Holding

Non‑compliance with Order XXI Rule 85—failure to deposit the full purchase price within 15 days—renders the auction sale a nullity, and a mistake of the court or a set‑off claim does not excuse the decree‑holder purchaser.

Summary

The appellant, a decree‑holder, obtained a money decree against the respondent and sought execution by auctioning the respondent's agricultural land. Although the appellant was permitted to bid and his bid was accepted, he failed to deposit the full purchase price within the statutory 15‑day period, citing a set‑off of the decretal amount and a clerical mistake by the court. The executing court later accepted a shortfall payment, reasoning that it could correct its own mistake, and confirmed the sale, which the respondent challenged. The High Court set aside the sale, holding that non‑compliance with Order XXI Rule 85 renders the sale void, a view affirmed by the Supreme Court. The Supreme Court reiterated that Rule 85 is mandatory, that a decree‑holder purchaser cannot escape its requirements by claiming set‑off or alleging court error, and that the executing court lacks power to extend the time limit. Consequently, the appeal was dismissed and the land ordered to be restored to the judgment‑debtor with appropriate financial adjustments.

Issues considered

Whether failure to deposit the full purchase price within 15 days as required by Order XXI Rule 85 makes an auction sale void.
Whether a decree‑holder purchaser can rely on set‑off under Rule 72 to avoid the mandatory deposit requirement.
Whether the executing court has inherent power to correct its mistake and extend the time for payment.
Whether Rule 90, dealing with irregularities, applies instead of the mandatory Rule 85 in this context.

Legislation cited

Code of Civil Procedure, 1908

Subjects

auction saledecree‑holder purchaserset‑offOrder XXI Rule 85mandatory complianceCivil Procedure Codeexecution of decreesale voidinherent jurisdictionRule 90Rule 84Rule 72

Judgment

A BALRAM S/0 BHASA RAM
v.
ILAM SINGH AND ORS.
[
AUGUST 23, 1996

B [J.S. VERMA AND B.N. KIRPAL JJ.]

Civil Procedure Code, 1908 order XXl Rules 66, 72, 84, 85, 86 and 90.

Execution of Decree-Auction Sale of Agricultural Land-Appellant
c bidding at the sale with pennission of court-Non compliance of order XX/
Rule 85 renders the auction sale void-Judgment debtor can not be dispos-
sessed when the auction purchaser does not deposit the entire sale considera-
tion within 15 days.

The appellant decree holder obtained a money decree against
D respondent No. 1 the judgment debtor. The appellant filed an application
for Execution of decree for rc~covery of decretal amount by sale of a large
tract of agricultural land. The appellant bid at the auction sale with the
permission of the court. Bid was accepted. No deposit was made by the
appellant on the date of auction and he claimed adjustment of decretal
E amounts against the sale price. Even after set off of decretal amount there
was shortfall in the sale price. The appellant deposited balance amount to
make it foll sale price after expiry of prescribed period. However amount ~

deposited fell short of the full sale price. The Executing Court accepted
the amount taking the view that shortage was due to mistake of court office
and held. that court has inherent power to correct its own mistake. Judg·
F ment debtor's objection to validity of sale was rejected and revision filed
by the judgment debtor against order of Executing Court was also dis-
missed. The Judgment debtor filed writ petition before the High Court.
re-
High Court by interim order dated 19.12.1986 stayed the further proceed·
ings for confirmation of sale subject to the condition that the judgment
G debtor deposited the entire decretal amount within 2 months. The judg·
ment debtor deposited the entire decretal amount on 9.1.1987.

Executing Court proceeded with the execution and confirmed the
sale on 4.5.1987 and gave possession of land to the appellant.

H The High Court held that the full amounts of sale price not being
104
106 SUPREME COURT REPORTS [1996) SUPP. 5 S.C.R.

