Order 21 CPC | Separate Suit Challenging Auction Sale Barred for Pendente Lite Transferees; Remedy Lies in Execution Proceedings: Supreme Court

“The scheme of the Code appears to be to put an end to the protraction of the execution and to shorten the litigation between the parties or persons claiming right, title and interest in the immovable property in execution.”— In a seminal ruling, the Supreme Court of India, comprising Justice J.B. Pardiwala and Justice R. Mahadevan, allowed a civil appeal, holding that a separate suit instituted by pendente lite transferees to challenge an auction sale conducted by an Executing Court is not maintainable, being barred by Section 47 and Order XXI of the Code of Civil Procedure (CPC).

The Court set aside the concurrent findings of the High Court of Punjab and Haryana, the First Appellate Court, and the Trial Court, all of which had erroneously held that a separate suit was maintainable on the grounds of fraud in the auction process.

A 40-Year-Old Legal Tangle

The dispute dates back to 1970 when one Duli Chand mortgaged his property (116 Kanals 13 Marlas) to New Bank of India (Respondent No. 6) for a loan. Upon default, the Bank filed a suit in 1982, which was decreed ex-parte in 1984.

Crucially, after the passing of the decree but before the auction, the legal heirs of the borrower sold a portion of the mortgaged property (the suit property) to the Plaintiffs (Respondent Nos. 1 & 2) via sale deeds in 1985. Subsequently, the Executing Court attached the property and auctioned it in 1988. The Appellants (nephews of the judgment-debtors) were the highest bidders. The sale was confirmed, and possession was handed over in 1989.

The Plaintiffs, claiming to be bona fide purchasers who were unaware of the bank’s decree, filed a separate civil suit in 1989 seeking a declaration that the auction sale was void due to fraud and irregularities. The lower courts decreed the suit, holding that fraud vitiates all proceedings and that the Plaintiffs were not bound by the auction.

The Doctrine of Lis Pendens

The Supreme Court first addressed the validity of the sale to the Plaintiffs. The Court held that since the transfer occurred during the pendency of the execution proceedings where the right to the mortgaged property was "directly and specifically in question," the transaction was hit by Section 52 of the Transfer of Property Act, 1882.

“By purchasing a mortgaged property during the pendency of the suit instituted by the respondent no.6-bank, the respondent nos. 1 and 2 respectively could be said to have agreed to be bound by the outcome of such proceedings.”

The Court clarified that the lack of knowledge of the pending suit is no defense against the doctrine of lis pendens.

Bar Under Order XXI Rule 90: Irregularities in Auction

The Plaintiffs argued that the auction was conducted in camera, undervalued, and fraudulent. The Supreme Court held that such grievances fall squarely within Order XXI Rule 90 CPC (setting aside sale on ground of irregularity or fraud).

The Bench elucidated that:

1. Scope: Rule 90 covers irregularities in "publishing or conducting" the sale, including defects in attachment.

2. Limitation: Such an application must be filed within 60 days from the date of sale (Article 127, Limitation Act).

3. Bar on Suit: Order XXI Rule 92(3) explicitly bars a separate suit to set aside an order confirming the sale if the grounds could have been raised under Rule 90.

“One cannot allege material fraud or irregularity to set-aside the sale while simultaneously also wanting to pay a deposit to set it aside.”

The Court held that the Plaintiffs failed to file an application under Rule 90 within the limitation period and could not circumvent this bar by filing a separate suit years later.

Section 47 CPC: The Representative Character

A pivotal aspect of the judgment was the interpretation of Section 47 CPC, which mandates that all questions relating to the execution, discharge, or satisfaction of a decree must be determined by the Executing Court and not by a separate suit.

The Court noted that since the Plaintiffs purchased the property from the judgment-debtors during the pendency of the suit, they stepped into the shoes of the vendors. Thus, they were "representatives" of the judgment-debtors.

“The separate suit instituted by the respondent nos. 1 and 2 respectively would be non-maintainable because they are representatives of the judgment-debtor and the bar envisaged under Section 47 CPC would squarely apply to their case.”

"Third Party" under Order XXI Rule 92(4)

The Plaintiffs argued their suit was maintainable under Order XXI Rule 92(4), which allows a "third party" to challenge the judgment-debtor's title via a separate suit.

The Supreme Court rejected this, clarifying the definition of a "third party." The Court held that a pendente lite transferee is not a "third party" under Rule 92(4). A third party is a stranger to the decree who claims an independent title and falls outside the scope of Section 47 CPC. Since the Plaintiffs derived their title from the judgment-debtors during the litigation, they could not avail the benefit of Rule 92(4).

Remedy for Dispossession: Rule 99 vs. Separate Suit

The Court conducted an exhaustive analysis of Order XXI Rules 97 to 104. It held that if a person (other than the judgment-debtor) is dispossessed in execution of a decree, their only remedy is to file an application under Rule 99 complaining of dispossession.

“Adjudication under Order 21, Rules 98, 100 and 101 and its successive rules is sine qua non to a finality of the adjudication of the right, title or interest in the immovable property under execution.”

The Court ruled that Rule 101 is a complete code that empowers the Executing Court to adjudicate all questions of title and interest, deeming such orders as decrees. Consequently, filing a separate suit as an alternative to a Rule 99 application is impermissible.

However, the Court noted a catch-22 for the Plaintiffs: even if they had filed an application under Rule 99, Rule 102 would bar them from relief because they were pendente lite transferees. The Court held that this statutory bar cannot be bypassed by filing a separate suit.

The Supreme Court allowed the appeal, holding the separate suit filed by the Plaintiffs as non-maintainable. The auction sale in favor of the Appellants was upheld.

However, invoking its powers under Article 142 of the Constitution, the Court noted the peculiar equities of the case. The Appellants (auction purchasers) were the nephews of the original vendor (judgment-debtor), and the Plaintiffs had paid consideration for the land 40 years ago. To do "substantial justice," the Court directed the Appellants to pay Rs. 75,00,000/- to the Plaintiffs within six months, failing which 12% interest would apply.

Date of Decision: December 15, 2025