2014 (4) TMI 1048 - SC - Indian Laws

Validity of auction sale - Period of limitation to file appeal - whether the High Court could have ignored the settled law that under Article 127 of the Limitation Act 1963 an application to set aside a sale under Order XXI Rule 89 CPC has to be filed within 60 days from the date of sale and same is the period for making the required deposit - Held that - A careful perusal of the provisions in Rules 89 and 92 of Order XXI CPC and Article 127 of the Limitation Act leaves no manner of doubt that although Order XXI Rule 89 CPC does not prescribe any period either for making the application or the required deposit Article 127 of the Limitation Act now prescribes 60 days as the period within which such an application should be made. In absence of any separate period prescribed for making the deposit as per judgment of the Constitution Bench in the case of Jammlu Ramulu (2001 (8) TMI 1371 - SUPREME COURT OF INDIA) the time to make the deposit and that for making the application would be the same. - High court committed grave error of law in not noticing the relevant provisions of CPC and the Limitation Act and in allowing the Writ Petition for re-consideration of the petition under Order XXI Rule 89 CPC. In absence of required deposit made by the judgment-debtor within the time mandated by law such an exercise would be only an exercise in futility because the Executing Court does not have any option but to reject the petition. In such a situation the judgment under appeal is set aside - Decided in favour of appellant.

Summary

Issues:
Execution Proceeding - Court Sale Confirmation - Order under Appeal - Limitation Act Application - Deposit Requirement - Ignoring Relevant Provisions - Fresh Disposal - Appellant's Contentions - Respondent's Contentions - Interpretation of Rules 89 and 92 of Order XXI CPC - Article 127 of Limitation Act - Precedents Considered - High Court's Decision - Error of Law - Appeal Allowed with Costs

Analysis:
The judgment pertains to an Execution Proceeding where a property was put to auction, and the Court Sale was confirmed in favor of the auction purchaser, the Appellant, after rejecting the objections raised by the judgment-debtor, Respondent no.1. The Respondent filed an application under Order XXI Rule 89 of the CPC to set aside the Court Sale, which was dismissed by the Executing Court. The matter escalated through appeals and a Writ Petition before the High Court, which remitted the case back to the Executing Court for fresh disposal. The key legal question raised was whether the High Court could disregard the 60-day limitation period under Article 127 of the Limitation Act for filing an application to set aside a sale under Order XXI Rule 89 CPC.

The Court noted that the judgment-debtor failed to make the required deposit within the stipulated time frame. The Appellant contended that the High Court erred in not considering the relevant provisions of Rules 89 and 92 of Order XXI CPC and Article 127 of the Limitation Act. Citing precedents like Ram Karan Gupta v. J.S. Exim Ltd. and Dadi Jagannadham v. Jammlu Ramulu, the Appellant argued that the deposit is a prerequisite for setting aside the sale, and failure to do so should result in the dismissal of the application.

On the other hand, the Respondent argued that the High Court's decision to provide another opportunity to the judgment-debtor was justified given the circumstances of the case. The Court analyzed Rules 89 and 92 of Order XXI CPC along with Article 127 of the Limitation Act, emphasizing that the deposit and application timelines are aligned as per the Constitution Bench judgment in Jammlu Ramulu. Referring to the Ram Karan Gupta case, the Court reiterated that the deposit within the prescribed time is mandatory for setting aside the sale.

Ultimately, the Court held that the High Court erred in not applying the relevant provisions of the CPC and the Limitation Act. Given the established legal principles, the Executing Court had no choice but to reject the petition due to the absence of the required deposit within the statutory period. Consequently, the appeal was allowed, and Respondent no.1 was directed to pay costs to the Appellant.