M. Swarna and anr. Vs. State Bank of India, Warangal Branch and ors. - Court Judgment

Excerpt:
- - similarly, rule 85 mandates that the balance of 75% amount shall be paid 'before the court closes on 15th day, from the sale of property'.for best of the explanations also, the time for deposit of the balance amount cannot be extended, beyond what is stipulated under the rule. even otherwise, payment through demand draft, issued by a bank, is treated as authenticated and reliable. a reading of the entire judgment discloses that, an important condition, as to deposit of the decretal amount along with the application, was treated as not essential, in case the liability under the decree, stood satisfied. 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. it means that even where the deposit of the amount mentioned in rule 89 is made either defectively or in shortfall;l. narasimha reddy, j.1. the 1st respondent filed o.s. no. 87 of 1997 against respondents 2 to 6 for foreclosure of mortgage. the outstanding liability was rs. 3,59,180/-. a preliminary decree was passed on 19-06-1998. this was followed by a final decree dated 27-09-2001 in i.a. no. 344 of 1999. e.p. no. 30 of 2001 was filed to bring the mortgaged property, i.e. ac.4.11 guntas of land in sy. no. 62/aa2 of gouraram village to sale. in the auction held on 01-03-2006, the 7th respondent emerged as the highest bidder, for rs. 10,47,375/-.2. the appellants filed eano.17 of 2006, under rules 89 and 92 of order xxi c.p.c. they pleaded that the schedule property was purchased by them on 27-02-2004 from respondents 3 to 6, and that they did not have the knowledge of the mortgage, created by their vendors. they made a deposit of 5% of the decretal amount, and have taken out a demand draft for rs. 3,59,180/-, which was payable under the decree to the 1st respondent i.e. the decree-holder, and filed the same along with the e.a. appellants prayed for setting aside the auction sale in favour of the 7th respondent. the e.a was mainly contested by the 7th respondent. it was urged that the application filed by the appellants is untenable, on the ground that clause (a) of rule 89(1) of order xxi c.p.c., was not complied with. according to them, taking out a demand draft in the name of the decree-holder, or the executing court, does not amount to deposit of the amount, contemplated under clause (b) thereof. the executing court accepted the plea of the 7th respondent and dismissed the e.a., through order, dated 09.08.2007. hence, this appeal.3. sri g. vidyasagar, learned counsel for the appellants contends that the appellants complied with both the clauses of rule 89(1) of order xxi c.p.c., and that the executing court did not raise any objection, when the decretal amount was tendered through a demand draft, particularly when it is conferred with the power under rule 92(3) of order xxi, to direct the rectification of any defects. it is also submitted by the learned counsel that the executing court has not only received the demand draft, presented by the appellants, for the decretal amount, by treating it as a compliance, but also addressed letters to the concerned bank, to extend the validity for the period, during which, the e.a. was pending, and in that view of the matter, there was no basis, or justification for the dismissal of the e.a.4. sri k. ramakrishna reddy, learned senior counsel appearing for the 7th respondent, on the other hand, submits that the conditions stipulated under rule 89 of order xxi c.p.c., are mandatory and any non-compliance with them, would invariably lead to dismissal of the application. he contends that the appellants understood, that the deposit of the amount must be into the court, in cash, and the same is evident from the deposit of 5% of the sale amount, under clause (a) of the said rule. according to the learned senior counsel, the decretal amount must be deposited into the court, as required under clause (b), and it is for the decree-holder, to take steps thereafter, for withdrawal of the same. he submits that the rule does not permit, or authorize a third party, to make payment straightaway, to the decree-holder, either by way of cash, or through demand draft. another facet of the argument of the learned senior counsel is that the appellants cannot be said to be 'interested third parties', since the sale in their favour is hit by section 52 of the transfer of property act (for short 'the act), apart from other provisions of law.5. both the learned counsel have cited precedents, in support of their respective contentions.6. the 1st respondent obtained a preliminary, and thereafter, a final decree, in a mortgage suit filed by it, against respondents 2 to 6. since the amount was not paid, steps were initiated for sale of the mortgaged property. the sale of the property in favour of the appellants is, long after the final decree dated 27-09-2001. the sale, no doubt, is hit by the principle of lis pendens, under section 52 of the act. apart from that, a transferee of a mortgaged property would only acquire equity of redemption. however, any defect or imperfection in the transfer does not