REPORTABLE
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NO. 8652 OF 2012
[Arising out of SLP (Civil) No. 34402 of 2011]
Ram Karan Gupta .. Appellant
Versus
J. S. Exim Ltd. and Ors. .. Respondents
J U D G M E N T
K. S. Radhakrishnan, J.
1. Leave granted.
2. This matter arises in execution and
this appeal has been preferred by
one of the judgment debtors challenging the common final judgment and order
dated 11.11.2011 passed by the High Court of Delhi in C. M. (M) No. 1093 of
2011 and E.F.A. No. 15 of 2011.
3. Decree holders and judgment debtors are co-sharers of a property
bearing No. 1-87, Ashok Vihar, Delhi (hereinafter referred to as the ‘suit
property’).
Late Rameshwar Dass Gupta filed a suit for partition of the
suit property and
after passing a preliminary decree, a final decree was
passed and
the suit property was ordered to be sold in public auction and
sale proceeds were directed to be distributed among the shareholders.
4. Decree holders filed execution petition and vide order dated
20.11.2009, the auction sale was scheduled to be held on 9.1.2010.
However,
objector/J.D.2 Shri Ram Karan Gupta (appellant herein) moved an
application seeking stay of auction sale scheduled to be held on 9.1.2010
and a joint application was moved by the decree holders and judgment
debtors, wherein it was disclosed that J.D.2 had agreed to purchase the
suit property, as such, the auction sale be adjourned.
Later on, J.D.2
failed to comply with the terms and conditions of the Compromise and,
therefore, a fresh process for auction sale was issued and the auction sale
was scheduled to be held on 4.7.2010.
Due to various reasons, it did not
materialize. Later, auction sale was scheduled to be held on 8.10.2010
and the auction was completed and
the auction purchaser M/s J.S. Exim Ltd.
(1st respondent herein) was found to be the highest bidder for a bid amount
of Rs.9.60 crores.
The auction purchaser deposited Rs.2.40 crores by way
of 27 demand drafts of even date towards 25% of the bid amount.
The Court
Auctioneer placed on record the record of the auction proceedings held on
8.10.2010.
5. Later, the auction purchaser moved an application for depositing the
remaining 75% of the sale price/bid amount of the suit property and the
application was allowed and 75% of the sale amount was deposited by the
auction purchaser on 23.10.2010 in the State Bank of India, Tees Hazari
Court, Delhi.
6. The auction purchaser, later, moved an application under Order 21
Rules 94 and 95 of the Code of Civil Procedure (for short ‘CPC’) for
confirmation of sale.
J.D.2, the appellant herein, then sought for
cancellation of the auction held on 8.10.2010 stating that the auction
purchaser had failed to deposit 25% of the bid amount on completion of the
auction sale proceedings. Further, it was also pointed out that the
auction purchaser had enclosed the drafts dated 7.10.2010 issued by the
Indian Overseas Bank, Chennai, but the said bank drafts had not been
enclosed by the Court Auctioneer with her report. It was also contended
that the auction was vitiated due to the violation of the mandatory
provisions of Order 21 Rule 84 and 85 CPC.
7. The auction purchaser refuted all those contentions and submitted
that 25% of the bid amount was deposited on the date of auction after
conclusion of the auction sale proceeding and the remaining 75% of the bid
amount was deposited on 23.10.2010. Further, it was pointed out that the
auction purchaser had got prepared the demand drafts of Rs.2.50 crores in
the name of the Court Auctioneer. But, later on, it was disclosed by the
Court Auctioneer that the demand drafts should be issued in the name of the
competent authority, consequently, the auction purchaser got prepared the
said demand drafts on 8.10.2010 and handed over the same to the Court
Auctioneer.
Further, it was also pointed out that the words occurring
“shall pay” and “immediately” do not mean that the 25% of the bid amount
should be paid at the fall of the hammer.
Further, it was also pointed out
that the auction sale could be set aside only on the ground of material
irregularity or fraud that had resulted in substantial injury to the
applicant.
8. The Executing Court elaborately considered the various contentions
raised by the parties and perused the documents and took the view
that the
auction purchaser had deposited 25% of the bid amount as mandated by Order
21 Rule 84 CPC. Further, it was also held
that the remaining 75% of the
bid amount was also deposited by the auction purchaser on 23.10.2010 in
terms of Order 21 Rule 85 CPC.
