*THE HONOURABLE SRI JUSTICE L.NARASIMHA REDDY + C.R.P.No.1832 of 2011 %19.10.2011 #Pallepu Poleswari ..Petitioner. Vs. $ Tammisetty Nageswarao Rao and others. ..Respondents. !Counsel for the petitioner : Sri Nimmagadda Satyanarayana ^Counsel for the Respondents : Sri G.Vasantha Rayudu <Gist : >Head Note: ?Cases Referred: [1] AIR 1981 AP 238 2 AIR 1970 PATNA 368 THE HON’BLE SRI JUSTICE L.NARASIMHA REDDY C.R.P.No.1832 of 2011 ORDER: This revision presents an occasion to deal with certain important aspects of Rule 89 of Order XXI of the Code of Civil Procedure, 1908 (C.P.C). The facts that gave rise to the filing of this revision are: The 1st respondent filed O.S.No.74 of 1992 in the Court of the Junior Civil Judge, Parchur, against respondents 2 to 5, for recovery for foreclosure of a mortgage, covering a sum of Rs.7,930/-. A preliminary decree was passed on 28.03.1997. Since that was not complied with, the Executing Court passed a final decree on 29.06.1999, at the instance of the 1st respondent. Both the items of mortgaged property were proceeded against. The first item was sold on 01.07.2008. The 1st respondent participated in the auction by seeking permission under Rules 72 of Order XXI C.P.C., and he emerged as the highest bidder. No challenge is made to that sale. The second item of the E.P. schedule was brought to sale on 06.03.2009. Here again, the 1st respondent participated in the auction and emerged as the highest bidder. The petitioner filed E.A.No.54 of 2007 under Rule 58 of Order XXI C.P.C., stating that Item No.2 of the E.P. Schedule property was purchased by her father under an agreement of sale dated 15.09.1986, from the previous owner and that he filed O.S.No.169 of 2001, in the same Court for the relief of specific performance of the agreement. She further pleaded that the dispute in the suit was settled by the Lok Adalat, balance of consideration was paid on 12.12.2003, and that rights of ownership were conferred upon her father. The property was said to have been settled upon her, through a written document. With these and other relevant pleadings, she claimed the relief provided for under the Rule. That application was not pursued, obviously because the sale has taken place. The petitioner filed E.A.No.139 of 2009 under Rule 89 of Order XXI C.P.C. It was stated that the petitioner is prepared to deposit the amounts provided for under the said provision, and prayed for setting aside of the sale. The application was opposed by the 1st respondent. He stated that the petitioner has no right to file the petition, since the deed of settlement relied upon by her is invalid in law. The Executing Court dismissed the E.A., through order, dated 06.04.2011. Hence, this revision. Sri Nimmagadda Satyanarayana, learned counsel for the petitioner, submits that the view taken by the Executing Court that the petitioner is not entitled to file an application under Rule 89 of Order XXI, is not tenable in law. He contends that it is not necessary for any individual to prove and establish title to maintain an application under that provision. Placing reliance upon a judgment of this Court in T.Venugopal Naidu v. N.Tirumala Naidu[1] and that of the Patna High Court in Onkar Nath Jalan v. Ramanand Prasad[2], learned counsel submits that it is not at all necessary for a person to establish title and that having interest in the property is sufficient for this purpose. Sri G.Vasantha Rayudu, learned counsel for the 1st respondent, on the other hand, submits that the petitioner failed in her effort in seeking relief under Rule 58 of Order XXI C.P.C. and that the one filed under Rule 89 of the said Order, is not maintainable in law. He submits that the petitioner did not file any document in support of her plea; and that the Executing Court has taken correct view of the matter. The dispute between the petitioner, on the one hand, and the 1st respondent, on the other hand, is in relation to item No.2 of the E.P. Schedule Property. An application under Rule 58 can be maintained, before the sale of the attached property takes place. It is no doubt true that the petitioner filed an application under Rule 58 of Order XXI on an earlier occasion, but did not pursue the same, resulting in dismissal thereof. The dismissal of an application under Rule 58 of Order XXI C.P.C., does not operate as a bar against filing of an application under Rule 89 of Order XXI C.P.C., if it is otherwise tenable. The reason is that the parameters for determination of claims under these two provisions are different from each other. An application under Rule 58 has to be filed before the sale of the attached property takes place. Further, an applicant in such proceedings can succeed, only if he