A 2..1. The proviso to rule 85 is enacted for the benefit of the purchaser
when he is the decree holder and is entitled to the advantage of any set off
under r'Ule 72. The proviso to rule 85 does not relieve the judgment debtor
or the 1requirement of depositing the full amount by taking advantage of
set off. (114-D-E]

B 2,.2. Any mistake made while claiming the set off which results in
failure to deposit the full a.mount of purchase money within 15 days of the
date of sale renders the decree holder purchaser liable to the same adverse
conse~1uences which would ensure to any other purchaser due to non-com-
pliance or rule 85. [114-E-F]
c
:l.3. The provisions iin order XXI relating to sale of property begin-
ning with rule 64 clearly indicate the responsibility of decree holder in
calculating the figure of the decretal amount in drawing up of the sale
proclamation. [112-C-D]

D 3. Sale proclamation is drawn up by the executing court after notice
to thf' decree holder. Amount for the recovery of which the sale is ordered
is stated in the sale proclamation on the basis or the duly singed and
verified statement made by the decree holder which accompanies the
decree holder's application for an order of sale. A mistake for which decree
E holder himself is responsible can not furnish a grounds to the decree
hold1!r to avert the adver'Se consequences on him of his failure to comply
with the mandatory requirement of rule 85. [113-G-H; 114-A; CJ

4. Duty to pay the full amount of purchase money within the
presi:ribed period of 15 days from the date of sale of property is cast on
F the 1mrchaser by virtue of rule 85 of order XXI and entire responsibility
to make full compliance of the mandatory provision is his. [114-D]

CIVIL APPELLATE JURISDICTION: Civil Appeal No. 2901 of
1991.
G
From the Judgment and Order dated 19.4.90 of the Allahabad High
Comt in Civil W.P. No. 21230 of 1996.

Satish Chandra and J.M. Khanna for the Appellant.

H J.P. Goyal,,R.P. Goyal and Rajesh for the Respondents.
BALRAM v. ILAM SINGH (J.S. VERMA; J.] 107
~

The Judgment of the Court was delivered by A

J.S. VERMA, J. The appellant obtained a money decree against
respondent No. 1 on 25.12.1982. On 2.1.1983 the appellant filed an applica-
tion for execution of the decree by recovery of the amount of Rs. 17.892.
The appellant applied for recovery of the decretal amount by sale of a large B
tract of agricultural land of the respondent No. 1, the value of which shown
by the appellant was Rs. 73,000 in 1976. The auction was held on
10.12.1984. The appellant bid at that auction with the permission of the
Court. The appellants' bid was for the amount of Rs. 23, 500. On 12.12.1984

- the bid of the appellant was accepted. The appellant did not make any
deposit on the date of auCtion and claimed adjustment of the decretal
amount against the sale price. Admittedly, there was a shortfall in the sale
C

price, even after the decretal amount was set off and the deposit made by
the appellant within the time allowed was taken into account. After expiry
of the period prescribed for payment of the full sale price, on 19.4.1985 the
appellant deposited Rs. 3,727.25 which fell short towards the sale price of D
Rs. 23,500. On 18.9.1985 the executing court accepted this amount of Rs.
3,727.25, taking the view that the shortage in deposit was due to the mistake
of the court office in making the calculation and the court has inherent
power to correct its own mistake. The judgment-debtor filed objection to
the validity of the sale which was rejected.
E
The judgment-debtor, respondent No. 1, preferred a revision against
this order of the executing court to the District Judge, which was dismissed.
The judgment-debtor, respondent No. 1, filed a petition under Article 227
of the Constitution of India in the High Court. which has been allowed. By
interim order dated 19.12.1986 the High Court directed further proceed- F
ings for the confirmation of the sale to remain stayed subject to the
condition that the judgment-debtor, respondent No. 1, deposit the entire
decretal amount within 2 months. On 9.1.1987 the judgment-debtor
deposited Rs. 19,773, which fell short by Rs. 2,007.85. This shortage also
appears to have occurred due to the mistake in calculation of the court's
..... office. The judgment-debtor, on discovery of the mistake deposited the G
remaining amount of Rs. 2,007.85. However, the executing court proceeded
with the execution and confirmed the sale on 4.5.1987 and also gave
possession of the land auctioned to the appellant. By order dated 19.4.1990
the High Court allowed the petition of the respondent No. 1 and held that
the judgment-debtor has been wrongly dispossessed from the land inspite H
108 SUPREME COURT REPORTS (1996] SUPP. 5 S.C.R.