extinguish the interest of the appellants. having interest in a property is not the same thing as acquiring title. whether as persons, who parted with the consideration for sale, or those, who acquired equity of redemption, the appellants can certainly fit into the description of 'persons claiming interest in the property', which occurs in rule 89 of order xxi c.p.c. therefore, the objection raised on behalf of the 7th respondent, that the appellants cannot be treated as 'persons interested'; is difficult to be accepted.7. it is a matter of record that the decretal amount, as it stood on the date of auction, dated 01-03-2006, was rs. 3,59,180/-, and that the 7th respondent offered to purchase it, for rs. 10,47,375/-. the 7th respondent made the initial deposit of 25%, and the balance, within the time stipulated, under the relevant provisions of law, i.e., rules 84 and 85 of order xxi. in the applications filed by them, the appellants invoked the rules 89 and 92 of order xxi c.p.c. rule 89 reads as under:order xxi, rule 89: application to set aside sale on deposit.:(1) where immovable property has been sold in execution of a decree, any person claiming an interest in the property sold at the time of the sale or at the time of making the application, or acting for or in the interest of such person, may apply to have the sale set aside on his depositing the court,:(a) for payment to the purchaser, a sum equal to five per cent of the purchase-money, and(b) for payment to the decree-holder, the amount specified in the proclamation of sale as that for the recovery of which the sale was ordered, less any amount which may, since the date of such proclamation of sale, have been received by the decree-holder.(2) where a person applies under rule 90 to set aside the sale of his immovable property, he shall not, unless he withdraws his application, be entitled to make or prosecute an application under this rule.(3) nothing in this rule shall relieve the judgment-debtor from any liability he may be under in respect of costs and interest not covered by the proclamation of sale.8. the conditions to be complied with, while filing an application under this provision are mentioned in clauses (a) and (b) of sub-rule (1). a sum equivalent to 5% of the purchase money, and the amount specified in proclamation of sale, which, in turn, is the amount due under the decree, must be deposited. that the facility created under rule 89 is different from the one, provided for under rule 90; is evident from sub-rule (2).9. the petitioners made a deposit of 5% of the purchase money, thereby complied with sub-rule (1)(a) of rule 89, of order xxi. to this extent, there is no controversy. so far as the amount specified in the proclamation of sale is concerned, he has taken out a demand draft for rs. 3,59,180/-in the name of the 1st respondent. the name of the court is also mentioned in the demand draft dated 23-03-2006. the whole controversy turns around the question, does the tendering of the amount through demand draft amounts to compliance with sub-rule (1) (b), of rule 89? here itself, it needs to be mentioned that the application was filed within the period of limitation.10. order xxi of c.p.c., prescribes a comprehensive and compendious procedure, to be followed in the execution of decrees. it covers a wide range of situations, and the size of its text is more than that of a comprehensive enactment.11. during the course of execution of decrees, particularly those, for recovery of money, deposit of amounts becomes essential. the relevant rules of order xxi not only prescribe the mode of deposit, but also the time, within which, the deposit must be made. the timeframe as regards some deposits is very stringent and no deviation from, or relaxation of, the rule, is permitted. for instance, rule 84 of order xxi mandates that the person declared as highest bidder, in an auction of an immovable property conducted in execution proceedings, shall deposit 25% of the amount 'immediately after declaration'. even a single working day cannot intervene the declaration of the highest bid, and deposit of 25% of the bid amount. similarly, rule 85 mandates that the balance of 75% amount shall be paid 'before the court closes on 15th day, from the sale of property'. for best of the explanations also, the time for deposit of the balance amount cannot be extended, beyond what is stipulated under the rule.12. reference can also be to the payment of money, made outside the court. rule 1 of order xxi prescribes the modes of payment. rule 2 indicates the method of certification of payment. while no time is stipulated for a decree-holder, to certify the payment or adjustment, an application by a judgment-debtor to record satisfaction is required to be filed within 30 days from the date of payment. sub-rule (3) of rule 3 (sic. 2) of order xxi ordains that, any payment, which is not certified or recorded, shall not be recognized by an executing court.13. if rule 89 of order xxi is to be understood as the one, operating with such stringency and rigor: as regards mode of deposit, no exception can be taken to the order under appeal. a perusal of the provision, however, leaves something more to be said in this regard. two aspects become important: the first is about the mode of payment, and the second is about the power of the court, to correct deficiencies, if any. except stating that the amounts mentioned in clauses (a) and (b) of rule 89(1) of order xxi c.p.c., shall be deposited in court, the rule does not stipulate any particular method of deposit. rule 1 of order xxi has some bearing in this regard. it reads,order xxi, rule 1: modes of paying money under decree.