V.D. Gyani, J.
1. This order shall also dispose of Civil Revision No. 377 of 1985 (Bhandari Iron and Steel Co. P. Ltd. v. Dr. Gokuldas], which arises out of the same order dated October 1, 1985, passed by the Addl. District Judge, Indore, in Execution Case No. 6-B of 1962.
2. This appeal is directed against the order dated October 1, 1985, passed by the 7th Addl. District Judge, Indore, in Execution Case No. 6B of 1962, thereby rejecting the appellants' objection and refusing to set aside the sale in execution case involving mortgaged properties.
3. Brief facts of this appeal are that the appellants, M/s. Bhandari Iron and Steel Co. Pvt. Ltd., Indore, mortgaged certain properties, including the land sold, in execution with the State Bank of Indore, which filed a suit No. 6B of 1962 and obtained a decree for Rs. 20,19,435.83 against appellants Nos. 1, 2 and 3, who were directors and guarantors of the first appellant, the company. The first execution was filed by the decree-holder-bank on April 30, 1964, which continued till January 30, 1973, and was closed as no bidders were forthcoming. On December 19,1974, an application was filed for permission to sell certain assets mortgaged to the decree-holder for Rs. 11,00,000, which was permitted by the court, but ultimately the sale could not materialise. Thereafter, the decree-holder-bank filed a fresh execution application on May 9, 1975, prayingexecution of the decree by (i) sale of mortgaged property, as described in schedule II, appended to the execution application, (ii) sale of personal assets and properties of the judgment-debtors Nos. 2 and 3 to the extent necessary for satisfying the decree. The decree-holder also prayed that the execution should proceed against the mortgaged property and execution against judgment-debtors Nos. 2 and 3 may proceed simultaneously, as it was not possible to cover up the entire decretal amount and the highest bid earlier did not even reach half of the decretal amount which, on the date of filing the execution application, stood at Rs. 32,38,652.40. Decree-holder also prayed for leave to bid at the auction and further submitted that in the event of such permission being granted, the amount due on the decree might be set off against the purchase money and satisfaction of the decree might be entered in part or in whole, as the case might be. Judgment-debtors Nos. 2 and 3 were also called upon to produce the full particulars of all their immovable properties and other assets as held by them.
4. The judgment-debtors entered their appearance on April 6, 1976, and repeatedly sought time for filing objections, but no objection as such was filed by them against the prayers made by the decree-holders in the execution application. The executing court on April 27, 1977, issued a warrant of attachment of immovable properties and on August 16, 1977, the judgment-debtor-appellant No. 2 applied for private sale of some property for Rs. 6'50 lakhs. The decree-holder-bank also moved an application on September 6, 1977, seeking a month's time for procuring a purchaser willing to pay more than Rs. 6.50 lakhs. On October 19, 1977, the judgment-debtor-appellant No. 2 made an application with a schedule annexed thereto, praying for sale of certain properties for Rs. 7'15 lakhs. The schedule included the mortgaged properties as well. The executing court accorded permission to sell the machinery for Rs. 7.15 lakhs, which was completed. On November 15, 1977, notice under Order 21, Rule 66, Civil Procedure Code, was issued for sale of the rest of the property. This notice was served on the judgment-debtor-appellants on February 6, 1978, but no objections as such were filed in reply to the notice. Appellant No 2 deposited Rs. 25,000 on October 3, 1977, and Rs. 40,000, on October 24, 1977, against sale of goods. As no objections were filed in spite of service of notice, the executing court on September 4, 1978, ordered bids on the spot on October 10, 1978, and bids on the court on October 20, 1978. But it was required to be stayed for sometime as the I.J.D.--appellants Nos. 2 and 3 applied for sale of IMLA (the structure) of main workshop building for Rs. 19,000 and crediting the sale proceeds towards decretal amount on October 24, 1978, on which date the Nazir also reported no bids. Thejudgment-debtor-appellants applied for sale of debris for Rs. 19,000 and again, the auction was stayed for the time being. By order dated December 15, 1978, the judgment-debtor was allowed to sell the debris and a month's time was given for selling the remaining properties. The judgment-debtor-appellants Nos. 2 and 3, on February 15, 1979, prayed for three months time to make payment by means of another deal. On the date fixed, i.e., July 5, 1979, the judgment-debtor was absent and his application dated February 15, 1979, was rejected. On July 10, 1979, he applied for setting aside the order, which was set aside on July 21, 1979, and the execution proceeded. Sale dates were called and fixed on September, 22, 28, 1979, by order dated August 2, 1979. The decree-holder-bank applied for sale-notice to be published in newspapers, which was allowed on August 23, 1979. The judgment-debtor-appellant No. 2 again applied on September 18, 1979, praying for final sale being stayed till the middle of December, 1979, on the ground that proposals for sale were being negotiated. He was granted time as applied for by him on September 28, 1979, and was directed to make payments by December 5, 1979, but instead of making such payments, the judgment-debtor-appellant No. 2, on December 5, 1979, applied for three months time and prayed for adjournment of the sale. He was again given time till February 22, 1980, and it was made clear that in default, the sale will proceed without further proclamation. Decree-holder had not objected to adjournment of two months provided the sale continued. Once again, the sale was adjourned till May 1980, on judgment-debtors' application dated February 22, 1980, with the direction that the sale shall be resumed after fresh proclamation. Judgment-debtor-appellant No. 2, on January 6, 1981, came out with an application that the scheduled auction of property be put off for another quarter so as to enable him to pay the decretal amount in full. He also addressed a letter to the bank, which was filed along with the bank's reply dated January 13, 1984, stating that he had a ready buyer for the assets for Rs. 15 lakhs in full and final settlement of the banks' dues against court decrees and interest and offered payment by instalments. In the meanwhile, on May 8, 1981, the executing court permitted the decree-holder-bank to bid at the auction. Judgment-debtor-appellant No. 1 was dissolved by order dated November 5, 1981, passed by the High Court. On September 7, 1982, the appellants prayed for postponement of the auction for a couple of months and waiver of fresh proclamation. The application was moved on October 5, 1983, by the appellants seeking three months time to sell the property privately and for stay of sale in the meantime. The same prayer was repeated on December 7, 1983, by appellant No. 1 on the ground that he had brought a buyer ready to pay the amount higher than the bid at the auction and further seeking time to negotiatewith the decree-holder-bank. A similar application was moved by appellant No. 2 on December 19, 1983, stating that the