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REPORTABLE

IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL     APPEAL     NO.      8652      OF     2012   [Arising out of SLP (Civil) No. 34402 of 2011]

Ram Karan Gupta .. Appellant

Versus

J. S. Exim Ltd. and Ors. .. Respondents

J     U     D     G     M     E     N     T   

K.     S.     Radhakrishnan,     J.   

1. Leave granted.

2. This matter arises in execution and this appeal has been  

preferred by one of the judgment debtors challenging the common  

final judgment and order dated 11.11.2011 passed by the High  

Court of Delhi in C. M. (M) No. 1093 of 2011 and E.F.A. No. 15 of  

2011.

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3. Decree holders and judgment debtors are co-sharers of a  

property bearing No. 1-87, Ashok Vihar, Delhi (hereinafter referred  

to as the ‘suit property’).  Late Rameshwar Dass Gupta filed a suit  

for partition of the suit property and after passing a preliminary  

decree, a final decree was passed and the suit property was ordered  

to be sold in public auction and sale proceeds were directed to be  

distributed among the shareholders.

  4. Decree holders filed execution petition and vide order dated  

20.11.2009, the auction sale was scheduled to be held on 9.1.2010.  

However, objector/J.D.2 Shri Ram Karan Gupta (appellant herein)  

moved an application seeking stay of auction sale scheduled to be  

held on 9.1.2010 and a joint application was moved by the decree  

holders and judgment debtors, wherein it was disclosed that J.D.2  

had agreed to purchase the suit property, as such, the auction sale  

be adjourned.   Later on, J.D.2 failed to comply with the terms and  

conditions of the Compromise and, therefore, a fresh process for  

auction sale was issued and the auction sale was scheduled to be  

held on 4.7.2010.  Due to various reasons, it did not materialize.  

Later, auction sale was scheduled to be held on 8.10.2010 and the

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auction was completed and the auction purchaser M/s J.S. Exim  

Ltd. (1st respondent herein) was found to be the highest bidder for a  

bid amount of Rs.9.60 crores.   The auction purchaser deposited  

Rs.2.40 crores by way of 27 demand drafts of even date towards  

25% of the bid amount.  The Court Auctioneer placed on record the  

record of the auction proceedings held on 8.10.2010.   

5. Later, the auction purchaser moved an application for  

depositing the remaining 75% of the sale price/bid amount of the  

suit property and the application was allowed and 75% of the sale  

amount was deposited by the auction purchaser on 23.10.2010 in  

the State Bank of India, Tees Hazari Court, Delhi.

6. The auction purchaser, later, moved an application under  

Order 21 Rules 94 and 95 of the Code of Civil Procedure (for short  

‘CPC’) for confirmation of sale.  J.D.2, the appellant herein, then  

sought for cancellation of the auction held on 8.10.2010 stating  

that the auction purchaser had failed to deposit 25% of the bid  

amount on completion of the auction sale proceedings.  Further, it  

was also pointed out that the auction purchaser had enclosed the  

drafts dated 7.10.2010 issued by the Indian Overseas Bank,

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Chennai, but the said bank drafts had not been enclosed by the  

Court Auctioneer with her report.  It was also contended that the  

auction was vitiated due to the violation of the mandatory  

provisions of Order 21 Rule 84 and 85 CPC.    

7. The auction purchaser refuted all those contentions and  

submitted that 25% of the bid amount was deposited on the date of  

auction after conclusion of the auction sale proceeding and the  

remaining 75% of the bid amount was deposited on 23.10.2010.  

Further, it was pointed out that the auction purchaser had got  

prepared the demand drafts of Rs.2.50 crores in the name of the  

Court Auctioneer. But, later on, it was disclosed by the Court  

Auctioneer that the demand drafts should be issued in the name of  

the competent authority, consequently, the auction purchaser got  

prepared the said demand drafts on 8.10.2010 and handed over the  

same to the Court Auctioneer.   Further, it was also pointed out  

that the words occurring “shall pay” and “immediately” do not mean  

that the 25% of the bid amount should be paid at the fall of the  

hammer.  Further, it was also pointed out that the auction sale

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could be set aside only on the ground of material irregularity or  

fraud that had resulted in substantial injury to the applicant.    

