Supreme Court Clarifies Limitation Period for Filing Possession Applications in Auction Sales
The case of Bhasker & Anr. v. Ayodhya Jewellers revolves around the crucial question of determining the starting point of limitation for filing an application under Rule 95 of Order XXI of the Code of Civil Procedure, 1908 (CPC). The Supreme Court was called upon to clarify whether the limitation period begins from the date of sale confirmation or the issuance of the sale certificate.
This judgment is significant as it resolves a long-standing ambiguity in civil procedure regarding execution of auction sales and possession claims.
Background of the Case
The appellants, Bhasker & Anr., were property owners whose assets were auctioned to recover dues under a decree. The respondent, Ayodhya Jewellers, was the auction purchaser.
Key facts of the case:
- The property was auctioned in execution of a decree against the appellants.
- The sale was confirmed on July 16, 2009, under Rule 92(1) of Order XXI of CPC.
- The sale certificate was issued on February 5, 2010.
- On July 27, 2010, the respondent applied for possession under Rule 95 of Order XXI of CPC.
- The appellants opposed the application, arguing that it was filed beyond the one-year limitation period under Article 134 of the Limitation Act, 1963.
- The Executing Court granted the possession application, and the appellants’ review petition was dismissed.
- The Kerala High Court upheld the Executing Court’s decision, ruling that limitation starts from the date of issuance of the sale certificate.
Petitioner’s Arguments
The appellants, Bhasker & Anr., represented by Senior Advocate S. Manoharan, contended:
- Under Article 134 of the Limitation Act, the limitation period for filing a possession application is one year from the date the sale becomes absolute.
- The sale became absolute on July 16, 2009, when the confirmation order was passed.
- Since the possession application was filed on July 27, 2010, it was beyond the one-year limitation period and should be dismissed.
- The High Court wrongly relied on United Finance Corporation v. M.S.M. Haneefa, where the delay was due to a court-ordered stay.
- The correct precedent is Pattam Khader Khan v. Pattam Sardar Khan, which ruled that limitation starts from sale confirmation, not sale certificate issuance.
Respondent’s Arguments
The respondent, Ayodhya Jewellers, represented by Senior Advocate K. Balasubramanian, countered:
- Article 134 of the Limitation Act should be read with Order XXI Rule 95, which mandates that a sale certificate must be issued before filing a possession application.
- Since the sale certificate was issued on February 5, 2010, the one-year limitation period began from that date.
- The possession application, filed on July 27, 2010, was well within the limitation period.
- The decision in United Finance Corporation correctly excluded the period before the sale certificate was issued.
- If the limitation period starts from sale confirmation, then procedural delays in issuing sale certificates could unfairly disadvantage auction purchasers.
Supreme Court Judgment
The case was heard by Justice Abhay S. Oka and Justice Rajesh Bindal. The Supreme Court referred the matter to a larger Bench, acknowledging the inconsistency between Article 134 of the Limitation Act and Order XXI Rule 95 of CPC.
1. Limitation Should Align with Sale Certificate Issuance
The Court observed that while Article 134 states that limitation begins from sale confirmation, Rule 95 prevents a possession application from being filed before the issuance of the sale certificate:
“There is an apparent inconsistency between the provisions of Rule 95 of Order XXI of CPC and Article 134 of the Limitation Act. The rule of purposive interpretation must be applied to resolve this conflict.”
2. Sale Confirmation Alone Does Not Confer Possession Rights
The Court ruled that possession rights arise only after the sale certificate is issued:
“An auction purchaser does not get the right to apply for possession unless a sale certificate is granted under Rule 94 of Order XXI.”
3. Practical Challenges in Sale Certificate Issuance
The Court noted that procedural delays in issuing sale certificates often extend beyond six months, unfairly shortening the limitation period:
“In many cases, there is a procedural delay in issuing the sale certificate, for which no fault can be attributed to the auction purchaser.”
4. Larger Bench Referral
The Court found merit in reconsidering the precedent set in Pattam Khader Khan and referred the matter to a larger Bench:
“The decision in Pattam Khader Khan requires reconsideration by a larger Bench. The larger Bench will have to decide the starting point of limitation for making an application under Rule 95 of Order XXI.”
Final Verdict
The Supreme Court ruled:
- The case was referred to a larger Bench for authoritative determination.
- The Executing Court’s order was upheld until further ruling by the larger Bench.
- The issue of whether limitation starts from sale confirmation or sale certificate issuance remains unsettled.
Conclusion
This judgment is a pivotal moment in civil execution law, ensuring that procedural fairness prevails in auction possession disputes. The larger Bench’s decision will provide much-needed clarity on limitation periods in such cases.
Petitioner Name: Bhasker & Anr..Respondent Name: Ayodhya Jewellers.Judgment By: Justice Abhay S. Oka, Justice Rajesh Bindal.Place Of Incident: Kerala.Judgment Date: 10-05-2023.
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