The Court, therefore, rejected the
objection raised by the appellant/judgment debtor and confirmed the
auction, vide its order dated 24.3.2011.
9. The appellant/judgment debtor, aggrieved by the said order, preferred
an appeal being E.F.A. No. 15 of 2011 and C.M. (M) No. 1093 of 2011 before
the High Court of Delhi.
Before the High Court, contention was raised
that the auction purchaser had not complied with the mandatory requirements
of Order 21 Rules 84 and 85 CPC and that 25% of the bid amount was not
deposited on the fall of the hammer and, consequently, the entire sale
transaction was void and liable to be set aside.
Further, it was also
stated that since the appellant was one of the family members, he should
have been permitted to get the sale executed in his favour, since he had a
pre-emptive right and he was ready and willing to deposit the amount of
Rs.9.60 crores, so as to avoid the sale.
10. The High Court considered the various contentions raised by the
parties and concurred with the views expressed by the Executing Court that
the auction purchaser had complied with Order 21 Rules 84 and 85 CPC.
The
High Court noticed that the auction purchaser had deposited 25% of the bid
amount as mandated by Order 21 Rule 84 CPC and that he had also paid the
remaining 75% of the bid amount within the statutory period, in terms of
Order 21 Rule 85 CPC.
The High Court, therefore, upheld the order of the
trial Court confirming the sale and directed the parties to execute
documents of title in favour of the auction purchaser. Aggrieved by the
same, this appeal has been preferred.
11. Shri Ranjit Kumar, learned senior counsel appearing for the
appellant, submitted
that the auction purchaser had not complied with the
mandatory provisions of Order 21 Rules 84 and 85 CPC, inasmuch as he did
not deposit 25% of the bid amount immediately on the fall of the hammer.
It was pointed out that 25% of the bid amount was deposited only on
11.10.2010 and non-compliance of the above mentioned statutory provisions
has vitiated the auction sale.
In support of his contentions, reliance was
placed on the judgments of this Court in Manilal Mohanlal Shah and Others
v. Sardar Sayed Ahmed Sayed Mahmad and another AIR 1954 SC 349 and Balram
son of Bhasa Ram v. Ilam Singh and others AIR 1996 SC 2781.
Learned senior
counsel submitted that the appellant had preferred an application on
1.12.2010 before the Executing Court to allow the appellant to deposit the
entire amount of the sale, after deduction of his one-forth share in the
property, and handover the possession to him.
Learned senior counsel
submitted that the application was filed before the confirmation of sale,
but was not considered by the Executing Court.
Learned senior counsel
submitted that only if the application is allowed under Order 21 Rule 92(2)
CPC, the appellant could deposit the amount within the time stipulated in
the said provision.
Learned senior counsel submitted that the Executing
Court has committed an error in confirming the sale before entertaining the
application and allowing the same, so that the appellant could have
deposited the entire amount.
Learned senior counsel submitted that even
now the appellant is willing to pay the entire amount deposited by the
auction purchaser including interest.
Further, it was also submitted that
the appellant is willing even to pay Rs.1 crore more so that he can save
the property where he is residing.
Learned senior counsel also placed
reliance on a Constitution Bench judgment of this Court in Dadi Jagannadham
v. Jammlu Ramulu and Others (2001) 7 SCC 71 and
pointed out that there is
no strict time limit in depositing the amount and the question of deposit
arises only after the application is allowed.
Learned senior counsel
pointed out that rationale in P. K. Unni v. Nirmala Industries and others
(1990) 2 SCC 378 and the views expressed in that judgment
that Order 21
Rule 92(2) CPC prescribed a period of limitation, was found to be incorrect
in Jammlu Ramulu (supra).
Learned senior counsel also placed reliance on
M. Noohukan v. Bank of Travancore and another (2008) 11 SCC 161 and
submitted that this Court, in the similar circumstances, had extended the
time for depositing the amount.
Learned senior counsel submitted that,
under such circumstances, the prayer for depositing the amount, as stated
above, be allowed.
12. Shri C. A. Sundram, learned senior counsel appearing for the
respondent, submitted that this Court shall not interfere with the
concurrent findings rendered by the Courts below.
