Order 21 Rule 84 of CPC: The auction purchaser, after declaration, shall immediately deposit 25% of purchase money.

In the present case ‘there is non-compliance of the mandatory provisions of Order 21 Rules 84 and Rules 85, therefore the sale was vitiated - the Apex Court viewed.

                                          

        The present case is a case where Rajendra Morathi & Ors were appellants in High Court of Madhya Pradesh at Jabalpur which set aside the order passed by the lower Appellate Court and restored the order passed by the Executing Court.

        The appellant, in the  Supreme Court, Gas Point Petroleum India Limited was respondent before the Executing Court. Smt. Gayatri Agarwal,  Plaintiff/ Decree Holder instituted suit against National Ginni Enterprises (Judgment Debtor) with respect to the  agreement of  providing  L.P.G gas. The trial Court passed a decree to provide L.P.G gas as per the conditions of the agreement and directed the Judgment Debtor to pay Rs. 2,38,450/- plus Rs. 23,500/-  if the  JD is unable to implement the said order. The JD failed to pay. So  Decree Holder approached the Executing Court to fulfil the order. The Executing Court decided to sell the property of JD. Property was auctioned and sold in favour of Rajendra Morathi. The appellant, Gas Point Petroleum India Limited filed objection before the Executing Court that the property was purchased from National Ginni Enterprise in 1991. Therefore they are in possession of the said land. The appellant filed an application under Order XXI Rule 90 to set aside sale on ground of irregularity or fraud. The Executing Court overruled the objections and rejected.

        The appellant filed Miscellaneous Civil Appeal before the Court of Additional District Judge. The lower Appellate Court allowed the appeal and set aside the order of the Executing Court and remitted the matter back to the Executing Court to rehear the parties and pass fresh order in accordance with law. Thereafter the appellant preferred appeal before the High Court against the said order of lower Appellate Court who set aside the order of the Executing Court. the High Court set aside the order of the lower Appellate Court by observing that the appellant/respondent no.1 has failed to plead and establish the nature of irregularity or fraud committed in sale and therefore stated there was no fault in the order of the Executing Court.

          Therefore feeling aggrieved and dissatisfied with the judgment and order passed by the High Court, the appellant/original respondent no. 1 preferred the present appeal.

          The learned counsel appearing on behalf of the appellant has vehemently submitted that High Court has committed a serious error in allowing the writ petition and quashing and setting aside the well-reasoned order passed by the lower Appellate Court.

          He submitted that there was breach of Order 21 Rule 64 and Order 21 Rule 84/85 of Civil Procedure Code and therefore, due to non-compliance of the aforesaid provisions the sale has been vitiated.

          He submitted that the property was put to auction and therefore the auction purchaser was required to deposit 25% of sale amount immediately.

          There was non-compliance of Order 21 Rule 84 because the auction purchaser deposited 25% of the amount after 15 days which was required to pay immediately after declaration.

          There was violation of Order 21 Rule 85 of CPC because the auction purchaser deposited 75% of the sale consideration in sixteen days. The auction purchaser was required to pay within fifteen days.

          The learned counsel prayed to allow the appeal by relying upon the Order 21 Rules 64,84,85 and 86 and also relying upon the decisions of Supreme Court in the cases of Manilal Mohanlal Shah and Ors. vs. Sardar Sayed Ahmed Sayed Mahmad and Anr. (1955) 1 SCR 108 and Rosali V. Vs. TalcoBank and Ord. (2009) 17 SCC 690.

          As per Rule 84, every sale of immovable property the person declared to be the purchaser shall pay immediately after such declaration deposit of twenty-five percent on the amount of his purchase-money and in default of such deposit, the property shall forthwith be resold.

And as per Rule 85, the full amount of purchased money payable shall be paid by the purchaser into Court before the Court closes on the  fifteenth day from the sale of property.

          The learned counsel for appellant further submitted that the High Court has not properly appreciated the fact that the property in question was purchased by the appellant in 1999 from the judgment debtor and at that time the property in question was not the subject matter of civil suit.

          The civil suit for specific performance was filed only in respect of the LPG Gas agreement. The interim injunction filed by decree holder/original plaintiff in 1999 was not the subject matter of property in question.

          It is also submitted that at the time when the property was auctioned the judgment debtor was not the owner of the property in question. The property was purchased by the appellant by the registered sale deed in 1999.

          Therefore, it is submitted that High Court has committed a serious error in observing that the appellant purchased the property despite the injunction granted by the Trial Court and that the appellant cannot be permitted to raise the objection as he had purchase the property despite the injunction.

          On the other side, the learned counsel on behalf of respondent also submitted his argument and prayed for dismissal of appeal. He submitted that High Court has committed no error in restoring the order passed by the learned Executing Court and overruling the objections raised by the appellant.

          He submitted that the appellant purchased the property in question during the pendency of the suit and the injunction was in operation.

          Therefore, the appellant shall not be entitled to raise objection thereafter and prayed to set aside the sale on the ground that the property in question was purchased by it.

          He further submitted that even the alleged non-compliance of Order 21 Rules 64, 84 and 85 were not raised before the Executing Court and therefore, the High Court rightly observed that the same cannot be permitted to be raised subsequently.

          After hearing the respective counsels, the Hon’ble Supreme Court, on the fact of the case observed that the auction purchased did not deposited 25% of the amount as required under Order 21 Rule 84 immediately i.e on the day on which he was declared purchaser on 18.10.2011 but deposited on 3.11.2011. Even the balance 75% of the amount was not been paid as required under Order 21 Rule 85 i.e within fifteen days from the date of auction. Therefore there was non-compliance of Order 21 Rule 84 and 85 of CPC.

          To give light on the above facts, the Hon’ble Court found proper to refer and consider the decisions of the below cases.

          Manilal Mohanlal Shah and Ors. vs. Sardar Sayed Ahmed Sayed Mahmad and Anr.

It was observed and held that the provision regarding the deposit of 25% of the amount by the purchaser other than the decree holder is mandatory and the full amount of the purchase money must be paid within fifteen days, the Court has discretion to forfeit the deposit, and there the discretion ends but the obligation of the Court to resell the property is imperative. A further consequence of non-payment is that the defaulting purchase forfeits all claim to the property.

          The decision of Manilal Mohanlal Shah’s case fell for consideration in the case of Rosali V in interpreting the word ‘immediately’ in Order 21 Rule 84. The said decision states that provisions of Rules requires the deposit of 25% 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 as mandatory and upon non-compliance with these provisions there is no sale at all.

          Hence after applying the laws laid down in the decisions above, the Apex Court viewed ‘there is non-compliance of the mandatory provisions of Order 21 Rules 84 and Rules 85, therefore the sale was vitiated.

          In view of the above facts and circumstances, the Hon’ble Supreme Court passed judgment, quashing and setting aside of judgment and order of High Court and Executing Court and restored the order passed by the Lower Appellate Court.  However the Court gave liberty to respondent to get back the amount deposited by him in the Executing Court.

 

Coram:

Justice M.R.Shah and Justice C.T Ravikumar

Case:

Gas Point Petroleum India Limited vs Rajendra Marothi & Ors. ( Civil Appeal no. 619 of 2023.

Date of Judgment: 10.02.2023

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