FAO No. 114 of 2019 · Kerala High Court

BY ADVS. SRI.MATHEW B. KURIAN SRI.K.T. THOMAS THIS FIRST APPEAL FROM ORDERS HAVING BEEN FINALLY HEARD ON

04.07.2024, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: FAO No.114 of 2019 2 Harisankar V. Menon, J. JUDGMENT This appeal is filed under Section 104 and Order XLIII Rule 1(j) of the Code of Civil Procedure, 1908 (for short, the Code) by the defendant in O.S.No.95 of 2009 and the petitioner in E.A.No.157 of 2015 in E.P.No.23 of 2012 in O.S.No.95 of 2009 before the Subordinate Judge’s Court, Cherthala. The application as above, for setting aside the sale conducted on 11.08.2015, was dismissed by the Subordinate Judge’s Court, Cherthala and the present appeal is filed, challenging the above order.

The short facts necessary for the disposal of this appeal are as follows: The appellant-defendant had entered into an agreement with the respondent-plaintiff on 29.08.2008 for the sale of certain property in his ownership and possession for Rs.35,000/- per cent. Insofar as the sale did not take place in spite of the repeated requests as claimed by the plaintiff, she instituted O.S.No.95 of 2009 praying for a decree for recovery of the advance amount of Rs.5 lakhs paid to the appellant-defendant. The appellant- defendant resisted the suit by filing a detailed written statement. However, the suit is decreed on 04.07.2011 for the realisation of FAO No.114 of 2019 3 Rs.5,46,000/- with future interest. For the execution of the above decree, E.P.No.23 of 2012 in O.S.No.95 of 2009 was filed by the respondent-plaintiff. The plaint schedule property was put to sale, fixing the value thereof at Rs.10,17,500/-. The respondent- plaintiff-decree holder herself auctioned the property Rs.10,17,600/-.

As the sale was not conducted by following the procedures prescribed as per law, the appellant-defendant filed E.A.No.157 of 2015 in E.P.No.23 of 2012 in O.S.No.95 of 2009 under Order XXI Rule 90 of the Code, for setting aside the sale, mainly pointing out that there was no notice as contemplated under Order XXI Rule 66(2) of the Code and that the total liability of Rs.5,20,000/- as regards the scheduled property shown in the auction notice was incorrect, insofar as all the cases referred to were settled before the sale notice was published. The appellant-defendant also disputed the fixed upset price at Rs.10,17,500/-.

The trial court by the impugned order found that the sale proclamation was published in the Collectorate, Alappuzha Village Office South and North, Cherthala, Court notice board, Cherthala South Grama Panchayat and in the plaint scheduled property, and no irregularity in publishing the sale proclamation was noticed as FAO No.114 of 2019 4 pointed out by the appellant-defendant. The trial court also referred to the encumbrance certificate which showed other liabilities to the extent of Rs.5,20,000/- and that the appellant- defendant did not produce any evidence to prove that the debts had already been cleared. As regards the contention with respect to the low value of the property concerned, the trial court found that the valuation certificate produced by the decree-holder shows the value as Rs.25,600/- per Ares in 2014 and the market value fixed by the court on 27.06.2015 was Rs.50,000/- per Ares, whereas the appellant-defendant did not produce any document to show that a higher value ought to have been fixed by the court. The trial court also made reference to the market value as contended by the appellant-defendant at Rs.18 lakhs, as also the value shown in the agreement entered into between the petitioner and the decree-holder in 2008 at Rs.17,50,000/- and made reference to the contention of the plaintiff that the defendant had cut and removed valuable trees in the property on account of which the value of the property had diminished. The trial court, thereafter, found as under: “10. Upset price was fixed by the court after considering the valuation certificate produced by the respondent. Total extent of decree schedule property was also considered then. FAO No.114 of 2019 5 Therefore, mere statement of the respondent that market value of the property sold was 18 lakhs need not be looked into. In spite of proper publication of sale proclamation, nobody had come forward to participate in the auction.

It was argued by the learned counsel for the petitioner that decree schedule property is lying as a single plot and the sale of property without showing value of 3 schedules separately was to help the respondent. I don’t find any merit in the said argument. There is no illegality or irregularity in selling the entire property lying as a single plot.

Petitioner who is well aware of the decree did not even paid single paise to the respondent. He willfully remained absent on receipt of Rule 66 notice and filed this petition without even filing an application to set aside exparte order. How he came to learn about sale was not stated in the affidavit. He pretended ignorance of receipt of Rule 66 notice and was watching entire proceedings behind the curtain and appeared before the court with this petition after sale of property.” Finding thus, the petition filed for setting aside the sale by the appellant-defendant is dismissed. It is challenging the above order; this appeal is filed by the appellant-defendant.

