or.21, rule 90 CPC- claim petition by society – non production of mortgage deed – sale conducted by suppressing the mortgage – trial court and appellant court dismissed the claim petition – High court remand the case for fresh disposal giving an opportunity to the society to adduce fresh evidence as there are allegations of misappropriation of public fund by Jdr in the capacity of president of society. HIGH COURT OF HYDERABAD







Rowthulapudi Primary Agricultural Cooperative Credit Society Petitioner


Kalla Sitaramam and 4 others .Respondents


Counsel for the petitioner :Smt. B. Vijaya Lakshmi


Counsel for the respondents : Sri KB. Ramanna Dora







? Cases referred

1.2015 (4) ALD 693

2.2011 (3) ALD 626








The revision petitioner is the unsuccessful party in

E.A.No.89 of 2009 and CMA.No.36 of 2010 maintained the

revision against the concurrent dismissal orders and findings of

the learned Senior Civil Judge, Peddapuram (Executing Court)

vis–vis learned III Additional District Judge, Kakinada, East

Godavari District (first appellate Court). The revision petitioner is

a third party to the proceedings in O.S.No.21 of 2006 and

E.P.No.1 of 2008. The plaintiff in the suit was one K.Sitaramam

(decree holder/auction purchaser) and the defendants are

B.Lakshmi, B.Chakradharudu, B.Nookaraju and B.Sudheer (wife

and 3 children of late B.Appanna Babu).

The suit O.S.No.21 of 2006 was filed based on the foot of

pro-note said to have been executed by said Appanna Babu by

creating the property as collateral security for the pro-note debt

in maintaining suit and the suit O.S.No.21 of 2006 was decreed

by the Senior Civil Judge, Yalamanchili, and the decree was

transmitted for execution to the Senior Civil Judge, Peddapuram,

where the property lies. It is in the course of execution, the

decree holder on his application under Order 21 Rule 72 CPC was

permitted to bid and became the bidder of the property and the

auction held on 20.02.2009 and knocked the bid in his favour for

Rs.2,26,000/- and after adjustment of the decree amount he

deposited balance amount of Rs.48,916/- into Court and later for

grant of sale certificate for filing of Non-judicial stamp papers to

engross the sale in favour of auction purchaser/decree holder the

matter when posted, the petitioner/society states came to know of

it and approached the Sub Registrar, Tuni and obtained

encumbrance certificate and found that the said B.Appanna Babu

created mortgage over item No.1 of E.P. schedule property on

10.06.1998 itself in favour of society and the mortgage debt is in

subsistence that was not liquidated and suppressing the facts the

property brought to sale. Said claim petition in E.A.No.89 of

2009 contested by decree holder/auction purchaser and the

J.Drs. remained exparte and the counter of the decree

holder/auction purchaser was that the petitioner society and

J.Drs./respondent Nos.2 to 4 colluded in placing all the ended

transactions to cause inconvenience and hardship to the decree

holder/auction purchaser and it is a contested decree and based

on that in execution, property was attached and after obtaining

EC the property brought to sale and the decree holder became the

auction purchaser. The society kept all the time silent filed the

present petition at the belated stage without any just cause and

has no bonafides and the claim petition is liable to be dismissed.

It is therefrom by formulation of points for consideration in E.A.