Learned senior counsel
submitted that the auction purchaser deposited 25% of the bid amount on
8.10.2010 and further deposited the remaining amount i.e. 75% of the bid
amount on 23.10.2010.
Learned senior counsel pointed out that the mandate
of Order 21 Rules 84 and 85 CPC was complied with in letter and spirit and
the Court Auctioneer was satisfied that the entire amount had been paid.
Learned senior counsel submitted
that the word “immediately” occurring in
Order 21 Rule 84 CPC was expanded by this Court in Rosali V. v. Talco Bank
and others AIR 2007 SC 998.
It was pointed out that, in the present case,
27 drafts of Rs.2.40 corores had been paid to the Court Auctioneer on
8.10.2010, which is reflected in the report of the Court Auctioneer dated
8.10.2010.
The balance amount was also deposited in accordance with Order
21 Rule 85 CPC.
Learned senior counsel submitted that there is no bona
fide in the offer made by the appellant and, if, had any genuine interest
for avoiding the sale, the amount offered should have been deposited before
the confirmation of sale and within the time stipulated in Order 21 Rule
92(2) CPC.
13. We are in full agreement with the order passed by the Executing Court
as well as the High Court that the auction purchaser had deposited 25% of
the amount on 8.10.2010.
When the auction is for such a large amount,
running in crores of rupees, nobody can expect the auction purchaser to pay
the amount in cash on the fall of the hammer.
So far as the instant case is
concerned, facts would reveal that the auction purchaser had paid Rs.2.40
crores, may not be in cash, but by way of drafts on 8.10.2010 and the
balance amount i.e. 75 % of the bid maount was also paid on 23.10.2010,
consequently, in our view, the auction purchaser had complied with the
provisions of Order 21 Rules 84 and 85 CPC.
14. We may, in this connection, refer to the judgment of this Court in
Talco Bank (supra), wherein this Court has extended the meaning of the term
“immediately” which occurs in Order 21 Rule 84 CPC, as follows:
“30. The term “immediately”, therefore, must be construed
having regard to the aforementioned principles. The term has two
meanings. One, indicating the relation of cause and effect and the
other, the absence of time between two events. In the former sense, it
means proximately, without intervention of anything, as opposed to
“immediately.” In the latter sense, it means instantaneously.
31. The term “immediately”, is thus, required to be construed
as meaning with all reasonable speed, considering the circumstances of
the case. (See Halsbury’s Laws of England, 4th Edition, Vol. 23, para
1618, p. 1178).”
Learned senior counsel appearing for the appellant, as we have already
indicated, submitted
that the Executing Court should have allowed his
application dated 1.12.2010 since he preferred that application within 60
days of the date of sale, but could not deposit the amount since the
application filed in terms of Order 21 Rule 92(2) CPC was neither dealt
with nor allowed.
Order 21 Rule 89 CPC, it may be noted, gives a final
opportunity to the judgment debtor to save his property by setting the sale
aside before the confirmation upon the terms of satisfying the decretal
debt and of paying compensation to the auction purchaser.
Rules 89 to 92
of Order 21 deal with setting aside of sale. When a property is sold in
execution of a decree and an application for setting aside the sale can be
made under those provisions by the persons affected on the grounds
mentioned therein.
Such an application has to be made within the
prescribed period of limitation, the provisions mentioned therein are in
the nature of concession and those provisions must be strictly complied
with before a sale is set aside before confirmation.
On setting aside the
sale under Order 21 Rule 89 CPC the property continues to be the property
of the judgment debtor.
15. This Court in Tribhovandas Purshottamdas Thakkar v. Ratilal Motilal
Patel and others AIR 1968 SC 372
held that the rule is intended to confer a
right upon the judgment debtor, even after the property is sold, to satisfy
the claim of the decree holder and to compensate the auction purchaser by
paying him 5 per cent of the purchase-money.
In Challamane Huchha Gowda
v. M. R. Tirumala and another (2004) 1 SCC 453,
this Court held that it
gives a final opportunity to put an end to the dispute, at the instance of
the judgment debtor before the sale is confirmed by the Executing Court and
enables him to save his property.
Order 21 Rule 89 CPC is, therefore,
intended to (i) to save the judgment debtor from the threatened deprivation
of his property, (ii) to satisfy the claim of the decree holder and (iii)
to compensate the auction purchaser.
