Sale of Immovable Property

(Order XXI Rule 82-94 of the Code of Civil Procedure, 1908)

SUBJECT: CIVIL PROCEDURE LAW

UNIVERSITY INSTITUTE OF LEGAL STUDIES, PANJAB UNIVERSITY, CHANDIGARH.

SUBMITTED BY:

NAME- DISHA GROVER

CLASS- B.COM LLB (HONS.), “C”

ROLL NO - 129/15

SEMESTER- 5
 TABLE OF CONTENTS

TABLE OF CONTENTS.............................................................................................................................................. 2

EXECUTION ............................................................................................................................................................ 4

SALE AS A MODE OF EXECUTION ........................................................................................................................... 5

SALE GENERALLY (RULE 64-73) ............................................................................................................................... 6

A. POWER OF COURT ................................................................................................................................................6

B. PROCLAMATION OF SALE .......................................................................................................................................6
C. CONTENTS OF PROCLAMATION:-..............................................................................................................................8
D. TIME OF SALE (RULE 68) .......................................................................................................................................8
E. ADJOURNMENT AND STOPPAGE OF SALE ...................................................................................................................8
F. DEFAULT BY PURCHASER ........................................................................................................................................9
G. PURCHASE OF AUCTION BY DECREE-HOLDER OR OFFICER CONNECTED WITH AUCTION .......................................................10

SALE OF IMMOVABLE PROPERTY ......................................................................................................................... 11

A. COURTS COMPETENT TO ORDER SALES ....................................................................................................................11

B. POSTPONEMENT OF SALE .....................................................................................................................................11
C. DEPOSIT BY PURCHASER AND RE-SALE ON DEFAULT ..................................................................................................12
D. BID BY CO-OWNER: RULE 88 ................................................................................................................................13
E. SETTING ASIDE SALE ...........................................................................................................................................13
F. JUDGMENT-DEBTOR HAVING NO SALEABLE INTEREST: RULE 91 ..................................................................................17
G. WHEN SALE BECOMES ABSOLUTE: RULE 92 ............................................................................................................17
H. EFFECT OF SETTING ASIDE SALE: RULE 93................................................................................................................18
1. CERTIFICATE OF SALE: RULE 94 .............................................................................................................................18
I. EFFECT OF SALE: SECTION 65 ...............................................................................................................................19

SOME RECENT CASES ........................................................................................................................................... 19

BIBLIOGRAPHY ..................................................................................................................................................... 20

WEBLIOGRAPHY .................................................................................................................................................. 20

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 TABLE OF CASES

Ryan Babu S/o. Narasimha Rao Vs. B.K.L. Traders rep. by its Proprietor, B. Venkateswarlu, S/o. Venkata Ramanayya and
I. Srinivasa Rao S/o. Rama Rao, 2010(5)ALT217 ........................................................................................................................ 19
A. Venkatachalam v. E.M Zackria, 1987 Supp SCC 124 ..................................................................................................................... 8
Ambati Narasayya v. M. Subba Rao & Anr 1990 AIR 119 .................................................................................................................. 6
Ambika Ranjan Mujumdar v. Manikganj Loan Office, Ltd. AIR 1929 Cal 818 .................................................................................... 6
Balram Singh v.Ilam Singh, AIR 1996 SC 2781 ................................................................................................................................. 13
Desh Bandhu Gupta v. N.L. Anand, (1994) 1 SCC 131 ....................................................................................................................... 8
Ghanshyam Das v. Anant Kumar Sinha, AIR 1991 SC 2251 ............................................................................................................... 5
Gopal Kr. Das v. Sailendra Das AIR 1975 SC 1290 ............................................................................................................................. 9
Gulab Singh v. Chandra Pal Singh , AIR 1987 Bom 90 ....................................................................................................................... 6
Gurusuami v. Venkatasami, ILR (1891) 14 Mad 277 ....................................................................................................................... 12
K.T. Thomas v. Indian Bank, 1984 Supp SCC 703. ........................................................................................................................... 12
Kora Lal v. Punjab National Bank Ltd., AIR 1921 Lah 384 ................................................................................................................ 11
Kummathi v. Narayanappa v. Talari Akkulappa, AIR 1965 AP 215 at p. 217 ..................................................................................... 8
Manilal Mohanlal v. sardar Sayed Ahmed, AIR 1954 SC 349 .......................................................................................................... 13
Nedungadi Bank Ltd. V. Ezhimala Agri Products, (2004) II B.C. 498 (Ker.) (DB) .............................................................................. 10
Nedungadi Bank Ltd. V. Ezhimala Agri. Products, AIR 2004 Ker 62. ................................................................................................ 16
Patnam Subbalakshmamma Vs. Sunkugari Sreenivasa Reddy and Balsani Ramesh Babu, AIR2011AP298 .................................... 19
R.P.A Vallimmal v. R. Palanichami Nadar, AIR 1997 SC 1996 .......................................................................................................... 16
Sannidhi Krishna Murthy and Anr.Vs. Ponipireddy Venkata Rao and Ors, ..................................................................................... 19
Siddavee Rappa v. Jalal Khan ILR 1953 Mys. 570 ............................................................................................................................ 18

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 EXECUTION

Execution is the last stage of any civil litigation. There are three stages in litigation:

 Institution of litigation.
 Adjudication of litigation.
 Implementation of litigation.

