1 Spb/- IN THE HIGH COURT JUDICATURE AT BOMBAY ORDINARY ORIGINAL CIVIL SIDE JURISDICTION APPEAL NO. 1132 OF 2005 IN COMMISSIONER REPORT DATED 12TH AUGUST 2004 IN EXECUTION APPLICATION NO. 77 OF 2002 IN AWARD DATED 3RD NOVEMBER 2001 1. M/s.Sudarshan Constructions & Anr. ... Appellants. (Org.Answering Respondent Nos.1 & 3) V/s. 1. Camoron Finance & Investments. ... Respondents. (Org.Judgment Creditor) 2. M/s. Viral Enterprises ... Respondents. And 3 to 5 others. (Org.Judgment Debtors) AND 6. Commissioner for Taking Accounts ... Respondent. 7. Mr. Pradeed Wadhwa ... Respondents. (Org.Ans.Respondent-2) --- Mr. V.A. Thorat, Sr. Advocate with Mukul Tally & Ms. Prachi i/by S. Mahomedbhai & Co. for the Appellants. Mr. K.P. Jain for Commissioner for Taking Accounts. Mr. V.R.Dhond i/by Denzil D Mello for Respondent Nos. 1 to 4. --- WITH APPEAL NO. 1133 OF 2005 IN CHAMBER SUMMONS NO. 859 OF 2005 IN 2 EXECUTION APPLICATION NO. 77 OF 2002 IN AWARD DATED 3RD NOVEMBER 2001 1. M/s.Sudarshan Constructions ... Appellant. (Org.Applicant) V/s. Camoron Finance & Investments. ... Respondents. (Orig. Claimants) AND 1. M/s. Viral Enterprises ... Respondents. And 2 to 4 others. (Org.Judgment Debtors) AND 1. Mr. Pradeed Wadhwa ... Respondents. And 2 to 8 others. (Org.Respondents) --- Mr. V.A. Thorat, Sr. Advocate with Mukul Tally & Ms. Prachi i/by S. Mahomedbhai & Co. for the Appellant. Mr. K.P. Jain for Commissioner for Taking Accounts. Mr. V.R.Dhond i/by Denzil D Mello for Respondent Nos. 1 to 4. Mr. J.P.Sen with Ms. B. Singh i/by Mulla & Mulla & CB & C. for Respondent Nos. 5 and 8. --- CORAM: D.K.DESHMUKH AND V.R.KINGAONKAR,JJ. DATED: 29TH MARCH, 2010 P.C.: 1. Both these Appeals can be conveniently disposed of by a common order because both the 3 Appeals are directed against the same order. 2. The facts which are relevant are that there is an Award made by the Arbitrator against M/s. Viral Enterprises (hereinafter referred to as `Judgment Debtor ) and in favour of the M/s. Camoron Finance and Investments (hereinafter referred as `Decree Holder ). The execution proceedings pursuant to the Award, which has become a decree, were initiated. In those execution proceedings, the Commissioner for Taking Accounts conducted sale of the immovable property of the judgment debtor. The property (hereinafter shall be referred as Chakala property ). The Commissioner put a report before the court for confirmation of the sale in favour of one M/s. Sudarshan Constructions (hereinafter referred as the appellant ). It appears that when the auction was conducted before the Commissioner, one M/s. Zoom Developers Pvt. Ltd., had given their bid. The property has been ultimately sold in favour of the M/s. Zoom Developers (hereinafter referred as the purchaser ). It appears that the court accepted 4 the highest bid of the appellant for the property but the appellant did not deposit the amount that was to be deposited as per the terms of auction. Therefore, the matter came before the court and on behalf of the appellant, further time was sought for depositing the amount but the amount was not deposited. Ultimately, when the court found that the appellant is not depositing the amount, the court by order dated 5 th of February, 2004, directed that clause 7 of the terms and conditions of the auction should be invoked. The court directed the Commissioner to proceed against the appellant in terms of clause 7. The court at that time proceeded to accept the bid given by the purchaser- M/s. Zoom Developers. An objection to that course of action being adopted was raised on behalf of the judgment-debtor. According to the judgment debtor, the court should invite fresh offers. The court, however, rejected that request. It appears that an appeal was filed by the judgment debtor against the order dated 5 th February, 2004 but that appeal was dismissed by the Division Bench. It appears that, 5 thereafter, Chamber summons No. 859 of 2004 was taken out by the appellant for various reliefs. It appears that the principal case of the appellant was that the bid was not given before the court by its authorized representative and, therefore, what ever is said in the order dated 5 th of February, 2004 is not binding on it. It appears that the Commissioner also submitted his report whereby he had quantified the amount that was to be recovered from the appellant for its failure to deposit the amount. When the Commissioner s report and the chamber summons alongwith other proceedings was decided by the learned single Judge by the order dated 21 st of September, 2005, the chambers summons taken out by the appellant was dismissed and the Commissioner Report was granted in terms of the prayer clauses (a),(b) and (c). The net result is that an amount of Rs.2,01,00,000/- (Rs.Two crores one lakh) was to be recovered from the appellant being the deficit amount. In other words, it is the amount of difference between the price offered by the appellant and the price for which the property has 6 been sold now to the purchaser. 