Pius C. Kuriakose, J.

The Nedungadi Bank Ltd. (Original decree-holder) and the Punjab National Bank, its successor by amalgamation (the present decree-holder) are the appellants. The appeal is directed against an order passed by the executing court dismissing an application filed by the original decree-holder for cancellation of sale on grounds of fraud and material irregularity.

2. Heard Sri. K.P. Balasubramanian, counsel for the appellants and Sri. C.M. Andrews, counsel for the 15th respondent as well as Sri.M.P.Ashok Kumar, counsel for the 13th and 14th respondents, Perused the lower court records.

3. The decree was one for sale for immovable properties based on a mortgage in favour of the original decree-holder. A-schedule to the decree had four items of immovable properties out of which item No.4 was situated outside the local limits of the Payyannur Sub Court wherein the execution proceedings were initiated. As on the date of the execution petition, i.e., 27.8.1991, the amount due under the decree was Rs.6,66,237.70. Execution was sought by sale of the properties, item Nos.1 to 3 in A-Schedule to the decree. The original decree-holder suggested upset prive of Rs.60,000/- for item No.1, RS.75,000/- for item No.2 and Rs.65,000/- for item No.3. The 13th judgment-debtor (13th respondent herein) filed objections seriously contending that the market value of the properties is far above the upset price suggested by the original decree-holder. Nervertheless the court accepted the decree-holder’s suggestions and fixed Rs.60,000/-, Rs.75,000/-, and Rs.65,000/- as upset prices respectively for item Nos. 1 to 3. E.A.No.202 of 1992 filed by the original decree-holder under Order XXI Rule 72 for leave to bid in the auction was allowed by the court. In the auction held on 7.1.1993, item Nos.1 and 2 were purchased by the 14th respondent for Rs.60,100/- and 75,100/- and item No.3 was purchased by the 15th respondent for a sum of Rs.65,300/-. The original decree-holder filed the instant application invoking order XXI Rule 90 of the Code, Alleging fraud, collusion and material irregularity. The application was stiffly resisted not only by the auction-purchasers, but also by respondents Nos.11 and 13 who were the owners of the properties. A clerk of the original decree-holder in charge of litigation matters was examined as PW.1 of behalf of the petitioner, while no counter-evidence whatsoever was adduced on behalf of any of the respondents. The application was dismissed by the executing court which took the view that the petition was short of specific pleadings regarding the fraud alleged; that the court having accepted the upset prices suggested by the original decree-holder, it was not open to that decree-holder, it was not open to that decree-holder to contend that there has been under valuation; that the court having granted leave to the original decree-holder to bid in auction and that decree-holder having not participated in the auction, there is no warrant for a contention that a higher price could have been realized in a proper sale, The Court also refused to accept the Version of PW.1 that two or three other persons who had bee brought over by the Bank to participate in the sale were weaned away by the judgment-debtors. According to the court, the circumstance that the auction-purchasers were close relatives of the Judgment-debtors by itself will not justify an inference regarding perpetration of fraud.

4. Assailing the order of the executing court from various angles. Sri.K.P.Balasubramanian submitted that a mistake committed by the original decree-holder while suggesting the upset price has been taken advantage of by the judgment-debtors and the auction-purchasers who colluded together and played fraud on the court as well as on the decree-holder and thereby brought about a situation wherein properties worth more than the entire decree-debt were sold for a total amount which even at the time of sale was only a small fraction of the decree-debt. According to the learned counsel, respondent No.14, purchaser of item Nos.1 and 2 was none other than the son of the 13th respondent and respondent No.15, purchaser of item No.3 was a close relative of 11th respondent. According to the learned counsel, collusion between them was apparent from the unusual situation that the original decree-holders application for setting aside the sale was stiffly opposed by the two judgment-debtors. The learned counsel submitted that the original decree-holder bank was disabled from participating in the sale due to non-fixation of reserve price by the executing court while granting leave under Order XXI, Rule 72 and this situation was capitalized by the auction-purchasers and the judgment-debtors. Mr. Balasubramanian also submitted that there was evidence only on the side of the petitioner and the weight of such uncontroverted evidence was sufficient to justify the grant of the application.

