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REPORTABLE

IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO.    154        OF 2013 (Arising out of S.L.P. (C) No.21765 of 2010)

C.N. Paramsivan & Anr. …Appellants

Versus

Sunrise Plaza TR. Partner & Ors. …Respondents

J U D G M E N T

T.S. THAKUR, J.

1. Leave granted.

2. This appeal  by special leave arises out  of  an  order  

passed by the High Court of Judicature at Madras whereby  

writ petition No.14594 of 2007 filed by the appellants has  

been dismissed and orders passed by the Debt Recovery  

Appellate Tribunal in M.A. No.90 of 2006 upheld, no matter  

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on a ground other than the one on which that found favour  

with the Appellate Tribunal.   

3. Facts  leading to  the  filing of  the  writ  petition  have  

been set out at considerable length in the orders passed by  

the Appellate Tribunal and that passed by the High Court.  

We do not, therefore, consider it necessary to recapitulate  

the entire history over again except to the extent the same  

is necessary for the disposal of the present appeal.  The  

long drawn legal battle that has raged over the past two  

decades or so has its genesis in a loan which respondent  

Indian Bank advanced to M/s. Sunrise Plaza, a partnership  

concern  comprising  respondent-S.  Kalyanasundaram and  

his wife - Mrs. Vasantha Kalyanasundaram. The loan was  

advanced on the  basis  of  an  equitable  mortgage  of  the  

properties owned by the partners of the firm by deposit of  

title deeds relevant thereto. The borrower having defaulted  

in the repayment of the loan amount, the respondent-bank  

filed O.A. No.238 of 1998 re-numbered as O.A. No.1098 of  

2001 before the Debt Recovery Tribunal at Chennai. Failure  

of the respondents to appear and contest the claim made  

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against  them  culminated  in  the  passing  of  an  ex-parte  

decree in favour of the bank on 20th September, 1999. An  

application for setting aside of the said decree was then  

made by the borrower defendants which was dismissed by  

the Tribunal for default. An application for recall of the said  

order too failed and was dismissed by the Tribunal.

4. Proceedings for execution of the Recovery Certificate  

issued in favour of the bank were in the meantime initiated  

and the property mortgaged with the bank brought to sale  

in  a  public  auction  on  7th March,  2003  in  which  the  

appellants  emerged  as  the  successful  bidders.  The  

respondents then filed I.A. No.146 of 2003 for setting aside  

of the auction sale, while I.A. No.150 of 2003 filed by them  

prayed for an order of refusal of confirmation of the sale.  

The Debt Recovery Tribunal passed a conditional order in  

the  said  application  deferring  the  confirmation  of  sale  

subject  to  the  judgment-debtor  depositing  a  sum  of  

Rs.10,00,000/- with the decree holder bank on or before  

25th April, 2003.  I.A. No.146 of 2003 for setting aside the  

sale was, however, dismissed by the Tribunal on 15th April,  

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2003,  as  not  maintainable.  A  prayer  made  by  the  

respondents - judgment-debtors for extension of time to  

make the deposit of the amount directed by the Tribunal  

having  been  rejected,  the  recovery  officer  proceeded  

further  and  issued  a  sale  certificate  in  favour  of  the  

appellants  on  28th May,  2003.  The  judgment-debtors  

-respondent Nos.1 to 3 then filed an appeal challenging the  

orders passed by the Debt Recovery Tribunal in which the  

Appellate Tribunal directed them to pay the requisite court  

fee.  

5. Aggrieved by the order of the Appellate Tribunal, the  

judgment-debtors filed Writ Petition No.28235 of 2003 in  

which the High Court by an order dated 14th October, 2003  

set aside the ex-parte decree on payment of costs. That  

order  when  challenged  by  the  decree  holder  bank  in  a  

Special Leave Petition before this Court was affirmed and  

the  SLP  dismissed  in  July  2004.  Undeterred  by  the  

dismissal  of  the  Special  Leave Petition,  the  bank filed a  

Review Application before the High Court for review of its  

order dated 14th October, 2003 setting aside the ex-parte  

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decree. Even the appellants herein filed a review petition  

against the said order which applications were dismissed by  

the  High  Court  with  liberty  to  the  auction  purchaser-

appellants herein to represent their case before the Debt  

Recovery Tribunal in the O.A. pending before it.  

