(Prayer: Original Side Appeal has been filed under Order XXXVI Rule 9 of the Original Side Rules, 1994 and Clause 15 of Letters Patent of 1865, praying to set aside the order dated 21.01.2025 passed in Application No.5189 of 2023 in C.S.No.721 of 1923 declaring the 2nd respondent as the highest bidder in respect of the subject lands at Thiruvarankurichy Village, Ponnampatti Town Panchayat, Marungapuri Taluk, Trichy District passed by this Court and subsequent order dated 04.06.2025 in continuation of the above order in Application No.5189 of 2023 in C.S.No.721 of 1923 and consequently to conduct fresh open auction in respect of the above land.)

S.M. SUBRAMANIAM, J.

I. Introduction:

The present original side appeal has been instituted to set aside the order dated 21.01.2025 passed in Application No.5189 of 2023 in C.S.No.721 of 1923, whereby the learned Single Judge of this Court declared the 2nd respondent as the highest bidder in respect of the subject lands situated at Thiruvarankurichy Village, Ponnampatti Town Panchayat, Marungapuri Taluk, Trichy District and also to set aside the subsequent order dated 04.06.2025 in continuation of the above order in the Application.

II. Background Facts and Scheme Decree:

2. The brief facts show that an agreement was entered among the family members of Sri Gopaldas Govardhandas on 05.06.1955. A Scheme decree was passed on 17.02.1925 in C.S.No.721 of 1923. Application No.5189 of 2023 was filed by the Trust viz. Gopaldas Dwarakadas Family Trust Estate, represented by its Managing Trustee, seeking permission to sell the immovable properties belonging to the Trust, described in the schedule to the Judge’s Summons to one Mr.Abul Abbas for a sale consideration of Rs.2,09,50,000/-.

3. In the application itself, the Trust has identified and declared the proposed purchasers of the Trust property along with the sale consideration. Under the Scheme Decree passed by the High Court in C.S.No.721 of 1923 dated 17.02.1925, the Managing Trustees shall conduct charities by applying the surplus income. The Managing Trustee has stated that the income from the Trust properties is very meagre and in order to carry out the laudable objects of the Trust, they have decided to sell the immovable properties.

4. Clause 14 of the Scheme Decree dated 17.02.1925, clearly prohibits any alienation by the Managing Trustee except with the permission of the Court. On 27.03.2023, a General Body Meeting was convened by the Trust and a resolution was passed authorising the Managing Trustee to apply for Court permission to sell the scheduled immovable properties. According to the Trust, the cultivating tenants, who are in possession of the properties have offered to purchase the scheduled properties for Rs.2,09,50,000/-. In order to avoid further expenditure, the sale price and the purchaser were identified.

5. The learned Single Judge considered the issue of whether the price offered by the proposed buyer at Rs.2,09,50,000/- is a fair market price. According to the Trust, the tenants had pooled their resources and offered to purchase the properties for the said amount. Court while exercising Parens patriae jurisdiction under Section 92 C.P.C, it was considered just and proper to invite better offers before accepting the offer made by the cultivating tenants. Accordingly, the learned Single Judge directed the Trust to issue wide public notice in leading Tamil Dailies viz., Dina Thanthi and Dina Malar, inviting offers for purchase of the schedule properties and specifically setting out the schedule of the property. The Court further directed that the application should inform interested buyers to submit their offers in a sealed cover to the Registrar General, Madras High Court within 10 days from the date of publication.

6. In pursuance to the order dated 07.06.2024 paper publication was made in “Dinamani”, Trichy Division on 26.12.2024. Thereafter, learned Single Judge further proceeded to pass the impugned order on 21.01.2025. The said order would show that seven offers had been received by the Registrar General, Madras High Court but only three parties have shown interest and appeared before the Court. One among them was Mr.Abul Abbas, who had earlier deposed before the Master as an interested buyer and who is in occupation of a portion of the subject property. The other two interested purchasers present in the Court were Mr.Mohammed Ismail and Mr.K.Rajamanickam.

