CPC | Separate Suit Against Confirmed Auction Sale Barred Under Order XXI Rule 92(3), Remedy Lies Under Section 47 : Supreme Court

The Supreme Court on Monday (December 15) ruled that once an auction sale is confirmed and the aggrieved party has not sought to set it aside, a separate suit challenging the order confirming the sale is expressly barred under Order XXI Rule 92(3) of the Code of Civil Procedure. The Court clarified that the appropriate remedy in such cases is to move an application under Section 47 CPC, limited to grounds such as lack of jurisdiction or nullity of the order. A bench of Justice J.B. Pardiwala and Justice R. Mahadevan heard the case originated from a 1970 mortgage by one Duli Chand in favour of New Bank of India (now Respondent No. 6) for a tractor loan. Upon default, the bank obtained an ex parte decree in 1984. During the pendency of the suit and after the decree, two purchasers (Respondents 1 & 2) bought parcels of the mortgaged land from one of the judgment debtors in 1985. In execution proceedings, the entire mortgaged property was auctioned in 1988. The appellants, sons of a judgment debtor, were declared the highest bidders for a sum of ₹35,000. The sale was confirmed in August 1988, and possession was delivered in June 1989. Subsequently, in July 1989, the respondents filed a separate civil suit seeking a declaration that the auction sale concerning their purchased portion was void, alleging irregularities and fraud in the auction process. The Trial Court, Appellate Court, and the Punjab & Haryana High Court ruled in their favour, declaring them owners and granting joint possession, prompting the defendant-Appellants to move to the Supreme Court. Setting aside the concurrent rulings of the Court's below, the judgment authored by Justice Pardiwala observed that since, the Respondent Nos. 1 and 2, claimed to be aggrieved by the auction sale of the mortgaged property to the Appellants, hence the separate suit filed by them to set aside the auction sale would not be maintainable as per the express bar provided under Order XXI Rule 92(3) CPC, when the auction sale became confirmed under Rule 92(1) and no application to set aside the auction sale was made either under Rule 89 or Rule 90 of Order XXI CPC. Moreover, the separate suit filed by the Respondent Nos. 1 and 2 was also held to be barred under Section 47 of CPC, which mandates that all execution-related questions be determined by the executing court alone. Thus, the Court held that, instead of filing a separate suit against the auction sale, the Respondent Nos. 1 and 2 should have filed an application under Section 47 CPC, alleging irregularities and fraud in the auction process. Explaining the distinction between the two recourses, the Court held: “What we are trying to say is that there may also arise unique situations where the party cannot file a separate suit to set-aside the order of confirmation of sale owing to the bar under Rule 92(3), yet they may be able to prefer an application under Section 47 to allege that the entire sale was without jurisdiction or a nullity. To put it simply, although someone could be covered under the bar to a separate suit referred to in Rule 92(3), yet they may very well maintain an application under Section 47 CPC. For example, consider a scenario where a judgment-debtor has already paid the decretal amount but his property is nevertheless sold in the auction sale and the auction sale is also confirmed – he would not be able to file a separate suit owing to him being a person against whom the order confirming the sale was passed under Rule 92(1) and thereby, he would fall under the bar specified in Rule 92(3). However, he would be able to prefer an application under Section 47 CPC on the ground that the entire sale was a nullity. In such a situation, both the bars to a suit i.e., the bar under Rule 92(3) and the bar under Section 47 CPC, would interact and prevent the filing of a separate suit while making the option of preferring a simpliciter application under Section 47 CPC available to him. In such cases, the appropriate course of action would be to prefer an application under Section 47 and not institute a separate suit.”The Court has clarified that a party cannot bypass the limitation period prescribed for challenging an execution sale under Order XXI Rules 89, 90 or 91 CPC by filing an application under Section 47 CPC after the sale has already been confirmed.If an application filed under Section 47 is, in substance, based on grounds that properly fall under Rules 89, 90 or 91, the executing court must treat it as an application under those Rules, regardless of how it is labelled. Once so treated, the application will necessarily fail if the limitation period under Article 127 of the Limitation Act, 1963 has expired. In short, Section 47 cannot be used as a device to revive time-barred challenges to an execution sale."However, the aforesaid must not be construed to mean that when a party is unable to raise the grounds mentioned under Rules 89, 90 or 91 respectively within the limitation as...

CPC | Separate Suit Against Confirmed Auction Sale Barred Under Order XXI Rule 92(3), Remedy Lies Under Section 47 : Supreme Court

Yash Mittal

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CPC | Separate Suit Against Confirmed Auction Sale Barred Under Order XXI Rule 92(3), Remedy Lies Under Section 47 : Supreme Court

Yash Mittal

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