Whether the words “illegally” and “material irregularity” cover either errors of fact or law?

 We may gainfully refer to the following observations of this Court in the case of Keshardeo Chamria v. Radha Kissen Chamria and others (1953) 4 SCR 136 while considering the scope of the words ‘material irregularity’, as are found in Section 115 of the Code of Civil Procedure, 1908:

“Reference may also be made to the observations

of Bose, J. in his order of reference

in Narayan Sonaji v. Sheshrao

Vithoba [AIR 1948 Nag 258] wherein it

was said that the words “illegally” and

“material irregularity” do not cover either

errors of fact or law. They do not refer to

the decision arrived at but to the manner

in which it is reached. The errors contemplated

relate to material defects of

procedure and not to errors of either law

or fact after the formalities which the law

prescribes have been complied with.” {Para 33}

34. In the present case, leave apart, there being any

‘material irregularity’, there has been no ‘irregularity’ at all

in the process adopted by the RP as well as the CoC. 

REPORTABLE

IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NOS.36653666

OF 2020

NGAITLANG DHAR Vs PANNA PRAGATI INFRASTRUCTURE

PRIVATE LIMITED & ORS.

Author: B.R. GAVAI, J.

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Basic principles to be followed by court while setting aside sale of property sold in execution of decree

The law which governs the controversy involved in this appeal is laid down by this Court in the case of Saheb Khan v. Mohd. Yousufuddin and Ors. MANU/SC/2026/2006 : 2006 (4) SCC 406 (Three Judge Bench). While examining the scope of Order 21 Rule 90 of the Code, Justice Ruma Pal speaking for the Bench held as under:

12. We are unable to sustain the reasoning of the High Court. Order 21 Rule 90 of the Code of Civil Procedure allows, inter alia, any person whose interests are affected by the sale to apply to the court to set aside a sale of immovable property sold in execution of a decree on the ground of "a material irregularity or fraud in publishing or conducting" the sale. Sub-rule (2) of Order 21 Rule 90 however places a further condition on the setting aside of a court sale in the following language:

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

13. 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 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.

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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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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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