8. The Executing Court elaborately considered the various  

contentions raised by the parties and perused the documents and  

took the view that the auction purchaser had deposited 25% of the  

bid amount as mandated by Order 21 Rule 84 CPC.   Further, it  

was also held that the remaining 75% of the bid amount was also  

deposited by the auction purchaser on 23.10.2010 in terms of  

Order 21 Rule 85 CPC.   The Court, therefore, rejected the objection  

raised by the appellant/judgment debtor and confirmed the  

auction, vide its order dated 24.3.2011.    

9. The appellant/judgment debtor, aggrieved by the said order,  

preferred an appeal being E.F.A. No. 15 of 2011 and C.M. (M) No.  

1093 of 2011 before the High Court of Delhi.   Before the High  

Court, contention was raised that the auction purchaser had not  

complied with the mandatory requirements of Order 21 Rules 84  

and 85 CPC and that 25% of the bid amount was not deposited on  

the fall of the hammer and, consequently, the entire sale  

transaction was void and liable to be set aside.  Further, it was also

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stated that since the appellant was one of the family members, he  

should have been permitted to get the sale executed in his favour,  

since he had a pre-emptive right and he was ready and willing to  

deposit the amount of Rs.9.60 crores, so as to avoid the sale.

10. The High Court considered the various contentions raised by  

the parties and concurred with the views expressed by the  

Executing Court that the auction purchaser had complied with  

Order 21 Rules 84 and 85 CPC.  The High Court noticed that the  

auction purchaser had deposited 25% of the bid amount as  

mandated by Order 21 Rule 84 CPC and that he had also paid the  

remaining 75% of the bid amount within the statutory period, in  

terms of Order 21 Rule 85 CPC.  The High Court, therefore, upheld  

the order of the trial Court confirming the sale and directed the  

parties to execute documents of title in favour of the auction  

purchaser.  Aggrieved by the same, this appeal has been preferred.

11. Shri Ranjit Kumar, learned senior counsel appearing for the  

appellant, submitted that the auction purchaser had not complied  

with the mandatory provisions of Order 21 Rules 84 and 85 CPC,  

inasmuch as he did not deposit 25% of the bid amount immediately

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on the fall of the hammer.  It was pointed out that 25% of the bid  

amount was deposited only on 11.10.2010 and non-compliance of  

the above mentioned statutory provisions has vitiated the auction  

sale.  In support of his contentions, reliance was placed on the  

judgments of this Court in Manilal Mohanlal Shah and Others v.  

Sardar Sayed Ahmed Sayed Mahmad and another AIR 1954 SC  

349 and Balram son of Bhasa Ram v. Ilam Singh and others  

AIR 1996 SC 2781.  Learned senior counsel submitted that the  

appellant had preferred an application on 1.12.2010 before the  

Executing Court to allow the appellant to deposit the entire amount  

of the sale, after deduction of his one-forth share in the property,  

and handover the possession to him. Learned senior counsel  

submitted that the application was filed before the confirmation of  

sale, but was not considered by the Executing Court.  Learned  

senior counsel submitted that only if the application is allowed  

under Order 21 Rule 92(2) CPC, the appellant could deposit the  

amount within the time stipulated in the said provision.  Learned  

senior counsel submitted that the Executing Court has committed  

an error in confirming the sale before entertaining the application  

and allowing the same, so that the appellant could have deposited

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the entire amount.   Learned senior counsel submitted that even  

now the appellant is willing to pay the entire amount deposited by  

the auction purchaser including interest.  Further, it was also  

submitted that the appellant is willing even to pay Rs.1 crore more  

so that he can save the property where he is residing.  Learned  

senior counsel also placed reliance on a Constitution Bench  

judgment of this Court in Dadi Jagannadham v. Jammlu  

Ramulu and Others (2001) 7 SCC 71 and pointed out that there is  

no strict time limit in depositing the amount and the question of  

deposit arises only after the application is allowed.  Learned senior  

counsel pointed out that rationale in P. K. Unni v. Nirmala  

Industries and others (1990) 2 SCC 378 and the views expressed  

in that judgment that Order 21 Rule 92(2) CPC prescribed a period  

of limitation, was found to be incorrect in Jammlu Ramulu (supra).  

