M/S. JAGAN SINGH & CO. versus LUDHIANA IMPROVEMENT TRUST & ORS.

[2022] 14 S.C.R. 747

M/S. JAGAN SINGH & CO.

LUDHIANA IMPROVEMENT TRUST & ORS.

(Civil Appeal No.371 of 2022)

SEPTEMBER 02, 2022

[SANJAY KISHAN KAUL, S. RAVINDRA BHATAND M.M. SUNDRESH, JJ.]

Land Acquisition – Compensation – Execution proceedings –Auction sale – Setting aside of Auction Sale – Civil ProcedureCode,1908 – O. XX1 R. 17, 66, 54, 66, 89, 90(3) and s.151 –Respondent no. 1 (Respondent Trust) acquired the land and failedto give the compensation as determined by the Land AcquisitionTribunal – In the first round of execution proceedings, the propertybearing khasra no. 271 and 272 of Respondent Trust was attachedand sold to the appellant by way of auction for 22.65 lakhs –Respondent Trust filed application before the Court of the SeniorSub Judge to set aside the ex-parte attachment and auction of theTrust’s property – The executing Court dismissed the objections anduphold the sale – SLP filed before Supreme Court – The Court setaside the impugned orders and remitted the matter to the ExecutingCourt for deciding the application u/O. XX1 R. 90 de novo – In theSecond round of Execution Proceedings – Executing Courtdismissed the objections, raised against the auction sale, on theground of material irregularities and substantial injury caused tothe Respondent Trust – First Appellate Court also confirmed thedecision of Execution Court – High Court set aside the judgmentsof the executing Court and the First Appellate Court on the groundthat there were glaring irregularities in the auction sale – The propertyauctioned consisted of Khasra nos. 271 and 272, whereas the listof property was only in reference to the land in khasra no 272 –Appellant in appeal before the Supreme Court – Held : No doubtoriginally Khasra No. 271 was not mentioned and only Khasra No.272 was mentioned but that would have been relevant if there was aproblem in identification of the property and the ownership of theproperty – And, there was no problem in such identification – Theproperty is clearly described in site plan – Order XXI of the Code isexhaustive – It is clearly stated in O. XXI Rule 90(3) that no

Aapplication to set aside sale on grounds of irregularity or fraudunder the Rule can be entertained on any ground which the applicantwould have taken on or before the date on which the proclamationof sale was drawn up – The Explanation to the Rule further saysthat mere absence of or defect in attachment of the property soldshould not by itself be ground for setting aside the sale under thisBRule – The Judgment Debtor/Respondent Trust failed to avail anyof these opportunities at different stages – The dual test of materialirregularity of fraud and substantial injury is not satisfied in thepresent case – Thus, auction sale is confirmed.

Allowing the appeal, the CourtC

HELD :

1. The dragging of the proceedings for three decades havebeen grave injustice to the Appellant, who have been deprivedof the enjoyment of the property despite having paid the fullDauction price 30 years back. Merely because the RespondentNo. 1 is an Improvement Trust does not give it licence to takea citizen’s right for ride. [ Para 29][759-B-C]

2. In the view of this Court, there is no irregularity ordiscrepancy in identification of the property when the site planEwas filed with it. This Court has reproduced the site plan so as tomake it explicitly clear how the bounded property was clearlydescribed. No doubt originally Khasra No.271 was not mentionedand only Khasra No.272 was mentioned but that would have beenrelevant if there was problem in identification of the propertyand the ownership of the property. This was not so. [Para 32][759-FG-H; 760-A]3. The Court fails to understand how the dual test of materialirregularity of fraud and substantial injury is satisfied in thepresent case. In fact, neither part of the dual test is satisfied.The Respondent Trust cannot be permitted to say that merelyGbecause the property was auctioned there is some substantialinjury. No doubt there were some structures shown in the siteplan itself, however, they were merely basic structures of godownand quarter. [Para 34][760-A]

4. The Executing Court and the First Appellant Court dulyHsupported the reasoning based on various failures of the

TRUST & ORS.