purchaser was willing to purchase the property outside the court and was negotiating with the bank. These applications were opposed by the decree-holder on the ground that no genuine buyer was either brought or produced and in such circumstances the highest bid of Rs. 11.75 lakhs be accepted. On January 12, 1984, appellant No. 2 filed objections under Order 21, Rule 90, objecting to the area as mentioned in the proclamation and contended that the director's bungalow was worth Rs. 10 lakhs, which had been undervalued. The decree-holder-bank filed its reply on January 13, 1984, praying for acceptance of the highest bid. Judgment-debtor's application was dismissed. In the meanwhile, the judgment-debtor addressed yet another letter to the bank stating that he had a ready buyer prepared to pay Rs. 20,11,000 in full and final settlement of dues against court decrees, interest, cost and release of guarantors, but proposed payment by instalments (application filed with reply dated January 13, 1984): Finally, the executing court, on April 30, 1985, rejected the objection regarding description of property raised by the appellants on March 25, 1985, and April 6, 1985. This order was challenged in Civil Revision' No. 173 of 1985 before this court, which was ultimately dismissed on August 26, 1985. June 11, 12, 1985, as sale dates were given by the Nazir on May 3, 1985. Respondent No. 1, on June 12, 1985, offered a bid of Rs 25 lakhs. On the same day, appellant No. 2 made an application for sale of the land and the bungalow separately proposing the land to be sold in plots and also objecting to their value shown in the proclamation as inadequate. This objection was replied to on June 13, 1985, raising a legal objection that the erstwhile directors of the company had no right to represent the company after dissolution. On June 14, 1985, objections dated June 12, 1985, raised by the appellants were rejected and the bid of respondent No. 2 was accepted. A revision was preferred against this order, being C. R. No. 192 of 1985, challenging the rejection of objections filed by the appellants. It was in this revision petition that ah application for amendment of revision memo was moved on June 22, 1985, by appellant No. 2 so as to incorporate a ground about omission to frame a final decree. But this revision petition also met with dismissal on August 29, 1985, and the application for amendment was dismissed as not pressed. In the meanwhile, the appellants preferred objections under Order 21, Rule 90, Civil Procedure Code. Decree-holder submitted its reply on September 6, 1985, and by order dated October 1, 1985, the executing court dismissed the application under Order 21, Rule 90, Civil Procedure Code, and the sale was confirmed. It may be noted at this stagethat confirmation of sale had been ordered to be stayed by order dated May 30, 1985, passed in Civil Revision No. 173 of 1985.
5. As questions pertaining to company law having a vital bearing on the maintainability of this appeal have also been raised and the locus stand! of appellants Nos. 2 and 3 is itself under challenge, it is necessary to make a note of certain important dates about appellant No. 1 the company. The High Court, in Company Case No. 12 of 1964, on March 25, 1965, passed a winding-up order and on February 6, 1966, permission was granted by the High Court to the bank to prosecute the execution application. As noted above, the High Court passed the dissolution order on November 5, 1981.
6. Shri Kokje, learned counsel appearing for the appellants, raised the following objections in his arguments in this appeal :
(i) that the decree was in executable except to the extent provided by the terms of the decree and the entire execution proceedings on the preliminary decree are without jurisdiction and null and void inasmuch as the decree did not permit any process against the immovable properties in pursuance to the preliminary part of the decree ; (ii) that, under the terms of the decree, the respondent-State Bank of Indore was bound to apply for the passing of a final decree and in the absence of a final decree, there was nothing to be executed and the court had no jurisdiction to execute the decree, (iii) that no notice under Order 21, Rule 22, Civil Procedure Code, was ever issued in the present execution against the immovable properties nor were the properties ever attached in execution and in the circumstances, the entire proceedings of sale and confirmation and subsequent actions were without foundation and without jurisdiction ; (iv) that since the mortgage decree was clearly contemplated under Order 34, Rule 5, Civil Procedure Code, no execution could be levied against the mortgaged properties on the erroneous assumption of execution of a money decree, especially in view of the last provisions of the decree itself, (v) that the learned executing court has failed to appreciate that the entire proceedings before it are bad for want of jurisdiction inherently and, therefore, without any legal sanction or effect ; (vi) that the learned executing court has also ignored the last clause of the decree which emphasizes that the decree as regards movables alone was final and executable, while as regards the immovable properties, it was specifically made preliminary and without applying for and obtaining a final decree, no execution could proceed ; (vii) that the executing court has failed to appreciate that proceedings for a final decree were not proceedings in execution and until a final decree was passed, the suit itself continued as regards the immovable properties and for want of such a decree therewas no jurisdiction in it to levy execution; (viii) that the executing court was, therefore, entirely wrong in finding that the conduct of the judgment-debtors amounted to waiver of drawing up a final decree and further holding that if not this, at least the judgment-debtors agreed that the property sold could be attached and sold in execution of the decree as it is ; (ix) that the executing court has totally failed to appreciate that there was no part of the decree which permitted direct recovery of the amount except as a mortgage decree under Order 34, Rule 5, Civil Procedure Code, (x) that the executing court was wrong in holding that th6 sale which began on June 11, 1985, could culminate, without sanction of the court, in proper sale or acquire validity merely because it was continued on June 12, 1985, (xi) that proper publicity by publication in a newspaper was necessary in order to attract bidders and in the absence of such proclamation, the court was bound on objection by the judgment-debtors to enquire into the alleged loss caused to the judgment-debtors, (xii) that the executing court erred in holding that the properties had fetched an adequate price, (xiii) that the purchaser, Dr. Gokuldas, was a man set up by the bank itself by providing him with a loan, (xiv) that objections as regards area, measurements and the prevalent market price should have been gone into by the executing court and omission to do so has resulted in grave injustice to the judgment-debtors, (xv) that the executing court misconstrued the principles of res judicata and estoppel and misapplied the same to the judgment-debtors on the basis of their alleged conduct, and (xvi) that the bar of Order 21, Rule 90(3), Civil Procedure Code, was not attracted in the instant case.