6. The appellants-auction purchasers at that stage filed  

I.A. No.20 of 2005 before the Debt Recovery Tribunal at  

Chennai  seeking  delivery  of  possession  of  the  property  

purchased by them. That application was allowed by the  

Tribunal with a direction to the Recovery Officer to put the  

auction  purchasers  in  possession  of  the  property  in  

question.  The  defendants-respondents  herein  challenged  

that  order  before  the  Appellate  Tribunal  at  Chennai  on  

several  grounds  in  M.A.  No.90  of  2006.  The  Appellate  

Tribunal allowed the said appeal and set aside the order  

passed by the Debt Recovery Tribunal with a direction to  

the Debt Recovery Tribunal to take up I.A. No.20 of 2005  

along with O.A. No.1098 of 2001 and dispose of the same  

in accordance with law.  

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7. The  appellants  questioned  the  correctness  of  the  

above order in Writ Petition No.29356 of 2006 which was  

allowed by a Division Bench of the High Court by Order  

dated 29th November, 2006, setting aside the order passed  

by the Appellate Tribunal and remitting the matter back to  

the Debt Recovery Appellate Tribunal to decide the issue  

whether  or  not  the  rights  of  a  bona fide  purchaser  get  

curtailed if the ex-parte decree on the basis whereof the  

auction  sale  was conducted  is  eventually  set  aside.  The  

Debt  Recovery  Appellate  Tribunal  examined  the  matter  

afresh  and  held  that  the  appellants-auction  purchasers  

were not bona fide purchasers of the property as they were  

aware of the pending legal proceedings between the bank  

and the borrower.  The Tribunal accordingly set aside the  

sale with a direction to the defendants-respondents 1 to 3  

to deposit the entire amount claimed in original application.

8. Aggrieved  by  the  orders  passed  by  the  Appellate  

Tribunal,  the  appellants  filed  Writ  Petition  No.14594  of  

2007 before the High Court which writ petition has been  

dismissed by the High Court as already mentioned above.  

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The  High  Court  approached  the  issues  from  a  slightly  

different  angle;  for  instead  of  going  into  the  question  

whether the appellants were bona fide auction purchasers,  

it examined the validity of the auction itself and came to  

the conclusion that the auction conducted by the Recovery  

Officer was illegal and void because of non-compliance with  

the provisions of Rule 57 in the Second Schedule of the  

Income Tax Act, 1961 which were in view of the provisions  

of Section 29 of the Recovery of Debts Due to Banks and  

Financial Institutions Act, 1993 (hereinafter referred to a  

‘RDDB Act’ for short) applicable to recovery of debt dues  

under the latter mentioned Act. The present appeal assails  

the  correctness  of  the  above  order  passed by the  High  

Court.   

9. Appearing for the appellants Mr. L. Nageshwar Rao,  

learned  senior  counsel,  made  a  threefold  submission  in  

support of his case.  Firstly he contended that the remand  

order passed by the High Court in the earlier round was  

limited to the Appellate Tribunal finding out whether the  

rights of a bona fide purchaser stood curtailed in view of  

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the  setting  aside  of  the  ex-parte  decree  on  which  the  

auction  had  been  conducted.  While  the  Tribunal  had  

answered that question, the High Court had failed to do so  

in the writ petition filed by the appellants. The High Court  

had digressed from the subject and added a new dimension  

which had not been noticed or pressed in the earlier round.  

10. Secondly  he contended that even if  the High Court  

could examine a ground other  than the one on which a  

remand had been ordered, it failed to appreciate that the  

provisions of the Income Tax Rules set out in the Second  

Schedule of the Income Tax Act were applicable only “as  

far as possible and with necessary modification”.  This was,  

according  to  Mr.  Rao, evident  from  a  plain  reading  of  

Section 29 of the RDDB Act.  The use of the expressions  

“as  far  as  possible”  and “with  necessary  modifications”,  

argued  the  learned  counsel,  gave  sufficient  play  at  the  

joints to the Recovery Officer to apply the said rules in the  

manner considered most appropriate by him, having regard  

to the facts and circumstances of a given case.  The High  

Court had, argued Mr. Rao, fallen in an error in ignoring  

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the  expressions appearing in  Section 29 and proceeding  

