Page 1 1

REPORTABLE

IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO. 8652 OF 2012

[Arising out of SLP (Civil) No. 34402 of 2011]

Ram Karan Gupta .. Appellant

Versus

J. S. Exim Ltd. and Ors. .. Respondents

J U D G M E N T

K. S. Radhakrishnan, J.

1.Leave granted.

2.This matter arises in execution and this appeal has been

preferred by one of the judgment debtors challenging the common

final judgment and order dated 11.11.2011 passed by the High

Court of Delhi in C. M. (M) No. 1093 of 2011 and E.F.A. No. 15 of

2011.

Page 2 2

3.Decree holders and judgment debtors are co-sharers of a

property bearing No. 1-87, Ashok Vihar, Delhi (hereinafter referred

to as the ‘suit property’). Late Rameshwar Dass Gupta filed a suit

for partition of the suit property and after passing a preliminary

decree, a final decree was passed and the suit property was ordered

to be sold in public auction and sale proceeds were directed to be

distributed among the shareholders.

4.Decree holders filed execution petition and vide order dated

20.11.2009, the auction sale was scheduled to be held on 9.1.2010.

However, objector/J.D.2 Shri Ram Karan Gupta (appellant herein)

moved an application seeking stay of auction sale scheduled to be

held on 9.1.2010 and a joint application was moved by the decree

holders and judgment debtors, wherein it was disclosed that J.D.2

had agreed to purchase the suit property, as such, the auction sale

be adjourned. Later on, J.D.2 failed to comply with the terms and

conditions of the Compromise and, therefore, a fresh process for

auction sale was issued and the auction sale was scheduled to be

held on 4.7.2010. Due to various reasons, it did not materialize.

Later, auction sale was scheduled to be held on 8.10.2010 and the

Page 3 3

auction was completed and the auction purchaser M/s J.S. Exim

Ltd. (1

st

respondent herein) was found to be the highest bidder for a

bid amount of Rs.9.60 crores. The auction purchaser deposited

Rs.2.40 crores by way of 27 demand drafts of even date towards

25% of the bid amount. The Court Auctioneer placed on record the

record of the auction proceedings held on 8.10.2010.

5.Later, the auction purchaser moved an application for

depositing the remaining 75% of the sale price/bid amount of the

suit property and the application was allowed and 75% of the sale

amount was deposited by the auction purchaser on 23.10.2010 in

the State Bank of India, Tees Hazari Court, Delhi.

6.The auction purchaser, later, moved an application under

Order 21 Rules 94 and 95 of the Code of Civil Procedure (for short

‘CPC’) for confirmation of sale. J.D.2, the appellant herein, then

sought for cancellation of the auction held on 8.10.2010 stating

that the auction purchaser had failed to deposit 25% of the bid

amount on completion of the auction sale proceedings. Further, it

was also pointed out that the auction purchaser had enclosed the

drafts dated 7.10.2010 issued by the Indian Overseas Bank,

Page 4 4

Chennai, but the said bank drafts had not been enclosed by the

Court Auctioneer with her report. It was also contended that the

auction was vitiated due to the violation of the mandatory

provisions of Order 21 Rule 84 and 85 CPC.

7.The auction purchaser refuted all those contentions and

submitted that 25% of the bid amount was deposited on the date of

auction after conclusion of the auction sale proceeding and the

remaining 75% of the bid amount was deposited on 23.10.2010.

Further, it was pointed out that the auction purchaser had got

prepared the demand drafts of Rs.2.50 crores in the name of the

Court Auctioneer. But, later on, it was disclosed by the Court

Auctioneer that the demand drafts should be issued in the name of

the competent authority, consequently, the auction purchaser got

prepared the said demand drafts on 8.10.2010 and handed over the

same to the Court Auctioneer. Further, it was also pointed out

that the words occurring “shall pay” and “immediately” do not mean

that the 25% of the bid amount should be paid at the fall of the

hammer. Further, it was also pointed out that the auction sale

Page 5 5

could be set aside only on the ground of material irregularity or

fraud that had resulted in substantial injury to the applicant.

