Supreme Court redefines exemPtion u/s 60 (1) ccc of
CPC
Solitary
residential house of judgment debtor exempted from auction/sale?
The
Supreme Court has revisited again, legal issues raised, of late, as regards
whether a solitary dwelling house- residential unit belonging to judgment debtor
shall be exempted from attachment and sale in execution of a decree. Though,
before unravelling the situation, it is necessary to point out that exemption
to a solitary dwelling unit from attachment and sale has never been under any
ambiguity after the decision rendered by the hon’ble Division bench of Delhi
High Court, whereby the division bench were pleased to held in a matter
reported as SC Jain Vs Union of India 1983 Delhi 367 that the
exemption to a judgment debtor in execution of decree is absolute and no fetter
could be attached thereto. The ambiguity, though, arose in a judgment rendered
by a division bench of Delhi High Court reported as Sujata Kapoor Vs
Union Bank of India 2019 Lawsuit (Del) 3324, wherein it was held, that,
though, the exemption to a judgment debtor shall be available, but the
exemption cannot be extended to a large plot of land with building, in as much
as exemption of a big plots with building may not gel with the object and
purpose of the provisions as contained in the Code of Civil Procedure. In this
context, it is worth mentioning that the subsequently, yet another division
bench of Delhi High Court has held in Mohinder Singh ( since deceased) Through
LRs Vs Bimal Saxena (Deceased through Assignee) EFA (OS) 17/2024
that judgment rendered in Sujata Kapoor (Supra) was per
incuriam, since, the earlier categorical judgment of hon’ble Supreme Court
reported as Kiran Bala Vs Surinder Kumar AIR 1996 Supreme Court 2094
was not referred to or placed before the division bench in Sujata Kapoor
(Supra). Pertinently, no such fetter was attached by the Supreme Court in the
aforesaid dicta, hence, the judgment rendered in Sujata Kapoor (Supra)
shall be per incuriam, as afore stated.
That said, in the perspective as
set out hereinabove, the Supreme Court has again revisited the provision as
contained in Section 60(1) (ccc) of Code of Civil Procedure, albeit, in
slightly different context, still, being a recent dictum, post Sujata
Kapoor it assumes significance. It may be apt, though, to specify ,
before delineating the matter further, that, such exemption historically shall
be available to the residents of Delhi and Punjab only, since the provision as
contained in Section 60(1) (ccc) by way pf amendment shall only be applicable
to Delhi and Punjab. Why it is so, shall be deliberated later. The Supreme
Court has also reaffirmed that whereas exemption to a solitary dwelling unit,
if not mortgaged, shall be available, but that will be available only to a
judgment debtor or certificate debtor and such exemption shall not be available
to the legal heirs of such judgment debtor. The Supreme Court, thus as referred
to above, has in greater detail, analysed the law as regards section 60(1)
(ccc) of Code of Civil Procedure in a matter reported as 2026 INSC 863 (arising
out of Civil Appeal No. 182 OF
2016) and captioned as Sheela Gehlot Vs Mohini Hardayal Singh & Ors. The finding of the
hon’ble Supreme Court as well as law existed in this regard and also its revisit by the Supreme Court
in reiteration shall be further
discussed hereinafter. The execution proceedings, whether in civil courts or
before the Debt Recovery Tribunal (DRT) which is though governed by RDDB Act
1993 and recovery proceedings arising thereunder relates to 2nd
& 3rd Schedule of Income Tax Act also adhere to the basic
principles of Section 60(1) (ccc) in view of Rule 10 & Rule 11 of 2nd
Schedule of Income Tax Act.
SUJATA
KAPOOR (Supra) AND AFTERMATH
The
discussion will be incomplete, if the background of the judgment rendered in
Sujata Kapoor (Supra) and its subsequent effect is not discussed. The brief
facts of Sujata Kapoor (Supra) was as under:
(i)
The writ petition was filed by a third party objector and not a certificate
debtor/judgment debtor , therefore, exemption under Section 60(1) ccc of Code
of Civil Procedure was not available to her.
(ii)
The property was purchased by petitioner from her father-in-law.
(iii)
The predecessor-in interest of Sujata Kapoor was restrained from creating any
third party interest in the said property;
(iv)
The certificate debtor/owner of the property had breathed his last and the
objection was preferred after his death. It is worth mentioning that Sujata
Kapoor was not even the LRs of certificate debtor. Though, it is reiterated
that no exemption shall be available to the LRs of debtors.