3. Appeal No.1132 of 2005 is filed by the appellant challenging the order, granting the Commissioner s report and appeal No. 1133 has been filed challenging the order of the learned single Judge, dismissing the chamber summons taken out by the appellant. 4. The learned counsel appearing for the appellants, relying on the provisions of Order 21, Rule 71 of C.P.C. and the judgment of the Supreme Court in the case of Gopal Krishan Das vs. Sailendra Nath Biswas (AIR 1975 Supreme Court 1290), and also on the provisions of Rule 547 of the Original Side Rules, submits that the question of recovering the deficiency of price from the defaulting purchaser arise only when there is an order for re-sale of the property made. The learned counsel took us through the record to contend that there is no order made for re-sale of the property and therefore, according to the learned counsel, the 7 order of recovery of the deficiency of price is not valid. The learned counsel further submitted that an order for recovery of deficiency of price can be made at the instance of either the decree holder or the judgment debtor. In the present case, neither the judgment debtor nor the decree holder had moved the learned single Judge for making an order for the recovery of deficiency of price. The learned counsel submitted that the reliance placed by the learned single Judge on the provisions of Rule 542 of the Original Side Rules is also not proper. The learned counsel submitted that there is no order made by the learned single Judge dispensing with the issuance of fresh notification. The learned counsel submitted that there cannot be any re-sale without cancellation of the earlier sale and issuance of fresh notification for sale of the property. The learned counsel further submitted that the judgment debtor also cannot now urge that issuance of fresh notification, was not necessary in view of the contentions raised by the judgment debtor before the learned single Judge. 8 5. We also heard the learned counsel appearing for the judgment debtor and the Commissioner. The learned counsel appearing for the judgment debtor submits that there is in fact an order for re-sale made by the learned single Judge. He took us through the order passed by the learned single Judge. According to him there is in fact an order of re-sale made and that the learned single Judge himself has held that he has made an order for dispensing with the issue of publication on fresh notification. The learned counsel further submits that in the present case, the contention that the order for recovery of deficiency of price could not have been made without there being an application from the decree holder or the judgment debtor made before the learned single Judge, cannot be permitted to be urged in appeal as that contention was not raised before the learned single Judge. The learned counsel submits that in the present case, the appellant himself invited an order by taking out a chamber summons for setting aside the order of the learned 9 single Judge, directing the recovery of deficiency of price from the appellant. The learned counsel also submits that the appellant is guilty of conduct which is unbecoming of a litigant. He submits that he solemnly gave bid and then approached the court saying that he did not authorize the person who had given the bid on his behalf. 6. Now if the record is perused in the light of these rival submissions, it is clear that in view of the provisions of Order 21 Rule 71, an order can be made for recovery of deficiency of price from the defaulting purchaser only on a re-sale of the property, when it is found that there is deficiency of price. Therefore, there has to be a re-sale. The Order 21, Rule 71 reads as under : 71. Defaulting purchaser answerable for loss on re-sale.-- Any deficiency of price which may happen on a re-sale by reason of the purchaser s default, and all expenses attending such re-sale, shall be certified to the Court [***] by the officer or other person holding the sale, and shall, at the instance of either the decree-holder or the judgment- debtor, be recoverable from the defaulting purchaser under the provisions relating to 10 the execution of a decree for the payment of money. Perusal of the above rule also shows that for an order of recovering deficiency of price the condition precedent is re-sale. The term re-sale is not defined by the Civil Procedure Code. The provision of the Original Side Rules which is relevant, is the provision of Rule 542 which reads as under : R. 542. Proceedings on a re-sale.