Sale in Execution

Clause (e) is the sweep-up and it states the purpose of the whole rule: a bidder must be able to judge the nature and value of what he is buying.

The second proviso settles a point that comes up constantly: nothing in the rule requires the Court to enter its own estimate of the value of the property, but the proclamation shall include the estimate, if any, given by either or both of the parties. So the court does not value the property; it records what the parties say it is worth.

Rule 67 provides for the mode of making the proclamation, and Rule 68 for the time of sale: no sale shall take place until after the expiration of at least fifteen days in the case of immovable property, and seven days in the case of movable property, calculated from the date on which the copy of the proclamation was affixed on the court-house.

Rule 69 allows the Court to adjourn a sale, and provides that where a sale is adjourned for more than thirty days, a fresh proclamation shall be made unless the judgment-debtor consents to waive it.

Deposit and payment by the purchaser: Rules 84 to 86

Rule 84(1): on every sale of immovable property, the person declared to be the purchaser shall immediately deposit twenty-five per cent of the amount of his purchase money to the officer conducting the sale, and in default of such deposit the property shall forthwith be resold.

Rule 85: the full amount of purchase money shall be paid by the purchaser on or before the fifteenth day from the sale of the property.

Rule 86: on default of that payment, the deposit may, after defraying the expenses of the sale, be forfeited to the Government, and the property resold, and the defaulting purchaser forfeits all claim to the property or to any part of the sum for which it may subsequently be sold.

So the two figures to hold are twenty-five per cent immediately and the balance within fifteen days.

Rules 72 and 73 restrict who may bid. Rule 72(1): no holder of a decree in execution of which property is sold shall, without the express permission of the Court, bid for or purchase the property. Rule 73: no officer or other person having any duty to perform in connection with any sale shall, directly or indirectly, bid for, acquire or attempt to acquire any interest in the property sold.

Setting the sale aside: Rules 89, 90 and 91

There are exactly three routes, and an answer should name all three and say who may use each.

Rule 89, deposit. Where immovable property has been sold, any person claiming an interest in the property sold at the time of the sale, or at the time of making the application, or acting for or in the interest of such a person, may apply to have the sale set aside on depositing in Court:

(a) for payment to the purchaser, a sum equal to five per cent of the purchase money; and (b) for payment to the decree-holder, the amount specified in the proclamation of sale as that for the recovery of which the sale was ordered, less any amount received by the decree-holder since the proclamation.

Rule 89(2): a person who applies under Rule 90 to set aside the sale of his immovable property shall not, unless he withdraws that application, be entitled to make or prosecute an application under Rule 89. He must choose.

Rule 89(3): nothing in the rule relieves the judgment-debtor from liability for costs and interest not covered by the proclamation.

Rule 90, irregularity or fraud. Where immovable property has been sold, the decree-holder, or the purchaser, or any other person entitled to share in a rateable distribution of assets, or whose interests are affected by the sale, may apply to set the sale aside on the ground of a material irregularity or fraud in publishing or conducting it.

Rule 90(2), and this is the condition that decides these applications: no sale shall be set aside on that ground unless, upon the facts proved, the Court is satisfied that the applicant has sustained SUBSTANTIAL INJURY by reason of the irregularity or fraud.

Rule 90(3): no application shall be entertained on any ground which the applicant could have taken on or before the date on which the proclamation was drawn up. A party who sat through the proclamation stage cannot complain about it afterwards.

Rule 91, no saleable interest. The purchaser may apply to set the sale aside on the ground that the judgment-debtor had no saleable interest in the property.

Notice how the three fit together. Rule 89 is the judgment-debtor's route and needs money, not a complaint. Rule 90 is the complaint route and needs substantial injury. Rule 91 belongs to the disappointed purchaser.

When the sale becomes absolute: Rule 92

Rule 92(1): where no application is made under Rule 89, Rule 90 or Rule 91, or where such an application is made and disallowed, the Court shall make an order confirming the sale, and thereupon the sale shall become absolute.

The proviso protects a pending stranger's claim: where property is sold pending the final disposal of any claim to, or objection to the attachment of, that property, the Court shall not confirm the sale until the final disposal of that claim or objection. That ties back to Order XXI Rule 58, in [Attachment of Property].

