At a party
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The books are real books, not just the front cover for show.
However, back in 1920's when a book was binded the pages were still stuck together, so when somebody has read the book they would have to tear the pages apart (therefore leaving jagged edges)
The owl-eyed man notices that the books have not been read at all, this is the irony in the books, they are as good for show only.
This is also a way Gatsby shows of his wealth, to win back Daisy.
"Absolutely real -have pages and everything......Knew when to stop too, -didn't cut the pages...."pg 51-52