Order XXI Rule 90(3) CPC Puts Bar Against Setting Aside Of Sale If Judgment Debtor Fails To Raise Ground To Invalidate It At Appropriate Stage: Supreme Court

The auction purchaser filed an appeal challenging an order passed by the Madras High Court invalidating an auction sale held by the Assistant Judge, City Civil Court.

The Division Bench of Justice Sanjay Kumar and Justice Alok Aradhe held, “Given the insertion of Order XXI Rule 90(3) in the statute book with effect from 01.02.1977, it would be incumbent upon a judgment debtor or any other interested person who applies for setting aside an execution sale, held thereafter, to satisfy the executing Court that the ground upon which the application was made could not have been taken on or before the date on which the proclamation of sale was drawn up. In effect, if such a ground could have been taken by that applicant who seeks setting aside of the sale but he failed to do so at the appropriate stage, he would stand barred, by Order XXI Rule 90(3) CPC, from doing so at a subsequent stage.”

Referring to its recent judgment in Bhikchand S/o Dhondiram Mutha (Deceased) through LRs vs. Shamabai Dhanraj Gugale (Deceased) through LRs (2024) , the Court noted“However, this case did not involve the application of Order XXI Rule 90(3) CPC, which postulates a bar against setting aside of the sale at the behest of a judgment debtor, if he failed to raise an available ground to invalidate it at the appropriate stage.”

Factual Background

A suit was filed by the fourth respondent against one Komala Ammal and her son, K.J. Prakash Kumar, for recovery of a sum of ₹3,75,000 along with interest. It was her case that the defendants, along with late K. Jagannathan, the husband of the first defendant and father of the second defendant, jointly borrowed a sum of ₹2,00,000 from her. The suit was decreed ex parte, directing the defendants therein to pay the plaintiff a sum of ₹3,75,000. An Execution Petition was filed by the respondent seeking execution of the decree. Komala Ammal and K.J. Prakash Kumar, the judgment debtors/ defendants, made an unsuccessful attempt to have the judgment set aside. However, owing to their failure to comply with the decree, the property was directed to be attached.

The sale was finally held and G.R. Selvaraj emerged successful. The sale certificate was issued to Selvaraj after he deposited the sale consideration amount before the executing Court, which was duly handed over to Rasheeda Yasin, the decree holder. An Execution Application was filed by the judgment debtors, Komala Ammal and K.J. Prakash Kumar, under Order XXI 5 Rule 90 of the Code of Civil Procedure, 1908, to set aside the sale on the ground of reduction of the upset price and alleging that it was done without notice to them.

The City Civil Court, Chennai, dismissed the application. The dismissal order was subjected to appeal, and the same was also dismissed. Aggrieved by this judgment, K.J. Prakash Kumar and his sisters, K.J. Hemalatha and K.J. Padmasini, approached the High Court. The High Court held in favour of the judgment debtors and set aside the sale. Consequential directions were issued for the initiation of fresh steps. Aggrieved thereby, the appellant approached the Apex Court.

Reasoning

The Bench, at the outset, noticed that Order XXI Rule 90 CPC was substituted by Act No. 104 of 1976, with effect from February 1, 1977. The Bench took note of the recent decision in Bhikchand S/o Dhondiram Mutha (Supra) in the context of an execution sale. In that case, the sale was held in 1985, and the decree holders themselves purchased the attached property. Taking note of Order XXI Rule 66(2) CPC, it was held that the executing Court’s power to auction any property or part thereof also enjoins an obligation on that Court to examine the issue as to whether the sale of part of the property would have been sufficient to satisfy the decree.

The Bench made it clear that this case did not involve the application of Order XXI Rule 90(3) CPC, which postulates a bar against setting aside of the sale at the behest of a judgment debtor, if he failed to raise an available ground to invalidate it at the appropriate stage.

“ It is in this context that the aforementioned observations made by this Court in Desh Bandhu Gupta (supra) gain significance as that was a case involving an execution sale held after the insertion of Order XXI Rule 90(3) CPC and this Court made it clear that, even in the context of a material irregularity under Order XXI Rule 66(2)(a) CPC, if the judgment debtor had been put on notice by the executing Court but had acquiesced, by taking no action before the date of the sale, he would be precluded from assailing its legality or correctness thereafter. In a given case, where a judgment debtor is not given notice prior to the sale, as was the situation in Desh Bandhu Gupta (supra), Order XXI Rule 90(3) CPC obviously cannot posit a bar to his raising a ground thereafter”, it stated.

On a perusal of the facts of the case, the Bench noticed that not only were the judgment debtors in the case on hand put on notice at every stage during the exercises undertaken by the executing Court to reduce the upset price from one unsuccessful sale to another, they also participated to an extent and then chose to refrain from doing so. As per the Bench, they did not have the right to claim that they were not put on notice.

“Having failed to raise a material irregularity in the context of Order XXI Rule 66(2)(a) CPC at the appropriate stage, i.e., with regard to sale of a part of the property beinsufficient to satisfy the decree, it is not open to them to now raise such a belated plea and blithely place the burden on the executing Court, so as to seek setting aside of a sale held as long back as in the year 2002. Unfortunately, the High Court, having noted the bar postulated by Order XXI Rule 90(3) CPC in para 31 of the impugned judgment, failed to give effect to it assuming that the obligation under Order XXI Rule 66(2)(a) CPC would operate independently upon the executing Court, irrespective of the lapse on the part of the judgment debtors”, it clarified.

Thus, allowing the appeal and setting aside the impugned order of the High Court, the Bench confirmed the judgment of the City Civil Court.

Cause Title: G.R. Selvaraj (Dead) v. K.J. Prakash Kumar (Neutral Citaiton: 2025 INSC 1353)

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