-- When a re- sale is directed, unless otherwise ordered, a fresh notification shall be issued and published and the proceedings down to the certificate of sale shall be similar to those on an original sale. Perusal of the above quoted provisions show that as a matter of course whenever there is a re-sale to be conducted, a fresh notification has to be issued and it is also to be published as was done at the time of conducting original sale. The court can, however, dispense with this requirement by making an order to that effect. Rule 547 (vii) lays down that if the purchaser is in default in depositing the amount, the 11 property is to be re-sold. Sub-rule (ix) of Rule 547 is relevant which reads as under : Sub-rule (ix) of Rule 547 : Any deficiency of price which may arise on a resale by reason of the purchaser s default and all costs and expenses occasioned by such re-sale shall, at the instance of any party concerned, be recoverable from the defaulting purchaser under an order to be obtained on a Chamber Summons which shall be served on the defaulting purchaser and the parties to the suit. The Judge may direct the defaulting purchaser to pay interest at such rate from the date of default and on such amount as to the Judge may seem just. Perusal of this Rule shows that there has to be an order made by the court at the instance of any party concerned for recovery of the deficiency of price. It was contended on behalf of the judgment- debtor that when by order dated 5 th February, 2004, the court invoked clause 7 of the terms and conditions, the order for re-sale is implicit in it. Paragraph 2 of the order dated 5 th February 2004 reads as under : 12 Para-2 : According to the Learned Counsel, the notice for sale issued is vague. That is no argument available to M/s. Sudarshan Constructions, who participated in the sale and had given highest bid. This only shows that they are more interested in prolonging the proceedings than concluding the transaction by depositing the balance amount. In such a situate, the only course open to this court is to invoke clause 7 of the Terms and Conditions of Sale of the property in question of ordered accordingly. 7. It can be said that there is some substance in the submission made on behalf of the judgment- debtor that there is an order made for re-sale of the property by the learned single Judge. To contend that the requirement of issuing and publishing a fresh notice was dispensed with by the court, the judgment -debtor relies on paragraph 4 of the said order dated 5 th February, 2004, which read as under : Para-4: Mr. Denzil D Mello for the Judgement Debtor submits that Court should make one more effort to invite fresh offers in respect of the property in question. I see no reason to accept this suggestion, for it is more than evident that on five occasions, such attempt has been made in the past and no fruitful purpose would be served by inviting fresh offer, moreover the offer given by M/s. Zoom Developers Private Limited is far in excess of the fair market price indicated in the second valuation report. Hence, that request is rejected. 13 Thus it can also be said that there is substance in the submission that the court made an order for dispensing with issuance and publication of fresh notification for re-sale. The question, however, according to us that remains is, can the court make an order for recovery of deficiency of price without there being an application made for that purpose by the decree-holder or judgment-debtor as required by the Order 21, Rule 71 of the Civil Procedure Code and Rule 547 (x) of Original Side Rules? Rule 71, Order 21, which we have quoted above, empowers the court to make an order for recovery of deficiency of price only at the instance of either the decree-holder or the judgment-debtor. In other words, only the judgment-debtor and the decree -holder have the locus to move an application for recovery of deficiency in price. In our opinion, the words at the instance of either the decree -holder or the judgment-debtor , negate existence of suo moto powers in the court to order recovery of deficiency of price. The provisions of Rule 547 (ix) 14 quoted above, reinforce this position. In that Rule also it is clearly provided that an order for recovery of deficiency of price can be obtained on a chamber summons which is moved by a party concerned. This also rules out existence of suo moto powers in the court. What is further to be seen here is that deficiency of price recovered goes towards payment of decretal amount and, therefore, unless either the judgment-debtor or the decree -holder invoke the jurisdiction of the court, the court will be powerless to make the order for recovery of deficiency of price. 