Saturday 1 September 2012

court can condone delay in paying puchase amount in auction sale as per bombay amendment

Bare perusal of the above referred provisions of Rule 85 would demonstrate that the amount of purchase money payable undoubtedly would include the amount required for general stamp paper for the certificate under Rule 94 of the Code of Civil Procedure and the total amount is required to be paid by the purchaser into the Court before the Court closes on 15th day from the date of sale of the property. While interpreting the provisions of Rule 85, there is no scope for holding that the amount of purchase price, does not include the amount required for the general stamp paper for certificate under Rule 94. On the other hand, it can safely be construed that provisions of Rule 85 intended the amount required for general stamp paper to be part and parcel of the amount of purchase price.
As far as power of condonation of delay in allowing the auction purchaser to make good the shortfall in purchase price after the stipulated period of fifteen days from the date of sale is concerned, it is undoubtedly clear that the Court does have a power and discretion to condone the same. However, such discretion needs to be exercised only in case of bona fide mistake or miscalculation on the part of the purchaser, which has resulted in shortfall of full amount of purchaser money
Bombay High Court
Arni Vividh Karyakari Sahakari ... vs Maharashtra State Co-Operative ... on 30 March, 2001
Equivalent citations: 2001 (4) BomCR 542
Author: D Sinha
Bench: D Sinha
JUDGMENT
D.D. Sinha, J.
1. Rule returnable forthwith. Heard finally by consent of Shri Dharmadhikari, learned Counsel for the applicant, Shri Kothari, learned Counsel for the respondent No. 1 and Shri Bhangade, learned Counsel for the respondent No. 2.

2. The civil revision application is directed against the order dated 20-12-2000 passed by the Civil Judge, Senior Division, Yavatmal below Exhs. 58 and 61 in Special Darkhast No. 34/1988 whereby the Executing Court has rejected Exh. 58 and allowed Exh. 61. The facts which give rise to the controversy, in nutshell, are as follows.
3. The respondent No. 1 decree holder filed execution proceedings against the present applicant/judgment debtor for recovery of Rs. 2,48,377.96, which were registered as Special Darkhast No. 34/1988. The decree holder during the pendency of the execution proceedings applied for attachment and sale of plot admeasuring 60' x 100' (6000 sq.ft.) along with the building situated at Arni, Tahsil Arni, District Yavatmal. The Executing Court directed auction of the property in question. The Executing Court held auction on 18-10-1995 and respondent No. 2 gave a bid for Rs. 67,900/-. The same being highest, was accepted. The respondent No. 2 auction purchaser deposited 1/4th of the bid amount, i.e. Rs. 16,975/- on the same day, i.e. 18-10-1995 and the balance amount of Rs. 50,925/- on 31-10-1995. The auction purchaser failed to deposit the amount of stamp duty of Rs. 2,720/- payable on the sale certificate within the stipulated period.
4. The present applicant filed an application for setting aside sale, which was rejected on 5-4-1997 and the appeal against the said order also came to be rejected by this Court. The applicant thereafter applied for cancellation of sale and re-sale of the property in question order Order 21, Rules 85 and 86 of the Code of Civil Procedure vide Exh. 58 on 1-1-1998. The respondent No. 1 submitted reply to the said application (Exh. 58) on 3-3-1998. After hearing all the parties, the Civil Judge, Senior Division vide impugned order dated 20-12-2000 rejected the application of the applicant (Exh. 58) whereas allowed the application of the auction purchaser (Exh. 61) and granted permission to deposit the requisite stamp duty payable on the sale certificate. Being aggrieved by the said order, the applicant has filed the present civil revision application.
5. Shri Dharmadhikari, learned Counsel for the applicant, contended that the provisions of Rule 85 of Order 21 of the Code of Civil Procedure are mandatory in nature and require strict compliance by the party. The Court below failed to consider that no-compliance of provisions of Order 21, Rule 85 renders sale as nullity. The learned Counsel contended that auction was held on 18-10-1995. The purchase price was fixed at Rs. 67,900/-. The 1/4th purchase price, i.e. Rs. 16,975/- was deposited by the respondent No. 2 in the Court on 18-10-1995 whereas the balance price of Rs. 50,925/- was deposited on 31-10-1995. It is, therefore, contended that respondent No. 2 has not deposited the amount of stamp duty payable on the sale certificate within fifteen days from the date of sale, which has resulted in non-compliance of mandatory provisions of Rule 85 of Order 21 of the Code of Civil Procedure by respondent No. 2 auction purchaser and as per provisions of Rule 86 of Order 21, the Court has no alternative, but to resale the property. It is contended that the Court below completely failed to appreciate this legal aspect of the matter and, therefore, the impugned order suffers from non-application of mind and is against the established principles of law and, therefore, is vitiated being against the principles of law.