5. Sri. C.M.Andrews, learned counsel for the 15th respondent would submit that it is not open to the 2nd appellant-Bank to contend that there has been undervaluation in the matter of conduct of sale. According to the learned counsel, the respective upset prices were suggested by the original decree-holder itself and the evidence of PW.1 was to the effect that such suggestions were made on the basis of local inspections. Undervaluation, according to counsel, is an aspect which should have been taken up on or before the settlement of proclamation and the interdict of Order XXI Rule 90(3) would prevent the bank also from raising objections regarding valuation. Fraud, according to the learned counsel, was not a matter for inference. Counsel submitted that the argument of the appellants in the context of fixation of reserve price was of no relevance since the properties were purchased not by the mortgage-decree-holder but by third-party purchasers and that the bank cannot have any genuine grievance regarding the sales which were for amounts exceeding the upset prices.

6. In reply Sri.Balasubramanian submitted that fraud was something highly objectionable that the Supreme Court in the decision in Nani Gopal Paul v. T.Prasad Singh (AIR 1995 SC1971) set aside the sale on ground of fraud and material irregularity even ignoring the law of limitation. The learned counsel fortified his submissions in the context of Order XXI Rule 72A regarding fixation of reserve price by citing the decision of the Supreme Court in D.S.Chohan v. State Bank of Patiala (1997) 10 SCC 65 [LQ/SC/1996/891] . The learned counsel concluded his submissions by inviting out attention to the decision of the Supreme Court in State Bank of India v. Ajit Jain & Ors. I (1995) BC 446 [LQ/SC/1994/1144 ;] ">(1995) BC 446 [LQ/SC/1994/1144 ;] [LQ/SC/1994/1144 ;] , a case where the Supreme Court had taken into account interests of all parties-the decree-holders, judgment-debtors and even auction purchasers-by passing appropriate conditional orders.

7. Noticing that respondents Nos.13 and 14 are father and son appearing through the very same counsel and that there was community of interest between the 11th respondent and the 15th respondent (the one respondent who contested most seriously before us), we suggested during the course of the hearing that the Bank will be directed to forego a sizable portion of the interest payable under the decree, provided the entire decree-debt is liquidated within a time-frame. Accordingly Sri.K.P. Balasubramanian, learned counsel for the appellants filed a statement which reveals that as on 31.5.2003 the amount due to the Bank is Rs.13,23,547/- which takes in interest at the rate of 12.5.% per annum on Rs.2,84,070.60 and at the rate of 14% per annum on Rs.1,44,713.10 from 3.9.1987. However, the learned counsel reported that they have not been able to have an out-of-court settlement reached between their respective clients.

8. On our scanning of the lower court records and through the rival submissions made before us, the following facts have irrefutable emerged:-

1. The total amount realized by the sale of the three items of immovable properties which constituted the chunk of the mortgaged properties came to less than one-third of the decree-debt.

2. The 14th respondent who has purchased items 1 and 2 which account for a substantial portion of the properties sold is none other than the son of 13th respondent-judgment-debtor.

3. The amount realized in auction sale was far below the actual market value of the properties.

4. The suggestion of upset prices of Rs.60,000/- Rs.75,000/- and Rs.65,000/- respectively for items 1 to 3 by the bank was the result of a mistake (not necessarily inadvertent) and judgment debtors 11 and 13 were very enthusiastic to have the sale knocked down for the upset prices.

5. Judgment debtors 11 and 13-the owners very much wanted the sales to be confirmed and with that end stiffly opposed the application filed by the bank to set aside sale.

6. Even though leave had been granted by the court to the decree-holder under Order 21 Rule 72 C.P.C, the court completely ignored the mandates of Order 21 Rule 72A which obliges the court to fix a reserve price as against the mortgagee bank. The bank could not have lawfully participated in the sale for want of fixation of reserve prices would have been more or less equal to a proportionate portion of the entire decree-debt so that the total price would have wiped off the decree debt in full.

7. Even though the decree-holder was unable to substantiate it case that the 15th respondent is a close relative of the 11th respondent-judgment debtor, neither that judgment-debtor nor the 15th respondent were prepared to adduce any counter evidence to rebut the banks consistently maintained version that the 15th respondent is a relative of the 11th respondent.

8. The impugned sale resulting in substantial injury for the bank was the result of an obvious collusion between the auction purchasers and the concerned judgment-debtors at which somebody in-charge of the banks litigational affaris also connived.