8. Section 129 of the Civil Procedure Code confers power on High Courts to make rules to regulate their civil procedure. In exercise of its powers, the High Court has framed the Rules. Rule 71 of Order 21 of the Civil Procedure Code and Sub-rule (ix) of Rule 547 of the Original Side Rules, both of which are quoted above, occupy the same field and are on the same subject. Therefore, both will have to be read harmoniously. Rule 71 of Order 21 15 contemplates the court, exercising its power under that Rule at the instance of either the decree holder or the judgment -debtor and Sub-rule (ix) of Rule 547 contemplates the court, exercising that power while making an order on a chamber summons filed by any party concerned. The term party concerned found in Sub-rule (ix) of Rule 547 will have to be construed to mean the decree -holder or judgment debtor or any party whose interest is aversely affected because of the deficiency of price pursuant to the re-sale. In our opinion, therefore, the power of the court to order recovery of deficiency of price on re-sale, can be exercised by the court only at the instance of either judgment debtor, decree-holder or any party whose interest is adversely affected because of the deficiency of price. In the present case, admittedly, no proceedings for recovery of deficiency of price were taken up either by the judgment-debtor or by the decree-holder or by any other person. The order was made suo moto by the court on its own motion. The Supreme Court in a judgment in the case of State of 16 Uttar Pradesh vs. Singhara Singh & Ors. (AIR 1964 Supreme Court 358) has referred with approval to the judgment of the Judicial Committee in Nazir Ahmed s case (AIR 1936 PC 253). In that case Judicial Committee held that the principle laid down in Taylor vs. Taylor [(1876) 1 Ch D 426], is well recognized and is founded on sound principle. Its result is that if a statute has conferred a power to do an act and has laid down the method in which that power has to be exercised, it necessarily prohibits the doing of the act in any other manner than that which has been prescribed. The principle behind the Rule is that if this were not so, the statutory provision might as well not have been enacted. Viewed from this point of view, in our opinion, it will have to be held in the present case, that in absence of any application being moved, seeking an order for recovery of deficiency of price, moved by either the decree -holder or judgment-debtor or a party which is adversely affected by the deficiency of price, the learned single Judge on his own motion, could not have made 17 the order. 9. Sofar as the submission of the learned counsel appearing for the appellant that this question was not raised before the learned single Judge and therefore, it should not be permitted to be raised in these proceedings is concerned, in our opinion, as the question goes to the root of the jurisdiction of the court to make an order for recovery of deficiency of price and as no investigation into any facts is necessary for deciding the point, we cannot refuse to consider this contention, though raised for the first time in the appeal. The Supreme Court in its judgment in the case of Gopal Krishan Das, referred to above, has held Order 21 Rule 71 is intended to provide an expeditious remedy to the judgment debtor or the decree holder who has suffered a detriment due to the default of the auction purchaser. The officer or other person holding the sale has to certify to the court the deficiency of price which on the re-sale has happened by reason of the purchaser s default and all expenses attending 18 the re-sale. Upon such certification the amount becomes recoverable from the defaulting purchaser at the instance of the decree -holder or the judgment- debtor under the provisions relating to the execution of a decree for the payment of money. The Supreme Court has further held that Order 21, Rule 71 provides a speedy remedy to the judgment-debtor or the decree-holder to recover the deficiency of price. Thus in the opinion of the Supreme Court, Order 21 Rule 71 is a remedy provided to judgment-debtor or decree-holder and therefore, unless they adopt the remedy, court before whom remedy is provided to them, will be powerless till they move the court by adopting the procedure which is laid down by the law. Thus absence of any application made by the judgment -debtor or the decree- holder goes to the very root of jurisdiction of the court to make the order for recovery of deficiency of price. In our opinion, therefore, we cannot prohibit the appellant from raising that question though it is raised for the first time before us. 19 10. In the result, the order of the learned single Judge, directing recovery of deficiency of price from the appellant will have to be set aside. It is accordingly, hereby set aside. To this extent both the appeals are hereby allowed. 11. It is made clear that we set aside only the order directing recovery of deficiency of price from the appellant and no other part of the order. As we find in favour of the appellant on the above issue, it is not necessary to consider rest of the contentions raised. 12. At the request of the learned counsel appearing for the judgment-debtor, it is directed that the discharge of the bank guarantee given pursuant to the interim order and withdrawal of any amount that may have been deposited by the appellant, shall be permitted only after a period of eight weeks from today unless contrary order is received from the superior court. 20 13. Notice of Motion Nos. 1633 of 2007 and 4601 of 2007 are disposed off. (D.K.DESHMUKH,J.) (V.R.KINGAONKAR,J.) .....