M/S. MOTORS AND INVESTMENTS LTD.versusTHE NEW BANK OF INDIA AND ORS.

              MIS. MOTORS AND INVESTMENTS LTD.                                  A
                                     v.
               THE NEW BANK OF INDIA AND ORS.

                           OCTOBER 29, 1996

           [K. RAMASWAMY AND G.B. PATTANAIK, JJ.]                               B

      Court auction-Property sold in Court auction and confirmed by
Court-Price fetched being to meagre and inadequate, High Court directed
re-auction of the property-On appeal held, no interference called for -
Compensation to the appellant who has deposited the money consequent
on the Court (J!uction-Ifthe amount is kept in any interest earning security,   C
the princif!9lamount together with interest to be refunded to the appellant-
Otherwise the appellant is entitled to interest at 18% per annum on the
amount from the date ofdeposit till the date ofrepayment to the appellant-
Sale to be conducted keeping in view the interest liability.
                                                                                D
     CIVIL APPELLATE JURISDICTION: Civil Appeal No. 14818 of
1996.

     From the Judgment and Order dated 24.10.90 of the Madras High
Court in O.S.A. No. 148 of 1982.
                                                                                E
      A.K. Ganguli and V. Balachandran for the Appellant.

     A.T.M. Sampath, Parmanand Gaur and M.A. Chinnasamy for the
Respondents.
                                                                                F
      The following Order of the Court was delivered :

      lmpleadment ordered.

      Leave granted.
                                                                                G
      This appeal by special leave arises from the judgment and decree of
the Division Bench of the Madras High Court made on October 24, 1990
in OSA No.148/82. The first respondent-Bank laid the suit for the recovery
of mortgage amount by sale of 44 acres of land out of 80 acres belonging
to respondents 2, 3 and 7 in this appeal. Pending suit, respondents 2 and 3     H
                                    141
    142                      SUPREME COURT REPORTS [1996] SUPP. 8 S.C.R.


A were adjudged as insolvents in J.P. No. 15/1978. In consequence, their
  right, title and interest held in the land stood vested in the official assignee,
  the 4th respondent in this Court. In insolvency proceedings, the High
                                                                                      ..
  Court by order dated July 18, 1979 directed the official assignee to sell
  their interest in 44 acres of land by public auCtion. Since no one was
  coming forward to purchase the land in the auction, the appellant had
B offered Rs. 67,500 and by order of the Court dated July 26, 1982 the
  Court accepted the appellant's offer of Rs. 77,500. By proceedings dated
  August 18, 1982 the learned Single Judge confirmed the sale. Feeling
  aggrieved, on appeal, the 7th respondent, in this Court respondent No. 9,
  had offered a sum of Rs. 16,28,000 and respondent No. 8 had offered a
  sum of Rs. 1,50,000 which was later raised to Rs. 2,50,000 respectively.
C Treating it as offer, the Division Bench directed the 9th respondent to
  deposit I 00/o of the upset price but he did not deposit the· same; the official
  assignee was also asked to file a report before the Division Bench on the
  value of the land prevailing in the neighbourhood. The official assignee
  has reported that the price of lands in the neighbourhood varies between
  Rs. 4,000/- and Rs. 5,000/- per acre and the lands in question would fetch
D as on December I 0, 1990 a sum of Rs. 3,35,000 which was worked out at
  the rate of Rs. 7,600 per acre. The High Court has set aside the sale and
  directed reauction of the land, fixing the upset price offered by the 8th
  respondent and directed the sale in open auction accordingly.

          Pending proceedings in this Court, 7th respondent had also offered
E to deposit a sum of Rs. 20,00,000 and as per the direction of this Court the
    order was revoked. When the appeal was dismissed by a short order, on
    being mentioned by the learned counsel for the respondents to hear the
    matter on merits, order passed on July 24, 1995 recalling the order dated
    July 17, 1995 and setting out the matter for disposal. Thus, this appeal by
F   special leave is being heard.