7. The Court permitted the three parties to bid for the subject lands inside the Court Hall. During the open bidding, Mr.Mohammed Ismail opted out of the race at one stage and the bid continued between Mr.Rajamanickam and Mr.Abul Abbas. Finally, Mr.Abul Abbas has offered Rs.12.55 Crore as total sale consideration for sale of the entire 58 and odd acres of the schedule property in Thiruvarankurichy Village, Ponnampatti Town Panchayat, Marungapuri Taluk, Trichy District.

8. The said offer was accepted as the highest bid and the intending purchaser Mr.Abul Abbas was directed to deposit a sum of Rs.2.50 Crores on or before 31.01.2025, further a sum of Rs.5 Crore on or before 28.02.2025 and the remaining Rs.5.05 Crore on or before 31.03.2025 to the credit of A.No.5189 of 2023 in C.S.No.721 of 1923. On compliance of the said deposits, the Court shall issue further directions regarding sale of the property in his favour.

III. Grounds of Appeal and Allegations on the Predetermined Purchaser:

9. The learned Single Judge further passed an order on 04.06.2025 to consider the objection raised by the learned counsel for the Trust regarding the deduction of Government Commission and Audit Fees on accrued interest, and claimed that it is in violation of orders of the Court.

10. In view of the public auction conducted by the Court, as narrated in the preceding paragraphs, the appellant has chosen to file the present original side appeal questioning the validity of the public auction conducted inside the Court Hall for the sale of the trust properties. The learned Senior Counsel appearing on behalf of the appellant would mainly contend that Trust had predetermined the purchaser, Mr.Abul Abbas by describing him as a cultivating tenant, which he is not, and had fixed a meagre sale consideration of Rs.2,09,50,000/- for the vast extent of land measuring about 58 and odd acres. The Trust has claimed the said price as a fair market value of the property.

11. Departing from the original offer made by the proposed purchaser inside the Court Hall, which he offered Rs.12.55 Crore. The bid made by the proposed purchaser, Mr.Abul Abbas, raises several doubts. It is a case where trustees and the auction purchasers perpetrated and participated in the fraudulent scheme, misleading the Court in order to have a vast area of about 58.50 acres sold for a meagre price.

12. Even during conduct of auction sale inside the Court Hall, with a view to keep away all the bidders from participation, open auction publication has been deliberately carried out by omitting the next date of hearing i.e., 06.01.2025, despite the order of the Trial Court to include the date of hearing in the paper publication. Thus, even the order of the Court was not complied with. The Trial Court by its order dated 04.06.2025 directed to inform a convenient date determined by the Sub-Registrar, for registration of the sale deed and list the matter on 11.06.2025.

13. The 2nd respondent Mr.Abul Abbas had knowledge about the filing of the present appeal on 05.06.2025. Without intimating the said fact to the Court and in violation of the directions issued by the Court on 04.06.2025, the sale deed was hurriedly registered on 09.06.2025. Even before registration of sale deed, the appeal seeking to set aside the auction sale order dated 21.01.2025 passed in Application No.5189 of 2023 has already been instituted.

IV. Contentions of the 1st Respondent:

14. The learned counsel for the 1st respondent would strenuously oppose by stating that the resolution was passed to sell the property for better achieving the laudable objects of the trust and accordingly, an application filed seeking permission to effect the sale. Since the 2nd respondent was a cultivating tenant and expressed his willingness to purchase trust properties, trust negotiated and fixed the sale price and awarded the same with the application.

15. The Court conducted public auction by following the prescribed procedures, including issuance of paper publication. Since the procedures were duly complied with, the sanctity of the Court auction is to be protected. The auction was conducted inside the Court Hall in the presence of Hon’ble Judge. Therefore, the contention of the appellant need not be entertained, as he was not only a fence-sitter but also quoted Rs.6 Crore as the bid amount. Since the 2nd respondent quoted Rs.12.55 Crore as against the bid amount of Rs.6 Crore made by the appellant, there is no reason to entertain the present appeal. The appellant has not even deposited the said bid amount as Rs.6 Crore and thus he is not a bona fide purchaer. Consequently, his claim is liable to be rejected at the threshold.

