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Nichhattar Singh And Others v. Babu Khan And Others
Structured Summary of the Opinion (Execution — Order 21, Rules 85 & 86 CPC)
Factual and Procedural Background
This second appeal arises from an execution application in which the sale of property of the judgment-debtor (Darbara Singh) was confirmed and an objection petition filed by Milkha Singh was dismissed.
Relevant facts (as stated in the opinion):
- Rukan Din obtained a decree for Rs. 2,400 against Darbara Singh. In execution of the decree land belonging to the judgment-debtor measuring 32 kanals and 2 marlas was attached.
- Subsequently the land was ordered to be auctioned. Auction took place on 19 June 1966. The highest bidder was Babu Khan, who immediately deposited Rs. 900 (one-fourth of the sale price).
- The balance of the sale price was not deposited within the fifteen days prescribed by Rule 85; the balance was not deposited until 25 August 1966.
- Prior to attachment (12 April 1965) Darbara Singh executed a gift deed in respect of his entire land measuring 99 bighas and 16 biswas in favour of Nachattar Singh and Milkha Singh.
- Nachattar Singh and Milkha Singh filed an objection under Order 21, Rule 58 CPC; that objection was dismissed. Their suit under Order 21, Rule 63 was also dismissed.
- Execution proceedings remained stayed for a period; on 16 December 1968 the auction-purchaser applied for confirmation of the sale. Notice was given; Rukan Din had died and his widow and daughters were placed on record as legal representatives.
- The legal representatives of the decree-holder also applied for confirmation and for payment. Milkha Singh filed an objection petition. The trial Court disposed of the three applications by order dated 30 July 1969. Against that order Milkha Singh, Nachhattar Singh and Darbara Singh filed an appeal which was dismissed by the impugned order.
Legal Issues Presented
- Whether the auction sale was a nullity because the auction-purchaser failed to deposit the balance of the purchase-money within fifteen days as required by Rule 85 of Order 21 of the CPC.
- Whether the Court may treat a sale as valid where the time for payment has been extended (expressly or by conduct) and whether such extension or the rule can be waived by parties who benefit from the sale.
- Whether the Court is bound to re-sell the property under Rule 86 when there is default in payment, irrespective of whether any party makes an application to challenge the sale.
- Whether a judgment-debtor who did not object before the executing Court to confirmation of the sale is nevertheless barred from raising the default under Rule 85 at a later stage.
Arguments of the Parties
Appellants' Arguments
- The principal argument raised on behalf of the appellants was that because the auction-purchaser failed to deposit the balance of the sale-price within fifteen days as required by Rule 85 of Order 21, the sale was a nullity and the Court was obligated to order a re-sale under Rule 86.
Respondents' / Lower Courts' Position (as described in the opinion)
- The learned Courts below followed Shahzadi Begum v. Hakim Manohar Lal (AIR 1955 Hyd 110) and V.I Subramanyan Nambudri v. V.K.V Kammathi (AIR 1923 Mad 48), taking the view that where time was extended by the Court with the consent of interested parties the sale was not rendered a nullity.
- The lower Courts relied on the proposition that the requirement in Rule 85 can be waived by persons who stand to benefit by the sale, and they drew an inference of consent (from the judgment-debtor's failure to object to confirmation) to conclude that the delay was with consent.
- It was also argued (by respondents) that because Darbara Singh had not filed any objection before the executing Court to the confirmation of the sale, he was debarred from raising the objection at a later stage.