8.The Executing Court elaborately considered the various

contentions raised by the parties and perused the documents and

took the view that the auction purchaser had deposited 25% of the

bid amount as mandated by Order 21 Rule 84 CPC. Further, it

was also held that the remaining 75% of the bid amount was also

deposited by the auction purchaser on 23.10.2010 in terms of

Order 21 Rule 85 CPC. The Court, therefore, rejected the objection

raised by the appellant/judgment debtor and confirmed the

auction, vide its order dated 24.3.2011.

9.The appellant/judgment debtor, aggrieved by the said order,

preferred an appeal being E.F.A. No. 15 of 2011 and C.M. (M) No.

1093 of 2011 before the High Court of Delhi. Before the High

Court, contention was raised that the auction purchaser had not

complied with the mandatory requirements of Order 21 Rules 84

and 85 CPC and that 25% of the bid amount was not deposited on

the fall of the hammer and, consequently, the entire sale

transaction was void and liable to be set aside. Further, it was also

Page 6 6

stated that since the appellant was one of the family members, he

should have been permitted to get the sale executed in his favour,

since he had a pre-emptive right and he was ready and willing to

deposit the amount of Rs.9.60 crores, so as to avoid the sale.

10.The High Court considered the various contentions raised by

the parties and concurred with the views expressed by the

Executing Court that the auction purchaser had complied with

Order 21 Rules 84 and 85 CPC. The High Court noticed that the

auction purchaser had deposited 25% of the bid amount as

mandated by Order 21 Rule 84 CPC and that he had also paid the

remaining 75% of the bid amount within the statutory period, in

terms of Order 21 Rule 85 CPC. The High Court, therefore, upheld

the order of the trial Court confirming the sale and directed the

parties to execute documents of title in favour of the auction

purchaser. Aggrieved by the same, this appeal has been preferred.

11.Shri Ranjit Kumar, learned senior counsel appearing for the

appellant, submitted that the auction purchaser had not complied

with the mandatory provisions of Order 21 Rules 84 and 85 CPC,

inasmuch as he did not deposit 25% of the bid amount immediately

Page 7 7

on the fall of the hammer. It was pointed out that 25% of the bid

amount was deposited only on 11.10.2010 and non-compliance of

the above mentioned statutory provisions has vitiated the auction

sale. In support of his contentions, reliance was placed on the

judgments of this Court in Manilal Mohanlal Shah and Others v.

Sardar Sayed Ahmed Sayed Mahmad and another AIR 1954 SC

349 and Balram son of Bhasa Ram v. Ilam Singh and others

AIR 1996 SC 2781. Learned senior counsel submitted that the

appellant had preferred an application on 1.12.2010 before the

Executing Court to allow the appellant to deposit the entire amount

of the sale, after deduction of his one-forth share in the property,

and handover the possession to him. Learned senior counsel

submitted that the application was filed before the confirmation of

sale, but was not considered by the Executing Court. Learned

senior counsel submitted that only if the application is allowed

under Order 21 Rule 92(2) CPC, the appellant could deposit the

amount within the time stipulated in the said provision. Learned

senior counsel submitted that the Executing Court has committed

an error in confirming the sale before entertaining the application

and allowing the same, so that the appellant could have deposited

Page 8 8

the entire amount. Learned senior counsel submitted that even

now the appellant is willing to pay the entire amount deposited by

the auction purchaser including interest. Further, it was also

submitted that the appellant is willing even to pay Rs.1 crore more

so that he can save the property where he is residing. Learned

senior counsel also placed reliance on a Constitution Bench

judgment of this Court in Dadi Jagannadham v. Jammlu

Ramulu and Others (2001) 7 SCC 71 and pointed out that there is

no strict time limit in depositing the amount and the question of

deposit arises only after the application is allowed. Learned senior

counsel pointed out that rationale in P. K. Unni v. Nirmala

Industries and others (1990) 2 SCC 378 and the views expressed

in that judgment that Order 21 Rule 92(2) CPC prescribed a period

of limitation, was found to be incorrect in Jammlu Ramulu (supra).

Learned senior counsel also placed reliance on M. Noohukan v.

