H.S. Goutham Vs. Rama Murthy [February 12, 2021]

EQUIVALENT CITATIONS	AIRONLINE 2021 SC 269
DATE OF JUDGMENT	12th FEBRUARY 2021
COURT	HON’BLE SUPREME COURT
PETITIONER	H.S. GOUTHAM
RESPONDENT	RAMA MURTHY AND ANR.
BENCH	JUSTICE M.R. SHAH, JUSTICE R. SUBHASH REDDY, JUSTICE ASHOK BHUSHAN

INTRODUCTION

In the Supreme Court’s H.S. Goutham Vs. Rama Murthy case the main topic of discussion for the three-judge bench, which includes Justice Subhash Reddy, Justice M.R. Shah, and Justice Ashok Bhushan, was Order 21 of the CPC Because it deals with the court’s decrees and orders being carried out, Order 21 of the CPC is significant. This case is a significant legal decision concerning the interpretation and application of Order 21 of the Code of Civil Procedure (CPC), which governs the execution of decrees and orders by courts. This case revolves around the principles of finality and procedural correctness in the execution of a mortgage decree and subsequent sale of mortgaged property.

FACTS OF THE CASE

1. According to the original plaintiff’s case the respondents in this case the original defendants, borrowed Rs.1,00,000 through a simple mortgage deed from the appellant’s father which was executed on 11/07/1990 and an additional Rs. 50,000 through a promissory note in 1992. The original defendants, serving as the Mortgager, and a single partnership firm, C.H. Shantilal & Co., serving as the Mortgagee, executed the mortgage deed. The initial plaintiff was the son of Shri C.H. Shantilal who is also a partner in the business firm that dissolved on 17^th December 1994.
2. Rather than mortgage the suit property, the mortgagee gave the mortgager a loan of Rs. 1,00,000 to satisfy their previous commitment in line with the original plaintiff’s case and within five years of the deed’s execution, the mortgager was obliged to repay the mortgagee Rs. 1,00,000, plus interest at the rate of 1.5% per month or 18% yearly act.
3. After the defendant failed to make payment, the appellant filed a lawsuit to recover the money, and the defendant consented to pay the agreed-upon amount of Rs. 2,50,000 in monthly installments of Rs. 5,000 over the course of three years. The Court upheld the aforementioned compromise. Proceedings in the Lower Courts on February 28, 1996, the appellant filed an execution petition before the Court of City Civil Judge in accordance with the previously indicated compromise. The respondent argued that fraud was used to acquire the compromise.
4. The Executing Court overruled the judgment debtor-respondent’s objections by order dated 03-03-1998, and on November 21, 1998, the mortgaged property was sold at Rs. 4,50,000, the appellant was deemed to be the highest bidder. On the day of the sale, he deposited 25% of the total bid sum.
5. The judgment debtor filed an application on 19/02/1999 in the Execution Petition to set aside the auction/sale dated 30/10/1999 and to stop further proceedings with regard to the sale of the relevant mortgaged property. The sale certificate was granted to the auction purchaser and the sale was registered after the court dismissed the application. By its order dated June 1, 2000, the High Court denied the Revision Application that the judgment debtor had submitted.
6. As a result, the parties reached another agreement in which the judgment debtor committed to paying Rs. 6, 96,062 as the final and complete settlement of the Trial Court’s verdict. Once more, the judgment debtors pulled out of their agreed-upon agreement and appealed to the High Court. Based on the Principal City Civil Judge’s findings, the High Court declared that the consent decree obtained by fraud, and thus annulled and set aside the decision made by the Trial Court.
7. The Bench noted that the Trial Court’s consent decree was annulled and set aside by the High Court, which also granted the initial appeal filed by the original defendants. Observing that the judgment debtor was aware of the consent decree, the judgment debtors filed their objections in the execution petition rather than challenging it on the grounds that it was obtained through fraud. Debtors’ objections were overruled, and the decision became final because it was not challenged in front of any appellate forum.

According to the Bench, “Order XXI Rule 92 of CPC read with Order XXI Rule 94, the same should become final once the sale was confirmed and the sale certificate had been issued in favor of the purchaser.”

ISSUES RAISED

1. Whether the miscellaneous case is maintainable?
2. Whether the petitioners got a valid cause of action for this case?
3. Whether the case is barred by the principles of limitation and estoppel and res judicata?
4. Is the auction sale illegitimate, inconsistent, arbitrary, devoid of legal authority, and incapable of being revoked?

CONTENTIONS 

PETITIONER’S CONTENTIONS

1. The original Defendant no.1 has put his signature on the Vakalatnama, written statement and compromise deed, hence this is not the case of forged signatures.
2. Accordingly, it is argued that the learned Executing Court expressly stated in its order dated March 3, 1998, that the judgment debtors have not been able to provide convincing evidence that the decree was obtained by fraud.
3. Furthermore, it is argued that the High Court overlooked the fact that the judgment debtors, who were the initial defendants, only brought a challenge to the consent decree of January 6, 1995, in 2001.
4. It is submitted that a number of proceedings were started before the Executing Court, and that the court issued orders on March 3, 1999, and November 30, 1999. The mortgaged property was even auctioned, and the sale certificate was given to the winning bidder in November 1999. The judgment debtors, who were the original defendants, did not contest the consent decree until 2001, claiming that it was obtained through fraud. Therefore, it is argued that the responders’ behavior exhibits laches and delays.
5. The original plaintiff’s learned counsel further argues that the judgment debtors neglected to deposit the requisite amount of sale price before the Executing Court, as mandated by Order XXI Rule 90 of the CPC.
6. It is argued that because the written statement and consent compromise deed were conducted in English and the document itself was written in that language, the learned Principal City Civil Judge made an error in recognizing the judgment debtors’/original defendants’ plea that he was unaware of their contents. It is maintained that it cannot be presumed that the original defendants were just fluent in common speech because they signed the mortgage deed, which was drafted in English and signed by them on every page.