On 25.06.2019, this Court admitted this appeal ordering stay in the execution proceedings for a period of one month. The said order has been revived and extended on 04.03.2021 for a period of four months and is being extended from time to time. FAO No.114 of 2019 6

We have heard the learned counsel appearing for the appellant-defendant and the learned counsel representing the respondent-plaintiff.

The learned counsel for the appellant-defendant contended that the finding of the trial court that the appellant- defendant did not produce any evidence to show that the liability over the property has already been cleared, is patently against the factual position as is clear from the document produced before this Court along with I.A.No.1 of 2023. Therefore, he prays that the impugned order may be set aside. Per contra, the learned counsel for the plaintiff contended that the order issued by the trial court is correct and there is no reason pointed out by the appellant- defendant for interfering with the said orders.

We have considered the rival submissions made before us as well as perused the connected records.

The appellant has filed the application before the trial court for setting aside the sale conducted on 11.08.2015 under Order XXI Rule 90 of the Code. The provisions under Order XXI Rule 90 of the Code read as under:

90. Application to set aside sale on ground of irregularity or fraud.— (1) Where any immovable property has been sold in FAO No.114 of 2019 7 execution of a decree, the decree-holder, or the purchaser, or any other person entitled to share in a rateable distribution of assets, or whose interests are affected by the sale, may apply to the Court to set aside the sale on the ground of a material irregularity or fraud in publishing or conducting it. (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. (3) No application to set aside a sale under this rule shall be entertained upon any ground which the applicant could have taken on or before the date on which the proclamation of sale was drawn up. Explanation.—The mere absence of, or defect in, attachment of the property sold shall not, by itself, be a ground for setting aside a sale under this rule.

Thus, an application for setting aside a sale can be presented, on the ground of material irregularity or fraud in publishing or conducting the sale.

The definite case of the appellant-defendant before the trial court was that the property would have definitely fetched more value than the value for which the same has been sold. It was pointed out that the market value of the property was around Rs.18 lakhs and even the agreement for sale was for Rs.17.50 lakhs. The trial court noticed the pre-existing liability FAO No.114 of 2019 8 of Rs.5.20 lakhs as reflected in the encumbrance certificate for fixing the upset price at Rs.50,000/- per Are. Though the appellant-defendant contended that the liability as noticed above had been cleared by him, the trial court found that no evidence was produced to prove the same. However, before this Court, the appellant has filed I.A.No.1 of 2023, producing certain documents. In the affidavit accompanying the application, it is pointed out that much prior to the fixation of upset price and sale of property, the court attachments mentioned above were lifted, and the said facts were even communicated to the concerned Village Office from the concerned trial court on

24.07.2014. The order by which O.S.No.30 of 2009 was compromised, issued by the Sub Court, Cherthala, and the covering letter to the Sub Registrar’s Office, Cherthala, have been produced as Annexures A1 and A2. As regards O.S.No.116 of 2010, reference is made to Annexure A3 to point out that the suit itself was dismissed on 15.06.2011. The above I.A.No.1 of 2023 has been presented under Order XLI Rule 27 of the Code, as per which Rule, the appellate court may allow such additional evidence to be produced. Thus, it is seen that by virtue of the above documents, the liability over the scheduled property FAO No.114 of 2019 9 noticed by the trial court does not actually exist. It is also noticed that the documents relied on by the appellant are sufficiently earlier to the date on which the sale was conducted on 11.8.2015.

11. The contention of the appellant that the upset price fixed for the sale in 2015 is very low, has to be viewed in the light of the above documents. However, the trial court did not have an occasion to consider the above documents while deciding the application filed under Order XXI Rule 90 of the Code. In such circumstances, we allow this appeal, setting aside the impugned order dated 26.3.2019 in E.A.No.157 of 2015 in E.P.No.23 of 2012 in O.S.No.95 of 2009 of the Sub Court, Cherthala and remit the matter back to the trial court for fresh consideration with reference to the orders at Annexures A1 to A3 referred to above. Sd/- ANIL K. NARENDRAN JUDGE Sd/- HARISANKAR V. MENON JUDGE FAO No.114 of 2019 10 APPENDIX OF FAO 114/2019 APPELLANT’S ANNEXURES: ANNEXURE A1 CERTIFIED COPY OF ORDER IN E.A 146/2014 IN EP 47/2012 IN OS 30/2009 OF SUB COURT, CHERTHALA DATED 22/07/2014 ANNEXURE A2 CERTIFIED COPY OF COMMUNICATION FROM SUB JUDGE, CHERTHALA DATED 24/07/2014 ANNEXURE A3 CERTIFIED COPY OF JUDGEMENT IN DATED 15/06/2011 IN O.S NO. L 16/2010 OF SUB COURT, CHERTHALA ANNEXURE B1 CERTIFIED COPY OF SALE DEED NO.2021/15 OF CHERTHALA SUB REGISTRAR