as to the society is entitled to the declaration that the sale held in

E.P.No.1 of 2008 is illegal and irregular and to set aside. In

deciding the above point in the claim petition in the course of

enquiry on behalf of claim petitioner/society, the PW.1 one YSB

Dora was examined and placed reliance on Exs.P1 to P4 viz.,

registration copy of the mortgage deed executed by B.Appanna

Babu, Photostat account copy of mortgage loan transaction, EC

and certified copy of the order of attachment issued by Divisional

Cooperative Officer, Peddapuram. On behalf of the decree

holder/auction purchaser contesting respondent to the claim

petition he came to witness box as RW.1 and no documentary

evidence or further oral evidence adduced. From the above, the

learned SCJ dismissed the said claim petition E.A.No.89 of 2009

on 24.08.2010 with the observation that PW.1 in his cross

examination stated of no personal knowledge about the Ex.P1

mortgage transaction of the mortgage created by B.Appanna Babu

covered by Ex.P2 account copy of the loan amount due and no

person having personal acquaintance with the mortgage

transaction on behalf of the society and marking of Ex.P1

registration copy of the mortgage deed not established the

mortgage for PW.1 has no personal knowledge of the transaction

and said B.Appanna Babu worked as President of the society

during 1992-2005 according to PW.1 however no document filed

in this regard and there is no order to say the report of Deputy

Registrar of Cooperative society as Appanna Babu and Meera

Mohiddin were directed to pay Rs.7,10,186/- to the society in

respect of the alleged misappropriation of funds by said Appanna

Babu and there is no evidence produced to consider the same

thereby even Ex.P1 there is endorsement, the same was returned

to the President of the society for not in proper way even to call it

as proper mortgage deed and the property auctioned in E.P.No.1

of 2008 and the mortgage property not correlate to the claim and

PW.1 admitted about the loans as on 31.03.2007 was waived to

say a loan of Appanna Babu to take as waived. The claim

petitioner cannot claim of there is valid attachment of the EP

schedule property by the Deputy Registrar of Cooperative society

from said evidence of PW.1 with reference to Exs.P1 to P4

including certified copy of the order of attachment issued by

DCO. It is observed that RW.1, decree holder/auction purchaser

deposed in his evidence about the alleged debt of Appanna Babu

even if true as it is wiped out under Debt Relief Scheme, 2008, of

the alleged debt of agriculturist due by 31.03.2007 and the mere

pendency of departmental enquiry for the so called

misappropriation cannot be a ground to say the debt not wiped

out and the sale was proclaimed in Surya Telugu daily newspaper

and there are no grounds to set aside the sale under Order 21

Rule 90 CPC that too when the claim petitioner/society failed to

prove the so called mortgage debt over the EP schedule property.

Thereby held the claim is liable to be dismissed for nothing to set

aside the sale. The CMA.No.36 of 2010 filed by the society was

also ended in dismissal on 08.11.2010 with the observations that

evidence of PW.1 shows original defendant Appanna Babu

committed irregularities in society while dealing with affairs as

President and departmental enquiry conducted in directing to pay

Rs.7,10,186/- along with others and for its realization Ex.P4

attachment order passed and a perusal of Ex.P4 shows Deputy

Registrar, Peddapuram by order dated 23.03.2005 passed

directing Assistant Registrar of DCO Office, Peddapuram, to

conditionally attach the properties of Appanna Babu for recovery

of the misappropriated amount of Rs.3,89,660/- with interest of

Rs.4,65,173/- with subsequent interest at 18% per annum.

However there is no evidence to show said attachment was

affected, as PW.1 did not file any document of said attachment

was affected pursuant to Ex.P4 proceedings, including from his

say in cross examination of no document filed of attachment

affected thereby society failed to prove properties of the original

J.Dr. were under attachment of the society. Ex.P1 registration

extract of mortgage deed and Ex.P2-photostat account copy of the

mortgage loan transaction and the borrowal even not disputed by

filing counter by the J.Drs. or by the auction purchaser of the

E.P. as one of the respondents what is contended is debt has

been waived because of debt waiver scheme applies to the debts

outstanding by 31.03.2007. A perusal of Ex.P1 mortgage deed

shows it is only registration extract and the recitals at the fag end

shows registration authority returned the document for

compliance of objections and nothing to show objections complied

with and if so when and which date the document was registered,

though it is a compulsory registerable document and to be proved

by examining anybody connected with and none connected with

Ex.P1 were examined. Thereby evidence of PW.1 is of no avail

and also he deposed in his cross examination of he cannot say

whether there are recitals in Ex.P1 to the effect that mortgage

deed returned to the President of the society due to defects and

unless he see the records he cannot say details of mortgage

property including survey numbers and even he deposed about

Ex.P1 original is in the head office, no steps taken to get the

original marked, thereby failed to prove the said mortgage

transaction and PW.1s evidence shows mortgage debt has been

waived of what is originally borrowed of Rs.25,000/- though PW.1

stated of no waiver given to the loans in respect of which enquiry

is pending for misappropriation even according to him there is no

enquiry pending with regard to mortgage loan covered by Ex.P1,

leave apart original J.Dr. is an agriculturist and the loan was for

agricultural purpose availed to say it might have been waived and

for the foregoing discussions, the appellant-society failed to

substantiate the claim to seek set aside the sale. Thereby, CMA

ended in dismissal.

In the revision impugning the same the grounds urged are

that the concurrent findings of the court below are erroneous or

perverse and unsustainable and devoid of merits and it results in

failure of justice. The Courts below should have seen that Ex.P4

attachment proceedings dated 23.03.2005 issued by Deputy

Registrar of Cooperative Societies in exercise of power conferred

under Section 73 of the Act in issuing order of attachment and

Courts below should have seen that for the misappropriation of

funds and irregularities committed by said Appanna Babu while

dealing with the affairs of the society enquiry conducted and in

directing to pay Rs.7,10,186/- and for its realization Ex.P4

attachment was ordered and Courts below gravely erred in

holding debt contacted by said Appanna Babu is waived without

any evidence in support of it and should have seen that original

J.Drs. and the decree holder/auction purchaser colluded and

Exs.P1 to P3 establishes the subsistence of the mortgage debt of

the mortgage over the property entered on 10.06.1998.

Whereas it is the submission of the learned counsel for the

respondents to the revision, the auction purchaser of the

impugned orders of the Courts below with concurrent findings no

way requires interference while sitting in revision.

