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Disposition
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  • Section 5 of the Limitation Act
  • Section 5, Subsection 2 of the 1983 Income Tax Act
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Cites
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Citation Codes
Equivalent Citations
citation codes
Case Number
Disposition
Advocates
Judges
Acts
  • Section 5 of the Limitation Act
  • Section 5, Subsection 2 of the 1983 Income Tax Act
Smart Summary

Factual and Procedural Background

The case arises from execution proceedings on a money decree against the petitioner-judgment-debtor. A proclamation of sale was issued on 19-07-1992 and the scheduled immovable properties were auctioned on 26-08-1992, with the final court bid being offered by Respondent 1 on 28-08-1992.

Within one month, on 25-09-1992, the judgment-debtor paid the entire decretal amount and costs to the decree-holder (Respondent 2) and filed objections requesting that the execution proceedings be closed and the sale not be confirmed. The executing court eventually ordered the judgment-debtor to pay the statutory five-per-cent solatium to the auction-purchaser; Respondent 1 refused to accept it and instead filed an application under Order 21 Rule 92 CPC for confirmation of sale.

On 24-07-1993 the judgment-debtor moved for his earlier objections to be treated as an application under Order 21 Rule 89 CPC and, in the alternative, filed a separate Rule 89 application along with a plea for condonation of delay. The executing court accepted the objections as a valid Rule 89 application, found all statutory deposits satisfied, set aside the auction sale, and closed the execution.

Respondent 1’s appeal succeeded before the first appellate court, and the High Court dismissed the judgment-debtor’s revision, holding that neither the objections nor the later application complied with Order 21 Rule 89 and that limitation was fatal. The present appeal challenges that High Court judgment.

Legal Issues Presented

  1. Whether the objections/memo filed by the judgment-debtor on 25-09-1992, together with timely statutory deposits, constitute a valid “application” under Order 21 Rule 89 CPC to set aside the auction sale.
  2. Consequently, whether the executing court was correct in setting aside the sale under Order 21 Rule 92(2) CPC.

Arguments of the Parties

The opinion does not contain a detailed account of the parties' legal arguments.

Table of Precedents Cited

Precedent Rule or Principle Cited For Application by the Court
Raoji Baburao v. Bansilal Narayan Marwari, AIR 1919 Bom 130 Deposit alone is insufficient; a separate application under Order 21 Rule 89 is necessary. Referred to as representing the “strict” view; ultimately not chosen.
R. Venkatasubba Rao v. K. Narayana Rao, AIR 1922 Mad 83 Same “strict” view that deposit cannot be treated as an application. Cited illustratively.
Ram Autar v. Sheo Piarey Lal Pandey, AIR 1925 Oudh 411 Strict view requiring a formal application. Cited illustratively.
Pachiayae v. Vallimuthu Velan, AIR 1925 Mad 639 Strict view. Cited illustratively.
Jyotish Chandra Sikdar v. Surendra Nath Das, AIR 1939 Cal 153 Deposit challan itself can be treated as an application. Cited as part of the “liberal” view accepted in principle.
Mahboob Khan v. Sk. Majid Husain, AIR 1939 All 241 Tender for deposit implies an application; no third requirement exists. Cited as liberal view.
Pallipurayil Asan Kutti v. Mukkolakkal Koyaman Kutti, AIR 1937 Mad 342 Money deposit treated as application. Cited as liberal view.
Kishun Lal v. Babuain Hardevi Kuar, AIR 1946 Oudh 45 Prayer to set aside sale is implicit in making the deposit. Cited as liberal view.
Parmanand Verma (Dr) v. Satnarain Prasad, AIR 1952 Pat 99 Petition plus deposit, though lacking express prayer, suffices. Cited as “third” category analogous to present facts.
Mst. Hirania v. Sm. Ram Piari, AIR 1950 All 367 Application to deposit money implies request to set aside sale. Cited as analogous authority.
Maruti Shidalappa Kamble v. Shivappa Mallappa Chaugule, AIR 1967 Bom 39 Purshis with deposit is sufficient; no specific form mandated. Cited as supporting liberal approach.
Behari Lall v. Gopal Krishna Pathak, AIR 1972 Pat 347 Request to accept challan necessarily seeks setting aside of sale. Cited as supporting liberal approach.
Pratap Kishore Patnaik v. Rama Chandra Patra, AIR 1969 Ori 278 Similar liberal view. Cited illustratively.
Durga Prasad Singh v. Ram Lakhan, AIR 1995 All 160 Similar liberal view. Cited illustratively.