Learned senior counsel also placed reliance on M. Noohukan v.  

Bank of Travancore and another (2008) 11 SCC 161 and  

submitted that this Court, in the similar circumstances, had  

extended the time for depositing the amount.  Learned senior  

counsel submitted that, under such circumstances, the prayer for  

depositing the amount, as stated above, be allowed.

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12. Shri C. A. Sundram, learned senior counsel appearing for the  

respondent, submitted that this Court shall not interfere with the  

concurrent findings rendered by the Courts below.  Learned senior  

counsel submitted that the auction purchaser deposited 25% of the  

bid amount on 8.10.2010 and further deposited the remaining  

amount i.e. 75% of the bid amount on 23.10.2010.  Learned senior  

counsel pointed out that the mandate of Order 21 Rules 84 and 85  

CPC was complied with in letter and spirit and the Court Auctioneer  

was satisfied that the entire amount had been paid.   Learned  

senior counsel submitted that the word “immediately” occurring in  

Order 21 Rule 84 CPC was expanded by this Court in Rosali V. v.  

Talco Bank and others AIR 2007 SC 998.   It was pointed out  

that, in the present case, 27 drafts of Rs.2.40 corores had been paid  

to the Court Auctioneer on 8.10.2010, which is reflected in the  

report of the Court Auctioneer dated 8.10.2010.  The balance  

amount was also deposited in accordance with Order 21 Rule 85  

CPC.  Learned senior counsel submitted that there is no bona fide  

in the offer made by the appellant and, if, had any genuine interest  

for avoiding the sale, the amount offered should have been

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deposited before the confirmation of sale and within the time  

stipulated in Order 21 Rule 92(2) CPC.     

13. We are in full agreement with the order passed by the  

Executing Court as well as the High Court that the auction  

purchaser had deposited 25% of the amount on 8.10.2010.   When  

the auction is for such a large amount, running in crores of rupees,  

nobody can expect the auction purchaser to pay the amount in  

cash on the fall of the hammer. So far as the instant case is  

concerned, facts would reveal that the auction purchaser had paid  

Rs.2.40 crores, may not be in cash, but by way of drafts on  

8.10.2010 and the balance amount i.e. 75 % of the bid maount was  

also paid on 23.10.2010, consequently, in our view, the auction  

purchaser had complied with the provisions of Order 21 Rules 84  

and 85 CPC.

14. We may, in this connection, refer to the judgment of this Court  

in Talco Bank (supra), wherein this Court has extended the  

meaning of the term “immediately”  which occurs in Order 21 Rule  

84 CPC, as follows:

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“30. The term “immediately”, therefore, must be  construed having regard to the aforementioned  principles.  The term has two meanings. One, indicating  the relation of cause and effect and the other, the  absence of time between two events. In the former sense,  it means proximately, without intervention of anything,  as opposed to “immediately.”   In the latter sense, it  means instantaneously.

31. The term “immediately”, is thus, required to be  construed as meaning with all reasonable speed,  considering the circumstances of the case.  (See  Halsbury’s Laws of England, 4th Edition, Vol. 23, para  1618, p. 1178).”

Learned senior counsel appearing for the appellant, as we have  

already indicated, submitted that the Executing Court should have  

allowed his application dated 1.12.2010 since he preferred that  

application within 60 days of the date of sale, but could not deposit  

the amount since the application filed in terms of Order 21 Rule  

92(2) CPC was neither dealt with nor allowed.  Order 21 Rule 89  

CPC, it may be noted, gives a final opportunity to the judgment  

debtor to save his property by setting the sale aside before the  

confirmation upon the terms of satisfying the decretal debt and of  

paying compensation to the auction purchaser.   Rules 89 to 92 of  

Order 21 deal with setting aside of sale.  When a property is sold in  

execution of a decree and an application for setting aside the sale

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can be made under those provisions by the persons affected on the  

grounds mentioned therein.  Such an application has to be made  

within the prescribed period of limitation, the provisions mentioned  

therein are in the nature of concession and those provisions must  

be strictly complied with before a sale is set aside before  

confirmation. On setting aside the sale under Order 21 Rule 89 CPC  

the property continues to be the property of the judgment debtor.   

