Supreme Court recalls order of property sale in execution of decree: Yatinder Kumar Aggarwal & Ors. vs. Mukund Swarup & Ors. (22 January 2019)

Introduction

Date of the Judgment: 22 January 2019

Citation: [Not Available in the source]

Judges: A.K. Sikri, J., S. Abdul Nazeer, J., M.R. Shah, J.

Can a court set aside a property sale conducted to recover a debt if it is later shown that the debt was already paid? The Supreme Court of India recently addressed this question in a case involving a long-standing dispute over a money decree. The court had to consider whether new evidence presented in a review petition warranted the reversal of its previous order upholding the property sale. This case highlights the importance of ensuring that execution proceedings are fair and just, and that all relevant facts are considered before a final decision is made.

The judgment was delivered by a three-judge bench consisting of Justice A.K. Sikri, Justice S. Abdul Nazeer, and Justice M.R. Shah. The judgment was authored by Justice A.K. Sikri.

Case Background

In 1955, Hari Kishan Das (the plaintiff) filed a money suit against M/s. Diwan Kripa Ram Radha Kishan (the defendant). The court passed a decree in favor of the plaintiff for Rs. 11,666.66. The defendant did not fully pay the amount, leading to execution proceedings. In 1962, the plaintiff filed Execution Case No. 29 of 1962. An auction notice was published on 16 April 1964. The defendant applied for postponement of the sale under Order XXI Rule 83 of the Civil Procedure Code, 1908, promising to pay the amount. On 8 October 1964, the parties agreed that the defendant would have four months to deposit the full amount, failing which the property would be sold without further notice. Although the defendant made some payments, they did not pay the full amount within the stipulated time. The property was eventually sold, and the plaintiff’s son purchased it for Rs. 13,700. Objections to the sale were dismissed, and appeals to the High Court were also unsuccessful. The matter then reached the Supreme Court.

Timeline

Course of Proceedings

The initial suit resulted in a decree in favor of the plaintiff. The defendant failed to pay the full amount, leading to execution proceedings. The property was sold in auction, and the defendant’s objections were dismissed. The High Court also dismissed the appeal against the order of the executing court. The Supreme Court initially dismissed the appeal in C.A. No. 8398 of 2013 on 20 September 2013, noting that the decree amount was not paid. The defendant then filed a review petition, claiming that the full amount had been paid and provided additional evidence to support this claim.

Legal Framework

The case involves the execution of a money decree under the Civil Procedure Code, 1908. Specifically, Order XXI Rule 83 of the Civil Procedure Code, 1908, which allows for the postponement of a sale if the judgment debtor can satisfy the decree amount, is relevant. The court also considered the implications of the defendant’s payments over time and the effect of the District Judge’s order holding that the decree was satisfied.

Arguments

Defendant/Review Petitioner’s Arguments:

• The defendant argued that the Supreme Court had made a factual error in its earlier judgment by stating that the entire decree amount was not paid.
• The defendant submitted that the entire amount had been paid, and the decree was satisfied.
• The defendant referred to the order dated 17 February 1971, passed by the District Judge, Saharanpur, in Misc. Appeal No. 116 of 1970, which held that the amount directed by the High Court had been deposited and the decree was satisfied.
• The defendant also pointed out that the plaintiff’s appeal against the District Judge’s order was dismissed by the High Court on 15 October 2001.
• The defendant submitted a detailed list of payments made to the executing court, totaling Rs. 35,906, which exceeded the original decree amount of Rs. 11,666.66.

Plaintiff/Respondent’s Arguments:

• The plaintiff did not dispute the payments made by the defendant.
• The plaintiff contended that the order of the District Judge was the subject of a pending appeal in the High Court.

Issues Framed by the Supreme Court

The primary issue before the Supreme Court was whether the review petition should be allowed based on the new evidence presented by the defendant, which suggested that the decree amount had been satisfied.

Treatment of the Issue by the Court

Authorities

Judgment

How each authority was viewed by the Court?

• The Court relied on the order of the District Judge, Saharanpur, which stated that the decree stood satisfied.
• The Court also noted that the High Court had dismissed the appeal against the District Judge’s order.

What weighed in the mind of the Court?

The Supreme Court was primarily influenced by the fact that the defendant had presented substantial evidence, including the order from the District Judge, showing that the decree amount had likely been satisfied. The court noted that the defendant had made payments over time, and the District Judge had explicitly recorded that the entire decree stood satisfied. The court also took into consideration the fact that the High Court had dismissed the plaintiff’s appeal against the District Judge’s order.

The Court’s reasoning was as follows:

The Court stated, “These facts were not noted while giving the judgment dated 20.09.2013, which material alters the outcome of the case.” The Court further noted, “As on today the position as per the order of the District Judge is that the entire decree stands satisfied.” The Court also observed, “Even if the appeal of the plaintiff succeeds and the High Court finds that some more amount is due that may not be substantial amount, if at all and, therefore, the defendant/judgment debtor can always be directed to pay the amount.”

The Court recalled its order dated 20 September 2013, and allowed the Civil Appeal No. 8398 of 2013, thereby setting aside the order of sale of the property in question. The Court also addressed the contempt petition, noting that the contemnors had violated the court’s orders by selling the property. However, considering that the properties were no longer subject to sale, the court took a lenient view and directed the contemnors to pay a compensation of Rs. 50,000 to the plaintiff/decree holder within four weeks.

Key Takeaways

• If a judgment debtor demonstrates that the decree amount has been satisfied, a property sale in execution can be set aside.
• Courts must consider all relevant evidence, including orders from lower courts and payment records, before making a final decision in execution proceedings.
• Even if an appeal is pending, if there is sufficient evidence that the decree has been satisfied, the court may set aside a sale.
• Contempt of court orders can result in penalties, even if the underlying issue is resolved.

Directions

The contemnors were directed to pay a sum of Rs. 50,000 as compensation to the plaintiff/decree holder within four weeks.

Development of Law

The ratio decidendi of this case is that a property sale in execution of a decree can be set aside if the judgment debtor demonstrates that the decree amount has been satisfied. This case reinforces the principle that execution proceedings must be fair and just, and that all relevant facts must be considered. The court’s decision to recall its previous order highlights the importance of ensuring that justice is served, even if it means revisiting earlier judgments.

Conclusion

The Supreme Court allowed the review petition, recalled its earlier order, and set aside the sale of the property. This decision was based on new evidence showing that the decree amount had likely been satisfied. The court also imposed a penalty for contempt of court, but took a lenient view considering the circumstances. This case underscores the importance of fairness and justice in execution proceedings and the need to consider all relevant facts.