Case Note & Summary
The petitioner, a borrower, had availed a housing loan from respondent No.1 finance company and mortgaged the purchased flat. Upon default, the lender obtained an arbitral award and initiated execution proceedings. The executing court auctioned the flat on 23.4.2012, with respondent No.3 as the highest bidder. Meanwhile, respondent No.2 Asset Reconstruction Company claimed a prior charge over the property as a secured creditor by assignment from ICICI Bank. On 26.6.2012, the petitioner filed an application under Order 21 Rule 89 CPC to set aside the auction sale by depositing the requisite amount, but the executing court rejected it on 25.10.2012 as time-barred, noting a delay of three days beyond the sixty-day limitation under Article 127 of the Limitation Act. Additionally, on 27.2.2013, the executing court directed disbursement of the auction sale proceeds to respondent No.2 and allowed respondent No.1 to receive the amount deposited by the petitioner. The petitioner challenged these orders in the High Court by way of a writ petition under Articles 226 and 227 of the Constitution. The main legal issue was whether the application under Order 21 Rule 89 was time-barred and whether the executing court could condone the delay. The High Court observed that Order 21 Rule 89 itself does not prescribe any limitation period, but Article 127 of the Limitation Act provides a sixty-day period from the date of sale. Section 5 of the Limitation Act expressly excludes applications under Order XXI, thereby depriving the executing court of any power to condone delay. The court rejected the petitioner's argument that limitation should run from the date of confirmation of sale, relying on the settled principle that limitation commences from the date of sale itself. Consequently, the High Court upheld the executing court's rejection of the application as time-barred, finding the delay of three days inexcusable. The court also implicitly upheld the orders on the secured creditor's claim and the payment directions. The writ petition was dismissed.
Headnote
A) Civil Procedure - Execution - Order 21 Rule 89 CPC - Limitation Act, 1963, Article 127, Section 5 - Petitioner filed application to set aside auction sale on deposit on 26.6.2012, 63 days after the sale held on 23.4.2012 - Executing court rejected application as time-barred - High Court held that Article 127 of Limitation Act prescribes 60 days from date of sale, and Section 5 expressly excludes applications under Order XXI CPC, thus no condonation of delay is permissible - Held that application was rightly dismissed as barred by limitation (Paras 8-12)
Issue of Consideration
Whether an application under Order 21 Rule 89 of the Code of Civil Procedure, 1908 to set aside an auction sale on deposit of the amount can be entertained after the expiry of 60 days from the date of sale, and whether the executing court has the power to condone such delay given the exclusion of Order XXI applications from Section 5 of the Limitation Act, 1963?
Final Decision
Decision not clearly stated
Law Points
- Legal points not extracted
- Application under Order 21 Rule 89 CPC to set aside auction sale must be filed within 60 days from date of sale as per Article 127 Limitation Act
- 1963
- Section 5 of Limitation Act expressly excludes applications under Order XXI CPC
- hence executing court has no power to condone delay
- period of limitation for Order 21 Rule 89 application runs from date of sale
- not from date of confirmation of sale
- Section 148 CPC cannot be invoked to extend time for filing such application as time is not fixed by court
- secured creditor with prior charge on auctioned property entitled to priority in distribution of sale proceeds in execution proceedings
Case Details
2026 LawText (BOM) (05) 167
WRIT PETITION NO. 2754 OF 2013
C.R. Thorat, S.S. Gangakhedkar, L.D. Vakil, A.D. Kasliwal, N.T. Tribhuwan, R.C. Bora
Kausar Sultana W/o Sk. Shakeel
City Financial Consumer Finance India Ltd., Assets Reconstruction Company (India) Ltd., Mohammad Parvez Hamiduddin, Kotak Mahindra Bank Ltd.
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Nature of Litigation
Challenge to orders of Executing Court rejecting application under Order 21 Rule 89 CPC to set aside auction sale, and directing disbursement of sale proceeds to secured creditor and amount deposited to decree-holder.