Court's Reasoning and Analysis

The Supreme Court focused on the text of Order 21 Rule 89 and its linkage with Rule 92(2). The Court observed that:

  • Rule 89 prescribes only two substantive conditions for a judgment-debtor: (i) deposit of five per cent of the purchase money for the auction-purchaser, and (ii) deposit of the decretal amount for the decree-holder.
  • The rule does not prescribe any particular form for the accompanying application; even a memo that prays for setting aside the sale is adequate.
  • Once both monetary conditions are met within thirty days of sale, Rule 92(2) makes it mandatory for the court to set aside the sale after notice to affected parties.
  • In the present case, the decretal amount was admittedly paid to the decree-holder on 25-09-1992—well within thirty days—and the solatium was subsequently deposited in court when the auction-purchaser refused to accept it. Thus both statutory deposits were completed in time.
  • The memo of 25-09-1992 explicitly objected to confirmation of sale; treating it as a Rule 89 application causes no procedural prejudice and accords with the liberal judicial view recognised in several precedents.
  • Merely because the objections did not cite Rule 89 or were not in a particular format could not defeat substantive compliance, especially when execution jurisprudence aims at enforcement of decrees, not creation of technical hurdles.
  • Accordingly, the executing court’s decision to set aside the sale was “perfectly in tune with the Code,” and the contrary views of the appellate court and High Court ignored crucial, undisputed facts.

Holding and Implications

Holding: The appeal is allowed; the judgments of the High Court and the first appellate court are set aside, and the order of the executing court setting aside the auction sale and closing the execution proceedings is restored.

Implications: The decision clarifies that a timely deposit satisfying both limbs of Order 21 Rule 89, accompanied by any document that manifests an intention to set aside the sale, is sufficient. It underscores that procedural formalities should not override substantive compliance in execution proceedings, thereby safeguarding judgment-debtors from technical forfeiture of property when statutory deposits are duly made. No new precedent is created, but the ruling reinforces the liberal interpretative line of earlier authorities.

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    Challamane Huchha Gowda v. M.R Tirumala And Another

    S. Rajendra Babu, J.— Leave granted.

    2. In execution of a decree the executing court brought the properties owned by the petitioner-judgment-debtor for sale. Proclamation was published on 19-7-1992. On 26-8-1992 the scheduled properties were put up for auction. The final bid was offered by Respondent 1 in court on 28-8-1992. On 25-9-1992 the petitioner-judgment-debtor paid the entire decretal amount together with the cost to Respondent 2 decree-holder accompanied by a memorandum of objections to confirmation of sale. A memo was also filed praying to close the execution proceedings. On 30-10-1992 another memo was filed in the executing court reporting the payment of the decree amount. Then the executing court directed the petitioner-judgment-debtor to pay solatium to Respondent 1 auction-purchaser. The executing court also noted that Respondent 1 auction-purchaser was not ready to accept the solatium amount. In the meanwhile, on 13-11-1992 Respondent 1 auction-purchaser filed an interlocutory application under Order 21 Rule 92 CPC for confirmation of sale. On 24-7-1993 the petitioner-judgment-debtor filed an application to treat the earlier objection dated 25-9-1992 as an application under Order 21 Rule 89 CPC. However a separate application was also filed under Order 21 Rule 89 CPC with a prayer for condoning the delay. The execution court held that the objection filed by the petitioner-judgment-debtor on 25-9-1992 could be treated as application under Order 21 Rule 89 CPC. Predominantly noting the fact that the petitioner-judgment-debtor had paid the entire decree amount and that the sale was yet to be confirmed, the executing court set aside the sale. Accordingly, the execution proceeding was closed.