6. The learned Counsel for the applicant further canvassed that the Executing Court has no discretion to condone the delay in payment of stamp duty. It is argued that bare reading of Rules 85 and 86 of Order 21 of the Code of Civil Procedure would reveal that under Rule 85, the Executing Court has discretion to condone the delay only with respect to shortfall of amount of purchase money and that too, only due to bona fide mistake or miscalculation of the amount. In the present case, there is neither bona fide mistake nor miscalculation of amount deposited and, hence, the order passed by the Court below condoning the delay in this regard is misconceived and devoid of substance and de hors of the provisions of Rule 85 of Order 21 of the Code of Civil Procedure.
7. The learned Counsel for the applicant further contended that as per provisions of Rule 86 of Order 21 of the Code of Civil Procedure, in case of default in payment of amount of purchase money and stamp duty within a period stipulated in Rule 85, the Executing Court has no option but to direct re-sale of the property. It is contended that discretion is only in respect of forfeiture of the amount and cannot be extended to condone the delay in payment of amount of purchase money and stamp duty required to be made within a stipulated period contemplated under Rule 85. It is submitted that Court below completely failed to consider these mandatory provisions and mis-conceived the issue in question, which, renders the impugned order bad in law.
8. Learned Counsel Shri Dharmadhikari further argued that application moved by the respondent No. 2 (Exh. 61) does not disclose any bona fide mistake or mis-calculation of amount and as such, delay in payment of stamp duty within the period specified can never be condoned considering the mandatory provisions of Rules 85 and 86 of Order 21 of Code of Civil Procedure. It is, therefore, contended that the impugned order is devoid of substance and liable to be set aside. In order to substantiate the above contentions, Shri Dharmadhikari placed reliance on the judgments in Manilal Mohanlal Shah and others v. Sardar Sayed Ahmed Sayed Mahmad and another, , Rao Mahmood Ahmed Khan v. Sh. Ranbir Singh and others, , Balram v. Ilam Singh and others, 1997(1) Mh.L.J. 687 and Ram Singh v. Uttam Chand, .
9. The learned Counsel for the applicant further submitted that the provisions of sections 148 and 149 of the Code of Civil Procedure are not at all attracted and do not apply to the controversy in question, which falls only within the ambit of Rules 85 and 86 of Order 21 of the Code of Civil Procedure. In order to substantiate this contention, reliance is placed by the learned Counsel on the judgment in Ratna Bai v. N. Narayani, A.I.R. 1973 Mysore 174, and Smt. Matrani Devi and others v. Chhathu Prasad and others, .
10. Shri Bhangde, learned Counsel for the respondent No. 2, contended that the auction was held on 18-10-1995 as per proclamation of sale. The respondent No. 2 was the highest bidder and sale was knocked down in his favour at Rs. 67,900/-. Auction sheet was prepared on the same day and Executing Court has passed the following order on the auction sheet :
"Highest bid of Rs. 67,900/- is accepted. The bidder shall deposit immediately 25% of the sale price and in default of such deposit, the property shall forthwith be resold. The remaining amount shall be deposited within 15 days of this order."
The learned Counsel further submitted that auction purchaser deposited the amount of Rs. 16,975/-, i.e. 25% of the sale price on 18-10-1995. Thereafter on 31-10-1995, the auction purchaser filed an application (Exh. 31) praying for grant of permission to deposit the balance amount. The auction purchaser has deposited the amount of Rs. 50,925/- on 31-10-1995. It is contended that the judgment debtor had filed an application dated 1-11-1995 (Exh. 32) under Rule 90 of Order 21 read with sections 47 and 141 of the Code of Civil Procedure raising objections to the auction sale, which was held on 18-10-1995. The applicant/judgment debtor prayed that the process of sale dated 27-9-1995, 18-10-1995 and 31-10-1995 as well as sale amount accepted is improper and illegal, hence, auction sale be cancelled. Shri Bhangde further contended that the applicant/judgment debtor filed another application (Exh. 44) under sections 38 and 39 and Order 21 of the Code of Civil Procedure for dismissal of execution proceedings for want of territorial jurisdiction. The learned Counsel vehemently argued that the present applicant/judgment debtor did not raise any objection in the above referred applications that the auction purchaser has not deposited the amount required for stamp paper and, therefore, auction sale held on 18-10-1995 should be cancelled and property in question should be put to re-sale in view of Rule 86 of Order 21 of the Code of Civil Procedure.
