Supreme Court of India
M/S. MAHAKAL AUTOMOBILES & ANR.versusKISHAN SWAROOP SHARMA
- Citation
- 2008 INSC 443
- Decided
- 2 April 2008
- Disposal
- Disposed off
- Bench
- ARIJIT PASAYAT
Holding
A sale of immovable property under execution of a decree without serving the required notice to the judgment‑debtor and without a proper proclamation of sale is a nullity, rendering the auction void.
Summary
The plaintiff sold a 7200 sq.ft. land to the appellants who paid only part of the consideration, leading to a suit for recovery of the balance. The trial court issued a preliminary decree under Order XII Rule 6 CPC ordering payment and allowing execution by sale of the charged property. During execution, the appellants contended that the attachment and auction were invalid because the statutory notices required under Order 21 Rules 54(1A) and 66(2) of the CPC were not served, no proclamation of sale was made, and the property was not properly valued. The High Court had upheld the auction, but the Supreme Court held that sale of immovable property without the mandatory notice and proclamation is a nullity, and the execution proceedings were therefore invalid. Consequently, the Supreme Court set aside the High Court’s order, directed the appellant to deposit the stipulated amounts, and ordered the title to vest in the appellant upon payment. The appeal was disposed of in favour of the appellant.
Issues considered
- Whether the attachment and auction of the property complied with the mandatory procedural requirements of Order 21 Rules 54(1A) and 66(2) of the CPC.
- Whether a preliminary decree can be executed without a final decree.
- Whether the High Court erred in confirming the auction sale despite alleged non‑compliance with statutory notice provisions.
Legislation cited
- Code of Civil Procedure, 1908s. Order 12 Rule 6, s. Order 21 Rule 50, s. Order 21 Rule 54(1A), s. Order 21 Rule 58, s. Order 21 Rule 66(2), s. Order 21 Rule 67, s. Section 151
Subjects
execution of decreeattachment of immovable propertypublic auctionnotice requirementpreliminary decreeCivil Procedure Codenullity of saleproperty valuation
Judgment
[2008] 5 S.C.R. 1020
A MIS. MAHAKAL AUTOMOBILES & ANR.
II.
KISHAN SWAROOP SHARMA
(Civil Appeal No. 2598 of 2005)
APRIL 2, 2008
B
(DR. ARIJIT PASAYAT AND 5.H. KAPADIA, JJ.) '
J._
Code of Civil Procedure, 1908:
Order 21, rules 54(1A) and 66(2) - Execution of decree
c - Attachment of immovable property and proclamation of sale
by public auction - HELD: At each stage of execution of
decree, when a property is sold, it is mandatory that notice
shall be served upon the person whose property is being sold
and sale of any property without notice to its owner is a nullity,
D and all actions pursuant thereto are liable to be quashed -
Under Order 21 Rule 66(2) service of the notice has to be
~
personally effected on judgment-debtor- On facts, There was
no proclamation of sale as per the statutory provisions of M.P.
Civil Court Rules, 1961 read with Order 21 Rule 66 -Also no·
E notice was served upon judgment-debtor under Order 21 Rule
54 (1-A) - High Court erred in confirming auction sale -
Judgment-debtor directed to make payment as specified in
the judgment.
The respondent-plaintiff sold the suit property to the
F appellant-defendants. Since the latter could make only a
part payment, the respondent filed a suit for recovery. On >
defendants' admission, the trial court passed the
judgment under Order 12 Rule 6 of the Code of Civil
Procedure, 1908. A preliminary decree was drawn up. In
G execution proceedings, the appellant-judgment debtors
filed IAs resisting the attachment and auction sale of the
property on the ground, inter alia, that no notice was given
to them under Order 21, Rules 54 and 66(2). Ultimately,
the High Court dismissed the IAs, upholding confirmation
H 1020
1022 SUPREME COURT REPORTS [200815 S.C.R.
.....
A [1026-C-D; 1029-E-G]
Deshbandhu Gupta v. N. L. Anand @ Rajinder Singh
1994(1) SCC 131; and Mis. Shalimar Cinema v. Bhasin Film
Corporation and Another 1987(4) sec 717 - relied on.
B 2. The appellant has deposited Rs.14,38,893/- and
Rs.4,46,9261- purportedly for satisfaction of the execution t.
court. The appellant shall further deposit a sum of
Rs.15,00,000/~. Respondent no.1 shall be entitled to
withdraw the amount deposited in the bank with accrued
c interest. The appellant shall be responsible for payment
of and shall pay the property tax of the suit property from
the date of execution of sale deed i.e. 5.12.1986 till date.
