AARIFABEN YUNUSBHAI PATEL & ORS. versus MUKUL THAKOREBHAI AMIN & ORS. on 17 March 2020

1. M/s Abhilasha Construction, Respondent No.3 herein(hereinafter referred to as R-3), obtained a loan from Shree MahalaxmiMercantile Co-op Bank Ltd., Respondent No.2 herein (hereinafterreferred to as R-2), but failed to repay the loan and R-2 filed summaryHproceedings for recovery of the amount due to it from R-3 and Mukul Thakorebhai Amin, Respondent No.1 herein (hereinafter referred to asR-1), who was a partner in the said Firm. During the pendency of thesuit, R-3 applied for release of 12 flats and 2 penthouses which werepermitted to be released on the said respondents depositing Rs. 65 lakhs.However, Respondent Nos. 1 & 3 failed to deposit the said amount.On 12.08.2004, the adjudicating authority granted leave to the defendantsto contest the suit on the condition that they would deposit 33% of theamount claimed by R-2. This amount was also not deposited.Thereafter, a decree for a sum of Rs. 1,89,94,105.50, was passed on14.09.2004 in favour of R-2 and against the defendants which includedRespondent Nos. 1 & 3. We have given the facts of Civil AppealNo.1643-1644 of 2020. As far as Civil Appeal No.1647 of 2020 isconcerned, that relates to advertisement for sale of a bungalow whichwas issued on 13.01.2008, and sale was made on 03.03.2008.

2. The said decree dated 14.09.2004 was challenged in appealbefore the Gujarat State Cooperative Tribunal. It appears no stay wasgranted. In the meantime, R-2 filed an application for execution of thedecree before the Civil Judge, Vadodara on 01.11.2007. On the verynext day, i.e. 02.11.2007, an application was filed for appointment ofreceiver for execution of decree. The court allowed the said applicationon 02.11.2007 itself and the court receiver was permitted to sell theproperty and report to the Court within 15 days. R-2 also filed anapplication for attachment of property on which orders were also passedon 02.11.2007. Advertisement for auction of the said property waspublished in the newspaper on 21.11.2007. The upset price was notmentioned in the said advertisement. Pursuant to the public notice forsale, the auction of the attached property was conducted on 26.11.2007,wherein the appellants offered Rs.78,25,251/-. There were only twobidders and the appellants were the highest bidders and they deposited25% of the sale consideration on the spot. Thereafter, on 10.12.2007R-2 applied for permission to confirm the sale and vide order dated10.12.2007 the executing court accepted the report of court receiverand permitted him to execute the same. Thereafter, the receiver filedsome application for clarification and on 18.12.2007 counsel appearingon behalf of R-3 sought time to file objections.

3. Instead of filing objections, R-1 filed a writ petition before theHigh Court of Gujarat challenging the sale of 12 flats and 2 penthousespursuant to the court auction. This petition was filed on 26.12.2007. Italso appears that R-1 kept appearing before the executing court andrequested the executing court to stay further proceedings. Initially, the AB

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Aproceedings were stayed but when R-1 did not file any objections underOrder XXI Rule 90 of the Code of Civil Procedure, 1908 (CPC forshort), sale certificate in respect of 12 flats and 2 penthouses was issuedin favour of the appellants by the executing court on 29.02.2008.

4. On 05.03.2008, a statement was issued by R-1 that a buyerBis ready and willing to purchase the properties for Rs.1.7 crores. Thelearned Single Judge of the High Court permitted the proposed buyerto deposit a sum of Rs.50 lakhs and status quo was granted. Thisamount of Rs.50 lakhs was deposited. Aggrieved, the appellantspreferred a Letters Patent Appeal (LPA for short) and order dated05.03.2008 was stayed by order dated 01.04.2008. Aggrieved by theCorder of the Division Bench, R-1 filed SLP in this Court. It appearsthat in the meantime, R-2 had filed an application before the executingcourt on the ground that it had not authorised its officer to get theproperty sold. Therefore, on 21.04.2008 on the statement of learnedcounsel for R-1, permission was given to withdraw the SLP in view ofDthe application filed by R-2 before the executing court. Thereafter, on20.06.2008, R-1 filed an application under Order XXI Rule 90 of theCPC and the main grievance in this application was that no notice hadbeen sent to R-1 or R-3, either of the execution petition or of theattachment of the property or before settling the terms of proclamationof sale. In addition to this, another grievance was that the propertyEhad been sold for a price much less than the mortgaged price.