         Shri Ganguli, learned senior counsel for the appellant, contended
  that while the appellant had offered the consolidated sum of Rs. 67,500
  since no one was coming forward to bid at higher amount, the appellant
  offered the highest bid of Rs. 77,500. The learned single Judge, in view of
G the fact that the sale was postponed on more than one occasion, considered
  it appropriate to confirm the sale. The Division Bench, having noticed
  that respondent No. 9 had failed to deposit I 0% of his offer, was not
  justified in setting aside the sale and directing resale of the property. Even
  in this Court, the respondents have not complied with the offer of depositing
  the amount within the time and it indicates that the respondents are only
H intending to prolong the sale but they were not sincere to bid the highest
         MOTORS AND INVESTMENT LTD. v. NEW BANK OF INDIA 143


    price, as offered by the appellant. Shri Sampath, learned counsel for the        A
    respondents, contended thatthe report of the official assignee is self-evident
>   that the price of the lands in the neighbourhood varies between Rs. 4,000
    and Rs. l 5,000/- per acre. Therefore, the price fetched by the sale of 44
    acres, i.e., Rs. 71,500 i> too meagre and inadequate. Accordingly, the
    Division Bench was right in directing re-auction of the property fixing
    upset price offered by the 8th respondent. Though the 7th respondent's           B
    conduct is not worthy of credence, the fact remains that 44 acres of the
    land were sold for inadequate consideration; therefore, this Court is not
    inclined to interfere with the order passed by the Division Bench.

           Having regard to the facts and circumstances of the case, the question
    is: whether the confirmed action of sale by the learned single Judge is          C
    valid in law. It is now well settled legal position that when the Court was
    inclined to bring the property to sale, the endeavour of the Court should
    be to sustain the Court sale. Equally, though Court sale is compulsive sale,
    equal endeavour should be made to fetch adequate price for the property
    sold so that the decree debt would get satisfied and surplus, if any, could


-   be paid over to the judgment debtor. In this case, in the suit for redemption
    of the mortgage, decree has yet to be passed. Since respondent Nos. 3 and
    4 have been declared insolvents, the right, title and interest had by them in
    the property stood vested in the official assignee and the official assignee
    was directed to put the properties to sale. Resultantly, the properties have
                                                                                     D



    been brought to sale. Sri Sarnpath says that insolvency order was anulled
    but the same was disputed by Shri Ganguli. Be it as it may, it is seen that      E
    44 acres of land situated in Vadakkupattu in Chhangulput District near
    about Chennai were brought to sale for a price Rs. 77,500. It appears to be
    highly inadequate and the learned single Judge, therefore, was not right in
    confirming the same. The Division Bench has taken note of the offer
    made by the 8th respondent at Rs. 1,50,000 which was subsequently raised
    to Rs. 2,50,000 and directed to conduct the open auction. The Division           F
    Bench also has taken into consideration the report submitted by the official
    assignee that the market value in the neighbourhood lands ranges between
    Rs. 4,000 and Rs. 15,000 per acre and the lands in question would be
    worked out at the rate of Rs. 7,600 per acre, as in the year 1990. This
    circumstance would also indicate that the sale of the land made in 1982          G
    was too inadequate. Therefore, an attempt should have been made by the
    learned single Judge to have the property sold by public auction by inviting
    either tenders or open auction. The Division Bench, therefore, was right
    in its conclusion in setting aside the sale.

          Shri Ganguli may be right in his contention that the appellant having      H
    144                      SUPREMECOURTREPORTS[1996] SUPP.8 S.C.R.


A deposited the money, should be suitably compensated and no direction has
    been given by the Division Bench in that behalf. In the event of any
    subsisting liability againstthe estate ofthe respondents 2 and 3, to discharge
    any debts, it may be open to the official assignee to bring such part of the
    properties which may be sufficient to discharge the liability, to sale by
    public auction either by inviting tenders or through appropriate procedure
B   under order XX! of the CPC and then to conduct the sale in accordance
    therewith. In case the official assignee has kept Rs. 77,500 in any interest
    earning security, the principal amount together with interest is directed to
    be refunded to the appellant. In case the amount was not kept in any
    deposit and was used to discharge outstanding debt due by respondent
    Nos. 2 and 3, the appellant is entitled to get interest at 18% per annum on
C   the amount deposited by the appellant and the sale should be so conducted
    keeping in view the interest liability. From the amount secured by sale,
    apart from discharging the liabilities fastened on the lands, the interest
    also should be repaid to the appellant from the date of the deposit till date
    of repayment to the appellant.

D         The appeal is accordingly disposed ofbut in the circumstances without
    costs. It may be open to the appellant to participate in the auction that may
    be conducted by the official asignee. In that event, it may be open to the
    appellant to withdraw the amount.

E G.N.                                                      Appeal disposed of.