(v)
The objection of Sujata Kapoor seeking exemption of alleged solitary dwelling
unit was discovered by the ld Recovery Officer, also in appeal against the
order passed by ld Recovery Officer, even the ld DRAT had also dismissed the
appeal filed against the order of Presiding Officer of DRT and thereafter, a
writ petition was preferred after suffering three (3) successive and concurrent
judgments against her.
(vi)
The allegation of collusive sale was made.
(vii)
The sale was made in defiance of Rule 16 and Rule 51 of Second Schedule of
Income Tax Act.
As
narrated above, in Sujata Kapoor (Supra) a fetter was sought to be
imposed that exemption of a large piece of land and building may not be
available to a judgment debtor and the exemption, though, shall be available in
Delhi and Punjab, but not for inordinately large size of the plot and building.
Thus, in essence, the very provision of exemption in favour of certificate
debtor was upheld.
In
Mohinder Singh ( since deceased) Through LRs Vs Bimal Saxena
(deceased) Through Assignee, EFA(OS)17/2024, yet again, another division bench of Delhi High Court,
subsequently held that Sujata Kapoor (Supra) judgment was per incuriam in view
of the fact that judgment of co-ordinate bench reported as VP Arora vs
Punjab National bank 1991 SCC OnLine Del 581. Significantly, in Kiran
Bala Vs Surinder Kumar (1996) 4 SCC 372 was also not brought to the attention
of the concerned division bench which has provided for unfettered exemption of
a solitary dwelling unit of a judgment debtor. It is held in Kirna Bala
(Supra):
“6.
Having set out the above facts, it is crystal clear to us that we have to grant
relief to the appellant. It is evident that she sold the house in question
ostensibly to pay off her debts, but the sale has been declared by the civil court,
decided in CS No. 636 dated 06/08/1991, to be null and void. The effect of this
decision would be that the said sale becomes non est and parties reverted to their
original position, meaning thereby that the appellant got a negative
declaration that she continued to be the owner-in-possession of the house in
question. On that premises, what sequelly follows cannot be withheld merely on
account of the conduct of the appellant. Since, the legal consequence is that
she would be the owner-in possession of the house, she would definitely be
entitled to claim its exemption from attachment or sale under sub-clause (ccc)
of section 60 (1) of the CPC above referred to. Had the claim of the plaintiff
in the said suit been negatived as regards the transfer being with the object
of defeating or delaying her creditors. The house in question would necessarily
have been out of the reach of the decree holder. Merely because it has now been
reverted back to the judgment debtor that fact, by itself, would not disentitle
the judgment debtor from raising the legal plea of exemption. In this view of
the matter, we are convinced that the executing court was in error in
dismissing the objection of the petitioner/appellant and so was the High Court
in dismissing the revision petition in limine”.
In
VP Arora (Supra) it was held as under:
“10.
As already noted, the underlying object of section 60 (ccc) is not to displace
a judgment debtor from the main residential house in execution of money decree.
It hardly matters whether he owned the house when decree was passed or he comes
to own the house when it is sought to be attached or sold. That is why the law
framers used the word “or” between attachment and sale. The last relevant time
would be the date of sale and if on the date of sale a residential house is
owned by the judgment debtor, it would not be sold and will have to be released
from attachment”
In
Mohinder Singh (Supra), therefore, the division bench ,
subsequent to Sujata Kapoor (Supra) has held that the earlier division bench
judgment of Sujata Kapoor ( Supra) was per incuriam as judgment rendered by the
Supreme Court was not placed before the concerned division bench. and hence, it
did not lay down correct law.
In
Brij Mohan Arora Vs Bank of Baroda & Ors 1988(4) SCC OnLine 157
Del (EFA No. 7 of 1985) the Delhi High Court has held in the context of section
60(1) (ccc) of CPC as under:
“3. It has been held
by a Division bench of this Court in S.C Jain Vs Union of India and ors AIR
1983 Delhi 367 that the aforesaid clause is still applicable to Delhi. In the
aforesaid case a challenge was made that by virtue of Civil Procedure Amendment
Act of 1976 and in view of section 97 of the Act, this amendment made by Punjab
State introducing clause (ccc) in section 60 of Code of Civil Procedure , is no
longer applicable to the Union Territory of Delhi, but this challenge was
repelled and it was held by the division bench of this Court that the said
Clause (ccc0 continues to apply to Delhi. No challenge has been made before me
to the ratio laid down in the said judgment and I am respectfully bound by the same….”
