Judgment:
Rakesh Kumar Jain, J.
1. This appeal is directed against the order dated 12.11.2005 passed by Addl. District Judge II, Jind, disposing of the objections against the appellant regarding the sale of his property.
2. Brief facts of the case are that M/s S.R. Buildcon India (P) Limited (respondent No. 1), took a loan of Rs. 5,28,200/- from M/s Motor & General Finance Ltd. (respondent No. 2) which was to be returned in 35. instalments. Respondent No. 1 executed a Hire Purchase Agreement dated 3.8.1999 in favour of respondent No. 2. The appellant who is working in a bank signed the agreement as a guarantor, for its due performance. Since the instalments were not being paid, a dispute arose between respondents No. 1 and 2 which was referred to the Arbitrator,' who vide his awaYd dated 19.7.2003, held both respondent No. 1 and the appellant jointly and severaliy liable t6 pay Rs. 4,07,700/- towards unpaid amount as per settlement of account (Mark A-3) produced before the Arbitrator. The Arbitrator also allowed payment of interest @ 2% per month on the amount of Rs. 70,864/- and a sum of Rs. 2,50,000/- towards amount of jeep. Interest @ 18% per annum was ordered to be paid from the date of filing of claim till the date of realization.
3. Pursuant to the award available on the record as Annexure A-2, respondent No. 2 filed an execution application in the Civil Court at Tis Hazari, New Delhi. Since the property of the guarantor/appellant was situated at Jind therefore, an application was moved by respondent No. 2 before the Civil Court at Tis Hazari, New Delhi, for transfer of the execution application to the Civil Courts at Jind. On transfer, the said execution was entrusted to the Court of Sh. A.K. Raghava, Addl. District Judge, II-Jind. On 1.6.2004, the Court passed the following order in the said execution application.
Execution application has been received by way of transfer from the Court of learned Addl. District Judge, Delhi with a Certificate of non-satisfaction of decree. Entrusted to Sh. A.K. Raghava, learned Additional District Judge, Jind for disposal according to law. File be sent. To appear in that Court today itself.
On the same day, the learned Court passed the following order:
Execution received by transfer. It be checked and registered. Now notice of execution he given to JD for 17.7.2004 on filing of the PF etc. within two days.
Thereafter, the following order was passed:
Powerof attorney on behalf of J.Ds filed by Sh. Chander Mohan, Advocate. He requested for a date for consideration in this case. Now to come up on 19.8.2004 for consideration.
On 19.8.2004, the following order was passed by the learned Additional District Judge, Jind:
A date is requested by the learned proxy counsel for JDs for consideration, as original counsel is not available today. The adjournment is not opposed and granted. Now to come up on 11.9.2004 for consideration.
On 11.9.2004, the following order was passed:
Date is requested by the learned Counsel for JD for consideration. Now to come upon 16.10.2004 for consideration.
On 16.10.2004, the following order was passed:
A date is requested by the learned Proxy Counsel for the J.D. Sh. A.K. Batra, Advocate. To file Vakalatnama as Sh. C.M. Baragi, Advocate has joined the service. Now to come up on 2.12.2004 for filing of vakalatnama by Batra, Advocate.
On 2.12.2004, the following order was passed:
None has come present on behalf of J.D. So, warrants of attachment of the property of J.D. be issued for 22.1.2005 on filing of PF and list of property of the J.D. within two days.
On 22.1.2005, the following order was passed:
Now notice be issued to the respondent under Order 21 Rule 66 of C.P.C. On P.F. etc.
Thereafter the case was taken up on 7.2.2005 and the following order was passed:
The application under Order 21 Rule 66 of C.P.C. filed today. Notice of this application be issued to the respondent/J.D. for 16.3.2005 on P.F. etc.
On 16.3.2005, the following order was passed:
Notice has been duly served of the application under Order 21 rule 66 of C.P.C. Now, to come up on 23.4.2005 for further proceedings.
On 23.4.2005 the following order was passed:
Now warrants of sale of property of J.D. be issued as per the following programme on filing of P.F. etc.
Notice at Court At spot Sale Report4.5.2005 16.5.2005 1.8.2005 27.8.2005Now, report be called for 27.8.2005.
