Holding

If an appeal is pending against an order refusing to set aside a sale, the sale is not yet final and the judgment‑debtor may deposit the decretal amount under Order 34 Rule 5 of the CPC.

Summary

The appellant mortgaged an industrial plot and failed to deposit the decree amount, leading to a foreclosure suit and auction of the property. The auction sale was confirmed by the trial court, but the appellant challenged it under Order 21 Rule 90 and later deposited amounts during the pendency of appeals, claiming protection under Order 34 Rule 5. The High Court Single Judge allowed the appeals, treating the deposits as valid, but the Division Bench set aside that judgment, holding that deposits could not be made after the sale was confirmed. The Supreme Court examined the meaning of “before the confirmation of sale” and held that when an appeal is pending against an order refusing to set aside the sale, the sale remains in a nebulous state, allowing the judgment‑debtor to make deposits under Order 34 Rule 5. Relying on U. Nilan and Maganlal cases, the Court overruled the Division Bench, restored the Single Judge’s order and allowed the appeals. No costs were awarded.

Issues considered

When is a sale of mortgaged property deemed to be “confirmed” for purposes of Order 34 Rule 5 of the CPC?
Can a judgment‑debtor make a deposit under Order 34 Rule 5 while an appeal against the order confirming the sale is pending?

Legislation cited

Code of Civil Procedure, 1908s. Order 21 Rule 90, s. Order 21 Rule 92, s. Order 32 Rule 5, s. Order 34 Rule 5

Subjects

mortgageforeclosureauction saleconfirmation of saleOrder 34 Rule 5appeal pendingCivil Procedure Codeexecution

Judgment

KHARAITI LAL A
v.
RAMINDER KAUR AND ORS.

MARCH 15, 2000

[S. SAGHIR AHMAD AND D.P. WADHW A, JJ.] B

Code of Civil Procedure, 1908 :

Order 34 Rule 5, Order 21 Rule 90-Confirmation of sale-Mortgage
suit-Auction sale-Application to set aside the sale, rejected-Confirmation
of sale-Orders refusing to set aside. the sale and c01rfi.rmation of sale chal- c
lenged in appeal-Deposits made pending appeal-Held, it would be open to
judgment debtor to invoke provisions of Order 34 Rule 5 and make necessary
deposits.

The appellant mortgaged an industrial plot. Later the mortgagee D
filed a suit for foreclosure in order to recover the mortgage money by sale
of the said plot and the building constructed thereon. A preliminary decree
was passed directing the appellant to deposit the amount along with future
interest. The appellant did not deposit the amount. The Court passed the
final decree. In execution proceedings the property was auctioned and was
purchased by the predecessor-in-interest of the respondents. The appellant E
challenged the auction-sale under Order 21 Rule 90 CPC. The Court
rejected the objection and confirmed the auction-sale. The appellant filed
appeals before the High Court and also deposited the amount. The Single
Judge held that the appellant had already deposited the requisite amount
under Order 32 Rule 5 CPC, and allowed the appeals and set aside the F
auction sale as also its confirmation. The respondents filed two letters
patent appeals and the Division Bench allowed the same. Aggrieved, the
mortgagor filed the present appeals.

It was contended for the appellant that Order 34 Rule 5 CPC contem-
plated deposit before "confirmation of sale" and if the order by which the G
sale was confirmed was challenged in appeal, the sale would not be treated
as confirmed unless the appeal was disposed of and; that since the appel-
lant had made the deposits during pendency of the appeals, the deposi~ so
made were valid and could not have been treated to have been made "after
confirmation." H
445
446 SUPREME COURT REPORTS [2000] 2 S.C.R.
A Allowing the appeals, this Court

HELD : If an appeal was pending against an order refusi~~ to set
aside the sale, the confirmation of sale as also the issuance of Sale Certifi-
cate would be in a nebulous state and, consequently, it would be open to the
judgment-debtor to invoke the provisions of Order 34 Rule 5 C.P.C. and
B make the necessary deposits to save his property from being transferred to
a third person or, may be, to the decree-holder, in execution of the decree
passed in the mortgage suit. [449-F]

U. Nilan v. Kamzayyan (Dead) through Lrs., [1999] 8 SCC 511 =[1999]
6Scale 358 = JT (1999) 7 SC621, reiterated.
c
Maganlal & Am: v. Jaiswal Industries, Neemach & Ors., [1989] 4 SCC
344 = [1989] 3 SCR 696 = AIR (1989) SC 2113, relied on.

