1986 (3) TMI 337 - HC - Indian Laws

Property Sale Voided for Lack of Public Auction Compliance, Co-Owners Denied Purchase Rights

Gulb Singh Versus Chandrapal Singh and Ors.

The court found the sale procedure of a property to be invalid as it was not conducted through a public auction as required by the Code of Civil ... - Issues Involved:1. Validity of the sale procedure adopted by the Commissioner.2. Applicability of the Partition Act and Code of Civil Procedure provisions.3. Rights of co-owners to purchase the property.4. Material irregularity and substantial injury in the sale process.5. Entitlement of the auction purchaser to interest on the deposit.Issue-wise Detailed Analysis:1. Validity of the sale procedure adopted by the Commissioner:The applicant challenged the sale of the suit house, arguing that it was not conducted by public auction as required by Order 21 Rule 65 of the Code of Civil Procedure (CPC). The Commissioner had invited offers through an advertisement, which the applicant contended did not constitute a public auction. The court agreed, finding that a sale by advertisement does not meet the requirements of a public auction, which involves open competition and the ability to raise bids on the spot. The sale was thus deemed a nullity.2. Applicability of the Partition Act and Code of Civil Procedure provisions:The court examined whether the sale was conducted under Section 2 of the Partition Act, which allows for the sale of property that cannot be divided among co-owners. The court found that the sale was indeed under Section 2, as the trial court had applied its mind to the terms of the compromise decree, which stated that the property was incapable of division. However, the court also noted that the sale should have complied with the procedures outlined in the CPC for public auctions, which it did not.3. Rights of co-owners to purchase the property:The applicant and another co-owner had filed an application under Section 3 of the Partition Act to purchase the property at the highest bid price. The trial court rejected this application, finding it was not bona fide as they had not deposited any amount and had not participated in the bidding process. The High Court upheld this decision, noting that the terms of the consent decree did not reserve any liberty for co-owners to buy the property. The court emphasized that the trial court was bound by the consent decree and could not entertain the co-owners' offer.4. Material irregularity and substantial injury in the sale process:The applicant argued that the advertisement for the sale lacked material particulars, which adversely affected the number of bidders and the price fetched. The court found that the sale by advertisement did not meet the requirements of a public auction as mandated by Order 21 Rule 65 of the CPC. The court also noted that the absence of a public auction constituted a material irregularity. However, since the sale was deemed a nullity, the issue of substantial injury did not need to be addressed.5. Entitlement of the auction purchaser to interest on the deposit:The auction purchaser, a non-applicant, argued for interest on the deposit made for the purchase of the suit house, citing principles of restitution under Section 144 of the CPC. The court found that these principles were not applicable as the purchase money had not been paid to the co-owners. The court also noted that Order 21 Rule 93 of the CPC, which deals with repayment of purchase money, was not exhaustive and did not cover cases where the sale was a nullity. The court concluded that the auction purchaser was not entitled to interest from the co-owners, as they had not benefited from the deposit.Conclusion:The court allowed the revision, setting aside the trial court's order confirming the sale. The trial court was directed to conduct a fresh sale by public auction, appointing a new Commissioner and following the procedure laid down in the CPC. No order as to costs was made in the revision.