Case Note & Summary
In a civil execution proceeding, the appellant judgment-debtor challenged the auction sale of her property conducted in execution of a money decree in O.S. No. 67/87. The property consisted of 1053 square feet of land with a built-up house. The executing court sold the property for Rs.15,100/- subject to discharge of a mortgage encumbering the property. Initially, the property was valued at Rs.75,000/-, later reduced to Rs.50,000/-, with an upset price of Rs.15,000/-. The respondent's bid of Rs.15,100/- was accepted, and the sale was knocked down subject to the mortgage. The appellant filed objections under Order 21 Rule 97 of the Code of Civil Procedure, 1908, but the executing court rejected them. The High Court of Madras, in C.R.P. No. 1895/93 by order dated 26.09.1993, confirmed the executing court's order. The appellant then appealed to the Supreme Court by special leave. The central legal issue was whether the execution sale was illegal and in excess of execution. The appellant contended that the sale was invalid under Order 21 Rule 97 CPC because the property was sold for a grossly inadequate price while being subject to a mortgage that exceeded the bid amount. The second respondent's counsel stated that the respondent was himself the mortgagee of the property for Rs.40,000/- and that no other bidders came forward to purchase the property. The appellant also claimed that she had already deposited the entire decretal amount, which was withdrawn by the decree-holder. The Supreme Court considered the undisputed facts: the property was originally valued at Rs.75,000/- and later reduced to Rs.50,000/-, but at auction it was sold for a mere Rs.15,100/- against an upset price of Rs.15,000/-. The successful bidder was the respondent, who was also the mortgagee, and no independent bidders participated. The court observed that the sale was subject to discharge of the mortgage, meaning the purchaser would take the property burdened by a mortgage of Rs.40,000/- (the judgment initially mentioned Rs.43,000/-). Under these circumstances, the sale was held to be in excess of execution and obviously illegal. The court also noted that the appellant had deposited the entire decretal amount, which the decree-holder had withdrawn, indicating that the execution could be satisfied without the sale. Accordingly, the Supreme Court allowed the appeal, set aside the execution sale as illegal and in excess of execution, and imposed terms for restitution. The appellant was directed to deposit interest at 18% per annum from the date of sale, i.e., 20.01.1992, till date on the amount of Rs.15,100/- deposited by the respondent, with liberty to the respondent to withdraw the same. The appellant was also directed to pay Rs.2000/- towards poundage fee. The deposit was to be made within six months. No costs were awarded.
Headnote
A) Civil Procedure - Execution Sale - Validity of Auction Sale - Code of Civil Procedure, 1908, Order 21 Rule 97 - Property measuring 1053 sq. ft. with built-in house was sold in execution of a money decree for Rs.15,100/- though initially valued at Rs.75,000/- and later reduced to Rs.50,000/-, and subject to discharge of a mortgage (stated as Rs.43,000/- initially and Rs.40,000/- later). The successful bidder was the mortgagee/respondent and no other bidders came forward. The court held that the sale was in excess of execution and obviously illegal, warranting setting aside under Order 21 Rule 97 CPC. Held that the sale conducted by the executing court is set aside. B) Civil Procedure - Execution Sale - Terms for Setting Aside Illegal Sale - Code of Civil Procedure, 1908, Order 21 Rule 97 - The appellant judgment-debtor had already deposited the entire decretal amount which was withdrawn by the decree-holder. The court directed the appellant to deposit interest at 18% per annum from the date of sale (20.01.1992) till date on Rs.15,100/- and to pay Rs.2000/- towards poundage fee within six months, with liberty to the respondent to withdraw the interest. Held that the appeal is allowed subject to these terms with no order as to costs.
Issue of Consideration
Whether the execution sale of the judgment debtor's property was illegal and in excess of execution under Order 21 Rule 97 CPC when the property was sold for a grossly inadequate price subject to a mortgage, and what relief should be granted.
Final Decision
Appeal allowed; execution sale of property set aside as illegal and in excess of execution. Appellant directed to deposit interest @ 18% per annum from 20.01.1992 till date on Rs.15,100/- and pay Rs.2000/- poundage fee within six months; respondent at liberty to withdraw interest; no costs.
Law Points
- Execution sale of property at gross undervalue when no bidders except mortgagee is illegal and in excess of execution
- Objection under Order 21 Rule 97 CPC maintainable to challenge execution sale
- Auction sale subject to mortgage for amount more than bid price is invalid
- Payment of decretal amount by judgment debtor can justify setting aside sale with interest and poundage