Implementation of litigation is also known as execution. A decree will come into existence
where the civil litigation has been instituted with the presentment of the plaint. The decree means
operation or conclusiveness of judgment. Implementation of a decree will be done only when
parties have filed an application in that regard. A decree or order will be executed by the court as
facilitative and not an obligation. If a party is not approaching the court, then the court has no
obligation to implement it suo motu. A decree will be executed by the court which has passed the
judgment. In exceptional circumstances, the judgment will be implemented by another court
which is having competency in that regard.

Execution is the medium by which a decree-holder compels the judgment-debtor to carry out the
mandate of the decree or order as the case may be. It enables the decree-holder to recover the
fruits of the judgment. The execution is complete when the judgment-creditor or decree-holder
gets money or other thing awarded to him by judgment, decree or order.

The word '' Execution'' is not defined in Code of Civil Procedure, 1908 (herein after referred as
CPC). The word '' Execution'' can, in this context, be understood as '' a judicial act by which a
public officer is empowered to carry judgments or orders into effect.'' In other words, it means
the carrying into effect the judgment or order delivered in a court of law. In England, the usual
mode of execution of money judgment is by writ of ''fieri facias'' (popularly known as fi. fa.).
However, it is apt to say the process of administration of justice is known as '' Execution''. In
India, Order 21 of CPC consists of several rules i.e Rules 1 to 106.

Order 21 provides several issues such as '' Courts executing decrees, Payment under decrees,
Application and process for execution, Mode of execution, Stay of execution, arrest and
detention in Civil Prison, Attachment of property, Adjudication of claims and objections, Sale
generally, Sale of movable property, Sale of immovable property.

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 SALE AS A MODE OF EXECUTION

The word “Execution” is not defined in Code of Civil Procedure, 1908 (herein after referred as
CPC). The word “Execution” can, in this context, be understood as “a judicial act by which a
public officer is empowered to carry judgments or orders into effect.” In other words, it means
the carrying into effect the judgment or order delivered in a court of law.

Hon’ble Apex Court in Ghanshyam Das v. Anant Kumar Sinha1 dealing with provision of the
code relating to execution of decree and orders, observed in following words –

“so far as the question of executability of a decree is concerned, the Civil Procedure
Code contains elaborate and exhaustive provisions for dealing with it in all aspects. The
numerous rules of Order 21 of the code take care of different situations providing
effective remedies not only to judgment- debtors and decree-holders but also to claimant
objectors, as the case may be.”

It is only the execution, which reveals and signifies the importance of the decrees to be passed
and the pedestal of the Court and sanctity of the document. As such, the decrees are required to
be executed with force, so that the Decree holder having a document containing declaration of
his rights may not feel cheated or helpless having earned no fruits of the lis got settled by him
from the Court even after spending decades altogether.

Order 21 of the Code of Civil Procedure deals with the solemn act of execution of the decrees
passed by the Courts from grassroots to the top. Ultimately, after the judgment attains finality or
where there is no stay in the execution by any Appellate or Revisional Court, it is the Court of
original jurisdiction which performs this sacred act of implementation of the execution. The
provisions of the Civil Procedure Code, 1903, on the subject of sales are contained in Order XXI,
Rules 64 to 102. Rule 64 to 73 deal with “sale generally”; Rules 74 to 81, with “sale of moveable
property”; and Rules 82 to 104 with “sale of immovable”.

1
AIR 1991 SC 2251

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 SALE GENERALLY (RULE 64-73)

A. Power of Court
Rule 64. “Any Court executing a decree may order that any property attached by it and liable to
sale, or such portion thereof as may seem necessary to satisfy the decree shall be sold, and the
proceeds of sale, or a sufficient portion thereof, shall be paid to the party entitled under the
decree to receive the same.”