15. This Court in Tribhovandas Purshottamdas Thakkar v.  

Ratilal Motilal Patel and others AIR 1968 SC 372 held that the  

rule is intended to confer a right upon the judgment debtor, even  

after the property is sold, to satisfy the claim of the decree holder  

and to compensate the auction purchaser by paying him 5 per cent  

of the purchase-money.    In Challamane Huchha Gowda v. M. R.  

Tirumala and another (2004) 1 SCC 453, this Court held that it  

gives a final opportunity to put an end to the dispute, at the  

instance of the judgment debtor before the sale is confirmed by the  

Executing Court and enables him to save his property.  Order 21  

Rule 89 CPC is, therefore, intended to (i) to save the judgment  

debtor from the threatened deprivation of his property, (ii) to satisfy  

the claim of the decree holder and (iii) to compensate the auction

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purchaser. Rule 89 of Order 21 CPC also applies to a sale in  

execution of a decree for payment of money and an order of sale of  

property under the Partition Act, 1893 is a deemed decree under  

the Code and, therefore, an application for setting aside sale in  

execution of such decree is maintainable.   It also applies to a  

decree passed in terms of an award in a Partition suit, so also to a  

sale in execution of mortgage decree.   Order 21 Rule 92 CPC  

provides for confirmation of sale, as also setting aside the sale,  

which reads as follows:

“92. Sale when to become absolute or be set  aside.- (1) Where no application is made under 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 sixty  days from the date of sale, or in cases where the amount  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

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such time as may 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:

Provided further that the deposit under this sub- rule may be made within sixty days in all such cases  where the period of thirty days, within which the deposit  had to be made, has not expired before the  commencement of the Code of Civil Procedure  (Amendment) Act, 2002.

        (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- debtor’s title by filing a suit against the auction- purchaser, the decree-holder and the judgment-debtor  shall 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 proceeding in which the  sale had been held shall, unless the Court otherwise  directs, be revived at the stage at which the sale was  ordered.

Sub-rule (1) of Rule 92 deals with cases where no application to set  

aside the sale is made or such an application is made and  

disallowed.  In all these cases, the Court shall make an order  

confirming the sale.  Sub-rule (2) of Rule 92 covers those cases

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where an application for setting aside is made and allowed or in an  

application under Rule 89 requisite deposit has been made, in all  

such cases, the Court is bound to set aside the sale.   

16. A Constitution Bench of this Court in Jammulu Ramulu  

(supra) had occasion to consider the scope of Order 21 Rule 92(2)  

and Rule 89 CPC.  Overruling P. K. Unni (supra), this Court held as  

follows:

“15. A plain reading of Order 21 Rule 92 CPC  shows that the court could either dismiss an application  or allow an application. Order 21 Rule 89 CPC prescribes  no period either for making the application or for making  the deposit. The Limitation Act also prescribes no period  for making a deposit. However, Article 127 of the  Limitation Act prescribes a period within which an  application to set aside a sale should be made. Earlier,  this was 30 days, now it has been enhanced to 60 days.  Unless there was a period prescribed for making a  deposit, the time to make the deposit would be the same  as that for making the application. This is so because if  an application is made beyond the period of limitation,  then a deposit made at that time or after that period  would be of no use.

16. Normally, when the legislature wishes to  prescribe a period for making a deposit, it does so by  using words to the effect “no deposit shall be made after  …  days”  or “a deposit shall be made within …  days”  or  “no application will be entertained unless a deposit is  made within … days”. Order 21 Rule 92(2) CPC does not

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use any such expressions. The relevant portion of Order  21 Rule 92(2) CPC reads as follows:

“92. (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, … the  court shall make an order setting aside the sale:”

Thus Order 21 Rule 92(2) CPC is only taking away  discretion of the court to refuse to set aside the sale  where an application is made and allowed and the  deposit has been made within 30 days from the date of  sale. It is thus clear that Order 21 Rule 92(2) CPC is not  prescribing any period of limitation within which a  deposit has to be made.

