PAUL vs. T. MOHAN

1 NON­REPORTABLE IN THE SUPREME COURT OF INDIA CIVIL APPELLATE JURISDICTION CIVIL APPEAL NO.   6146   OF 2019 PAUL                            ….APPELLANT VERSUS    T. MOHAN AND ANOTHER                               ….RESPONDENT(S) J U D G M E N T Vineet Saran, J. The appellant herein is the auction purchaser of the scheduled property measuring 2 acres 43 cents in Village Managiri, Madurai District, Tamil Nadu, which auction has been quashed by the High Court, and hence, this appeal. 2. The brief facts of this case are that the respondent No. Signature Not Verified Digitally signed by DEEPAK SINGH Date: 2020.04.24 16:59:00 IST Reason: 1 – T. Mohan was a guarantor  of one Rajendran (who was his son’s friend). The said Rajendran  had taken a chit for a 2 sum   of   Rs.   5,00,000/­   (Rupees   five   lakhs   only)   from respondent No. 2­ Shriram Chits Tamil Nadu Ltd. (for short “Chits   Company”)   for   a   period   of   40   months   and     had executed   a   pro­note   dated   18.01.2000   for   a   sum   of   Rs. 3,37,500/­ (Rupees three Lakhs thirty seven thousand five hundred only), for which  the respondent No. 1 and his son stood as guarantors, and for that, a collateral security of the scheduled property had been executed.  The said Rajendran had paid the first 25  installments out of 40  and thereafter failed   to   pay   the   remaining   installments.     A   notice   was issued   to   the   said   Rajendran   requiring   him   to   pay   the remaining   amount   of   Rs.   1,84,840/­   (Rupees   one   lakh eighty four thousand eight hundred forty only) along with interest @ 24%, which he failed to pay.  The respondent No. 2 ­Chits Company, thus filed a petition   under Section 64 (1)(A) of Indian Chit Funds Act, 1982 before the  Deputy Registrar  of  Chits, Madurai South,  in  which an  ex­parte Award dated 21.1.2002 was passed and the respondent No. 1 was directed to  pay a sum of  Rs. 1,95,631/­ (Rupees one lakh ninety five thousand six hundred thirty one only) to the 3 respondent   No.   2­Chits   Company.     Respondent   No.   1 claimed that he was not aware of the ex­parte award. 3. The respondent No. 2 ­Chits Company filed Execution Petition No. 21 of 2003 before the Ist Additional Subordinate Judge, Madurai for execution of the ex­parte Award. 4. On receipt of the notice of the execution proceedings, the   son   of   respondent   No.   1   started   to   repay   the   due amount in instalments .   However, in the meantime, the suit property   was   auctioned   on   01.03.2010,   in   which   the appellant   was   the   highest   bidder,   for   an   amount   of   Rs. 1,77,000/­ (rupees one lakh seventy seven thousand only) and   the   same   was   confirmed   on   04.03.2010,     after   the appellant   had deposited the said amount.   On coming to know   of   the   said   facts,   the   son   of   respondent   No.   1 approached   the   respondent   No.   2­Chits   Company   and repaid the entire amount.  On 10.3.2010,  respondent No. 1 preferred Revision being Executing Application No. 208 of 2010 under Order XXI Rule 89 and Section 151  of Code of Civil Procedure, 1908 (CPC)  for  setting­aside the auction of the   suit   property.     It   is   note­worthy   that   during   the 4 pendency of the said application, respondent No. 2­ Chits Company had issued a no­dues certificate,   as the entire dues had been cleared  by the respondent No. 1, which facts was brought to the knowledge of the Executing Court.     5.   The matter was kept pending, without any progress, for nearly four years and  in the meantime, respondent No. 1 had sold the suit property  to a third party on 12.09.2011. It was, thereafter that on 01.04.2014, the  Revision filed by the respondent No. 1 was dismissed and sale certificate was issued in the name of auction purchaser – appellant   on 21.7.2014.     Based   on   the   same,   the   appellant­auction purchaser  made an attempt to take the possession of the property,   which   was   objected   to     by   the   third   party purchaser   and     on   the   complaint   of   the   third   party purchaser, the respondent No. 1 and his family members were arrested and later released  on bail.  The respondent No. 1 contends  that it was only after  he was released on bail that he came to know of the dismissal of his Revision and   after   obtaining   the   certified   copy   of   the   order,   he preferred   Civil   Revision   Petition   before   the   High   Court, 5 which   has   been   allowed   by   a   detailed   judgment   dated 02.08.2018,   the   operative   portion   of   which   is   extracted hereinbelow:  “In the Result: (a) This Civil Revision Petition is allowed  and the impugned order in EA No. 208 of 2010 in E.P. No. 21 of 2003 dated 1.3.2014, on the file of the learned Ist Additional Subordinate Judge, Madurai   is   set­aside   and   the   auction   sale dated 04.03.2010 is also set­aside. (b) The   revision   petitioner/guarantor   is   hereby directed   to   deposit   the   entire   auction   sale amount   of   Rs.   1,77,000/­   along   with   the interest at the rate of 9% per annum from the date of auction i.e. on 04.03.2010 till the date of deposit, before the Executing Court namely; the learned Ist Additional Subordinate Judge, Madurai, within a period of two weeks from the date of receipt of a copy of this order; nd (c) The 2  respondent/auction purchaser shall be entitled   to   claim   the   amount   by   making necessary   application   before   the   Executing Court; (d) The Executing Court namely; the learned Ist Additional   Subordinate   Court,   Madurai   is directed   to   pass   orders   for   proclamation informing   the   concerned   Registrar   of Registration Department for making necessary entry to this effect and further cancel the entry regarding the sale certificate dated 21.7.2014 nd issued   in   favour   of   2   respondent/auction purchaser; 6 (e) The Executing Court is directed to complete the said exercise within a period of two weeks from   the   date   of   deposit   of   the   amount   by revision petitioner as directed in clause (b); (f) The   revision   petitioner   is   entitled   to   make necessary   application   before   the   executing court seeking refund of the amount deposited nd by   the   2   respondent/auction   purchaser, pursuant to the auction held on 04.03.2010, which   application   shall   be   decided   by   the Executing   Court   after   giving   notice   and sufficient   opportunity   to   the   Ist   respondent chits, which exercise shall be completed within a period of two months from the date of such application.     