Judgment Debtor: (a) did not file objections at the time ofpresentation of execution petition; (b) did not file any objectionsat the time of order of attachment; (c) no objections filed whenproclamation under Order XXI Rule 66 of the said Code wasmade; (d) no objections filed even at the time of public auctionbeing actually conducted. [Para 35][760-H; 761-A]

5. It is clearly stated in the Order XXI Rule 90(3) of thesaid Code that no application to set aside sale on grounds ofirregularity or fraud under the Rule can be entertained on anyground which the applicant would have taken on or before thedate on which the proclamation of sale was drawn up. TheExplanation to the Rule further says that mere absence of ordefect in attachment of the property sold should not by itself be aground for setting aside the sale under this Rule. The JudgmentDebtor/Respondent Trust failed to avail any of these opportunitiesat different stages. [Para 36][761-B-C]

6. The impugned judgement of the High Court dated06.03.2018 is set aside and the view taken by the Executing Courtand the Appellate Court is sustained. The Court grants costs tothe Appellant against Respondent No. 1 quantified at Rs. 1 lakh.The Appeal is allowed. [Para 40][764-C-D]

Trust, Ludhiana v. Ujagar Singh and Others(2010) 6SCC 786; Saheb Khan v. Mohd. Yousufuddin andOthers(2006) 4 SCC 476 ;Sadashiv Prasad Singh v.Harendar Singh(2015) 5 SCC 574 : [ 2014] 1 SCR 249;Sugandhi (Dead) by LRs. & Ors. v. P. Rajkumar (2020)10 SCC 706 ;Chilamkurti Bala Subrahmanyam v.Samanthapudi Vijaya Lakshmi & Anr. (2017) 6 SCC770 : [2017] 3 SCR 826 - referred to

Case Law Reference

ACIVIL APPELLATE JURISDICTION : Civil Appeal No.371 of2022.

From the Judgment and Order dated 06.03.2018 of the High Courtof Punjab and Haryana at Chandigarh in Civil Revision No.815 of 2016(O&M).

P. S. Patwalia, Sr. Adv., Ms. Natasha Dalmia, Gagandeep SinghSirphikhi, Jitendra Kumar, Advs. for the Appellant.

Neeraj Kumar Jain, Sr. Adv., Sudhir Walia, Ms. NiharikaAhluwalia, Arpit Sharma, Dr. Abhishek Atrey, Shubham Bhalla, SumirAhuja, Ms. Akansha Gulati, R. K. Rathore, Mukesh Berry, Ms. RanjeetaCRohatgi, Ms. Samten Doma, Advs. for the Respondents.

The Judgment of the Court was delivered by

SANJAY KISHAN KAUL, J.

1. The dispute about the non-payment of acquired land under theLand Acquisition Act, 1984 (hereinafter referred to as the ‘LA Act’)Dhas spanned over more than three decades.

2. Respondents no. 2 to 5 were the original owners of the land,measuring 8 Kanals and 11 ½ Marlas, which was acquired by LudhianaImprovement Trust, Respondent no.1 (hereinafter referred to as “theRespondent Trust”).

3. The compensation determined by the Respondent Trust wasnot acceptable to the land owners, thus, reference was sought in termsof Section 18 of the LA Act. The Land Acquisition Tribunal made anaward enhancing the compensation to the owners by determining thecompensation as Rs.4,27,068/- along with future interest at 9%, perFannum, from the date of the application. The Respondent Trust, however,did not pay the amount while it continued to enjoy the land.

4. It appears from the list of dates that despite all requests to theowners, the Respondent Trust did not oblige, leaving the owners withlittle option but to file an execution petition in the year 1991. The ExecutionPetition was, however, dismissed as unsatisfied on 21.09.1991.

5. perusal of the order, however, shows no reason for the sameexcept mere sentence of the decree, holding the execution petition asunsatisfied. On 27.09.1991, the owners filed the second executionapplication for recovery of the compensation amount, along with interest,seeking to make the recovery through attachment of property. The details

of the property, which was sought to be attached, were more specificallydescribed by site plan, which was filed in the proceedings and hasbeen placed before us. The site plan shows triangular piece of land i.e.field on one side, Pakhowal Road towards Ludhiana on the second sideand the railway line on the hypotenuse side.