Earlier the Supreme
Court in a matter reported as Ram Lal & Ors Vs Piar Lal Gobindram &
Ors AIR 1973 Supreme Court 2124 has also held on the similar line.
Yet
again, Delhi High Court in Punjab National Bank Vs Suresh Kumar Jain
& Ors 2000 SCC OnLine Del 160 has held as under:
“ learned counsel
for the decree holder has rightly drawn my attention to the judgment of
division bench of this court which is fully binding on me. In Jain (S.C) Vs
Union of India (1983) 143 ITR 607 (Delhi) : AIR 1983 Delhi 367, which is relied
by both the parties, it has firstly clarified that the Punjab Amendment is
fully applicable to Delhi, and thereafter it has been held that a residential house
of a judgment debtor or assessee which is occupied by him is exempted from
being proceeded against for execution of a simple money decree or income tax
demands.. This judgment therefore recognises the existence of a disparate status
of a money decree vis-à-vis a mortgage decree. This dichotomy is preserved. This
decision, would, therefore, leave no option but to negative the arguments put
forward by the learned counsel for the applicant/judgment debtor no.2. In these
circumstances, the application is rejected and dismissed…”.
Thus,
the aforesaid discussion clearly brings forth the fact that the solitary
dwelling unit of a judgment debtor is exempted from attachment or sale if the same
belonged to a judgment debtor/certificate debtor and the judgment debtor is in
possession of the said solitary dwelling house and in case that is not
mortgaged. As referred to above, however, the exemption, shall only relate to
solitary residential house belonging to the judgment debtor in Delhi and Punjab.
The Legal heirs (LRs) of the judgment debtor , though, shall not have such
exemption as has been successively held and again reinforced recently by the Supreme
Court in Sheela Gehlot case.
In
order to further navigate to the stream of law with a view to deal with the
aforesaid aspect in the light of the dictum of Sheela Gehlot
(Supra) the further comprehensive discussion may be imperative.
PRELUDE TO SECTION 60(1) CCC
The
clause (ccc) is incorporated in sub-Section (1) of Section 60 of the Code, by
means of Section 35 of the Punjab Relief of Indebtedness Act, 1934 as amended
by Punjab Amendment Act No. XII of 1940 and Punjab Amendment Act No.VI of 1942,
application of which was extended to the
erstwhile State of Delhi by a subsequent notification dated 08.06.1956
published in the Gazette on 16.06.1956. Admittedly, Section 60(1)(ccc) of the
Code applies to National Capital Territory of Delhi. The relevant extract of
Section 60(1)(ccc) of the Code is reproduced below: -
“60.
Property liable to attachment and sale in execution decree-
(1) x x
x
Provided
that the following particulars shall not be liable to such attachment or sale,
namely, (ccc) one main residential house and other buildings attached to it
(with the material and the sites thereof and the land immediately appurtenant
there to and necessary for their enjoyment) belonging to a judgment-debtor
other than an agriculturist and occupied by him:
Provided
that the protection afforded by this clause shall not extend to any property
specifically charged with the debt sought to be recovered.”
Section
60(1)(ccc) of the Code in its application to Delhi exempts attachment and sale
of one main residential house belonging to judgment-debtor other than an
agriculturist and occupied by him the protection is by its own text personal to
the judgment debtor as it is confined to a house belonging to and occupied by
the judgment debtor and this protection does not extend to legal
representatives of judgment debtor.
The
Delhi High Court in Yogesh Sharma & Ors. v. Devi Dayal & Ors.,
AIR 1977 Delhi 270, while interpreting Section 60(1)(ccc) of the
Code has held that a legal representative is a distinct juridical concept from
judgment debtor and liability devolving upon legal representative is limited to
the estate in his hands and he cannot, merely by virtue of residing in a house
which belonged to the deceased judgment debtor, claim personal exemption that
Section 60(1)(ccc) of the Code affords to a judgment-debtor alone. The same
view has commended itself to the Punjab & Haryana High Court in two
decisions, reported as (i) K.L. Bawa v. Basant Textiles, AIR 1982
P&H 275, (II) Pargat Singh &
Anr. v. Gurmail Kaur & Ors.; 2014 SCC OnLine P&H 23436.