5. On 17.07.2008, R-1 made a submission before the High Courtthat it had filed an application under Order XXI Rule 90 of the CPC,before the executing court and the High Court recorded the followingobservation:-F

“Mr. Majumdar, learned advocate appearing on behalf of thepetitioner has submitted that even the question with respect tolimitation in preferring the application for setting aside the salemight arise. Mr. Sanjanwala, learned advocate senior advocateappearing with Ms. Sonal Shah, learned advocate appearing onGbehalf of the contesting respondent Nos.7 and 8 and Mr. M.M.Saiyed, learned advocate appearing on behalf of the contestingRespondent No.9, have submitted that let the application forsetting aside the sale be decided on merits and they will not raisethe objection with respect to limitation. Mr. Sanjanwala, learnedHsenior counsel with Ms. Sonal Shah, learned advocate appearing on behalf of respondent Nos. 7 and 8 and Mr. Saiyed, learnedadvocate appearing on behalf of the respondent No.9 havesubmitted for a period of one week from today, the parties willmaintain status-quo.”

6. On 25.07.2008 the LPA filed earlier was dismissed asinfructuous. On 07.10.2008, the appellants herein filed an applicationto recall the concession not to raise the issue of limitation recorded inthe order dated 17.07.2008. The High Court dismissed this application.Thereafter, the appellants approached this Court by filing SLP(C) No.26745-26746 of 2008. These petitions were disposed of on 23.03.2009,and the relevant portion of the order reads as follows:- “…In these cases, what is sought to be argued on behalf of thepetitioner is that the Execution Petition in which there is anallegation of fraud, in the holding of the auction sale, was timebarred. This question needs to be decided by Executing Court.But even if it comes to the conclusion that the application forexecution was time barred, we direct the Executing Court to giveits findings as to whether there was a fraud in conducting thesale. While deciding the question of limitation the Executing Courtwill also decide the scope and applicability of Section 5 andSection 14 of the Limitation Act…”

Thereafter, the matter went back to the Executing Court whichby a very detailed order rejected the application of R-1 filed under OrderXXI Rule 90 of the CPC. Thereafter, R-1 challenged the order of theexecuting court by filing a petition in the High Court which was allowedvide impugned order. The objections to the execution petition filed byR-1 were accepted and sale in favour of the appellants was set aside.The High Court went into the merits of the petition but did not decidethe issue of limitation. Though the High Court noticed that the appellantshad raised the plea of limitation, it did not decide the same and theobservation of the High Court in this regard is as follows:- “29. The court has come to the conclusion that the auction ofboth the properties were vitiated on account of lack of notice tothe judgment-debtor, and that being an error fatal to the validityof auction sale, in light of the decision of the Supreme Court theauction sale cannot be permitted to remain and they have to bequashed. Other submissions of the counsel for the auctionpurchasers therefore need not be elaborately dealt with, but A

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Asuffice it to say that the Court is quashing the auction sale onground of non-compliance with the mandatory provision of noticeto the judgment-debtor.”

We are constrained to observe that the High Court totally ignoredthe order of this Court quoted hereinabove. This Court had specificallyBdirected the executing court to decide both, the issue of limitation andobjections on merits. This was obviously done with the purpose that incase later if the issue of limitation is decided in favour of the objectors,R-1 and R-3, then the matter again should not be remanded for decisionon merits of the case. The issue of limitation could not have beenignored and should have been decided by the High Court.

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7. We may note that it has been strenuously urged by Mr. NikhilGoel, learned counsel for the Respondents that the sale is fraudulentwithout following the procedure prescribed by law, but we are clearlyof the view that first we have to decide whether the objections filedby the respondents were filed within time or not. In case the petitionDis filed beyond the period of limitation it is not necessary for the Courtto go into other issues.

8. Order XXI Rule 90 of the CPC reads as follows:- “90. Application to set aside sale on ground of irregularityor fraud.-E

(1) Where any immovable property has been sold inexecution of a decree, the decree-holder, or thepurchaser, or any other person entitled to share in arateable distribution of assets, or whose interests areaffected by the sale, may apply to the Court to set asideFthe sale on the ground of a material irregularity or fraudin publishing or conducting it.

(2) No sale shall be set aside on the ground of irregularityor fraud in publishing or conducting it unless, upon thefacts proved, the Court is satisfied that the applicant hasGsustained substantial injury by reason of such irregularityor fraud.

(3) No application to set aside a sale under this rule shallbe entertained upon any ground which the applicantcould have taken on or before the date on which theHproclamation of sale was drawn up.”

AARIFABEN YUNUSBHAI PATEL & ORS. v. MUKULTHAKOREBHAI AMIN & ORS. [DEEPAK GUPTA, J.]

9. The limitation for filing an application to set aside a sale inexecution of decree is 60 days in terms of Article 127 of Third Division,Part-1 of the Limitation Act, 1963 (for short the Act). Reference mayalso be made to Section 5 of the Act which reads as follows:- “5. Extension of prescribed period in certain cases.—Anyappeal or any application, other than an application under any ofthe provisions of Order XXI of the Code of Civil Procedure, 1908(5 of 1908), may be admitted after the prescribed period, if theappellant or the applicant satisfies the court that he had sufficientcause for not preferring the appeal or making the applicationwithin such period.

