Bombay High Court
Sanjay Bhimrao Patil And Others vs Shriram City Union Finance Ltd And ... on 24 September, 2024
2024:BHC-AUG:22676
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IN THE HIGH COURT OF JUDICATURE AT BOMBAY
BENCH AT AURANGABAD
WRIT PETITION NO.13865 OF 2023
1. Sanjay Bhimrao Patil,
Age: 45 Years, Occu.: Business,
R/o. Near School No.11,
Fule Colony at Chalisgaon,
Taluka: Chalisgaon, District: Jalgaon
2. Renuka Sanjay Patil,
Age: 39 Years, Occu.: Household,
R/o.: Near School No.11,
Fule Colony at Chalisgaon,
Taluka: Chalisgaon, District: Jalgaon
3. Prataprao Chandrarao Bhosale,
Age: 55 Years, Occu.: Business,
R/o.: Netaji Chowk, Near Maruti Mandir
at Chalisgaon, Taluka: Chalisgaon,
District: Jalgaon
4. Mulchand Tirthdas Goplani,
Age: 52 Years, Occu.: Business,
R/o.: 203, Sindhi Colony Road,
at Chalisgaon, Taluka: Chalisgaon,
District: Jalgaon
5. Bhimsing Kautik Patil,
Age: 50 Years, Occu.: Business,
R/o.: Near School No.11,
Fule Colony at Chalisgaon,
Taluka: Chalisgaon, District: Jalgaon .. Petitioners
(Original Judgment debtor)
Versus
1. Shriram City Union Finance Ltd.,
Vitthal Shopping Complex, 119
A Wing, Shop No. 1-6, Jay Nagar,
Beside Omkareshwar Temple, Jalgaon
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Taluka and Jalgaon- Jalgaon .. Respondent
(Original Decree Holder)
2. Bhagesh Chhotu Chaudhari,
Age: 33 Years, Occu.: Business,
R/o.: Behind Hanuman Mandir,
Netaji Palkar Chowk, Chalisgaon,
Taluka: Chalisgaon, District: Jalgaon .. Respondent
(Auction Purchaser)
...
Advocate for Petitioners: Mr. Jitendra Vijay Patil
Advocate for Respondent No.1: Mr. V. Y. Bhide
Advocate for Respondent No.2: Mr. Ujwal S. Patil
...
CORAM : ARUN R. PEDNEKER, J.
DATE : 24.09.2024
JUDGMENT:
1. Heard.
2. Rule. Rule returnable forthwith. With consent of the
parties, the matter is heard finally.
3. By the present petition, the petitioners are challenging
the order dated 03.10.2023, passed below Exhibit 198, in Arbitration
Regular Darkhast No.292 of 2020, passed by the Civil Judge, Senior
Division, Chaligaon. By the impugned order, the learned Judge has
allowed the application filed by the auction purchaser and extend
the time to deposit balance amount of the auction purchase.
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4. The facts giving rise to the petition are summarized as
under:
A] Petitioners No.1 and 2 obtained loan from respondent
no.1 financial institution by mortgaging property admeasuring
248.45 Sq. Meters along with constructed house on plot no.309.
Petitioners No.3 and 4 are the guarantors of the loan. Since, the
petitioners were unable to pay the loan, respondent no.1 financial
institution instituted recovery proceedings against the petitioners
and award came to be passed on 14.07.2018 in favour of respondent
no.1.
B] Regular Darkhast No.292 of 2020 was filed before the
learned Civil Judge, Senior Division, Chalisgaon and during
pendency of the execution proceedings compromise took place
between the parties. It was agreed that borrowers would pay
Rs.60,00,000/- towards the final settlement of the award. The
petitioners only paid Rs.17,00,000/- and were unable to pay the
balance amount, as such, the recovery proceedings continued further
and the mortgaged property was put up for auction.
C] On 16.09.2023, respondent no.2 was declared as the
highest bidder of the mortgaged property. Accordingly, as per Rule
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84 of Order 21 of the CPC, on 16.09.2023, the auction purchaser
deposited 25% of the amount before the executing court.
D] Respondent no.2 / auction purchaser deposited 25% of
the purchase money on 16.09.2023 and again 25% of the purchase
money on 03.10.2023, and, also, by an application at Exhibit-198, he
prayed for extension of time to deposit remaining 50% of the
purchase money in the court.
E] The application was resisted by the petitioners
contending that the purchase money has to be deposited within 15
days of the auction, failing which the auction has to be set aside. The
civil court by impugned order dated 03.10.2023, below Exhibit 198,
passed the following order.
" ORDER
1. The application (Exh.198) is allowed.
2. The concerned Clerk to present the first cheque
dated 03.10.2023 for encashment immediately and the
second cheque on 02.11.2023 and report its
compliance."