Thus,
it is abundantly clear that the plea of exemption under Section 60(1)(ccc) of
the Code is personal to the judgment-debtor and is not available to be raised
by his legal representatives.
In
Sheela Gehlot (Supra) The High Court allowed the writ petition, while
setting aside the judgment of the DRAT dated 01.02.2008, and remitted the
matter to the DRT, with a direction that an inquiry be held within three
months, and a decision be rendered within six weeks to ascertain whether
respondent No.1 had suffered substantial prejudice by reason of alleged non service
of notice and whether the Delhi property qualified for exemption under Section
60(1)(ccc) of the Code. It directed status quo as to possession of the
Delhi property to be maintained pending the fresh inquiry and left the parties
to bear their own costs of the writ petition.
Being
aggrieved, the Auction-Purchaser namely, Ms. Sheela Gehlot has preferred C.A.
No.182 of 2016, the Bank has preferred C.A. No.190 of 2016 and Mr. Jagminder
Singh, son of judgment-debtor has preferred C.A. No.191 of 2016.
SUBMISSIONS by the appellant
The benefit of Section 60(1)(ccc)
of the Code is limited for the benefit of the judgment-debtor himself and not
for his legal heir. Reliance was placed on :
(a) Yogesh Sharma Vs Devi Dayal & Ors 1977SCC OnLine Del 39
(b) It was urged that by virtue of the Punjab Relief of Indebtedness
Act, 1934 (1934 Act), which introduced Section 60(1)(ccc) into the Code, the
judgment-debtor alone could have invoked the aforesaid provision, and also the
language of the 1934 Act excludes the debts given by scheduled banks. It was,
therefore, urged Section 60(1)(ccc) of the Code has been misapplied and misused
as it excludes the debts by the scheduled banks.
(iii) The reliance was also
placed on judgment of the High Court of Delhi reported as Sujata Kapoor
(Supra).
(iv) It was pointed out that the
case was transferred from Morena court after the enactment of the 1993 Act and
there was no occasion to issue notice under Order XXI Rule 22 of the Code.
(v) Insofar as alleged absence of
notice under the Second Schedule to the 1961 Act, is concerned, admittedly, the
judgment-debtor herself filed detail objections in an application on 24.10.2004
seeking recall of the order passed by the Recovery Officer, DRT on 20.09.2004
and, therefore, the question of prejudice to the respondent no.1, does not
arise as she had complete knowledge and exercised the opportunity to vigorously
object to the direction for auction by filing detailed objections in which all
factual and legal points were urged.
It
was, therefore, contended that the impugned judgment deserves to be set aside.
It was further contended that the appeal filed by the son of judgment-debtor is
devoid of any merit and is liable to be dismissed.
On
behalf of the appellant in C.A. No.191 of 2016
it was submitted that:
(i) The High Court erred in holding that equities were
in favour of auction purchaser and ought to have appreciated that no notice of
execution proceeding was served either on the widow or the legal representative
of the judgment-debtor.
(ii) The Delhi property is the
residential house of the legal representative of the judgment-debtor and is
exempt under the provision of Section 60(1)(ccc) of the Code.
(iii) On account of
non-compliance of Section 31A of 1993 Act, the auction was required to be set
aside.
(iv) The DRT had no jurisdiction
to execute the decree in respect of an immovable property not situated within
its local limits.
It was thus urged that in the
appeals preferred by the Auction- Purchaser and the Bank, no interference was
called for. In support of the aforesaid submissions, reliance were placed on
the following:
(i) Syam
Mandal v.
Satinath Banerjee, AIR 1917 Cal 728;
(ii) Charan
Kanwal Rice General Mills & Ors. v. New Bank of India & Ors., [I (2000) BC 26
ORT]; (iii) O. Vasantha v. Karnataka Bank Ltd., Mangalore & Ors. [II (1999)
BC 54];
(iv) Punjab
& Sind Bank v. M/s Avi Autos & Ors.; [I (2000) BC 112 ORT; DRT, Mumbai;
(v) Gauri Lal
v. Smt.
