Supreme Court: Any sale by auction or other public procurement methods once confirmed ought not to be set-aside except on grounds of collusive, fraudulent or vitiated by inadequate pricing or underbidding

  Any sale by auction or other public procurement methods once already confirmed or concluded ought not to be set-aside or interfered with lightly except on grounds that go to the core of such sale process, such as either being collusive, fraudulent or vitiated by inadequate pricing or underbidding. Mere irregularity or deviation from a Rule which does not have any fundamental procedural error does not take away the foundation of authority for such proceeding. In such cases, courts in particular should be mindful to refrain entertaining any ground for challenging an auction which either could have been taken earlier before the sale was conducted and confirmed or where no substantial injury has been caused on account of such irregularity. {Para 218}

IN THE SUPREME COURT OF INDIA

Contempt Petition (C) Nos. 158-159 of 2024.

Decided On: 13.12.2024

Celir LLP Vs. Sumati Prasad Bafna and Ors.

Hon'ble Judges/Coram:

J.B. Pardiwala and Manoj Misra, JJ.

Author: J.B. Pardiwala, J.

Citation: 2024 INSC 978,MANU/SC/1343/2024.

Read full Judgment here: Click here.

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Supreme Court Explains 'Henderson Doctrine' : Re-Litigation of Issues That Could Have Been Raised Earlier Is Barred

b. The 'Henderson' Principle as a corollary of Constructive Res- Judicata.

135. The 'Henderson Principle' is a foundational doctrine in common law that addresses the issue of multiplicity in litigation. It embodies the broader concept of procedural fairness, abuse of process and judicial efficiency by mandating that all claims and issues that could and ought to have been raised in a previous litigation should not be relitigated in subsequent proceedings. The extended form of res-judicata more popularly known as 'Constructive Res Judicata' contained in Section 11, Explanation VII of the Code of Civil Procedure originates from this principle.

136. In Henderson v. Henderson reported in MANU/ENRP/1168/1843 : [1843] 3 Hare 999, the English Court of Chancery speaking through Sir James Wigram, V.C. held that where a given matter becomes the subject of litigation and the adjudication of a court of competent jurisdiction, the parties so litigating are required to bring forward their whole case. Once the litigation has been adjudicated by a court of competent jurisdiction, the same parties will not be permitted to reopen the lis in respect of issues which might have been brought forward as part of the subject in contest but were not, irrespective of whether the same was due to any form of negligence, inadvertence, accident or omission. It was further held, that principle of res judicata applies not only to points upon which the Court was called upon by the parties to adjudicate and pronounce a judgement but to every possible or probable point or issue that properly belonged to the subject of litigation and the parties ought to have brought forward at the time. The relevant observations read as under: -

In trying this question I believe I state the Rule of the Court correctly when I say that, where a given matter becomes the subject of litigation in, and of adjudication by, a Court of competent jurisdiction, the Court requires the parties to that litigation to bring forward their whole case, and will not (except under special circumstances) permit the same parties to open the same subject of litigation in respect of matter which might have been brought forward as part of the subject in contest, but which was not brought forward, only because they have, from negligence, inadvertence, or even accident, omitted part of their case. The plea of res judicata applies, except in special cases, not only to points upon which the Court was actually required by the parties to form an opinion and pronounce a judgment, but to every point which properly belonged to the subject of litigation, and which the parties, exercising reasonable diligence, might have brought forward at the time. [...]

140. The fundamental policy of the law is that there must be finality to litigation. Multiplicity of litigation benefits not the litigants whose rights have been determined, but those who seek to delay the enforcement of those rights and prevent them from reaching the rightful beneficiaries of the adjudication. The Henderson Principle, in the same manner as the principles underlying res judicata, is intended to ensure that grounds of attack or defence in litigation must be taken in one of the same proceeding. A party which avoids doing so does it at its own peril. In deciding as to whether a matter might have been urged in the earlier proceedings, the court must ask itself as to whether it could have been urged. In deciding whether the matter ought to have been urged in the earlier proceedings, the court will have due regard to the ambit of the earlier proceedings and the nexus which the matter bears to the nature of the controversy. In holding that a matter ought to have been taken as a ground of attack or defence in the earlier proceedings, the court is indicating that the matter is of such a nature and character and bears such a connection with the controversy in the earlier case that the failure to raise it in that proceeding would debar the party from agitating it in the future. The doctrine itself is based on public policy flowing from the age-old legal maxim interest reipublicae ut sit finis litium which means that in the interest of the State there should be an end to litigation and no party ought to be vexed twice in a litigation for one and the same cause.

141. The Henderson Principle was approvingly referred to and applied by this Court in State of U.P. v. Nawab Hussain reported in MANU/SC/0032/1977 : (1997) 2 SCC 806 as the underlying principle for res-judicata and constructive res-judicata for assuring finality to litigation. The relevant observations read as under: -

3. The principle of estoppel per rem judicatam is a Rule of evidence. As has been stated in Marginson v. Blackburn Borough Council [(1939) 2 KB 426 at p. 437], it may be said to be "the broader Rule of evidence which prohibits the reassertion of a cause of action". This doctrine is based on two theories: (i) the finality and conclusiveness of judicial decisions for the final termination of disputes in the general interest of the community as a matter of public policy, and (ii) the interest of the individual that he should be protected from multiplication of litigation. It therefore serves not only a public but also a private purpose by obstructing the reopening of matters which have once been adjudicated upon. It is thus not permissible to obtain a second judgment for the same civil relief on the same cause of action, for otherwise the spirit of contentiousness may give rise to conflicting judgments of equal authority, lead to multiplicity of actions and bring the administration of justice into disrepute. It is the cause of action which gives rise to an action, and that is why it is necessary for the courts to recognise that a cause of action which results in a judgment must lose its identity and vitality and merge in the judgment when pronounced. It cannot therefore survive the judgment, or give rise to another cause of action on the same facts. This is what is known as the general principle of res judicata.

