Supreme Court of India

SEETHAMMALversusSENTHIL FINANCE AND ANR.

Citation: 1996 INSC 396
Decided: 15 March 1996
Disposal: Appeal(s) allowed
Bench: K RAMASWAMYG T NANAVATI

Holding

The sale was illegal and in excess of the execution, and the appeal was allowed, directing the appellant to pay interest at 18% and a poundage fee of Rs 2,000.

Summary

In execution of a money decree, a mortgaged property valued at Rs 75,000 (later reduced to Rs 50,000) was auctioned and sold for Rs 15,100, with the mortgagee himself submitting the winning bid. The appellant, the judgment debtor, challenged the validity of the sale under Order 21 Rule 97 of the CPC, arguing that the sale was in excess of the execution. The High Court had confirmed the sale, but the appellate court found that the sale was illegal because the price was far below market value and the mortgagee purchased the property, leaving no genuine purchaser. The court allowed the appeal, directing the appellant to deposit interest at 18% from the date of sale to the date of payment and to pay a poundage fee of Rs 2,000, with the respondent entitled to withdraw the deposited amount. No costs were awarded.

Issues considered

Whether the auction sale of the mortgaged property at a price far below its market value, purchased by the mortgagee, is valid under Order 21 Rule 97 of the CPC.
Whether the decree debtor is liable to pay interest and poundage fee on the amount deposited by the respondent.

Legislation cited

Code of Civil Procedure, 1908s. Order 21 Rule 97

Subjects

auction saleexecution of decreeOrder 21 Rule 97illegal salemortgagee purchaseinterest liabilitypoundage feedecree debtor

Judgment

A                                 SEETHAMMAL
                                          v.
                         SENTHIL FINANCE AND ANR.

                                  MARCH 15, 1996

B                (K. RAMASWAMY AND G.T. NANAVATI, JJ.]

            Code of Civil Procedure, 1908: Order 21-fl.ule 97.

            Decree--Executio11 of-Auctio11 sale for-Clzallenge to validity ofauc-
C tion sale by judgment debto,-..Ilejection of by Executio11 Court-Confirmation
  by High Court-Appeaf'-f'roperty for Rs. 40,000 mortgaged with respon-
  de11t-Property originally valued fer Rs. 75,000 but subsequently reduced to
  Rs. 50,000 Respondent's bid for Rs. 15,000 accepted subject to discharge of
  mortgage sum-Nobody comi11g forward to purchase the property-Respon-
  dent-mortgagee himselfpurchasing for Rs. 15, !()()-Sale conducted by Execut-
D ing Court held illegal-Entire decretal amount deposited by Judgment Debtor
  already withdrawn by decree holde,-.-Judgment debtor directed fi1rther to
  deposit 18% interest from the date of sale till date of deposit of Rs. 15,000
  as well as Rs. 2,000 towards poundage fee.

            CIVIL APPELLATE JURISDICTION: Civil Appeal No. 5092 of
E   1996.

         From the Judgment and Order dated 26.9.95 of the Madras High
    Court in C.R.P. No. 1895 of 1993.

            R. Sundaravardhan, C. Balasubramaniam and K. Ram Kumar for the
F Appellant.
            A.T.M. Sampath and T. Srinivasadhran for the Respondents.

            The following Order of the Court was delivered :

G           Leave granted.

            Heard counsel for both the parties.

          In execution of money decree in O.S. No 67/87, the property, i.e.,
    1053 sq. feet of land with built-in house was sold for a sum of Rs. 15,100
H   subject to discharge of the mortgage sum of Rs. 40,000 encumbered on the
                                         498
                       SEETHAMMAL v. SENTHIL FINANCE                     499

    property. The appellant/judgment-debtor questioned the validity of the sale A
    under Order 21, Rule 97, CPC. The executing Court rejected the same
    which was confirmed in C.R.P. No. 1895/93 by the impugned order dated
    September 26, 1993 of the High Court of Madras. Thus this appeal.

          Having heard the learned counsel on both sides, we are of the view
    that the sale is in excess of the execution. It is not in dispute that the B
    property sold consists of a built-up house in a portion measuring 1053 sq.
    ft. The property was originally valued for a sum of Rs. 75,000. But sub-
    sequently, it was reduced to Rs. 50,000. At an auction, it was sold for a
    mere sum of Rs. 15,000. The upset price was Rs. 15,000. The respondent's
    bid was for Rs. 15,100 and the sale was knocked down as stated earlier, C
    subject to discharge of the mortgage for a sum of Rs. 40,000. It is now
    stated by Mr. A.T.M. Sampath, the learned counsel for the second respon-
    dent that the respondent himself is a mortgagee of that property for a sum
    of Rs. 40,000. It is, therefore, clear that nobody was coming forward to
    purchase the property and the respondent himself had purchased it for a
    sum of Rs. 15,100. Under these circumstances, we are of the view that the D
    sale conducted by the executing Court was obviously illegal. It is stated that
    the appellant had already deposited the entire decretal amount and it was ·
    withdrawn by the decree-holder also. In addition, the appellant is directed
    to deposit interest @ 18% from the date of the sale, namely, January 20,
    1992 till date on the amount of Rs. 15,100 deposited by the respondent and E'
    the respondent shall be at liberty to withdraw the same. In addition, the
    appellant shall also pay a sum of Rs. 2,000 towards poundage fee. The
    amount shall be deposited within a period of six months from today.

j            The appeal is accordingly allowed subject to the above terms. No
    costs.                                                                      F
    T.N.A.                                                    Appeal allowed.

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