V. Contentions of the 2nd Respondent:

16. The learned counsel for the 2nd respondent would submit that in view of the resolution passed by the Trust, the tenants who were in possession of the schedule lands had agreed to purchase the trust property. A request was made to the trust on 02.04.2023 to sell the property in favour of the 2nd respondent for a consideration of Rs.2,09,50,000/-. During the course of public auction conducted by the Court in the presence of the Hon’ble Judge, the 2nd respondent has quoted a sum of Rs.12.55 Crore as sale price. Since he is the highest bidder in the public auction, the Court confirmed the sale and consequently, the sale deed was executed by the Trust. It is a completed transaction and therefore, the present appeal filed by a third person deserves to be rejected.

17. The Court followed the procedures as contemplated and conducted a public auction and thus, the claim of the appellant is not based on any bona fide claim and he has not even deposited the bid amount of Rs.6 Crore and thus, the appeal is to be rejected.

VI. Analysis:

18. This Court had considered the rival submissions made between the parties to the lis.

19. The learned Single Judge granted permission and conducted auction of the Trust property in the Court Hall. Bids were submitted before the Registrar General, Madras High Court, who in turn placed the bids before the learned Single Judge and public auction was conducted. The 2nd respondent was the successful bidder. The learned Single Judge recorded auction proceedings in the order impugned.

VI.(A) Statutory Frame Work Governing Sale of Trust Property:

20. Section 92 of CPC deals with Public Charities. Under Section 92(1)(f) of CPC, a decree could be passed authorising sale of trust property. In the present case, Original Side of the High Court is empowered to entertain the civil suit. In the case of sale of Trust property, the jurisdiction of the Court is advisory in nature and the Court should endeavour to inquire the market value of the property and the sale must be by way of public auction.

VI.(B) Procedure for Conduct of Public Auction: Madras High Court Original Side Rules

               “ORDER XXXVIII

               SALE OF PROPERTY UNDER ORDER OF COURT

               Public auction to be conducted according to rules of Order XXXIX.

               1. Subject to the provisions of Order XXXIX, Rules 38 to 42 inclusive of these rules with respect to the sale of attached property, a sale by public auction of any property, when directed in a suit or matter, shall be conducted in manner prescribed by this Order read with Order XXI of the Code.

               Certificate of encumbrances.

               2. In the case of a sale of immovable property, the applicant shall cause a search to be made in the office of the Registrar of Assurances of the district or sub-district in which the property is situate, or if a previous search has been made in the suit or matter, then from the date to which the same was made, but so that the whole period shall be not less than twelve years: or, if no search has been made, then for a period of not less than twelve years prior to the date of the order for sale.

               Sale papers to be filed.

               3. The applicant shall, within one calendar month from the date of the order for sale, or such other period as may be fixed by the Court, bring into Court (1) two copies of a proclamation of sale, in Form No.115 or No. 116 (2) an affidavit by himself or by some person acquainted with the property, stating the matters required by Order XXI, Rule 66, sub-rule (2) of the Code, and what, in his opinion, is the best time and place of sale and method of advertising the same, the lots, if any, into which the property should be divided, and the market value of, and reserve price to be fixed for, the property or the several lots: (3) if an officer of the Court is not to be appointed, an affidavit as to the fitness of the proposed auctioneer; and (4) in the case of immovable property, a certificate of the result of the search in the preceding rule mentioned and the extract from the register of the Collector mentioned in Order XXI, Rule 14 of the Code, and of the Corporation of Madras, respectively, showing the quit-rent and taxes payable in respect of the property, and what amounts are due in respect of the same and also all title deeds and other documents affecting the property proposed to be sold which may be in the applicant's possession or power.

               Manner of sale to be settled by the Registrar.

               4. The Registrar shall determine the manner of advertising the sale; and shall fix the date and place of sale. In the event of an objection being raised to the lots, the market value or reserve price mentioned in the affidavit in the last preceding rule, the Registrar shall call upon the party objecting, to file an affidavit in support thereof, and may thereupon consider and dispose of the objection.

               An application to amend a proclamation of sale finally settled by the Registrar shall be made to the Master, and notice shall be served on all parties interested in the property sought to be sold.

               Officers empowered to sell property.