Rule 92(2): where such an application is made and allowed, and in the case of a Rule 89 application the deposit is made within sixty days from the date of sale, the Court shall make an order setting aside the sale. The rule also allows a deficiency in the Rule 89 deposit caused by a clerical or arithmetical mistake to be made good within a time fixed by the Court. No order shall be made unless notice of the application has been given to all persons affected.

So the two periods in Rule 89 and Rule 92 must be kept apart: the five per cent and the decree amount are what is deposited, and sixty days from the date of sale is when.

Rule 94: where a sale of immovable property has become absolute, the Court shall grant a certificate specifying the property sold and the name of the purchaser, and that certificate shall bear the date of the day on which the sale became absolute.

Rule 95: where the property sold is in the occupancy of the judgment-debtor, or of some person on his behalf, and a certificate has been granted, the Court shall, on the purchaser's application, put him in possession.

Section 65 states the effect: where immovable property is sold in execution and the sale has become absolute, the property shall be deemed to have vested in the purchaser from the time when the property is sold, and not from the time when the sale becomes absolute.

That relation back is worth noticing. Title passes only on confirmation, but once it passes it is treated as having vested from the date of the sale.

Rateable distribution: section 73

Section 73(1): where assets are held by a Court and more persons than one have, before the receipt of such assets, made application to the Court for the execution of decrees for the payment of money passed against the same judgment-debtor and have not obtained satisfaction, the assets, after deducting the costs of realisation, shall be rateably distributed among all those persons.

The three conditions worth stating are that the applications must be for money decrees, against the same judgment-debtor, and made before the receipt of the assets. A creditor who applies after the money is in gets nothing under this section.

A worked example

A money decree against Zara is executed and her flat is attached and put up for sale.

What must the proclamation say? Under Rule 66 it is drawn up after notice to both sides, in the language of the Court, and states the time and place and, as fairly and accurately as possible, the property, the revenue if any, any incumbrance, the amount for which the sale is ordered, and anything else material for a purchaser to judge the nature and value. The Court need not give its own valuation but must include the parties' estimates if any are given.

When can the sale happen? Not until fifteen days after the copy of the proclamation was affixed on the court-house, that being immovable property.

The auction is held. Under Rule 84 the successful bidder must immediately deposit twenty-five per cent, failing which the property is resold at once, and under Rule 85 must pay the balance within fifteen days, failing which the deposit is forfeited and the property resold under Rule 86.

Zara finds the money after the auction. Rule 89: she may apply to set the sale aside on depositing five per cent of the purchase money for the purchaser and the amount specified in the proclamation for the decree-holder, less anything he has received since. Under Rule 92(2) the deposit must be made within sixty days of the date of sale.

She instead says the proclamation understated the property. That is Rule 90, material irregularity in publishing the sale. But under Rule 90(2) the sale will not be set aside unless she proves she sustained substantial injury by it, and under Rule 90(3) not at all if it was a ground she could have taken before the proclamation was drawn up.

She tries both routes at once. Rule 89(2): having applied under Rule 90, she cannot make or prosecute a Rule 89 application unless she withdraws the Rule 90 one.

Nobody applies. Rule 92(1): the Court confirms the sale and it becomes absolute. Under Rule 94 the purchaser gets a certificate bearing the date the sale became absolute, and under section 65 the property is deemed to have vested in him from the date of the sale.

The purchaser cannot get in. Rule 95: on his application the Court shall put him in possession, and if he is obstructed, Explanation II to section 47 keeps the dispute in the executing court. See [Questions to be Determined by the Executing Court].

A stranger's claim to the flat was pending when it was sold. The proviso to Rule 92(1): the Court shall not confirm the sale until that claim is finally disposed of.

Three other creditors hold money decrees against Zara. Section 73: if they applied for execution before the sale proceeds were received and remain unsatisfied, the assets are rateably distributed among them after deducting the costs of realisation.

What it does not mean

The court does not value the property. Rule 66's second proviso requires only the parties' estimates, if given.

A sale does not pass title on the fall of the hammer. Title passes when the sale becomes absolute under Rule 92, though section 65 then relates the vesting back to the date of sale.

An irregularity alone does not set a sale aside. Rule 90(2) requires substantial injury, and Rule 90(3) bars grounds available before the proclamation.

The judgment-debtor cannot run both routes. Rule 89(2) makes him choose between the deposit route and the irregularity route.