Explanation.—The fact that the appellant or the applicant wasmisled by any order, practice or judgment of the High Court inascertaining or computing the prescribed period may be sufficientcause within the meaning of this section.”

A bare reading of this provision clearly shows that Section 5 ofthe Act which deals with extension of time or condonation of delay isnot applicable to proceedings under Order XXI Rule 90 of the CPC.Therefore, the delay, if any, cannot be condoned under Section 5 ofthe Act.

10. That takes us to Section 14 of the Act, which reads asfollows:- “14. Exclusion of time of proceeding bona fide in courtwithout jurisdiction.—(1) In computing the period of limitationfor any suit the time during which the plaintiff has beenprosecuting with due diligence another civil proceeding, whetherin a court of first instance or of appeal or revision, against thedefendant shall be excluded, where the proceeding relates to thesame matter in issue and is prosecuted in good faith in a courtwhich, from defect of jurisdiction or other cause of a like nature,is unable to entertain it.

(2) In computing the period of limitation for any application, thetime during which the applicant has been prosecuting with duediligence another civil proceeding, whether in a court of firstinstance or of appeal or revision, against the same party for thesame relief shall be excluded, where such proceeding isprosecuted in good faith in a court which, from defect of A

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Ajurisdiction or other cause of a like nature, is unable to entertain it.

(3) Notwithstanding anything contained in rule 2 of Order XXIIIof the Code of Civil Procedure, 1908 (5 of 1908), the provisionsof sub-section (1) shall apply in relation to a fresh suit institutedBon permission granted by the court under rule 1 of that Orderwhere such permission is granted on the ground that the first suitmust fail by reason of a defect in the jurisdiction of the court orother cause of a like nature.

Explanation.—For the purposes of this section,—

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(a) in excluding the time during which a former civilproceeding was pending, the day on which thatproceeding was instituted and the day on which it endedshall both be counted; (b) a plaintiff or an applicant resisting an appeal shall beDdeemed to be prosecuting a proceeding;

(c) misjoinder of parties or of causes of action shall bedeemed to be a cause of a like nature with defect ofjurisdiction.”

In terms of this Section the time spent by the applicant forEprosecuting with due diligence other civil proceedings may be excludedif such proceedings are prosecuted in good faith in a court which, fromdefect of jurisdiction or other cause, is unable to entertain it.

11. As far as the present case is concerned it is not even disputedby R-1 that it had knowledge about the sales on 18.12.2007 whenFcounsel appearing for R-3, had sought permission to file the objectionapplication under Order XXI Rule 90 of the CPC. The writ petitionwas filed on 26.12.2007. On 21.04.2008, R-1 withdrew the SLP beforethis Court on the ground that an application has been filed by R-2 beforethe executing court on 18.03.2008. The writ petition itself was dismissedGon 17.07.2008. On behalf of R-1 it is urged that since the writ petitionwas disposed of on 17.07.2008 and the objection to the execution petitionwas filed on 20.06.2008, the same is within limitation.

12. We are unable to accept this proposition. Any person claimingbenefit of Section 14 of the Act can only claim exclusion of time ofHthat period for which it had been prosecuting another remedy with due diligence and in good faith. We are prima facie of the view that itcannot be said that the writ petition was filed in good faith or by duediligence because on 18.12.2007 the counsel for R-3 had made astatement that he would file objections to the execution petition.However, assuming that these proceedings were filed in good faith, aftera statement was made before this court on 21.04.2008, R-1 should haveimmediately filed the application before the executing court. Thecontinuance of the proceedings before the High Court can neither besaid to have been done in good faith nor in exercise of due diligence.

13. Even if we accept the case of R-1, at best, the period from26.12.2007 to 21.04.2008 can be excluded. If we exclude that periodthen we have 7 days in December, 9 days in April, 31 days in Mayand 19 days in June. Thus, by giving benefit of all days of passing ofthe orders then also R-1 & R-3, would be barred by limitation for filingthe application under Order XXI Rule 90 of the CPC by 6 days. Sincethere is no power to condone such delay, the petitions had to be dismissedas being time barred. Therefore, the appeals have to be allowed onthis short ground.

14. Accordingly, we allow the appeals and set aside the judgmentof the High Court dated 07/08.11.2008 in Special Civil Application No.3166 of 2010 and uphold the order of the executing court dated23.02.2010 in Special Petition No. 81 of 2007. In view of this judgment,Contempt Petition (Civil) No.63 of 2020, is also disposed of. Pendingapplication(s), if any, shall also stand disposed of.

Ankit Gyan

Appeals allowed.

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