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Madhya Pradesh High Court · body

1998 DIGILAW 73 (MP)

PRAKASH CHAND RAI v. STATE BANK OF INDORE, BHOPAL

1998-01-29

R.S.GARG

body1998
R. S. GARG, J. ( 1 ) JUDGMENT by this appeal under Order 43, Rule 1 (3) of the Code of Civil Procedure, the petitioners challenge the order dated 20-12-1996 passed by the First Addl. District Judge, Raisen, in execution case No. 9-B/91. ( 2 ) BRIEF facts for proper disposal of the case are that the decree-holder obtained a decree for recovery of money against the judgment-debtor. In execution, certain properties already mortgaged with the decree-holder were proposed to be put to auction. Certain objections were filed by the judgment-debtor on 25-1-1993 and 1-3-1993. It appears that the objections were many fold but the relief claimed was that the auction be stayed till compromise is effected between the parties. The applications were listed for argument. The said applications, though not specifically but tacitly were deemed to be disposed of under the order dated 18-11-1992 and 25-1-1994. The judgment-debtors again moved an application under Order 21, Rule 66, C. P. C. The trial Court (executing Court) did not pass any orders on this application. On 27-1-1994, the Court ordered that notice of the application be issued to the decree-holder. The case was adjourned to 7-2-1994. On 7-2-1994, an application was again filed by the judgment-debtors raising various objections, including the objection under Order 21, Rule 24 and Rule 66. The application was supported with an affidavit. Reply to application dated 7-2-1994 was filed on10-7-1994. On 10-2-1994 itself, an application under Order 21, Rules 26, 29, 59, 66 (1) (2) and Rule 69 was filed. On 16-2-1994, yet another application under Order 21, Rules 26, 29, 66 (1) (2) was filed. The applications were properly replied. It is to be noted that the Court had already fixed 9-2-1994 as the date for auction on the spot and 10-2-1994 for submission of report. The matter was taken up for hearing on 11-2-1994. The applications which were filed before 11-2-1994 and filed after 10-2-1994 were not decided by the Court. It is also to be seen from the records that on 9-2-1994, the auction purchaser did not deposit 25 per cent of the bid amount on the spot immediately. Within the next 15 days, he did not deposit the balance of 75 per cent of the bid as required to be deposited under Rule 85 of Order 21. Objections filed by the judgment-debtors were heard on 5-1-1995. Within the next 15 days, he did not deposit the balance of 75 per cent of the bid as required to be deposited under Rule 85 of Order 21. Objections filed by the judgment-debtors were heard on 5-1-1995. The executing Court by its order dated 5-1-1995 rejected the objections holding that as the sale had already been effected and to that effect report from the Nazir had also been received, the objections have become infructuous. In the opinion of this Court, the said approach was patently illegal. When the objections were raised prior to the sale itself, those were required to be decided before effecting the sale or in any case could not be rejected as infructuous. No Court has been given authority under the law to create a situation where legal rights of the litigants are adversely affected because it is expected of the Court that by its act/acts, it would not cause prejudice or loss to any body. After 5-1-1995, certain objections were again filed by the judgment-debtors on 21-4-1995. Replies, etc. were filed to the said objections. The executing Court by its order dated 3-9-1996 rejected the judgment-debtors' application dated 21-4-95, holding that under the provisions of Rule 90 of Order 21, an auction sale can be set aside on the ground of irregularities or fraud but as substantial irregularities or fraud was not found in the case, the sale could not be set aside. The Court being aware of the fact that till by that time the auction purchaser had not deposited the amount in compliance of Rule 84 or Rule 85, directed that notice be issued to the auction purchaser. On 7-10-1996, an objection under Order 21, Rule 84 was again filed bringing to the notice of the Court that the auction purchaser did not comply with the provisions of Rule 84 and/or Rule 85, therefore, in view of non-compliance of the mandatory provisions of law, material irregularities and illegalities, the sale be set aside as those likely to cause and in fact had caused substantial financial injury and loss to the judgment-debtors. On 28-11-1996, yet another application was filed. The learned executing Court rejected the application filed under Order 9, Rule 13, C. P. C. and simultaneously overruled the objections raised in the application dated 7-10-1996 (I. A. No. 9 ). On 28-11-1996, yet another application was filed. The learned executing Court rejected the application filed under Order 9, Rule 13, C. P. C. and simultaneously overruled the objections raised in the application dated 7-10-1996 (I. A. No. 9 ). The executing Court observed that as the objections raised by the judgment-debtors were rejected on 5-1-1995, therefore, identical objections could not be permittied to be raised. The lower Court was also of the opinion that the proceedings were conducted in accordance with Rules 84 and 85 of Order 21 and