Learned counsel for the revision petitioner placed reliance

on the expression of this Court in NCV Subba Rao Vs. Gunda

Anka Rao , saying as can be seen from Order 21 Rule 90 CPC

sale of the property in execution of the decree can be set aside on

the ground of material irregularity or fraud in publishing or

conducting sale and the ground available for setting aside the

sale is material irregularity. Once that is not shown even full

description of property not given or market value shows lesser to

actual value cannot be a ground to set aside the sale when such

plea not taken on or before proclamation of sale drawn up. The

above decision has no application since the facts are entirely

different. In Mamillapalli Jyothish Kumar Vs. Deputy

Registrar, DCC Bank, Eluru it was held that any alienation after

statutory charge under Section 36 of the Act 1964 is void.

Heard both sides and perused the material on record.

Ex.P4 is the certified copy of the order of attachment issued

by the Divisional Cooperative Officer, Peddapuram. The only

thing to be seen therefrom with reference to evidence of PW.1 is

the attachment effected or not for the amount of Rs.7,46,186/-

which includes amounts misappropriated as Ex-President of the

society by late Appanna Babu that comes to Rs.7,10,186/-

covered by regular departmental enquiry by the Deputy Registrar

of Cooperative Societies in passing the surcharge proceedings in

Roc.No.594/03 dated 03.12.2005. The claim petition averments

clearly show the attachment was affected and PW.1s evidence

speaks he has no personal knowledge of the attachment is

effected or not. The counter filed by the auction

purchaser/decree holder of the suit O.S.No.21 of 2006 it is not

shown any specific denial of attachment affected nor in the

evidence as RW.1 he did not specifically say no attachment

effected, leave about of official acts are presumed to be duly

performed unless contrary is shown and at best if at all there is

any doubt, any of the Courts below should have been asked for

production regarding attachment is effected if not by the lower

Court remand the matter to the trial Court that too when there is

a huge amount of misappropriation and what is wiped out of the

agricultural debt of the mortgage for Rs.36,000/- and odd even

that mortgage deed was returned with defects before registration

and not even registered. Once for the agricultural loan that

mortgaged is covered, the Courts below should have been

considered whether the document is contemporaneous to the

debt or a subsequent acknowledgment of the past transaction by

the terms used therein. Once such is the case of any

acknowledgment of past transaction registration is not

compulsory as per the settled law rather than saying it is not

proved the question of proving arise for a registered mortgage for

compulsory registerable if there is a specific denial under Section

68 of the Evidence Act and not for a document nor a registered

mortgage and once that is the conclusion arrived by the Courts

below of not a complete registered mortgage then the question of

proving does not arise even the same is stated a registration

extract. Once such is the case, it is outcome of registration and

even it is not a registered one and the document not in dispute by

specific contentions in the cross examination, but for in saying no

persona knowledge for not a case of forged or fabricated or untrue

transaction, but for in saying the debt is deemed wiped out and

that when evidence of PW.1 shows for those persons where

departmental enquiry and irregularities pending they did not wipe

out the debt and once such is the case, the deemed wiping out

does not arise for the mortgage in subsistence and any sale by

attachment for recovery of any money decree then shall be

subject to mortgage debt that is not done in the case on hand,

leave apart even for the surcharge proceedings of the

misappropriation amount attachment proceedings issued, but for

not given clarification from lack of personal knowledge of PW.1.

Once the proceedings is to effect and deemed effected by drawing

presumption it is subject to that attachment any sale by Court

attachment shall follow and it was not down in the case on hand

and that too to say it is collusive one, the publication is in Surya

Telugu daily non circulated local newspaper and J.Drs. not even

contested being the LRs of Appanna Babu. It is the decree

holder/auction purchaser with permission of the Court knocked

the bid and it is not even an observation by Court in considering

what is the market value of the property with reference to Sub

Registrar value and Amin value and decree holder value and J.Dr.

value. As it is one of the primary duties of Court under Order 21

Rule 64 CPC only to sell the extent required and not the whole

property, leave apart the prior attachment if at all in subsistence

and prior mortgage of the society if at all in subsistence, the sale

in favour of the decree holder/auction purchaser of the suit debt

shall be subject to the above dismissal of the claim petition and

the dismissal of the appeal by the Court is unsustainable and

accordingly set aside.

Having regard to the above, the Civil Revision Petition is

allowed by setting aside the dismissal order confirmed in appeal

and by restoring the E.A.No.89 of 2009 by remanding to the

Executing Court for deciding afresh by affording further

opportunity to the claimant-society and the contesting

respondents viz., decree holder/auction purchaser and J.Drs. of

the execution proceedings of the decree in O.S.No.21 of 2006, to

decide the E.A.No.89 of 2009 on own merits afresh therefrom

preferably within six months from the date of receipt of this order.

Consequently, miscellaneous petitions, if any shall stand

closed. No costs.



Date: 09.03.2018