               5. Except in the case of attached property, the Official Referee or any other officer of Court appointed by the Registrar shall sell the property. The Court may, under special circumstances, upon the application of a party or suo motu appoint an advocate or other person as Commissioner to sell the property and may fix as his remuneration a sum certain, or a percentage on the net sale-proceeds not exceeding the scale fixed by items 29 and 30 of Appendix II of the High Court Fees Rules.

               Order of sale.

               6. The copies of the proclamation of sale, if approved by the Registrar shall be signed by him, and he may then order the sale to proceed, or make such order as he thinks fit. If an order for sale is made, and unless otherwise ordered, the further hearing of the suit or matter shall be adjourned to a date not less than thirty days from the day fixed for the sale.

               Application for leave to bid.

               7. An application for leave to bid at the sale may be made to the Master supported by affidavit setting forth any facts showing that an advantageous sale cannot otherwise be had: and unless otherwise ordered, an undertaking shall be given by or on behalf of the applicant, that, in the event of his being declared the purchaser of the purchase of the property, or of any lot or lots, he will give credit, or will enter up satisfaction of the decree or order under which the sale is made for a sum not less than the market value of the property or of the lot or lots purchased by him, as determined by the court: Provided that, if there are several decree holders entitled to rateable distribution, the purchase money shall be paid into Court.

               Unless otherwise ordered, notice of the application shall be given to the other parties to the suit or matter.

               Copies of proclamation, etc., to be furnished.

               8. The Registrar shall deliver to the Official Referee or other officer of the Court or to the Commissioner as the case may be, one of the said copies of the proclamation of sale, and a certified copy of the decree or order for sale, and the same shall be authority for the sale; and it shall not be necessary to take out a warrant of sale.

               Report of sale and deposit of sale proceeds.

               9. The Commissioner shall conduct the sale in the manner prescribed by the Code for the sale of attached property and shall pay into Court any deposit or sale moneys as soon as they are received by him.

               Upon the completion of the sale, the Commissioner appointed to sell the property shall file in Court a report of the sale.

               Power of Court to compel Commissioner to pay interest if he commits default to bring in the sale money.

               10. Where it appears that the Commissioner conducting the sale has failed, without sufficient cause, to bring in the money deposited, the Court may disallow his commission and compel him to repay or restore the money with interest not exceeding twelve per cent per annum, and may pass such other orders as the Court may think fit.

               Application of sale-proceeds and issue of sale certificate or deed of assignment.

               11. At the adjourned hearing referred to in rule 6, the court may pass an order directing the payment to the applicant of the expense of the sale, and to the Commissioner of his commission, if any, and providing for the application of the balance of the sale-proceeds. If the sale of immovable property is confirmed by the Court, an order confirming the sale shall be drawn up. The purchaser shall, within the time limited by the conditions of sale, or such period as may be allowed by the Court in the case of immovable property, bring into Court a draft of the certificate of sale and the case of movable property in respect which an instrument of transfer is required, a draft deed assignment or transfer of the property, as the case may be; and the same, if approved by the Registrar, shall be signed by him in the margin as approved, and the purchaser shall bring into Court two copies of the said documents, one of which shall be on duly stamped paper. The certificate or sale or deed of assignment shall be signed by the Registrar or by the person directed to convey the property as the case may be.

               Application to set aside sale.

               12. If the sale is set aside under Order XXI, Rule 90 of the code, the Judge shall determine whether any and what party is responsible therefor, and may order such party to pay the costs of the sale and may pass an order for re- sale of the property and give the conduct of the re- sale to any other party.

               Further conduct of sale in case of default by the applicant for sale.

               13. If at any time it is made to appear to the Court that any party who applied for the sale has failed to comply with any order of the Court, or any of the provisions of the Code, or of these rules, or is not proceeding with due diligence the Court may make such orders as to the further conduct of the sale and the costs thereof, as the Court thinks fit.

               SALES BY THE OFFICIAL REFEREE

               Sales by Official Referee to be by public auction-Charges for attending sale to be deposited.

               14. Unless otherwise ordered by Court, all sales by the Official Referee shall be by public auction and in cases of immovable property the sale shall be held at the premises.