A of the interim order dated 19.12.1986; that the full amount of sale price not
being deposited by the appellant within the time fixed under Order XXI,
Rule 85, Code of Civil Procedure, the deposit of the balance amount of
Rs. 3,727.25 much later did not cure the defect, since the executing court
has no power to extend that time.

B This appeal by special leave is by the decree-holder against the above
order of the High Court. In view of the fact that the appellant is continuing
in possession of the land auctioned inspite of the orders of the High Court.
In this appeal stay was granted in favour of the appellant by the interim

c
order dated 6.8.1991 subject to the following conditions :

"(a) The appellant must deposit a sum of Rs. 65,000 as security in
the Trial Court within a period of 6 months from today in 3
-
instalments. The first instalment of Rs. 20,000 shall be deposited
within a period of 2 months from today; the second instalment of
Rs . 20,000 within a period of 4 months from today; and the last
D instalment for Rs. 25,000 within a period of 6 months from today;

(b) The appellant must further deposit a sum of Rs. 15,000 per
year in the Trial Court for the period June, 1991 till the appeal is
finally disposed of. The amount shall be deposited on or before
E the 31st of July each year, the first deposit being on or before
31.7.1992.

(c) The amount deposited as directed above shall be invested by
the Trial Court in interest earning fixed deposits in a nationalised
bank and shall be subjeet to the direction of this court.
F
( d) ln case of default in depositing any of the aforesaid amounts
as mentioned in Clause (a) and (b) above the order of stay shall
automatically stand vacated." ..
Shri Satish Chandra, learned counsel for the appellant submitted that
G the consequences envisaged by Order XXI Rule 85 due to the non deposit
of the full sale price do not ensue in the present case because the shortage
in deposit by the appellant was occasioned by the mistake of the Court in
specifying a lesser amount in the sale proclamation as the decretal amount
then due. He submitted that in these circumstances Rule 90 and not Rule
H 85 of Order XXI applies and resort to the provision in Rule 90 not being
BALRAM v. lLAM SINGH [J.S. VERMA, J.] 109

made by the judgment debtor, the validity of the sale remains unaffected. A
He submitted that the judgment-debtor had to make an application under
Rule 90 within the prescribed period of 15 days to set aside the sale which
was not done and, therefore, the sale had to be confirmed. It was also
argued that the actual date of sale in the present case must be taken fo be
the date on which the correct amount due under the decree was calculated
B
by the Court for the purpose of set off against the sale price and not the
date on which the sale was actually held. Learned counsel further sub-
mitted that the judgment-debtor not having made the deposit in accord-
ance with Rule 89(2) of Order XXI, the confirmation of sale cannot be
questioned.
c
In reply shri J.P. Goel learned counsel for the respondent No. 1,
judgment-debtor, submitted that the provision in Order XXI Rule 85 is
mandatory, requiring strict compliance and the undoubted failure by the
appellant to deposit the full amount of sale price within the time prescribed
therein, rendered the sale void since there was no power in the executing D
court to extend that period. Shri Goel also submitted that a large tract of
land was auctioned for a very low price for recovery of a much lesser
decretal amount and this has deprived the judgment-debtor, respondent
No. l, of his only source of livelihood.