Rule 89 of Order 21 CPC also applies
to a sale in execution of a decree for payment of money and an order of
sale of property under the Partition Act, 1893 is a deemed decree under the
Code and, therefore, an application for setting aside sale in execution of
such decree is maintainable.
It also applies to a decree passed in terms
of an award in a Partition suit, so also to a sale in execution of mortgage
decree.
Order 21 Rule 92 CPC provides for confirmation of sale, as also
setting aside the sale, which reads as follows:
“92. Sale when to become absolute or be set aside.- (1) Where no
application is made under Rule 89, Rule 90 or Rule 91, or where such
application is made and disallowed, the court shall make an Order
confirming the sale, and thereupon the sale shall become absolute:
Provided that, where any property is sold in execution of a
decree pending the final disposal of any claim to, or any objection to
the attachment of, such property, the court shall not confirm such
sale until the final disposal of such claim or objection.
(2) Where such application is made and allowed, and where, in
the case of an application under Rule 89, the deposit required by that
rule is made within sixty days from the date of sale, or in cases
where the amount deposited under Rule 89 is found to be deficient
owing to any clerical or arithmetical mistake on the part of the
depositor and such deficiency has been made good within such time as
may be fixed by the court, the court shall make an Order setting aside
the sale:
Provided that no order shall be made unless notice of the
application has been given to all persons affected thereby:
Provided further that the deposit under this sub-rule may be
made within sixty days in all such cases where the period of thirty
days, within which the deposit had to be made, has not expired before
the commencement of the Code of Civil Procedure (Amendment) Act, 2002.
(3) No suit to set aside an Order made under this rule shall
be brought by any person against whom such Order is made.
(4) Where a third party challenges the judgment-debtor’s title
by filing a suit against the auction-purchaser, the decree-holder and
the judgment-debtor shall be necessary parties to the suit.
(5) If the suit referred to in sub-rule (4) is decreed, the
Court shall direct the decree-holder to refund the money to the
auction-purchaser, and where such an order is passed the execution
proceeding in which the sale had been held shall, unless the Court
otherwise directs, be revived at the stage at which the sale was
ordered.
Sub-rule (1) of Rule 92 deals with cases where no application to set aside
the sale is made or such an application is made and disallowed. In all
these cases, the Court shall make an order confirming the sale. Sub-rule
(2) of Rule 92 covers those cases where an application for setting aside is
made and allowed or in an application under Rule 89 requisite deposit has
been made, in all such cases, the Court is bound to set aside the sale.
16. A Constitution Bench of this Court in Jammulu Ramulu (supra) had
occasion to consider the scope of Order 21 Rule 92(2) and Rule 89 CPC.
Overruling P. K. Unni (supra), this Court held as follows:
“15. A plain reading of Order 21 Rule 92 CPC shows that the
court could either dismiss an application or allow an application.
Order 21 Rule 89 CPC prescribes no period either for making the
application or for making the deposit. The Limitation Act also
prescribes no period for making a deposit. However, Article 127 of the
Limitation Act prescribes a period within which an application to set
aside a sale should be made. Earlier, this was 30 days, now it has
been enhanced to 60 days. Unless there was a period prescribed for
making a deposit, the time to make the deposit would be the same as
that for making the application. This is so because if an application
is made beyond the period of limitation, then a deposit made at that
time or after that period would be of no use.
16. Normally, when the legislature wishes to prescribe a period
for making a deposit, it does so by using words to the effect “no
deposit shall be made after … days” or “a deposit shall be made within
… days” or “no application will be entertained unless a deposit is
made within … days”. Order 21 Rule 92(2) CPC does not use any such
expressions. The relevant portion of Order 21 Rule 92(2) CPC reads as
follows:
“92. (2) Where such application is made and allowed, and
where, in the case of an application under Rule 89, the deposit
required by that rule is made within thirty days from the date
of sale, … the court shall make an order setting aside the
sale:”
Thus Order 21 Rule 92(2) CPC is only taking away discretion of the
court to refuse to set aside the sale where an application is made and
allowed and the [pic]deposit has been made within 30 days from the
date of sale. It is thus clear that Order 21 Rule 92(2) CPC is not
prescribing any period of limitation within which a deposit has to be
made.