Bank of Travancore and another (2008) 11 SCC 161 and

submitted that this Court, in the similar circumstances, had

extended the time for depositing the amount. Learned senior

counsel submitted that, under such circumstances, the prayer for

depositing the amount, as stated above, be allowed.

Page 9 9

12.Shri C. A. Sundram, learned senior counsel appearing for the

respondent, submitted that this Court shall not interfere with the

concurrent findings rendered by the Courts below. Learned senior

counsel submitted that the auction purchaser deposited 25% of the

bid amount on 8.10.2010 and further deposited the remaining

amount i.e. 75% of the bid amount on 23.10.2010. Learned senior

counsel pointed out that the mandate of Order 21 Rules 84 and 85

CPC was complied with in letter and spirit and the Court Auctioneer

was satisfied that the entire amount had been paid. Learned

senior counsel submitted that the word “immediately” occurring in

Order 21 Rule 84 CPC was expanded by this Court in Rosali V. v.

Talco Bank and others AIR 2007 SC 998. It was pointed out

that, in the present case, 27 drafts of Rs.2.40 corores had been paid

to the Court Auctioneer on 8.10.2010, which is reflected in the

report of the Court Auctioneer dated 8.10.2010. The balance

amount was also deposited in accordance with Order 21 Rule 85

CPC. Learned senior counsel submitted that there is no bona fide

in the offer made by the appellant and, if, had any genuine interest

for avoiding the sale, the amount offered should have been

Page 10 10

deposited before the confirmation of sale and within the time

stipulated in Order 21 Rule 92(2) CPC.

13.We are in full agreement with the order passed by the

Executing Court as well as the High Court that the auction

purchaser had deposited 25% of the amount on 8.10.2010. When

the auction is for such a large amount, running in crores of rupees,

nobody can expect the auction purchaser to pay the amount in

cash on the fall of the hammer. So far as the instant case is

concerned, facts would reveal that the auction purchaser had paid

Rs.2.40 crores, may not be in cash, but by way of drafts on

8.10.2010 and the balance amount i.e. 75 % of the bid maount was

also paid on 23.10.2010, consequently, in our view, the auction

purchaser had complied with the provisions of Order 21 Rules 84

and 85 CPC.

14.We may, in this connection, refer to the judgment of this Court

in Talco Bank (supra), wherein this Court has extended the

meaning of the term “immediately” which occurs in Order 21 Rule

84 CPC, as follows:

Page 11 11

“30.The term “immediately”, therefore, must be

construed having regard to the aforementioned

principles. The term has two meanings. One, indicating

the relation of cause and effect and the other, the

absence of time between two events. In the former sense,

it means proximately, without intervention of anything,

as opposed to “immediately.” In the latter sense, it

means instantaneously.

31.The term “immediately”, is thus, required to be

construed as meaning with all reasonable speed,

considering the circumstances of the case. (See

Halsbury’s Laws of England, 4

th

Edition, Vol. 23, para

1618, p. 1178).”

Learned senior counsel appearing for the appellant, as we have

already indicated, submitted that the Executing Court should have

allowed his application dated 1.12.2010 since he preferred that

application within 60 days of the date of sale, but could not deposit

the amount since the application filed in terms of Order 21 Rule

92(2) CPC was neither dealt with nor allowed. Order 21 Rule 89

CPC, it may be noted, gives a final opportunity to the judgment

debtor to save his property by setting the sale aside before the

confirmation upon the terms of satisfying the decretal debt and of

paying compensation to the auction purchaser. Rules 89 to 92 of

Order 21 deal with setting aside of sale. When a property is sold in

execution of a decree and an application for setting aside the sale

Page 12 12

can be made under those provisions by the persons affected on the

grounds mentioned therein. Such an application has to be made

within the prescribed period of limitation, the provisions mentioned

therein are in the nature of concession and those provisions must

be strictly complied with before a sale is set aside before

confirmation. On setting aside the sale under Order 21 Rule 89 CPC

the property continues to be the property of the judgment debtor.

15.This Court in Tribhovandas Purshottamdas Thakkar v.