establishes his title vis-à-vis the attached property. Anything short of it, would disentitle him to claim the relief. The consequences that flow from an order allowing an application under Rule 58 would be that the property would not be available to be proceeded in the execution of a decree at all and the decree-holder has to look for some other alternative. In contrast, the application under Rule 89 of Order XXI can be maintained, only after the sale of the attached property takes place. Further, the interests of the decree-holder are adequately protected, even if the sale is set aside, in as much as the petitioner in such an application is required to deposit not only the sale consideration, but also 5% thereof, in excess. At any rate, E.A.No.54 of 2007 was not dismissed on merits, on account of the petitioner not pursuing it. The principal objection raised by the 1st respondent for E.A.No.139 of 2009 filed under Rule 89 of Order XXI C.P.C. was that the petitioner does not answer the description of “any person claiming interest” occurring in that provision. That plea weighed with the Executing Court and the application was dismissed. Therefore, it becomes necessary to examine the purport of the said provision. Rule 89 of Order XXI C.P.C. reads as under: “89. Application to set aside sale on deposit.- 1) Where immovable property has been sold in execution of a decree, 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 person, may apply to have the sale set aside on his 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 which may, since the date of such proclamation of sale, have been received by the decree-holder. 2) Where a person applies under rule 90 to set aside the sale of his immovable property, he shall not, unless he withdraws his application, be entitled to make or prosecute an application under this rule. 3) Nothing in this rule shall relieve the judgment-debtor from any liability he may be under in respect of costs and interest not covered by the proclamation of sale.” From a perusal of this, it becomes clear that the provision does not insist that a person must hold valid title to maintain an application under it. There is an important background through which the rule evolved to its present form. Before C.P.C. was amended in the year 1976, the relevant portion of Rule 89 was: “Where immovable property has been sold in execution of decree, “any person, either owning such property or holding an interest therein by virtue of a title acquired before such sale”, may apply to have the sale set aside….” Through Act 104 of 1976, the Parliament substituted the portion which is underlined in the full text of the Rule, in preceding paragraph. The requirement that an applicant must either own the property or hold interest by virtue of a title, was done away with. According to the provision, as it stands, it would be sufficient, if the person claims “interest” in the property that is sold, or is acting for or on behalf of the persons having such interest. The word ‘interest’ is not defined anywhere in C.P.C., nor it is capable of being defined. The best way to understand the purport of this word is to see whether there exists any person, who is also claiming rights over the same property. In such a case, the Court would have an occasion to weigh, the relative strengths of the interest so claimed and to examine the nature of legal rights pleaded by them. As long as the plea of a person claiming interest is not opposed by any party to the proceedings, or even a third party, the Court cannot deny the relief. There is a strong reason that persuaded the Parliament to amend the provision, to its present form. Once an item of property is brought to sale, in execution proceedings normally the judgment-debtor must take steps to prevent the sale from being confirmed. The very fact that the judgment-debtor did not initiate such steps, discloses that either he did not have the capacity to deposit the amount or that he would not suffer any prejudice, on account of the sale. Even where the judgment-debtor remains the absolute owner of the property, there may be persons, who will be affected on account of the sale. Such persons may be his legal descendents, creditors or the persons who would otherwise be benefited, in case the sale is not affected. There may also be cases where the judgment-debtor does not have any subsisting interest in the property at all, and obviously, he does not feel aggrieved on account of the sale thereof. In matters of this nature, the persons who may have interest in the form of a perfect title or the right to enjoy the property in one manner or the other, may be interested in avoiding the sale. The Parliament maintained a distinction