7. Shri Sanghi, learned counsel appearing for respondent No. 1, and Shri Chitley, learned counsel appearing for respondent No. 2 have supported the order.
8. Following questions arise for determination in this appeal: (i) whether the decree, on its true construction, is executable as it is, (ii) whether a final decree ought to have been drawn up before executing the decree as it is and (iii) can the sale be set aside on the ground that a final decree has not been passed. Shri Chitley strenuously urged whether such a question can be raised at all. According to him, objections raised by the appellants before the executing court were barred by limitation. The doctrine of res judicata also applied to the case and the appellants were estopped from raising such objections, as they failed to raise the same at the proper stage. Objections which could and ought to have been raised in view of Explanations IV and VII to Section 11, Civil Procedure Code, indisputably were not raised by the appellants.
9. Order 21 contemplates different stages when objections are raised regarding execution of a decree, their scope and nature as prescribedand as one moves ahead from stage to stage, the scope and nature of objections is proportionately curtailed. The appellants could well have raised an objection at the stage when a notice under Sub-rule (1) of Rule 22 of order 21 was issued. Then, under Rule 23 which provides a second stage, next, under Rule 66 a third stage, for the appellants to have raised objections and thereafter under Rule 72A and Rules 89 and 90 of Order 21, Civil Procedure Code. If objections have not been raised at the proper stage, then they cannot be allowed to be raised and agitated at a belated stage. According to Shri Chitley, the appellants are estopped and debarred from raising these objections both by operation of res judicata and estoppel. He referred to a number of applications on record, where, at no stage, the appellants raised such an objection. The respondent-bank moved an application on December 19, 1974, for sale of the mortgaged and hypothecated property for Rs. 11,00,000 by private sale, but the present appellants did not oppose such an application made by the decree-holder-bank and by order dated December 23, 1974, passed by the executing court, the application was allowed. Thereafter, by application dated October 24, 1978, the appellants applied to the court for sale of IMLA of the main workshop building for Rs. 19,000 and prayed for crediting the sale proceeds towards the decretal amount. The decree-holder-bank applied for publication of a notice for sale in the newspapers on August 23, 1979, and that prayer was allowed on the same day. The other applications, as referred to in paragraph 4 above, unfailingly point to 'waiver' of such objections on the part of the appellants.
10. Shri Chitley has also challenged the very maintainability of this appeal, for, according to him, the appellants have no 'locus standi' to maintain the appeal on behalf of the company, as they are merely shareholders or directors of a dissolved and wound up company.
11. Taking up the first submission advanced by Shri Kokje, learned counsel for the appellants, on whether for want of a final decree, the decree as it is, could be executed, Shri Kokje contended that no amount of waiver by conduct of judgment-debtors, would render an otherwise invalid decree executable. He referred to paragraph 11 of the impugned order and submitted that the executability of a decree does not depend on any concession or waiver, as has been done by the executing court. Shri Kokje's main contention has been that so far as the mortgage part of the decree is concerned, it is not final and that, therefore, the property under mortgage could not be auctioned and the court had no jurisdiction to deal with such mortgaged property.
12. To appreciate this contention, reference has to be made to the impugned order. The executing court has noted the important words of the decree'this decree be treated as an ex parte final decree, as regards the money decree and its satisfaction by sale of the hypothecated movable properties and it should be treated as an ex parte preliminary decree for the sale of mortgaged immovable property.' It was on this basis that the executing court observed that it could be said that the decree is partly final and partly preliminary, so far as the mortgaged immovable property was concerned.
13. Shri Sanghi, learned counsel appearing for respondent No. 1, referred to Order 34, which relates to suits relating to mortgage of immovable property. Rule 2 of Order 34, relates to preliminary decree in a foreclosure suit and Rule 4 is regarding preliminary decree for sale, while Rule 5 of Order 34 speaks of final decree in a suit for sale. He also referred to forms of decrees prescribed under these Rules. (Appendix 'D' of Code of Civil Procedure). Form No. 5A relates to preliminary decree for sale and Form No. 6 is the form of final decree for sale.
14. The form of decree, which has been used in the instant case, is Form No. 1 of decree in original suit under Order 26, Rules 6 and 7. To determine the real nature of the decree, the operative part of the judgment may also be seen. Paragraph 7 of the judgment reads as follows :
' In the result, the claim of the plaintiff is decreed and it is hereby ordered :
(i) that the defendant do pay Rs. 20,10,435.83 to the plaintiff with future interest at the rate of 6% per annum on the principal amount of Rs. 17,95,922.11 and costs of the suit on or before 1st day of March, 1964, or any later date up to which, time for payment may be extended by the court;
(ii) that on such payment and on payment thereafter before such date as the court may fix of the amount specified in Sub-clause (i) including costs and future interest till the date of payment the plaintiff shall bring into court all such documents in possession or power relating to the mortgaged property......
(v) that it is further ordered that the money realised by such sale shall be paid into court and shall be duly applied (after deduction therefrom of the expenses of sale) in payment of the amount payable to the plaintiff under the decree and under any further orders that may be passed in this suit and in payment of any amount which the court may adjudge due to the plaintiff in respect of costs together with interest as may be payable under the decree and that the balance, if any, shall be paid to the defendants or other person entitled to receive the same.
(vi) and it is hereby further ordered that if the money realised by such sale shall not be sufficient for payment in full of the amount payable to the plaintiff as aforesaid, the plaintiff shall be entitled to executethe decree for the balance against the other property of the defendants and shall be at liberty to apply for a personal decree against defendant No. 2 for the amount of the balance.
(vii) this decree be treated as an ex parte final decree as regards the money decree and its satisfaction by sale of the hypothecated move-able properties and it should be treated as an ex parte preliminary decree for the sale and mortgage of immovable property.