Hukamchand v. Bansilal & Ors., [1967] 3 SCR 695 =AIR (1968) SC 86,
D distinguished.

CIVIL APPELLATE JURISDICTION : Civil Appeal No. 2126-2127 of
2000.

From the Judgment and Order dated 2.7.98 of the Punjab & Haryana
E High Court in L.P.A. No. 1172-73 of 1985.

R.K. Kapoor, Sumit Kumar, S.K. Srivastava and Anis Ahmad Khan for
the Appellant.

Raju Ramachandran, Piyush Sharma and Pramod Dayal for the Re-
F spondents. \

The Judgment of the Court was delivered by

S. SAGHIR AHMAD, J. Leave granted.

The appellant, who was the owner of a plot of land ril~asuring one and
G
a half kanal, situated in Industrial Area, Chandigarh, had mortgaged the said
land with one Col. Joginder Singh for a sum of Rs. 20,000 after raising certain
constructions thereon.

Col. Joginder Singh subsequently filed a suit for foreclosure in order
H to recover the mortgage money by sale of Industrial Plot No. 255-P and the

.'
KHARAITI LAL v. RAMINDER KAUR [S.S. AHMAD, J.] 447
building constructed thereon. A preliminary decree was passed in that suit
on January 23, 1976, directing the appellant to deposit a sum of Rs.
28,187.50 along with future interest at the rate of 9 per cent per annum on
or before March 23, 1976. The amount was not deposited and, therefore, Col.
Joginder Singh filed an application for final decree which was passed by the
Sub-ordinate Court, Chandigarh, on April 8, 1976. The decree was put to B
execution and in execution proceedings, the property was auctioned on
August 25, 1976. Nazar Singh, who is now represented by the present
respondents, purchased the property at the auction for a sum of Rs. 45,000.
The auction-sale was challenged by the appellant by filing an application
under Order 21 Rule 90 C.P.C. on August 28, 1976. The objections were
rejected on November 28, 1977 and on the next day, namely, on November
c
29, 1977, the Court confirmed the auction-sale.

The appellant, thereafter, filed two appeals (Appeal Nos. 373 and 374
of 1977) in the High Court. During the pendency of those appeals, he also
deposited a sum of Rs. 47,250 on May 3, 1985 and another amount of Rs. D
525 was deposited by him on August 19, 1985. When the appeals came up
for hearing before the Single Judge, it was noticed that the appellant had
already deposited the requisite amount under Order 34 Rule 5 of the Code
of Civil Procedure and, therefore, the appeals were allowed on August 30,
1985 and the auction-sale as also its confirmation were set aside with the E
direction that the amount, deposited by the appellant, would be paid to the
heirs of Nazar Singh who had, in the meantime, died and was substituted
in the appeals by the present respondents. The judgment passed by the Single
Judge was challenged by the respondents in the Letters Patent Appeals filed
before the Division Bench, which allowed both the appeals by the impugned
F
judgment dated July 2, 1998 and set aside the judgment passed by the Single
Judge. It is in these circumstances that the present appeals have come up
before us.

Learned counsel for the appellant has contended that the Division
Bench of the High Court was in error in interfering with the judgment G
passed by the Learned Single Judge on the ground that the deposits, made
i:>y the appellant during the pendency of the appeals in the High Court,
would not enure to his benefits and could not be treated to have been made
under Order 34 Rule 5 C.P.C. as the auction-sale had already been confirmed.
It is further contended that Order 34 Rule 5 C.P.C. contemplates deposit
H
448 SUPREME COURT REPORTS [2000] 2 S.C.R.
A before "confirmation of sale" and ·if the order by which the sale was
confirmed had been challenged in appeal, the sale would not be treated as
confirmed unless the appeal was disposed of. It is further contended that
since the appellant, in the instant case, had made the deposits during the
pendency of the appeals in the High Court, which were directed against the
B auction-sale as also its confirmation, the deposits so made were valid and
could not have been treated to have been made "after confirmation."