RESPONDENT’S CONTENTIONS

1. The purchaser of the auction purchases the property in the execution proceedings upon being deemed the highest bidder, according to the learned attorney representing the auction purchaser.
2. It is also argued that the judgment debtors’ initial defendants’ actions were not taken into account by the High Court. It is argued that a compromise petition was prepared even before the High Court, in which the judgment debtors—the original defendants—agreed to pay Rs. 6,96,062 as full and final settlement of the decree issued by the learned Trial Court. However, the respondents withdrew from the compromise at the time of the compromise petition.
3. The learned Principal City Civil Judge’s conclusion that the consent decree obtained by deception is based on reappreciation of evidence is put out in this submission. It is argued that the High Court correctly ordered the Trial Court to conduct an investigation into the possibility that fraud or misrepresentation was used to obtain the decree.
4. According to the submission, the consent decree is not legally binding once it is determined that it was obtained through fraud and deception, both before and after the lawsuit was filed. For this reason, the High Court properly set aside the consent decree and returned the case to the Trial Court so that it could be decided on the merits. It is argued that as a result, the High Court has the right to set aside all other orders that were passed during the execution process because they would all be void.

JUDGMENT

The Supreme Court of India noted that the High Court’s decision to shake and set aside the consent decree was unjustified when the mortgaged property in question had already been sold at auction through the execution proceedings, the sale had been verified in the buyer’s favor, and a sale certificate had been issued. The bench consisting of Justices R. Subhash Reddy, M. R. Shah, and Ashok Bhushan held that if Order 21 Rule 92 of the Code of 1908 is read along with Order 21 Rule 94 of the Code, the result is that the sale becomes final and cannot be revoked once it has been confirmed and a sale certificate has been issued in the purchaser’s favor. The Apex Court’s observation verified that the High Court had went too far in its jurisdiction. The SC further held that the appellate court could not order any subordinate court to gather further evidence and forward it to the appellate court, nor could the parties to the appeal lead additional evidence unless the Order XLI Rules 27, 28, 29 of the Code of Civil Procedure were followed. It was further determined that in accordance with Order XXI Rule 90, the decree holder may file an application to set aside the sale on the grounds of serious irregularity or fraud in publishing or conducting it. The other technical argument stated by O.P.s is that this miscellaneous case is barred under the rule of limitation and the principle of res-judicata. This is in accordance with Issue Nos. 1, 2, and 3. Additionally, the petitioner lacks a legitimate cause of action in this matter. O.Ps. further contends that this court has jurisdiction to hear the matter since Order 21 Rule 90(3) prohibits the petitioner from raising it in accordance with this provision, even if he may have done so prior to the sale’s announcement. Therefore, this scenario cannot be maintained.

ANALYSIS

The H.S. Goutham vs. Rama Murthy case is significant because it clarifies the procedural framework surrounding the finality of auction sales in execution proceedings. It reinforces the principle that once a sale is confirmed and a sale certificate issued, it becomes final and cannot be challenged except under specific conditions. The judgment also highlights the limits of appellate jurisdiction and the importance of adhering to procedural rules and timelines. This case serves as a critical reference for understanding the execution of court orders and the enforcement of decrees under Indian civil procedure law. The judgment reinforced the importance of following procedural rules and timelines set by the Code of Civil Procedure (CPC). Parties involved in execution proceedings must adhere to these rules to ensure the fair and orderly conduct of legal processes. Overall, the Supreme Court’s decision in this case serves as a key reference for understanding the finality of judicial sales, the limitations of appellate courts, and the standards required for challenging consent decrees and execution proceedings. It upholds crucial legal principles that contribute to the effective and stable administration of justice.

CONCLUSION

In essence, the Supreme Court’s decision in H.S. Goutham vs. Rama Murthy affirms fundamental principles related to the finality of judicial sales, the limitations of appellate review, and the necessity for procedural compliance. These principles contribute to the integrity, efficiency, and stability of the judicial process, ensuring that once legal decisions are made, they are respected and upheld unless substantial and timely evidence suggests otherwise. It emphasizes the importance of timely and well-supported challenges to judicial orders and reinforces the procedural framework that governs execution proceedings under the CPC. This case serves as a significant reference point for future disputes involving execution sales and consent decrees, contributing to a more predictable and efficient judicial process.

REFERENCES

1. https://www.sci.gov.in
2. https://indiankanoon.org › doc
3. https://www.studocu.com › … › civil procedure code
4. https://www.the-laws.com › Encyclopedia › Browse › Case

This Article is written by Manherleen Kaur Bhangoo student of G.H.G. Institute of Law, Sidhwan Khurd, Ludhiana, Punjab; Intern at Legal Vidhiya. 

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