Supreme Court clarifies limitation in auction-sale objections—Order XXI Rule 90 applications under CPC must be filed within 60 days, delay not condonable
Case Name: Aarifaben Yunusbhai Patel & Ors. v. Mukul Thakorebhai Amin & Ors.
Citation: 2020 INSC 297
Date of Order: 17 March 2020
Bench: Justice L. Nageswara Rao and Justice Deepak Gupta
Held: The Supreme Court held that an application under Order XXI Rule 90 of the Code of Civil Procedure, 1908, seeking to set aside a court auction sale, must be filed within the limitation period of 60 days as prescribed under Article 127 of the Limitation Act, 1963. Section 5 of the Act, which permits condonation of delay, expressly excludes proceedings under Order XXI; hence, no delay can be condoned in such applications. Further, the Court held that the benefit of Section 14 of the Limitation Act allowing exclusion of time spent in bona fide proceedings before a wrong forum can only be invoked if such proceedings were prosecuted in good faith and with due diligence. Since the respondents’ application under Order XXI Rule 90 was filed beyond the prescribed period and without sufficient cause, it was barred by limitation.
Summary: The case arose out of execution proceedings initiated by Shree Mahalaxmi Mercantile Co-operative Bank Ltd. against a defaulting borrower, M/s Abhilasha Construction, and its partner, Mukul Thakorebhai Amin. Pursuant to a decree dated 14 September 2004, the executing court ordered auction of 12 flats and two penthouses. The appellants purchased the property in auction on 26 November 2007, and the sale certificate was issued on 29 February 2008. Instead of filing objections before the executing court, the judgment debtor approached the Gujarat High Court by filing a writ petition on 26 December 2007, which was later withdrawn on 21 April 2008. Subsequently, on 20 June 2008, the respondents filed objections under Order XXI Rule 90 of the CPC, challenging the auction sale as fraudulent and irregular.
The executing court dismissed the objections as time-barred, holding that the application exceeded the 60-day limitation prescribed under Article 127 of the Limitation Act. The High Court, however, set aside the sale on the ground of non-service of notice upon the judgment debtor, without deciding the issue of limitation despite a specific direction from the Supreme Court to do so. In appeal, the Supreme Court observed that the High Court had erred in ignoring the earlier order directing adjudication on limitation as well as merits.
The Court held that Section 5 of the Limitation Act is inapplicable to proceedings under Order XXI Rule 90, and hence, delay in filing such applications cannot be condoned. Considering the plea under Section 14, the Court found that the respondents were aware of the sale as early as 18 December 2007 and that continuation of proceedings before the High Court beyond 21 April 2008 could not be regarded as bona fide or diligent. Even if the period from 26 December 2007 to 21 April 2008 were excluded, the application remained delayed by at least six days and was therefore barred by limitation.
Decision: The Supreme Court allowed the appeals and restored the executing court’s order dated 23 February 2010, dismissing the objections as time-barred. It held that proceedings under Order XXI Rule 90 of the CPC are strictly governed by Article 127 of the Limitation Act, and delay therein cannot be condoned under Section 5. The Court reaffirmed that limitation provisions in execution proceedings must be applied with precision to ensure finality of judicial sales and prevent abuse of process.