the stage of Rule 86 had not yet reached. The Court observed that out of the sale amount, a sum of Rs. 80,000/- was deposited on 25-4-1995 and Rs. 2,29,100/- had already been deposited by the auction purchaser on 5-5-1995. The learned trial Court rejected the objections and also observed that by order dated 5-1-1995, the sale had already been confirmed, therefore, the sale certificate be issued under Order 21, Rule 94. ( 3 ) THE Court is required to record its disapproval to the manner in which the proceedings have been conducted by the executing Court. It is most unfortunate that the objections filed under Rule 66, which were required to be decided before the auction sale, were not decided. The Court in fact created a situation in favour of the decree-holder. The Court was required to consider that the provisions of Rule 66 of Order 21 are almost mandatory and non-observance would lead to illegality. The attention of the executing Court is invited to the judgment of the Supreme Court in the matter of Gajadhar Prasad v. Babu Bhakta Ratan, AIR 1973 SC 2593 and M/s. Shalimar Cinema v. Bhasin Film Corporation, AIR 1987 SC 2081 . It appears that the Court below without appreciating the effect of Rule 66 kept the objections pending and decided the same on 5-1-1995, holding that the same had become infructuous. The illegality did not stop here. On 5-1-1995, the objections which were rejected were in relation to Rule 66 and not in relation to Rule 84 or Rule 85, because prior to 18-2-1994, the stage for filing objections against the sale or auctions did not arise. ( 4 ) RULE 84 of Order 21, and Rule 85 of Order 21 read as under :-"84 (1 ). On 5-1-1995, the objections which were rejected were in relation to Rule 66 and not in relation to Rule 84 or Rule 85, because prior to 18-2-1994, the stage for filing objections against the sale or auctions did not arise. ( 4 ) RULE 84 of Order 21, and Rule 85 of Order 21 read as under :-"84 (1 ). On every sale of immovable property the person declared to be the purchaser shall pay immediately after such declaration, a deposit of twenty-five per cent on the amount of his purchase money to the officer or other person conducting the sale, and in default of such deposit, the property shall forthwith be re-sold. (2) Where the decree-holder is the purchaser and is entitled to set-off, the purchase money under Rule 22 the Court may dispense with the requirements of this rule. 85. The full amount of purchase money payable shall be paid by the purchaser into Court before the Court closes on the fifteenth day from the sale of the property;provided that in calculating the amount to be so paid into Court, the purchaser shall have the advantage of any set-off to which he may be entitled under Rule 72. " ( 5 ) RULE 84 clearly provides that the persons declared to be the purchaser shall pay immediately after such declaration a deposit of 25 per cent of the amount of purchase money to the officer or other person conducting the sale and in default of such deposit, the property shall forthwith be resold. If the amount of 25 per cent is not deposited in accordance with Rule 84, the property is required to be resold forthwith. No Court would have jurisdiction to extend time for making the initial deposit contrary to the provisions of Rule 84. At this stage, learned counsel for the respondent No. 1, referring to Secion 148, C. P. C. submits that where any period is fixed or granted by the Court for the doing of any act prescribed or allowed by this Code, the Court may, in its discretion, from time to time, enlarge such period even though the period originally fixed or granted may have expired. Section 148 presupposes that some period is fixed or granted by the Court for the doing of any act prescribed or allowed by the Code. Section 148 presupposes that some period is fixed or granted by the Court for the doing of any act prescribed or allowed by the Code. Where the code itself fixes time and a party is obliged to observe the mandatory provisions, then the Court would not be entitled to extend or enlarge the time. The language of Rule 84 of Order 21, would not entitle the Court for exercising the powers under Section 148. The Court is not entitled to extend or enlarge time. Rule 84 clearly provides that the person declared to be the purchaser shall pay immediately, after such declaration, a deposit of 75 per cent of the amount of his purchase money and if he fails in doing so, the property shall forthwith be resold. The words 'immediately' and 'forthwith' are not ornamental words but they have their own significance. The word 'immediately' would mean soon thereafter or just after an act is over. When a person is required to deposit the money immediately after he has been declared to be the purchaser, then the spirit of the law would be satisfied only if soon after such declaration he deposits the money. In such a case, the Court would have no jurisdiction to extend the time. The word 'forthwith' would also assume importance at this stage because if the amount is not so deposited, the property is required to be resold forthwith. The word 'forthwith' would also mean that immediately thereafter. Taking the case from either angle, ithas to be held that in case of default of payment of the amount, the Court shall have no jurisdiction to extend the