4. But it may be that the same set of facts may give rise to two or more causes of action. If in such a case a person is allowed to choose and sue upon one cause of action at one time and to reserve the other for subsequent litigation, that would aggravate the burden of litigation. Courts have therefore treated such a course of action as an abuse of its process and Somervell, L.J., has answered it as follows in Greenhalgh v. Mallard [(1947) All ER 255 at p. 257]: "I think that on the authorities to which I will refer it would be accurate to say that res judicata for this purpose is not confined to the issues which the court is actually asked to decide, but that it covers issues or facts which are so clearly part of the subject-matter of the litigation and so clearly could have been raised that it would be an abuse of the process of the court to allow a new proceeding to be started in respect of them. This is therefore another and an equally necessary and efficacious aspect of the same principle, for it helps in raising the bar of res judicata by suitably construing the general principle of subduing a cantankerous litigant. That is why this other Rule has some times been referred to as constructive res judicata which, in reality, is an aspect or amplification of the general principle.

IN THE SUPREME COURT OF INDIA

Contempt Petition (C) Nos. 158-159 of 2024.

Decided On: 13.12.2024

Celir LLP Vs. Sumati Prasad Bafna and Ors.

Hon'ble Judges/Coram:

J.B. Pardiwala and Manoj Misra, JJ.

Author: J.B. Pardiwala, J.

Citation: 2024 INSC 978,MANU/SC/1343/2024.

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Supreme Court: Determination of lease U/S 111(d) of transfer of property Act-Doctrine of merger

 Learned Counsel for the writ Petitioner relying on provisions of Section 111 of the Transfer of Property Act, 1882 contends that leasehold rights have been merged in the lessor since when lessor's interest coalesces with lessee's interest, the principle of merger comes into play. He has placed reliance on judgment of this Court in T. Lakshmipathi and Ors. v. P. Nithyananda Reddy and Ors. MANU/SC/0263/2003 : (2003) 5 SCC 150 and Pramod Kumar Jaiswal and Ors. v. Bibi Husn Bano and Ors. MANU/SC/0346/2005 : (2005) 5 SCC 492. This Court in T. Lakshmipathi (supra) had examined the doctrine of merger as contained in Section 111(d). In Paragraph Nos. 14 to 17, following was laid down:

14. The common-law doctrine of merger is statutorily embodied in the Transfer of Property Act, 1882. Section 111(d) provides:

111. Determination of lease.--A lease of immovable property, determines--

* **

(d) in case the interests of the lessee and the lessor in the whole of the property become vested at the same time in one person in the same right;

* * *"

A bare reading of the doctrine of merger, as statutorily recognized in India, contemplates (i) coalescence of the interest of the lessee and the interest of the lessor, (ii) in the whole of the property, (iii) at the same time, (iv) in one person, and (v) in the same right. There must be a complete union of the whole interests of the lessor and the lessee so as to enable the lesser interest of the lessee sinking into the larger interest of the lessor in the reversion.

15. In Badri Narain Jha v. Rameshwar Dayal Singh MANU/SC/0054/1951 : AIR 1951 SC 186, it was held by this Court that if the lessor purchases the lessee's interest, the lease no doubt is extinguished as the same man cannot at the same time be both a landlord and a tenant, but there is no extinction of the lease if one of the several lessees purchased only a part of the lessor's interest. In such a case the leasehold and the reversion cannot be said to coincide.

16. In Sk. Faqir Bakhsh v. Murli Dhar MANU/PR/0179/1931 : AIR 1931 PC 63, the Plaintiff was holding on lease a portion of the entire property. Subsequently, the Plaintiff and the Defendant became pro indiviso joint proprietors of the property by purchasing shares from the earlier owners. The lease was subsisting when the shares were bought by the parties. In a suit for accounts filed by the Plaintiff it was held that the Plaintiff's rights under lease of a part do not merge in his rights as joint proprietor of the whole of the property as between the parties the Plaintiff held a valid and subsisting lease.

17. A Division Bench of the Patna High Court in Parmeshwar Singh v. Sureba Kuer MANU/BH/0096/1925 : AIR 1925 Pat 530, held that Section 111(d) applies only to a case where the interests of the lessee and of the lessor in the whole of the property become vested at the same time in one person in the same right. Merger is largely a question of intention, dependent on circumstances, and the courts will presume against it when it operates to the disadvantage of a party, as was held by this Court in Nalakath Sainuddin v. Koorikadan Sulaiman, MANU/SC/0564/2002 : (2002) 6 SCC 1 (SCC para 20)."

IN THE SUPREME COURT OF INDIA

Civil Appeal Nos. 1533 and 1534 of 2019

Decided On: 12.02.2019

Delhi Development Authority  Vs.  Karamdeep Finance & Investment (I) Pvt. Ltd. and Ors.

Hon'ble Judges/Coram:

Ashok Bhushan and K.M. Joseph, JJ.

Citation: MANU/SC/0183/2019,(2020) 4 SCC 136

Author: Ashok Bhushan, J.

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Whether court can treat sale as nullity if auction purchaser fails to deposit value of stamp duty for drafting sale certificate along with purchase money?

 In Manilal Mohanlal Shah and others v. Sardar Sayed Ahmed Sayed Mohamad and others, MANU/SC/0005/1954 : AIR 1954 SC 349, the Apex Court observed thus:

"Having examined the language of the relevant rules and the judicial decisions bearing upon the subject we are of opinion that the provisions of the rules requiring the deposit of 25 per cent of the purchase-money immediately on the person being declared as a purchaser and the payment of the balance within 15 days of the sale are mandatory and upon non-compliance with these provisions there is no sale at all. The rules do not contemplate that there can be any sale in favour of a purchaser without depositing 25 per cent of the purchase-money in the first instance and the balance within 15 days. When there is no sale within the contemplation of these rules, there can be no question of material irregularity in the conduct of the sale. Non-payment of the price on the part of the defaulting purchaser renders the sale proceedings as a complete nullity. The very fact that the Court is bound to re-sell the property in the event of a default shows that the previous proceedings for sale are completely wiped out as if they do not exist in the eye of law. We hold, therefore, that in the circumstances of the present case there was no sale and the purchasers acquired. No rights at all."