Pleader's fee, according to scale, if certified and permissible under the rules,'
15. Directions contained in the decree are ;
'The claim of the plaintiff is decreed and it is decreed and it is hereby ordered (i) that the defendants do pay Rs. 20,10,435.83 to the plaintiff with further interest at the rate of 6% per annum on the principal amount of Rs. 17,96,922.11 and the cost of the suit on or before March 1, 19,64, or any later date up to which, time for payment may be extended by the court, (ii) that on such payment and on payment thereafter before such date as the court may fix of the amount specified in Sub-clause (i), including cost and future interest till the date of payment, the plaintiff shall bring into court all such documents in possession or power relating to the mortgage property ; (iii) that it is further ordered that the money realised by such sale shall be paid into court and shall be duly applied (after deduction therefrom of the expenses of sale in payment of the amount payable to the plaintiff under the decree and under any further orders that may be passed in this suit and in payment of any amount which the court may adjudge as due to the plaintiff in respect of costs together with interest as may be payable under the decree and that the balance, if any, shall be paid to the defendants or other persons entitled to receive the same ; (iv) and it is hereby further ordered that if the money realised by such sale shall not be sufficient for payment in full of the amount payable to the plaintiff as aforesaid, the plaintiff shall be entitled to execute the decree for the balance against the other property of the defendants and shall be at liberty to apply for a personal decree against defendant No. 2 for the amount of balance ; and (v) this decree be treated as an ex parte final decree as regards the money decree and its satisfaction by sale of the hypothecated movable properties and it should be treated as an ex parte preliminary decree for the sale and mortgage of immovable property.'
16. Comparing the operative portion of the judgment with the decree, it must be said that the executing court was right in coming to the conclusion that the entire operative part of the judgment could not be reproduced in the decree and the court was further justified in observing that none of the parties cared to get the decree corrected, but, nevertheless,the sum and substance of the judgment is expressed in the decree and it can be said that it is partly final and partly preliminary and it is ordered that, first, the movables shall be used for recovery and, thereafter, the immovables. The contention that the 'decree' is inexecutable cannot be accepted.
17. Shri Kokje's contention is that in the absence of a final decree, the mortgaged property could not have been proceeded against. In order to support his contention, he has placed reliance on the following decisions, as reported in Nabbobai v. Hassan, AIR 1954 MB 181 and Ramnath v. Deokinandan, AIR 1947 All 47. A Full Bench of the Madhya Bharat High Court in the case of Nabbobai, AIR 1954 MB 181, held as follows (pages 182, 183):
' It is no doubt true that in the case of a mortgage suit a mere preliminary decree for sale in spite of the fact that it determines the amount payable by the defendant and contains a direction to pay the same within a specified time is not executable because of two reasons, viz., (i) the defendant is given the time to make the payment, and (ii) plaintiff is given the right to apply for sale of the mortgaged property in case no payment is made.'
18. Similar view has been expressed in the case of Ramnath v. Deokinandan, AIR 1947 All 47, and in Bhajanmal v. Tikamdas, AIR 1947 Sind 12.
19. 'Decree' means the formal expression of an adjudication which, so far as regards the court expressing it conclusively, determines the rights of the parties with regard to all or any of the matters in controversy in the suit and may be either preliminary or final. For an adjudication to be a decree, three essential conditions are necessary, namely, (I) that the adjudication must be given in a suit ; (2) the suit must start with a plaint and culminate in a decree ; and (3) that the adjudication must be formal and final and must be given by a civil or revenue court See Diwan Brothers v. Central Bank of India, AIR 1976 SC 1503.
20. The word 'execution ', in its widest sense, signifies the enforcement of, or for giving effect to, the judgments or orders of courts of justice. It is not the case of the appellants that the court passing the decree had no jurisdiction to try the suit and pass a decree therein. Their objection precisely is that, in the absence of final decree passed by the court, mortgaged immovable properties could not have been proceeded against in execution of the decree, as it is.
21. The objection that the decree was inexecutable, there being no inherent lack of jurisdiction in passing the decree and no inherent defect in the decree, is not well founded and the executing court was right in holding the same to be executable.
22. At this stage, the pleadings and prayer as contained in the plaint may also be referred to so as to appreciate the controversy about the extent of the decree being preliminary or final.
23. A cash credit loan account was opened by appellant No. 1, the company, with a limit of Rs. 12,50,000 on November 30, 1959, as averred in plaint-para 3 and admitted by the defendant-appellant that on December 5, 1959, defendant No. 1-company was indebted to the plaintiff-respondent No. 2 in the sum of Rs. 11,49,859.07, in its cash credit loan account. It is also admitted by the appellant that on December 2, 1959, an indenture of simple mortgage was executed by defendant No. 1 in favour of plaintiff-respondent No. 2, in respect of lease-hold rights held by the company over plot No. 5/80-Sheelnath Camp, Indore, with buildings, godowns, workmen chawls, office premises and other structures appurtenant thereto and standing thereon and all machinery, such as boiler-engines, furniture fittings, electrical installations, water connections, water wells, furnaces, spare stores, implements, etc. The other account opened and operated by the company was a collateral security created by hypothecation of the entire tangible assets owned by defendant No. 1, comprising of stocks of rerollable scraps and of finished goods of iron and steel and all pig-iron and of brass, zinc or other metals and all other kinds of scraps for casting or stocks in the process and manufactured articles of all kinds, stored or lying in the premises of the factory and other places at Indore or outside. The collateral security created by hypothecation is admitted by the defendant-appellant. The total liability of the company under the two accounts, on January 25, 1962, was Rs. 19,58,978.37. As provided by Clause 9 of the indenture of mortgage, if the company failed to pay the amount and interest as agreed to under the indenture of the mortgage, as a result of this default, the plaintiff had the right to realise its claim in enforcement of mortgage by sale of mortgaged property and other properties, belonging to defendant No. 1 and the personal property of defendants Nos. 2 and 3, who were personally liable jointly and severally as guarantors for the due payments by defendant No. 1 of the debit balance standing at the foot of the cash-credit loan account as per deed of guarantee executed by them on November 30, 1959 (annexure J to the plaint). The balance stated above stands confirmed by the defendant-appellant No. 1. The plaintiff, therefore, prayed for the following reliefs :
(i) A decree for Rs. 22,10,435-83 with interest at the rate of 6% from the date of suit till payment in full ;
(ii) Hypothecated goods be ordered to be sold and sale proceeds be applied to the satisfaction of the decree ;
(iii) Sale of mortgaged property :
(iv) If the hypothecated goods and immovable properties fall short of complete satisfaction of the decree, other immovable or movable properties belonging to defendant No. 1 be sold and proceeds applied to the satisfaction of the balance of the decretal amount ;
(v) If the amount under the above should fall short of satisfaction of the decree, then the movable or immovable properties belonging to defendants be ordered to be sold and the proceeds be applied to the satisfaction of the balance of the decree.
