1973 (8) TMI 169 - SC - Indian Laws

Supreme Court annuls sale of bungalows due to irregularities in auction process

Gajadhar Prasad and Ors. Versus Babu Bhakta Ratan and Ors.

The Supreme Court set aside the High Court and execution court's judgments and orders regarding the sale of two bungalows on Tej Bahadur Sapru Road. The ... - Issues Involved:1. Fraud or material irregularity in conducting auction sales.2. Proof of substantial injury to the judgment-debtor resulting from the auction sales.Detailed Analysis:Fraud or Material Irregularity in Conducting Auction Sales:The primary issue was whether there was either fraud upon the court or material irregularity in conducting the auction sales of the properties. The judgment-debtors contended that the execution court had accepted the decree-holders' valuation of the properties without considering their objections or providing reasons for rejecting their valuations. The court had failed to mention the judgment-debtors' valuations in the sale proclamation, which they argued was a significant irregularity.The execution court had relied on the decree-holders' valuation, which was significantly lower than that provided by the judgment-debtors. The judgment-debtors had also objected to the sale of two bungalows on Tej Bahadur Sapru Road in one lot, arguing that they would fetch a higher price if sold separately. The court had not considered these objections or the judgment-debtors' request for a commission to view the property and report on relevant facts before framing the sale proclamation.The Supreme Court noted that the execution court had practically accepted the decree-holders' valuation without indicating reasonable grounds for this preference and had not seriously considered the judgment-debtors' objections. This failure to apply its mind or give consideration to the objections constituted a material irregularity. The court emphasized that the duty to consider what particulars should be inserted in the sale proclamation and how the sale ought to be conducted should be performed judicially and reasonably. The execution court had not performed its duty fairly and reasonably in this case.Proof of Substantial Injury to the Judgment-Debtor:The second issue was whether substantial injury to the judgment-debtor had been proved as a result of the auction sales. The judgment-debtors argued that the properties were sold for significantly lower prices due to the undervaluation and irregularities in the sale process. They provided evidence, including an affidavit, indicating that the properties would have fetched higher prices if sold separately or if their true value had been considered.The Supreme Court found that the separate sales of the houses in Colonelgunj had fetched a higher price than the lump sum valuation by the decree-holders. Similarly, the High Court had found that the sales of the two bungalows on Tej Bahadur Sapru Road would have fetched a higher price if sold separately. The affidavit filed by the judgment-debtors had not been controverted by any material from the decree-holders, indicating that the judgment-debtors had suffered substantial injury.Conclusion:The Supreme Court allowed the appeal to the extent that it set aside the judgments and orders of the High Court and the execution court regarding the sale of bungalows Nos. 8 & 10 on Tej Bahadur Sapru Road. The execution sale of these two bungalows was set aside, and the court ordered that they be sold afresh after judicially considering and deciding whether they could be sold separately and what particulars should be inserted in the sale proclamation. The appeal was dismissed concerning the other properties, and the parties were ordered to bear their own costs.