A decree-holder cannot simply bid. Rule 72 requires the express permission of the Court, and Rule 73 bars anyone with a duty in connection with the sale.

The State's rule-making power over land sales: section 67

Section 67 empowers the State Government to make rules, consistent with the Code, as to the sale of land in execution of decrees, in particular as to the manner in which and the officers by whom such sales are to be conducted. So the Order XXI machinery above can be supplemented locally, and a practitioner checks the State rules alongside it.

Quick revision

Rule 64: sell the attached property, or so much as is necessary to satisfy the decree. Rule 65: by an officer of the Court or a person appointed, by public auction.

Rule 66, proclamation: after notice to both parties, in the Court's language, stating time and place and, as fairly and accurately as possible, the property, the revenue, any incumbrance, the amount to be recovered, and everything material for a purchaser to judge the nature and value. The Court need not give its own estimate but must include the parties' estimates.

Rule 68: not before fifteen days for immovable, seven days for movable, from affixing the proclamation. Rule 69: an adjournment beyond thirty days needs a fresh proclamation unless waived.

Rules 84 to 86: twenty-five per cent immediately or immediate resale; balance within fifteen days or forfeiture and resale. Rules 72 and 73: the decree-holder needs the Court's express permission to bid; officers connected with the sale may not bid at all.

Setting aside, three routes: Rule 89, by any person interested, on depositing five per cent for the purchaser and the proclamation amount for the decree-holder, within sixty days of the sale (Rule 92(2)); Rule 90, for material irregularity or fraud in publishing or conducting the sale, but only on proof of substantial injury, and not on a ground available before the proclamation; Rule 91, by the purchaser, that the judgment-debtor had no saleable interest. A Rule 90 applicant cannot also run Rule 89 without withdrawing.

Rule 92: confirmation makes the sale absolute, but not while a stranger's claim is pending. Rule 94: certificate dated as of the day the sale became absolute. Rule 95: the purchaser is put in possession. Section 65: the property is deemed to have vested from the date of sale.

Section 73: assets are rateably distributed among holders of money decrees against the same judgment-debtor who applied before the assets were received.

Test yourself

1. What must a proclamation of sale contain? It is drawn up after notice to the decree-holder and the judgment-debtor, in the language of the Court, and states the time and place of sale and specifies as fairly and accurately as possible the property to be sold, the revenue assessed where the property is an interest in an estate paying revenue to the Government, any incumbrance to which the property is liable, the amount for the recovery of which the sale is ordered, and every other thing which the Court considers material for a purchaser to know in order to judge of the nature and value of the property.

2. Must the Court state its own estimate of the value? No. The second proviso to Order XXI Rule 66 provides that nothing in the rule requires the Court to enter its own estimate of the value, but the proclamation shall include the estimate, if any, given by either or both of the parties.

3. What must the purchaser deposit, and when must he pay the rest? Twenty-five per cent of the purchase money immediately, on being declared the purchaser, failing which the property is forthwith resold; and the full amount of the purchase money on or before the fifteenth day from the date of sale, failing which the deposit may be forfeited and the property resold, the defaulting purchaser forfeiting all claim to it.

4. On what grounds may an execution sale of immovable property be set aside? On deposit under Rule 89, by a person claiming an interest in the property, of five per cent of the purchase money for the purchaser and the amount specified in the proclamation for the decree-holder; on the ground of material irregularity or fraud in publishing or conducting the sale under Rule 90; and by the purchaser under Rule 91 on the ground that the judgment-debtor had no saleable interest.

5. Is an irregularity by itself enough to set aside a sale? No. Rule 90(2) requires the Court to be satisfied on the facts proved that the applicant has sustained substantial injury by reason of the irregularity or fraud, and Rule 90(3) bars any ground which the applicant could have taken on or before the date the proclamation was drawn up.

6. When does the sale become absolute, and when does title pass? Where no application under Rules 89, 90 or 91 is made, or such an application is made and disallowed, the Court confirms the sale and it becomes absolute under Rule 92(1). By section 65 the property is then deemed to have vested in the purchaser from the time when the property was sold, and not from the time when the sale became absolute.

7. What is rateable distribution? Under section 73, where assets are held by a Court and more persons than one have, before the receipt of those assets, applied to it for execution of money decrees against the same judgment-debtor and have not obtained satisfaction, the assets are, after deducting the costs of realisation, rateably distributed among all of them.