Considering the meaning of the term “any property attached by it”, Where it is necessary in
execution of a decree for money to sell properties not within the local limits of the jurisdiction of
the Court which passed the decree, the sale of the properties can only be effected by the Court
within the beat limits of which the property is situate.2

Under this provision the executing Court derives jurisdiction to sell properties attached only to
the point at which the decree is fully satisfied. The words ‘necessary to satisfy the decree’ clearly
indicate that no sale can be allowed beyond the decretal amount mentioned in the sale
proclamation. In other words, where the sale fetches a price equal to or higher than the amount
mentioned in the sale proclamation and is sufficient to satisfy the decree, no further sale should
be held and the court should stop at that stage.3

Rule 65. Save as otherwise prescribed, every sale in execution of a decree shall be conducted by
an officer of the Court or by such other person as the Court may appoint in this behalf, and shall
be made by public auction in manner prescribed.

According to rule 65, every sale in execution of a decree shall be conducted by an officer of the
court by public auction, sale by asking offer through advertisement in Newspaper or otherwise is
barred and such a sale is nullity. There is a substantial distinction between the sale by calling for
offers through advertisement and the sale by public auction. An auction is held by public
competition wherein every bidder has the right to raise his own bid. The atmosphere therein
created by open bidding can tempt the bidder to raise his bid and thus enhanced price can be
fetched by the said mode. In a sale by tender, however no such opportunity is available to the
tenderer. Once he gives his offer that is final and cannot be raised, whereas in public auction
each bidder knows the bid of the other person, in the mode of sale by calling for offers of
tenders, none of the persons or tenderers know the price offered by the other.4

B. Proclamation of Sale
Rule 66. (1) Where any property is ordered to be sold by public auction in execution of a decree,
the court shall cause a proclamation of the intended sale to be made in the language of such
court.

2
Ambika Ranjan Mujumdar v. Manikganj Loan Office, Ltd. AIR 1929 Cal 818
3
Ambati Narasayya v. M. Subba Rao & Anr 1990 AIR 119
4
Gulab Singh v. Chandra Pal Singh , AIR 1987 Bom 90

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(2) Such proclamation shall be drawn up after notice to the decree holder and the judgment
debtor and shall state the time and place of sale, and specify as fairly and accurately as
possible—

(a) the property to be sold, or, where a part of the property would be sufficient to satisfy the
decree, such part;

(b) the revenue assessed upon the estate or part of the estate, where the property to be sold is an
interest in an estate or in part of an estate paying revenue to the government;

(c) any encumbrance to which the property is liable;

(d) the amount for the recovery of which the sale is ordered; and

(e) every other thing which the court considers material for a purchaser to know in order to
judge of the nature and value of the property:

Provided that where notice of the date for settling the terms of the proclamation has been given
to the judgment debtor by means of an Order under rule 54, it shall not be necessary to give
notice under this rule to the judgment debtor unless the court otherwise directs:

Provided further that nothing in this rule shall be construed as requiring the court to enter in the
proclamation of sale its own estimate of the value of the property, but the proclamation shall
include the estimate, if any, given, by either or both of the parties.

(3) Every application for an Order for sale under this rule shall be accompanied by a statement
signed and verified in the manner herein before prescribed for the signing and verification of
pleadings and containing, so far as they are known to or can be ascertained by the person
making the verification, the matters required by sub-rule (2) to be specified in the proclamation.

(4) For the purpose of ascertaining the matters to be specified in the proclamation, the court
may summon any person whom it thinks necessary to summon and may examine him in respect to
any such matters and require him to produce any document in his possession or power relating
thereto.

Rule 67. (1) Every proclamation shall be made and published, as nearly as may be, in the
manner prescribed by rule 54, sub-rule (2).

(2) Where the court so directs, such proclamation shall also be published in the Official Gazette
or in a local newspaper, on in both, and the costs of such publication shall be deemed to be costs
of the sale.

(3) Where property is divided into lots for the purpose of being sold separately, it shall not be
necessary to make a separate proclamation for each lot, unless proper notice of the sale cannot,
in the opinion of the court, otherwise be given.

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The object of issuing a proclamation is twofold,

 firstly it protects the interest of the intending purchasers by giving them all material
information regarding the property to be sold, and
 secondly, it protects the interest of the judgment-debtor by facilitating the fetching of
proper market price for his property and by preventing it from being knocked down at
public auction for a price much below the market price.5

It is no doubt easy to draw the line between irregularity and illegality in an execution sale, but
where a substantial provision like Order XXI, Rule 66, is violated the sale should be regarded as
having been illegally conducted and would be void.

A sale conducted without publication of proclamation is not merely an irregularity but a

nullity.6 It is incumbent on the court to be scrupulous to the extreme. No action of the court or its
officer should be such as to give rise to the criticism that it was done in a casual manner.7

It is the duty of the court to ensure that the requirements of Rule 66 are complied with. It is also
desirable that every proclamation of sale shall be made by beat of drum or other customary
mode.

