1964 (10) TMI 87 - SC - Indian Laws

Summary

Issues Involved:
1. Validity of the auction sale held on 14th May 1954.
2. Competence of respondent No. 1 to make an application under Order 21 Rule 90 of the Code of Civil Procedure.
3. Alleged material irregularity in the auction sale proclamation.
4. Substantial injury sustained by respondent No. 1 due to the irregularity.

Detailed Analysis:

1. Validity of the Auction Sale Held on 14th May 1954:
The auction sale in question was held to execute a money decree in favor of respondent No. 2 against respondent No. 3. The property sold was "old Daikhana" at Ajmer, which was mortgaged to the appellant. The sale was challenged by respondent No. 1 and respondent No. 3 under Order 21 Rule 90 of the Code of Civil Procedure on the grounds of irregularity and substantial injury.

2. Competence of Respondent No. 1 to Make an Application under Order 21 Rule 90:
Mr. Bishan Narain, representing the appellant, conceded that respondent No. 1, as a person holding a charge over the property sold, could rely on Section 100 of the Transfer of Property Act and was competent to make the application under Order 21 Rule 90. Order 21 Rule 90(1) allows any person whose interests are affected by the sale to apply for setting aside the sale on grounds of material irregularity or fraud.

3. Alleged Material Irregularity in the Auction Sale Proclamation:
The application by respondent No. 1 alleged that the auction sale proclamation failed to mention the charge in her favor, which had been recognized by a decree. This omission constituted an irregularity under Order 21 Rule 66(2)(e), which requires the proclamation to specify any encumbrance on the property. The court agreed that this was a material irregularity.

4. Substantial Injury Sustained by Respondent No. 1 Due to the Irregularity:
The core issue was whether respondent No. 1 had suffered substantial injury due to the irregularity. The Judicial Commissioner initially found that respondent No. 1 had suffered substantial injury and set aside the sale. However, upon remand, the Executing Court held that respondent No. 1 had failed to show substantial injury, leading to the dismissal of her application. The High Court later reversed this finding, holding that the Executing Court erred in concluding that respondent No. 1 had not proved substantial injury.

The Supreme Court examined whether the failure to mention the charge in the proclamation led to substantial injury. The court noted that substantial injury must be determined based on several factors, including the number of properties sold, the extent of the claim, and the value of the remaining properties. The court found that properties Nos. 4 and 6, which remained available to respondent No. 1, were sufficient to meet her claims, and thus, the sale of property No. 3 did not cause substantial injury.

Conclusion:
The Supreme Court concluded that although the charge was not mentioned in the proclamation, respondent No. 1 did not suffer substantial injury. Consequently, the requirement of the proviso to Order 21 Rule 90 was not satisfied. The appeal was allowed, the High Court's order was set aside, and the application by respondent No. 1 was dismissed. There was no order as to costs throughout.