On payment of the amounts, the title to the property
described in the registered sale deed will vest free of all
encumbrances on the appellant. [para 11] [1028-G-H;
D 1029-A-B]
CIVIL APPELLATE JURISDICTION : Civil Appeal No.
2598 of 2005
From the final Judgment and Order dated 28.04.2004 of
E the High Court of Madhya Pradesh, Indore Bench in M.A. No.
52 .of 2004
lndu Malhotra Ashok Kherkat and Kunal Tondon for the
Appellants.
F S.K. Dubey, Sunil Goyal, Dr. Sumant Bhardwaj, Shamba
Dutta and Praveen Chaturvedi for the Respondent.
).
The Judgment of the Court was delivered by
DR. ARIJIT PASAYAT, J. 1. Challenge in this appeal is to
the judgment of learned Single Judge of the Madhya Pradesh
G High Court, Indore Bench.
2. Background facts in a nutshell are as follows:
Respondent had sold 7200 sq.ft. land with some
construction on 15/11 /1986 for Rs.7 .20 lacs to the JDs/
H appellants and was paid only Rs.1.60 lacs. He had agreed to
M/S. MAHAKALAUTOMOBILES &ANR. v. KISHAN 1023
SWAROOP SHARMA [DR. ARIJIT PASAYAT, J.]
accept the remaining amount of Rs.5.60 lacs. in 4 installments A
· in 3 years with interest @ 1.50% per month. A charge was
created on this property. Respondent had later filed a Civil Suit
No. 13-A/89 (New No. 6-A/1991) for recovery of amount of
Rs.6,31,750/- by sale of such property.
8
JDs/appellants in their written statements had admitted
. liability to pay Rs.5 lacs as principal and Rs.65,000/- as interest
and pendentelite interest@ 1% per month. They disputed that
Babula I was the partner of M/s Mahakal Automobiles. Thus, the
ADJ on 24/9/1 991 gave a judgment and decree under Order
XII Rule 6 of the Code, relevant portion of which reads follows: · C
"As a result application of plaintiff is partly allowed and it
· is hereby ordered that defendants Nos. I and 3 shall pay
within 6 months from today Rs.5,65,00/- and iriteresr@1%
per month on Rs.5 lacs from the date of institution of suit D
i.e. 16/6/1989, otherwise the plaintiff would be entitled to
get a final decree for recovery of his amount by sale of
charged property. Order as to cost would be given at the
time of disposal of other points. A preliminary' decree be
framed accordingly. Description of charged· property be E
also given in preliminary decree."
A preliminary decree was accordingly dra.Wn up. However,
it was not drawn in prescribed form No.5-A or 7-C of Schedule
of Appendix-D to the Code of Civil Procedure, 1908 (in short
..
I
'the Code'). Admittedly, no accounts were to be taken. Simple
arithmetical calculation of interest would have specified the
actual amount payable.
F
On 28/4/1992 respondent filed an application for
execution. Notices to all JDs/appellants under Order XXI Rule
22 of the Code were issued. On 8/6/1992, JDs/2 appeared G
through Shri L.P. Bhargava, Advocate while JD/1 appeared
through Shri P.K. Modi, advocate. All JDs continued to appear
regularly till 16/11/1993. In the meantime two applications; one
under 01der XXI Rule 58 read with Section 151 of the Code
was filed on 8/6/1 992 and the second under order XXI rule 50 H
1024 SUPREME COURT REPORTS [2008) 5 S.C.R.
A read with Section 151 of the Code was filed on 2/11 /1992 by
the JDs which were disposed of on 16/12/1992 and 2/11/1992
respectively. No question as to non-executability of the decree
had been raised by the JDs according to the High Court.
On 16/10/1992 the court below directed that name of
8 Babula! Gupta be deleted from the execution application as there
had been no decree against him. A question was also raised I.
suo motu by the court whether the decree in its terms being
preliminary decree could be executed as it is, or the DH-
respondent be directed to obtain a final decree. The executing
C court granted several adjournments for arguments on this
question. On 12/2/1993 the e~xecuting court stayed the
proceedings of the execution to await the result of proceedings
under Order I Rule 10 and Section 151 of the Code before the
trial court in the original case which was also pending in the
D same court. On 8/3/1994 order of the High Court was received
in the original case and the execution proceedings were ordered
to be restarted. The execution proceedings as well as the civil
suit were transferred from court to court and none appeared for
the JDs in the execution case, till 14/7/1997.