C. Contents of proclamation:-
i. Time and place of sale
ii. Property to be sold
iii. Revenue, if any, assessed upon the property;
iv. Encumbrance, if any, to which property is liable;
v. Amount to be recovered;
vi. Details relating to property, such as title deed, length etc.

D. Time of Sale (Rule 68)

No sale shall, without the consent in writing of the judgment debtor, take place until after the
expiration of at least thirty days in the case of immovable property, and of at least fifteen days in
the case of movable property from the date of proclamation in the courthouse.8

The only exception is in the case, where the property ordered to be sold is perishable or the
expense of keeping it in custody is likely to exceed its value.

E. Adjournment and stoppage of sale

Rule 69: (1) The court may, in its discretion, adjourn any sale hereunder to a specified day and
hour, and the officer conducting any such sale may in his discretion adjourn the sale, recording
his reasons for such adjournment:

5
Kummathi v. Narayanappa v. Talari Akkulappa, AIR 1965 AP 215 at p. 217
6
A. Venkatachalam v. E.M Zackria, 1987 Supp SCC 124
7
Desh Bandhu Gupta v. N.L. Anand, (1994) 1 SCC 131
8
O 21 Rule 68

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Provided that, where the sale is made in, or within the precincts of, the court house, no such
adjournment shall be made without the leave of the court.

(2) Where a sale is adjourned under sub-rule (1) for a longer period than thirty days, a fresh
proclamation under rule 67 shall be made, unless the judgment debtor consents to waive it.

(3) Every sale shall be stopped if, before the lot is knocked down, the debt and costs (including
the costs of the sale) are tendered to the officer conducting the sale, or proof is given to his
satisfaction that the amount of such debt and costs has been paid into the court which ordered
the sale.

The Court is given discretionary power to postpone the sale to a specified day and hour,
however, if such sale is adjourned for more than thirty days, a fresh proclamation should be
issued, unless the judgment debtor waives it.

Waiver of sale proclamation implies waiver of an objection as to any of the defects apparent on
the proclamation. Whoever prays for adjournment of sale, fresh sale proclamation is needed
unless the judgment-debtor waives fresh sale proclamation.

This section also provides that the moment the amount specified in the sale proclamation for
recovery of which sale was ordered is realized, the sale of further item should be stopped.

F. Default by Purchaser
Rule 71: Any deficiency of price which may happen on a re sale by reason of the purchaser’s
default, and all expenses attending such re-sale, shall be certified to the court by the officer or
other person holding the sale, and shall, at the instance of either the decree holder or the
judgment debtor, be recoverable from the defaulting purchaser under the provisions relating to
the execution of a decree for the payment of money.

Where a resale has been occasioned by reason of the purchaser’s default, (i.e. due to the failure
to deposit the sale price) any deficiency of price and all expenses attending such resale shall be
certified to the court and shall be recoverable at the instance of either the decree-holder or the
judgment debtor from the defaulting purchaser.

When purchaser is not negligent then this rule won’t apply.9 This provision is salutary and has
been enacted with a view to minimize the hardship of the judgment-debtor or decree-holder
resulting from the auction-purchaser’s default. It also seeks to provide an expeditious remedy to
the aggrieved party (judgment-debtor or decree-holder), who has suffered due to the default of
the auction-purchaser. Therefore, if resale is not ordered because of the default of the auction
purchaser, this rule won’t be applied.

9
Gopal Kr. Das v. Sailendra Das AIR 1975 SC 1290

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A resale consequent on the failure of the auction-purchaser to deposit 25% of the purchase price
immediately after he is declared to be the purchaser of the property under Rule 84, O. XXI is an
instance where the resale is occasioned by the default of the auction purchaser. On the other
hand, resale consequent upon the setting aside of the sale on the ground of material irregularity
in publishing or conducting the sale as provided under Rule 90, may not be attributed to the
default of purchaser.

Principles of natural justice are applied to this rule. Before auction-purchaser is held liable under
this rule, he must be given notice and opportunity of hearing to show cause why an order adverse
to him should not be passed.

G. Purchase of auction by decree-holder or officer connected with auction

No holder of a decree in execution of which property is sold shall, without the express
permission of the court, bid for or purchase the property. 10 Where decree holder purchases,
amount of decree may be taken as payment—Where a decree holder purchases with such
permission, the purchase money and the amount due on the decree may, subject to the provisions
of section 73, be set-off against one another, and the court executing the decree shall enter up
satisfaction of the decree in whole or in part accordingly.11 Where a decree holder purchases, by
himself or through another person, without such permission, the court may, if it thinks fit, on the
application of the judgment debtor or any other person whose interests are affected by the sale,
by Order set aside the sale; and the costs of such application and order, and any deficiency of
price which may happen on the re-sale and all expenses attending it, shall be paid by the decree
holder.12 Similarly mortagee is also forbidden to bid at sale without the leave of the Court. If
leave to bid is granted to such mortgagee, then the court shall fix a reserve price as regards the
mortgagee, and unless the court otherwise directs, the reserve price shall be—

(a) not less than the amount then due for principal, interest and costs in respect of the mortgage if
the property is sold in one lot; and

(b) in the case of any property sold in lots, not less than such sum as shall appear to the court to
be properly attributable to each lot in relation to the amount then due for principal, interest and
costs on the mortgage.