The main point for decision is whether there is non-compliance of E
order XXI Rule 85 to render the auction sale void. The above facts are
undisputed. It is beyond controversy _that the full amount of purchase
money payable by the purchaser into the Court was not paid by hi.m within
15 days from the date of the auction sake. This result ensues even after
giving the advantage of set off of the decretal amount due to the purchaser p
decree-holder to which he may have been entitled under Rule 72. The only
argument to avoid its consequence is that the shortfall in the deposit was
occasioned by a mistake of the Court in the calculation of the amount, of
which the appellant was entitled to claim set off under Rule 72. The
question is whether this plea is tenable to avert the inevitable consequences
of the failure to comply with the strict requirement of Rule 85. G

In Mani/al Mohan/al Shah and Ors. v. Sardar Sayed Ahrned Sayed
Mohamad & Anr., [1955] 1 SCR 108, this Court examined the scheme of
the provisions of the Rules 84, 85 and 86 of Order XXI Code of Civil
Procedure and held as under : ' H
110 SUPREME COURT REPORTS [1996) SUPP. 5 S.C.R.

A ".....The principal question which falls to be considered is
whether the failure to make the deposit under order XXI, rules
84 and·85, is only a material irregularity in the sale which can only
be set aside under rule 90 or whether, it is wholly void. It is argued
that the case falls within the former category and the application
t
under rule 90 being barred by limitation, the sale cannot be set
B aside. It is also contended that the Court having once allowed the
set-off and condoned the failure to deposit, the mistake of the Court
should not be allowed to prejudii;e the purchasers who would cer-

c
tainly have deposited the purchase price but for the mistake. We are
of the opinion that both the contentions are devoid of substance. In
order to resolve this controversy a reference to the relevant rules
-
of Order XXI of the Civil Procedure Code will be necessary. These
Rules _are 72, 84, 85 and 86 :

xxx xxx xxx xxxx

D
The scheme of the rules quoted above may be shortly stated.
A decree-holder cannot purchase property at the Court-auction in
execution of his own decree without the express permission of the
Court and that when he does so with such permission, he is entitled
to a set-off, but if he does so without such permission, then the
E Court has a discretion to set aside the sale upon the application
by the judgment-debtor, or any other person whose interests are
affected by the sale (Rule 72). As a matter of pure construction
this provision is obviously directory and not mandatory - See Rai
Radha Krishna and Other v. Bisheshar Sahai and Others, (49 IA
F 312). The moment a person is declared to be the purchaser, he is
bound to deposit 25 per cent of the purchase-money unless he
happens to be the decree-holder, in which case the Court may not
require him to do so (Rule 84).

The provision regarding the deposit of 25 _per cent by the
G purchaser other than the decree-holder is mandatory as the lan-
!~age of the rule su~;gests. 17ze 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, however, mandatory ... (Rule 85). If the Payment is
H not made within the period of fifteen days, the Court has the
BALRAM v. IIAMSINGH (J.S. VERMA, J.) 111

discretion to forfeit the deposit, and there the discretion ends but A
the obligation of the Court to resell the property is imperative. A
further consequence of non-payment is that the defaulting pur-
chaser forfeits all claim to the property.... (Rule 86).
'•
xxx xxx xxx xxxx
B
(Pages 112 - 114)

"Having examined the language of the relevant rules and the
judicial decisions bearing up01; 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 c
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. 171e 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. D
When there is no sale within the contemplation of these rules, there
can be no question, of material i1Tegularity 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 bond to resell the property in the event of the default E
shows that the previous proceedings for sale are completely wiped
out as if they do no 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.

-It was urged before us that the Court could allow a set-off in F
execution proceedings under its inherent power apart from the
provisions of Order XXI, rule 19, of the 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...... " G
(Pages 116 - 117)

(Emphasis Supplied)

It is to be nqted that the argument that it is only a materiel ir- H
112 SUPREME COURT REPORTS (1996) SUPP. '5 S.C.R.

A regularity in the sale to attract Rule 90 instead of Rule 85 was expressly
rejected; and it was clearly held that Rule 85 being mandatory, its non-
compliance renders the sak proceedings a complete nullity requiring the
executing court to proceed under Rule 86 and property has to be resold
unless the judgment-debtor satisfies the decree by making the payment
B before the resale. The argument that the executing court has inherent
power to extend time on th1: ground of its own mistake was also expressly
rejected. In our .opinion the contentions of learned counsel for the appel-
lant are fully negatived by this decision of the Court.