15. (a) In Uttamchand Milapchand v. Balkrishna Ramnath, MANU/MH/0053/1961 : AIR 1961 Bom. 224, referring to Manilal Mohanlal Shah and others case (supra), the Bombay High Court expressed the similar view holding thus:

In Para No. 4 xxx....... In view of these observations of the Supreme Court it is clear that the provisions of Order 21 Rule 85 as well as Rule 86 are mandatory in the sense that in the event of the auction purchaser failing to deposit the full purchase price within 15 days from the date of the auction sale the Court will have no option but to order a re-sale of the property. This necessarily implies that the Court has no jurisdiction whatever to extend the time for the payment of the balance of the purchase price as fixed under Order 21 Rule 85 of the Code. Either the purchaser pays the price within 15 days of the sale or he does not. If he pays, the sale would be complete; if he does not pay then, as pointed out by the Supreme Court in the aforesaid decision, there is no sale at all and all the proceedings in respect of the auction sale would be a nullity. Applying the ratio of that decision to the facts of this case, it is clear that as auction purchaser, who is the applicant in the present revision application, failed to pay the full purchase price within 15 days of the auction sale, there was no sale at all in his favour and, therefore, there was no question of any irregularity in such a sale being waived on account of the consent of the judgment-debtor to the time being extended in favour of the auction purchaser. Following upon the default in the payment of the purchase price as required under Order 21 Rule 85 the Court had straightaway to order re-sale of the property which the learned Judge in the Court below has done in this case. Accordingly, in my opinion, the order passed by the learned Judge ordering re-sale of the property is perfectly valid.

IN THE HIGH COURT OF ANDHRA PRADESH AT AMARAVATI

CRP No. 6528 of 2018

Decided On: 18.03.2019

 G. Venkata Ramana Naidu Vs.  K. Venkataramana Reddy and Ors.

Hon'ble Judges/Coram:

U. Durga Prasad Rao, J.

Citation: AIR 2019 AP 21

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Whether admission with respect to the interest which has been parted away is admissible in evidence?

 Reliance has also been placed on Section 18 of the Evidence Act. In the instant case, there is no admission after parting with the interest made in the execution proceedings inter se husband and wife. The auction was held by the court in accordance with law. It was not the case set up that the decree passed in the maintenance suit was based upon fraud or a collusive one. Nor was such a case so set up with respect to the auction of the properties in the execution of the decree. On the contrary, the husband had preferred an appeal against the judgment and decree passed in the maintenance case, which was dismissed on merits. Section 18 of the Evidence Act states:

18. Admission by party to proceeding or his agent.-Statements made by a party to the proceeding, or by an agent to any such party, whom the Court regards, under the circumstances of the case, as expressly or impliedly authorized by him to make them, are admissions. by suitor in representative character.-Statements made by parties to suits, suing or sued in a representative character, are not admissions, unless they were made while the party making them held that character.

Statements made by-

(1) party interested in subject-matter..-persons who have any proprietary or pecuniary interest in the subject-matter of the proceeding, and who make the statement in their character of persons so interested, or

(2) person from whom interest derived..-persons from whom the parties to the suit have derived their interest in the subject-matter of the suit,

are admissions, if they are made during the continuance of the interest of the persons making the statements.

Thus, after parting with the interest, no admission with respect to the interest which has been parted away is admissible

IN THE SUPREME COURT OF INDIA

Civil Appeal No. 5007 of 2018 (Arising out of S.L.P. (C) No. 7468 of 2015)

Decided On: 11.05.2018

 Siddagangaiah  Vs. N.K. Giriraja Shetty (D) thr. L.Rs.

Hon'ble Judges/Coram:

Arun Mishra and U.U. Lalit, JJ.

Citation:(2018) 7 SCC 278,2019(2) MHLJ 577

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Whether civil suit is maintainable against auction sale conducted by recovery officer of DRT?

The challenge is to the jurisdiction of the Civil Court to entertain the civil suit. It is well established that the jurisdiction of the civil Court cannot be ousted unless any express or implied bar is pointed out. Keeping this established principle in mind, the provisions of sub-rule (6) of Rule 11 of the Second Schedule under the Income-tax Act, 1961 are required to be examined. The submission that a party gets right to institute civil suit only if the Recovery Officer passes an order against that party on merits, if accepted, then it will amount to giving a meaning to the provisions, which is not intended. The order dated 31st October, 2005 endorsed by the Recovery Officer on the notice, in terms amounts to refusal on his part to take cognizance of the objection raised by the plaintiff and in my view it would amount to an order made against the plaintiff, consequently, giving right to the plaintiff to institute civil suit.

IN THE HIGH COURT OF BOMBAY (NAGPUR BENCH)

Appeal Against Order No. 11 of 2017

Decided On: 14.03.2018

 Bank of India Vs.  Shivcharan and Ors.

Hon'ble Judges/Coram:

Z.A. Haq, J.

Citation: 2018(5) MHLJ 604

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When application filed by judgment debtor for setting aside auction sale is not maintainable?

 We notice, in this case, there was no reference at all to the provisions of Order 21 Rule 89 in the application filed by the Appellant on 1.12.2010, be that it may, even then the Appellant had not complied with the mandatory requirements of depositing the amount. Clause (a) of Sub-rule (1) of Rule 89 of Order 21 requires the applicant to deposit in Court 5 per cent of the purchase money for payment to the auction purchaser. Deposit of the requisite amount in the Court is a condition precedent or a sine qua non to an application for setting aside the execution of sale and such a amount must be paid within a period specified in the rule and if the deposit is made after the time limit, the application must be dismissed. The deposit made under Rule 89 of Order 21 Code of Civil Procedure should be unconditional and unqualified and the decree holder or the auction purchaser should be able to get the amount at once.