The learned Civil Judge, Senior Division, Chalisgaon, by
order dated 03.10.2023, granted extension of time to deposit
balance 50% of amount till 02.11.2023.
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5. The learned counsel for the petitioners submits that the
time to deposit would have not been extended beyond 15 days till
02.11.2023, in view of Order 21 Rule 85 of the CPC. He submits that
the provision is mandatory and relies upon the following Judgments:
[1] Manilal Mohanlal Shah and Ors. Vs. Sardar Sayed
Ahmed Sayed Mahamad and Ors., AIR 1954 SC 349,
[2] Nandkishor Daultrao Shelke Vs. Baban Vitthal
Mhaske and Ors., 2005 (3) ALLMR 131,
[3] Uttamchand Milapchand Vs. Balkrishna Ramnath,
AIR 1961 Bom. 224,
[4] Annamalai Vs. Nagoorgani and another, 2006 (5)
CTC 649.
6. Per contra, learned counsel appearing for respondent
no.1 / financial institution submits that the Bhagesh Chhotu
Chaudhari was the successful bidder in the auction sale for
Rs.50,12,000/- on the date of declaration as successful bidder i.e. on
16.09.2023, the bidder has deposited Rs.12,53,000/- as 25% of the
bid amount in the court by cheque payment. The 15 th day was
Sunday and 02.10.2023 was a public holiday, as such, on the very
next date i.e. on 03.10.2023, the successful bidder by filing
application Exhibit-198 in the pending execution Arbitration Regular
Darkhast No.292 of 2020 tendered payment of the entire remaining
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bid amount by two cheques; one cheque was of the same date i.e.
03.10.2023 of Rs.12,53,000/- and another cheque was of
Rs.24,55,880/- dated 02.11.2023. As such, the bidder prayed for
tendering payment of 50% of the bid amount by post dated cheque
of one month. The executing court allowed the application. He
submits that such an extension was permissible under Section 148 of
the CPC and the court was within it's jurisdiction to extend the time.
7. It is also contended that the petitioners have not come
up with any concrete proposal and no prejudice would be caused to
the petitioners by extension of time. The amount fetched is by way of
public auction.
8. In addition to the submissions made by the learned
counsel for respondent no.1, respondent no.2 / auction purchaser
contends that, respondent no.2 being the highest bidder, the amount
be accepted and the petitioners being the defaulters have not
deposited any amount; since the year 2020, as such, this court
should interfere in the matter.
9. Considering the submissions raised by the parties, the
issue that arises for consideration is, whether the executing court
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could have accepted the post dated cheque, thereby, granting an
additional one month time to the auction purchaser to deposit the
purchase money. The relevant provisions dealing with this aspect is
Order 21, Rules 84, 85 and 86, which are quoted below for ready
reference:
"84. Deposit by purchaser and re-sale on default
(1) On every sale of immovable property the person
declared to be the purchaser shall pay immediately after
such declaration a deposit of twenty-five per cent on the
amount of his purchase-money to the officer or other person
conducting the sale, and in default of such deposit, the
property shall forthwith be re-sold.
(2) Where the decree-holder is the purchaser and is
entitled to set-off the purchase-money under rule 72, the
Court may dispense with the requirements of this rule.
85. Time for payment in full of purchase money
The full amount of purchase-money payable shall be
paid by the purchaser into Court before the Court closes on
the fifteenth day from the sale of the property :
Provided that, in calculating the amount to be so paid
into Court, the purchaser shall have the advantage of any
set-off to which he may be entitled under rule 72.
86. Procedure in default of payment
In default of payment within the period mentioned in
the last preceding rule, the deposit may, if the Court thinks
fit, after defraying the expenses of the sale, be forfeited to
the Government, and the property shall be re-sold, and the
defaulting purchaser shall forfeit all claim to the property or
to any part of the sum for which it may subsequently be
sold."
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10. The Hon'ble Supreme Court in the case of Manilal
Mohanlal Shah and Ors. Vs. Sardar Sayed Ahmed Sayed Mahamad
and Ors. (supra), has considered similar question, whether failure to
deposit the auction price under Order 21, Rules 84 and 85 of the
CPC is only a material irregularity in the sale, which can only be set
aside under Rule 90 of the CPC or whether it is wholly void. The
Hon'ble Supreme Court, at para 8 of the Judgment has held that the
provision regarding deposit of 25% by the purchaser is mandatory
and the full amount of the purchase money must be paid within 15
days from the date of sale. Rule 85 is mandatory in nature and, if,
the payment is not made within a period of 15 days, the court has
discretion to forfeit the deposit and, there, the discretion ends but
the obligation of the court to re-sell the properties is imperative and
the further consequences of non payment is that the defaulting
purchaser forfeits all claim to the property. The Hon'ble Supreme
Court in the case of Manilal Mohanlal Shah and Ors. Vs. Sardar
Sayed Ahmed Sayed Mahamad and Ors. (supra), paras 8, 11 and 12
has observed as under:
"8. The provision regarding the deposit of 25 per cent by
the purchaser other than the decree-holder is mandatory as
the language of the rule suggests. The full amount of the
purchase-money must be paid within fifteen days from the
date of the sale but the decree-holder is entitled to the
advantage of a set-off. The provision for payment is,
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however, mandatory... (Rule 85). If the payment is not made
within the period of fifteen days, the Court has the discretion
to forfeit the deposit, and there the discretion ends but the
obligation of the Court to re-sell the property is imperative. A
further consequence of non-payment is that the defaulting
purchaser forfeits all claim to the property (Rule 86).