In other respects, the provisions of sub-rules (2) and (3) of rule 72 shall apply in relation to
purchase by the decree holder under that rule.13

Benefits arising out of statutory obligation of Court to fix reserve price under Order XXI, Rule
72-A (2) could not be waived. 14 No officer or other person having any duty to perform in

10
Rule 72 (1)
11
Rule 72 (2)
12
Rule 72 (3)
13
Rule 72-A
14
Nedungadi Bank Ltd. V. Ezhimala Agri Products, (2004) II B.C. 498 (Ker.) (DB)

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connection with any sale shall, either directly or indirectly, bid for, acquire or attempt to acquire
any interest in the property sold.15

SALE OF IMMOVABLE PROPERTY

Conducting of Sale of immovable property is a great task. The procedure for sale of immovable
property creates some confusion. Yet, if you pay attention on Order 21 of CPC and Civil Rules
of Practice, one can easily understand the procedure for conducting sale of Immovable property.
Rules 82-94 relates to the rule of sale of immovable property.

Rule 82 enables the executing court to postpone the sale to enable the judgement debtor to raise
decretal dues by private alienation. Rule 84 and 85 provide for payment of purchase money. Rule
86 covers cases of default by auction-purchaser in making requisite payment and resale of
property. Rule 89 to 91 and 93 deal with setting aside sale and effect thereof. Rule 92 and 94
provide for confirmation of sale and issuance of sale certificate. Section 65 declares the effect of
sale.

A. Courts competent to order sales

Any Court other than a Court of Small Causes may order sale of immovable property in
execution of a decree.16

B. Postponement of Sale
The court may postpone the sale to enable the judgement debtor to raise the decretal amount by
private alienation, such as sale, mortgage, charge, lease, etc. The chief aim of this provision is to
prevent the sale of immovable property of the judgement debtor in cases where the decree can be
satisfied by the private alienation of such property. It takes place at the discretion of the court
and can not be claimed by the judgement debtor as a matter of right. 17 Thus, where he has
sufficient time or where the decree shall not be satisfied in full by the private alienation of the
property, this application won’t be allowed. But, this postponement should only be for a
reasonable period and not afterwards and nevertheless, a private sale is not a complete
transaction unless and until it is sanctioned and confirmed by the court. 18

Rule 83: Postponement of sale to enable judgement- debtor to raise amount of decree

(1) Where an order for the sale of immovable property has been made, if the judgement-debtor
can satisfy the Court that there is reason to believe that the amount of the decree may be raised

15
Rule 73
16
Order XXI , R. 84
17
Kora Lal v. Punjab National Bank Ltd., AIR 1921 Lah 384.
18
Second proviso to R. 83(2).

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by the mortgage or lease or private sale of such property, or some part thereof, or of an other
immovable property of the judgment-debtor, the Court may, on his application, postpone the sale
of the property comprised in the order for sale on such terms and for such period as it thinks
proper, to enable him to raise the amount.

(2) In such case the Court shall grant a certificate to the judgment-debtor authorizing him
within a period to be mentioned therein, and notwithstanding anything contained in section 64,
to make the proposed mortgage, lease or sale:

Provided that all moneys payable under such mortgage, lease or sale shall be paid, not to the
judgment-debtor, but, save in so far as a decree-holder is entitled to set-off such money under the
provisions of Rule 72, into Court:

Provided also that not mortgage, lease or sale under this rule shall become absolute until it
has been confirmed by the Court.

(3) Nothing in this rule shall be deemed to apply to a sale of property directed to be sold in
execution of a decree for sate in enforcement of a mortgage of, or charge on, such property.

The Court may, on the application of the judgment debtor, postpone the sale of the property to
enable him to raise the amount of the decree by the mortgage, lease or private sale of the
property. The chief object of this provision is to prevent sale of property of the judgment-debtor
in cases where the decree can be satisfied by private alienation of such property. Postponement
of sale is at the discretion of the Court and cannot be claimed by the Judgment-debtor as a
right. 19 Therefore an application for postponement of sale will not be allowed where the
judgment-debtor had sufficient time to pay the decretal amount, or whereby private alienation the
decree will not be satisfied in full.20

Again, this provision applies only before the sale has taken place and not afterwards.

