Paul vs T. Mohan on 24 April, 2020

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Supreme Court of India
Paul vs T. Mohan on 24 April, 2020Author: Vineet Saran

Bench: Vineet Saran, Hemant Gupta, M.R. Shah

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NON­REPORTABLE

IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO. 6146 OF 2019

PAUL ….APPELLANT

VERSUS

T. MOHAN AND ANOTHER ….RESPONDENT(S)

JUDGMENT

Vineet Saran, J.

The appellant herein is the auction purchaser of the

scheduled property measuring 2 acres 43 cents in Village

Managiri, Madurai District, Tamil Nadu, which auction has

been quashed by the High Court, and hence, this appeal.

2. The brief facts of this case are that the respondent No.
Signature Not Verified

1 – T. Mohan was a guarantor of one Rajendran (who was
Digitally signed by
DEEPAK SINGH
Date: 2020.04.24
16:59:00 IST
Reason:

his son’s friend). The said Rajendran had taken a chit for a
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sum of Rs. 5,00,000/­ (Rupees five lakhs only) from

respondent No. 2­ Shriram Chits Tamil Nadu Ltd. (for short

“Chits Company”) for a period of 40 months and had

executed a pro­note dated 18.01.2000 for a sum of Rs.

3,37,500/­ (Rupees three Lakhs thirty seven thousand five

hundred only), for which the respondent No. 1 and his son

stood as guarantors, and for that, a collateral security of the

scheduled property had been executed. The said Rajendran

had paid the first 25 installments out of 40 and thereafter

failed to pay the remaining installments. A notice was

issued to the said Rajendran requiring him to pay the

remaining amount of Rs. 1,84,840/­ (Rupees one lakh

eighty four thousand eight hundred forty only) along with

interest @ 24%, which he failed to pay. The respondent No.

2 ­Chits Company, thus filed a petition under Section 64

(1)(A) of Indian Chit Funds Act, 1982 before the Deputy

Registrar of Chits, Madurai South, in which an ex­parte

Award dated 21.1.2002 was passed and the respondent No.

1 was directed to pay a sum of Rs. 1,95,631/­ (Rupees one

lakh ninety five thousand six hundred thirty one only) to the
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respondent No. 2­Chits Company. Respondent No. 1

claimed that he was not aware of the ex­parte award.

3. The respondent No. 2 ­Chits Company filed Execution

Petition No. 21 of 2003 before the Ist Additional Subordinate

Judge, Madurai for execution of the ex­parte Award.

4. On receipt of the notice of the execution proceedings,

the son of respondent No. 1 started to repay the due

amount in instalments. However, in the meantime, the suit

property was auctioned on 01.03.2010, in which the

appellant was the highest bidder, for an amount of Rs.

1,77,000/­ (rupees one lakh seventy seven thousand only)

and the same was confirmed on 04.03.2010, after the

appellant had deposited the said amount. On coming to

know of the said facts, the son of respondent No. 1

approached the respondent No. 2­Chits Company and

repaid the entire amount. On 10.3.2010, respondent No. 1

preferred Revision being Executing Application No. 208 of

2010 under Order XXI Rule 89 and Section 151 of Code of

Civil Procedure, 1908 (CPC) for setting­aside the auction of

the suit property. It is note­worthy that during the
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pendency of the said application, respondent No. 2­ Chits

Company had issued a no­dues certificate, as the entire

dues had been cleared by the respondent No. 1, which facts

was brought to the knowledge of the Executing Court.

5. The matter was kept pending, without any progress,

for nearly four years and in the meantime, respondent No.

1 had sold the suit property to a third party on 12.09.2011.

It was, thereafter that on 01.04.2014, the Revision filed by

the respondent No. 1 was dismissed and sale certificate was

issued in the name of auction purchaser – appellant on

21.7.2014. Based on the same, the appellant­auction

purchaser made an attempt to take the possession of the

property, which was objected to by the third party

purchaser and on the complaint of the third party

purchaser, the respondent No. 1 and his family members

were arrested and later released on bail. The respondent

No. 1 contends that it was only after he was released on

bail that he came to know of the dismissal of his Revision

and after obtaining the certified copy of the order, he

preferred Civil Revision Petition before the High Court,
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which has been allowed by a detailed judgment dated

02.08.2018, the operative portion of which is extracted

hereinbelow:

“In the Result:

(a) This Civil Revision Petition is allowed and the
impugned order in EA No. 208 of 2010 in E.P.
No. 21 of 2003 dated 1.3.2014, on the file of
the learned Ist Additional Subordinate Judge,
Madurai is set­aside and the auction sale
dated 04.03.2010 is also set­aside.