11. Learned Counsel Shri Bhangde further submitted that the Executing Court after hearing both the sides, was pleased to reject both the above referred applications moved by the applicant/judgment debtor at Exhs. 32 and 44 by two separate orders passed on 5-4-1997. It is contended that the applicant/judgment debtor had filed Appeal against Order No. 27/1998 challenging the order passed by the Executing Court dated 5-5-1997 below Exh. 32. This Court vide judgment dated 26-3-1998 rejected the said appeal preferred by the applicant/judgment debtor. It is contended that the respondent No. 2/auction purchaser in the meanwhile, filed an application (Exh. 52) for confirmation of sale and for issuing sale certificate under Rules 92 and 94 of Order 21 of the Code of Civil Procedure. The decree holder had filed application (Exh. 55) for withdrawal of amount of Rs. 67,900/- deposited by the respondent No. 2/auction purchaser. Shri Bhangde emphatically contended that the applicant/judgment debtor neither filed any reply nor objected to grant of prayers made by the auction purchaser in Exh. 52 or decree holder in Exh. 55. The decree holder had given his no objection for confirming the sale and for issuance of sale certificate in favour of the auction purchaser. Taking into consideration all these facts and circumstances, the Executing Court vide order dated 14-10-1997 confirmed the sale and allowed the applications (Exhs. 52 and 55) by passing the following orders:-
"Perused application and reply at Exh. 57. Heard both Counsel. Sale is confirmed. Issue sale certificate. Application allowed".
"Perused application and say on it. Perused report Rs. 67,900/- be paid to decree holder."
12. Learned Counsel Shri Bhangde further contended that even at the stage of confirmation of sale and issuance of sale certificate, the applicant/judgment debtor did not raise any objection and remained totally silent. The sale has become absolute and the order dated 14-10-1997 confirming sale has become final. The applicant/judgment debtor has not challenged this order. The order, therefore, has reached finality and it is not permissible to raise any objection to the auction sale after the sale has become final.
13. Shri Bhangde further argued that in view of Bombay Amendment to Order 21, Rule 85, it is no longer open to canvass that the provisions of Order 21, Rule 85 of the Code of Civil Procedure are mandatory. The Executing Court is now empowered to allow the auction purchaser to make good the shortfall in depositing the amount in question even after expiry of period specified in Order 21, Rule 85. It is contended that the Executing Court has exercised its discretion in a lawful manner and allowed the auction purchaser to make good the shortfall/deficiency in the amount that was required to be deposited on the ground of bona fide mistake. In order to substantiate the contentions, reliance is placed by the learned Counsel for the respondent No. 2 on the judgments of the Apex Court in Prem Lata Agarwal v. Lakshman Prasad Gupta and others, , Patel Narshi Thakershi and others v.
Pradyumansinghji Arjunsinghji, , and State of Punjab and others v. Gurdev Singh, .
14. I have given my anxious thought to the various contentions raised by the respective learned Counsel for the parties and perused the impugned order as well as relevant provisions of law. It will be appropriate to consider the undisputed facts before adjudicating upon the legal aspect of the matter.
15. It is not in dispute that the property was attached and sold in auction held on 18-10-1995 for Rs. 67,900/-. The bid of respondent No. 2/auction purchaser being the highest, came to be accepted by the Executing Court. The auction purchaser deposited 1/4th of the amount of auction price, i.e. Rs. 16,975/- on 18-10-1995 while balance amount of Rs. 50,925/- was deposited by him within a stipulated period of fifteen days, i.e. on 31-10-1995. The applicant/judgment debtor filed an application (Exh. 32) under Order 21, Rule 90 of the Code of Civil Procedure for cancellation of auction sale. The said application was dismissed on merits by the Executing Court on 5-4-1997 and this Court vide order dated 26-3-1998 dismissed the appeal preferred by the applicant/judgment debtor against the order dated 5-4-1997. The application moved by the auction purchaser vide Exh. 52 was allowed and the Executing Court was pleased to confirm the same and pass an order of issuance of sale certificate in favour of the auction purchaser on 14-10-1997 and the said order dated 14-10-1997 passed by the Executing Court confirming the sale attained finality.
16. In the backdrop of the above referred undisputed facts, two legal issues emerge for consideration of this Court, which are as under:
I) Whether the Executing Court in view of Bombay Amendment to Rule 85 of Order 21 of the Code of Civil Procedure has a power to condone the delay occurred due to bona fide mistake or mis-calculation in case the amount deposited falls short of full amount and whether the Court in its discretion can allow the shortfall to be made up after fifteen days of sale and condone the delay?