Sujham Devi & Ors. AIR 1986 Himachal Pradesh 3;
(vi)
Rajagopala Aiyar v.
Ramanuja Chariyar & Anr., AIR 1924 Madras 431;
(vii)
Kanchamalai v.
Shahaji Rajah Sahib & Ors. AIR 1936 Madras 205; Leelachand Walchand
Gujar v. Vishnu Ganesh Lakade, AIR 1945 Bombay 409;
(viii) Ajab
Lal v. Hari
Charan, AIR 1945 Patna 1; (viii) Marotrao Shama v. Narayan Jasrup &
Ors., AIR 1948 Nagpur 300;
(ix) Rm. P.
Ar. Ramanathan Chettiar v.
Pl. Ar. Lakshmanan Chettiar, AIR 1951 Madras 325; (x) Prabhash Chand Jain
& Ors. v. Punjab & Sind Bank, [(2000) 1 BC 43 (DRAT)] ;
(x) Devassia v. South Indian Bank Ltd.
[(2001) 2 BC 524];
(xi) Calcutta
Dock Labour Board v.
Smt. Sandhya Mitra and Ors., (1985) 2 SCC 1;
(xii) Badri
Chando v.
Raja Inderjit Pratap; (1932) ILR 54 All 736; and
(xiii) Radhakisan
Hakumji v.
Balvant Ramji, (1883) ILR 7 Bom 5
It
was contended on behalf of the respondent no. 1 in C.A. 182 of
2016, that Order XXI Rule 22 is mandatory and admittedly no notice was issued
by the executing court to respondent no. 1 and her children and therefore, the
auction is void. It was submitted that Rule 2 of the Second Schedule to
the 1961 Act, is couched in mandatory language which has not been followed in
the instant case. In support of the aforesaid submission, reliance has been
placed on a decision of the Supreme Court:
Satyanarain Bajoria & Anr. v. Ramnarain Tiberwal &
Anr., (1993) 4 SCC 414
SUBMISSIONS
BY THE BANK
(i) An auction sale conducted
under the 1993 Act, cannot be assailed by the judgment-debtor without filing an
appropriate application under Rule 60 or 61 of the Second Schedule to the 1961
Act.
(ii) The High Court in exercise
of the powers of superintendence does not act as a court of appeal or as a
court of error.
(iii) A sale can be set aside
only if there is a material irregularity or fraud in the sale which has
resulted in substantial injury to an applicant.
It was thus canvassed that the
appeal preferred by the legal representative of the judgment-debtor is liable
to be dismissed. In support of the aforesaid submissions, reliance were placed
on the following decisions:
(i)
Sadhana Lodh v. National insurance Co. Ltd. & Anr., (2003) 3 SCC 524;
(ii)
Shamshad Ahmad & Ors. v. Tilak Raj Bajaj (Deceased) Through LRs. &
Ors., (2008) 9 SCC 1;
(iii)
Canara Bank v. M/s. Luthra Industries & Ors., (2017) SCC Online Del 8165;
(iv)
Sujata Kapoor v. Union Bank of India & Ors., (2019) SCC OnLine Del 12184;
(v)
Saheb Khan v. Mohd. Yousufuddin & Ors. (2006) 4 SCC 476.
ANALYSIS BY THE SUPREME COURT
The
questions which arose for determination are as follows:
(i)
whether the plea of non-compliance of Order XXI Rule 22 of the Code has any
impact on auction sale?
(ii)
whether failure to serve notice under Rule 2 of Second Schedule to 1961 Act to
the respondent no.1 and her children in respect of Delhi property has rendered
the execution or sale void? and
(iii)
whether the Delhi property was exempt from attachment under Rule 10 of the
Second Schedule read with Section 60(1)(ccc) of the Code?
According
to the Supreme Court the statutory framework within which the aforesaid
questions arose for consideration. The 1993 Act is an Act enacted with an
object of expeditious adjudication and recovery of debts due to banks and
financial institutions and matters connected therewith or incidental thereto.