20. We have already indicated that the rule is in the nature of a concession shown to the judgment debtor, so he has to strictly comply with the requirements thereof and a sale will not be set aside unless the entire amount specified in rub-rule (1) is deposited within 60 days from the date of the sale and, if it is beyond 60 days, the Court cannot allow the application. We have already found that the Appellant-judgment debtor did not pay the amount within the stipulated time and he only made an application on 1.12.2010 without depositing the amount and hence the Court cannot entertain such an application and bound to confirm the sale which, in this case, the Court did on 23.10.2010.

IN THE SUPREME COURT OF INDIA

Civil Appeal No. 8652 of 2012 (Arising out of SLP (Civil) No. 34402 of 2011)

Decided On: 03.12.2012

Ram Karan Gupta Vs. J.S. Exim Ltd. and Ors.

Hon'ble Judges/Coram:

K.S. Panicker Radhakrishnan and Dipak Misra, JJ.

Citation: AIR 2013 SC 24

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Whether production of forged document to stall court auction amounts criminal contempt of court?

 It is in these circumstances that the High Court had drawn up an Article of charge with regard to commission of contempt by the Appellant. The said charge was primarily based on the fact that the forged bank draft was placed before the Court by the Appellant in order to stall the confirmation of sale in favour of the genuine bidder.

7. In the proceedings before the High Court the Appellant did not contest the authenticity of the bank draft and admitted that the same was forged. His principal defence appears to be that the demand draft in question was handed over to him by Gurmeet Singh Wadhalia and that he had no knowledge that the instrument was forged.

8. The High Court on a very elaborate consideration of the matter took the view that the explanation offered by the Appellant was not at all acceptable. In this regard the High Court came to the conclusion that the materials on record proved and established that the association of the Appellant with Gurmeet Singh Wadhalia was of recent origin and having regard to the short period of time that the two had known each other it was unnatural that Gurmeet Singh Wadhalia would have handed over a demand draft of the sum of Rs. 21.5 crores to the Appellant. The High Court also took the view that the Appellant was primarily engaged in the real estate business and the explanation given by him before the Court was too naive for acceptance; that the Appellant was guilty of commission of contempt and, therefore, deserved to be sentenced to undergo simple imprisonment for one month.

The High Court has elaborately considered these circumstances and has arrived at the impugned conclusion with which we can find no fault. Having considered the totality of the facts, set out above, we are of the view that the Appellant had deliberately and intentionally furnished a forged bank draft to stall the auction process and has, therefore, interfered in the process of administration of justice warranting the findings recorded against him with regard to the commission of contempt. The rejection of the "apology" offered by the applicant was in our view, rightly made by the High Court. We, therefore, affirm the said findings.

IN THE SUPREME COURT OF INDIA

Criminal Appeal D. No. 4120 of 2015

Decided On: 14.08.2017

 Radhe Shyam Middha Vs.  State of Delhi

Hon'ble Judges/Coram:
Ranjan Gogoi, L. Nageswara Rao and Navin Sinha, JJ.

Citation:(2017) 15 SCC539

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Basic principles for deciding application for setting aside auction sale in execution of decree

 Therefore before the sale can be set aside merely establishing a material irregularity or fraud will not do. The applicant must go further and establish to the satisfaction of the court that the material irregularity or fraud has resulted in substantial injury to the applicant. Conversely even if the applicant has suffered substantial injury by reason of the sale, this would not be sufficient to set the sale aside unless substantial injury has been occasioned by a material irregularity or fraud in publishing or conducting the sale. (See Dhirendra Nath Gorai v. Sudhir Chandra Ghosh MANU/SC/0018/1964 : (1964) 6 SCR 1001, Jaswantlal Natvarlal Thakkar v. Sushilaben Manilal Dangarwala MANU/SC/0190/1991 : 1991 Supp(2) SCC 691 and Kadiyala Rama Rao v. Gutala Kahna Rao MANU/SC/0112/2000 : (2000) 3 SCC 87)

14. A charge of fraud or material irregularity Under Order 21 Rule 90 must be specifically made with sufficient particulars. Bald allegations would not do. The facts must be established which could reasonably sustain such a charge. In the case before us, no such particulars have been given by the Respondent of the alleged collusion between the other Respondents and the auction-purchaser. There is also no material irregularity in publishing or conducting the sale. There was sufficient compliance with Order 21 Rule 67(1) read with Order 21 Rule 54(2).

 The law on the question involved herein is clear. It is not the material irregularity that alone is sufficient for setting aside of the sale. The judgment debtor has to go further and establish to the satisfaction of the Court that the material irregularity or fraud, as the case may be, has resulted in causing substantial injury to the judgment-debtor in conducting the sale. It is only then the sale so conducted could be set aside Under Order 21 Rule 90(2) of the Code. Such is not the case here.

IN THE SUPREME COURT OF INDIA

Civil Appeal No. 5988 of 2007

Decided On: 02.05.2017

Chilamkurti Bala Subrahmanyam Vs. Samanthapudi Vijaya Lakshmi and Ors.

Hon'ble Judges/Coram:

R.K. Agrawal and Abhay Manohar Sapre, JJ.

Citation:(2017) 6 SCC770

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Whether auction sale can be set aside for suppression of material facts?