No   costs.   Consequently, connected miscellaneous petition is closed.” 6. The specific case of respondent No. 1 before the High Court was that the petition filed by the respondent No. 2­ Chits   Company   before   the   Deputy   Registrar   of   Chits, Madurai   South   was   itself   not   maintainable,   as   no   prior notice was issued to the respondent No. 1.   It was also contended   that     straightaway   upset   price   fixed   as   Rs. 1,77,000/­     was   very   much   lower   than   the   guidelines contemplated under CPC and those issued by this Court.  It was further contended that   respondent No. 1 was merely the guarantor of one Rajendran and the Deputy Registrar of 7 Chits   should have first considered recovering the amount from   the   said   Rajendran   before   proceeding   against   the respondent No. 1.  The specific case of respondent No. 1 was that he had paid the entire amount within a week of the auction and obtained the no­due certificate from respondent No. 2 ­Chits Company, of which the Executing Court did not take notice and the matter was kept pending for nearly four years.   With regard to dismissal of his Revision by the Ist Additional   Subordinate   Judge   on   the   ground   that   the provisions of Order XXI Rule 89 CPC were not complied with,   it  was   contended   that   the   application   preferred   by respondent  No. 1 to set­aside the  auction was  also filed under Section 151 CPC and since the entire amount had already   been   paid   by   the   respondent   No.   1   to   the respondent No. 2­Chits Company, which had also issued a no­due   certificate,   there   was   no  necessity   to   deposit  the auction amount along with 5% interest as required under Order XXI Rule 89 CPC. 7.   The main contention of the appellant before the High Court was that the Revision of respondent No. 1 was rightly 8 dismissed by the Revisional   Court for non­compliance of the provisions of Order XXI Rule 89 CPC and as such,  the auction was rightly held and  confirmed.   8.    The High Court took notice of the said contentions of both   the   parties   and   was   of   the   opinion   that   “before applying the legal provisions and testing their applicability, the Court has to look into the facts and circumstances of that particular   case ”.       The   High   Court   noted     that   the respondent   No.   1   was   merely   a   guarantor   and   not   a borrower and that the entire due amount  was deposited by respondent   No.     1   with   the   respondent   No.   2   –   Chits Company, for which no­dues certificate was also issued, of which due information was given to the Execution Court, which had not been considered. Thus, since the Revision had been filed within less than a week of the auction and entire dues had been   settled,     the confirmation of the auction was not justified .        The High Court further  held that  the application had   been   filed   also   under   Section   151   CPC   and     the inherent powers  ought to have been invoked in the facts of 9 the present case,  as the entire amount due had been paid and the respondent No. 1 was merely a guarantor, and not the borrower.  After noticing that the right to property is a constitutional   right,   which   could   not   be   infringed   in   the manner   as has been done in the present case, the High Court allowed the Civil Revision Petition.   The High Court further held that the present case was that of a real fraud committed by the borrower, and the guarantor had lost his property and was knocking the doors of the High Court to save his right to hold the suit property.   The High Court noticed that there would be substantial injury caused to the respondent No. 1­guarantor, if   his property was allowed to be taken away.  It was, in such facts and circumstances of this case, that the Civil Revision Petition was allowed with the directions, as have been quoted hereinabove.    9.     The submission of the appellant herein is primarily based   on   the   Revision   of   respondent   No.   1   having   been dismissed by the Revisional Court on the ground of non­ compliance of Order XXI Rule 89 CPC. In our view, the said question has been dealt with by the High Court in detail and 10 in the peculiar facts and circumstances of this case, we are of the opinion that the view taken by the High Court  is not such, which would call for interference under Article 136 of the Constitution of India, as in our view, substantial justice between the parties has already been done.  Without laying down   any   law   with   regard   to   the   issue   relating   to   the application or non­compliance of Rule XXI Order 89 CPC, in the peculiar facts and circumstances of this case, we are not inclined to interfere with the view taken by the High Court. Accordingly,   this   Civil   Appeal   stands   dismissed.     The question of law is kept open. No order as to costs.  ………………………………..J.                                               [UDAY UMESH LALIT] ……………………………..J.                                         [VINEET SARAN]       NEW DELHI;       APRIL 24, 2020.