4. On 18.7.2005, the appellant filed objections (Annexure A-3) against the attachment pf his House No. 1248, Urban Estate, Jind. He categorically stated in the objections that he Decree Holder malafidely, concealing the true facts from the Court has got attached his sole residential house, who as per the decree was only guarantor and not a loanee and that the sole residential house of the objector in which he is residing is exempted from attachment under Section 60(i)(ccc) of Code of Civil Procedure (in short, C.P.C.)
5. Notice in the application (Annexure A-3) was issued by the Court to the Decree Holder on 20.7.2005 and the following order was passed:
An application/objection to the attachment of property of appellant and another application/objection to the attachment of property of applicant also filed. Notice of both these objections/applications be issued for 23.7.2005.
On 23.7.2005, the following order was passed:
Notice of the objection petition not issued. The same is issued returnable on or before 26.7.2005.
On 26.7.2005, the following order was passed:
Service completed. Reply not filed and a date is requested, which is not opposed and granted. Now, to come up on 30.7.2005 for filing of reply ana arguments.
On the adjourned date 30.7.2005, the Court passed the following order:
Reply to the objection petition filed. Heard. The following issues are hereby framed:
1. Whether the attached house No. 1248 is exempted from attachment, if so to what its effect? OPO
2. Relief:
No other issue is pressed or claimed for or arises. Onus not objected to. Now, to come up on 3.9.2005 for evidence of the objector. PF/DM etc. be filed within 7 days.
Though the case was adjourned to 3.9.2005, but it was taken up on 27.8.2005 in view of the order dated 23.4.2005 and following order was passed:
Warrants of sale has been received back duly executed. Now, to come up on 3.9.2005 the date already fixed in the objection petition for evidence of the objector.
On 3.9.2005, objections to the sale of the property of applicant were filed. Copy was given to other side. Case was adjourned to 1.10.2005 for reply of the application and also for arguments on the same.
On 1.10.2005, reply to the application was not filed and a date was sought which was not opposed. Adjournment was granted and the case was adjourned to 22.10.2005 for reply to the application and argument.
On 22.10.2005, again adjournment was sought and the case was adjourned to 12.11.2005 and on that date, the impugned order was passed.
6. Learned Counsel for the appellant has vehemently contended that the Court below has committed an error which is apparent on the face of the record having not decided the objections (Annexure A-3) filed against the attachment. He contended that, on the objections, the Court below has even framed an issue as to whether the house in dispute is exempted from attachment, if so what is the effect. He further submitted that though the matter was adjourned to 3.9.2005 for evidence but the file was taken up on 27.8.2005 and an order was passed that warrants of sale have been received back duly executed and then the matter was adjourned to 3.9.2005 again for evidence of the objector. He further contended that after recording this order, the Court below has dealt-with the objections filed against the sale and decided the same vide the impugned order. Thus, the objections filed against attachment for which even an issues was framed, remained undecided on the record.
7. Besides this, learned Counsel for the appellant has argued that the auction which has been conducted is contrary to Order 21 Rule 84 and 85 of C.P.C. This is an admitted position on record that the Court auctioneer had auctioned the property on 1.8.2005. On that date, respondent No. 3 Pawan Kumar gave highest bid and deposited 25% of the bid amount and deposited rest of 75% on 27.8.2005. Learned Counsel for the appellant contended that balance 75% was required to be deposited within 15 days from the date when 25% has been deposited. In this regard, he relied upon a judgment of the Supreme Court in the case of Mani Lal Mohan Lal Shah and Ors. v. Sardar Sayed Ahmed Sayed Mahmad and Anr. : (1955) S.C.R. 108 to contend that provision of Order XXI, Rules 84 and 85 of C.P.C. requiring the deposit of 25 percent of the purchase money immediately on the person being declared as a purchaser and the payment of the balance within 15 days of the safe are mandatory and if these provisions are not complied with, then there is no sale at all. He further contends that non-payment of the price on the part of the defaulting purchaser renders the sale proceedings as a complete nullity and the inherent powers of the Court cannot be allowed to circumvent the mandatory provisions of the Code and relieve the purchasers of their obligation to make the deposit. He further cited judgment of the Supreme Court in the case of Balram son of Bhasa Ram v. Ram Singh and Ors. 2 1996 (3) R.C.R. (Civil) 692 in which aforesaid judgment of the Supreme Court in Manilal's case (supra) has been relied upon and it was held that Order 21 Rules 85 is mandatory. He also placed reliance upon the judgments of the Apex Court in the cases of Rao Mahmood Ahmad Khan through their LR v. Ranbir Singh and Ors. : 1995 Supp.(4) S.C.C. 275, Gangabai Gopaldas Mohata v. Fulchand and Ors. : (1997) 10 Supreme Court Cases 387, Sardara Singh (Dead) by LRs and Anr. v. Sardara Singh (Dead) and Ors. : (1990) 4 Supreme Court Cases 90, Shilpa Shares and Securities and Ors. v. National Cooperative Bank Ltd. and Ors. (2007) 12 Scc 165 and the judgment of the Karnataka High Court in the case of Sabulal and Ors. v. Kunnamma and Ors. 2001 (1) CCC 698 to the same effect.