 Admittedly, the facts noticed hereinabove were not
disclosed to the intending bidders in the E-auction notice
dated 01.03.2016. A bidder would not intend to buy litigation with the
property, which may ensue between the Bank and the Housing Board.
The petitioner has specifically pleaded that on 24.04.2016 he filed an
application for providing a copy of NOC/permission, if any, granted by
the Housing Board for sale of the property in question. The averments
in paragraph no. 18 of the writ petition has been reiterated in
paragraph no. 5(o) of the memorandum of the instant appeal, however,
this assertion has not been controverted by the respondent-Bank. The
Bank has taken a position that there was no pleading in the writ
petition to the effect that while preparing for deposit of the balance bid
amount the petitioner came to know about the aforesaid illegality,
however, in view of the pleadings in the writ petition, particularly in
paragraph no. 18, the defects in the sale notice cannot be ignored.
There is no warrant of the proposition that illegality which would go to
the root of the auction sale must have been discovered by an auction
purchaser during the auction sale and a fact which would vitiate the
auction sale, if discovered subsequently, cannot be taken note of.
Knowledge to the petitioner about nature of the property put on auction
sale, even after the concluded sale, can be looked into to examine the
legality of the sale notice and the auction sale. The fact that the sale
notice was issued on “as is where is basis”, “as it is where it is
basis” and “whatever there is basis”, would not attach legality to the
auction sale inasmuch as, knowledge of the defect in property cannot
be imputed to an intending purchaser. Such covenants cannot
overcome the fatal defect in auction notice and the auction conducted
by suppressing vital informations must be held illegal.
16. The Bank was under a duty to disclose all relevant
facts including, the fact that the property put on auction sale was a
lease-hold property and it belongs to the Housing Board. This is a
basic requirement of fair play in action and more so, in case of a Public
Sector Bank. The auction sale which proceeded on a
misrepresentation to the intending bidders is definitely illegal and is
liable to be quashed. The terms and conditions of an illegal auction
sale cannot be enforced by the respondent-Bank, and accordingly
Clause-13 of E-auction notice which provides forfeiture of the amount
deposited by successful bidder in the event of failure to deposit the bid
amount within the stipulated time cannot be resorted to by the
respondent-Bank to forfeit EMD and 25% of the bid amount deposited
by the appellant. Dismissal of the writ petition on the ground that the
appellant-writ petitioner himself invoked jurisdiction of this Court
seeking a direction upon the Bank to confirm the sale and issue Sale
Certificate, is not justified. The writ petition was decided without
affording an opportunity to the Housing Board to file its response, as is
apparent from the proceeding in W.P.(C) No.2181 of 2016, which was10.
disposed of on the very first day of hearing. In view of the objection
raised by the Housing Board to the auction sale of its property, the
direction issued by the Writ Court to the respondent Bank to take steps
for execution of lease in the name of the appellant is also rendered
erroneous. Considering the aforesaid facts, we are of the opinion that
the impugned order dated 26.04.2016 passed in W.P.(C) No.2181 of
2016 suffers from serious error in law.
 IN THE HIGH COURT OF JHARKHAND AT RANCHI
 L.P.A. No. 220 of 2016

Kumar Rohit, 
 V
Allahabad Bank, 
CORAM:  MR. JUSTICE VIRENDER SINGH, CHIEF JUSTICE
  MR. JUSTICE SHREE CHANDRASHEKHAR

 Dated:26th July, 2016.
Citation: AIR 2017 Jharkh 65

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When it is not permissible for bank to forfeit amount deposited by successful bidder in Auction sale?

 Another issue which was debated during the course of
hearing of the instant Letters Patent Appeal, is whether forfeiture of the
amount deposited by the appellant would amount to unjust enrichment
of the respondent-Bank. The learned Senior counsel for the appellant
contended that in the subsequent auction vide E-auction notice
published in the Newspaper on 07.05.2016 the borrower himself has
paid all dues to the Bank, which issued “No Dues Certificate” to the
borrower vide letter dated 23.06.2016 and therefore, appropriation of
Rs.31,25,000/- deposited by the appellant would be unjust retention of
the said amount by the Bank amounting to unjust enrichment.
Mr. P.A.S. Pati, the learned counsel for the respondent-Bank, however,
contended that on account of failure of the appellant to deposit the
balance bid amount, the auction failed and the Bank was constrained
to re-auction the property. The amount deposited by the appellant has
to be forfeited in terms of the conditions attached to E-auction notice
dated 01.03.2016, and if, the Courts interfere with the matters like the
present one, no auction would ever be concluded.
18. The Contract Act, 1872 recognizes the principle of
unjust enrichment in Section 72. This principle is infact foundation
for the law governing restitution. The retention of money or property of
another against the principle of justice, equity and good conscience
has been held by the Courts “unjust enrichment”. On admitted facts,
forfeiture of the amount deposited by the successful bidder, for sale of
a property which the respondent-Bank could not have sold in auction
sale without prior approval of the Housing Board and after realizing its
dues from the borrower, would certainly amount to unjust enrichment.
The respondent-Bank cannot legally retain EMD and 25% of the bid
amount deposited by the appellant.

 IN THE HIGH COURT OF JHARKHAND AT RANCHI
 L.P.A. No. 220 of 2016

Kumar Rohit, 
 V
Allahabad Bank, 
CORAM:  MR. JUSTICE VIRENDER SINGH, CHIEF JUSTICE
  MR. JUSTICE SHREE CHANDRASHEKHAR

 Dated:26th July, 2016.
Citation: AIR 2017 Jharkh 65

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Whether validity of auction sale can be challenged in collateral proceedings?

In view of this position, the validity or otherwise of the
auction sale pursuant to the decree can not be incidentally gone into.
No relief has been claimed regarding the auction sale or the delivery
of possession affected pursuant to the decree. The Hon’ble Supreme
Court in the case of Inderjit Singh Grewal Vs. State of Punjab &
Anr. 2012 (1) BLJ 42 SC has held that even if an order is void or
voidable, same requires to be set aside by competent Court. Even if
a decree is void, ab initio, declaration to that effect has to be
obtained from competent Court. Such declaration cannot be obtained
in collateral proceedings.
IN THE HIGH COURT OF JUDICATURE AT PATNA
First Appeal No.601 of 1986

Harak Nath Yadav & Ors .
V
Mosmat Meena Devi & Ors 
CORAM: MR. JUSTICE MUNGESHWAR SAHOO

Dated: 04 th, October, 2016.
Citation: AIR 2017 Patna 44

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When auction sale of property in execution proceeding should not be set aside?