with  the  matter  as  if  Rule  57  of  the  said  rules  was  

mandatory  and  applicable  with  full  force.   It  was  also  

contended by the learned counsel that if Rules 57 and 58 of  

the Income Tax Rules were held applicable in the form in  

which  they  appear  in  the  Second  Schedule,  the  

requirement  of  Rule  61  of  the  said  Rules  could  not  be  

ignored and had to be mandatorily followed.  Inasmuch as  

the Interlocutory Application filed by the judgment-debtor  

for  setting  aside  the  sale  had  been  dismissed  by  the  

Tribunal and inasmuch as there was no challenge to the  

said dismissal order at any stage, the High Court ought to  

have held that the condition precedent for setting aside the  

sale namely filing of a proper application was not satisfied  

thereby  rendering  the  sale  in  favour  of  the  appellants  

immune from any challenge or interference.   

11. It  was  thirdly argued  by  learned  counsel  for  the  

appellants that the appellants were bona fide purchasers,  

hence protected against any interference with the sale in  

their favour, no matter the decree on the basis whereof the  

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sale had been effected had itself been set aside by High  

Court.  Reliance in support was placed by Mr. Rao upon the  

decisions of  this  Court  in  Janak Raj v.  Gurdial  Singh  

(1967) 2 SCR 77;   Janatha Textiles and Ors. v. Tax  

Recovery  Officer  and  Anr.  (2008)  12  SCC  582;  

(1994)  2  SCC  364,  Padanathil  Ruqmini  Amma Vs.   

P.K.  Abdulla  (1996)  7  SCC  668.  It  was  further  

contended that a contrary view was no doubt expressed by  

a Two-Judge Bench of this Court in Chinnammal and Ors.  

v. P. Arumugham and Anr. (1990) 1 SCC 513 but the  

conflict between the two lines of the decisions referred to  

above deserved to be resolved by a reference to a larger  

Bench.  

12. Mr. Rakesh Dwivedi, learned senior counsel appearing  

for the respondents,  per contra argued that the scope of  

the proceeding before the High Court in the second round  

was not in any way limited by the earlier remand order and  

the High Court could have and has indeed examined the  

question of validity of the auction sale.  He urged that the  

provisions of the Income Tax Rules in the Second Schedule  

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of the Act were applicable in the form in which the said  

rules were found in the statute book as no modification or  

amendment of the said rules had been made either by any  

legislative enactment or by way of Rules under the RDDB  

Act. He contended that the words “as far as possible” were  

incapable of conveying that the Recovery Officer could at  

his discretion play with the rules without any limitations on  

his power or discretion and without any guidelines under  

the Act or the Rules.  He submitted that decision of this  

Court in  Chinnammal and Ors. v. P. Arumugham and  

Anr. (1990) 1 SCC 513 was not in conflict with the view  

taken in the decisions relied upon by Mr. Rao inasmuch as  

the said decisions had not examined the issue as to what  

would constitute a bona fide purchaser  to be entitled to  

protection in law. We propose to deal with the contentions  

raised by Mr. Rao ad seriatim.

13. The remand ordered by the High Court in Writ Petition  

No.29356/2006  was an  open  remand which  allowed the  

parties  to  urge  their  respective  contentions  not  only  in  

regard to the rights of a bona fide purchaser, but any other  

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contention available to them on facts and in law.  This is  

evident from the operative portion of the order passed by  

the High Court which was as under:

“In  the  above  circumstances,  as  agreed  by  learned   counsel appearing for the parties, the impugned order   dated  13.7.2006  passed  by  the  Debt  Recovery   Appellate Tribunal in M.A. No.90 of 2006 is set aside   and  the  case  is  remitted  to  the  Debt  Recovery   Appellate Tribunal, Chennai, to determine the aforesaid   issues and any other issue as has been raised by one   or other party in M.A. No.90 of 2006, preferably within   two months from the date of receipt or production of a   copy of this order.”

14. The language employed in the remand order apart,  

the  High  Court  had  not  examined  or  determined  the  

question whether  Rule 57 of the Income Tax Rules was  

mandatory and if so whether there was any breach of that  

provision or  the  effect  thereof.  There  was no discussion  

leave alone any finality to the determination of that aspect,  

so as to prevent anyone of the parties from urging their  

submissions on those questions. We have in that view no  

hesitation in rejecting the first limb of Mr. Rao’s argument  

that the High Court could not have gone into any other  

question apart the rights of a bona fide purchaser in the  

proceedings arising after the remand order.   

