LexTechSuite - The Legal Tech Ecosystem


State Bank of India v/s Mohini Devi

    O.M.P 207 Of 1996
    Decided On, 09 October 1998
    At, High Court of Himachal Pradesh
    By, THE HONOURABLE MR. JUSTICE R.L. KHURANA
    For the Appearing Parties: K.D. Sood, Ajay Sharma, B.C. Negi, Advocates.


Judgment Text
R.L. KHURANA, J.

(1.) This order will dispose of the abovenoted four original miscellaneous petitions. The brief facts leading to these petitions may be thus stated. The State Bank of India, hereinafter, referred to as the decree-holder, on 28.3.1988 was granted a decree for the recovery of Rs. 2,34,489.40p with costs and future interest at the rate of 12.5% per annum with quarterly rests. Such decree was passed against S/Shri Pritam Chand, Parmeshwari Dass, Uttam Chand Goel and Lekh Raj Sood, Smt. Pawana Sood and Smt. Sarojini Sood jointly and severally.

(2.) The decree-holder sought the enforcement of such decree by making an execution application on 17.10.1990, being Ext. P.No. 19 of 1990. Judgment-debtor Pritam Chand Sood died during the pendency of the execution proceedings. His widow, sons and daughters were accordingly impleaded as judgment debtors No. 1 (a) to 1 (f)- During the execution proceedings the landed property of the deceased judgment- debtor Pritam Chand was attached and sold by auction.

(3.) In the auction held on 11.3.1996, the attached land was purchased by one Shri Surinder Mohan Sood, hereinafter referred to as the auction purchaser for a sum of Rs. 1,25,000/- Such sale was confirmed by this Court on 7.7.1997. O.M.P. No. 207/96:

(4.) This Petition has been preferred by the legal heirs of the deceased judgment-debtor Pritam Chand, hereinafter referred to as the objectors, under Order 21, Rule 85, Code of Civil Procedure, for the setting aside of the sale held on 11.3.1996 in favour of the action purchaser. Two grounds have been raised, namely, the sale could not have been made in view of the pendency of M.P. No. 39/96 and secondly that the entire decretal amount stood paid and decree stood satisfied. Pursuant to the warrants of sale having been issued by this Court the objector made an application being O.M.P. No. 39/96, wherein the following prayer was made:- "ft is, therefore, prayed that appropriate order may be passed to stay the execution of sale fixed for 11.3.1996 and allowed the legal representatives of the judgment-debtor Pritam Chand to pay the balance of the decretal amount, if any, and also by the private sale of attached land which is being sold." This court on 8.3.1996 passed the following order on the said application:- "Reply within two weeks. List thereafter along with OMP NO. 22/96. However, the sale be effected in accordance with law and it be not confirmed till further orders." In view of the order passed on 8.3.1996, it cannot be said that the sale made on 11.3.1996 was in contravention or violation of the order of this Court. Therefore, the sale is not liable to be set aside on this ground.

(5.) Insofar as the payment of the entire amount of the decree is cocerned, it is significant to note that such amount has been paid after the sale. The last of such payment of Rs. 2,131/-was made on 10.7.1996. Therefore, the sale also cannot be set aside on the ground that the decree stood satisfied.

(6.) A contention was raised on behalf of the objectors that under Rule 85 of Order 21, the auction purchaser was required to deposit the sale consideration less the amount of 25% deposited under Rule 84, within fifteen days of the sale.

(7.) As stated above, the sale took place on 11.3.1996 for a sum of Rs. 1,25,000/-. The aution purchaser deposited 25% of the sale price with the officer conducting the sale as required under Order 21, Rule 84, Code of Civil Procedure. The balance sale consideration was required to be deposited within fifteen days thereafter, that is, before the close of the Court on 26.3.1996.

(8.) A perusal of the record shows that such balance sale consideration was deposited by the auction purchaser with the Naib Tehsildar, Dehra, the officer who had conducted the sale. The said Naib Tehsildar on 26.3.1996 had remitted the said amount by way of a bank draft to the Deputy Commissioner, Kangra for onward transmission to this Court. The Deputy Commissioner had returned the said amount to the Naib Tehsildar with the remarks that the auction purchaser should deposit the amount personally with this Court. The Naib Tehsildar on having received the Bank Draft back from the auction purchaser on 6.4.1996, vide his letter dated 12.4.1996 addressed to the Registrar of mis Court though intimated that the Bank Draft was being returned to the auction purchaser, had instead forwarded the same to this Court. Such bank draft was received in the Registry on 16.4.1996.