Looking to the above said facts and circumstances, when, the fraud alleged has not been established, this Court has to consider whether the judgment debtor has established under Order 21 Rule 90 of CPC that the applicant has sustained substantial injury due to the material irregularity in the conduct of Sale, and the applicant could have taken that ground on or before the date on which the proclamation was ordered.

22. As I have already narrated that mere existence of material irregularity, not by itself a ground for setting aside the sale under the said provision. Therefore, it is clear from the above said provisions that mere irregularity or fraud by themselves are not grounds for setting aside the same. Though irregularity or fraud is established, there must be a substantial injury occasioned by the irregularity or fraud. It depends however upon several relevant facts. There must be an express plea as to substantial injury suffered by the judgment debtor, however, it can also be ascertained if it is implicit in the allegations made in the application. It is the bounden duty of the Court to ascertain even otherwise on the basis of the overall facts and materials on record whether any substantial injury has been occurred due to the material irregularity or any fraud played in conducting the sale. If the Court is of the opinion that there is no substantial injury, even if it is established the existence of material irregularity or fraud, the Court cannot interfere with the sale proceeding.

IN THE HIGH COURT OF KARNATAKA AT BENGALURU

M.F.A. No. 1968/2016 (CPC)

Decided On: 10.02.2017

 L. Nanjunda Murthy and Ors.

Vs.

 S. Suresh Reddy and Ors.

Hon'ble Judges/Coram:

K.N. Phaneendra, J.

Citation:AIR 2017 Karnat

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Whether auction sell can be set aside on ground of non publication of auction notice in vernacular language?

Non-compliance of statutory requirements of publication of possession notice and auction notice in vernacular language rendered the statutory requirement as farce. There should be purposeful compliance of the provisions of law and it cannot be reduced to an empty formality. The requirement to cause publication in ‘vernacular language’ in the newspaper is fundamental and the statutory requirement which cannot be compromised. It is not for the borrower or guarantor to establish that non-publication of the said notices in -‘vernacular language’ in the newspaper has caused any prejudice to its cause. It is for the Respondents to establish that non compliance of the statutory requirements has not caused any prejudice at all.

42. In view of the above, both the writ petitions succeed and are allowed. All proceedings subsequent to notice under Section 13(4) of the Act, 2002 being in flagrant violation of the statutory provisions are liable to be quashed. The case is squarely covered by the judgments of the Apex Court referred to above, wherein the Apex Court held that not following the statutory provisions itself is a good ground for quashing the confirmed sale.

In the High Court of Allahabad

(Before Mahesh Chandra Tripathi, J.)

Ashok Kumar v.

Authorized Officer, Punjab National Bank And Others .

And

Writ - C No. - 66988 of 2012

Decided on February 10, 2017, 

Citation: 2017 SCCONLINE ALL 333

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When application under O 21 R 95 of CPC will not be barred by limitation?

Considering the facts of the present case in the light of the above
principles, in our view, the sale could not have become absolute till the
proceedings in the revision in C.R.P.No.2829/2002 was over and the
revision was disposed of. The judgment-debtor, as discussed earlier, had
filed two applications E.A.No.315/2001- (i) to set aside the sale alleging
that the property was sold for a lower price as a result of which substantial
injury was caused to him and (ii) another application in E.A. No.77/2002-
an application for appointing Advocate-Commissioner to assess the value
of the property. As against the order dismissing E.A.No.77/2002, the
judgment-debtor has filed the revision in C.R.P.No.2829/2002. So long as
the said revision was pending, the court auction sale was yet to become
absolute. For the sake of arguments, assuming that the said revision was
allowed, then in that case the court auction sale would have been set aside
on the ground that the property was sold for a lesser price. Therefore, till
the revision in C.R.P. No. 2829 of 2002 was disposed of in one way or the
other, the sale was yet to become absolute. Be it noted that in Article 134
of the Limitation Act, the legislature has consciously adopted the
expression “when the sale becomes absolute” and not when the sale
was confirmed. As against the order dismissing E.A No.77/2002 since the
revision was preferred by the judgment-debtor and the same came to be
disposed of on 9th July, 2003 the sale became absolute only on 9th July,

2003. The application filed under Order XXI Rule 95 C.P.C on 30th August,
2003 was well within the period of limitation. In our view, the High Court
was not right in holding that the application under Order XXI Rule 95 C.P.C
was barred by limitation and the impugned order cannot be sustained.
REPORTABLE
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NO.4204 OF 2007

UNITED FINANCE CORPORATION  Vs. M.S.M. HANEEFA 

Dated:January 11, 2017.

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How to appreciate evidence if there is dispute as to title to property?

