Ghulam Hasan, J. - (1.) This appeal brought by the auction purchasers by special leave raises the question of the validity of a sale of certain properties which took place on August 13, 1942. The respondents are the Judgment-debtor and the legal representative of the deceased decree-holder.
(2.) The decree-holder applied on March 30, 1940 for execution of his decree by sale of 4 lots of property belonging to the Judgment-debtor. The properties were valued at 1,50,000 and were subject to a previous mortgage of Rs. 60,000 existing in favour of the auction-purchaseers. It appears that under the terms of the mortgage-deed the mortgagees were entitled to proceed in the first instance against the first 3 lots and against the fourth lot only in the event of a deficiency in sale price to cover the decretal amount. The first 3 lots with which alone we are concerned in the appeal were sold to the mortgagees for Rs. 53,510 on August 13,1942. They were sold free from the encumbrance under the order of the court passed at the instance of the decree-holder and the mortgagees by without notice to the judgment-debtor. It may however, be noted that on the application of certain third parties their right of annuity over the properties sought to be sold was notified in the sale proclamation. On the same date the mortgagees applied for a set-off stating that the purchase price was Rs. 53,510 while the amount due to them was Rs. 1,20,000. The Court allowed the set off then and there. It is important to bear in mind that the mortgagees had filed no suit and obtained no decree to recover the money due on the mortgage.
(3.) The order notifying the claim to annuity was challenged by the judgment - debtor in revision to the High Court but it was dismissed on November 10, 1943, by Sen, J. who observed that as the sale had already taken place, the proper remedy of the judgment-debtor was to move the Court for setting aside the sale. Thereupon the judgment debtor applied on November 20,1943, under Order 21, Rule 90 of the Civil Procedure Code to have the sale set aside (Ex. 51). Allegations imputing fraud and collusion to the mortgagees were added in the application; in particular it was alleged that the 3 lots were purchased at a grossly inadequate price by under-valuing them in the proclamation and that the mortgages not having paid 25 per cent, of the bid the sale should not have been sanctioned in their favour. While this application was pending, the judgment - debtor made another application on January 15, 1947, challenging the sale as a nullity on the ground that the purchaser had neither made the deposit required under Rule 84 of Order 21 nor paid the balance of the purchase-price as required by Rule 86, and praying for resale of the property to realize the price. The order allowing set-off was attacked as being without jurisdiction, No separate order was passed on this application as the application Ex. 51 was granted on the same grounds. The trial court found that at the time of attachment on April 30, 1940, lost Nos. 1 and 2 and lost No. 3 were valued at Rs. 40,000/- each separately but at the time of proclamation of sale on March 6,1942, the first two were valued at Rs. 45,000/- and the third at Rs, 8,000/- only. The property did not consist of mere survey numbers but admittedly had bungalows, and superstructures and in the opinion of the court the subsequent valuation was bound to mislead bidders. The court, however, set aside the sale on the ground that the provisions of Order 21, Rules 34 and 35 had not been complied with in that the price was not deposited but a set-off was wrongly claimed and allowed om the absence of the judgment debtor by the Court, which had no authority or jurisdiction. The Court observed. "There is nothing to show that these Opponents took any permission from the court to bid at the auction and in fact they could hardly have contained any such permission , they being mortgages whose dues had yet to be proved and determined. If they could ask for set-off, there is no reason why they should not be required also to seek previous permission from the Court to bid under Order 21, Rule 72 of the Civil Procedure Code. It may be noted that one of these Opponents is himself a pleader and he was not justified in taxing such an unauthorised order from the court without fully acquainting with all the facts. Under all these circumstances, these Opponents can with little justification avoid the consequence of non-compliance with the provisions of Order 21, Rules 84 and 85, referred to above. Without proving their claim under the mortgage, they have succeeded in purchasing for a gross under value these properties and even that value they have not paid in court by taking resource to the device of set off... In my opinion, there could not be a more fraudulent and materially irregular procedure than what has taken place in the present case at the instance of these mortgagees, to the great detriment and injury of the present applicant, viz, the judgment-debtor".;