17. Viewed in this context the intention of the legislature in
extending the period under Article 127 of the Limitation Act may be
seen. It is very clear from the Statement of Objects and Reasons,
which have been set out hereinabove, that the period under Article 127
of the Limitation Act was extended from 30 days to 60 days in order to
give more time to persons to make deposits. The legislature has noted
that the period of 30 days from the date of sale was too short and
often caused hardships because judgment-debtors usually failed to
arrange for money within that period. The question then would be
whether by merely amending Article 127 of the Limitation Act the
legislature has achieved the object for which it increased the period
of limitation to file an application to set aside sale.”
The Constitution Bench held that all that Order 21 Rule 92(2) CPC provides
is that if the deposit is made within 30 days from the date of sale and an
application is filed then the court would have no discretion but to set
aside the sale. The Court held that that does not mean that if the deposit
is made after 30 days the court could not entertain the application. If
the deposit is made beyond the period of 30 days, but within the period of
60 days, then it will be within the discretion of the court whether or not
to grant the application.
17. Law Commission in its 89th report, para 42.35, page 219, Law
Commission report 139th report paras 3.1 to 3.6 and 4.1 to 4.5 considered
the period of limitation of thirty days for depositing the amount to set
aside sale as specified in sub-rule (2) of Rule 92 and suggested
enlargement of period of sixty days so as to be consistent with Section 127
of the Limitation Act. Following that the second proviso to sub-rule (2)
of Rule 92, as inserted by the Code of Civil Procedure (Amendment) Act,
2002, clarified that the amendment would also apply to all those cases
where the period of thirty days within which the deposit was required to be
made had not expired before the commencement of the Amendment Act, 2002.
The amendment which came into force w.e.f. 01.07.2002 extends the period of
deposit up to sixty days, which is in conformity with Section 127 of the
Limitation Act, as amended by the Code of Civil Procedure (Amendment) Act
1976.
18. In Challamane Huchha Gowda (supra), the Court was primarily dealing
with the question as to whether a mode of application has been prescribed
for making an application for setting aside the sale. The Court noted that
Order 21 Rule 89 CPC requires an application to be made for setting aside
the sale, nothing is stated in the rule regarding the mode of application
and then held that purshis contains an implicit prayer for setting aside
the sale and the absence of a formal application does not amount to non-
compliance with the provision. The above view expressed by certain High
Courts was found favour by this Court in Tribhovandas Purshottamdas Thakkar
(supra) and this Court held that Order 21 Rule 89 CPC does not provide that
the application in a particular form shall be filed to set aside the sale.
19. We notice, in this case,
there was no reference at all to the
provisions of Order 21 Rule 89 in the application filed by the appellant
on 1.12.2010, be that it may, even then the appellant had not complied with
the mandatory requirements of depositing the amount.
Clause (a) of Sub-
rule (1) of Rule 89 of Order 21 requires the applicant to deposit in Court
5 per cent of the purchase money for payment to the auction purchaser.
Deposit of the requisite amount in the Court is a condition precedent or a
sine qua non to an application for setting aside the execution of sale and
such a amount must be paid within a period specified in the rule and if the
deposit is made after the time limit, the application must be dismissed.
The deposit made under Rule 89 of Order 21 CPC should be unconditional and
unqualified and the decree holder or the auction purchaser should be able
to get the amount at once.
20. We have already indicated that the rule is in the nature of a
concession shown to the judgment debtor, so he has to strictly comply with
the requirements thereof and a sale will not be set aside unless the entire
amount specified in rub-rule (1) is deposited within 60 days from the date
of the sale and, if it is beyond 60 days, the Court cannot allow the
application.
We have already found that the appellant-judgment debtor did
not pay the amount within the stipulated time and he only made an
application on 1.12.2010 without depositing the amount and hence the Court
cannot entertain such an application and bound to confirm the sale which,
in this case, the Court did on 23.10.2010.
21. We, therefore, find no error in the judgment and orders of the
Executing Court as well as the High Court and the belated offer made by the
appellant for depositing the amount now cannot be entertained and the same
is rejected.
22. The appeal, therefore, lacks in merits and the same is dismissed,
with no order as to costs.
………………………………..J.
(K.S. Radhakrishnan)
…………………………………..J.
(Dipak Misra)
New Delhi,
December 3, 2012
