Full Judgment Text
REPORTABLE
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NOS. 16431644 OF 2020
AARIFABEN YUNUSBHAI PATEL & ORS. … APPELLANTS(S)
VERSUS
MUKUL THAKOREBHAI AMIN & ORS. … RESPONDENT(S)
WITH
CONTEMPT PETITION(CIVIL)No. 63 of 2020
In
CIVIL APPEAL NOS.16431644 of 2020
And
CIVIL APPEAL NO. 1647 OF 2020
J U D G M E N T
Deepak Gupta, J.
1. M/s. Abhilasha Construction, Respondent No.3 herein
(hereinafter referred to as R3), obtained a
loan from Shree Mahalaxmi Mercantile Coop Bank Ltd.,
Signature Not Verified
Respondent No. 2 herein (hereinafter referred to as
Digitally signed by
GEETA AHUJA
Date: 2020.03.17
15:17:47 IST
Reason:
R2), but failed to repay the loan and R
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2 filed summary proceedings for recovery of the amount due to it
from R3 and Mukul Thakorebhai Amin, Respondent No.1 herein
(hereinafter referred to as R1), who was a partner in the said
Firm. During the pendency of the suit, R3 applied for release of
12 flats and 2 penthouses which were permitted to be released on
the said respondents depositing Rs. 65 lakhs. However,
Respondent Nos. 1 & 3 failed to deposit the said amount. On
12.08.2004, the adjudicating authority granted leave to the
defendants to contest the suit on the condition that they would
deposit 33% of the amount claimed by R2. This amount was
also not deposited. Thereafter, a decree for a sum of Rs.
1,89,94,105.50, was passed on 14.09.2004 in favour of R2 and
against the defendants which included Respondent Nos. 1 & 3.
We have given the facts of Civil Appeal No.16431644 of 2020.
As far as Civil Appeal No.1647 of 2020 is concerned, that relates
to advertisement for sale of a bungalow which was issued on
13.01.2008, and sale was made on 03.03.2008.
2. The said decree dated 14.09.2004 was challenged in appeal
before the Gujarat State Cooperative Tribunal. It appears no stay
was granted. In the meantime, R2 filed an application for
execution of the decree before the Civil Judge, Vadodara on
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01.11.2007. On the very next day, i.e. 02.11.2007, an
application was filed for appointment of receiver for execution of
decree. The court allowed the said application on 02.11.2007
itself and the court receiver was permitted to sell the property
and report to the Court within 15 days. R2 also filed an
application for attachment of property on which orders were also
passed on 02.11.2007. Advertisement for auction of the said
property was published in the newspaper on 21.11.2007. The
upset price was not mentioned in the said advertisement.
Pursuant to the public notice for sale, the auction of the attached
property was conducted on 26.11.2007, wherein the appellants
offered Rs.78,25,251/. There were only two bidders and the
appellants were the highest bidders and they deposited 25% of
the sale consideration on the spot. Thereafter, on 10.12.2007 R
2 applied for permission to confirm the sale and vide order dated
10.12.2007 the executing court accepted the report of court
receiver and permitted him to execute the same. Thereafter, the
receiver filed some application for clarification and on 18.12.2007
counsel appearing on behalf of R3 sought time to file objections.
3. Instead of filing objections, R1 filed a writ petition before
the High Court of Gujarat challenging the sale of 12 flats and 2
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penthouses pursuant to the court auction. This petition was
filed on 26.12.2007. It also appears that R1 kept appearing
before the executing court and requested the executing court to
stay further proceedings. Initially, the proceedings were stayed
but when R1 did not file any objections under Order XXI Rule 90
of the Code of Civil Procedure, 1908 (CPC for short), sale
certificate in respect of 12 flats and 2 penthouses was issued in
favour of the appellants by the executing court on 29.02.2008.
4. On 05.03.2008, a statement was issued by R1 that a buyer
is ready and willing to purchase the properties for Rs.1.7 crores.
The learned Single Judge of the High Court permitted the
proposed buyer to deposit a sum of Rs.50 lakhs and status quo
was granted. This amount of Rs.50 lakhs was deposited.
Aggrieved, the appellants preferred a Letters Patent Appeal (LPA
for short) and order dated 05.03.2008 was stayed by order dated
01.04.2008. Aggrieved by the order of the Division Bench, R1
filed SLP in this Court. It appears that in the meantime, R2 had
filed an application before the executing court on the ground that
it had not authorised its officer to get the property sold.
Therefore, on 21.04.2008 on the statement of learned counsel for
R1, permission was given to withdraw the SLP in view of the
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application filed by R2 before the executing court. Thereafter,
on 20.06.2008, R1 filed an application under Order XXI Rule 90
of the CPC and the main grievance in this application was that no
notice had been sent to R1 or R3, either of the execution
petition or of the attachment of the property or before settling the
terms of proclamation of sale. In addition to this, another
grievance was that the property had been sold for a price much
less than the mortgaged price.
