Where the successful purchaser is disputed, Order XXI Rule 85’s payment period begins upon declaration.

The appeal challenged the order dated 5 May 2026 passed by the Executing Court in Execution Case No. 3281/2024, dismissing objections under Order XXI Rule 90 CPC to the auction of property bearing No. J-60, First Floor, Lajpat Nagar-III, New Delhi.

The auction was conducted on 6 May 2025 pursuant to a proclamation fixing a reserve price of ₹1.70 crore and authorising the Court Auctioneer to determine the bidding increments.

The Auctioneer fixed the lot size at ₹10 lakh. Respondent No. 2, Lokesh Mendiratta, offered ₹2.60 crore, which was treated as the highest valid bid.

The Appellant’s subsequent offer of ₹2.61 crore, and Respondent No. 2’s offer of ₹2.62 crore, were recorded but not treated as valid bids because they did not conform to the prescribed lot size and, in the latter case, were made at or after 1:00 p.m.

Cheques representing 25% of the respective bid amounts were accepted from both bidders, although the Appellant’s cheque was accepted to maintain order amid the dispute.

The Appellant claimed to be the highest bidder and sought issuance of a sale certificate, while Respondent No. 3 separately challenged the auction process.

The Executing Court ultimately declared Respondent No. 2 the successful purchaser and granted him fifteen days to deposit the balance consideration; he deposited the remaining 75% on the same day.

1. Whether the Appellant’s bid of ₹2.61 crore, though higher in amount and recorded by the Court Auctioneer, ought to have been treated as the highest valid bid and whether the Appellant was entitled to be declared the successful purchaser?

2. Whether Respondent No. 2 became the purchaser on the date of the auction, thereby attracting the mandatory deposit requirements under Order XXI Rules 84 and 85 CPC from 6 May 2025?

3. Whether Respondent No. 2’s failure to comply with interim directions requiring deposit of the balance bid amount rendered his bid liable to rejection?

4. Whether the auction proceedings were vitiated by material irregularity, fraud, or other illegality warranting their setting aside under Order XXI Rule 90 CPC?

The Court applied Order XXI Rules 84 and 85 CPC, under which the person declared to be the purchaser must deposit 25% of the purchase money immediately after such declaration and the balance within fifteen days from the sale; non-compliance ordinarily renders the sale a nullity and necessitates resale, as explained in Manilal Mohanlal Shah v. Sardar Sayad Ahmed Sayed Mahmad and the authorities following it.

It also applied Order XXI Rule 92 CPC, under which a sale becomes absolute upon confirmation after disposal of objections, and Rule 94 concerning issuance of the sale certificate.

The Court relied on Navalkha & Sons v. Sri Ramanya Das and Valji Khimji & Co. v. Official Liquidator for the principle that where acceptance or confirmation is reserved to the Court, a bidder acquires no vested or absolute right merely by making the highest bid.

It further applied the principle that court auctions should not be interfered with absent fraud, collusion, inadequate pricing, substantial injury, or grave procedural irregularity, as recognised in Sanjay Sharma v. Kotak Mahindra Bank Ltd.

The terms of the proclamation were binding, particularly the clauses authorising the Auctioneer to determine the bidding increment and requiring a declaration of the purchaser before the deposit obligations arose.

The Court held that the ₹10 lakh lot size was authorised by Clause 2 of the proclamation and had been announced and maintained by the Auctioneer during the bidding process.

Consequently, the Appellant’s ₹2.61 crore offer was not a valid bid because it did not conform to the prescribed increment; the mere recording of that offer and acceptance of his cheque did not make him the purchaser.

The Court distinguished the authorities imposing strict timelines under Rules 84 and 85 because, in those cases, the purchaser had already been identified and declared.

Here, the Auctioneer had not declared Respondent No. 2 the purchaser on 6 May 2025; the identity of the successful purchaser remained disputed and was decided only by the Executing Court on 5 May 2026.

Therefore, Respondent No. 2’s obligation to deposit the balance amount under Rule 85 commenced only upon his declaration as purchaser. His deposit of the balance 75% on the same day as that declaration satisfied the applicable requirement.

The Court also held that the earlier non-compliance with directions to deposit the bid amount did not independently require rejection of Respondent No. 2’s bid, since those directions were issued while the purchaser’s identity remained unresolved and the Executing Court ultimately granted time for payment.

No sufficient fraud, collusion, or grave irregularity was established to justify interference with the auction.

Respondent No. 2 was validly declared the successful purchaser by the Executing Court, and the period for payment under Order XXI Rules 84 and 85 CPC ran from that declaration, not from the date of the auction.

The order dated 5 May 2026 was upheld, the appeal was dismissed, and the interim orders dated 21 May 2026 and 3 July 2026 were vacated.