II) Whether non-compliance of provisions of Order 21, Rule 85 of the Code of Civil Procedure renders the sale proceedings nullity and Court is bound to put the property to resale, under Rule 86 even though judgment debtor could not bring this to the notice of the Court?
17. So far as the first proposition of law is concerned, it will be appropriate to consider the provisions of Rule 85 of Order 21 of the Code of Civil Procedure and for the purpose of ready reference relevant part is produced thus:
"The full amount of purchase money payable, together with the amount required for the general stamp paper for the certificate under Rule 94, shall be paid by the purchaser into Court before the Court closes on the 15th day from the date of the sale of the property."
Provided that, in respect of the purchase money, the purchaser shall have the advantage of any set off to which he may be entitled under Rule 72.
Provided further that, if as a result of some bona fide mistake or miscalculation the amount deposited falls short of the full amount of the purchase money, the Court may in its discretion, allow the shortfall to be made up after fifteen days of the sale, and if the full amount of the purchase money is deposited within such time as the Court may allow, the Court may condone the delay, if it considers it just and proper to do so."
Bare perusal of the above referred provisions of Rule 85 would demonstrate that the amount of purchase money payable undoubtedly would include the amount required for general stamp paper for the certificate under Rule 94 of the Code of Civil Procedure and the total amount is required to be paid by the purchaser into the Court before the Court closes on 15th day from the date of sale of the property. While interpreting the provisions of Rule 85, there is no scope for holding that the amount of purchase price, does not include the amount required for the general stamp paper for certificate under Rule 94. On the other hand, it can safely be construed that provisions of Rule 85 intended the amount required for general stamp paper to be part and parcel of the amount of purchase price. In the instant case, total purchase price would come to Rs. 70,620/-. Rule 85 makes it obligatory on the part of the purchaser to pay the total purchase money into the Court before the Court closes on 15th day of sale of property. In the instant case, the respondent No. 2 auction purchaser paid Rs. 67,900/- on 31-10-1995, i.e. within fifteen days from the date of sale of property. However, it is to be seen whether shortfall of Rs. 2,720/- in the purchase money was due to bona fide mistake or miscalculation and the Court is competent to condone the delay on these counts.
18. As far as power of condonation of delay in allowing the auction purchaser to make good the shortfall in purchase price after the stipulated period of fifteen days from the date of sale is concerned, it is undoubtedly clear that the Court does have a power and discretion to condone the same. However, such discretion needs to be exercised only in case of bona fide mistake or miscalculation on the part of the purchaser, which has resulted in shortfall of full amount of purchaser money. In the instant case, the property was sold in auction on 18-10-1995 for Rs. 67,900/- and stamp duty for the amount required for general stamp paper for certificate under Rule 94 is Rs. 2720/-. Thus, the total purchase money comes to Rs. 70,620/-. The respondent No. 2 auction purchaser deposited Rs. 67,900/- on 31-10-1995 and there was a shortfall of Rs. 2,720/- in the purchase price, which remained to be deposited. It is not in dispute that the applicant/judgment debtor moved an application under Order 21, Rule 90 of the Code of Civil Procedure for setting aside/cancellation of the auction sale vide Exh. 32, which was dismissed on merits on 5-4-1997 and the proceedings preferred before this Court by the judgment debtor were also dismissed on 26-3-1998. The applicant/judgment debtor did not raise any objection orally or in writing to the application moved by the auction purchaser vide Exh. 52 for confirmation of sale. The sale was confirmed on 4-10-1997. It is, therefore, clear that the applicant/judgment debtor did not raise any objection in respect of the auction proceedings from 1995 till 1998 nor challenged the order dated 14-10-1997 by which sale was confirmed. It is also not in dispute that the shortfall in the amount of purchase price was neither considered by the Court nor was brought to the notice of the auction purchaser. The auction purchaser under the bona fide belief miscalculated the amount of total purchase price, which includes an amount required for general stamp paper, which has resulted in causing shortfall in the total purchase price to be deposited in the Court within fifteen days from the date of sale of property. The Executing Court, in my opinion, in the context of the circumstances of the present case, rightly held that the delay caused is neither deliberate nor intentional and was justified in condoning the same in view of the provisions of Rule 85 of Order 21 of the Code of Civil Procedure. The contention raised by the learned Counsel for the applicant in this regard, therefore, must fail and needs to be rejected. The ratio laid down in Ratna Bai v. Narayani, A.I.R. 1973 Mysore 174 as well as Smt. Matrani Devi and others v. Chhathu Prasad and others, relied upon by the learned Counsel for the applicant in the facts and law involved in the present case may not be of any help to the applicant.