E The High Court by the impugned order set aside the order
of the trial court holding that the I.As. filed by the judgment
debtors, respondents in the appeal, before High Court were to
be dismissed. Auction sale in favour of the respondent-DH was
valid and order of its confirmation was upheld.
F
3. In support of the appeal learned counsel for the appellant
submitted as follows:
•
(i) Records reveal that no Process Fee was paid by the
Decree Holder as per Order dated 4.10.1997.
G
(ii) Attachment of Warrant was not as per Order 21 Rule
54 (1A) CPC.
(iii) · No Notice was given to the appellants when
execution proceedings got delinked from the suit and
H got transferred from one court to another.
M/S. MAHAKAL AUTOMOBILES & ANR. v. Kl SHAN 1025
SWAROOP SHARMA [DR. ARIJIT PASAYAT, J.]
(iv) Attachment proceedings. were carried out in the A
absence of the Judgment Debtor.
(v) No notice was given to the appellant under Order 21
Rules 54 and 66(2). The procedure under Order 21
Rule 54 (1A) and 66(2) is mandatory. Hence, the
objections taken by way of IA Nos. 1, 2 and 6 should B
) have been accepted
(vi) The Court found total absence of d.rawing up of the
proclamation of sale and . its . terms by judicial
application of mind. c
(vii) It was held that ttie executing court did not follow the
mandatory procedure as provided under the Code.
4. It was submitted that the High Court by the impugned
order erroneously reversed the judgment on the ground that the
D
appellant could be presumed to have known of the proceeding
and it is not a case of complete non issue of service of
attachment of warrant and that ratio of the decision in
Deshbandhu Gupta v. N.L. Anand@ Rajinder Singh [1994(1)
sec 131] does not apply.
E
5. Learned counsel for the respondent on the other hand
submitted that the High Court has analysed the .factual position
in the background of legal position as set out by this court.
· 6. When a property is put up for auction to satisfy a decree
of the Court, itis mandatory for the Court executing the Decree, F
.. to comply with the following.stages before a property is sold in
f,
execution of a particular decree:
(a) Attachment of the Immoveable Property:
(b) Proclamation of Sale by Public Auction; G
(c) Sale by Public Auction
7. Each stage of the sale is governed by the provisions of
the Code. For the purposes of the present case, the relevant
provisions are Order 21 Rule 54 and Order 21 Rule 66. At each H
1026 SlJPREME COURT REPORTS [2008] 5 S.C.R.
A stage of the execution of the decree, when a property is sold, it
is mandatory that notice shall be served upon the person whose
property is being sold in execution of the decree, and any
property which ls sold, without notice to the person whose
property is being sold is a nullity, and all actions pursuant thereto
B are liable to be struck down/qua8hed.
8. The admitted position that has emerged is that:
l
(i) There was no notice served upon the Judgment-
Debtor under Order 21 Rule 54 (1-A).
C (ii) There was no valuation of the property carried out;
(iii) There was no proclamation of sale as per the statutory
provisions of the M.P. Civil Court Rules, 1961 read
with Order 21 Rule 66.
D (iv) There was no publication of the sale.
9. In Deshbandhu Gupta's case (supra) it was held as
follows:
"The Proclamation should include the estimate, if any, given
E by either judgment-debtor or decree holder or both the
parties. Service of Notice on judgment-debtor under Order
21 Rule 66 (2) unless waive by appellants or remained ex-
parte, is a fundamental step in the procedure of the Court
in execution, judgment-debtor should have an opportunity
F to give his estimate of the property The estimate of the
value of the property is a material fact to enable the
purchaser to know its value. It must be verify as accurately
and fairly as possible so that the intending bidders are not
mislead or to prevent them from offering inadequate price
or to enable them to make a decision in offering adequate
G
price. In Gajadhar Prasad Vs. Babu Bhakta Ratan, this
Court after noticing the conflict of judicial opinion among
the High Courts, said that a review of the authorities as
well as amendments to Rule 66 (2) (e) make it abundantly
clear that the Court, when stating the estimated value of
H
MIS. MAHAKALAUTOMOBILES & ANR. v. KISHAN , 1027
SWAROOP SHARMA [OR. ARIJIT PASAYAT, J.]
the property to be sold, must not accept th·e ipse dixit of A
one side. It is certainly not necessary for it to state its own
estimate
. . .