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15. That brings us to the question whether Section 29 of  

the RDDB Act do not apply the Income Tax Rules in the  

Second Schedule of the Income Tax Act to the recovery  

proceedings under RDDB Act with full force and that the  

expression  ‘as  far  as  possible’  appearing  in  Section  29  

vests the Recovery Officer with discretion to apply the said  

Rules  depending  upon  the  fact  situation  of  each  case.  

Section 29 of the RDDB Act 29 is as under:

29. Application of certain provisions of Income- tax  Act.—The  provisions  of  the  Second  and  Third   Schedules  to  the  Income-tax  Act,  1961  and  the   Income-tax (Certificate Proceedings) Rules, 1962, as in   force from time to time shall, as far as possible, apply   with necessary modifications as if the said provisions   and the rules referred to the amount of debt due under   this Act instead of to the Income-tax:   

Provided that any reference under the said provisions   and the rules to the “assessee” shall be construed as a   reference to the defendant under this Act.

16. A  bare  reading  of  the  above  leaves  no  manner  of  

doubt that the rules under Income Tax Act were applicable  

only “as far as possible” and with the modification as if the  

said provisions and the  rules  referred  to  the  amount  of  

debt due under the RDDB Act instead of the Income Tax  

Act.   The  question  is  whether  the  said  two expressions  

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render the provisions of Rule 57 directory no matter the  

same  is  couched  in  a  language  that  is  manifestly  

mandatory in nature.   

17. Legislation  by  incorporation  is  a  device  to  which  

legislatures often take resort for the sake of convenience.  

The  phenomenon  is  widely  prevalent  and  has  been  the  

subject matter of judicial pronouncements by Courts in this  

country as much as Courts abroad. Justice G.P. Singh in his  

celebrated  work  on  Principles  of  Statutory  

Interpretation has explained the concept in the following  

words:

“Incorporation of  an earlier  Act  into  a  later  Act  is  a   legislative device adopted for the sake of convenience   in  order  to  avoid  verbatim  reproduction  of  the   provisions of  the  earlier  Act  into  the  later.  When an   earlier Act or certain of its provisions are incorporated   by  reference  into  a  later  Act,  the  provisions  so   incorporated become part and parcel of the later Act as   if they had been ‘bodily transposed into it. The effect of   incorporation  is  admirably  stated  by  LORD  ESHER,   M.R.:  ‘If  a  subsequent  Act  brings  into  itself  by   reference  some of  the  clauses  of  a  former  Act,  the   legal effect of that, as has often been held, is to write   those sections into the new Act as if  they had been   actually written in it with the pen, or printed in it.  

Even though only particular sections of an earlier Act   are  incorporated  into  later,  in  construing  the   incorporated sections it may be at times necessary and   permissible to refer to other parts of the earlier statute   which  are  not  incorporated.  As  was  stated  by LORD  BLACKBURN:  “When  a  single  section  of  an  Act  of   

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Parliament  is  introduced  into  another  Act,  I  think  it   must be read in the sense it bore in the original Act   from which it  was taken, and that consequently it  is   perfectly legitimate to refer to all the rest of that Act in   order  to  ascertain  what  the  section  meant,  though   those other sections are not incorporated in the new   Act.”  

18. In Ram Kirpal Bhagat and Ors. v. State of Bihar   

(1969)  3  SCC  471 this  Court  examined  the  effect  of  

bringing into an Act the provisions of an earlier Act and  

held that the legislation by incorporation of the provisions  

of  an  earlier  Act  into  a  subsequent  Act  is  that  the  

provisions  so  incorporated  are  treated  to  have  been  

incorporated in the subsequent legislation for the first time.  

This Court observed:

“The effect of bringing into an Act the provisions of an   earlier Act is to introduce the incorporated Sections of   the  earlier  Act  into  the  subsequent  Act  as  if  those   provisions have been enacted in it for the first time.   The  nature  of  such  a  piece  of  legislation  was   explained by Lord Esher M. R. in  Re Wood’s Estate   [1881] 31 Ch. D.607 that “if some clauses of a former   Act were brought into the subsequent  Act the legal   effect  was to write those Sections into the new Act   just as if they had been written in it with the pen”.   