19. The second legal issue which needs consideration is whether non-compliance of Order 21, Rule 85 of the Code of Civil Procedure by the auction purchaser renders the sale proceedings nullity and the Court is bound to proceed with the resale of the property under Rule 86, Order 21 irrespective of the fact that no application has been made by any party to the proceedings to challenge the same. It is no doubt true that this aspect is covered by the ratio laid on by Punjab and Haryana High Court in the case of Ram Singh v. Uttam Chand, and Balram v. Ilam Singh and others, 1997(1) Mh.L.J.
687. However, it is not in dispute that in both these cases, the Lordships of the respective Courts did not have an occasion to consider Bombay Amendment made to Rule 85 of Order 21 of the Code of Civil Procedure whereby the Court was given power and discretion to condone the delay to make good the shortfall in amount of purchase money even after fifteen days from the date of sale in case of bona fide mistake or miscalculation. Hence, though there is no quarrel with the proposition laid down by their Lordships of the respective courts in the above referred judgments, it will be of no help to the applicant in the context of the amended provisions of Rule 85 of Order 21 of the Code of Civil Procedure. It is undoubtedly clear that but for this Bombay Amendment to Rule 85 of Order 21 of the Code of Civil Procedure, non-compliance of Rule 85 by the auction purchaser would render sale proceedings nullity and Court is bound to put the property to resale under Rule 86 of Order 21 of the Code of Civil Procedure irrespective of the fact that no application has been made by any party to the proceedings to challenge the same. However, as observed hereinabove, the second proviso to Rule 85 empowers Court to exercise its discretion to allow the shortfall to be made good after fifteen days of sale in the case of bona fide mistake or miscalculation, it cannot be said that the impugned order is without jurisdiction or the Court exercised jurisdiction not vested in it.
20. The contention of the learned Counsel for the applicant that as per the provisions of Rule 86 of the Code of Civil Procedure, in case of default of payment within the period mentioned in Rule 85, the deposit may if the Court thinks fit, be forfeited to the Government and property shall be re-sold in view of the scheme of provisions of Rule 85 is misconceived and cannot be accepted. Similarly, the contention raised by the petitioner that discretion needs to be exercised by the Court as per Rule 86 is only in respect of forfeiture of amount and cannot be extended to condone the delay in payment of amount of purchase money and stamp duty is also devoid of substance and needs to be rejected. As observed hereinabove, the language used and words mentioned in Rule 85 i.e. "the full amount of purchase money payable, together with the amount required for the general stamp paper for the certificate under Rule 94, shall be paid by the purchaser into Court before the Court closes on 15th day from the date of the sale of the property, clearly show that purchase money payable is together with the amount for stamp paper and, therefore, is one unit and cannot be segregated from each other. In the context of the provisions of Rule 85, it can safely be construed that the amount for stamp paper is included in the amount of purchase money and required to be paid by the purchaser on or before the 15th day from the date of sale of the property. Second proviso to Rule 85 in the scheme of this Rule also needs to be construed that the discretion provided in this second proviso to make good the shortfall cannot be restricted only to the purchase money simplicitor since the term purchase money includes the amount required for general stamp paper and it is total amount i.e. purchase money simplicitor and the amount required for general stamp paper shall constitute the term purchase money under the scheme of the proviso, the discretion available to the Court can be exercised in case of bona fide mistake or miscalculation resulted in causing short fall in depositing the full amount of purchase price within the stipulated period of 15 days from the date of sale as contemplated and delay in this regard can be condoned.
21. In the instant case, it has already been held that the Court was justified in condoning the delay in view of scheme of the provisions of Rule 85, which would show that there is no apparent default as contemplated by Rule 86 to proceed in the matter by the Court for forfeiture of the deposit and resale of the property in question. It is, however, true that if the Court was not vested with the power and jurisdiction to condone the delay to make good the shortfall in the amount of purchase money beyond the period of 15 days, in case of bona fide mistake or miscalculation then that would have been the default in paying the purchase amount as contemplated by Rule 86 and Court could have proceeded for forfeiture of the deposit to the Government and it would have been mandatory for the Court to re-sell the property. However, for the reasons stated hereinabove when we consider the scheme and provisions of the Rules, such contigencies do not exist in the present case and, therefore, the contention raised by the learned Counsel in this regard is rejected.
22. In view of the controversy in question, the contention raised by the learned Counsel for the applicant in regard to provisions of sections 148 and 149 of the Code of Civil Procedure does not require adjudication.
23. For the reasons stated hereinabove, the revisions is misconceived and devoid of substance. Hence, the same is dismissed. No order as to costs.
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