6. In the application filed under Order XXI Rule 66 of the Code ofCivil Procedure, 1908 (hereinafter referred to as ‘the said Code’) readwith Section 151 of the said Code, proclamation of the sale of theproperty, comprised of Khewat No.867, Khatauni No.971, KhasraNo.272, as per Jamabandi for the year 1988-89, Village Jawaddi, HadbastNo.160, Tehsil and District, Ludhiana, was sought. It may be noted thatin the site plan, there is an ear marking of the godown and the chowkidarroom and the remaining land has been shown as vacant. The tentativecost of the property, as stated in the application, is about Rs. 8 lakhswhich was sufficient to cover the recovery of Rs.4,27,068/- along withinterest at the rate of 9% per annum.

7. Once again, the notice was served upon the Respondent Truston 12.05.1992, but elicited no response from the Respondent Trust. TheCourt of Civil Judge, Senior Division, Ludhiana, issued warrant forsale of the attached property on 25.05.1992. Consequently, the attachedproperty, measuring 7000 sq. yards approximately, bearing Khasranos.271 and 272, was sold to the Appellant by way of auction conductedby the Court Auctioneer on 12.08.1992 for consideration of Rs.22.65lakhs.

8. The Respondent Trust apparently woke up only thereafter andon 26.09.1992 filed an application before the Court of the Senior SubJudge, Ludhiana, under Order XXI Rule 90 of the said Code to set asidethe ex parte attachment and auction of the Trust’s property. It may benoted that even during this period of time it is not as if the paymentswere made to the land owners.

9. perusal of the objection shows that it is pleaded that therewas no valid or proper service of notice though it is not disputed thatthere was service of notice. There were certain other technicalobjections also raised, inter alia, alleging that no mandatory notice underOrder XXI Rule 66 of the said Code was issued or served, no proclamationof sale by auction has been made or published, the property in question,is not capable for attachment and sale as it is part of development scheme,which stands already allocated for allotment under Punjab Improvement

AAct read with Land Disposal Rules framed thereunder. It was, thus,sought to be claimed that the Judgment Debtors did not have saleableinterest in the property. The factum of the earlier execution proceedingwas dismissed for non satisfaction of motion. This application wascontested by the Appellant, as auction purchaser, pointing out that thewarrants for attachment of the property were filed by order datedB03.10.1991. The warrant for attachment was issued on 01.04.1992,Munadi was effected on 03.04.1992 and the property was attached onthe same date, thereafter notice under Order XXI Rule 66 of the saidCode was served on 12.05.1992, which was duly received by theJudgment Debtor on the same date along with the copy of the execution.CThe sale warrants were issued on 25.05.1992, Munadi was effected onthe spot on 17.07.1992 and the auction took place on 12.08.1992. Thedecree holder also contested proceedings to challenge the auction.10. After hearing learned counsel for the parties, the ExecutingCourt decided Execution no. 93/1991 post framing of issues on 11.02.1993

Dand recording evidence while dismissing the objections on 05.06.1993and upholding the sale of the land to the Appellant.

11. perusal of the proceedings shows that Respondent Trust, asobjector, produced no evidence despite repeated opportunities nor evenfiled the list of witnesses. This is recorded in the proceedings on17.04.1993, 08.05.1993, 29.05.1993 (and was called on more than oneEoccasion). The Executing Court noticed that no specific fraud ormisrepresentation has been mentioned in the objections by the objectornor any substantial irregularities have been pointed out. The objectorhas neither deposited the decreetal amount nor the amount equal to 5%of the purchase amount for payment to the auction purchaser as is

Frequired under Order XXI Rule 89 of the said Code. Thus, the objectionswere not even maintainable. In view of the said provision, no sale couldbe set aside unless the Court is satisfied that the applicant has sustainedsubstantial injury by reason of irregularity or fraud in completing orconducting the sale. For convenience, Order XXI Rule 90 of the saidCode is reproduced as under:G

“ORDER XXI

EXECUTION OF DECREES AND ORDERS

........

90. Application to set aside sale on ground of irregularityHor fraud: (1) Where any immovable property has been sold in

execution of decree, the decree-holder, or the purchaser, or anyother person entitled to share in rateable distribution of assets orwhose interests are affected by the sale, may apply to the courtto set aside the sale on the ground of material irregularity orfraud in publishing or conducting it.

