Natesa Pillai And Others v. Venkatarama Ayyar And Another S

(Delivered by Stodart, J.)

The appellants are the judgment-debtors. They applied to the Court below under O. 21, R. 90 to set aside a Court sale of their property held on 12th August, 1935, on the ground that there was irregularity in publishing and conducting it, which resulted in the property being sold for a price much below its real value. The objections of the appellants were not stated with any degree of clarity in their application to the lower Court but in the course of the hearing it was urged that the sale was also vitiated by illegality. For the Court at the beginning of its judgment states that:

“it is urged inter alia that there has been material irregularity and illegality and fraud in the publication and conduct of the sale.”

The Court held that the price fetched at the sale was not unduly low, that there was no material irregularity or illegality in publishing or conducting it and that the price fetched at the sale even if considered to be low was not the result of the alleged irregularities or illegalities. Hence this appeal. The contesting respondents here are the decree-holder and the purchaser at Court auction who opposed the petition in the lower Court. The latter is the decree-holder's father.

The questions we have to decide are:

I. Was the price fetched at the sale unduly low so that it can be said to have resulted in substantial loss to the judgment-debtors?

II. If so was that loss due to material irregularity or fraud in publishing or conducting the sale.

III. Was the sale vitiated by illegality?

Learned Counsel on both sides have taken us very carefully through all the evidence relating to the value of the property. The property consisted of 240 acres of wet land and 140 acres of dry land. It was sold for Rs. 32,100. Portions of the wet land are admittedly of inferior quality and liable to submersion. Portions again are handicapped by defect of irrigational facilities. See the reports of the Receiver appointed in the suit dated 13th August, 1935, Ex. XXX and 26th March, 1936, Ex. P. An appreciable area of the wet land namely 111 acres is unyielding. See the Receiver's report dated 17th August 1934, Ex. XXXI. And we observe that the Government assessment on the wet land is lower than the average. It ranges from Rs. 3 per acre to Rs. 4-8-0. The fact is that the lands are near the sea at the end of the cauvery delta. In the cultivation season there is scarcity of water for the cultivation of the crops. When the crops are ripe there is excess of water due to defect of drainage and this causes submersion and loss of crop due to the paddy sprouting in ears. See Ex. P.

In addition to these general indications, there is direct evidence in the record relating to the value of the lands. When the major portion of the lands was proclaimed for sale on a previous execution petition in April 1934 the judgment-debtors filed objections to the upset price of certain of the wet lands as proposed by the decree-holder. The decree-holder had proposed, for the upset price of the wet lands therein concerned measuring 241 acres, a flat rate of Rs. 225 per acre. The judgment-debtors did not object to this rate in the case of 129 acres. But in respect of 112 acres they contended that the rate was too low and should be Rs. 600. The fact which is relevant here is that the judgment-debtors were prepared to accept Rs. 225 per acre for 129 acres out of the 241 acres of wet land which was then put up for sale (Ex. XII A). It is also important to note in this connection that though the Court put up all the wet lands for sale at Rs. 225 per acre on that occasion, there were no bidders.

Direct evidence of the market value of the lands is afforded by the proceedings of the Receiver appointed during the course of the execution proceedings in 1934. On the 14th of August 1934 he held an auction in the village and leased 271 acres of wet land and 117 acres of dry land to the highest bidder: Ex. XXXI. The rent of the lands as ascertained in this manner was 2000 kalams of paddy per annum for the wet lands and Rs. 40 per annum for the dry lands, and 200 bundles of straw (Ex. B-1). Commuting the paddy and straw into money at the rates stated in a previous lease effected by the judgment-debtors dated 1st July 1934 (Ex. B) the total rent reserved under the lease was Rs. 2045. In order to ascertain the net profit to the landlord we must deduct from this the amount payable annually to the Government as land revenue. Taking the average assessment of the wet land at Rs. 3-8-0 per acre and of dry land at Re. 1 per acre, the assessment works out at Rs. 1,065. The net income therefore is in round figure Rs. 1,000. At 16 years purchase the value of the land then leased namely 271 acres wet and 117 acres dry would be only Rs. 16,000. And even this figure must be discounted, for the lease of 1934 was not an outright lease. The lessee reserved the right in the event of deficiency of crop due to shortage of water, or loss of crop due to floods, to pay rent in kind, namely 75 per cent of the yield in the case of some lands and 70 per cent in the case of others. The principal fact brought to our notice by learned Counsel for the appellants is that in the prior execution proceedings of 1934, the decree-holder offered Rs. 36,000 for the land then put up for sale, which is less in quantity than the land now sold. That is true. But it is explained that the decree-holder had not seen the lands when he made this offer. There does not appear to be any reason why that explanation should not be accepted. And as against that offer made by the decree-holder in 1934 we think it only fair to place his present offer made and maintained upto the end of the enquiry in the lower Court namely to restore the lands to the appellants provided he is paid the sale amount with interest. Ex. B-2 is also relied on by the appellants in support of their contention that Rs. 32,100 is an unduly low price for the lands. This is a counter part of a lease effected by the Receiver for 252 acres of wet land and 66 acres of dry. It was executed on 25th June 1935, that is to say, pending this sale. The price of paddy had gone up since the date of the previous lease and the money value of this lease was Rs. 3,884. See Ex. P. The capital value of the land calculated on the basis of this lease would be in the region of Rs. 47,000. But here again the lease was not an outright lease. It contained the same stipulation as the previous lease that in the event of the failure or loss of crop the lessee was entitled to give the landlord rent in the shape of a share of the actual out-turn. And we know from the subsequent report of the Receiver that is what actually happened. The supply of water in the early part of the cultivation season was poor and the Receiver had to conduct the harvest himself. See Ex. XXIX. The rent reserved in these leases effected by the Receiver was not a real competitive rent, and affords no real criterion of the value of the lands. It was payable only on condition that the seasonal conditions and the supply of water were favourable which apparently is a condition of affairs which does not often exist in the case of the lands now in controversy.