(9.) On the above facts, it was contended that since the auction purchser failed to deposit the balance sale consideration within the stipulated period of fifteen days as laid down under Rule 85 of Order 21, Code of Civil Procedure, the sale was a nullity.

(10.) In Manilal Mohanlal Shah and Ors. v. Sardar Sayed Ahmed Sayed Mohamad and Anr.1 The Hon'ble Supreme Court had the occasion to deal with the scope and ambit of Rules 84 and 85 of Order 21 of the Code of Civil Procedure. It was held :- "Having examined the language of the relevant rules and the judicial decisions bearing upon the subject we are of the opinion that the provisions of the rules requiring the deposit of 25 per cent of the purchase money immediately, on the person being declared as a purchaser and the payment of the balance within 15 days of the sale are mandatory and upon non-compliance with these provisions there is no sale at all. The rules do not contemplate that there can be any sale in favour of a purchaser without depositing 25 per cent of the purchase money in the first instance and the balance within 15 days. When there is no sale within the contemplation of these rules, mere can be no question of material irregularity in the conduct of the sale. Non-payment of the price on the part of the defaulting purchaser renders the sale proceedings as a complete nullify. The very fact that the Court is bound to resell the property in the event of a default shows that the previous proceedings for sale are completely wiped out as if they do not exist in the eye of law. We hold, therefore, that in the circumstances of the present case there was no sale and the purchaser's required no rights at all." The above ratio was followed and reiterated in Messrs Thakur Cold Storage v. Punjab Financial Corporation. In mis case the auction sale of the cold storage was held on 6.11.1982. The decree-holder Punjab Financial Corporation was permitted to bid at the auction. The sale was knocked down in its favour for Rs. 9,10,000/-. The sale was confirmed on 12.12.1985. There was a failure on the part of the decree-holder corporation, which was the auction purchaser, to deposit the balance three-fourth amount of the purcahse price within fifteen days of the auction sale. It was held that since there was non-compliance of the mandatory provisions of Order 21, Rule 85, Code of Civil Procedure, the sale ws a nullity.

(11.) The learned Counsel for the auction purchaser, on the other hand, has raised the following three contentions, namely:- (a) the objection petition being time- barred, the objectors cannot assail the auction sale-; (b) The balance sale consideration was deposited within the stipulated period with the Naib Tehsildar, the officer conducting the sale and as such the deposit with him, being an agent of the Court, would be deemed to be the deposit in Court within the meaning of Rule 85 of Order 21, Code of Civil Procedure; and (c) Sale having been confirmed as not liable to be set aside.

(12.) Insofar as the first contention is concerned, it is significant to note that Article 127, Limitation Act, 1963, prescribes a period of limitation of 60 days from the date of sale for an application under Order 21, Rule 90, Code of Civil Procedure, when the sale is sought to be set aside on the ground of irregularity or fraud in the conduct of sale.

(13.) Insofar as Rule 85 of Order 21, is concerned, there is no provision for making of an application. A plain reading of these provisions shows that on the failure of the auction purchaser to deposit the remaining amount within the statutory period of fifteen days, the sale would automatically stands cancelled.

(14.) In Dharam Rao v. Shankarappa (deceased by LRs) and others, it has been held that if the auction purchaser fails to deposit the remaining amount within the statutory period of fifteen days, the sale automatically stands cancelled and it is not necessary either for the judgment-debtor or for any one even to apply under Order 21, Rule 90, Code of Civil Procedure to make an application for setting aside the sale. Order 21, Rule 90 would come into play only when the sale is vitiated by irregularity or fraud in publishing or conducting the sale. A Division Bench of the Allahabad High Court in Mool Chand v. Jalaun and Ors., after holding that the provisions contained in Rules 84 and 85 of Order 21, Code of Civil Procedure, to be mandatory, has held :- ".... In our opinion these provisions are mandatory and in the event of their non compliance the execution Court or the officer conducting the sale has no other option but to re-sell the property. They are not vested with any jurisdiction to extend the period provided for making these deposits. The twenty-five per cent of the amount of the bid is to be deposited immediately after the declaration of the person to be the purchaser and the full amount of the purchase money payable has to be paid on or before the fifteen day from the date of the sale. Non-payment of the price on the part of the defaulting purchaser would render the sale proceedings a complete nullity. It is not necessary for the judgment- debtor to file an objection to draw the attention of the executing Court or the officer conducting the sale to such default of the purchaser. It is an obligation and a duty placed under the statute on the execution court or the officer conducting the sale." Therefore, if no application is required to be made for setting aside the sale on the ground of non-compliance of the provisions contained in Rule 85 of Order 21, Code of Civil Procedure, the period of limitation as prescribed under Article 127, Limitation Act, would not come into play and the present petition cannot be thrown out on the ground of limitation.