24. Comparing the operative part of the judgment and the decree, the following omissions in the decree were pointed out by Shri Chitley, but notwithstanding these omissions, learned counsel maintained that the decree as it is, is certainly executable :
'Clauses (iii) and (v) of the judgment entirely missing from the decree. No requirement to make application for final decree for sale. No direction for sale (i) that the defendants do pay Rs. (illegible) to the plaintiff.
Clause (ii) of the decree is the same as (ii) of the judgment but words ' pledged and ' were missing.
Clause (iii) of the decree is the same as Clause (v) of the judgment.
Clause (iv) of the decree is the same as Clause (vii) of the judgment.
Clause (v) of the decree is the same as Clause (vii) of the judgment'
25. In view of the pleadings, prayers, the operative parts of the judgment and the decree as it is, it cannot be said that the executing court was not right in coming to the conclusion that the decree was executable.
26. In reply to the main argument of Shri Kokje that immovable property could not be proceeded against in the absence of a final decree, learned counsel, Shri Chitley, went a step further and contended that even assuming the decree to be inexecutable, as contended by the appellants, the question is who could have raised such an objection and at what stage Whether the objection, which is being now raised by the appellants, can be raised at all Rule 22 of Order 21 provides for issuance of notice. The object and purpose of this rule is to give the judgment-debtor an opportunity to show cause why the execution should not be proceeded. The object of notice under Rule 22 is not merely to furnish an opportunity to the persons concerned to raise any objection regarding the very maintainability of the execution, but is also intended to prevent his being taken by surprise and to enable him to satisfy the decree before the execution is issued against him. This is the first step in the execution of a decree, where the judgment-debtor is noticed and inview of the overwhelming evidence on record, it must be held in this case that they were so noticed. The order sheets and the processes issued are on record, which clearly establish that the judgment-debtors were in fact noticed and it must also be held that no objection was taken by the appellants. Rule 23 of Order 21 provides for procedure after issuance of notice under Rule 22 and if a person to whom a notice is issued under Rule 22, either fails to appear or omits to put forth his objection, he cannot, at any later stage, raise any objection as to the executability of the decree. Thereafter, comes the stage under Rule 66 of Order 21, which provides for proclamation of sale by public auction in execution of a decree and Sub-rule 2 of Rule 66 again requires notice to the judgment-debtor, and before coming to an objection under Rule 90 to set aside the sale on ground of irregularity or fraud (as in the instant case the decree-holder-bank having been granted leave on August 5, 1981, to bid). Rule 72A and Rule 89 of Order 21 were the stages at which objections could have been raised, but were not raised. Of course, the scope and nature of such objections is considerably reduced and curtailed as one proceeds ahead of the stage of notice, as contemplated by Rule 22 of Order 2 1.
27. Shri Chitley contended that objections, which could and ought to have been raised, as regards executability of the decree, at the earliest opportunity, at the stage of notice under Rule 22, indisputably not having been raised, such an objection cannot be raised at this belated stage and that too in the second round of execution proceedings instituted more than a decade back on May 9, 1975, the first execution application having been filed on April 30, 1964, and the execution case having been closed on January 30, 1973, as no bidders were forthcoming.
28. Shri Chitley invoked the doctrine of res judicata. Explanation IV to Section 11, Civil Procedure Code, reads as follows :
' Any matter which might and ought to have been made a ground of defence or attack in such former suit shall be deemed to have been a matter directly and substantially in issue in such suit.'
29. Explanation VII to Section 11 leaves no manner of doubt that the provisions of this section have now been made applicable to execution cases as well.
30. The first execution application was filed on April 30, 1964. Sale of lands, building, factory and machinery was advertised a number of times and it was appellant No. 2, who, on February 29, 1968, applied to the court for procuring a buyer. The entire property was valued by an approved valuer at Rs. 15,37,452.30. On January 2, 1965, sale of entire machinery was advertised in the 'Times of India.' Again, it was at theinstance of appellant No. 2, that a buyer brought by him offered to purchase the entire property for Rs. 3,01,000, which was subject to many other riders and conditions. It was on February 29, 1968. Mortgaged machinery worth Rs. 2,04,822 was sold on February 4, 1969, pursuant to public proclamation of sale and advertisements in all-India newspapers. On September 15, 1972, sale proclamation for lands, buildings and machinery was again made but no objection as such was raised by the present appellants, when, in fact, the mortgaged immovables were proclaimed to be sold. As if it was not enough, when the execution case came to a close, as a result of bidders not forthcoming on January 3, 1973, appellant No. 2 proposed to the bank on March 20, 1974, to sell certain mortgaged and pledged properties for Rs. 11 lakhs. It may also be noted that in Company Petition No. 9 of 1966, when I. A. No. 2625 of 1974 moved by the plaintiff-bank was allowed on December 19, 1974, permitting sale of mortgaged and hypothecated properties for Rs. 11 lakhs by private sale, the order having been passed in the presence of official liquidator, directors and shareholders, no opposition was made or objection was raised by the appellants to that application. The application was allowed by the High Court on December 18, 1974, and the Additional District Judge also permitted sale of the mortgaged properties by private sale on December 23, 1974. This was an occasion for raising any objection with regard to the sale of mortgaged immovables on the ground which is now being raised, viz., absence of a final decree.