    3. On appeal preferred by Respondent 1 auction-purchaser, the first appellate court reversed the order passed by the executing court. Aggrieved by the findings of the first appellate court, the petitioner-judgment-debtor moved a civil revision petition before the High Court. The High Court found that an objection can never be treated as an application within the meaning of Order 21 Rule 89 or 90; that the later application filed is barred by limitation; that Section 5 of the Limitation Act is not applicable in the instant case; that the deposit was not made within the prescribed date; that there is no evidence to the effect that the value of the property is more than the bid/purchase price; that the question of adequacy of the sale price is irrelevant as it is outside the scope of Rule 89 of Order 21. For these reasons the revision petition was dismissed. This judgment is impugned before us.

    4. The only question that requires our consideration in this case is whether the setting aside of sale by the executing court is correct or not. Under Order 21 Rule 89(1) CPC an application to set aside sale under Rule 89(1) can be filed. The said provision reads as under:

    “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 in 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.”

    5. The follow-up action to Rule 89(1) is provided under Rule 92(2) of Order 21, which reads as follows:

    “92. (1)***
    (2) 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 thirty 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.”

    6. In Raoji Baburao v. Bansilal Narayan Marwari AIR 1919 Bom 130, R. Venkatasubba Rao v. K. Narayana Rao AIR 1922 Mad 83 (1), 1922 MWN 171, Ram Autar v. Sheo Piarey Lal Pandey AIR 1925 Oudh 411 and Pachiayae v. Vallimuthu Velan AIR 1925 Mad 639, 1925 MWN 175 where the judgment-debtor deposited the entire decretal amount, cost and compensation in court but could not file an application to set aside sale and his contention that the deposit of money itself could be treated as an application to set aside sale was rejected. Diametrically opposite view has been expressed in several decisions which we may briefly notice.

    7. In Jyotish Chandra Sikdar v. Surendra Nath Das AIR 1939 Cal 153 the Court treated challan deposited by the judgment-debtor under Rule 89 as an application. In Mahboob Khan v. Sk. Majid Husain AIR 1939 All 241, 1939 All LJ 97 the tender for deposit of money in court itself was held to be an application for the reason that the presentation of the tender form itself clearly shows the intention of the judgment-debtor to set aside the sale. Here the Court also found that Rule 89 only insists for two things: (a) deposit for decree-holder, and (b) deposit for the purchaser by way of compensation. The Court clearly said that there is no third requirement of an application under the rule. Money deposit itself was treated as an application in Pallipurayil Asan Kutti v. Mukkolakkal Koyaman Kutti AIR 1937 Mad 342, (1937) 1 MLJ 658. In Kishun Lal v. Babuain Hardevi Kuar AIR 1946 Oudh 45, 1945 OWN 372 the Court was of the opinion that: (AIR pp. 46 & 47)

    “The prayer that an auction sale should be set aside is implicit in the making of the deposit. … We do not think that the deposit in order to be valid must necessarily be made along with the application.”

    In the view we propose to take, we need not examine which of these two views is correct.

    8. There is a third view taken in situations arising as in the present case. In Parmanand Verma (Dr) v. Satnarain Prasad AIR 1952 Pat 99 the judgment-debtor deposits the decretal amount and compensation along with a petition, but with no express prayer to set aside the sale. Here the Court ruled that in such circumstances the petition as a whole has to be considered, otherwise there would be no reasonable meaning to such an application. So is the decision in Hirania v. Ram Piari AIR 1950 All 367, 1950 AWR 164 wherein an application to deposit money in court itself was treated as an application to set aside the sale. The Bombay High Court insisted upon an application made under Order 21 Rule 89(2) in Raoji Baburao v. Bansilal case AIR 1919 Bom 130 but in Maruti Shidalappa v. Shivappa Mallappa Chaugule AIR 1967 Bom 39 it treated purshis along with money deposited in the court as an application to set aside sale. The Court noted that though Order 21 Rule 89 CPC requires an application to be made for setting aside the sale, nothing is stated in the rule regarding the mode of application and then held that purshis contains an implicit prayer for setting aside the sale and the absence of a formal application does not amount to non-compliance with the provision. In Behari Lall v. Gopal Krishna Pathak AIR 1972 Pat 347, 1972 BLJR 576 the High Court ruled that (AIR p. 348, para 6)