But, the essential facts vvhich had a bearing on the very
material question of value of the property and w6ich could
assist the purchaser in forming his own opinion m'ust be 8
stated, i.e. the value of the property, that is, after au,
the
whole object of Order XXI, Rule 66 (2) (e) CPC. The Court
has only to decide what are allthese material particular in
. each case. We think that this is an obligation imposed by
Rule 66 (2) (e). In discharging it, the ·court normally state C
the valuation given by both the Decree· Holder as well as ·
- · the Judgment 'Debtor where they both have valued the '
property, and it does not appear fantastic."
·"The absence of Notice causes irremediable injury to the
0
judgment debtor. Equally publication of the proclamation
··of sale under' Rule 67 and specifying the date and place
of sale of the property under Rule 66 (2) are intended so
that the prospective bidders would know the value so as
·to mak~ up their mind to offer the price and to attempt that
sale of the property and to secure competitive bidders · E
·and fair price to the property sold. Absence of Not to the ·
Judgment Debtor disables him to offer his estimate of the
value who better know its value and to publicise on his
part, canvassing and bringing the intended bidders at the
time of sale. Absence of notice prevents him to do the F
above and also disables him to know fraud committed iii
•
the publication and. conduct of sale or other material
irregularities in the conduct of sale. It would be broached
from yet another angle. The compulsory sale of immovable
property under Order 21 divests right, title and interest of G
the judgment debtor and confers those rights, in favour of
the purchaser. It thereby deals with the rights and
· disabilities either of the judgment debtor or tfie decree··•
holder. A sale made,· therefore, without notice to the
judgment debtor is a nullity since it divests the judgment H
1028 SUPREME COURT REPORTS [2008] 5 S.C.R.
A debtor of his right, title and interest in his property without
an opportunity. The jurisdiction to sell the property would
arise in a Court only where the owner is given notice of the
execution for attachment and sale of his property. It is very
sak.itary that a person's property cannot be sold without
B his being told that it is being so sold and given an
opportunity to offer his estimate as he is the person who
intimately knew the value of his property and prevailing in
the locality, exaggeration at time be possible."
10. In Mis. Shalimar Cinema v. Bhasin Film Corporation
c and Another [1987(4) sec 717] it was held that the court has a
duty to ensure that the requirement of order 21 Rule 66 has
properly applied. It is incumbent on the court to be scrupulous in
the extreme.
11. The records do not reveal that the appellant-judgment
D
debtor was served with a notice as required under Order 21
Rule 54(1 )(A) of the Code in the appendix B Forms 23, 24 and
29. It is to be noted that the records reveal that the address of
...
the appellant as contained in the sale deed was different from·
the address at which the process server purportedly affixed the
E notice on the door and in open court and at the chorah only. It
has also to be noted that under Order 21 Rule 66(2) the service
of the notice has to be personally affected on the judgment
debtor. That also does not appear to have been done.
Interestingly, the valuation of the property as required to be done
F under the proviso to sub-rule (2) of Rule 66 of Order 21 of the
Code has not been done. The same appears to have been
valued on the spot at Rs.9,00,000/- and it was not done by the .\'
'
Court. There are admittedly other non-compliance with certain
requirements. We do not think it necessary to deal with those
G aspects in detail in view of the order proposed to be passed.
From the records it is revealed that Rs.14,38,893/- and
Rs.4,46,9261- have been deposited by the appellant purportedly
for satisfaction of the Execution Court Ujjain and Indore
respectively. The appellant shall further deposit a sum of
H Rs.15,00,000/-within 4 months from today. The respondent No.1
M/S. MAHAKAL AUTOMOBILES & ANR. v. Kl SHAN 1029
SWAROOP SHARMA [DR. ARIJIT PASAYAT, J:]
shall be entitled to withdraw the amount deposited in the bank A
with accrued interest. The appellant shall be responsible for
payment of the property tax of the property from th\3 date of
execution of sale deed i.e. 5.12.1986 till date and the same
shall be paid deposited with the concerned authority within the
aforesaid period of four months. On payment of the amounts, B
~ the title to the property described in the registered sale deed
will vest free of all encumbrances on the appellant.
12. If any property of the respondent No.1 is there in the ·
property in question, the same shall vest to respondent No.1
· with liberty to remove them as soon as the payment is made. C
13. The appeal is disposed of accordingly. No costs.
R.P. Appeal disposed of.
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