. Subba Rao 1989 Supp (2) SCC 693.) The duty cast upon the court to sell only such portion or portion thereof as is necessary to satisfy the decree is a mandate of the legislature which cannot be ignored. Similar view has been expressed in S. Mariyappa v. Siddappa (2005) 10 SCC 253. The position was also highlighted in Balakrishnan v. Malaiyandi Konar (2006) 3 SCC 49.
10. In the aforesaid background normally we would have remitted the matter for consideration of the aspects covered by Order 21 Rule 64 of the Code. But considering the peculiar facts of the case and the long passage of time, we direct that Respondent 1 shall pay a sum of rupees one lakh to the appellant within a period of three months. In case of non-payment of the aforesaid amount, the appellant shall be free to pay a sum of Rs 3,12,000 with 9% interest from the date of auction, to Respondent 1 and get the property conveyed in his favour under the directions of the Court.
11. Appeal is accordingly disposed of with no order as to costs.
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