- (1) all money, payable under a decree shall be paid as follows, namely:(a) by deposit into the court whose duty it is to execute the decree, or sent to that court by postal money order or through a bank; or(b) out of court, to the decree-holder by postal money order or through a bank or by any other mode wherein payment is evidenced in writing; or(c) otherwise, as the court which made the decree, directs.(sub-rules (2) to (4) are not reproduced, since they are not treated as relevant, in this limited context).14. three types of payment i.e., by deposit into the court, sending by postal money order, or through bank, are treated, on par with each other. in a way, it can be said that order xxi c.p.c., recognizes these three modes as proper, unless the court itself has directed any other mode of payment. the ultimate object is to ensure that the decretal amount is paid into the court. as long as the proper and accurate payment is ensured, it should not matter, as to in what manner it was paid. even otherwise, payment through demand draft, issued by a bank, is treated as authenticated and reliable.15. learned senior counsel for the 7th respondent appears to have undertaken considerable study and search on the subject. he placed reliance upon a judgment rendered by the calcutta high court in jotish chandra ghose v. bireswar haldar 1935 (39) cwn 829. that was a case where the judgment-debtor has paid the decretal amount, after the sale was conducted in a mortgage decree. a person claiming interest in the property, filed an application under order xxi rule 89 c.p.c. he deposited 5% of the amount, as provided for, under clause (1) (a) of rule 89. however, the decretal amount was not deposited, on the ground that it was already paid by the judgment-debtor to the decree-holder. an objection was raised by the auction-purchaser, as to the maintainability of the application under rule 89, on the ground that the decretal amount was not paid. the executing court rejected that objection and allowed the application, holding that 5% amount payable to the auction-purchaser was deposited and there was no necessity to deposit the decretal amount, since the judgment-debtor has already paid that amount, so much so, the satisfaction of the decree was reported. appeal filed against the said order was dismissed.16. a revision was filed before the calcutta high court. the contention of the petitioner therein, was to the effect that the amount contemplated under rule 89 must be paid in cash and the same was noted. a reading of the entire judgment discloses that, an important condition, as to deposit of the decretal amount along with the application, was treated as not essential, in case the liability under the decree, stood satisfied. the revision was dismissed. apart from not supporting the contention advanced by the 7th respondent, the said judgment, to certain extent, suggests the other way. if an application under rule 89 was allowed, without there being any payment under clause (1)(b) thereof, there must not be any difficulty, if the amount is paid through a demand draft.17. learned senior counsel has also cited a judgment of the calcutta high court in rahim bux v. nundo lal gossami ilr 1887 cal 321, which is of the year 1887. the calcutta high court was dealing with a provision analogous to rule 89 of order xxi c.p.c., viz., section 622 of the erstwhile code of civil procedure. along with an application to set aside an auction sale, a government promissory note for the decretal amount was tendered and no cash was paid. naturally, it was held that there is non-compliance with the provisions, since the amount covered by a promissory note cannot be equated to deposit of money as such. that is not the case here.18. in mohd. yunus v. mohd. mustaqim : (1983) 4 scc 566, arising under rule 2 of order xxi c.p.c., their lordships took the view that, unless the certification is done in accordance with the procedure prescribed under rule 2, it cannot be taken into account. the purport of this provision has already been mentioned and no certification was done, as pleaded in this case. in that case, the deposit as required under clause (1)(a) of rule 89 was made, but the amount paid under clause (b) was totally inadequate. the justification pleaded to the effect that the decree-holder had given up a part of the mortgage claim, was not taken into account, and the application was not entertained. it was held that adjustment or payment for satisfaction of the decree was not certified as per rule 2 of order xxi c.p.c.19. in the instant case, the entire amount was deposited. the