19. To the  same effect  is  the  decision of  this  Court  in  

Mahindra and Mahindra Ltd.  v.  Union of India and  

Anr. (1979) 2 SCC 529 where this Court held that once  

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the  incorporation  is  made,  the  provisions  incorporated  

become  an  integral  part  of  the  statute  in  which  it  is  

transposed and thereafter there is no need to refer to the  

statute  from  which  the  incorporation  is  made  and  any  

subsequent amendment made in it has no effect on the  

incorporating  statute.  The  following  passage  is  in  this  

regard apposite:

“The effect of incorporation is as if the provisions were   written out in the incorporating statute and were a part   of  it.  Legislation  by  incorporation  is  a  common  legislative  device employed by the legislature,  where   the legislature for convenience of drafting incorporates   provisions from an existing statue by reference to that   statute instead of setting out for itself  at  length the   provisions  which  it  desires  to  adopt.   Once  the   incorporation  is  made,  the  provision  incorporated   becomes an integral part of the statute in which it is   transposed and thereafter there is no need to refer to   the statute from which the incorporation is made and   any subsequent amendment made in it has no effect   on the incorporating statute.”

20. We may also refer to the decisions of this Court in  

Onkarlal Nandlal v. Rajasthan and Anr. (1985) 4 SCC  

404,  Mary Roy and Ors. v. State of Kerala and Ors.   

(1986)  2  SCC  209,  Nagpur  Improvement  Trust  v.   

Vasantrao and Ors. and Jaswantibai and Ors. (2002)  

7 SCC 657, and  M/s Surana Steels Pvt. Ltd. v. The  

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Deputy  Commissioner  of  Income  Tax  and  Ors.  

(1999)  4  SCC  306,  which  have  reiterated  the  above  

proposition of law.

21. Applying  the  above  principles  to  the  case  at  hand  

Section 29 of the RDDB Act incorporates the provisions of  

the Rules found in the Second Schedule to the Income Tax  

Act for purposes of realisation of the dues by the Recovery  

Officer  under  the RDDB Act.  The  expressions “as  far  as  

possible” and “with necessary modifications” appearing in  

Section 29 have been used to take care of situations where  

certain provisions under the Income Tax Rules may have  

no application on account of the scheme under the RDDB  

Act being different from that of the Income Tax Act or the  

Rules framed thereunder. The provisions of the Rules, it is  

manifest, from a careful reading of Section 29 are attracted  

only in  so far  as  the  same deal  with recovery of  debts  

under  the Act  with the modification that  the ‘amount of  

debt’ referred to in the Rules is deemed to be one under  

the RDDB Act. That modification was intended to make the  

position  explicit  and  to  avoid  any  confusion  in  the  

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application  of  the  Income Tax  Rules  to  the  recovery  of  

debts  under  the  RDDB Act,  which  confusion  could  arise  

from a literal application of the Rules to recoveries under  

the said Act.  Proviso to Section 29 further makes it clear  

that any reference “to the assessee” under the provisions  

of the Income Tax Act and the Rules shall be construed as  

a reference to the defendant under the RDDB Act.  It is  

noteworthy  that  the  Income Tax  Rules  make  provisions  

that do not strictly deal with recovery of debts under the  

Act.  Such of the rules cannot possibly apply to recovery of  

debts under the RDDB Act.  For instance Rules 86 and 87  

under the Income Tax Act do not have any application to  

the provisions of the RDDB Act, while Rules 57 and 58 of  

the  said  Rules  in  the  Second  Schedule  deal  with  the  

process  of  recovery  of  the  amount  due  and present  no  

difficulty in enforcing them for recoveries under the RDDB  

Act.  Suffice it to say that the use of the words “as far as  

possible” in Section 29 of RDDB Act simply indicate that the  

provisions of the Income Tax Rules are applicable except  

such of them as do not have any role to play in the matter  

of recovery of debts recoverable under the RDDB Act. The  

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argument that the use of the words “as far as possible” in  

Section  29  is  meant  to  give  discretion  to  the  Recovery  

Officer to apply the said Rules or not to apply the same in  

specific  fact  situations  has  not  impressed  us  and  is  

accordingly rejected.  