11. Having examined the language of the relevant rules
and the judicial decisions bearing upon the subject we are of
opinion that the provisions of the rules requiring the deposit
of 25 per cent of the purchase-money immediately on the
person being declared as a purchaser and the payment of the
balance within 15 days of the sale are mandatory and upon
non-compliance with these provisions there is no sale at all.
The rules do not contemplate that there can be any sale in
favour of a purchaser without depositing 25 per cent of the
purchase-money in the first instance and the balance within
15 days. When there is no sale within the contemplation of
these rules, there can be no question of material irregularity
in the conduct of the sale. Non-payment of the price on the
part of the defaulting purchaser renders the sale proceedings
as a complete nullity. The very fact that the Court is bound to
resell the property in the event of a default shows that the
previous proceedings for sale are completely wiped out as if
they do not exist in the eye of law. We hold, therefore, that in
the circumstances of the present case there was no sale and
the purchasers acquired. no rights at all.
12. It was urged before us that the Court could allow a
set-off in execution proceedings under its inherent powers
apart from the provisions of Order XXI, Rule 19, of the Code
of Civil Procedure Code. We do not think that the inherent
powers of the Court could be invoked to circumvent the
mandatory provisions of the Code and relieve the purchasers
of their obligation to make the deposit. The Appellants by
misleading the Court want to benefit by the mistake to which
they themselves contributed. They cannot be allowed to take
advantage of their own wrong."
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11. The Hon'ble Madras High Court also in the case of
Annamalai Vs. Nagoorgani and another (supra), has held that Order
21, Rules 84, 85 and 86 mandatory. The Hon'ble Madras High Court
has further held that the court has no power under Section 148 of
the CPC to extend the time fixed by the law or the statute and
observed at paras 14, 15, 16 and 19 as under:
"14. It is thus clear that the provisions are mandatory being
saddled with the specified time for payment and penalties in
case of failure to deposit the purchase money. If the Court
extends the time, the mandatory provisions of Order 21
Rules 84, 85 and 86 would be circumvented by resorting to
Section 148 of CPC.
15. Let us consider now Section 148 of C.P.C. itself. Section
148 of the Code provides for enlargement of time by the
Court. As per Section 148, where any period is fixed or
granted by the Court for doing any act prescribed or allowed
by the code, the Court may in its discretion from time to time
enlarge such period even though, the period originally fixed
or granted may have expired.
16. Time stipulated under Section 148 C.P.C. has been
amended by the C.P.C. Amendment Act 46/1999 (w.e.f.
1.7.2002) by inserting the words " not exceeding 30 days in
total". Under Section 148, the Court can enlarge the time for
doing any act fixed or granted by the Court for any act fixed
or allowed by the Code. Time stipulated for payment of
purchase money within a period of two weeks is the
mandatory provision stipulated under Order XXI Rule 89
C.P.C. Such time is not fixed by the Court; but period fixed by
the Code. In such cases, under Section 148 of C.P.C. the
Court has no power to extend the time fixed by the law or
Statute.
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19. Since the Petitioner has not deposited the balance
amount within the stipulated time, the Executing Court has
rightly dismissed the Petition for extension of time. If any
payment is made within the date, under Order 21 Rule 86,
the Court has discretion to forfeit the deposit. Since under
Order 21 Rule 81, the Court has the discretion, it is for the
Executing Court to pass appropriate Orders if any application
is filed by the Revision Petitioner/Auction Purchaser to
refund the amount after defraying the expenses of the sale."
12. In view of the clear enunciation of the law in the above
two judgments of the Hon'ble Supreme Court and Madras High
Court that Order 21, Rules 84, 85 and 86 of the CPC being
mandatory, no extension can be granted beyond 15 days in
depositing the entire amount. The auction sale is, thus, set aside.
However, in view of the discretion, which is available with the court
under Order 21 Rule 86 of the CPC, this court would direct refund of
the amount deposited along with accrued interest to the auction
purchaser within a period of four (04) weeks from today.
13. The Writ Petition is accordingly allowed. Rule is made
absolute in above terms.
[ARUN R. PEDNEKER, J.]
marathe