time. 5a. Similar would be the position in Rule 85. According to the rule, the full amount of purchase money payable shall be paid by the purchaser into Court before the Court closes on the 15th day from the sale of the property. A conjoint reading of Rule 84 and Rule 85 would make it crystal clear that immediately on the declaration, the purchaser is required to make a deposit of 25 per cent of the sale amount and within 15 days from the sale of the property, he is required to deposit the balance amount so that the full amount is made in deposit or held in deposit within the period of 15 days. The word 'shall' used in Rule 85 would clearly show that the rule is mandatory and any breach would lead to penal consequences, i. e, as provided under Rule 86. Rule 86 reads as under :-"86. In dafault 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 re-sold and the defaulting purchaser shall forfeit all claim to the property or to any part of the sum for which it may subsequently be sold. "according to rule 86, if there is default of payment within the period mentioned in the last preceding rule, i. e. rule 85, if the Court thinks fit, after defraying the expenses of the sale, may direct that the amount so deposited may be forfeited to the Government and the property shall be re-sold and in such a situation, the defaulting purchaser shall forfeit all claim to the property or to any part of the sum for which it may subsequently be sold. ( 6 ) THE proceedings recorded by the Court below clearly show that the auction was held on 9-2-94. No amount was deposited in compliance of rule 84. The record shows that compliance of rule 85 was also not made. Objections of the judgment-debtors were rejected on 3-9-96. On the very same day, the Court directed that the auction purchaser be informed that he was required to take further action in the matter. The auction purchaser appeared on 7-10-96. On the same day, an application under Order 21, Rules 84, 85 and 86 was also filed by the judgment-debtors. On 20-12-96, while rejecting the application filed by the judgment-debtors, the Court observed that the auction purchaser had already deposited the amount on 25-4-95 and 5-5-95. The amount which was required to be deposited immediately on 10-2-95 and within the next 15 days, was deposited at least after 16 and 17 months. The order further reads that the auction was finalised on 5-1-95. On 5-1-95, the Court had simply observed that the auction had taken place. The proceedings do not record that the sale was confirmed. It is unheard that an auction sale can be accepted or confirmed before the amount is deposited in the Court by the auction purchaser. The order further reads that the auction was finalised on 5-1-95. On 5-1-95, the Court had simply observed that the auction had taken place. The proceedings do not record that the sale was confirmed. It is unheard that an auction sale can be accepted or confirmed before the amount is deposited in the Court by the auction purchaser. On 20-1-95 the Court passed an order recording that the sale effected on 10-2-95 secured a bid of Rs. 3,09,100/- and that appeared to the Court to be the maximum. The Court confirmed the bid. It is unfortunate that the learned Court below did not care to see whether the auction was in accordance with law or not. On 20-1-95, the Court directed the decree-holder to pay the process for issuance of summons to the auction-purchaser, asking him to deposit the auction amount. If on 20-1-95, the learned Judge found that the amount was not in deposit, he was duty bound to observe the provisions of rules 84 and 85. When non-observance of alw defeats justice, then the Court cannot close its eyes and say that no prejudice is caused to the judgment-debtor. It is not expected of the Court that it would leave the fate of the case in the hands of the parties because the Court has to decide the matter in accordance with law seeing that justice triumphs. In the present case, it is not only violation or non-observance of one or two rules of law but the present case is a burning example of the mockery of every provision of law. The Court failed in its duty to observe the mandatory provisions. The Court withoutapplying its mind to the facts of the case and the provisions of law, confirmed the auction without even observing that the amount was not deposited in accordance with law. The Court has failed to see that the objections which were rejected on 5-1-95 were not in relation to Order 21, Rules 84, 85 and 86 or rule 90 of the Order. An order is always passed on the application which has been pressed into service and argued before the Court. The Court has failed to see that the objections which were rejected on 5-1-95 were not in relation to Order 21, Rules 84, 85 and 86 or rule 90 of the Order. An order is always passed on the application which has been pressed into service and argued before the Court. The Court is not entitled to rely upon its earlier order for rejecting the subsequent application without appreciating that the subsequent application could not be filed on earlier occasion nor there was any cause of action for the applicant to file the application on earlier occasion. ( 7 ) THE learned counsel for the decree-holder and auction-purchaser, placing reliance upon Article 127 of the Limitation Act, contended that