17. Viewed in this context the intention of the  legislature in extending the period under Article 127 of  the Limitation Act may be seen. It is very clear from the  Statement of Objects and Reasons, which have been set  out hereinabove, that the period under Article 127 of the  Limitation Act was extended from 30 days to 60 days in  order to give more time to persons to make deposits. The  legislature has noted that the period of 30 days from the  date of sale was too short and often caused hardships  because judgment-debtors usually failed to arrange for  money within that period. The question then would be  whether by merely amending Article 127 of the Limitation  Act the legislature has achieved the object for which it  increased the period of limitation to file an application to  set aside sale.”

The Constitution Bench held that all that Order 21 Rule 92(2) CPC  

provides is that if the deposit is made within 30 days from the date  

of sale and an application is filed then the court would have no

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discretion but to set aside the sale.  The Court held that that does  

not mean that if the deposit is made after 30 days the court could  

not entertain the application.  If the deposit is made beyond the  

period of 30 days, but within the period of 60 days, then it will be  

within the discretion of the court whether or not to grant the  

application.   

17. Law Commission in its 89th report, para 42.35, page 219, Law  

Commission report 139th report paras 3.1 to 3.6 and 4.1 to 4.5  

considered the period of limitation of thirty days for depositing the  

amount to set aside sale as specified in sub-rule (2) of Rule 92 and  

suggested enlargement of period of sixty days so as to be consistent  

with Section 127 of the Limitation Act.  Following that the second  

proviso to sub-rule (2) of Rule 92, as inserted by the Code of Civil  

Procedure (Amendment) Act, 2002, clarified that the amendment  

would also apply to all those cases where the period of thirty days  

within which the deposit was required to be made had not expired  

before the commencement of the Amendment Act, 2002.  The  

amendment which came into force w.e.f. 01.07.2002 extends the  

period of deposit up to sixty days, which is in conformity with

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Section 127 of the Limitation Act, as amended by the Code of Civil  

Procedure (Amendment) Act 1976.

18. In Challamane Huchha Gowda (supra), the Court was  

primarily dealing with the question as to whether a mode of  

application has been prescribed for making an application for  

setting aside the sale.  The Court noted that Order 21 Rule 89 CPC  

requires an application to be made for setting aside the sale,  

nothing is stated in the rule regarding the mode of application and  

then held that purshis contains an implicit prayer for setting aside  

the sale and the absence of a formal application does not amount to  

non-compliance with the provision.  The above view expressed by  

certain High Courts was found favour by this Court in  

Tribhovandas Purshottamdas Thakkar (supra) and this Court  

held that Order 21 Rule 89 CPC does not provide that the  

application in a particular form shall be filed to set aside the sale.

19. We notice, in this case, there was no reference at all to the  

provisions of Order 21  Rule 89 in the application filed by the  

appellant on 1.12.2010, be that it may, even then the appellant had  

not complied with the mandatory requirements of depositing the

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amount.  Clause (a) of Sub-rule (1) of Rule 89 of Order 21 requires  

the applicant to deposit in Court 5 per cent of the purchase money  

for payment to the auction purchaser.  Deposit of the requisite  

amount in the Court is a condition precedent or a sine qua non to  

an application for setting aside the execution of sale and such a  

amount must be paid within a period specified in the rule and if the  

deposit is made after the time limit, the application must be  

dismissed. The deposit made under Rule 89 of Order 21 CPC  

should be unconditional and unqualified and the decree holder or  

the auction purchaser should be able to get the amount at once.  

20. We have already indicated that the rule is in the nature of a  

concession shown to the judgment debtor, so he has to strictly  

comply with the requirements thereof and a sale will not be set  

aside unless the entire amount specified in rub-rule (1) is deposited  

within 60 days from the date of the sale and, if it is beyond 60 days,  

the Court cannot allow the application.  We have already found that  

the appellant-judgment debtor did not pay the amount within the  

stipulated time and he only made an application on 1.12.2010  

without depositing the amount and hence the Court cannot

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entertain such an application and bound to confirm the sale which,  

in this case, the Court did on 23.10.2010.

21. We, therefore, find no error in the judgment and orders of the  

Executing Court as well as the High Court and the belated offer  

made by the appellant for depositing the amount now cannot be  

entertained and the same is rejected.   

22. The appeal, therefore, lacks in merits and the same is  

dismissed, with no order as to costs.   

                                                                                             ………………………………..J.

   (K.S. Radhakrishnan)

…………………………………..J.           (Dipak Misra)

New Delhi, December 3, 2012