    application by judgment-debtor whereby a prayer was made for passing the challan for deposit of requisite money, by necessary implication, there was a prayer to do justice by setting aside the sale.

    Similar view was taken in Pratap Kishore Patnaik v. Rama Chandra Patra AIR 1969 Ori 278 and Durga Prasad Singh v. Ram Lakhan AIR 1995 All 160.

    9. Execution is the enforcement by the process of the court of its orders and decrees. This is in furtherance of the inherent power of the court to carry out its orders or decrees. Order 21 CPC deals with the elaborate procedure pertaining to the execution of orders and decrees. Sale is one of the methods employed for execution. Rule 89 of Order 21 is the only means by which a judgment-debtor can escape from a sale that has been validly carried out. The object of the rule is to provide a last opportunity to put an end to the dispute at the instance of the judgment-debtor before the sale is confirmed by the court and also to save his property from dispossession. Rule 89 postulates two conditions: they are depositing: (1) of sum equal to five per cent of the purchase money to be paid to the purchaser, (2) of the amount specified in the proclamation of sale less any amount received by the decree-holder since the date of such proclamation, in the court. If these two conditions are satisfied the court shall make an order for setting aside the sale under Rule 92(2) of Order 21 CPC on an application made to it. In other words, then there will be compliance with the court's order or decree that is sought to be executed. Because the purpose of Rule 21 is to ensure the carrying out of the orders and decrees of the court, once the judgment-debtor carries out the order or decree of the court, the execution proceedings will correspondingly come to an end. It is to be noted that the Rule does not provide that the application in a particular form shall be filed to set aside the sale. Even a memo with prayer for setting aside sale is sufficient compliance with the said Rule. Therefore, upon the satisfaction of the compliance with conditions as provided under Rule 89, it is mandatory upon the court to set aside the sale under Rule 92. And the court shall set aside the sale after giving notice under Rule 92(2) to all affected persons.

    10. In the case on hand, it is not disputed that within the stipulated period of one month from the date of final bid in court, the petitioner-judgment-debtor paid the decree amount to the decree-holder and also filed a memo for setting aside the sale in the form of objections. The executing court noted this aspect. By this payment the requirement under Rule 89(1)(b) of Order 21 was fulfilled. It is also noted that Respondent 1 auction-purchaser refused to accept the solatium and he subsequently, filed an application for confirmation of sale. Meanwhile, the executing court ordered for the deposit of solatium with the court. This deposit complied with the second requirement under Rule 89(1)(a) of Order 21. Admittedly, on 25-9-1992 the petitioner-judgment-debtor filed his objections to the sale and also paid the entire decree amount together with the cost to Respondent 2 decree-holder. The factum of the payment of entire decree amount to the decree-holder with cost was not looked into by the first appellate court or by the High Court nor did it attach any value to the memo of objections for setting aside sale. It is also a settled position of law that a mere non-mentioning or wrong mentioning of a provision in an application is not a ground to reject an application. Since there is no bar in treating the objection (filed in the present case) as an application for setting aside the sale, the setting aside of sale by the execution court is perfectly in tune with the Code. In this view of the matter, it is not necessary to look into other aspects agitated by the contesting parties nor to look into the authorities cited before us. Accordingly, the order of the High Court affirming that of the first appellate court is set aside and the order of the executing court is restored.

    11. Appeal allowed accordingly.

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    Challamane Huchha Gowda v. M.R Tirumala And Another
    (Dec 8, 2003)