Order XXI CPC | Failure To Raise Objections Before Proclamation Of Sale Not Bar To Challenge An Irregular Sale: Kerala High Court

The Kerala High Court recently laid down that the failure to raise objections before the proclamation of sale as prescribed under Order XXI Rule 90(3) CPC does not preclude the appellant from challenging the sale if the mandatory procedures under Order XXI Rule 64 were not complied with. 

Order XXI Rule 64 CPC deals with the power of the court to order property attached to be sold and proceeds to be paid to the person entitled. The provision states that an execution Court must sell such portion of property as may be necessary to satisfy the decree.

The Division Bench of Justice Anil K. Narendran and Justice P.G. Ajithkumar emphasised the duty of the court to ensure strict compliance with procedural requirements and noted that a proclamation of sale drawn up casually, without adherence to mandatory provisions, would not be considered a valid sale.

"...where the Court failed to discharge its duty by non complying with the mandatory provisions in Order XXI, Rule 90(3) of Order XXI of the Code does not debar the appellant from raising such infraction. Therefore the contention that in all cases where the judgmental debtor had opportunity to raise objection before conducting sale the bar under sub-rule (3) of Order XXI, Rule 90 of the Code cannot be held good. If there occurred non-compliance of mandatory provisions of Rule 64 of Order XXI, it cannot be said that the failure of the judgment debtor to question the proclamation then and there would disentitle him from raising that question at post sale stage". 

The appellant had moved the Court challenging the order of an Additional District Judge which refused to set aside the sale of his property. The sale involved the disposal of 4.05 Acres of land and the appellant contended that it was conducted with serious irregularities, resulting in a meagre selling price of Rs. 7,50,100, significantly undervaluing the property's actual worth of Rs. 65 lakhs.

The matter was referred for mediation, but it was unsuccessful. The dispute arose from an arbitral award of Rs. 20,82,897, and the respondent had initiated execution proceedings to recover this amount. Although the appellant had filed an objection to the draft proclamation schedule, the Court below settled the proclamation estimating the value of the property to be sold a Rs.7,50,000/- and the sale proclamation was accordingly dismissed. The respondent decree holder had bid on the property. 

The appellant, represented by Advocate G. Sreekumar, alleged that the proclamation schedule was drawn up without mentioning the building and thereby quoting a low price. The appellant submitted that the sale was in disregard to the mandatory provisions of Rule 64 of Order XXI CPC, and was thus liable to be set aside. 

The respondent however argued that since the appellant already had sufficient opportunity to file an objection to the proclamation schedule, he could not seek to set aside the sale on such grounds. The respondent claimed that the property had been purchased for a commensurate price and that there was no evidence to substantiate that the property would have fetched more value. The respondent also relied upon Order XXI Rule 90(3) of the Code, and the sale was held after giving notice to the appellant and after considering his objections. 

In this light, the Court took the view that in case of non-compliance with mandatory provisions of Rule 64 of Order XXI, it cannot be said that the failure of the judgment debtor to question the proclamation would disentitle him from raising that question at the post-sale stage.

The Court took note of the Apex Court decision in Shalimar Cinema v. Bhasin Film Corporation (1987) that courts are vested with the duty to ensure that the requirements of Order XXI, Rule 66 are properly complied with and that no action of the court or its officer should be such as to give rise to the criticism that it was done in a casual way.

The Court added that a proclamation of sale drawn casually without compliance with the mandatory requirement and a sale held in furtherance thereof is not a sale in the eyes of law.

"While drawing up the proclamation, it is the obligation of the court as insisted by Rule 64 of Order XXI of the Code to decide whether the whole or what portion of the property of the judgment debtor need be sold. There is nothing on record to show that the landed property as well as the building were separately valued and the price estimated. Without taking into account such necessary aspects in order to ascertain the probable value of the property, the Execution Court proceeded to sell the same. When the building in the scheduled property is not described in the proclamation, the effect is disastrous. A prospective purchaser would not exact details of the property being auctioned and that certainly would result in selling the property at a low price," the Court observed, while adding that the the sale of 4.05 Ares of land along with a building thereon for an amount of Rs.7,50,100/- resulted in substantial injury to the appellant. 

It thus set aside the sale on finding it vitiated by material irregularity.

The respondent was represented by Advocates VB/ Unniraj, R.S. Geetha, K. Seema, and P. Anitha. 

Case Title: Mohammed Moideen v. Maben Nidhi Ltd. 

Citation: 2023 LiveLaw (Ker) 459 

Case Number: F.A.O.NO. 6 OF 2021 

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