(2) No sale shall be set aside on the ground of irregularity or fraudin publishing or conducting it unless, upon the facts proved, thecourt is satisfied that the applicant has sustained substantial injuryby reason of such irregularity or fraud.

(3) No application to set aside sale under this rule shall beentertained upon any ground which the applicant could have takenon or before the date on which the proclamation of sale was drawn

Explanation.- The mere absence of, or defect in, attachment ofthe property sold shall not, by itself, be ground for setting asidea sale under this rule.”

12. certificate of sale dated 15.06.1993 was issued by the Courtunder Order XX1 Rule 94 of the said Code confirming the sale.

13. On the Respondent Trust assailing the Executing Court’s order,Additional District Judge, Ludhiana, rejected the same vide order dated04.03.1994 and the High Court also dismissed the Revision Petition. Thematter finally came up before this Court in SLP filed by the RespondentTrust, being SLP (Civil) No.22328/2004. Leave was granted and thesaid appeal was decided by the judgment dated 09.06.2010 inImprovement Trust, Ludhiana v. Ujagar Singh and Others, reportedat (2010) 6 SCC 786. reading of the order shows that what weighedthis Court was that the negligence of the counsels should not be blamedon the parties, as the matter has been prosecuted after having goneunrepresented. The impugned orders were set aside and the matter wasremitted to the Executing Court for deciding the application under OrderXXI Rule 90 of the said Code at an early date. However, being consciousof the fact that the Appellant had been put to inconvenience and hadalready deposited huge amount of Rs.22.65 lakhs in 1992 but has notbeen able to get the fruits thereof, Rs.50,000/-, as costs, were imposedon the Respondent Trust. Thus, the first round itself reached culminationafter more than 15 years of acquisition of land but once again startingthe process almost de novo on the Executing Court taking up theproceedings again.

A14. It is pleaded on behalf of the Respondent Trust that the exparte proceedings earlier initiated, which resulted in the order for auctionof the property, were without valid or proper service of notice, no formerproclamation for attachment of Judgement Debtor’s property, as requiredunder Order XXI Rule 54 of the said Code, was made and no mandatorynotice under Order XXI Rule 66 of the said Code was either issued orBserved to Respondent Trust.

15. The question of land being part of Development Scheme wasagain contended. In substance what was pleaded was that the objections,which were pleaded earlier in the execution, were once again urged.While contending on the dual principle of; (A) the sale was conductedwith gross material irregularities and (B) the Respondent Trust hassustained substantial injury to their rights.

16. The objections were once again rejected by the ExecutingCourt on 10.11.2012. perusal of the order shows that the ExecutingDCourt observed that the Respondent Trust, as Judgement Debtor, hasnot denied that the property bearing Khasra no.271 and 272 was thesame, which was shown by way of boundaries in the site plan, and nodiscrepancy or distinction between the properties attached and sold wasmade out.

17. On the issue of valuation raised under Order XXI Rule 66 ofthe said Code, the Executing Court opined that the Judgment Debtor haschosen not to protest the settlement terms and the Court had no objectionbut to go by the valuation report of the decree holder. For convenience,Order XXI Rule 66 of the said Code is reproduced as under:

“ORDER XXI

EXECUTION OF DECREES AND ORDERS

........

66. Proclamation of sales by public auction.- (1) Where anyproperty is ordered to be sold by public auction in execution of adecree, the court shall cause proclamation of the intended saleto be made in the language of such court.

(2) Such proclamation shall be drawn up after notice to the decreeholder and the judgment debtor and shall state the time and placeof sale, and specify as fairly and accurately as possible—

(a) the property to be sold, [or, where part of the property wouldbe sufficient to satisfy the decree, such part];

(b) the revenue assessed upon the estate or part of the estate,where the property to be sold is an interest in an estate or in partof an estate paying revenue to the government;

(c) any incumbrance to which the property is liable;

(d) the amount for the recovery of which the sale is ordered; and

(e) every other thing which the court considers material for apurchaser to know in order to judge of the nature and value of theproperty:

[Provided that where notice of the date for settling the terms ofthe proclamation has been given to the judgment debtor by meansof an Order under rule 54, it shall not be necessary to give noticeunder this rule to the judgment debtor unless the court otherwisedirects:

Provided further that nothing in this rule shall be construed asrequiring the court to enter in the proclamation of sale its ownestimate of the value of the property, but the proclamation shallinclude the estimate, if any, given, by either or both of the parties.]