Chapter IV of the 1993 Act deals with the procedure of Tribunals. Section 19
provides for an application to the Tribunal whereas Section 22 enumerates the
procedure and powers of the Tribunal and the Appellate Tribunal. Section 22
which is relevant for the purposes of controversy involved in the appeals reads
as under: -
“22. Procedure and powers of the Tribunal and the
Appellate Tribunal.—
(1)
The Tribunal and the Appellate Tribunal shall not be bound by the procedure
laid down by the Code of Civil Procedure, 1908 (5 of 1908), but shall be guided
by the principles of natural justice and, subject to the other provisions of
this Act and of any rules, the Tribunal and the Appellate Tribunal shall have
powers to regulate their own procedure including the places at which they shall
have their sittings.
(2)
The Tribunal and the Appellate Tribunal shall have, for the purposes of
discharging their functions under this Act, the same powers as are vested in a
civil court under the Code of Civil Procedure, 1908 (5 of 1908), while trying a
suit, in respect of the following matters, namely:—
(a)
summoning and enforcing the attendance of any person and examining him on oath;
(b)
requiring the discovery and production of documents;
(c)
receiving evidence on affidavits;
(d)
issuing commissions for the examination of witnesses or documents;
(e)
reviewing its decisions;
(f)
dismissing an application for default or deciding it ex parte;
(g)
setting aside any order of dismissal of any application for default or any
order passed by it ex parte;
(h)
any other matter which may be prescribed.
(3)
Any proceeding before the Tribunal or the Appellate Tribunal shall be deemed to
be a judicial proceeding within the meaning of sections 193 and 228, and for
the purposes of section 196, of the Indian Penal Code (45 of 1860) and the
Tribunal or the Appellate Tribunal shall be deemed to be a civil court for all
the purposes of section 195 and Chapter XXVI of the Code of Criminal Procedure,
1973 (2 of 1974).
(4)
For the purpose of proof of any entry in the ‘bankers books’, the provisions of
the Bankers’ Books Evidence Act, 1891 (18 of 1891) shall apply to all the
proceedings before the Tribunal or Appellate Tribunal.”
Thus,
it was observed that Section 22(1) of the RDDB Act 1993 stipulates that
Tribunal while deciding an application under Section 19 of the 1993 Act, shall
not be bound by the procedure of the Code and shall be guided by the principles
of natural justice. Section 29 of the 1993 Act makes certain provisions of the 1961
Act, applicable to recovery of the amount of debt due under the 1993 Act.
Section 29 is extracted below for the facility of reference :-
“29.
Application of certain provisions of Income-Tax Act.—
The
provisions of the Second and Third Schedules to the Income tax Act, 1961 (43 of
1961) and the Income tax (Certificate Proceedings) Rules, 1962, as in force
from time to time shall, as far as possible, apply with necessary modifications
as if the said provisions and the rules referred to the amount of debt due
under this Act instead of to the Income-tax:
Provided
that any reference under the said provisions and the rules to the “assessee”
shall be construed as a reference to the defendant under this Act.”
Section
29 of the 1993 Act mandates the Recovery Officer to proceed in accordance with
the procedure envisaged under the Second Schedule to the 1961 Act subject to
such modification as may be notified for recovery of debts due under the Act.
It
is apposite to take note of Order XXI Rule 22 of the Code which reads as under:
“22.
Notice to show cause against execution in certain cases. –
(1) Where an
application for execution is made, -
(a) more than
two years after the date of the decree, or
(b) against the legal
representative of a party to the decree or where an application is made for
execution of a decree filed under the provisions of section 44A or
(c) against the assignee or
receiver in insolvency, where the party to the decree has been adjudged to be
an insolvent, the Court executing the decree shall issue a notice to the person
against whom execution is applied for requiring him to show cause, on a date to
be fixed, why the decree should not be executed against him: Provided that no
such notice shall be necessary in consequence of more than two years having
elapsed between the date of the decree and the application for execution if the
application is made within two years from the date of the last order against
the party against whom execution is applied for, made on any previous
application for execution, or in consequence of the application being made
against the legal representative of the judgment-debtor if upon a previous
application for execution against the same person the Court has ordered
execution to issue against him.
(2) Nothing in the foregoing
sub-rule shall be deemed to preclude the Court from issuing any process in
execution of a decree without issuing the notice thereby prescribed, if for
reasons to be recorded, it considers that the issue of such notice would cause
unreasonable delay or would defeat the ends of justice.”