9. According to the court below, fraud is a matter to be specifically pleaded an substantiated by cogent evidence and undervaluation by itself will not be sufficient to infer fraud in the context of a court-sale. According to us, the insistence of the learned Subordinate judge on detailed pleadings and cogent evidence in the context of the alleged fraud is not fully justified in the context of the varioud pronouncements of the Supreme Court such as S.P.Chengalvaraya Naid v. Jagannath (1994) 1 SCc 1 [LQ/SC/1993/933] and the decision of this Court in Bappu Moidunni v. Mohammed (1993 (2) KLT 969). Fraud is too unholy a thing to be condoned and courts will be justified in coming down heavily on fraud and perpetrators of the same when the same is noticed in judicial proceedings. It should be noticed that in Nani Gopal Paul (Supra) the Supeme Court ignored the law of limitation and set aside the sale on ground of fraud. Though undervaluation by itself may not be sufficient to infer fraud, gross undervaluation coupled with the peculiar circumstance obtaining in this case of one of the purchasers being the son of one of the judgment-debtors and another one being a relative of one of the judgment-debtors and the enthusiasm exhibited by the judgment-debtors in having the sale of their own property confirmed ought to have been taken due note of the learned Subordinate Judge as a circumstance indicating fraud.

10. It is not on fraud alone that the original decree-holder-bank applied for cancellation of the sale. The material irregularity highlighted by the bank is the failure of the court to fix a reserve price while granting leave to the bank under Order XXI Rule 72. The learned Subordinate Judge appears to have been of the view that upset prices having been fixed as suggested by the original decree-holder-bank cannot have a grievance regarding the omission of the court of fix reserve price. Sri.C.M.Andrews also submitted that virtually the two expressions upset price and reserve price mean the same thing.

11. The expression "upset price" is more one of language than of law. The said expression though very much in use in the context of sales does not figure even once in the code nor has the same been defined in the General Clauses Act. But law and language dictionaries give sufficient cue as to what the term means. According to Blacks Law Dictionary, Fifth Edn., "upset price" means "The price below which property exposed to sale is not to be sold". According to the Seventh Edition of the same dictionary, "upset price" "The lowest amount that a seller is willing to accept for property or goods sold at auction". The expression "reserve price" though not defined in the Code appears at Order XXI Rule 72A. Blacks Law Dictionary, Seventh Edn. Has defined "reserve price" as "The price announced at an auction as the lowest that will be entertained". It would appear at first blush that the terms" upset price" and "reserve price" are synonymous. In fact, a Division Bench of the Madras High Court in A.U.Natarajan v. Indian Bank. Madras (AIR 1981 Madras 151) did define the term "upset price" as the lowest selling price or reserve price and thus indicted that the two terms are synonymous. A Division Bench of this Court in Anto Nitto v. South Indian Bank Ltd. (AIR 1998 Kerala 219) virtually approved the said view of the Madras High Court by taking the view that simply because the executing court had employed the words "upset price" in place of "reserve price" it is not possible to contend that reserve price has not been fixed. We however are of the view that the terms reserve price" and "upset price though analogous and almost homologous are not synonymous. While understood in the context in which the expression is employed in the code, "reserve price" means a price reserved at an auction as the minimum amount realizable by sale of the property so as to realize the entire mortgage debt or a proportionate portion of the mortgage debt-a price which will remain static during the sale unless the court on grounds of genuine diffidence on the side of the decree-holder chooses to reduce the same. Fixation of reserve price is peculiar to situations where court grants permission to mortgagee-decree-holders to bid in the auction. Upset price and reserve price are certainly the lowest prices for which the properties will be sold in auction. But the term "reserve price" is exclusive to mortgagee-purchasers. The term "upset price" is used generally in respect of purchases by all others including third should commerce with that price and the sale will ultimately be held for an amount higher than that price. But in the case of reserve price, the bid can commence with the upset price which may be an amount below the reserve price. But the moment the mortagagee-decreeholder avails the leave granted to him by the court, the sale will be knocked down in his favour for the reserve price, though nothing prevents a conscientious decree-holder from bidding and purchasing for a higher amount.