C. Deposit by Purchaser and Re-sale on Default

Immediately after the sale of immovable property, the purchaser must deposit 25% of the
purchase money, unless such requirement is dispensed with by the court.21 The balance of the
purchase money must be paid by the purchaser within 15 (fifteen) days from the date of the
sale.22 In case of default, the amount of deposit can be forfeited23 and property shall be resold
after issuing fresh proclamation.24

19
K.T. Thomas v. Indian Bank, 1984 Supp SCC 703.
20
Gurusuami v. Venkatasami, ILR (1891) 14 Mad 277.
21
Order XXI , R. 84
22
Order XXI, R. 85
23
Order XXI, R.86
24
Order XXI, R. 8

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Therefore, In case of failure on the part of the purchaser to deposit the amount or the balance
within 15 days from auction sale, the property shall be resold and in the latter case the deposit
may be forfeited to the Government after defraying the expenses of the sale.

Failure to deposit the purchase price is not a mere irregularity in the sale and it cannot be averted
on the plea that such shortfall had been occasioned by a mistake of the Court in calculating the
amount.25

The rules do not contemplate that there can be any sale in favour of a purchaser without
depositing 25% of the purchase money in the first instance and the balance within 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.26

Thus it can be concluded that these rules are mandatory and non-compliance with the same
vitiates the sale.

D. Bid by Co-owner: Rule 88

Where the property sold is a share of undivided immovable property and two or more persons,
including co-sharer, bid the same sum for it, the co-sharer has a right of pre-emption which
means the bid of the co-sharer shall prevail. The object is to enable the co-sharers in the
undivided immovable property to keep strangers out if they so desire.

E. Setting Aside Sale

Rules 89 to 92 deal with setting aside of sale. When a property is sold in execution of decree, an
application for setting aside may be made on any ground covered by Rules 89-92 and no other
ground, in other words the rules as to setting aside execution sale are exhaustive. Such an
application must be made within the prescribed period of limitation (60 days).27

 On Deposit: Rule 89

Application to set aside sale on depositor

(1) Where immovable property has been sold in execution of a decree 3[any person claiming an
interest in the property gold 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

25
Balram Singh v.Ilam Singh, AIR 1996 SC 2781
26
Manilal Mohanlal v. sardar Sayed Ahmed, AIR 1954 SC 349
27
Art. 127, Limiatation Act, 1963.

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 (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 was drawn up.

It will be seen from the above that the application to set aside a sale of immovable property
under the above rule may be made by-

 any person owning the property – he may be the judgment debtor or some other persons
whose property has been sold as the property of judgment debtor. (co-sharer in property
etc.)
 Any person holding an interest in property by the virtue of a title acquired before the sale-
a co-sharer of a mortgagee may be such a person; so are the mortgagor and the
mortgagee; beneficial owner, etc.

Rule 89 requires that two primary conditions relating to deposit must be satisified, namely,

(i) the applicant must deposit in the court for payment to the auction purchaser 5% of the
purchase money; and
(ii) he must also deposit the amount specified in the proclamation of sale, less any
amount received by the decree-holder since the date of proclamation of sale for
payment to the decree-holder.

The intention of Rule 89 of Order XXI is to provide simple procedure where at last moment a
judgment-debtor may come and deposit without condition the full decretal amount and 5%
penalty. The making of deposit is a pre condition to the making of application under this rule.
The deposit has to be made for payment to the decree holder the amount specified in the
proclamation of sale. 5% deposit has to be paid as compensation for the purchaser who suffers
the loss on account of sale being set aside and not confirmed in his favour.

If a person has applied under Rule 90 to set aside the sale, then unless he has withdrawn his
application , he is not entitled to make and prosecute an application under Rule 89.28

An application must be made within 60 days from the date of sale and before an order setting
aside a sale is made, notice of the application must be given to all persons likely to be affected by
the order thereupon.29

28
Rule 89(2)

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  On irregularity or Fraud

Rule 90: Application to set aside sale on ground of irregularity or fraud

(1) Where any immovable property has been sold in execution of a decree, the decree-holder, or
the purchaser, or any other person entitled to share in a ratable distribution of assets or whose
interests are affected by the sale, may apply to the Court to set aside the sale on the ground of a
material irregularity or fraud in publishing or conducting it.

(2) No sale shall be set aside on the ground of irregularity or fraud in publishing or conducting
it unless, upon the facts proved, the Court is satisfied that the applicant has sustained substantial
injury by reason of such h irregularity or fraud.

(3) No application to set aside a sale under this rule shall be entertained upon any ground which
the applicant could have taken on or before the date on which the proclamation of sale was
drawn up.