(b) The revision petitioner/guarantor is hereby
directed to deposit the entire auction sale
amount of Rs. 1,77,000/­ along with the
interest at the rate of 9% per annum from the
date of auction i.e. on 04.03.2010 till the date
of deposit, before the Executing Court namely;
the learned Ist Additional Subordinate Judge,
Madurai, within a period of two weeks from the
date of receipt of a copy of this order;

(c) The 2nd respondent/auction purchaser shall be
entitled to claim the amount by making
necessary application before the Executing
Court;

(d) The Executing Court namely; the learned Ist
Additional Subordinate Court, Madurai is
directed to pass orders for proclamation
informing the concerned Registrar of
Registration Department for making necessary
entry to this effect and further cancel the entry
regarding the sale certificate dated 21.7.2014
issued in favour of 2nd respondent/auction
purchaser;
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(e) The Executing Court is directed to complete
the said exercise within a period of two weeks
from the date of deposit of the amount by
revision petitioner as directed in clause (b);

(f) The revision petitioner is entitled to make
necessary application before the executing
court seeking refund of the amount deposited
by the 2nd respondent/auction purchaser,
pursuant to the auction held on 04.03.2010,
which application shall be decided by the
Executing Court after giving notice and
sufficient opportunity to the Ist respondent
chits, which exercise shall be completed within
a period of two months from the date of such
application. No costs. Consequently,
connected miscellaneous petition is closed.”

6. The specific case of respondent No. 1 before the High

Court was that the petition filed by the respondent No. 2­

Chits Company before the Deputy Registrar of Chits,

Madurai South was itself not maintainable, as no prior

notice was issued to the respondent No. 1. It was also

contended that straightaway upset price fixed as Rs.

1,77,000/­ was very much lower than the guidelines

contemplated under CPC and those issued by this Court. It

was further contended that respondent No. 1 was merely

the guarantor of one Rajendran and the Deputy Registrar of
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Chits should have first considered recovering the amount

from the said Rajendran before proceeding against the

respondent No. 1. The specific case of respondent No. 1 was

that he had paid the entire amount within a week of the

auction and obtained the no­due certificate from respondent

No. 2 ­Chits Company, of which the Executing Court did not

take notice and the matter was kept pending for nearly four

years. With regard to dismissal of his Revision by the Ist

Additional Subordinate Judge on the ground that the

provisions of Order XXI Rule 89 CPC were not complied

with, it was contended that the application preferred by

respondent No. 1 to set­aside the auction was also filed

under Section 151 CPC and since the entire amount had

already been paid by the respondent No. 1 to the

respondent No. 2­Chits Company, which had also issued a

no­due certificate, there was no necessity to deposit the

auction amount along with 5% interest as required under

Order XXI Rule 89 CPC.

7. The main contention of the appellant before the High

Court was that the Revision of respondent No. 1 was rightly
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dismissed by the Revisional Court for non­compliance of

the provisions of Order XXI Rule 89 CPC and as such, the

auction was rightly held and confirmed.

8. The High Court took notice of the said contentions of

both the parties and was of the opinion that “before

applying the legal provisions and testing their applicability,

the Court has to look into the facts and circumstances of that

particular case”. The High Court noted that the

respondent No. 1 was merely a guarantor and not a

borrower and that the entire due amount was deposited by

respondent No. 1 with the respondent No. 2 – Chits

Company, for which no­dues certificate was also issued, of

which due information was given to the Execution Court,

which had not been considered. Thus, since the Revision

had been filed within less than a week of the auction and

entire dues had been settled, the confirmation of the

auction was not justified.

The High Court further held that the application

had been filed also under Section 151 CPC and the

inherent powers ought to have been invoked in the facts of
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the present case, as the entire amount due had been paid

and the respondent No. 1 was merely a guarantor, and not

the borrower. After noticing that the right to property is a

constitutional right, which could not be infringed in the

manner as has been done in the present case, the High

Court allowed the Civil Revision Petition. The High Court

further held that the present case was that of a real fraud

committed by the borrower, and the guarantor had lost his

property and was knocking the doors of the High Court to

save his right to hold the suit property. The High Court

noticed that there would be substantial injury caused to the

respondent No. 1­guarantor, if his property was allowed to

be taken away. It was, in such facts and circumstances of

this case, that the Civil Revision Petition was allowed with

the directions, as have been quoted hereinabove.

9. The submission of the appellant herein is primarily

based on the Revision of respondent No. 1 having been

dismissed by the Revisional Court on the ground of non­

compliance of Order XXI Rule 89 CPC. In our view, the said

question has been dealt with by the High Court in detail and
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in the peculiar facts and circumstances of this case, we are

of the opinion that the view taken by the High Court is not

such, which would call for interference under Article 136 of

the Constitution of India, as in our view, substantial justice

between the parties has already been done. Without laying

down any law with regard to the issue relating to the

application or non­compliance of Rule XXI Order 89 CPC, in

the peculiar facts and circumstances of this case, we are not

inclined to interfere with the view taken by the High Court.

Accordingly, this Civil Appeal stands dismissed. The

question of law is kept open.

No order as to costs.

………………………………..J.
[UDAY UMESH LALIT]

……………………………..J.
[VINEET SARAN]

NEW DELHI;
APRIL 24, 2020.