(3) Every application for an Order for sale under this rule shall beaccompanied by statement signed and verified in the mannerhereinbefore prescribed for the signing and verification of pleadingsand containing, so far as they are known to or can be ascertainedby the person making the verification, the matters required bysub-rule (2) to be specified in the proclamation.

(4) For the purpose of ascertaining the matters to be specified inthe proclamation, the court may summon any person whom itthinks necessary to summon and may examine him in respect toany such matters and require him to produce any document in hispossession or power relating thereto.”

18. As regards the objection relating to the conduct of auctionproceedings, the Executing Court held that the auction purchaser hadproved due proclamation and conduct of auction sale at the spot and,thus, drawing, signing and issuance of sale certificate is entirely underthe domain of the Court. The property was described as “plot/godown

Asituated at Pakhowal Road, near Railway Crossing, Ludhiana,shown as red in the site plan attached” with the sale certificate dated15.06.1993. Thus, as the evidence show, the sale was not confirmed inreference to any Khasra number, therefore, the mention of Khasranumber could not be inadvertent inclusion. The Court also upheld the

objections raised by the Appellant that the objections have not been filedBby the competent person and were, thus, invalid.

19. To appreciate the locational aspect we reproduce the site planas under:

CDEF

G20. The endeavour of the Respondent Trust to assail the aforesaidorder was rejected by the First Appellate Court confirming the judgmentof the Executing Court on 14.09.2015. Thereafter that matter went inCivil Revision no.815/2016 before the High Court filed by the RespondentTrust. It is relevant to note that one aspect of submission of the AppellantHwas that in view of Order XXI Rule 90(3) of the said Code, the

Respondent Trust could not be heard at that stage as the grounds wereavailable to the Trust before the proclamation of sale was done. In thisbehalf, reference was made to the judgment in Saheb Khan v. Mohd.Yousufuddin and Others[1], opining that the safest rule to determinewhat is an irregularity and what is nullity is to see whether the partycan waive the objection. If the party can waive the objection, it amountsto irregularity and in case he cannot, it is nullity.

21. The High Court, however, in terms of the impugned judgmentdated 06.03.2018 set aside the judgments of the Executing Court andthe First Appellate Court. The impugned judgment is predicated on thereasoning that although there were glaring irregularities, yet the salewas confirmed. The property auctioned consisted of Khasra nos.271and 272, whereas the list of property submitted by the decree holderwas only in reference to the land in Khasra no.272.

22. On the issue of the compliance of the provisions of OrderXXI Rule 17 and Order XXI Rule 66 of the said Code, the High Courtobserved that the Executing Court had failed to apply its mind since thestatutory provisions mentioned clearly stipulate that the attached property’sprice must correspond to the decretal amount and the court mustadjudicate upon whether the entire attached property or only part of itis required to be sold to satisfy the decree.

23. balance was required to be maintained between the rightsof the Judgment Debtor and the auction purchaser under Order XXIRule 90 of the said Code as the land projected was not barren stand-alone land, but had constructed building on it. The twin conditionsreferred to aforesaid was established and the auction sale was set aside.

24. The aforesaid judgment has been assailed before us and noticewas issued on 24.07.2018 and the interim direction to the parties tomaintain status quo as on date was issued. Leave was granted on07.01.2022 while making the interim order absolute.

Submissions on behalf of the Appellant:

25. Mr. P.S. Patwalia, learned senior counsel for the Appellanturged that the Appellant was bona fide successful auction purchaserhaving purchased the property in public auction with the considerationamount of Rs.22.65 lakhs, duly deposited. The amount was paid between

A13.08.1992 and 24.08.1992. The sale certificate was also issued in theAppellant’s favour on 15.06.1993 and despite this the Appellant has notbeen able to enjoy the property for 30 years due to pendency of thislitigation. On reading of Order XXI Rule 90(3) of the said Code, it wasurged that the Respondent Trust as Judgment Debtor could not satisfythe test by merely pointing out material irregularity but had to furtherBestablish to the satisfaction of the Court that the material irregularity orfraud has resulted in causing substantial injury to the Judgment Debtor.There was no ground to have reversed the concurrent findings of thecourts below especially when the decree holder did not file any objectionsat the time of presentation of the execution petition or at the time ofCorder of attachment or when the issuance of proclamation under OrderXXI Rule 66 of the said Code was issued. In fact they had chosen toabsent themselves. It was urged that in light of Order XXI Rule 90 (3),no application to set aside sale can be entertained upon any groundwhich the applicant could have taken on or before the date on which the

proclamation of sale was drawn up. The objections of the decree holderDcould not be entertained at belated stage.