31. On May 9, 1975, another application for execution came to be filed, which included the remaining items of mortgaged properties, including lands, buildings and machinery, as set out in the schedule appended to the execution application, with a prayer by the decree-holder to sell the mortgaged property described in the schedule and sale of personal assets and properties of appellants Nos. 2 and 3. A simultaneous execution against mortgaged property and properties belonging to appellants Nos. 2 and 3 was prayed to be sold by public auction and the decree-holder-bank to be permitted to bid. Notices were issued to the judgment-debtors, who were duly served. They entered appearance on April 6, 1976, and Shri Mujumdar, advocate, appearing on their behalf, prayed for some time, which was granted. But no reply was filed till July 3, 1976. Again, on July 21, 1976, time was sought by Shri Mujumdar for filing a reply. Accordingly, time was granted. On February 26, 1977, warrant of attachment of immovable properties was directed to be issued under Order 21, Rule 54, Civil Procedure Code. On August 17, 1977, an application was moved by appellant No. 2 under Order 21, Rule 72, Civil Procedure Code, praying for sale of some of the properties for Rs. 6.50 lakhs. The list of properties proposed to be sold includedmortgaged property, but at no stage, the present objection was raised by the judgment-debtor-appellants. On October 19, 1977, yet another application for sale, by appellant No. 2, of certain properties for Rs. 7.15 lakhs was moved. On November 15, 1977, a notice under Order 21, Rule 66, was directed to be issued for sale of the rest of the property. This notice was served on the judgment-debtor-appellants on February 6, 1978. No objection was preferred or filed by the appellants. This was an opportunity to the appellants to raise an objection. By that time, the court called for a sale date, which was fixed for February 13, 1978. In the meanwhile, at the request of Shri Majumdar, counsel for the appellants, time was granted for submitting a reply to the notice on February 13, 1978, but no reply as such was filed on February 13, 1978. By order dated September 4, 1978, bids on the spot were fixed for October 19, 1978, and bids on the court on October 20, 1978. On October 24, 1978, Nazir's report was received and the judgment-debtor, by his application, applied for sale of debris for Rs. 19,000. The auction was stayed for the time being. As per order-sheet dated December 15,1978, the judgment-debtor was allowed to sell the debris and a month's time was also given for selling the remaining property. On February 15,1979, the judgment-debtor-appellants made another application to make payment by means of another deal and this application was rejected on July 5, 1979, as none appeared for the judgment-debtors. Order-sheet dated July 21, 1979, indicates that although the judgment-debtor had applied for three months' time on February 15, 1979, five months had already elapsed and nothing was done in the matter, so the application was dismissed as infructuous. The executing court again fixed dates for auction on September 27, 1979, on the spot and on September 28, 1979, in the court. Sale proclamation was directed to be issued on August 2, 1979. On August 23, 1979, sale proclamation was directed to be published in the newspapers. On September 5, 1979, it was the judgment-debtors who submitted another proforma for sale proclamation. Thus, from the above narration of events and facts, it is clear that at no stage in the execution proceedings, the judgment-debtor-appellants raised the objection which is now being raised and pressed. The following dates and events, as detailed hereunder would further show the conduct of the judgment-debtor-appellants : On September 18, 1979, judgment-debtor No. 2 made an application stating that proposals were being negotiated and prayed for stay of sale, till middle of December, 1979. On September 28, 1979, judgment-debtor applied for time for payment and prayed for adjournment of sale. Time was granted till December 5, 1979, to make payment. On December 5, 7, 1979 the judgment-debtor applied for three months' time and adjournment of sale and time till February 22,1980 was allowed making it clear that in default, sale will proceed without further proclamation. On December 7, 1979, the court ordered adjournment and decree-holder had no objection to such adjournment of two months, provided the sale was to continue. On February 22, 1980/ February 15, 1980, the judgment-debtor applied for four months time stating that letter of intent had been received for collaboration plans, the scheduled auction be adjourned for about four months and if at all necessary, it may be continued without fresh proclamation, and thus the sale was adjourned till May, 1980. On February 22, 1980, the courtgranted adjournment and ordered that sale be resumed after fresh proclamation. On January 6, 1981, Capt. Bhandari made an application praying that the scheduled auction of property be put off for another quarter so as to enable them to pay the decretal amount in full, and on May 8, 1981, permission to bid was granted to the decree-holder. On May 7, 1981, Capt. Bhandari addressed a letter to the bank stating that he had a buyer for the assets in the account mentioned in the letter for Rs. 15,00,000 in full and final settlement of bank's dues against court decrees and interest and offered payment by instalments. On April 9, 1982, Capt. Bhandari made an application stating that negotiations were on for sale of property and prayed for postponement of auction for three months. On September 7, 1982, the appellants made an application for adjournment of auction for a couple of months and waiver of fresh proclamation. On October 5, 1983, appellants Nos. 2 and 3 applied for three months' time to sell the property privately and for stay of sale in the meantime. On December 7, 1983, appellant No. 1 made an application stating that he had brought a buyer ready to pay an amount higher than the bid at the auction and seeking time to negotiate with the bank. On December 19, 1983, appellant No. 2 made an application stating that he had brought a buyer who was willing to purchase the property outside the court and was negotiating with the bank. On December 21, 1983, a reply to this application was filed stating that no genuine buyer was available and the pending highest bid might be accepted.
32. Thus, what emerges from the foregoing statement of events and facts and what is demonstrably clear is that instead of raising an objection that there being no final decree, the mortgaged immovable property could not be proceeded against in execution, the judgment-debtor-appellants were out to negotiate a private sale in waiver of notice of proclamation of sale. In such circumstances, the submission made by Shri Chitley, learned counsel for respondent No. 2, deserves to be accepted. The doctrine of constructive res judicata is fully attracted to the facts of this case. The objection, which is now being raised, ought to have been raised at the earliest stage when a notice under Order 21,rule 22, Civil Procedure Code, was served on the judgment-debtor-appellants, more than a decade back on April 6, 1976.