as to the consideration in an application filed under Rule 58, on the one hand, and Rule 89, on the other hand. Sub-rule (2) of Rule 58 places an obligation on the Court to decide the questions relating to right, title or interest claimed the parties to the proceedings or their representatives, whereas no such obligation is placed upon the Court, while dealing with the application under Rule 89. It is not difficult to perceive the reason. While the acceptance of a claim under Rule 58 would take away the property from the purview of the execution, grant of relief under Rule 89 would leave the decree-holder in the same position, as if the sale of the property was not interfered with at all. Not only the sale consideration/decretal amount, but also 5% of the purchase money is realized. Therefore, the necessity to require a claimant, is an application under Rule 89 of Order XXI to prove his title or absolute right to the property in question was advisedly done away with. What prompted the Parliament to amend Rule 89 of Order XXI C.P.C. in 1976 appears to be certain administrative and judicial steps taken by the Patna High Court. Even when the Rule remained in its unamended form, the Patna High Court introduced a State amendment to that Rule, in its application to the State of Bihar, substituting the following text: “a judgment-debtor or any person deriving title through the judgment-debtor, or any person holding an interest in the property at the date of the application under this rule.” (in the place of the words underlined portion at page 6) The said provision has fallen for interpretation before a Full Bench of the Patna High Court in Onkar Nath Jalan’s case (2 supra). The Full Bench took note of the background in which the Patna High Court substituted a different provision and the division of opinion among various High Courts. Ultimately, it held that provision as it applied to the State of Bihar did not warrant that an applicant must prove his title to the property, before he can seek the relief of setting aside the sale. After holding so, the Full Bench made the following observation: “I may, however, state before parting with the case that the most comprehensive wording and the one which is not only consonant with the underlying policy of the amendments but has besides it, the advantage of avoiding unnecessary investigation of the nature of interest is that of the High Court of Lahore, prior to partition and that of the Nagpur High Court and should be adopted in our High Court as well. The amendment stands thus: “any person claiming any interest in the property sold at the time of the sale or at the time of making the application under this rule or acting for or in the interest of such a person.” The decree-holder is interested in getting his dues. The auction-purchaser while bidding knows the provision of Order 21, Rule 89, and receives the compensation and thereby can have no grudge as to why the amount of purchase money is deposited and sale set aside. No one suffers by the procedure adopted in the above amendment and it may be reaffirmed that no prudent man is likely to waste his good money in depositing it for the benefit of the judgment- debtor merely in a gratuitous manner.” It is indeed gratifying that the text suggested by the Full Bench were adopted verbatim, by the Parliament and it was incorporated in Rule 89, in the year 1976. After the amendment came into force, the provision fell for consideration before this Court in T.Venugopal Naidu’s case (1 supra). A learned Single Judge of this Court took the view that a person, who is in possession of the property even without title, is entitled for the relief under rule 89 of Order XXI. It appears that these judgments were not brought to the notice of the Executing Court and it dismissed the application of the petitioner, on the ground that she failed to prove title to the property. She was not required to prove her right unless of course, another person claimed any superior right in the property, before it came to be sold in the execution of the decree. The result of the foregoing discussion is that the petitioner is entitled for the relief under Rule 89 and the Executing Court was not justified in dismissing her application. The C.R.P. is accordingly allowed and the order under revision is set aside. As a result, E.A.No.139 of 2009 is allowed and the sale of item No.2 of the E.P. schedule, shall stand set aside, in case the petitioner has complied with the requirements as to deposit of the amount under Rule 89 of Order XXI C.P.C. There shall be no order as to costs. ____________________ L.NARASIMHA REDDY, J. Dated: 19.10.2011 L.R. copy to be marked. GJ [1] AIR 1981 AP 238 [2] AIR 1970 PATNA 368