1. The challenge by means of this first appeal under Order 43 Rule 1 of the Code of Civil Procedure, 1908 (CPC) is to the impugned order dated 17.2.2010 by which the application of the respondent No.2 herein under Order 21 Rule 90 CPC was accepted and the auction sale proceedings in execution of a money decree was set aside.
2. The facts of the case are that respondent No.1/finance company advanced a loan to one M/s. Shama Airways Private Limited. On failure of the said company to repay the dues, a suit for recovery was filed against the said M/s. Shama Airways Pvt. Ltd. under Order 37 CPC impleading therein three other defendants who were the directors and guarantors. This suit was ultimately decreed ex-parte in favour of the respondent No.1 company. However, before the suit was decreed, the respondent No.2 herein had moved an application under Order 1 Rule 10 CPC for being impleaded in the suit on the ground that he had purchased the rights in the suit property from the defendants/judgment debtors. This application was however dismissed and which resulted in the respondent No.2 filing the suit for declaration, injunction etc. claiming rights to the suit property. Interest in the property was claimed by the respondent No.2 under an agreement to sell dated 27.2.1998. It was also claimed that respondent No.2 was in actual physical possession of the property inasmuch as the judgment debtors/defendants in the suit filed by the respondent No.1 for recovery had in fact delivered possession to the respondent No.2 herein under the agreement dated 27.2.1998. In this suit, the respondent No.2 was successful in getting an injunction order dated 31.5.2004 restraining the respondent No.1/finance company from in any manner creating third party interest in the property. The respondent No.1 company, however, after the suit under Order 37 CPC was decreed exparte, filed execution proceedings and in such proceedings the suit property, in spite of the order of the Civil Court dated 31.5.2004, was auctioned and was purchased by the present appellant. The respondent No.2 thereafter filed objections in such execution under Order 21 Rule 90 read with Section 151 CPC (the same would also be under the relevant provisions from Order 21(97) to Order 21(106) CPC) for setting aside the auction sale proceedings and which auction sale proceedings have been set aside by the impugned order, inter alia being in violation of provision of Order 34 Rule 14 proviso CPC. Before this Court, learned counsel for the respondent No.2 also states that auction sale proceedings are liable to be set aside because they were in violation of the injunction order dated 31.5.2004 passed in favour of the respondent No.2 in the suit No.171/04 filed by him of the declaration, injunction etc. with respect to the suit property. Learned counsel for the appellant herein has argued in reply that the auction sale proceedings are final and they confer title on the appellant by virtue of provision of sub Rule 3 of Order 21 Rule 90 CPC. It is also argued by the counsel for the appellant that the agreement dated 27.2.1998 was an illegal, fraudulent/manipulated document and therefore no rights have been created in favour of the respondent No.2 by means of such document. It is also argued that auction sale proceedings are also final because the rights under Order 34 Rule 14 proviso CPC can be waived and thus the fact that merely because the auction sale proceedings have taken place in violation of the interim order dated 31.5.2004 in the suit filed by respondent No.2 against the finance company and others, would not mean that auction sale proceedings can be set aside.
3. A resume of the above facts shows that there are highly disputed questions of facts between the parties. These disputed questions of facts include as to whether or not there is a valid agreement dated 27.2.1998 in favour of respondent No.2 herein. If the said agreement is valid, then, whether the auction sale proceedings could have been taken place in violation of Order 34 Rule 14 proviso as also the interim injunction order dated 31.5.2004 passed in suit No.171/04 filed by respondent No.2. There are also other disputed questions of facts as to whether the respondent No.2 had notice of the auction sale proceedings so as to object to the same before the auction sale proceedings were conducted, and which the counsel for the appellant claims that if such objections were not filed, though the auction sale proceedings were known to respondent No.2 may create certain vested rights in favour of the appellant. The impugned order disposed of the application under Order 21 Rule 90 CPC read with Section 151 CPC of the respondent No.2 merely on the basis of the affidavits i.e. the application and reply to such application. In my opinion, this procedure is clearly erroneous because CPC was amended w.e.f. 1.2.1977 by Act No.104 of 1976 whereby all questions as to title of a property which is sold in execution of a decree have to be decided in the execution proceedings itself and not by means of an independent suit. The Legislature has inserted different provisions, and amended some of the existing provisions, laying down the procedure from the provisions of Order 21 Rule 97 to Order 21 Rule 106 CPC and as per which detailed procedure objections in execution by a person who claims right independent to the judgment debtor in the suit in which the decree has been passed have to be decided. The person whose property is sold, if he claims right independent of the judgment debtor or independent of the decree holder, may also seek to get the auction sale proceedings set aside. The provision of Order 21 Rule 101 CPC makes it clear that all questions including questions relating to right, title or interest in the property arising between the parties to a proceeding on an application filed under the relevant provisions will be decided not by a separate suit but in the execution proceedings themselves.
4. Accordingly, it was necessary for the trial Court before it disposed of the objections of the respondent No.2 herein to frame appropriate issues, allow the parties to lead evidence including the right to cross-examine the witnesses of the opposite party and only thereafter decide such objections of the respondent No.2. Counsel for the parties agree to such procedure now being followed by the trial Court.
5. Learned counsel for the respondent No.2 states that he should be permitted to file comprehensive objections including to the auction sale proceedings and which I find to be a very reasonable request inasmuch as like a suit plaint can be amended, surely, objections which have to be dealt with like a suit can also be amended. Accordingly, the respondent No.2 shall on or before 10.7.2011 file its objections to the execution and the auction sale proceedings and which will be treated as amended objections to the objection petition already filed. To such objections, the present appellant will have a right to file the reply and take all such defences as it seeks to take, both in facts and law. On the pleadings being completed in such objection petition, the trial Court will frame such issues as arise between the parties inter alia considering the observations made in the present order. The Executing Court will thereafter allow both the parties to lead their evidence and give right of cross-examination of witnesses of one party to the other party. Both the parties agree that none of the parties will take unnecessary adjournments and in case if such unnecessary adjournments are sought, the trial Court will be entitled to impose heavy costs on the parties taking unnecessary adjournments. It is also agreed between the parties that the trial Court/Executing Court be requested to dispose of the objections of the present respondent No.2 as expeditiously as possible, and to the extent possible within a period of one year from the date it receives the copy of the present order subject to the condition that none of the parties will take any unnecessary adjournments.
6. The appeal is accepted and the impugned order dated 17.2.2010 is set aside. The trial Court will dispose of the objections of the respondent No.2 in accordance with law taking into consideration the observations made in para 4 & 5 above. Nothing contained in today's order or in the impugned order dated 17.2.2010 will be a reflection one way or the other on the merits of the issues which will come up for decision and which will be ultimately decided in the objections of the respondent No.2. Both the parties are fully entitled to take all such defences in facts and law as are permissible to them during the course of hearing. This objection petition will be heard and disposed of in accordance with law.
With the aforesaid observations, the appeal and applications stand disposed of.