33. Shri Chitley also contended that the appellants are estopped from raising such an objection by their own conduct as has been revealed during the execution proceedings and as set forth above in the foregoing paragraphs. There are a few other events which deserve to be noted. When objection under Order 21, Rule 90, Civil Procedure Code, was filed, the objection was with regard to the area and the fact that the director's bungalow alone was worth 10 lakhs, which had been under valued. Judgment-debtor-appellant No. 2 addressed letters to the decree-holder-bank (which have been placed on record along with reply dated April 24, 1984) stating that he had a buyer, who was ready to pay Rs. 20,11,000 in full and final settlement of dues against court decrees, interest, costs and release of guarantors, but the payment was proposed to be made by instalments. Again, objections regarding measurements were raised by appellant No. 2, but the same were rejected on April 30, 1985, and a fresh proclamation was directed to be issued. Appellant No. 2 moved yet another application on June 12, 1985, praying that the land and bungalow be sold separately and the land be sold in plots and objecting to the value shown in the proclamation as inadequate. In the meanwhile, sale dates were fixed as June 11, 12, 1985, and Civil Revision No. 173 of 1985, preferred by the judgment-debtor-appellant against order dated April 30, 1985, refusing correction of the area in the proposed proclamation was filed, wherein, by an interim order, confirmation of sale was stayed. This revision petition was dismissed by this court on August 26, 1985, and it operates as a constructive res judicata, as regards any objection about the area in the sale proclamation. On June 14, 1986, the bid of respondent No. 2 was accepted and the objection dismissed. The judgment-debtor-appellant again preferred Civil Revision No. 192 of 1985 against the order dated June 14, 1985, rejecting the objection preferred by him. It was in this revision that for the first time the objection as regards omission to frame a final decree was raised, that too by way of an amendment application, seeking to amend the revision memo. Eventually, this revision petition was also dismissed by the court on August 29, 1985, and the objection, which was sought to be raised by way of amendment application dated July 23, 1985, was not pressed, and the court ordered :
'The trial court has rejected the objections on the ground that the sale has already started. It cannot be held that the executing court has acted illegally or with material irregularity in exercise of the jurisdiction vested in it by law in passing the impugned order.'
34. Thus, it is not only the doctrine of constructive res judicata but, in view of the conduct of the appellants, the rule of estoppel is also attracted. The appellants having failed to raise the objections at the proper stage, when the objection as regards omission to frame a final decree could and ought to have been raised but was not raised, it is not open to them to raise such an objection at this belated stage and they are further held by their own conduct, as estopped from raising such an objection, as the rule of estoppel is also fully attracted.
35. There is one more important point raised by Shri Chitley, which relates to the 'locus standi' of the appellants in maintaining this appeal. The determination of this point involves consideration of applicability of certain provisions of the company law, as regards dissolution and winding-up of a company, its effect on the properties, vis-a-vis the rights of the directors and shareholders of a dissolved company. The appellant company has been ordered to be wound up by the High Court of Rajasthan on March 25, 1965, in Company Case No. 12 of 1964. By a subsequent order passed on November 5, 1981, the company has been dissolved and its name has been directed to be struck off from the register of the Registrar of Companies. The contention advanced by learned counsel for the respondents, Shri Chitley, is that appellants Nos. 2 and 3 had no right to represent the company, appellant No. 1, in view of the winding up and dissolution of appellant No. 1 and have no 'locus standi ' to rile the appeal.
36. Appellants Nos. 2 and 3, who have submitted and signed the appeal-memo at the end have not disclosed in what capacity, whether as a director of the company or on any authority they claim, they have preferred this appeal. The effect of dissolution of a company is stated by Ghosh in his Company Law (12th edition), at page 1195, in the following terms ;
' Dissolution puts an end to the existence of a company. A company which has been dissolved, observed Viscount Cave, 'no longer exists as a separate entity capable of holding property or of being sued in any court.' It prevents any proceeding being taken against promoters, directors or officers of the company in respect of any misfeasance or breach of trust, or a creditor proving a debt against the company.'
37. After the winding-up order, the directors cease to be such and the managing director has no locus standi to appeal against an order appointing an official liquidator or an order refusing re-hearing of the appointment proceedings. (Ghosh on Company Law, page 1101).
38. In view of the aforesaid legal position, this appeal preferred by appellants Nos. 2 and 3 cannot be said to be a properly presentedappeal, as appellants Nos. 2 and 3 had no locus standi to prefer such an appeal after dissolution of the company, which has no legal existence.
39. Shri Kokje, learned counsel for the appellants, raised a question as against whom the execution was proceeding? The company, being dissolved, had no legal existence and there could be no proceedings against the company. It was, therefore, contended that the execution itself was illegal. The winding-up order of the appellant-company had been passed on March 25, 1965, and permission for execution was granted on February 16, 1966, in the company petition pending before the Rajasthan High Court. A reference was made to Section 511 of the Companies Act which relates to distribution of property of a company.
40. Shri Chitley, replying to this argument, contended that the decree-holder-bank, being a secured creditor, having a decree in its favour, is entitled to proceed against the assets of the company. No secured creditor need, or can be forced to prove his debt and such a creditor can stand wholly outside the winding-up proceedings, if he so elects, and rely upon his security or his decree, if he has obtained one, provided he has obtained leave to proceed from the winding-up judge. (See Ghosh on Company Law, page 1292). The required leave had also been granted by the company judge by order dated February 16, 1966, which is quoted here-under :
' Shri C. K. Garg prays for an adjournment. The prayer is declined. He was informed of the application of Shri Sagar Chand several days ago. The applicant, State Bank of Indore, claims to be a secured creditor. A secured creditor is outside the liquidation proceedings and not bound to take rateably with other secured creditors. The applicant is permitted to prosecute the execution application in the Court of the Additional District Judge, Indore.'
41. With this order, the respondent-bank, as a secured creditor, is fully entitled to proceed against the mortgaged property in execution of its decree. There is nothing wrong in proceeding against the mortgaged property. The Supreme Court in M.K. Ranganathan v. Govt. of Madras, [1955] 25 Comp Cas 344, quoting Lord Wrenbury, has explained the position of a secured creditor in the following words (p. 351) :
' The phrase 'outside the winding-up ' is an intelligible phrase if used, as it often is, with reference to a secured creditor, say a mortgagee. The mortgagee of a company in liquidation is in a position to say ' the mortgaged property is, to the extent of the mortgage, my property. It is immaterial to me whether my mortgage is in winding up or not. I remain outside the ' winding-up ' and shall enforce my rights as 'mortgagee.' This is to be contrasted with the case in which such a creditor prefers to asserthis right, nor as a mortgagee, but as a creditor.' He may say, 'I will prove in respect of my debt', If so, he comes into the winding up.'