26. Learned senior counsel sought to canvas that the bona fidepurchaser for value in an auction sale is treated differently than decreeholder purchasing such properties and, in that behalf, relied upon thejudgment of this Court in Sadashiv Prasad Singh v. Harendar Singh[2]Ewherein it was opined that even if such decree is set aside, the interestof the bona fide purchaser in an auction-sale is saved.

Submissions on behalf of the Respondents:

27. Mr. Neeraj Kumar Jain, learned senior counsel appearing forthe Respondent Trust sought to support the impugned judgment on theFground that the High Court had found material irregularities and illegalitiescausing substantial injury to the Respondent Trust. The non-disclosureat the time of filing of the application under Order XXI Rule 66 of thesaid Code qua the land whereby the land comprised in Khasra No.271had also been sold in the public auction was material as only the landGcomprised in Khasra No.272 could have been sold.

28. On the delay of three decades reference was sought to bemade to the judgment of this Court in Sugandhi (Dead) by L.Rs. &Ors. v. P. Rajkumar[3] to contend that mere delay in disposal of the case

2 (2015) 5 SCC 574 (para 17 to 19)H3 (2020) 10 SCC 706

should not come in the way of the court to do justice between the parties.There had been procedural lapses on the part of the Respondents infollowing up the case but public property ought not to be auctioned forthe errors committed by the errant officers.

Conclusion:

29. We have given thought to the matter and the submissions ofthe learned counsel and have no doubt whatsoever that the dragging ofthe proceedings for three decades have been grave injustice to theAppellant, who have been deprived of the enjoyment of the propertydespite having paid the full auction price 30 years back. Merely becausethe Respondent No. 1 is an Improvement Trust does not give it licenceto take citizen’s right for ride.

30. We may notice at the threshold itself that though the right inproperty is not fundamental right, it is still constitutional right underArticle 300A of the Constitution of India. Thus, person can be deprivedof the rights of the property only in manner known to law. Theacquisition proceedings in respect of the land in question sought to deprivethe owners of their land which had to be paid for in terms of the provisionsof the LA Act. The amount of compensation was determined by thereference court under Section 18 of the LA Act and the matter was nottaken further. Thus, both the owner and acquiring beneficiary agreed tothe compensation as determined by the Tribunal. The next step shouldhave been to immediately pay the amount to the owners which did nothappen. On the other hand, the owners were made to run from pillar topost and ultimately the execution proceedings were filed six years afterthe amount had been so determined. This conduct of the RespondentTrust itself is not condonable and this is what resulted in the proceedingsfor execution, the auction and the matter being dragged on for decades.

31. The fact of the first execution petition being dismissed as notsatisfied will not, in our view, preclude filing of the second executionpetition giving details of the property. In those proceedings also theRespondent Trust chose to absent itself. The execution proceedings haveto proceed in accordance with the various stages as envisaged underOrder XXI of the said code and those stages were duly followed.

32. In our view, there is no irregularity or discrepancy inidentification of the property when the site plan was filed with it. Wehave reproduced the site plan so as to make it explicitly clear how thebounded property was clearly described. No doubt originally Khasra

ANo.271 was not mentioned and only Khasra No.272 was mentioned butthat would have been relevant if there was problem in identification ofthe property and the ownership of the property. This was not so.