22. In  Osmania University v.  V.S. Muthurangam and  

Ors.  (1997)  10  SCC  741,  the  question  that  fell  for  

consideration was whether the age of superannuation of the  

non-teaching staff at Osmania University should be raised to  

60 years when the same had been raised to 60 years for the  

University's  teaching  staff.  Since  Section  38(1)  of  the  

Osmania University Act, 1959 stated that the conditions of  

service for all salaried staff of the University shall be uniform  

“as far as possible”, the decision in the case turned on the  

meaning to be given to that phrase.  It was argued by the  

Solicitor General on behalf of the University that the use of  

this  phrase  in  Section  38(1)  indicated  that  the  provision  

could be departed from in certain situations. This Court ruled  

otherwise and held as follows :  

“8...Mr. Solicitor General  is justified in his contention   that Section 38(1) of the Act recognizes flexibility and   

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the  expression  'as  far  as  possible'  inheres  in  it  an   inbuilt  flexibility...But  if  uniform conditions of service   for teaching and non teaching staff of the University is   not otherwise impracticable  , the University is under    an obligation to maintain such uniformity  because of   the mandate of Section 38(1) of the Act. In the instant   case, we do not find that it is    not at all practicable    for the University to maintain the parity in the age of   superannuation  of  both  teaching  and  non  teaching   staff.”

    (emphasis  supplied)

23. It follows that while the phrase “as far as possible”, may  

be indicative of a certain inbuilt flexibility, the scope of that  

flexibility extends only to what is “not at all practicable”. In  

order to show that Rules 57 and 58 of the Second Schedule  

of  the  Income Tax  Act  may be  departed  from under  the  

RDDB Act, it would have to be proved that the application of  

these Rules is “not at all practicable” in the context of RDDB  

Act.

24. The  interchangeable  use  of  the  words “possible”  and  

“practicable”  was  previously  established  by  a  three-judge  

Bench of this Court in N.K. Chauhan and Ors. v. State of  

Gujarat and Ors.,  (1977) 1 SCC 308,  where this Court  

observed  that  in  simple  Anglo-Saxon  Practicable,  feasible,  

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possible,  performable,  are  more  or  less  interchangeable.  

Webster defines the term ‘practicable’ thus :  

“1. That can be put into practice; feasible.  2. That can   be used for an intended purpose; usable.”   

25. Black's Law Dictionary similarly defines ‘practicable’  

as follows :  

“(Of  a  thing)  reasonably  capable  of  being   accomplished; feasible.”

26. It is, therefore, reasonable to hold that the phrase “as  

far as possible” used in Section 29 of the RDDB Act can at  

best mean that the Income Tax Rules may not apply where it  

is  not  at  all  possible to  apply them having regard  to  the  

scheme and the context of the legislation.  

27. There is nothing in the provisions of Section 29 of RDDB  

Act or the scheme of the rules under the Income Tax Act to  

suggest that a discretion wider than what is explained above  

was meant to be conferred upon the Recovery Officer under  

Section 29 of the RDDB Act or Rule 57 of the Income Tax  

Rules which reads as under:

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“57. (1)  On  every  sale  of  immovable  property,  the   person  declared  to  be  the  purchaser  shall  pay,   immediately  after  such  declaration,  a  deposit  of   twenty-five per cent on the amount of his purchase   money,  to  the  officer  conducting  the  sale;  and,  in   default  of such deposit,  the property shall  forthwith   be resold.

(2) The full amount of purchase money payable shall   be paid by the purchaser to the Tax Recovery Officer   on or before the fifteenth day from the date of the   sale of the property.”

28. It is clear from a plain reading of the above that the  

provision is  mandatory  in  character.  The  use  of  the  word  

“shall”  is  both  textually  and  contextually  indicative  of  the  

making  of  the  deposit  of  the  amount  being  a  mandatory  

requirement.  The  provisions  of  Rules  57  and  58  of  the  

Income Tax Rules, have their equivalent in Order XXI Rules  

84, 85 & 86 of the C.P.C. which are pari materia in language,  

sweep and effect and have been held to be mandatory by  

this Court in  Manilal Mohanlal Shah and Ors. v. Sardar   

Sayed Ahmed Sayed Mahmed and Anr. (AIR 1954 SC  

349) in the following words:

“8. The provision regarding the deposit of 25 per cent.   by  the  purchaser  other  than  the  decree-holder  is   mandatory as the language of the rule suggests. The   full  amount  of  the  purchase-money  must  be  paid   within fifteen days from the date of the sale but the   decree-holder is entitled to the advantage of a set-off.   