               If the Official Referee under an order of the Court attends to conduct a sale or to inspect a property out of the Court-house, a fee of (Substituted for the words “annas eight per mile or part of a mile for the total mileage” by R.Dis.No.86/94, pub. in T.N.G.Gaz.,Pt.III, S.2, dt. 5.10.1994.) [Rupees two per kilometer or part kilometer for the total distance] covered from the Court-house to the place of sale or inspection and back to the Court- house shall be deposited into Court by the applicant for sale or by the person at whose instance the inspection of the property is required.

               Notice of application for stay of sale, etc., to be given to Official Referee.

               15. Notice of all applications for stay of sale, or for the postponement of a sale and notice of any settlement out of Court, shall be given to the Official Referee.

               Book for Referee.

               16. The Official Referee shall keep a book in which he shall enter the name of each bidder and the bid offered by him.

               Certificate of sale by the Official Referee

               17. Unless otherwise ordered, the deposit in the case of immovable property and the whole of the purchase money in the case of movables shall be paid to the Official Referee who shall thereupon grant a certificate to the purchaser in the following form:-

               "I declare A B to be the purchaser of .......… item ........in the proclamation of the sale for Rs....... and I have received from him Rs. The deposit or the purchase money payable in respect of such purchase".

               Particulars of Sale Certificate.

               18. The Official Referee shall, as soon as possible after the sale, certify the result to the Registrar. Such certificate shall contain the date of sale, the names of the bidders and their bid, the purchaser and the highest bid and shall set out the objections, if any, taken by any party at the time of the sale and the result.

               Payment of balance of sale price into Court by the purchaser.

               19. The purchaser shall pay the balance of the purchase money into Court. Applications to receive payment shall be accompanied by the certificate of the Official Referee and the rules of the Original Side relating to payment of moneys into Court shall apply to such payments.

               Official Referee to deposit monies into Court.

               20. The Official Referee shall, as soon as possible, pay into Court the deposit or purchase money received by him at the time of the sale.”

VI.(C) Procedural Irregularities in the Conduct of Auction:

21. In respect of the above established procedures for conduct of public auction, impugned order would show that the procedures as contemplated were not followed in the present case. Auction itself was conducted inside the Court Hall in the presence of the Hon'ble Judge, which is neither desirable nor contemplated under law. Court may pass orders for conduct of public auction, but the Court is not expected to act and conduct public auction. The power of the Court is limited to grant permission to sell the trust property by appointing an Officer of Court to conduct public auction, which must be done by scrupulously following the established principles and procedures recognised under law and through judicial precedents.

VI.(D) Supervisory Role of the Court in Public Auction:

22. It has been observed in paragraphs 2 and 3 of the impugned order that:

               “2. Though seven offers have been received by the Registrar General of this Court, only three parties have shown interest and are present physically before this Court. One of them includes the person who deposed his evidence as interested buyer being in occupation of the portion of the subject lands and also tendered evidence before the Master Court viz., Mr.Abul Abbas. Two other interested purchasers viz., Mr.Mohd.Ismail and Mr.K.Rajamanickam were also present and this Court permitted the three parties to bid for the subject lands.

               3. After open bid by all the parties, at one point of time Mr.Mohd.Ismail opted out of the race and the bid continued between Mr.Rajamanickam and Mr.Abul Abbas. Finally, Mr.Abul Abbas has offered Rs.12.55 Crores as total sale consideration for sale of the entire 58 and odd acres of the subject lands in Thiruvarankurichy Village, Ponnampatti Town Panchayat, Marungapuri Taluk, Trichy District”.

23. In paragraph 4 of the impugned order, wherein the Court declared the offer made by the 2nd respondent as highest bidder and he was put on following terms:

               “(a) The said intending purchaser Mr.Abul Abbas shall deposit a sum of Rs.2.50 Crores on or before 31.01.2025, further Rs.5.00 Crores on or before 28.02.2025 and the remaining Rs.5.05 Crores on or before 31.03.2025 to the credit of A.No.5189 of 2023 in C.S. No.721 of 1923.

               (b) On compliance of the said deposits, this Court shall issue further directions regarding sale of the property in his favour.”

