Order XXI Rule 84 CPC - Deposit Of 25% Of Amount By Auction Purchaser Mandatory ; Balance Amount To Be Paid Within Fifteen Days : Supreme Court

The Supreme Court observed that, under Order XXI Rule 84 CPC, the deposit of 25% of the amount by the auction purchaser is mandatory.

The full amount of the purchase money must be paid within fifteen days from the date of the sale, the bench of Justices M R Shah and CT Ravikumar observed

In this case, the property in question was put to auction on 18.10.2011. The auction purchaser deposited 25% of the amount on 03.11.2011. 75% of the sale consideration was deposited by the auction purchaser on 04.11.2011. Executing Court overruled the objections and rejected the application under Order 21 Rule 90 CPC and refused to set aside the sale. This order was upheld by the Madhya Pradesh High Court.

In appeal before the Apex Court, it was contended that there was breach of Order 21 Rule 64 and Order 21 Rule 84/85 of CPC and therefore, due to non­compliance of the aforesaid provisions the sale has been vitiated. Reliance was placed on the judgment in Manilal Mohanlal Shah and Ors. Vs. Sardar Sayed Ahmed Sayed Mahmad and Anr.; (1955) 1 SCR 108 and Rosali V. Vs. Taico Bank and Ors.; (2009) 17 SCC 690.

In Manilal, it was held that the provision regarding the deposit of 25% of the amount by the purchaser other than the decree­holder is mandatory and the full amount of the purchase money must be paid within fifteen days from the date of the sale. It held that 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 resell the property is imperative. In Rosali, the court observed thus : 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 non­compliance 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. Non­payment of the price on the part of the defaulting purchaser renders the sale proceedings as a complete nullity.

The court also noted that at the the time when the property was put to auction on 18.10.2011, the judgment debtor was not the owner and therefore, the same could not have been put to auction. The bench, while allowing the appeal, therefore observed:

"Applying the law laid down by this Court in the aforesaid decisions to the facts of the case on hand, it is evident that there is non­compliance of mandatory provisions of Order 15 21 Rule 84 and Order 21 Rule 85 and therefore, the sale was vitiated"

Case details

Gas Point Petroleum India Limited vs Rajendra Marothi | 2023 LiveLaw (SC) 89 | CA 619 OF 2023 | 10 Feb 2023 | Justices M R Shah and C T Ravikumar

For Petitioner(s) Mr. Ravindra Shrivastava, Sr. Adv. Mr. Arjun Garg, AOR Mr. Shobhit Jain, Adv. Mr. Aakash Nandolia, Adv. Ms. Sagun Shrivastava, Adv. of GSL Chambers

For Respondent(s) Mr. Sanjay K. Agrawal, AOR Mr. Sarthak Nema, Adv. Ms. Ankita Khare, Adv. Mr. Ramsakha Kushwaha, Adv. Mr. Yashovardhan Jain, Adv

Headnotes

Code of Civil Procedure, 1908 ; Order XXI Rule 84,85 - The deposit of 25% of the amount by the purchaser other than the decree-­holder is mandatory and the full amount of the purchase money must be paid within fifteen days from the date of the sale - 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 resell the property is imperative - 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 non­compliance 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. Non­payment of the price on the part of the defaulting purchaser renders the sale proceedings as a complete nullity - Referred to Manilal Mohanlal Shah and Ors. Vs. Sardar Sayed Ahmed Sayed Mahmad and Anr.; (1955) 1 SCR 108 and Rosali V. Vs. Taico Bank and Ors.; (2009) 17 SCC 690. (Para 8-9)

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