It
was held that requirement contained in Order XXI Rule 22 is mandatory and the
use of word “shall” in Order XXI Rule 22 of the Code admits of no ambiguity and
the executing court is under an obligation to issue notice to the person
against whom a decree is sought to be executed in the circumstances enumerated
in the following:-
(i) Bharat Kantilal
Dalal (Dead) through LR v. Chetan Surendra Dalal &
Ors., 2025 SCC OnLine SC 2502;
(ii)
Rahul S. Shah v. Jinendra Kumar Gandhi & Ors.;
(2021) 6 SCC 418;
(iii) Barkat Ali &
Anr. v. Badrinarain (Dead) by LRs., (2008) 4 SCC 615 and
(iv)
Satyanarain Bajoria & Anr. (supra)
It
was observed as under in Sheela Gehlot (Supra):
At
this stage, it is pertinent to take note of the addition made to Order XXI Rule
22 for the State of Punjab by which a proviso was inserted to sub-rule 2 of
Order XXI Rule 22 of the Code by High Court Notification No. 125-GAZ-XI-Y-14
dated 07.04.1932. For the facility of reference Order XXI Rule 22(2) with
proviso as applicable to the State of Punjab is extracted below:-
“22(2)-Nothing
in the foregoing sub-rule shall be deemed to preclude the Court from issuing
any process in execution of a decree without issuing the notice thereby
prescribed, if for reasons to be recorded, it considers that the issue of such
notice would cause unreasonable delay or would defeat the ends of justice.
In
Sheela Gehlot (Supra) it bears emphasis that Delhi property was the
subject matter, and it was neither attached nor brought to sale in execution of
the decree as a proceeding before the Morena (M.P) court. It was attached and
sold in exercise of powers under the 1993 Act which is a special enactment for
expeditious recovery of debts due to banks and financial institutions. 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. The procedure governing the execution before the
Recovery Officer only required the notice under Rule 2 of Second Schedule to
1961 Act.
Therefore,
the first question was answered in as much as it was held that Order XXI Rule
22 of the Code has no impact on the validity of the auction sale.
As
regards analysing the second question, the Supreme Court had taken note of Rule
2 and Rule 61 of the Second Schedule to the 1961 Act, which read as under:-
“2.
Issue of notice.—
When
a certificate has been received by the Tax Recovery Officer from the [Assessing
Officer] for the recovery of arrears under this Schedule, the Tax Recovery
Officer shall cause to be served upon the defaulter a notice requiring the
defaulter to pay the amount specified in the certificate within fifteen days
from the date of service of the notice and intimating that in default steps
would be taken to realise the amount under this Schedule.
61.
Application to set aside sale of immovable property on ground of non service of
notice or irregularity.—
Where
immovable property has been sold in execution of a certificate, [such
Income-tax Officer as may be authorised by the
[Principal Chief Commissioner or Chief Commissioner] or [Principal Commissioner or Commissioner] in
this behalf], the defaulter, or any person whose interests are affected by the
sale, may, at any time within thirty days from the date of the sale, apply to
the Tax Recovery Officer to set aside the sale of the immovable property on the
ground that notice was not served on the defaulter to pay the arrears as
required by this Schedule or on the ground of a material irregularity in
publishing or conducting the sale:
Provided
that—
(a)
no sale shall be set aside on any such ground unless the Tax Recovery Officer
is satisfied that the applicant has sustained substantial injury by reason of
the non-service or irregularity; and
(b)
an application made by a defaulter under this rule shall be disallowed unless
the applicant deposits the amount recoverable from him in the execution of the
certificate.”
The
Rule 2 of the Second Schedule to the 1961 Act, requires a notice of demand to
be served upon a defaulter before recovery is levied against him. Rule 2 of the
Second Schedule incorporates principles of natural justice to the procedure for
recovery. However, it is to be noted that the Second Schedule also contains
Rule 61 which supplies the consequences of and the remedy precisely for such a
default, namely an application to set the sale aside on the ground of
non-service of notice or of irregularity. Such an application has to be made
within a period of 30 days from the sale and requires that sale shall be set
aside only if an applicant has sustained substantial injury by reason of
non-service or irregularity.
Admittedly,
no notice under Rule 2 of the Second Schedule was served either on respondent
no. 1 or on her children. However, it is pertinent to note, respondent no. 1
and her children were already parties to the execution proceedings. The
respondent no. 1 had notice about the auction of Delhi property as she had
filed M.A. No. 65 of 2003 before DRT, Delhi seeking release of original title
deeds of the Delhi property. In the said M.A. respondent no.1 had stated about
pendency of execution proceeding. The respondent no.1 had also filed an
application seeking recall of the order dated 20.09.2004 directing an auction.
