Failure To Serve Order XXI Rule 22 Notice Won't Impact DRT Auction Sale : Supreme Court
The Supreme Court has held that the requirement to serve a legal notice on the judgment debtor's legal representatives under Order XXI Rule 22 CPC before execution of a decree does not apply to an auction sale conducted by the DRT under the Recovery of Debts and Bankruptcy Act, 1993. A bench of Justice Pamidighantam Sri Narasimha and Justice Alok Aradhe heard the case where the...
The Supreme Court has held that the requirement to serve a legal notice on the judgment debtor's legal representatives under Order XXI Rule 22 CPC before execution of a decree does not apply to an auction sale conducted by the DRT under the Recovery of Debts and Bankruptcy Act, 1993.
A bench of Justice Pamidighantam Sri Narasimha and Justice Alok Aradhe heard the case where the execution proceedings initiated by the Appellants in a civil court against the Respondent were subsequently transferred to the Debt Recovery Tribunal (DRT). The DRT had auctioned the Respondent's subject property to realise the debt owed by them to the Appellants. The auction sale was, however, resisted by the Respondents, arguing non-compliance with Order XXI Rule 22 of CPC. They claimed to have not been served with a notice before proceeding for auction of the property.
Allowing the appeal, the judgment authored by Justice Aradhe rejected the Respondent's argument about the non-compliance with Order XXI Rule 22 of CPC, noting that the moment the proceedings were transferred to the DRT, the CPC loses its applicability.
“The transfer of execution proceeding from Morena court to the DRT, effected under Section 31 of the 1993 Act, did not merely change the forum of execution, it clothed the Recovery Officer, with the power to recover the amount in accordance with the procedure prescribed under Section 29 of the 1993 Act read with Second Schedule to the 1961 Act, in supersession of procedure under the Code before the Morena Court…Therefore, Order XXI Rule 22 of the Code has no impact on the validity of the auction sale.”, the Court observed.
Accordingly, the appeal was allowed, thereby upholding the auction sale by the DRT.
Also From Judgment: CPC | Residential Property Exemption u/s 60(1)(ccc) Is Personal To Judgment-Debtor; LR Can't Claim : Supreme Court
Headnote
Civil Procedure Code, 1908 (CPC) – Section 60(1)(ccc) [as applicable to Delhi, Punjab, and Haryana via Punjab Relief of Indebtedness Act, 1934] – Exemption of main residential house from attachment and sale – Exemption is personal to the Judgment-Debtor and not available to Legal Representatives - The protection under Section 60(1)(ccc) of the CPC exempting one main residential house belonging to and occupied by a judgment-debtor (other than an agriculturist) is personal to the judgment-debtor - A legal representative is a distinct juridical concept, and the liability devolving upon them is limited to the estate in their hands - A legal representative cannot, merely by virtue of residing in a house that belonged to the deceased judgment-debtor, claim the personal exemption provided to the judgment-debtor alone. [Relied on Yogesh Sharma & Ors. v. Devi Dayal & Ors., AIR 1977 Delhi 270; K.L. Bawa v. Basant Textiles, AIR 1982 P&H 275; Pargat Singh & Anr. v. Gurmail Kaur & Ors., 2014 SCC OnLine P&H 23436; Paras 41–44]
Recovery of Debts and Bankruptcy Act, 1993 – Sections 22, 29, and 31 read with Income Tax Act, 1961 – Second Schedule, Rules 2 and 61 – Transfer of execution proceedings from Civil Court to DRT – Applicability of Order XXI Rule 22 CPC vs. Rule 2 of Second Schedule to 1961 Act – Non-service of notice under Rule 2 – Validity of Auction Sale - Upon the transfer of execution proceedings from a Civil Court to the Debts Recovery Tribunal (DRT) under Section 31 of the 1993 Act, the Recovery Officer is empowered to recover dues in accordance with the procedure under Section 29 of the 1993 Act read with the Second Schedule to the Income Tax Act, 1961, superseding the CPC execution procedure - The execution before the Recovery Officer is governed by Rule 2 of the Second Schedule and not Order XXI Rule 22 CPC. Consequently, non-compliance with Order XXI Rule 22 CPC has no impact on the validity of the auction sale - where the legal representatives had full knowledge of the execution and auction proceedings and filed objections/applications for recall, non-service of formal notice under Rule 2 causes no substantial injury - Absence of notice under Rule 2 does not render the execution or auction sale void per se, particularly when the remedy under Rule 61 (to set aside the sale on grounds of non-service/irregularity upon establishing substantial injury and making requisite deposit) was not availed. [Paras 35–44]
Constitution of India, 1950 – Article 226 – Writ Jurisdiction – Mixed Questions of Law and Fact cannot be raised for the first time in a Writ Petition - While a pure question of law can be raised at any stage of the proceedings, a question of fact or a mixed question of law and fact requiring factual inquiry and investigation cannot be permitted to be agitated for the first time in a writ petition without laying a proper factual foundation in the pleadings before the subordinate authorities/tribunals - The High Court erred in remitting the matter to the DRT for a factual inquiry into the claim of exemption under Section 60(1)(ccc) CPC when no such plea or evidence was placed before the Recovery Officer or the DRT. [Relied on Greater Mohali Area Development Authority & Ors. v. Manju Jain & Ors., (2010) 9 SCC 157; Paras 30 - 46]
Cause Title: SHEELA GEHLOT Versus MOHINI HARDAYAL SINGH & ORS. (With connected matters)
Citation : 2026 LiveLaw (SC) 808