We may also indicate that the persistent assertion on behalf of the
...
-

C appellant that the shortage in deposit by the appellant was occasioned by
a mistake of the executing court in indicating the figure of the decretal
amount due in the sale proclamation also has no sound basis. The
provisions in Order XXI relating to sale of property beginning with Rule
64 clearly indicate the responsibility of the decree-holder in this behalf and
D his role in the drawing up of the sale proclamation. The executing court
proceeds with the execution and draws up sale proclamation on the basis
of information supplied by the decree-holder. Rule 66 of Order XXI is as
under :

''Proclamation of sales by public auction. -
E
(1) Where any property is ordered to be sold by public auction in
execution of a decree, the Court shall cause a proclamation of the
intended sale to be made in the language of such Court.

(2) Such proclamation shall be drawn up after notice to the
F decree-holder and the judgment-debtor and shall state the
time and place of sale, and specify as fairly and accurately as
possible -

(a) the property to be sold or, where a part of the property
G would be sufficient to satisfy the decree, such part;

(b) the revenue assessed upon the estate or part of the estate,
where the property to be sold is an interest in an estate or in
part of an estate, paying revenue to the Government;

H (c) any incumbrance to which the property is liable;
BALRAM v. ILAM SINGH [J.S. VERMA, J.) 113

( d) the amount for the recovery of which the sale is ordered; A
and

(1!) every other thing which the Court considers material for
a purchaser to know in order to judge of the nature and value
of the property;
B
Provided that where notice of the date for setting the terms of
proclamation has been given to the judgment- debtor by means of
an order under rule 54, it shall not be necessary to give notice
under this rule to the judgment-debtor unless the court otherwise
directs : c
Provided further that nothing in this rule shall be construed as
requiring the Court to enter in the proclamation of sale its own
estimate of the value of the property, but the proclamation shall
include the estimate, if any, given, by either or both of the parties. D

(3) Every application for an order for sale under this rule shall be
accompanied by a statement signed and verified in the manner
hereinbefore prescribed for the signing and verification of plead-
ings and containing, so far as they are known to or can be ascer-
tained by the person making the verification, the matters required E
by sub-rule (2) to be specified in the proclamation.

(4) For t_he purpose of ascertaining the matters to be specified in
the proclamation, the Court may summon any person whom it
thinks necessary to summon and may examine him in respect to F
any such matters and require him to produce any document in his
possession or power relating thereto.

It is clear that the sale proclamation is drawn up by the executing court

-- after notice to the decree-holder, on an application for an order for sale G
made by the decree-holder which is to be accompanied by a statement
signed and verified by the decree-holder in the prescribed manner and
containing the matters required by sub-rule (2) to be specified in the
proclamation, which also includes "the amount for the recovery of which
the sale is ordered". It follows that "the amount for the recovery of which
the sale is ordered' is stated in the sale proclamation on the basis of the H
114 SUPREME COURT REPORTS (1996) SUPP. 5 S.C.R.

A duly signed and verified statement made by the decree-holder which ac-
companies the decree-holder's application for an order of sale. The
specification of the amount for the recovery of which the sale was ordered,
in the sale proclamation being based on a statement made and verified by
the decree-holder, it is not open to the decree-holder to claim that he was
misled by any mistake of the Court in the specification of that amount. The
B blame, if any, for the mistake lies squarely on the decree-holder. Moreover,
the decree-holder knows best the amount to which he is entitled under the
decree, and he does not have to depend on anyone else to furnish this
information. A mistake for which the decree-holder himself is responsible
cannot furnish a ground to the decree- holder to avert the adverse conse-
C quences on him of his failure to comply with the mandatory requirement
of Rule 85.