objection raised by the 7th respondent was, only as to the mode of payment. this court is of the view that the payment of the decretal amount made by the appellants through demand draft accords with rule 1 and thereby satisfies rule 89(1)(b) of order xxi c.p.c.20. assuming that there is any defect in payment of the amount, it needs to be seen, whether an executing court is conferred with any power to rectify errors, or defects, if any, in this regard. in the preceding paragraphs, reference was made to certain provisions, which do not permit of any deviation, or relaxation. though rule 89 of order xxi c.p.c., may appear to be an independent provision, a perusal of rule 92 makes it clear that, both the provisions would operate in tandem. specific reference is made in rule 92(2), to an application made under rule 89. it reads: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, 2002.21. apart from stipulating the time within which the application under rule 89 must be made, the provision confers power upon the executing court to correct deficiencies that may occur, on account of clerical or arithmetical mistakes, on the part of the depositor. the executing court is also conferred with the power to grant time within which such mistakes or deficiencies can be rectified. it means that even where the deposit of the amount mentioned in rule 89 is made either defectively or in shortfall; the same does not result in the dismissal of the application, or rejection of the relief. on the other hand, the executing court is conferred with the power to enable the applicant to rectify the deficiencies and defects.22. in the instant case, the executing court did not raise any objection, when the appellants tendered the amount covered by rule 89(1)(b), through demand draft. had the tendering or depositing of the amount been defective, the application could have been returned, in which event, the appellants would have corrected it and represented the application after compliance or filed a fresh one, within the period of limitation. it is not as if the i.a., was filed on the last date of limitation. it is a matter of record that the executing court had not only treated the payment made by the appellants as valid, but also has proceeded to address letter to the concerned bank for extension of the validity of the demand draft, when it was found that the i.a., was not decided, within the period of validity of the draft. the matter did not stop at that. a second renewal of the demand draft became necessary. when a letter was addressed by the executing court to the bank, in this regard a reply was received to the effect that the second renewal is not possible and that the amount may be converted into fdr. after necessary correspondence, the amount was converted into fdr. it, therefore, emerges that the executing court is conferred with the power, to correct the deficiencies, if any, in the application filed under rule 89 of order xxi c.p.c., particularly as regards the method and adequacy of deposits.23. let it be further assumed that, the demand draft submitted by the appellants ought not to have been received at all by the executing court. the fact, however, remains that, by the time the executing court rejected the e.a., the period of limitation for filing application under rule 89 expired. it is settled principle of law, that the delay or defect committed by a court, cannot defeat the rights of the parties. the maxim actus curiae neminem gravabit, gets attracted.24. in ambati raghavalu v. mova venkamma air 1962 a.p. 334 a division bench of this court dealt with a case which arose under rule 85 of order xxi c.p.c. it has already been observed that the time stipulated under rule 85 of order xxi, does not permit of any relaxation. in that case, the auction- purchaser approached the executing court on the last date of limitation stipulated under rule 85 for making deposit of balance of sale consideration. the executing court, however, took one day for issuing the challan. therefore, the deposit had to be made one day after the expiry of the period stipulated under rule 85. the sale was upheld by this court by applying the maxim, referred to above, though the sale otherwise stood cancelled and set aside by operation of rule 85 of order xxi c.p.c. the case on hand is more appropriate, for the application of the principle underlying that maxim.25. an important fact to be noted is that the appellants did not intend to save or avoid payment of the amount. depositing of the decretal amount straight into the court, in fact, would have enabled them to save the money spent towards charges for demand drafts. their anxiety in taking the demand draft, appears to be, to ensure easy and ready payment of the amount to the decree-holder.26. for the foregoing reasons, the c.m.a. is allowed, and the order under appeal is set aside. consequently, e.a. no. 17 of 2006 shall stand allowed. it shall be open to the 7th respondent to withdraw 5% of the amount deposited by the appellants, and to the decree-holder, to withdraw the amount paid towards the decretal amount.27. there shall be no order as to costs.