Learned counsel for the respondents, on the contrary, contended that
when a preliminary decree was passed by the trial court, the appellant was
allowed time to deposit the whole of the decretal amount by a specific date,
c namely, by March 23, 1976 but the appellant did not do so and, conse-
quently, the property was auction-sold. The sale was challenged by the
appellant through objections under Order 21 Rule 90 C.P.C., which were
rejected and the sale was thereafter confirmed. It is contended that after
rejection of the objections under Order 21 Rule 90 C.P.C., the Executing
D Court was bound to confirm the sale and since the sale was confirmed on
the next day of the rejection of the objections under Order 21 Rule 90
C.P.C., the sale, for all practical purposes, shall be deemed to have been
confirmed on that day. Any deposit, made by the appellant thereafter, would
be of no avail and on the basis of that deposit, the sale could not be set
E aside. It is contended that the Division Bench of the High Court was
justified in settng aside the judgment passed by the Single Judge.

A perusal of the judgment passed by the Division Bench would show
that after setting out the facts, it formulated a question as under :-

F "The question that arises for consideration is - when can a sale
of the mortgaged property be said to have been confirmed? The
ancillary question would be - Can a deposit be made under Order
34 Rule 5 even when an appeal is pending?"

Thereafter, the Division Bench proceeded to answer the question by
G
holding ultimately that. the deposit of money, during the pendency of appeals
in the High Court, could not be treated as a valid deposit under Order 34 Rule
5 C.P.C. For this purpose, it placed reliance upon a decision of this Court in
Hukamchand v. Bansilal & Ors., [1967] 3 SCR 695=AIR (1968) SC 86. The
decision in Hukamchand' s case (supra) was given on the particular facts of that
H case. It was noticed by the Court, in that case, as under :-
KHARAITI LAL v. RAMINDER KAUR [S.S. AHMADI, J.] 449
"Though O.XXXIV r.5(1) recognises the right of the judgment- A
debtor to pay the decretal amount in an execution relating to a
mortgage decree for sale at any time before the confirmation of sale,
the rule does not give any power to the court to grant time to deposit
the money after the final decree has been passed. It is not open to
the court to go on fixing date after date and postponing confirmation
B
of sale merely to accommodate a judgment-debtor."

The Court did not hold in that case that a deposit under Order 34 Rule
5 C.P.C. could not be made during the pendency of an appeal against the
order by which the sale was confirmed.
c
The entire case law was reviewed by this Court in a recent decision
in U. Nilan v. Kannayyan (Dead) through Lrs., (1999) 8 SCC 511=(1999)
6 Scale 358=JT (1999) 7 SC 621, in which also the Court had formulated
the following question :-
D
"What is the meaning of the phrase "before the confirmation of
sale "may now be considered in the light of other relevant provisions
of the Code of Civil Procedure."

The above question is identical to the question framed by the Division
E
Bench of the High Court in this case. This Court, on a consideration of a
number of decisions, including the decision of this Court in Hukamchand's
case (supra) laid down that if an appeal was pending against an order
refusing to set aside the sale, the confirmation of sale as also the issuance
of Sale Certificate would be in a nebulous state and, consequently, it would
be open to the judgment-debtor to invoke the provisions of Order 34 Rule F
5 C.P.C. and make the necessary deposits to. save his prnperty from being
transferred to a third person or, may be, to the decree-holder, in execution
of the decree passed in the mortgage suit. It may be mentioned that in U.
Nilan's case (supra), reliance was also placed upon the decision of this Court
in Maganlal & Am: V. Jaiswal Industries, Neemach & Ors., (1989) 4 sec G
344=[1989] 3 SCR 696=AIR (1989) SC 2113, in which it was held that the
sale does not become absolute or irrevocable merely on passing an order
confirming the sale under Order 21 Rule 92, but it would attain finality c,n
the disposal of the appeal, if any, filed against an order refusing to set aside
~~ H
450 SUPREME COURT REPORTS (2000] 2 S.C.R.
.,
... ____ _

A This decision; though rendered by this Court in 1989, was not noticed
by the Division Bench of the High Court.

For the reasons stated above, we allow the appeals, set aside the
judgment dated July 2, 1998, passed by the Division Bench and restore the
judgment dated 30.8.1985, passed by the Single Judge. There shall be no
B order as to costs.

R.P. Appeals allowed.