5. On 17.07.2008, R1 made a submission before the High
Court that it had filed an application under Order XXI Rule 90 of
the CPC, before the executing court and the High Court recorded
the following observation:
“Mr. Majumdar, learned advocate appearing on behalf of
the petitioner has submitted that even the question with
respect to limitation in preferring the application for
setting aside the sale might arise. Mr. Sanjanwala,
learned advocate senior advocate appearing with Ms.
Sonal Shah, learned advocate appearing on behalf of the
contesting respondent Nos.7 and 8 and Mr. M.M. Saiyed,
learned advocate appearing on behalf of the contesting
Respondent No.9, have submitted that let the application
for setting aside the sale be decided on merits and they
will not raise the objection with respect to limitation. Mr.
Sanjanwala, learned senior counsel with Ms. Sonal Shah,
learned advocate appearing on behalf of respondent Nos.
7 and 8 and Mr. Saiyed, learned advocate appearing on
behalf of the respondent No.9 have submitted for a period
of one week from today, the parties will maintain status
quo.”
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6. On 25.07.2008 the LPA filed earlier was dismissed as
infructuous. On 07.10.2008, the appellants herein filed an
application to recall the concession not to raise the issue of
limitation recorded in the order dated 17.07.2008. The High
Court dismissed this application. Thereafter, the appellants
approached this Court by filing SLP(C) No. 2674526746 of 2008.
These petitions were disposed of on 23.03.2009, and the relevant
portion of the order reads as follows:
“…In these cases, what is sought to be argued on behalf
of the petitioner is that the Execution Petition in which
there is an allegation of fraud, in the holding of the
auction sale, was time barred. This question needs to be
decided by Executing Court. But even if it comes to the
conclusion that the application for execution was time
barred, we direct the Executing Court to give its findings
as to whether there was a fraud in conducting the sale.
While deciding the question of limitation the Executing
Court will also decide the scope and applicability of
Section 5 and Section 14 of the Limitation Act…”
Thereafter, the matter went back to the Executing Court which by
a very detailed order rejected the application of R1 filed under
Order XXI Rule 90 of the CPC. Thereafter, R1 challenged the
order of the executing court by filing a petition in the High Court
which was allowed vide impugned order. The objections to the
execution petition filed by R1 were accepted and sale in favour of
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the appellants was set aside. The High Court went into the
merits of the petition but did not decide the issue of limitation.
Though the High Court noticed that the appellants had raised the
plea of limitation, it did not decide the same and the observation
of the High Court in this regard is as follows:
“ 29 . The court has come to the conclusion that the
auction of both the properties were vitiated on account of
lack of notice to the judgmentdebtor, and that being an
error fatal to the validity of auction sale, in light of the
decision of the Supreme Court the auction sale cannot be
permitted to remain and they have to be quashed. Other
submissions of the counsel for the auction purchasers
therefore need not be elaborately dealt with, but suffice it
to say that the Court is quashing the auction sale on
ground of noncompliance with the mandatory provision
of notice to the judgmentdebtor.”
We are constrained to observe that the High Court totally ignored
the order of this Court quoted hereinabove. This Court had
specifically directed the executing court to decide both, the issue
of limitation and objections on merits. This was obviously done
with the purpose that in case later if the issue of limitation is
decided in favour of the objectors, R1 and R3, then the matter
again should not be remanded for decision on merits of the case.
The issue of limitation could not have been ignored and should
have been decided by the High Court.
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7. We may note that it has been strenuously urged by Mr.
Nikhil Goel, learned counsel for the Respondents that the sale is
fraudulent without following the procedure prescribed by law, but
we are clearly of the view that first we have to decide whether the
objections filed by the respondents were filed within time or not.
In case the petition is filed beyond the period of limitation it is not
necessary for the Court to go into other issues.
8. Order XXI Rule 90 of the CPC reads as follows:
“ 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 decreeholder, or the
purchaser, or any other person entitled to share in a
rateable 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.”
9. The limitation for filing an application to set aside a sale in
execution of decree is 60 days in terms of Article 127 of Third
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Division, Part1 of the Limitation Act, 1963 (for short the Act).
Reference may also be made to Section 5 of the Act which reads
as follows:
“ 5. Extension of prescribed period in certain cases .—
Any appeal or any application, other than an application
under any of the provisions of Order XXI of the Code of
Civil Procedure, 1908 (5 of 1908), may be admitted after
the prescribed period, if the appellant or the applicant
satisfies the court that he had sufficient cause for not
preferring the appeal or making the application within
such period.