42. It is also summarised in Palmer's Company Precedents, Volume II, page 415 :
' Sometimes the mortgagee sells, with or without the concurrence of the liquidator, in exercise of a power of sale vested in him by the mortgage. It is not necessary to obtain liberty to exercise the power of sale although orders giving such liberty have sometimes been made.
The secured creditor is thus outside the winding up and can realise his security without the leave of the winding up court, though if he files a suit or takes other legal proceedings for the realisation of his security, he is bound under Section 231 (corresponding with Section 171, Indian Companies Act) to obtain the leave of the winding up court before he can do so although such leave would almost automatically be granted.'
43. Shri Chitley submitted that in the instant case, as per the report of the official liquidator dated October 5, 1981, no assets as such were available with the official liquidator, as per dissolution order dated November 5, 1981 passed by the company judge, and it was for this reason that the company was ordered to be dissolved. Notice of execution had also gone to the official liquidator. Placing reliance on the decision in Mahadeo v. Shantilal, AIR 1957 Bom 170, learned counsel submitted that in execution of the decree, where the mortgaged property is sold, the sale is not even voidable unless the irregularity has resulted in substantial injury. In the instant case, such an irregularity itself has not been made out, much less a substantial injury.
44. For the foregoing reasons, the objection raised by Shri Kokje deserves to be overruled and is accordingly rejected.
45. It was also contended that participation by the judgment-debtors can and should not be construed as their acquiescence in the execution, in the absence of a final decree. It was also stated that respondent No. 1 has been advanced a loan by the decree-holder-bank to purchase immovable property. These objections have been sufficiently and correctly dealt with by the executing court.
46. Much was said about the haste shown in fixing the dates for sale and seeing the whole deal through. It was contended that the executing court had erred in holding that the sale which began on June 11, 1985, without any sanction of the court, was a proper sale, merely because it continued on June 12, 1985. A perusal of the order sheets goes to show that in the marginal column, against the order sheet entry dated April 30, 1985, the sale dates as reported by the Nazir were June 11, 1986, on the spotand June 12, 1985, in the court. The order sheet dated April 30, 1985, reads as follows :
' D.H. by Shri Gagaonkar, advocate,
J.D. by Shri Rege, advocate,
Order passed. Objection dismissed. On payment of P.P., proclamation be issued after taking sale date from Nazarat. The description of property shall be as per schedule in exhibit P-4 (mortgage-deed) of the original suit. Put up on June 12, 1986, for S.D..'
47. No doubt the subsequent order sheet dated May 3, 1985, recites that the sale date given by the Nazir is June 12, 1985, and by order sheet dated April 30, 1985, the case was directed to be put up on June 12, 1985, for sale date. On June 10, 1985, on receiving a stay order from the High Court, the warrant of sale, if already issued, was directed to be recalled, but later on, on receiving a certified copy of the modified order, as the High Court had only stayed confirmation of sale, it was directed that the warrant of sale need not be called back. Only, confirmation shall not be done until disposal of the revision petition, pending before the High Court. Order sheet dated June 12, 1985, records the receipt of auction report and an application by the judgment-debtor for which the decree-holder prayed for time to reply. In the meanwhile, the auction was allowed to continue and the case was fixed for June 13, 1985. The case was again put up on August 13, 1985, the auction continuing in the meanwhile. Order sheet dated June 14, 1985, records that the last bid of Rs. 25 lakhs had been standing for the last three days and it had not been raised. Hence it was accepted as a final bid and the bidder was directed to deposit one-fourth the amount by bank draft or cheque and the rest in 15 days time. On September 17, 1985, the auction-purchaser filed reply to the objections preferred by the judgment-debtor. The judgment-debtor also filed additional written statement with reference to the reply submitted by the decree-holder. It was felt necessary to hear the parties on applications, objections and reply and September 19, 1985, was fixed for arguments. Thereafter, proceedings continued on September 20, 1985, September 23, 1985, and September 24, 1985, and the case was fixed for orders on October 1, 1985. The sale was confirmed on October 1, 1985, as no objection under order 21, Rules 58, 89, 90, 91, 92 was pending, and the case was posted for further proceedings on October 15, 1985, but in the meanwhile, on the same date, i.e., October 1, 1985, the auction purchaser moved an application for issuance of a sale certificate. As the sale had already been confirmed, the same was directed to be issued on October 1, 1985. Later on, it has been noted by the court that the purchaser submitted stamps and the sale certificatewas given to him, and a copy of the same was also sent to the Registrar As no objection was preferred, warrant for possession was also directed to be issued.
48. The foregoing order sheets, although may indicate haste, but it is difficult to infer any illegality therefrom. Order sheet dated October 1, 1985, was particularly referred to, but reading the same as a whole, notwithstanding, the promptitude with which steps were taken, it does not reflect any illegality or irregularity.
49. The other points as regards publication, paper publication, price of the land sold, ceiling on property, false bidder, area and description of property have been rightly dealt with by the learned judge of the executing court.
50. In the circumstances and for the foregoing reasons, this appeal fails and is liable to be dismissed, not merely on the ground of maintainability but also on merits. It is accordingly dismissed. There shall be no order for costs. For the same reasons, the connected Civil Revision No. 377 of 1985, which is also directed against the order dated October 1, 1985, passed by the executing court, is also liable to be dismissed and is accordingly dismissed, without any order as to costs. The argument was advanced on behalf of the appellants that there could be no res judicata or estoppel against the objections raised by the appellants, as they basically related to jurisdiction, but Sub-rules (2) and (3) of Rule 90 of Order 21, Civil Procedure Code, provides a complete answer to the objection raised and it may also be noted that mere irregularity or fraud standing by itself, is no ground for setting aside the sale, but there must be substantial injury occasioned by the irregularity or fraud alleged. As no such irregularity or fraud itself is made out, much less substantial injury, the objections were rightly rejected by the executing court.