It is also to be noted that the duty to pay the full amount of purchase
money within the prescribed period of 15 days from the date of sale of the
D property is cast on the purchaser by virtue of Rule 85 of Order XXI and
therefore, the entire responsibility to make full compliance of the man-
datory provision is his. The proviso to Rule 85 is enacted for the benefit
of the purchaser when he is the decree-holder and is entitled to the
advantage of any set off under Rule 72. The proviso giving this benefit to
the decree-holder purchaser merely relieves him of the requirement of
E depositing that amount of which he is entitled to claim set off, but it does
not relieve him of the duty to deposit the full amount taking advantage of
the set off. Any mistake made while claiming the set off which results in
failure to deposit the full amount of purchase money within 15 days of the
date of sale renders the decree-holder purchaser liable to the same adverse
F consequences which would ensue to any other purchaser due to non-com-
pliance of Rule 85. No distinction is made between a decree-holder pur-
chaser entitled to claim set off under Rule 72 and any other purchaser for
the purpose of strict compliance with the requirement under Rule 85. The
contentions of learned counsel for the appellant have no merit.

G The high Court has taken the view that there was also non-com-
pliance ·of Rule -'84 of Order XXI since 25 per cent of the amount of the
purchase money was not deposited by the appellant immediately as re-
quired by Clause 1 of Rule 84. Learned counsel for the appellant submitted
that the appellant was entitled to set off under Rule 72 as provided in
H Clause 2 of Rule 84. In reply learned counsel for respondent No. 1
BALRAM v. IlAM SINGH [J.S. VERMA, J.] 115

submitted that the Court has not dispensed with this requirement as no A
such permission was sought by the appellant. In view of our conclusion that
there was a clear non-compliance of the requirement of Rule 85 which
rendered the sale a nullity, we consider it unnecessary to decide this further
question in the present case.

The question now is of the ultimate order to make while dismissing B
. this appeal, in view of the fact that the appellant is in possession of the
lands since 4.5.1987 inspite of the stay order dated 19.12.1986 made by the
High Court which ultimately decided in favour of the respondent No. 1.
The High Court has clearly stated that the entire decretal amount due for
satisfaction of the decree had been deposited by the debtor respondent No. c
1 in the Court. The interim order dated 6.8.1991 made in this appeal while
granting stay to the appellant has also to be taken note of. We are informed
that the appellant has been making the deposits as required by the order
dated 6.8.1991. The appellant has enjoyed the usufruct of the property
since 4.5.1987 even though he has, so far been deprived of the benefit of D
the decretal amount which is meagre as compared to the benefit of the
enjoyment of the property by the appellant. On the other hand the judg-
ment-debtor, respondent No. 1, delayed the satisfaction of the decree
which, to some extent contributed to this situation.

In the circumstances of the case, the ultimate order which commends E
to us as the most appropriate, is as under :

(1) The decretal amount drposited by the judgment - debtor, respon-.
dent No. 1, in the Court shall be paid to the appellant decree-holder.
F
(2) In these circumstances one-half of the total amount deposited by
the appellant in the Court in accordance with the order dated 6.8.1991,
together with the accretions thereto must be paid to the judgment debtor,
respondent No. 1, while the remaining one-half of the total amount be

- refunded to the appellant.
G
.(3) The executing court should proceed forthwith to restore posses-
sion of the property to the judgment-debtor, respondent No.1. The appel-
lant must pay the amount due upto the date of restoration of possession
according to the interim order dated 6.8.1991, to be disbursed in the
manner indicated above. H
116 SUPREME COURT REPORTS (1996) SUPP. 5 S.C.R.

A (4) On compliance of the above directions the executing court is to
record full satisfaction of the decree and strike off the execution.

(5) The executing court is to make such orders as may be necessary
for giving full effect to these directions.

B We direct, accordingly.

The appeal is dismissed in the above terms with costs quantified at
Rs.10,000.

S.S. Appeal dismissed.