Table of Precedents Cited
| Precedent | Rule or Principle Cited For | Application by the Court |
|---|---|---|
| Shahzadi Begum v. Hakim Manohar Lal, AIR 1955 Hyd 110 | The proposition that where failure to deposit arises from the judgment-debtor's insistence or conduct (i.e., the Court had ordered money not to be taken till disposal of objection), the auction-purchaser should not be permitted to suffer; and that delay caused by the judgment-debtor cannot be used to set aside the sale. | The Court held this case distinguishable on facts and not applicable here because in Shahzadi Begum the delay was occasioned by the judgment-debtor's own act (an order securing that money should not be accepted). The lower Courts' reliance on Shahzadi Begum was held to be erroneous in the present facts. |
| V.I Subramanyan Nambudri v. V.K.V Kammathi, AIR 1923 Mad 48 | Referenced by lower Court in support of the view that time may be extended and sale not rendered a nullity when circumstances justify it. | The trial Court made reference to this case; the appellate Court found that reliance upon it (together with Shahzadi Begum) was misplaced in the present facts in view of the Supreme Court authority discussed in the opinion. |
| Manilal Mohanlal Shah v. Sardar Sayed Ahmed Sayed Mahmad, AIR 1954 SC 349 | Held that the requirement to deposit 25% immediately and the balance within fifteen days are mandatory; non-compliance means there is no sale at all and the Court must order re-sale under Rule 86. | The Court relied on this Supreme Court decision as decisive: it reaffirmed the mandatory character of Rule 85 and that non-payment renders the sale a complete nullity. The opinion applied this principle to set aside the sale. |
| Haji Imam Ullah v. Mohd Idris, AIR 1943 All 282 | Held that the Court is bound to re-sell the property upon default irrespective of any application being made by a party to challenge the sale. | The opinion treated the observations in this case as a complete answer to the argument that a failure to object earlier barred later challenge; it applied the principle to hold that Rule 85 imposes a duty on the Court to re-sell irrespective of any party's application. |
| Nathu Mai v. Malwa Mal, AIR 1931 Lah 15 | Some observations in this case were used in Shahzadi Begum to suggest Rule 85 might be directory rather than mandatory. | The Supreme Court in Manilal Mohanlal Shah considered Nathu Mai and did not accept the remarks that Rule 85 was merely directory; the present opinion follows that rejection and treats Nathu Mai's contrary comments as not authoritative on that point. |
| A.R Davar v. Jhinda Ram, AIR 1938 Lah 198 | Observations to the effect that the Court has no jurisdiction to extend the time for payment under Rule 85 and must order re-sale under Rule 86. | The opinion notes that the Supreme Court in Manilal Mohanlal Shah approved these observations, and the present Court relied on that position that the Court cannot extend time under Rule 85 but must order re-sale under Rule 86. |
Court's Reasoning and Analysis
The Court's analysis proceeds in the following steps (stated only in the terms used in the opinion):
- The Court considered Rules 85 and 86 of Order 21, CPC, which require (i) payment of one-fourth of the purchase-money immediately upon being declared purchaser, (ii) payment of the balance within fifteen days, and (iii) in default the deposit may be forfeited and the property re-sold (Rule 86).
- The Court reviewed the authoritative Supreme Court decision in Manilal Mohanlal Shah v. Sardar Sayed Ahmed Sayed Mahmad (AIR 1954 SC 349), which held that the provisions requiring the immediate 25% deposit and the balance within fifteen days are mandatory; non-compliance results in there being no sale at all and the Court must order re-sale under Rule 86.
- The opinion accepted the view in Haji Imam Ullah v. Mohd Idris (AIR 1943 All 282), as approved in Manilal, that the Court is bound to re-sell the property upon default irrespective of any application by any party — i.e., the duty to re-sell is automatic on default.
- The Court considered the lower Courts' reliance on Shahzadi Begum (AIR 1955 Hyd 110) and V.I Subramanyan Nambudri (AIR 1923 Mad 48). It distinguished Shahzadi Begum on its facts: in that case the delay was caused by the judgment-debtor's insistence and by an order obtained by the judgment-debtor that the balance not be accepted until disposal of the objection; therefore the purchaser could not be made to suffer. That factual situation is absent in the present case.
- On the facts of the present case the Court found no evidence that the time for payment had been extended with the consent of the interested parties. The sequence of events (sale on 19 June 1966; no extension obtained within the 15-day period; first Court order requiring deposit on 20 August 1966; further order on 25 August 1966 directing deposit within seven days) contained no statement that time had been extended with consent. The trial Court's inference of consent from the judgment-debtor's failure to object to confirmation was held to be erroneous.
- The Court reiterated that Manilal Mohanlal Shah had considered and rejected the view (expressed in Nathu Mai) that Rule 85 is merely directory. The Supreme Court also approved the proposition in A.R. Davar that the Court has no jurisdiction to extend time for payment under Rule 85 and must order re-sale under Rule 86.