an objection against sale is required to be filed within 60 days from the date of the sale and as, in the instant case, objections were not filed within 60 days, the Court was not required to consider the objections on merits. Article 127 provides limitation of 60 days and the running/starting point of limitation is the date of the sale. An application to set aside a sale in execution of a decree, including such application by the judgment-debtor is required to be filed within 60 days. As observed above, Rules 84, 85 and 86 are mandatory. The Court cannot close its eyes to the patent illegalities which are floating on the surface. The Court suffers latent lack of jurisdiction what of patent lack because neither it could extend time nor could it invite the auction purchaser to make the deposit. When a Court acts contrary to law and in exercise of the jurisdiction not vested in it by law, then the order passed by the Court could certainly be interfered at a subsequent stage, whenever it is brought to the notice of the Court that the Court by its act has committed a serious illegality and the order passed by the Court is void. In the instant case, the sale made by the Court was certainly contrary to the provisions of Order 21, Rule 66. Objections were raised before the auction was held, the Court for reasons best known to it did not decide the said objections and rejected the objections holding that as the sale had already taken place, the objections have become infructuous. Objections were raised before the auction was held, the Court for reasons best known to it did not decide the said objections and rejected the objections holding that as the sale had already taken place, the objections have become infructuous. The Court, as observed, had no jurisdiction to confirm the sale before deposit of the money. According to Code, it has no jurisdiction to extend time for making deposit either under rule 84 or rule 85. If these illegalities are seen in a wider angle, it would clearly show that the Court was not aware of the legal provisions and in some hot haste or being influenced by the counduct of the judgment-debtor or being influenced by the pendency of the execution, it passed the order which was contrary to law and could not be supported. ( 8 ) IN the matter of, Balram v. Ilam Singh, 1996 AIR SCW 3539 : ( AIR 1996 SC 2781 ), the Supreme Court considering the provisions of Rules 85 and 90 of Order 21 observed that the requirements of rule 85 of Order 21 that full amount of purchase money must be paid by the purchaser at the execution sale within 15 days from the date of the sale are mandatory. Its non-compliance would render the sale proceeding a complete nullity, requiring the executing Court to proceed under rule 86 and the property is to be re-sold, unless the judgment debtor satisfies the decree by making payment before re-sale. Failure to deposit purchase money as per rule 85 is not a mere material irregularity in the sale so as to attract rule 90 of Order 21. The consequences of the auction sale becoming a nullity on failure to deposit full sale price as/per rule 85 cannot be averted on the plea that the short-fall in the deposit was occasioned by mistake of the Court in calculation of the amount. The Court also considered the provisions of rule 64 of Order 21 and observed that "the provisions in Order 21 relating to sale of property beginning with rule 64 clearly indicate the responsibility of the decree-holder in this behalf and his role in the drawing up of the sale proclamation specifying the amount for the recovery of which the sale was ordered. If the sale proclamation is based on the statement made and verified by the decree-holder, it is open to the decree-holder to claim that he was misled by any mistake of the Court in specification of that amount. The blame, if any, for the mistake lies squarely on the decree-holder and the mistake for which the decree-holder himself is responsible cannot furnish a ground to the decree-holder to avert the adverse consequences on him on his failure to comply with the mandatory requirement of rule 85. The Court further observed that the duty to pay full amount of the purchase money within the prescribed period of 15 days from the date of sale of the property is cast on the purchaser by virtue of rule 85 of Order 21 and, therefore, the entire responsibility to make full compliance of the mandatory provisions is his. In the present case, undisputedly the amount was not deposited either immediately or within 15 days. If the responsibility was of the auction purchaser, then he could not wait for an invitiation from the Court in form of a summons that he was required to make the deposit. The Court below failed to appreciate the legal position. ( 9 ) IN the matter of, Gangabai v. Fulchand, AIR 1997 SC 1812 : (1997 AIR SCW 1162), the Supreme Court again had an occasion to consider the import and effect of rules 84 and 85. The Supreme Court, while appreciating the rules of Maharashtra Municipalities (Sale of Distrained or Attached Movable and Immovable Property) Rules, 1967, observed that the rules relating to Court sale provided in Order 21, Rules 84 and 85 are analogous. The Court observed that non-compliance with rules 84 and 85 of Order 21, would render the sale void in the eye of law. The Court further rejected