24. Thereafter, on 04.06.2025, when the matter was listed before the learned Single Judge, a note was put up by the Registry dated 16.04.2025 indicating the details of the remittances. Accordingly, the sale was confirmed and directed the Trust to inform a convenient date for registration of the sale deed. The matter was directed to be listed on 11.06.2025. On 11.06.2025, photo copies of the registered sale deed was filed and the same was recorded by the Court.

25. A perusal of the impugned order raises several questions in the mind of this Court, which were put forth to the counsels. Most pertinently, the initial questions that aroused are as follows:

               (1) Whether the High Court can sit in the seat of an auctioneer and conduct a public auction?

               (2) Whether Code of Civil Procedure or the Madras High Court Original Side Rules explicitly contemplates such procedure?

               (3) If the place of public auction is the Court hall and the Court plays the role of an auctioneer, would the right of the parties to the proceedings to challenge the auction be jeopardised in any manner?

               (4) Can a Court of law act as a witness to a public auction?

VI.(E) Guidelines for Public Auction:

26. Therefore, this Court found it appropriate to delve into relevant provisions of Code of Civil Procedure,1908, the Indian Trusts Act, 1882 and High Court Original Side Rules, 1994, to ascertain the correct position of law and the proper role of Courts in relation to the conduct of public auction.

27. Section 92 of CPC deals with “Public Charities”. As much as judicial supervision plays pivotal role in accordance with Section 92 of CPC, such supervision cannot take the shape of judicial participation or holding Courts/Judges in the position of witness to a public auction.

28. Order XXXVIII Madras High Court Original Side Rules details sale of property under the Orders of Court. Rule 1 says the sale by public auction of any property, when directed in a suit or matter shall be conducted in the manner prescribed by this Order read with Order XXI of the Civil Procedure Code. Under Rule 4, the Registrar shall determine the manner of advertising the sale and shall fix the date and place of sale. The proclamation of sale will be settled by the Registrar. Under Rule 5, the Registrar or any other Officer of the Court shall conduct the sale. The Court may, under special circumstances, upon application of a party or suo-motu, appoint an advocate or other person as Commissioner to sell the property.

29. A reading of the Rules reveal that the Courts are empowered to exercise a supervisory jurisdiction over the public auction conducted. But a clear line can be drawn from a bare reading of the Rules whereby the Courts cannot assume role of an auctioneer but can merely supervise the fair conduct of public auction.

30. In the instant case, the contents of impugned order reveal the Court has not merely supervised but had participated in the bid process by assuming the role of an auctioneer. Court halls are not places to conduct public auction. If Court assume the role of auctioneer, then parties to the auction will be prejudiced from exhausting their rightful legal remedies before Courts of law.

31. The Code of Civil Procedure as well as Madras High Court Original Side Rules specify procedures allowing Courts to exercise supervisory jurisdiction only. A restraint on the part of the Courts is required in matters pertaining to conduct of public auction. The duty of the Courts is refrained to ensuring and supervising fair conduct of public auction. No further interference in auction process is required or mandated under the relevant Rules.

32. The Madras High Court Original Side Rules is clear in its terms that the Court shall ensure the correct market value through a Court appointed Officer or Officers authorised by the Court. But in the present case, it is evident from the paragraphs 2, 3 and 4 of the impugned order that the Court itself has assumed the role of an auctioneer.

Conclusion:

33. Neither the Code of Civil Procedure nor the Madras High Court Original Side Rules allow the Court itself to engage in auction process. They provide only for judicial supervision, which cannot be interpreted as authorising the conduct of public auction within the Court Hall by the Court.

34. In view of the discussion made above, the impugned order dated 21.01.2025 passed in Application No.5189 of 2023 in C.S.No.721 of 1923 is set aside. Consequently all subsequent acts including execution of sale deed made between the parties in pursuance to the auction conducted in the Court Hall are also declared as null and void. The matter is remitted back to the Trial Court to pass appropriate orders for conduct of a public auction, in accordance with law.

35. Thus, the present Original Side Appeal stands allowed. The connected Miscellaneous Petitions are closed. There shall be no order as to costs.