In the light of all these circumstances we agree with the learned Sub Judge that judgment-debtors have not shown that they suffered any substantial injury by reason of the price fetched at the sale. And in this view of the case it is not necessary for us to decide the second question which arises in this appeal, namely, whether the learned Sub Judge was wrong in holding that there was no irregularity or fraud in publishing or conducting the sale. We proceed therefore to the third point. Was the learned Sub Judge wrong in holding that the sale was not vitiated by illegality? On this point we think the appellants are entitled to succeed. For reasons which we shall presently state we think the sale was vitiated by illegality. And in such a case the sale must be deemed to be altogether void. In order to set aside a sale on the ground of illegality it is not necessary for the Court to hold that the judgment-debtor has been materially prejudiced by the sale. For the sale itself is a nullity. In this particular case we are compelled to hold that the sale was held on a day which was not a day on which it had been advertised to take place or a day to which it had been adjourned. The sale was originally posted to 8th July 1935. It was adjourned to the 9th, then to the 10th and then to the 11th, the order of the Court being taken for every adjournment. Then on the 11th it was ordered to be continued from day to day till the 26th and it was further directed that the sale would be on the 26th. This was in our opinion an irregularity. It would not have been irregular if the Court had directed that the sale should be adjourned from day to day till satisfactory bids were forthcoming and that these de die in diem adjournments should not continue after the 26th. But for the Court to order on the 11th that the sale should not be concluded till the 26th amounted to an adjournment of the sale for 15 days. And O. 21, R. 69(2) as it then existed laid down the rule that a sale should not be adjourned for a longer period than 7 days without a fresh proclamation unless the judgment-debtor consents to waive it. And there is no indication here that the judgment-debtors did so consent. However it is not this irregularity which forms the basis of our present decision. We merely mention it in passing. We now come to the events of the 26th July. There was no sale on that day and the Court made an order that the auction should be continued for 10 days from the 27th. It further ordered that the sale would be held on the 5th August. Moreover it is clear that the order of the Court was taken as meaning that there would be no auction after the 5th August. For, the decree-holder forthwith caused notices to be printed and circulated in the villages to the effect that, as per order of the Court, the auction would be held continuously from the 26th July to 5th August and would be closed on the 5th August. These notices which were headed “sale notices”, were not only distributed in the villages and published in a local newspaper but also, presumably under the orders of the Court, were published in the same manner as regular proclamations of sale. They were proclaimed by beat of tom tom in the villages where the lands are situated, and were affixed to posts planted in the lands comprised in the notices. And the fact that these formalities had been observed was certified by the Village Munsif, who also obtained in the certificate the attestation of no less than 28 witnesses. It is abundantly clear, therefore, that the Court directed that this long drawn out auction would be closed on the 5th August; that this fact was made known to all concerned who might have been present at the Court when it was made; and that it was forthwith widely published in the villages where the lands are situated. See Ex. XXI series and Ex. XXV and Ex. XXVI.

But there was no sale on the 5th of August. Nor was the auction closed on that date. On that day the decree-holder represented that the auction sale should be continued for another week and deposited Rs. 3-8-0 for the expenses of conducting the sale on seven more successive days. The Court passed no orders on this request other than an order that the money so paid should be accepted. And the property was in fact put up for auction on the 6th August and successive days and eventually knocked down on 12th August for Rs. 32,100 to the decree-holder's father, the upset price being Rs. 32,087, the amount of the sale warrant.

The Court's action in not selling the property on the 5th August or concluding the sale on that day was highly irregular inasmuch as it had been widely proclaimed that was the latest date of sale. Its action in selling the property on a date subsequent to that date was positively illegal. A sale which is held on a day on which it has been expressly proclaimed that it shall not take place is not a valid sale at all. For that reason we must hold that this sale was vitiated by illegality, that it was a nullity, and must therefore be set aside. We allow the appeal with costs both here and in the lower Court.

Appeal allowed.

N.R.R