Ratilal Motilal Patel and others AIR 1968 SC 372 held that the

rule is intended to confer a right upon the judgment debtor, even

after the property is sold, to satisfy the claim of the decree holder

and to compensate the auction purchaser by paying him 5 per cent

of the purchase-money. In Challamane Huchha Gowda v. M. R.

Tirumala and another (2004) 1 SCC 453, this Court held that it

gives a final opportunity to put an end to the dispute, at the

instance of the judgment debtor before the sale is confirmed by the

Executing Court and enables him to save his property. Order 21

Rule 89 CPC is, therefore, intended to (i) to save the judgment

debtor from the threatened deprivation of his property, (ii) to satisfy

the claim of the decree holder and (iii) to compensate the auction

Page 13 13

purchaser. Rule 89 of Order 21 CPC also applies to a sale in

execution of a decree for payment of money and an order of sale of

property under the Partition Act, 1893 is a deemed decree under

the Code and, therefore, an application for setting aside sale in

execution of such decree is maintainable. It also applies to a

decree passed in terms of an award in a Partition suit, so also to a

sale in execution of mortgage decree. Order 21 Rule 92 CPC

provides for confirmation of sale, as also setting aside the sale,

which reads as follows:

“92. Sale when to become absolute or be set

aside.- (1) Where no application is made under Rule 89,

Rule 90 or Rule 91, or where such application is made

and disallowed, the court shall make an Order

confirming the sale, and thereupon the sale shall become

absolute:

Provided that, where any property is sold in

execution of a decree pending the final disposal of any

claim to, or any objection to the attachment of, such

property, the court shall not confirm such sale until the

final disposal of such claim or objection.

(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 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

Page 14 14

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.

(3) No suit to set aside an Order made under this

rule shall be brought by any person against whom such

Order is made.

(4) Where a third party challenges the judgment-

debtor’s title by filing a suit against the auction-

purchaser, the decree-holder and the judgment-debtor

shall be necessary parties to the suit.

(5) If the suit referred to in sub-rule (4) is decreed,

the Court shall direct the decree-holder to refund the

money to the auction-purchaser, and where such an

order is passed the execution proceeding in which the

sale had been held shall, unless the Court otherwise

directs, be revived at the stage at which the sale was

ordered.

Sub-rule (1) of Rule 92 deals with cases where no application to set

aside the sale is made or such an application is made and

disallowed. In all these cases, the Court shall make an order

confirming the sale. Sub-rule (2) of Rule 92 covers those cases

Page 15 15

where an application for setting aside is made and allowed or in an

application under Rule 89 requisite deposit has been made, in all

such cases, the Court is bound to set aside the sale.

16.A Constitution Bench of this Court in Jammulu Ramulu

(supra) had occasion to consider the scope of Order 21 Rule 92(2)

and Rule 89 CPC. Overruling P. K. Unni (supra), this Court held as

follows:

“15. A plain reading of Order 21 Rule 92 CPC

shows that the court could either dismiss an application

or allow an application. Order 21 Rule 89 CPC prescribes

no period either for making the application or for making

the deposit. The Limitation Act also prescribes no period

for making a deposit. However, Article 127 of the

Limitation Act prescribes a period within which an

application to set aside a sale should be made. Earlier,

this was 30 days, now it has been enhanced to 60 days.

Unless there was a period prescribed for making a

deposit, the time to make the deposit would be the same

as that for making the application. This is so because if

an application is made beyond the period of limitation,

then a deposit made at that time or after that period

would be of no use.

16. Normally, when the legislature wishes to

prescribe a period for making a deposit, it does so by

using words to the effect “no deposit shall be made after

… days” or “a deposit shall be made within … days” or

“no application will be entertained unless a deposit is

made within … days”. Order 21 Rule 92(2) CPC does not

Page 16 16

use any such expressions. The relevant portion of Order

21 Rule 92(2) CPC reads as follows:

“92. (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, … the

court shall make an order setting aside the sale:”

Thus Order 21 Rule 92(2) CPC is only taking away

discretion of the court to refuse to set aside the sale

where an application is made and allowed and the

deposit has been made within 30 days from the date of

sale. It is thus clear that Order 21 Rule 92(2) CPC is not

prescribing any period of limitation within which a

deposit has to be made.