- Addressing the contention that a judgment-debtor was debarred from raising the objection because he had not objected earlier, the Court relied on Haji Imam Ullah to hold that Rule 85 places a duty on the Court to re-sell on default irrespective of any application by parties; the sale proceedings become a nullity on default.
- On applying these legal principles to the facts, the Court concluded that there had been a violation of Rule 85 in this case, the sale was a complete nullity, and therefore the Courts below erred in confirming the sale.
Holding and Implications
Holding:
APPEAL ALLOWED; THE SALE IS SET ASIDE
Consequences and direct effects (as stated in the opinion):
- The orders of the Courts below confirming the sale are set aside.
- The applications of the auction-purchaser and the decree-holder are dismissed.
- Considering the circumstances, the parties were ordered to bear their own costs throughout.
The opinion applies established authorities (notably Manilal Mohanlal Shah and Haji Imam Ullah) to conclude that Rule 85 is mandatory and that default renders a sale a nullity; the opinion does not claim to announce any new legal principle beyond applying those authorities to the facts. No broader or novel precedent was asserted in the judgment.
1. This second appeal filed by the judgment-debtor and two others arises out of an execution application in which the sale of property of the judgment-debtor was confirmed and the objection petition of Milkha Singh was dismissed.
2. The facts giving rise to this appeal are not in dispute and are as follows. Rukan Din (who has since died) and obtained a decree for the recovery of Rs. 2,400/- against Darbara Singh and in execution of that decree he got land belonging to the judgment-debtor and measuring 32 kanals and 2 marlas attached. In a subsequent execution application the land was ordered to be auctioned and the sale took place on 19th June 1966. Babu Khan respondent was the highest bidder and he immediately deposited Ks. 900/- being the one-fourth of the sale-price. The balance of the money was, however, not deposited till 25th August 1966. While the property was under attachment Darbara Singh, the judgment-debtor executed a gift deed on 12th April 1965 in respect of his entire land measuring 99 bighas and 16 biswas in favour of Nachattar Singh and Milkha Singh. An objection petition under O. 21, R. 58 of the CPC was filed by Nachhattar Singh and Milkha Singh but this petition was dismissed by the executing Court and the suit brought by them under Order 21, Rule 63, was also dismissed. In view of these proceedings, the execution proceedings remained stayed and ultimately on 16th December 1968 the auction purchaser applied for the confirmation of the sale. Notice of this application was given to the parties concerned but as in the meantime Rukan Din died his widow and daughters were brought on the re cord as his legal representatives. The legal representatives of the decree-holder have also applied for the confirmation of the sale and for the payment of money to them. Milkha Singh, one of the transferees from Darbara Singh, filed an objection petition and all the three applications were disposed of by the trial Court by order dated 30th July 1969. Against this order, besides Milkha Singh who had filed the objection-petition, Nachhattar Singh and Darbara Singh also filed an appeal which was dismissed by the impugned order.
3. On behalf of the appellants the only argument raised was that as the auction-purchaser had failed to deposit the balance of the money within fifteen days as required by Rule 85 of Order 21, the sale was a nullity and the Court was bound to order the re-sale of the property. The learned Courts below following Shahzadi Begum v. Hakim Manohar Lal, AIR 1955 Hyd 110 and V.I Subramanyan Nambudri v. V.K.V Kammathi, AIR 1923 Mad 48 took the view that as the time was extended by the Court with the consent of the interested parties the sale was not rendered a nullity and that the rule can be waived by the persons who stand to benefit by the sale. In order to understand the respective contentions of the parties it is necessary to make reference to Rr. 85 and 86 of Order 21, which are in the following terms:—
“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.
86. 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 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.”
4. These rules came up for interpretation before the Supreme Court in Manilal Mohanlal Shah v. Sardar Sayed Ahmed Sayed Mahmad, AIR 1954 SC 349, and on a review of the entire case law, it was observed as under:—
“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 with 15 days. When there is no sale within the contemplation of these rules, there 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 nullity. The very fact that the court is bound to re-sell 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 purchasers acquired no rights at all”.