Therefore, the question of substantial injury being caused to respondent no. 1
and her children on account of non-service of notice under Rule 2 of the Second
Schedule to the 1961 Act, does not arise. It is also pertinent to note that
even after the sale, the legal representative did not take recourse to the
remedy provided under Rule 61 of the Second Schedule of the 1961 Act.
Therefore, in the facts and circumstance of the case, absence of notice under
Rule 2 of the Second Schedule to the 1961 Act, does not render either the
execution or the sale void. Accordingly, the second question is answered in the
negative.
As
regards the third question the supreme court had noted that clause (ccc)
incorporated in sub-Section (1) of Section 60 of the Code, by means of Section
35 of the Punjab Relief of Indebtedness Act, 1934 as amended by Punjab
Amendment Act No. XII of 1940 and Punjab Amendment Act No.VI of 1942, application
of which was extended to the erstwhile
State of Delhi by a subsequent notification dated 08.06.1956 published in the
Gazette on 16.06.1956. Admittedly, Section 60(1)(ccc) of the Code applies to
National Capital Territory of Delhi. The relevant extract of Section 60(1)(ccc)
of the Code is already narrated above.
Thus,
it is abundantly clear that the plea of exemption under Section 60(1)(ccc) of
the Code is personal to the judgment-debtor and is not available to be raised
by his legal representatives.
The
Supreme Court in reference to the above has held as under in Sheela Gehlot
(Supra) as under::
“44.
The view taken by the Delhi and Punjab & Haryana
High Courts about the interpretation of local amendment to Section 60(1) of the
Code, namely Section 60(1)(ccc) of the Code which is applicable to the State of
Punjab, Haryana and Delhi has held the field for thirty seven long years. We
find no good ground to differ with the view taken by the aforesaid High Courts.
Therefore, the plea of exemption under Rule 10 of the Second Schedule read with
Section 60(1)(ccc) of the Code is not available to respondent no. 1 and her
children”.
It
was further held by the Supreme Court that It is a well-settled legal
proposition that a pure question of law can be raised at any stage of the
proceeding but a question of fact that requires an investigation and inquiry
for which no factual foundation has been laid cannot be allowed to be agitated
in a writ petition. Thus, a mixed question of law and fact cannot be raised for
the first time in a writ petition. Reliance was placed on Greater Mohali Area Development
Authority & Ors. v. Manju Jain &
Ors.; (2010) 9 SCC 157.
The
Supreme Court in Sheela Gehlot (Supra) has categorically held as
under:
46.Since,
the respondent no. 1 neither in her application before the Recovery
Officer on 24.10.2004, nor in M.A. 65 of 2003 filed before the DRT, Delhi
raised an objection with regard to plea of exemption under Section 60(1)(ccc)
of the Code. The respondent no. 1 also did not raise the plea in her appeal
against order dated 10.10.2006 (31 of 2006) and in the writ petition filed
against the order dated 13.11.2006 passed by the DRT and The respondent no. 1’s plea of exemption under
Section 60(1) (ccc) of the Code, came to light for the first time in a writ
petition filed against the order dated 27.02.2007 rejecting the application for
stay wherein the High Court while dismissing the writ petition observed that
there is no iota on record that the exemption was ever claimed by her. In the
proceeding before the DRT, leading to order dated 29.05.2007, the respondent
no. 1 did not either plead or lead any evidence with regard to applicability of
exemption under Section 60(1)(ccc) of the Code. Therefore, the High Court erred
in entertaining and in remitting the matter to the Recovery Officer, DRT to
decide the same after giving an opportunity to the parties to lead evidence.
Accordingly, the third question is answered”.
The
Impugned judgment dated 15.05.2009 passed by the High Court of Madhya Pradesh
at Jabalpur in Writ Petition No. 2199 of 2008 was thus quashed and set aside. In the result C.A. No. 182 of 2016 and C.A. No. 190
of 2016 were allowed whereas C.A. No. 191 of 2016 was dismissed.
------
Anil K Khaware
Founder
& Senior Associate
Societylawandjustice.com