17. Viewed in this context the intention of the

legislature in extending the period under Article 127 of

the Limitation Act may be seen. It is very clear from the

Statement of Objects and Reasons, which have been set

out hereinabove, that the period under Article 127 of the

Limitation Act was extended from 30 days to 60 days in

order to give more time to persons to make deposits. The

legislature has noted that the period of 30 days from the

date of sale was too short and often caused hardships

because judgment-debtors usually failed to arrange for

money within that period. The question then would be

whether by merely amending Article 127 of the Limitation

Act the legislature has achieved the object for which it

increased the period of limitation to file an application to

set aside sale.”

The Constitution Bench held that all that Order 21 Rule 92(2) CPC

provides is that if the deposit is made within 30 days from the date

of sale and an application is filed then the court would have no

Page 17 17

discretion but to set aside the sale. The Court held that that does

not mean that if the deposit is made after 30 days the court could

not entertain the application. If the deposit is made beyond the

period of 30 days, but within the period of 60 days, then it will be

within the discretion of the court whether or not to grant the

application.

17.Law Commission in its 89

th

report, para 42.35, page 219, Law

Commission report 139

th

report paras 3.1 to 3.6 and 4.1 to 4.5

considered the period of limitation of thirty days for depositing the

amount to set aside sale as specified in sub-rule (2) of Rule 92 and

suggested enlargement of period of sixty days so as to be consistent

with Section 127 of the Limitation Act. Following that the second

proviso to sub-rule (2) of Rule 92, as inserted by the Code of Civil

Procedure (Amendment) Act, 2002, clarified that the amendment

would also apply to all those cases where the period of thirty days

within which the deposit was required to be made had not expired

before the commencement of the Amendment Act, 2002. The

amendment which came into force w.e.f. 01.07.2002 extends the

period of deposit up to sixty days, which is in conformity with

Page 18 18

Section 127 of the Limitation Act, as amended by the Code of Civil

Procedure (Amendment) Act 1976.

18.In Challamane Huchha Gowda (supra), the Court was

primarily dealing with the question as to whether a mode of

application has been prescribed for making an application for

setting aside the sale. The Court noted that 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. The above view expressed by

certain High Courts was found favour by this Court in

Tribhovandas Purshottamdas Thakkar (supra) and this Court

held that Order 21 Rule 89 CPC does not provide that the

application in a particular form shall be filed to set aside the sale.

19.We notice, in this case, there was no reference at all to the

provisions of Order 21 Rule 89 in the application filed by the

appellant on 1.12.2010, be that it may, even then the appellant had

not complied with the mandatory requirements of depositing the

Page 19 19

amount. Clause (a) of Sub-rule (1) of Rule 89 of Order 21 requires

the applicant to deposit in Court 5 per cent of the purchase money

for payment to the auction purchaser. Deposit of the requisite

amount in the Court is a condition precedent or a sine qua non to

an application for setting aside the execution of sale and such a

amount must be paid within a period specified in the rule and if the

deposit is made after the time limit, the application must be

dismissed. The deposit made under Rule 89 of Order 21 CPC

should be unconditional and unqualified and the decree holder or

the auction purchaser should be able to get the amount at once.

20.We have already indicated that the rule is in the nature of a

concession shown to the judgment debtor, so he has to strictly

comply with the requirements thereof and a sale will not be set

aside unless the entire amount specified in rub-rule (1) is deposited

within 60 days from the date of the sale and, if it is beyond 60 days,

the Court cannot allow the application. We have already found that

the appellant-judgment debtor did not pay the amount within the

stipulated time and he only made an application on 1.12.2010

without depositing the amount and hence the Court cannot

Page 20 20

entertain such an application and bound to confirm the sale which,

in this case, the Court did on 23.10.2010.

21.We, therefore, find no error in the judgment and orders of the

Executing Court as well as the High Court and the belated offer

made by the appellant for depositing the amount now cannot be

entertained and the same is rejected.

22.The appeal, therefore, lacks in merits and the same is

dismissed, with no order as to costs.

………………………………..J.

(K.S. Radhakrishnan)

………………………………… ..J.

(Dipak Misra)

New Delhi,

December 3, 2012