Applicability of the provisions of Article 17 or Order 21, Rule 92 IPC.

1. Three important questions of law as enunciated below, arise for consideration in this civil miscellaneous appeal. They are:

(i) Whether an agreement for sale of the equity of redemption by a mortgagor during the pendency of a suit by the mortgagee for enforcement of the mortgage, will be hit by the doctrine of lis pendens?

(ii) Whether the holder of an agreement of sale can file an application under Order 21, Rule 89, C.P.C. for setting aside the sale on deposit on the basis he is a person claiming interest in the property sold, and

(iii) Whether the period of limitation for filing an application under Order 21, Rule 89, C.P.C. is governed by Article 127 of the Limitation Act, or by Order 21, Rule 92(2), C.P.C.?

2. The facts giving rise to these questions of law are briefly as under : Respondents 3 to 9 were the owners of an item of property over which a mortgage was created in favour of the first respondent. On 23rd January, 1978 the first respondent filed a suit, O.S. No. 85 of 1978 on the file of the Sub Court, Coimbatore, for enforcement of the mortgage. About four months later, the appellant entered into an agreement of sale with respondents 3 to 9 for purchase of the hypotheca for a sum of Rs. 6 lakhs. The appellant paid Rs. 1 lakh as advance and the sale agreement provided that on completion of the sale, the appellant would discharge the debts listed out in the agreement from out of the balance of sale price. Alleging that the third respondent had committed default in completing the sale, the appellant filed C.S. No. 1538 of 1980 on the file of the Sub Court, Coimbatore, for specific performance of the sale agreement. To the said suit, the appellant had impleaded the creditors (including the first respondent) also as defendants. The appellant had offered in the plaint to deposit the amounts due to the creditors for payment to them. The first respondent entered appearance in the suit and took time twice, viz., on 4,3.1981 and 16.4.1981, for filing written statement and the suit was posted to 29.6.1981 for the filing of the written statement by him. However, without filing a written statement, the first respondent filed an execution petition, viz., E.P. No. 199 of 1981, in his suit, and brought the hypotheca for sale. The auction sale was held on 26.8.1981 and the second respondent herein was the successful bidder and he purchased the property for a sum of Rs. 7,52,000. The execution petition stood posted to 31.10.1981, for confirmation of the sale. It was at that stage, the appellant came forward with his application, E.A. No. 2058 of 1981, under Order 21, Rule 89, C.P.C for the sale being set aside on deposit. The appellant claimed in his petition that inasmuch as he had paid an advance of Rs. 1 lakh, and made further payments of Rs. 67,700 to the judgment-debtor, he held a statutory charge over the property, for the amounts paid by him, that further-more, his suit for specific performance was pending and in such circumstances, he is a person claiming an interest in the property sold and as such entitled to file an application under Order 21, Rule 89, C.P.C The appellant deposited the amount noted below in compliance with the requirements of Clauses (a) and (b) of Rs. 89: Amounts deposited

1. (a) Amount due as per execution

petition ... Rs. 91,664.50

(b) Subsequent interest on Rs. 32,900

at 18 p.cp.a. from 23.3.81 to date

of sale 22.10.81 Rs. 3,454.50

(c) costs in execution petition Rs. 586.85

(d) subsequent costs Rs. 36.85

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Rs.95,742.70

37,600.00

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1,33,342.70 or

1,33,343.00

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2. For payment to auction purchaser 5 per cent on the sale price of Rs. 7,52,000 i.e., Rs. 37.6000.

Note: No poundage need be paid in an application under Order 21, Rule 89, as per Civil Rules of Practice and under the decisions of the High Court.

...Total amount deposited. Rs. 1,33,343 rounding up The appellant alleged in his application that the court auction sale had been collusively brought about by the decree-holder auction-purchaser a