(15.) Coming to the second contention, the question falling for determination is whether deposit with the officer conducting the auction is a deposit into the Court within the meaning of Rule 85 of Order 21, Code of Civil Procedure. A similar question had arisen before a Division Bench of the Allahabad High Court in Hira Lal and Ors. v. Mst. Champa and Ors. In the said case also, the remaining amount of sale consideration was deposited by the auction purchaser within the stipulated period of fifteen days with the auctioneer appointed by the Court. The auctioneer then had forwarded such amount to the Court which was received by the court after the expiry of the prescribed period of fifteen days. It was held :- "...A comparison of Rules 84 and 85 will make it clear mat while the deposit of 25 per cent on the amount of the purchase-money has to be made to the officer or other person conducting the sale, the balance of the purchase-money has to be paid by the purchaser into Court. The handing over of the cheque, therefore, to the auctioneers was not payment into Court, nor could it be said that the handing over of the cheque was a deposit of the balance of the purchase- money. We are, therefore, satisfied that the provisions of Order 21, Rule 85, were not complied with." I am in full agreement with the ratio laid down by the Division Bench of the Allahabad High Court, it is, therefore, held mat the deposit of the remaining amount with the Naib Tehsildar, the officer who conducted the auction, cannot be termed as "deposit into the court" within the meaning of Rule 85 of Order 21, Code of Civil Procedure.

(16.) The last contention raised is that the sale having been confirmed on 7.7.1997 is not liable to be set aside except by way of a separate suit. There is no merit in contention of the learned Counsel for the auction purchaser. It has been held above that once the auction purchaser fails to deposit into the Court the remaining amount of sale consideration within the stipulated period in terms of Rule 85 of Order 21, Code of Civil Procedure, the sale become a nullity. Therefore, if confirmation of an invalid sale has been made, it will be an invalid confirmation and would have no effect Confirmation of an invalid sale would not render such sale to be valid.

(17.) . As a result, the application is allowed and the sale of the land of the objectors held on 11.3.1996 and as confirmed on 7.7.1997 is set aside being a nullity since the auction purchaser failed to deposit the balance amount of sale consideration within the stipulated period of fifteen days as contemplated by Order 21, Rule 85, Code of Civil Procedure.

(18.) . Ordinarily, the attached property would have been ordered to be resold, however, this course is not being adopted in the present case since the decree has been satisfied. It is, therefore, ordered that the land, subject-matter of sale, would stand released from attachment. OMP No. 207 of 1996 stands disposed of accordingly. O.M.RNo. 324/97:

(19.) . This application, in view of the orders passed on OMP No. 207/96, has become infructuous and is disposed of accordingly. OMP. Nos. 453/97 and 134/98:

(20.) . Both these applications have been made by the auction purchaser for the issuance of the sale certificate in his favour in respect of the landed property purchased by him in the auction sale hold on 11.3.1996 and as confirmed on 7.7.1997.

(21.) . The sale having become a nullity, stands set asid

Please Login To View The Full Judgment!
e. Therefore, there is no question of issuance of sale certificate in favour of the auction purchaser. Both the applications are, therefore, dismissed. (22.) . Next arises the question as to what amount is the auction purchaser entitled by way of refund. Rule 86 of Order 21, Code of Civil Procedure, provides;- "86. Procedure in default of payment-In default of payment within the period mentioned in the last preceding rule, the deposit may, if the Court thinks fit, after defraying the expenses of the sale, be forfeited to the government, and the property shall be resold, and the defaulting purchaser shall forfeit all calim to the property or to any part of the sum for which it may subsequently be sold," The use of the words "may, if the Court thinks fit" in the above provision shows that the Court has the discretion to forfeit the initial deposit or not. (23.) . In the present case, since there is no question of resale of the property as the judgment-debtors have since paid off the decretal amount, it is not a fit case for the exercise of discretion against the auction purchaser by ordering the forfeiture of the initial amount of 25% of the sale consideration. (24.) . Therefore, it is ordered that the amount of the initial deposit of Rs. 31,250/- less the expenses of sale as per the law, and the amount of subsequent deposit of Rs. 93,750/-. which stand invested in fixed deposits, be refunded to the auction purchaser alongwith the interest accrued due thereon. Petitions disposed of accordingly.