High Court of Judicature at Madras
THE HONOURABLE MR. JUSTICE M.THANIKACHALAM
Rajendra Kumar - Appellant
Versus
K.N.V.Natarajan & Others - Respondents
CRP NPD No.1158 of 2001
Decided On : 12 March 2004
auction purchaser - execution proceedings - Section 47 C.P.C. - Article 137 - The judgment discusses the application of Section 47 C.P.C. and Article 137 of the Limitation Act in the context of setting aside a court auction sale after the decree has been set aside. The court emphasizes the protection of the interest of the auction purchaser and the applicability of the residuary Article 137 for filing a petition under Section 47 C.P.C. The judgment also highlights the legal principles established in Janak Raj v. Gurdial Singh and Chinnammal v. P. Arumugham, emphasizing the protection of the auction purchaser's interest and the significance of the purchaser's knowledge of pending litigation.
Fact of the Case:
The third party auction purchaser participated in a court auction and purchased a property, but the exparte decree against the defendants was later set aside. The judgment debtors filed a petition under Section 47 C.P.C. to set aside the sale held on 19.2.1996.
Finding of the Court:
The court found that the auction purchaser was not a bona fide purchaser and was aware of the pending litigation, thus not entitled to protection as a bona fide purchaser. The court dismissed the revision, holding that the auction purchaser's interest should not be protected.
Issues: The main issue was whether the setting aside of the ex-parte decree nullifies the previous execution proceedings and the sale conducted, and whether the auction purchaser's interest should be protected.
Ratio Decidendi: The court applied the residuary Article 137 for filing a petition under Section 47 C.P.C. and emphasized the protection of the auction purchaser's interest. The court also established the significance of the purchaser's knowledge of pending litigation, as highlighted in Janak Raj v. Gurdial Singh and Chinnammal v. P. Arumugham.
Final Decision: The court dismissed the revision, holding that the auction purchaser was not a bona fide purchaser and was not entitled to protection, thus setting aside the sale held on 19.2.1996.
The third party-auction purchaser is the revision petitioner.
2. The third respondent herein as plaintiff had filed a suit against respondents 1 & 2 herein, arraying them as defendants, for recovery of certain amounts due on a promissory note. The suit was decreed exparte on 3.1.1995. Thereafter, a petition was filed by respondents 1 & 2/the defendants in the suit, to set aside the exparte decree, which was dismissed, for non compliance of certain conditions. After the dismissal of the petition to set aside the exparte decree, the decree holder filed E.P.No.49/95, which was opposed by the judgment debtors, as if they have no saleable interest in the property. Overruling the objection, the Executing Court fixed the sale on 19.2.1996, since the conditional order in I.A.No. 243/1995, directing the respondents 1 & 2 to deposit the decree amount on or before 20.12.1995, was not complied with and the further fact being that there was no stay, property of the judgment debtors were brought for sale in E.P.NO.49/95.
3. In the Court auction, the revision petitioner/third party purchased the property, for a sum of Rs.2,00,100/- and he had also deposited a sum of Rs.50,025/- as per the procedure, within the stipulated time. The auction purchaser deposited the balance of Rs.1,50,075/- and also a sum of Rs.14,010/-, towards non judicial stamps for sale certificate.
4. The defendants aggrieved by the dismissal of I.A.No.243/95, preferred revision before this Court in C.R.P.No.595/96. This Court, while allowing the C.R.P., passed a conditional order, that the judgment debtors should deposit 50% of the decree amount within the specified time. It seems, once again the judgment debtors had not complied with the conditional order and sought for extension of time in C.M.P.No.9278/98 in C.R.P.No.595/96. This Court taking a liberal view and exercising the discretionary power, extended the time, for payment by 13 days.
5. Before the orders passed in C.R.P.No.595/96 on 8.11.1997 and thereafter on 31.7.1998 in C.M.P.No.9278/98, the property of the judgment debtors was brought for sale in court auction, thereby executing the decree, in which the property was sold on 19.2.1996 and the stipulated conditions were complied with by the third party auction purchaser on 27.2.1996. This Court, while granting extension of time on 31.7.1998 had observed: "At this stage, I do not think the interest of the auction purchaser can be gone into". Then the learned Judge proceeded and condoned the delay, for the deposit of the amount. Though the order says, the interest of the auction purchaser cannot be gone into, the later portion of the order reads:
"the petitioner is directed to compensate the entire loss that would be caused to the auction purchaser in respect of the non use of the non judicial stamp papers and other incidental expenses".
Having observed so, this Court had not compensated the auction purchaser to the entire extent, since he had deposited a sum of Rs.14,010/- towards the non judicial stamp for sale certificate. However, an order is passed which reads:
".... Considering the fact I am of the view that this petition can be ordered on condition that the petitioner shall pay a costs of Rs.7500/- to the auction purchaser, who is the petitioner in C.M.P.No.9724 of 1998 towards the expenses incurred by him. Accordingly, this petition is ordered on condition that the petitioner shall pay to the auction purchaser a sum of Rs.7500/- within four weeks from today, failing which, this petition shall stand dismissed."
6. Thus it is seen, though this Court had observed that the interest of the auction purchaser need not be gone into, at later portion, the interest of the auction purchaser was taken into account and observed that the petitioners viz., the judgment debtors are directed to compensate the entire loss, that would be caused to the auction purchaser. But this is not given effect to, when the amount was quantified. In this view of the matter, after
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