the contention that non-compliance with the aforesaid rule only renders the sale irregular. Following the dictum of the Supreme Court in the matter of, Manilal Mohanlal Shah v. Sardar Sayed Ahmed, AIR 1954 SC 347, the Court observed that the sale would not only be rendered irregular but would be void. If non-observance of rules 84 and 85 makes an auction sale void, then what is void cannot be accepted even if it is not challenged by any party. If non-observance of rules 84 and 85 makes an auction sale void, then what is void cannot be accepted even if it is not challenged by any party. Whenever it is brought to the notice of the Court that the Court has committed an illegality, which is either void or perilously borders voidness then the Court cannot close its eyes to the facts, because it has to do complets justice between the parties. The present is not a case where the non-observance of the rules or provisions of law has not caused injustice. Non-observance of the legal provisions has resulted materially the spirit of justice. If the present is a case where it is brought to the notice of the Court that the order passed by any Court or Tribunal subordinate to it was void, then the higherCourt cannot close its eyes and say that as limitation has run out, the Court has no jurisdiction. What is void is contrary to law and what is contrary to law cannot be allowed to stand. In the opinion of this Court, where the sale is challenged on the ground of material irregularity alone, then the limitation of 60 days, as provided in Article 127 would apply but where it is brought to the notice of the Court that the sale was void or nullity, the question of limitation would not arise and the Court would be free to say that by its act it would not permit any body to gain something or cause loss to others. ( 10 ) THE order impugned dated 20-12-96 in the opinion of this Court shows absolute non-application of mind. The lower Court has observed that the objections raised by the judgment-debtors were rejected on 5-1-95, therefore, similar objections could not be raised under Order 21, rules 84, 85 and 86. It is unfortunate that the Court, while referring to the order sheet dated 5-1-95 did not care to see the application on which this order was passed. By this order dated 5-1-95, the judgment-debtors' objections under Order 21, Rule 66 were overruled holding that such objections became infructuous as the sale had already taken place. The Court lost sight of the fact that the objections which were filed prior to the sale could not be in relation to illegality, irregularity or fraud of the sale. By this order dated 5-1-95, the judgment-debtors' objections under Order 21, Rule 66 were overruled holding that such objections became infructuous as the sale had already taken place. The Court lost sight of the fact that the objections which were filed prior to the sale could not be in relation to illegality, irregularity or fraud of the sale. The Court below in a very casual, cursory and cavaliar manner observed that the auction sale was conducted or the proceedings were drawn in accordance with rules 84 and 85. The Court lost sight of the fact that there was absolute violation of rules 84 and 85. If the Court was of the opinion that the stage of rule 86 did not arise, then if it was brought to the notice of the Court that the mandatory provisions of rules 84 and 85 were not observed, then it should have immediately taken proceedings under rule 86 by forfeiting the amount deposited by the auction-purchaser after defraying the expenses for auction. The lower Court was alive to the situation that the auction amount required to be deposited under rule 84 was not deposited immediately nor the amount required to be deposited under rule 85 was deposited within 15 days. If all these illegalities were brought to the notice of the executing Court, then the Court, if had read the provisions in their true spirit, would not have passed such an order. In the opinion of this Court, the order passed by the learned Court below cannot be upheld either on facts or on the legal foundation. The order deserves to be and is accordingly set aside. The sale effected on 9-2-94/10-2-94 is set aside/quashed. The amount deposited by the auction-purchaser on 25-4-95 and 5-5-95 cannot be forfeited under rule 86 because prior to the said deposit the sale had become a nullity, and the auction-purchaser was directed by the executing Court to deposit the said amount. The amount so deposited by the auction purchaser be refunded back to him immediately, if he makes an application for refund. The amount so deposited by the auction purchaser be refunded back to him immediately, if he makes an application for refund. ( 11 ) AS the sale effected on 9/10-2-94 is being set aside, it is directed that the trial Court after observing the provisions of rule 65/66 of order 21 shall proceed to auction the property and if occasion arises for conduction of the auction sale, then it shall see that the provisions of rules 84 and 85 are observed and in default, proceedings under rule 86 are drawn. ( 12 ) THE appeal is allowed. No costs. Parties are directed to appear before the trial Court on 16-3-98. The registry is directed to remit the records immediately so as to reach the said Court on or before the said date. Appeal allowed. .