8. As against, this, Mr. Puneet Kansal, learned Counsel for the auction purchaser has vehemently contended that so far as his client is concerned, he should be considered as a bonafide purchaser as the property has been purchased by him in Court auction. He has cited a decision of the Supreme Court in the case of Jang Singh v. Brij Lal and Ors. : A.I.R. 1966 Supreme Court 1631 to contend that act of the Court should do no harm to the litigant. He further submitted that so far as the period of 15 days is concerned, he was informed by the Court auctioneer that he can deposit the balance amount within 30 days. In this regard, he has filed an affidavit in which he has stated that the Court auctioneer had told him that he is required to deposit the rest of the amount within 30 days from the date of auction.
9. In order to support his argument, he also referred to the objections filed by the appellant (Ex.A-6) in para (g) of which the appellant has averred that the Court auctioneer was conniving with the purchaser (respondent No. 3) and had given him 30 days' time to deposit the amount which means that the appellant himself admitted that Court auctioneer had given 30 days time to respondent No. 3 to deposit the balance amount, therefore, respondent No. 3 cannot be blamed for late deposit. However, learned Counsel for the appellant submits that in reply to para (g) of his objections (Annexure A-6), respondent No. 3 has stated that sub para of the objections are wrong and denied which means that respondent No. 3 denies that Court auctioneer had give him 30 days time to deposit the balance.
10. I have given my thoughtful consideration to the contentions raised by both the learned Counsel for the parties and have perused the record.
11. It is an undisputed fact that the appellant is not the borrower but a guarantor. The objections (Annexure A-3) were filed by the appellant against the attachment of the property in dispute on which an issue was framed by the Executing Court as to whether the attached house No. 1248 is exempted from attachment and the case was adjourned to 3.9.2005 for evidence of the objector/appellant. It is also not in dispute that the Executing Court took up the matter on 27.8.2005 i.e. before the adjourned date 3.9.2005 and recorded the order that warrants of sale has been received back duly executed and the case was adjourned again to 3.9.2005 for evidence of die objector. It is also not disputed that the said objections (Annexure A-3) have not been decided by the Executing Court and the property was auctioned on 1.8.2005. It is also transpired from the record that respondent No. 3 purchased die property in auction for a sum of Rs. 7,90,000/- and deposited 25% amounting to Rs. 197,500/- on 2.8.2005 and the balance 75% amounting to Rs. 5,92,500/- on 29.8.2005.
12. In the objections against die sale (Annexure A-6), it was categorically alleged by die appellant that in case balance amount has not been deposited within 15 days, then the sale is liable to be set aside. In this regard, learned court below in para 3 of the impugned order mentioned that no doubt in mis case die amount was deposited by die auction purchaser on 29.8.2005 which should have been deposited by him within 15 days but the reason of delay was the obstruction created by the judgment debtor who was filing frivolous objections.
13. It is pertinent to mention here mat only two objections have been filed by the appellant. The first objection has been filed against the attachment (Annexure A-3) and die second objection has been filed against the sale (Annexure A-6). Admittedly, the first objection raised by die appellant on die issue is as to whether the property could be attached being only a residential house in view of Section 60(i)(ccc) of the C.P.C., has not been decided. Further, admittedly, the sale consideration amounting to 75% has not been deposited by respondent No. 3 in compliance of Order 21 Rules 84 and 85 of the C.P.C. Thus, die question involved in this appeal is as to whether die Executing Court has committed a serious illegality by not deciding the objections against attachement although an issue was framed and evidence was sought before deciding the objections against me sale of the property and whether deposit of 75% of the purchase money by the third party (respondent No. 3) widiin a period of 15 days from the date of deposit of 25% is mandatory in law.