Explanation.-The lucre absence of, or defect in, attachment of the property sold shall not, by it
be a ground for setting aside a sale under this rule.

A sale of immovable property in execution can be set aside also on the ground of material
irregularity or fraud in publishing or conducting the sale, provided the applicant proves that he
has sustained substantial injury by reason of such irregularity or fraud. The pre-sale illegalities
committed in the execution are amenable to the remedy under section 47 and post sale
irregularities causing substantial injury to the judgment debtor are covered under Rule 90 of
Oder 21.

Under Order XXI, Rule 90, the only persons that may apply for setting aside the sale are:

 the decree-holder
 the purchaser
 any other person entitled to share in a ratable distribution of assets under Section 73; and
 any person whose interests are affected by the sale. This includes the judgment-debtor,
the legal representative of a judgement debtor and a purchaser from the judgment-
debtor pendente lite. Etc.

An appeal by a stranger auction purchaser against an order passed on an application for setting
aside sale under Order XXI, Rule 90 and section 47, CPC is incompetent, as he was not a party
to the suit.

Grounds:

 there has been material irregularity or fraud in publishing and conducting the sale; and

29
Provisio to, Rule 92 (2)

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  substantial injury has been caused to the applicant.

Objection to execution can be made only once and not repeatedly.30

The rule speaks of irregularity and not illegality, for if the act complained of is illegal, the sale is
void altogether and no substantial injury need be proved as is necessary in the case of material
irregularity. It is only when there is an allegation of material irregularity or fraud in publishing or
conducting the sale that Order XXI, Rule 90 would be applicable.

 Material Irregularity

The term “irregularity” here means not being in conformity with the law or any recognised rule.
It must be shown that there has been disregard of some positive provision of law relating to
execution, i.e. procedure to be followed before the property is put up for sale.

Where a court mechanically conducts the sale or routinely assigns assent to the sale papers, not
bothering to see if the offer is too low and a better price could have been obtained and in fact the
price is substantially inadequate, there is presence of both elements of irregularity and injury.

Under valuation by itself may not be sufficient to infer fraud, gross undervaluation coupled with
the peculiar circumstances that one of the purchasers being the son of one of the judgment-
debtors and another one being a relative of one of the judgment-debtors and the enthusiasm
exhibited by the judgment-debtor in having the sale of their own property confirmed ought to be
taken as a circumstances indicating fraud.31

 Fraud

“Fraud” means that “which is dishonest and morally wrong”. Fraud must established beyond
reasonable doubt by clear and cogent evidence; general and vague allegations and suspicious
circumstances are not enough.

A mere understanding between intending purchasers agreeing not to bid against one another is
not by itself objectionable and unlawful. But if such an agreement has been arrived at with a
dishonest intention and oblique motive with a view to prevent the best price from being
obtained, it would be fraudulent and invalid.

 Substantial Injury

Whether or not the injury suffered by the applicant is substantial depends upon the facts of each
case. It should not be confined to pecuniary loss and, therefore, mere inadequacy of price is no
proof of substantial injury though it is one of the relevant factors to be considered.

30
R.P.A Vallimmal v. R. Palanichami Nadar, AIR 1997 SC 1996.
31
Nedungadi Bank Ltd. V. Ezhimala Agri. Products, AIR 2004 Ker 62.

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 F. Judgment-debtor Having No Saleable Interest: Rule 91
The purchaser at any such sale in execution of a decree-may apply to the Court to set aside the
sale, on the ground that the judgment-debtor had no saleable interest in the property sold.

This rule applies only where the judgment-debtor has no interest at all, e.g. when the property
sold turns out to be not the property of the judgment-debtor or when the interest was not saleable.
It does not apply when the judgment debtor has no saleable interest in a portion of the property.
Even a saleable interest in one of the parcels sold at one time is sufficient.

The rule is intended for the protection of an innocent auction-purchaser; and it cannot, therefore,
be invoked where the purchaser knew at the time of sale that the judgment-debtor had no
saleable interest in the property.

Only the auction purchaser or a decree-holder auction purchaser can apply, the judgment debtor
cannot apply.

G. When Sale Becomes Absolute: Rule 92

(1) Where no application is made 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 thirty days from the date of sale, or in
cases where the amount of the 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 way 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.

(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-doubter’s title by filing a suit against the
auction-purchaser, the decree-holder and the judgment-debtor shaft 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

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proceeding in which sale the had been held shall, unless the Court otherwise directs, be revived
at the stage at which the sale was ordered.