33. We may also notice that when the objections were filed by theRespondent Trust, issues were framed. On the basis of the issues framedBevidence had to be led. Despite various opportunities the RespondentTrust did not lead any evidence and we have dealt with this aspect factuallyin detail while referring to the proceedings before the Executing Court inthe first round. The second round arose only on account of the benefitgiven by this Court in the first round of proceedings that the RespondentTrust should be able to assist the Court. In fact, the maximum indulgenceCwhich could be shown was shown to them predicated largely on the factthat Respondent No.1 was an Improvement Trust. It is fact that in thevarious stages of execution proceedings what was required to be doneby the Respondent Trust was never done. It is not one single failure. Inthe execution petition itself the amount to be realised and the value ofDthe property were both mentioned. There was no objection by theRespondent Trust that the property was far more valuable and, thus,only part of the property should be sold. If one may say, the RespondentTrust would have saved the day even at that time by depositing theamount due to the owners. It did not do so. The fact that ultimately theproperty fetched larger price cannot be held against the Appellant whoEparticipated in the process and offered the appropriate price, which wasaccepted. The Respondent Trust did not even comply with the requirementof Order XXI Rule 89 by depositing the decretal amount along with 5per cent of the auction amount. The Respondent Trust behaved as if ithad some superior right to appropriate the property of the owners withoutFpaying for it contrary to the mandate of the LA Act. That would behardly called case of fraud in such situation.

34. We also fail to understand how the dual test of materialirregularity of fraud and substantial injury is satisfied in the present case.In fact, neither part of the dual test is satisfied. The Respondent Trustcannot be permitted to say that merely because the property wasGauctioned there is some substantial injury. No doubt there were somestructures shown in the site plan itself, however, they were merely basicstructures of godown and quarter.

35. The Executing Court and the First Appellant Court dulysupported the reasoning based on various failures of the Judgment Debtor:H(a) did not file objections at the time of presentation of execution petition;

(b) did not file any objections at the time of order of attachment; (c) noobjections filed when proclamation under Order XXI Rule 66 of the saidCode was made; (d) no objections filed even at the time of public auctionbeing actually conducted.

36. Learned senior counsel for the Appellant rightly drew theattention of this Court to Order XXI Rule 90 (3) of the said Code tocontend that it is clearly stated that no application to set aside sale ongrounds of irregularity or fraud under the Rule can be entertained onany ground which the applicant would have taken on or before the dateon which the proclamation of sale was drawn up. The Explanation to theRule further says that mere absence of or defect in attachment of theproperty sold should not by itself be ground for setting aside the saleunder this Rule. The Judgment Debtor/Respondent Trust failed to availany of these opportunities at different stages.37. In Sadashiv Prasad Singh[4] it was emphasised by referringto the earlier judicial precedents that bona fide purchaser for value inauction sale is to be treated differently than decree holder purchasingsuch property. It would be useful to set forth the relevant paragraphs asunder:

“17. The learned counsel for the auction purchaser SadashivPrasad Singh, in the first instance vehemently contended, that interms of the law declared by this Court, property purchased by athird party auction purchaser, in compliance of court order, cannotbe interfered with on the basis of the success or failure of partiesto proceeding, if auction purchaser had bonafidely purchasedthe property. In order to substantiate his aforesaid contention,learned counsel representing Sadashiv Prasad Singh placedemphatic reliance, firstly, on judgment rendered by this Court inAshwin S. Mehta & Anr. vs. Custodian & Ors. (2006) 2 SCC385. Our attention was drawn to the following observationsrecorded therein: (SCC p. 407, para 70)

“70. In that view of the matter, evidently, creation of any third-party interest is no longer in dispute nor the same is subject toany order of this Court. In any event, ordinarily, bona fide-purchaser for value in an auctionsale is treated differentlythan decree-holder purchasing such properties. In the former

4 (supra)

event, even if such decree is set aside, the interest of thebona fide purchaser in an auction-sale is saved.(See NawabZain-ul-Abdin Khan v. Mohd. Asghar Ali Khan (1887-88)15 IA 12) The said decision has been affirmed by this Court inGurjoginder Singh v. Jaswant Kaur (1994) 2 SCC 368.”