Remedy Sought
Petitioner sought to set aside the auction sale of her flat and to reverse the orders directing payment to ARCIL and to decree-holder.
Filing Reason
Petitioner's application under Order 21 Rule 89 CPC was rejected as time-barred; the executing court also ordered that her deposited amount be paid to decree-holder and that sale proceeds go to secured creditor, which she alleged to be erroneous.
Previous Decisions
Arbitrator had passed an award for Rs.5,61,731 with interest. Executing Court in Regular Darkhast No.149/2009 ordered auction sale on 23.4.2012, and by orders dated 25.10.2012 (Exh.61) and 27.2.2013 (Exh.29 and 74) rejected the set-aside application and directed disbursement.
Issues
Whether the application under Order 21 Rule 89 CPC filed on 26.6.2012 was time-barred given the 60-day limitation from date of sale, and whether the executing court had power to condone the delay.
Whether the executing court's order directing payment of auction sale proceeds to respondent No.2 ARCIL, a secured creditor with prior charge, was valid.
Whether the executing court's direction that the amount deposited by the petitioner under Order 21 Rule 89 be paid to the decree-holder was permissible.
Submissions/Arguments
Petitioner contended that the auction sale was not confirmed until court order, so limitation should run from confirmation, not the auction date, and that the application was therefore within time; reliance placed on Kancherla Lakshminarayana vs. Mattaparthi Shyamala (AIR 2008 SC 2069).
Petitioner argued that the amount deposited under Order 21 Rule 89 could not be diverted to the decree-holder or the secured creditor, and the direction to pay sale proceeds to ARCIL was illegal because the borrower's account with ARCIL was not settled.
Respondent Nos. 1 and 2 opposed the petition and argued that the executing court's orders were correct and the application was clearly time-barred, and no interference was warranted.
Ratio Decidendi
An application under Order 21 Rule 89 CPC must be made within 60 days from the date of auction sale as per Article 127 of the Limitation Act, 1963. The executing court has no power to condone delay because Section 5 of the Limitation Act expressly excludes applications under Order XXI CPC. The period of limitation runs from the date of sale and not from the date of confirmation of sale.
Judgment Excerpts
The provision of Order 21 Rule 89 of CPC does not prescribe period of limitation within which the application is to be made... governed by Art. 127 of Limitation Act, which provides 60 days from the date of sale.
Section 5 of the Limitation Act on its own language, has no application specifically to the provisions of Order 21 of the CPC.
The Executing Court has no jurisdiction whatsoever, to condone the delay.
Procedural History
Petitioner obtained loan of Rs.5 lakhs from respondent No.1 on 7.9.2007 and purchased flat on 29.10.2007. On default, respondent No.1 referred dispute to arbitration; sole arbitrator passed award directing payment of Rs.5,61,731 with interest. Respondent No.1 filed Regular Darkhast No.149/2009 under Section 36 of Arbitration Act, 1996 for enforcement. Executing Court ordered auction of mortgaged flat; auction held on 23.4.2012, highest bid of Rs.10,75,000 accepted from respondent No.3. Respondent No.2 ARCIL intervened claiming first charge as secured creditor by assignment from ICICI Bank, which had created charge on 30.6.2003. Petitioner filed application Exh.61 on 26.6.2012 under Order 21 Rule 89 CPC to set aside auction sale, depositing Rs.11,03,985 (later recorded as Rs.11,09,985). Executing Court rejected Exh.61 on 25.10.2012 as time-barred, and on 27.2.2013 passed common order on Exh.29 and 74 directing sale proceeds to ARCIL and deposited amount to decree-holder. Petitioner challenged these orders in the present writ petition. The High Court reserved judgment on 22.9.2016 and pronounced it on 26.10.2016.
Acts & Sections
- Code of Civil Procedure, 1908: Order 21 Rule 89, Section 148
- Limitation Act, 1963: Article 127, Section 5
- Arbitration and Conciliation Act, 1996: Section 36
- Constitution of India: Article 226, 227
