Sale Of Judgment Debtor's Whole Property Impermissible When Sale Of Part Property Can Satisfy Decree: Supreme Court

In a recent judgment, the Supreme Court held that during the execution proceedings if the attachment of the judgment debtor's property takes place, then the executing courts shouldn't order the sale of the whole property when the part property could have satisfied the decree.

“The execution of a decree by sale of the entire immovable property of the judgment debtor is not to penalise him but the same is provided to grant relief to the decree holder and to confer him the fruits of litigation. However, the right of a decree holder should never be construed to have bestowed upon him a bonanza only because he had obtained a decree for realisation of a certain amount. A decree for realisation of a sum in favour of the plaintiff should not amount to exploitation of the judgment debtor by selling his entire property.”, the bench comprising Justices Hrishikesh Roy and Prashant Kumar Mishra said.

The Court observed that it is the executing court's duty to have satisfied itself on the aspect of whether the part attachment of the suit property could have satisfied the decree or not. Failing to do so would cause great injustice to the judgment debtor as his entire attached properties would be auctioned off causing huge loss to the judgment debtor and undue benefit to the auction purchaser.

In the present case, an attachment of the whole property of the judgment debtor was done by the executing court, thereafter in an auction sale of the Judgment debtor's property for executing the decree, the decree-holder itself purchased the suit property.

The Court noted that the attachment of the whole property cannot be legally justifiable when the attachment of the part property could satisfy the decree.

“In the case at hand, the Executing Court did not discharge its duty to ascertain whether the sale of a part of the attached property would be sufficient to satisfy the decree. When the valuation of three attached properties is mentioned in the attachment Panchanama, it was the duty of the Court to have satisfied itself on this aspect and having failed to do so the Court has caused great injustice to the judgment debtor by auctioning his entire attached properties causing huge loss to the judgment debtor and undue benefit to the auction purchaser.”, the court observed.

Also, the court emphasized the point that if under such an attachment a sale took place in an auction, whereby the whole property of the judgment debtor is purchased by the decree-holder, without examining the fact that the part sale of the judgment debtor's property could satisfy the decree, then such a sale would be termed as illegal.

“It is, thus, settled principle of law that court's power to auction any property or part thereof is not just a discretion but an obligation imposed on the Court and the sale held without examining this aspect and not in conformity with this mandatory requirement would be illegal and without jurisdiction.”, the court observed.

Also from the Judgment: S.144 CPC | Stranger Who Purchased Property Knowing About Appeal Pendency Can't Resist Restitution As Bona Fide Purchaser: Supreme Court

Case Title: BHIKCHAND S/O DHONDIRAM MUTHA (DECEASED) THROUGH LRS. VERSUS SHAMABAI DHANRAJ GUGALE (DECEASED) THROUGH LRS.

Citation : 2024 LiveLaw (SC) 375

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