(emphasis supplied),”

18. On the same subject, and to the same end, learned counselplaced reliance on another judgment rendered by this Court inJanatha Textiles & Ors. vs. Tax Recovery Officer & Anr., (2008)12 SCC 582, wherein the conclusions drawn in Ashwin S. Mehta’scase (supra) came to be reiterated. In the above judgment, thisCourt relied upon the decisions of the Privy Council and of thisCourt in Nawab Zain-Ul-Abdin Khan v. Mohd. Asghar AliKhan, (1887-88) 15 IA 12; Janak Raj vs. Gurdial Singh, AIR1967 SC 608; Gurjoginder Singh vs. Jaswant Kaur, (1994) 2SCC 368; Padanathil Ruqmini Amma vs. P.K. Abdulla, (1996)7 SCC 668, as also, on Ashwin S. Mehta (supra) in order toconclude, that: [Janatha Textiles case (supra) p. 586, para 18]:

“18. It is an established principle of law, that third party auctionpurchaser’s interest, in the auctioned property continues to beprotected, notwithstanding that the underlying decree issubsequently set aside or otherwise.”

It is, therefore, that this Court in its ultimate analysisobserved as under [Janatha Textiles case (supra) pp. 588-89, para 20]:

“20. Law makes clear distinction between stranger who isa bona fide purchaser of the property at an auction-sale and adecree-holder purchaser at court auction. The strangers tothe decree are afforded protection by the court because theyare not connected with the decree.Unless the protection isextended to them the court sales would not fetch market valueor fair price of the property.”

(emphasis supplied)

On the issue as has been dealt with in the foregoing paragraph,this Court has carved out one exception. The aforesaid exceptioncame to be recorded in Velji Khimji and Company vs. Official

Liquidator of Hindustan Nitro Product (Gujarat) Limited &Ors., (2008) 9 SCC 299, wherein it was held as under:

“30. In the first case mentioned above i.e. where the auction isnot subject to confirmation by any authority, the auction iscomplete on the fall of the hammer, and certain rights accruein favour of the auction-purchaser. However, where the auctionis subject to subsequent confirmation by some authority (undera statute or terms of the auction) the auction is not completeand no rights accrue until the sale is confirmed by the saidauthority. Once, however, the sale is confirmed by that authority,certain rights accrue in favour of the auction-purchaser, andthese rights cannot be extinguished except in exceptional casessuch as fraud.

31. In the present case, the auction having been confirmed on30.7.2003 by the Court it cannot be set aside unless some fraudor collusion has been proved. We are satisfied that no fraud orcollusion has been established by anyone in this case.”

(emphasis supplied)

19. It is, therefore, apparent that the rights of an auction-purchaserin the property purchased by him cannot be extinguished exceptin cases where the said purchase can be assailed on grounds offraud or collusion.”

38. The mandatory nature of the twin conditions to be satisfiedbefore an auction sale can be set aside as provided under Order XXIRule 90(3) of the said Code which has been discussed by this Court invarious judicial pronouncements. We may refer to two of them as under:

i.In Saheb Khan[5]case, it was observed that satisfaction ofonly one of the two conditions was not sufficient. It wasalso observed that charge of fraud or material irregularitymust be specifically made with sufficient particulars andbald allegations would not do.

ii.In Chilamkurti Bala Subrahmanyam v. SamanthapudiVijaya Lakshmi & Anr.[6], the aforesaid judgment wasreferred to with approval.

5 (supra)

6 (2017) 6 SCC 770

A39. We must note in the end that Order XXI of the said Code isexhaustive and in the nature of complete Code as to how the executionproceedings should take place. This is the second stage after the successof the party in the civil proceedings. It is often said in our country thatanother legal battle, more prolonged, starts in execution proceedingsdefeating the right of the party which has succeeded in establishing itsBclaim in civil proceedings. This is exactly what has happened in thepresent case. The various stages of Order XXI of the said Code whenviolated cannot given right to some extra indulgence merely because theRespondent Trust is an Improvement Trust. There cannot be licenceto prolong the litigation ad infinitum.

40. We have, thus, no hesitation in setting aside the impugnedjudgment of the High Court dated 06.03.2018 and sustain the view takenby the Executing Court in the order dated 10.11.2012 as sustained by theAppellate Court in its order dated 14.09.2015. We also grant costs to theAppellant against Respondent No.1 quantified at Rs.1 lakh. We onlyDhope that, at least, now the Appellant would be able to get the benefit ofusing the land they purchased three decades ago.

41. The appeal is accordingly allowed.

Ankit Gyan

E(Assisted by : Rakhi, LCRA)

Appeal allowed.