Admittedly, there are documents like Ext. 2 and Ext. 5 on
record to show that the public authorities had issued sale certificate
in favour of the plaintiff with regard to the suit land and also handed
over possession. The defendant, having claimed in written statement
of being in the possession of the suit land, did not come to the
witness box to establish his assertion. No witness from the locality
was brought to show as to whether the defendant was in possession 
of the land at any point of time as claimed. On the contrary, PW1,
being the father of the plaintiff, has asserted that the plaintiff is in
possession of the suit land and he proved the documentary evidence
as Ext.5 to show that the land was handed over to the plaintiff in the
year 1989 and in that event the claim of the plaintiff of being in
possession of the suit land is probable. The learned First Appellate
Court has considered Ext. 2 and Ext. 5 in their entirety and so such a
finding of the learned First Appellate Court in regard to possession of
the plaintiff cannot be erroneous or perverse. The only question
remains as to whether Ext. 3 was duly proved or not. Ext. 3, which
is available on record, is an unregistered document in the form of a
bank’s paper. This document described to be CLM form No. 13 of the
Bank, has been filled up by the appellant and it is not a mortgage
deed within the meaning of Section 59 of the Transfer of Property
Act. If this document is created by the bank by itself under CLM
Form No. 13, in that event, the learned First Appellate Court did not
commit any error in holding that the document having been
possessed by the bank and certified under the seal and signature of
Inspector of the Cooperative Society, was a valid document and is
admissible in terms of Section 30 of the 1960 Act. Had it been a case
of the plaintiff that mortgage deed was executed in compliance of
Section 59 of the Transfer of Property Act by executing and
registering document and attested by two witnesses, in that event, 
compliance of Section 68 of the Evidence Act would have been
necessary. The plaintiff presented the original document and it
shows that it is a bank document under CLM form No. 13 and so the
finding of the learned First Appellate Court in this regard, is correct.
13. In view of what has been stated above, it is clear that the land
in question was originally owned by Mahabir Ravidas, who died in
the year 1945 leaving behind 4 sons. Descendents of Mahabir
Ravidas acquired right, title and interest over the suit land and they
subsequently mortgaged the same in favour of the bank on
23.10.1973 and obtained loan of Rs.10,000/- and they having failed
to repay the debt, bank took recourse to auction sale and thereby
the sale certificate in question, vide Ext. 2 dated 13.02.1989, was
issued, which was confirmed by the Deputy Registrar of the
Cooperative Society. Under Section 18 of the Act, it is not open to
question the title of an auction purchaser on the ground that sale
has not been made by following the due procedure prescribed under
the Act.
14. In that view of the matter, the sale certificate, Ext. 2, cannot
be questioned. The defendant did not lead any evidence to show
that there was no such mortgage or there was no such sale and the
plaintiff having claimed to be the purchaser and having possession
over the suit land and not having come to the witness box to 
establish his case, presumption under Section 14 is liable to be taken
against him and the same has been done by the learned First
Appellate Court. Considering the entirety of the circumstances, the
findings arrived at by the learned First Appellate Court are neither
perverse nor erroneous and accordingly the sole substantial question
of law is decided in negative and against the appellant.
IN THE GAUHATI HIGH COURT
(THE HIGH COURT OF ASSAM; NAGALAND; MIZORAM AND
ARUNACHAL PRADESH)
RSA 22 of 2006
Md. Amir Uddin Laskar,

 - Versus –
Md. Abul Hussain Laskar,

BEFORE
HON’BLE MR. JUSTICE N. CHAUDHURY
Citation:AIR 2016 (NOC)380Gauhati

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When Auction sale should not be set aside?

Above all, clause 2 of Rule 90, Order XXI CPC requires the J.Dr. to demonstrate the substantial injury sustained by him by reason of any irregularity or fraud either in publishing or conducting the sale of immovable property, for the Court to be satisfied to set aside the sale so conducted. It is thus, clear that it is not every irregularity, which can fetch a satisfaction for the Court to set aside the sale conducted. The irregularity must be of such a grave nature and magnitude that it should result in causing substantial injury to the interest of the J.Dr.

The Supreme Court has spelt out the principle in this regard in Saheb Khan v. Mohd.Yusufuddin and others in the following words of Justice Ruma Pal speaking for a three-Judge bench:

Therefore before the sale can be set aside merely establishing a material irregularity or fraud will not do. The applicant must go further and establish to the satisfaction of the court that the material irregularity or fraud has resulted in substantial injury to the applicant. Conversely even if the applicant has suffered substantial injury by reason of the sale, this would not be sufficient to set the sale aside unless substantial injury has been occasioned by a material irregularity or fraud in publishing or conducting the sale. (See: Dhirendra Nath Gorai and Suibal Chandra Shaw and Ors. v. Sudhir Chandra Ghosh and Ors.(1964) 6 SCC 101; Jaswantlal Natvarlal thakkar v. Sushilaben Manilal Dangarwala and Ors. (1991) Supp.2 SCC 691; Kadiyala Rama Rao v. Gutala Kahna Rao (dead) by L.Rs and others (2000)3 SCC 87).

In the instant case, no such substantial injury suffered by the J.Dr. was either urged or demonstrated.

Hence, I do not find any merit in the appeal preferred by the Judgment Debtor and hence it deserves to be dismissed.

Andhra High Court

Ch.Mahender vs D.Venkat Reddy And 3 Others on 21 August, 2015

THE HONBLE SRI JUSTICE NOOTY RAMAMOHANA RAO

CIVIL MISCELLANEOUS APPEAL No.421 OF 2015 and batch         

Citation;AIR 2016 (NOC)287 HYD

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Whether oral evidence in respect of Auction sale is admissible?