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The provision for  payment is,  however,  mandatory...   (Rule  85).  If  the  payment  is  not  made  within  the   period of fifteen days, the Court has the discretion to   forfeit the deposit, and there the discretion ends but   the obligation of  the Court  to re-sell  the property is   imperative. A further consequence of non-payment is   that the defaulting purchaser forfeits all  claim to the   property (Rule 86)...

9...These  provisions  leave  no  doubt  that  unless  the   deposit and the payment are made as required by the   mandatory provisions of the rules, there is no sale in   the eye of  law in favour of the defaulting purchaser   and no right to own and possess the property accrues   to him.

xx xx xx xx

11.  Having  examined  the  language  of  the  relevant   rules  and  the  judicial  decisions  bearing  upon  the   subject  we are of  opinion that  the  provisions of  the   rules  requiring  the  deposit  of  25  per  cent.  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 are mandatory and   upon non-compliance with these provisions there is no   sale at all. The rules do not contemplate that there can   be any sale in favour of a purchaser without depositing   25  per  cent.  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. The very fact that   the Court is bound to resell the property in the event   of a default shows that the previous proceedings for   sale are completely wiped out as if they do not exist in   the  eye  of  law.  We  hold,  therefore,  that  in  the   circumstances of the present case there was no sale   and the purchasers acquired no rights at all.”

29. Relying in  Manilal Mohanlal’s case (supra) Rules 84,  

85 and 86 of Order XXI were also held to be mandatory in  

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Sardara  Singh  (Dead)  by  Lrs.  and  Anr.  v.  Sardara   

Singh (Dead) and Ors. (1990) 4 SCC 90.  

30. Similarly  in  Balram,  son  of  Bhasa  Ram  v.  Ilam  

Singh and Ors.  (1996) 5 SCC 705  this Court reiterated  

the legal position in the following words:

“7...it was clearly held [in Manilal Mohanlal] that Rule  85  being mandatory,  its  non-compliance renders  the   sale  proceedings  a  complete  nullity  requiring  the   executing court to proceed under Rule 86 and property   has to be resold unless the judgment-debtor satisfies   the decree by making the payment before the resale.   The argument  that  the  executing court  has  inherent   power to extend time on the ground of its own mistake   was also expressly rejected...”

31. We may also refer to the decisions of this Court in Rao  

Mahmood Ahmed Khan v. Sh. Ranbir Singh and Ors.   

(1995)  4  SCC  275,  Gangabai  Gopaldas  Mohata  v.   

Fulchand and Ors. (1997) 10 SCC 387, Himadri Coke &  

Petro  Ltd.  v.  Soneko  Developers  (P)  Ltd.  And  Ors.   

(2005) 12 SCC 364  and Shilpa Shares and Securities  

and Ors. v. The National Co-operative Bank Ltd. and  

Ors.  (2007) 12 SCC 165,  wherein the same position has  

been taken.  

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32. In the light of the above we see no reason to hold that  

Rules 57 and 58 of the Income Tax Rules are anything but  

mandatory in nature, so that a breach of the requirements  

under those Rules will render the auction non-est in the eyes  

of law.

33. That  leaves  us  with  the  third  and  the  only  other  

submission made by Mr. Rao touching the rights of bonafide  

purchaser  and  whether  there  is  any  conflict  between  the  

decisions of this Court on the subject to call for a reference  

to a larger bench.  There is, in our opinion, no doubt that  

there  is  an  apparent  conflict  between  the  decisions  upon  

which reliance was placed by learned counsel for the parties.  

But having regard to the view that we have taken on the  

question  of  the  validity  of  this  auction  itself,  we  do  not  

consider it necessary to make a reference to a larger bench  

to resolve the conflict.  The cleavage in the judicial opinion is  

for  the  present  case  only  of  academic  importance,  hence  

need not be addressed by us or by a larger bench for the  

present.

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34. In the result, this appeal fails and is hereby dismissed  

but in the circumstances without any order as to costs.

……..………….……….…..…J.         (T.S. Thakur)

     …………………………..…..…J.              (Gyan Sudha Misra)

New Delhi January 9, 2013

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