12. Under Order XXI Rule 72A(2), it is obligatory that the executing court shall fix the reserve price while mortagagee-decree-holder is given leave to purchase. The submission of Mr.Andrews that the original decree-holder bank itself having suggested the upset price is not entitled to impugn the sale on the reason of non-fixation of reserve price seems to be based on principles of waiver. There is an apparent conflict between two Division Bench decisions of this Court as to whether a judgment-debtor can waive the mandatory provisions of Order XXI Rule 72A(2). In Antony v. Catholic Syrian Bank (1994 (2) KLT 341) Their Lordships Justice K.T. Thomas and Justice S.Subramani took the view that the provisions of Order XXI Rule 72A(2) were waived by the judgment-debtors. Justice T.v.Ramakrishnan and Justice K.Narayana Kurup in Anto Nitto (Supre), after noticing Antony v. Catholic Syrian Bank (Supra), relied on the views of Justice K.Ramaswamy in a decision rendered by His Lordship as a Judge of the Andhra Pradesh High Court in P.Rami Reddy v. P.Sundara Rama Reddy (AIR 1986 A.P. 29), and held that the legislative purpose behind the introduction of Order XXI Rule 72A (2) was not only to benefit the judgment-debtor but also to serve a public purpose of nipping in the bud an incurable and pernicious tendency on the part of the decree-holders to take undue advantage of court-sale and prcatising fraud even in court proceedings and accordingly held that Order XX1 Rule 72A(2) is not a provision which can be waived by anybody. Antony v. Catholic Syrian Bank (supra) was a case where auction was conducted in favour of mortgagee decree holder who was given leave under Order XXI Rule 72 without a reserve price being fixed. The Division Bench however noticed hat the actual sale was for an amount which could have been fixed as reserve price-the entire decree-debt. In Anto Nittos Case even though the Division Bench understood the expressions upset price and reserve price as inter-changeable ones, noticed that the price realized was far below the decree-debt and for that reason set aside the sale.

13. In the instant case also we find that even the total upset price fixed for all the properties sold was below one-third of the decree-debt and we are of the view that there has been no waiver by the original decree-holder bank of its right to have reserve price fixed for the properties while being given leave under Order XXI Rule 72. Non-fixation of the reserve price in this case certainly amounted to a material irregularity vitiating the very sale. According to us, the benefits arising out of the statutory obligation of the court to fix a reserve price under Order XXI Rule 72A (2) is not one which can be waived.

14. But as we have indicated, we are not prepared to place all the blame on the judgment-debtors or the auction-purchasers who are presently the beneficiaries of the sale. The suggestion of considerably low prices as upset prices when noticed in the context of PW.1s assertion from the witness box will strongly indicate that somebody at the original decree holders level was also privy to the fraud of allowing the mortgaged properties being sold for a very low price. At the same time, we cannot endorse the learned Subordinate Judges view that since the situation is of the banks own making, the bank must face the result of being practically unable to recover a substantial portion of the decree-debt, in view of the obvious position that item No.4 will not fetch much. In view of out finding that two of the judgment-debtors, the auction-purchasers and even the original decree-holder bank contributed to the fraud and material irregularity vitiating the sale, we are of the view that the sale should be set aside, but only subject to certain directions which we are issuing hereunder keeping in mind the course adopted by the Supreme Court in State Bank of India V. Ajit Jain and ors (supra). While deciding on the directions we have taken into account the fact that the bank has not been able to establish the actual relationship between respondents 11 and 15.

15. Accordingly we order that

1. Sale of the property which is item No.3 will stand set aside on condition that the present decree-holder will deposit before the court below within two months from today an amount calculated at the rate of 9% per annum on the amounts deposited by the 15th respondent towards purchase price as well as towards value of stamp papers for engrossing the sale certificate from the dates of the respective deposits till date for payment to the 15th respondent towards purchase price as well as towards value of stamp papers for engrossing the sale certificate from the dates of the respective deposits till date for payment to the 15th repondent.

2. Sale of item Nos.1 and 2 in favour of the 14th respondent will stand set aside.

3. In case judgment-debtors 11 and 13 who are owners respectively of items 1 and 2 and item No.3 deposit the entire decree-debt of Rs.4,51,084.70 with interest on the entire interest bearing portion of Rs.4,25,783.70 at a uniform rate of 9% per annum from 3.9.1987 together with costs allowed under thedecree after deducting payments already made towards the decree0debt within a period of five months from today, the entire decree-debt will stand discharged and the properties will stand absolved of all liabilities. It is clarified that in the event of judgments-debtors 11 and 13 discharging the entire decree-debt as above, they will be entitled for indemnity/contribution from the other judgment-debtors including the owner of item No.4 property.

The C.M. Appeal is allowed as above. The parties will suffer their costs.