Mr. Almeida, learned Counsel for the defendants,
contended that in terms of Section 91 of the Evidence Act, oral
evidence with respect to the said auction sale in order to
establish that the auction sale is not only of the property
registered under no. 27202 but also in respect of 1/5th of the
property registered under no. 29845, is not admissible. On the
contrary, the contention of Mr Usgaonkar, learned Counsel for
the plaintiffs is that in respect of auction sale no document was
required to be executed by the Court and therefore Section 91 of
the Evidence Act does not bar such evidence. He relied upon the
Judgment of Division Bench of Patna High Court in the case of
“Tribeni Prasad Singh Vs. Ramasray Prasad Chaudhury”,
reported in A.I.R. 1932 Patna 80. In the case supra, the learned
Division Bench has observed that Section 65 of Civil. P.C. says
that where immovable property is sold in execution of a decree
and such sale has become absolute, the property shall be
deemed to have vested in the purchaser from the time when the
property is sold and not from the time when the sale becomes
absolute. It has been held that it is clear that the title of the
auction-purchaser is derived from the sale and not from the sale
certificate. It has been further held that the sale certificate is
merely evidence of title of the auction-purchaser and not the
title deed in the sense that the title is conveyed or created by it.
It is further observed that the word “sale certificate” itself
denotes that it is only a certificate by the Court that the auctionpurchaser
has purchased the property. It is further observed
that no provision of law has been placed before the Court to
show that the title of the auction-purchaser is derived from the
sale certificate. In the case supra, mortgaged property was
purchased by the decree holder in execution proceedings but no
sale certificate was obtained nor any document of delivery of
possession under Rule 95 or order XXI of C.P.C. was applied for
and obtained. In terms of Rule 94 of Order XXI of C.P.C., when
a sale of immovable property has become absolute, the Court
shall grant certificate specifying the property sold and the name
of the person who at the time of sale is declared to be the
purchaser and such certificate shall bear the date the day on
which the sale became absolute. An omission to obtain the
certificate does not destroy or take away the title of the
purchaser and the purchaser in such case can prove his title and
purchase by evidence aliunde. But when there is order of
confirmation of sale, the production of the same is sufficient to
prove the title of the auction-purchaser. The certificate of sale
may not by itself create title but is certainly evidence of title.
The facts and circumstances in the case of “Tribeni Prasad
Singh” (supra) are different. The ratio in the said judgment
does not apply to the facts of the present case. In the present
case, the property was not purchased in execution proceeding
and hence the provisions of order XXI of C.P.C. would not apply.
Auction was held in a Partition Suit No. 3450/1964. The said
document of auction proceedings was signed by Dr. Eurico Das
Dores Santana Da Silva, the learned Civil Judge Senior Dicision;
by Mr. Abel Agnelo Da Piedade Noronha, the Escrivao/Clerk of
that Court; by Mr. Antonio Coelho, the bailiff of the Court and by
the purchasers namely Maria Purificacao Jesuina Consolacao
Miranda Gomes and Soter Paulo Menino Gomes. It is stated in
the said document of auction proceedings that the said written
proceedings are being sent to Land Registration Office in terms
of the law. The document further shows that on 25/08/1972, the
executing parties namely Maria Jesuita Miranda Gomes and her
husband Soter Paulo admitted execution of the so-called
certificate of sale, before the Sub-Registrar, Salcete. On
26/09/1972, the execution of the said document of auction-sale
has been registered in the Land Registration Office of Salcete
under No. 1371 of Book No. 1, Vol. 99 at pages no. 335 to 340.
Section 91 of the Evidence Act, inter alia, provides that in all
cases in which matter is required by law to be reduced to the
form of a document, no evidence shall be given in proof of such
matter except the document itself, or secondary evidence of its
contents in cases in which secondary evidence is admissible
under the provisions herein before contained. In my view, the
learned First Appellate Court has rightly held that on account of
Section 91 of the Evidence Act, oral evidence in respect to the
auction sale in order to show that the auction sale was not only
in respect of the property registered under no. 27202 and
matriz no. 345 but also in respect of the property bearing
registration no. 29845 and matriz no. 344, is not admissible.
Hence the substantial question no. (1) above is answered in the
negative i.e. against the plaintiffs.
IN THE HIGH COURT OF BOMBAY AT GOA
SECOND APPEAL NO. 85 of 2009
 Smt. Dea Lima Gomes Alemao,

Versus
Smt. Aurora Silva e Diniz,

CORAM :- U. V. BAKRE, J.
 Reserved on : 8thAugust, 2014.

Citation; 2016(3) ALLMR183

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Whether auction purchaser can refuse to pay balance amount in auction sale on the ground that part of allotted land is encroached?

Be that as it may, we do not find any good reason to interfere in this Special Appeal, as the appellant has not deposited the amount of his highest bid, either in terms of the conditions of sale or in pursuance to the interim direction, as granted by this Court. The explanation that 100 sq.yards of the land out of 2056.32 sq.meters is under encroachment, and further, no development was made appears to be an excuse, as the details of encroachment or the failure of development or any reminders, or any representation, to this extent, was not brought on record, nor pleaded before learned Single Judge.
IN THE HIGH COURT OF JUDICATURE FOR RAJASTHAN
AT JAIPUR BENCH, JAIPUR


D.B. SPECIAL APPEAL No.1784/2014
M/s.High Image Developers (P) Limited 
Vs.
The State of Rajasthan & Anr.
Dated;13.02.2015
HON'BLE THE ACTING CHIEF JUSTICE MR. SUNIL AMBWANI
HON'BLE MR. JUSTICE PRAKASH GUPTA
Reportable
Citation; AIR 2015(NOC)1167 RAJ

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Whether auction sale without notice to JD U/O 21 Rule 22 is nullity?

A sale made, therefore, without notice to the judgment debtor is a nullity since it divests the judgment debtor of his right, title and interest in his property without an opportunity. The jurisdiction to sell the property would arise in a court only where the owner is given notice of the execution for attachment and sale of his property. It is very salutary that a person's property cannot be sold without his being told that it is being so sold and given an opportunity to offer his estimate as he is the person who intimately knew the value of his property and prevailing in the locality, exaggeration may at time be possible. In Rajagopal Iyer v. Ramachandra Iyer , the Full Bench held that a sale without notice under Order 21 Rule 22 is a nullity and is void and that it has not got to be set aside. If an application to set aside such a void sale is made it would fall under Section 47. 
ALLAHABAD HIGH COURT
Case :- CIVIL REVISION No. - 145 of 2009 

Revisionist :- Amit Kumar S/O Late V.P. Ram 
Opposite Party :- Prem Kumar Garg S/O Panna Lal Garg & Anr. 
CITATION;AIR 2015(NOC)885ALL
Hon'ble Anil Kumar,J. 

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