No Sale of immovable property shall become absolute until it is confirmed by the court. Where
no application to set aside the sale is made under Rule 89, 90 and 90 or where such application is
made and is disallowed by the Court, the Court shall make an order confirming the sale, and
thereupon the sale shall become absolute. Once the order is made under Rule 92 confirming the
sale, the title of the auction purchaser relates back to the date of sale.32

Proviso to sub-rule (1) of Rule 92 as added by the Amendment Act of 1976 enacts that where a
claim against an attachment in execution of a decree has been made but the property attached has
been sold pending the determination of such claim, the sale should not be confirmed by the court
before the final disposal of such claim.

A sale cannot be confirmed within 30 days of acceptance of the bid.33 It is not be confirmed
straightaway without declaring the auction-purchaser as the successful bidder under Order XXI,
Rule 84, and without allowing a period of one month for application under Order XXI, Rules 89
to 91, CPC.

The owners and certain other interested persons are afforded opportunity under the Code to make
a prayer for setting aside the sale on enumerated grounds, and after all such matters are disposed
of without disturbing the sale, the sale is confirmed under Rule 92.

H. Effect of Setting aside Sale: Rule 93

Where a sale of immovable property is set aside under 92, the purchaser shall be entitled to an
order for repayment of his purchase-money, with or without interest as the Court may direct,
against any person to whom it has been paid.

An application under this rule can be filed within three years from the date of the order setting
aside the sale.34

1. Certificate of Sale: Rule 94

After the sale has become absolute, the Court shall grant a certificate in favour of the purchaser.
It shall bear the date on which the sale became absolute and also specify the property sold and
the name of the purchaser.35

Such certificate is conclusive in nature, the sole object behind it being to avoid any controversy
regarding the identity of the property sold and the purchaser thereof and the date when the sale
became absolute.

32
Section 65.
33
Siddavee Rappa v. Jalal Khan ILR 1953 Mys. 570.
34
Art 137, Limitation Act, 1963.
35
Rule 94.

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 I. Effect of Sale: Section 65
After the sale has become absolute, the property shall be deemed to have vested in the purchaser
from the date when it is sold and not from the date when the sale becomes absolute. In other
words, the purchaser’s title relates back to the date of the sale and not the confirmation of the
sale.

SOME RECENT CASES

1. Patnam Subbalakshmamma Vs. Sunkugari Sreenivasa Reddy and Balsani Ramesh Babu,
AIR2011AP298,

HELD: Whenever the property of a judgment-debtor in suit for money decree has brought to
sale, he has a right under Rule 89 of Order 21 Code of Civil Procedure to seek annulment of the
sale, by making deposit of the decretal amount mentioned in the sale proclamation and a sum
equal to 5% of the purchase money, payable to the auction purchaser. In this case, it was further
observed that The limitation for such deposit is stipulated under Sub-rule (2) of Rule 92 Code of
Civil Procedure, as 60 days from the date of sale.

2. C.Ryan Babu S/o. Narasimha Rao Vs. B.K.L. Traders rep. by its Proprietor, B.
Venkateswarlu, S/o. Venkata Ramanayya and I. Srinivasa Rao S/o. Rama Rao, 2010(5)ALT217

Held: "If proclamations for sale are conducted without following the provisions of law then it is
material to claim for applicant to set aside the sale on the ground for irregularity or fraud."
(Order 21 Rule 90)

3. Sannidhi Krishna Murthy and Anr.Vs. Ponipireddy Venkata Rao and Ors,
AIR 2010 AP 79, 2009(6)ALD535, 2009(6)ALT498

HELD: "As per proviso (c) of Sub-section (1) of Section 73 of CPC, proceeds of sale need not be
rateably distributed among holders of decrees after sale of property."

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 BIBLIOGRAPHY

 SUDIPTO SARKAR & V R MANOHAR, 1 CODE OF CIVIL PROCEDURE (11th ed. Lexis Nexis

2006).

 C.K. TAKWANI, CIVIL PROCEDURE WITH LIMITATION ACT, 1963 (8th ed. E. Book 2017).

 LEXIS NEXIS, THE CODE OF CIVIL PROCEDURE, 1908 (3rd ed. Lexis Nexis 2016).

 EASTERN BOOK COMPANY, CIVIL PROCEDURE CODE 1908 WITH LIMITATION ACT 1963

(6th ed. E. Book 2016).

 D.N. MATHUR, CODE OF CIVIL PROCEDURE (3rd ed. Cent. Law Publishers 2015).

WEBLIOGRAPHY

 http://www.legalservicesindia.com/article/1591/Sale-of-Immovable-Property.html

 https://lawtimesjournal.in/sale-as-execution-sale-of-movable-property/#_ftnref7

 https://www.nls.ac.in/lib/bareacts/civil/cpc/cpco21.html

 http://www.aaptaxlaw.com/

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