5. While considering this question in Manilal Mohanlal Shah's case, AIR 1954 SC 349 the view taken in Haji Imam Ullah v. Mohd Idris, AIR 1943 All 282, which has been cited by the learned counsel for the appellants, was accepted and the observation occurring in this judgment that the Court was bound to re-sell the property upon default irrespective of any application being made by any party to the proceeding was cited with approval.
6. While accepting the view that in case payment was postponed by the consent of the parties, the sale need not be set aside, the learned District Judge relied on Shahzadi Begum's case, AIR 1955 Hyd 110 while trial Court, also made reference to V.I Subramanyan Nambudri's case, AIR 1923 Mad 48. The case of Shahzadi Begum is clearly distinguishable on facts as in that case the failure to deposit the price in the Court on the due date was brought about by the insistence of the judgment-debtor that the balance of the sale-price be not accepted from the auction-purchaser till the disposal of his objection. In view of this it was observed that as petitioner had himself secured an order from the Court that the money should not be taken from the respondent till after the disposal of his objection, the auction-purchaser cannot be blamed or allowed to suffer if he acted on the faith of the judgment-debtor and allowed the period set down in Rule 85 of Order 21 to pass and that the petitioner cannot in such a case be allowed to turn round and claim advantage of the delay in making of the deposit which was occasioned by his own act. This view in Shahzadi Begum's case was taken on the basis of certain observations occurring in Nathu Mai v. Malwa Mal, AIR 1931 Lah 15. In Manilal Mohanlal Shah's case, AIR 1954 SC 349 the Supreme Court specifically considered Nathu Mal's case and did not accept the remarks made therein that the provisions of Rule 85 were merely directory and not mandatory. This being the position, the learned Courts below had erred in relying on Shahzadi Begum's case especially when their attention had been drawn to Manilal Mohanlal's case.
7. Even on facts the observations in Shahzadi Begum's case, AIR 1955 Hyd 110 were not applicable in the instant case. The sale had taken place on 19th June 1966 and the balance of the sale-price was to be deposited within fifteen days of this date. No extension of time was obtained by the auction-purchaser within this period and it was only on 20th August 1966 that for the first time the Court ordered the auction-purchaser to deposit the remaining price and again on 25th August 1966 the Court ordered that the remaining price be deposited within seven days. In neither of these orders is there any mention that the time was being extended with the consent of the parties. From the fact that the judgment-debtor had not objected to the deposit of the money or had not filed any objection to the confirmation of the sale an inference was drawn that the time had been extended with his consent and he, therefore, could not raise any objection to the confirmation of sale. This view is clearly erroneous and the observations made in Shahzadi Begum's case cannot be applied to these facts. Here the delay in depositing the balance of the sale-price has not been brought about by any request of the judgment-debtor or the decree-holder and the judgment-debtor has not benefited as he has not withdrawn the balance of the money which was lying in Court. His failure to file objection to the confirmation of the sale cannot be equated to the having agreed to the deposit of the balance of the sale-price beyond the period provided by the rules. In this connection, it may also be noticed that in Manilal Mohanlal Shah's case, AIR 1954 SC 349 the Supreme Court had approved the observations made in A.R Davar v. Jhinda Ram, AIR 1938 Lah 198, that the Court has no jurisdiction to extend the time for the payment of the balance of the purchase-money under Rule 85 and must order re-sale under Rule 86.
8. As regards the objection that Darbara Singh having not filed any objection before the executing Court objecting to the confirmation of the sale was debarred from raising any objection at this stage the observations made in Haji Imam Ullah's case, AIR 1943 All 282 (Supra) reference to which has already been made, are a complete answer to the argument. Rule 85 places a duty on the Court to re-sell the property in case of dafault irrespective of the fact that no application has been made by any party to the proceedings to challenge the sale. Once there has been a default in the payment of the balance of the amount the sale proceedings become a nullity and the Court is bound to put the property to re-sale.
9. For the reasons stated above, I find that the Courts below had erred in confirming the sale as there had been violation of Rule 85 of Order 21 of the CPC, and the sale was complete nullity. I, therefore, accept this appeal and set aside the orders of the Courts below confirming the sale.
10. The applications of the auction-purchaser and the decree-holder are consequently dismissed. Considering the circumstances of the case, I leave the parties to bear their own costs throughout.
11. Appeal allowed.
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