Explanation.—The fact that the appellant or the applicant
was misled by any order, practice or judgment of the
High Court in ascertaining or computing the prescribed
period may be sufficient cause within the meaning of this
section.”
A bare reading of this provision clearly shows that Section 5 of
the Act which deals with extension of time or condonation of
delay is not applicable to proceedings under Order XXI Rule 90 of
the CPC. Therefore, the delay, if any, cannot be condoned under
Section 5 of the Act.
10. That takes us to Section 14 of the Act, which reads as
follows:
“14. Exclusion of time of proceeding bona fide in
court without jurisdiction .—(1) In computing the period
of limitation for any suit the time during which the
plaintiff has been prosecuting with due diligence another
civil proceeding, whether in a court of first instance or of
appeal or revision, against the defendant shall be
excluded, where the proceeding relates to the same
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matter in issue and is prosecuted in good faith in a court
which, from defect of jurisdiction or other cause of a like
nature, is unable to entertain it.
(2) In computing the period of limitation for any
application, the time during which the applicant has
been prosecuting with due diligence another civil
proceeding, whether in a court of first instance or of
appeal or revision, against the same party for the same
relief shall be excluded, where such proceeding is
prosecuted in good faith in a court which, from defect of
jurisdiction or other cause of a like nature, is unable to
entertain it.
(3) Notwithstanding anything contained in rule 2 of Order
XXIII of the Code of Civil Procedure, 1908 (5 of 1908), the
provisions of subsection (1) shall apply in relation to a
fresh suit instituted on permission granted by the court
under rule 1 of that Order where such permission is
granted on the ground that the first suit must fail by
reason of a defect in the jurisdiction of the court or other
cause of a like nature.
Explanation.—For the purposes of this section,—
(a) in excluding the time during which a former
civil proceeding was pending, the day on which
that proceeding was instituted and the day on
which it ended shall both be counted;
(b) a plaintiff or an applicant resisting an appeal
shall be deemed to be prosecuting a proceeding;
(c) misjoinder of parties or of causes of action
shall be deemed to be a cause of a like nature
with defect of jurisdiction.”
In terms of this Section the time spent by the applicant for
prosecuting with due diligence other civil proceedings may be
excluded if such proceedings are prosecuted in good faith in a
court which, from defect of jurisdiction or other cause, is unable
to entertain it.
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11. As far as the present case is concerned it is not even
disputed by R1 that it had knowledge about the sales on
18.12.2007 when counsel appearing for R3, had sought
permission to file the objection application under Order XXI Rule
90 of the CPC. The writ petition was filed on 26.12.2007. On
21.04.2008, R1 withdrew the SLP before this Court on the
ground that an application has been filed by R2 before the
executing court on 18.03.2008. The writ petition itself was
dismissed on 17.07.2008. On behalf of R1 it is urged that since
the writ petition was disposed of on 17.07.2008 and the objection
to the execution petition was filed on 20.06.2008, the same is
within limitation.
12. We are unable to accept this proposition. Any person
claiming benefit of Section 14 of the Act can only claim exclusion
of time of that period for which it had been prosecuting another
remedy with due diligence and in good faith . We are prima facie of
the view that it cannot be said that the writ petition was filed in
good faith or by due diligence because on 18.12.2007 the counsel
for R3 had made a statement that he would file objections to the
execution petition. However, assuming that these proceedings
were filed in good faith, after a statement was made before this
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court on 21.04.2008, R1 should have immediately filed the
application before the executing court. The continuance of the
proceedings before the High Court can neither be said to have
been done in good faith nor in exercise of due diligence.
13. Even if we accept the case of R1, at best, the period from
26.12.2007 to 21.04.2008 can be excluded. If we exclude that
period then we have 7 days in December, 9 days in April, 31 days
in May and 19 days in June. Thus, by giving benefit of all days of
passing of the orders then also R1 & R3, would be barred by
limitation for filing the application under Order XXI Rule 90 of the
CPC by 6 days. Since there is no power to condone such delay,
the petitions had to be dismissed as being time barred. Therefore,
the appeals have to be allowed on this short ground.
14. Accordingly, we allow the appeals and set aside the
judgment of the High Court dated 07/08.11.2008 in Special Civil
Application No. 3166 of 2010 and uphold the order of the
executing court dated 23.02.2010 in Special Petition No. 81 of
2007. In view of this judgment, Contempt Petition (Civil) No.63 of
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2020, is also disposed of. Pending application(s), if any, shall
also stand disposed of.
……………………………..J.
(L. Nageswara Rao)
…………………………….J.
(Deepak Gupta)
New Delhi
March 17, 2020
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