14. In respect of the first question, learned Executing Court has committed a serious illegality which has resulted in manifest injustice to the appellant because in case, the issue framed by the Executing Court as to whether the property is exempted from attachment in terms of provisions of Section 60(i)(ccc) of me C.P.C. decided in favour of the appellant then the question of sale itself does not arise at all. Therefore, in my view, die Executing Court should have decided the objections filed against attachment at die first instance before proceeding with me sale of the property. The unholy haste on the part of the Executing Court ignoring the objections (Annexure A-3) and the proceedings for sale of property is unwarranted, highly objectionable and patently illegal. Therefore, in my view die proceedings carried out by me Executing Court without deciding die objections (Annexure A-3) are non-est in the eyes of law and deserve to be set aside. Even otherwise, the entire proceedings of sale are illegal because admittedly 75% of the amount of sale consideration has not been deposited within 15 days of the date of initial deposit of 25%.
15. In this regard, relevant provisions of Order 21 Rule 84 and 85 of C.P.C. are reproduced below:
84. Deposit by purchaser and re-sale on default-
(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) Whether the decree-holder is the purchaser and is entitled to set off the purchase-money under Rule 72, the Court may dispense with the requirements of this rule.
85. Time for payment In full of purchase-money.
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.
16. Interpreting the aforesaid provisions, the Apex Court, in the case of Manilal Mohanlal (supra), has categorically held that provisions of Order 21 Rules 84 and 85 of C.P.C. requiring the deposit of 25% of the purchase money immediately by a person declared as a purchaser and the payment of balance 75% is required to be paid within 15 days of the sale are mandatory and if these provisions are not complied with, then there is no sale at all. It is held that non payment of price on the part of the defaulting purchaser renders sale proceedings as a complete nullity. The inherent powers of the Court cannot be allowed to circumvent the mandatory provisions of the Code and relieve the purchaser of his obligation to make the deposit. The aforesaid law laid down by the Apex Court has been followed by the Apex Court in the case of Bal Ram son of Bhasa Ram (supra). If the auction purchaser does not deposit the entire required amount within the statutory period, then the auction itself becomes nonest and the entire sale proceedings are a nullity.
17. The argument of learned Counsel for respondent No. 3 he has been misled by the Court Auctioneer who had asked him to deposit the balance amount within 30 days is not well founded. There is no evidence on record from which it can be inferred that the Court Auctioneer had informed respondent No. 3 that balance amount has to be paid by him within 30 days from the date of bid. Even otherwise in the objections (Annexure A-6), the appellant has also pleaded that it is a case of connivance between the Court Auctioneer and the purchaser to deposit the balance amount within 30 days from the date of bid. In the case of Bal Ram (supra), the Apex Court has held that in no case the time provided in Order 21 Rule 85 of C.P.C. can be extended.
18. No judgment to the contrary has been cited by the learned Counsel for respondent No. 3 in this regard.
19. Thus, keeping in view the totality of facts and circumstances of this case, I find that the auction proceedings in which respondent No. 3 has not complied with the mandatory provisions of Order 21 Rule 85 C.P.C. disentitles him to the property in auction and as such the entire auction proceedings are held to be a nullity. Since the objections (Annexure A-3) filed against the attachment of the property have not been decided by the Court below, therefore, the matter is remanded back to the Executing Court to decide the objections (Annexure A-3) in accordance with law.
20. Learned Counsel for respondent No. 3, at this stage, requests that further direction may be issued to the Executing Court to decide the objections (Annexure A-3) within a stipulated time as he had already paid the entire auction money to the decree holder.
21. In view of the facts and circumstances as discussed above, the Executing Court is directed to decide the objections (Annexure A-3) filed by the appellant in accordance with law as soon as possible, preferably within a period of six months from the date of receipt of a certified copy of this order.
22. The parties in person or through their counsel are directed to appear before the Executing Court on 4.5.2009. No costs.