K.L. Elumalai and others vs P. Natarajan and another

Thanikkachalam, J.—This revision is directed against the order passed in I.A. No. 188 of 1994 filed in O.S No. 47 of 1991 on the file of

the Subordinate Judge, Kanipet, North Arcot District. The 1st respondent is the third party auction purchaser. The 2nd respondent is the plaintiff in

the unit. The auction purchaser filed E.A. No. 73 of 1994 in LA. No. 188 of 1994 in O.S. No. 47 of 1991, for a direction to the Indian Bank,

SIPCOT branch to pay him the interest accrued for 97 days on the deposit amount, which he is entitled to. In the affidavit filed in support of the

petition E.A. No. 73 of 1994, the auction-purchaser submitted that he participated in the auction proceedings conducted by the Advocate-

Commissioner appointed by the Court in O.S. No. 47 of 1991. The auction was held on 23-3-1994. The auction purchaser was the successful

bidder to purchase the suit property for sum of Rs. 24,00,100/-. The sale was knocked down in his favour and he paid the entire amount of Rs.

24,00,100/- on 23-3-1994. It was deposited by the Advocate-Commissioner in the SIPCOT branch of Indian Bank on the same day. The sale

was confirmed after 60 days i.e. on 23-5-1994 which fell during the summer vacation of the court. Therefore, the sale certificate was issued after

the re-opening of the Court. After the sale registration proceedings, the court issued auction sale warrant on 30-6-1994 which was served on

petitioner on 1-7-1994. The sale amount of Rs. 24,00,100/- which was deposited in the bank, earned interest at the rate of Rs. 645/- per day

from 23-3-1993 to 30-6-1994. i.e from the date of deposit of sale consideration till the date of taking over possession of the property by the

auction purchaser. Thus the interest accrued comes to Rs. 62,565/-. The amount was in court deposit till the confirmation of sate and transfer of

possession in favour of the auction purchaser. Therefore according to the auction purchaser he is entitled to the interest amount accrued on the

amount which was deposited in the bank. Therefore, the auction purchaser requested the court to direct the bank to pay the accrued interest for

the said period to him. The respondents filed their counter. According to them, the property in question was sold in the court auction by the

Advocate Commissioner on 23-3-1994 and the game was confirmed on 23-5-1994. Therefore, the auction purchaser on no account can claim

any interest accrued on the amount deposited by him. According to the respondents once the sale was knocked down in favour of the auction

purchaser, the auction-purchaser has got to deposit the sale amount and after confirmation of the sale the auction purchaser will become the owner

of the property from the date of sale itself and he has nothing to do with the sale price deposited from the date of sale and he also cannot claim any

interest accrued from the date of sale till the date of confirmation or till possession of the property is handed over to him. Under the law, the

owners of the property, viz. the judgment debtors deprived of their right over the property on the date of sale itself. Under Order 21, Rule 93,

C.P.C, when the sale is set aside under Order 21, Rule 92, then only the auction-purchaser can get the refund of the sale price with or without

interest as the court may direct. Hence, the auction purchaser is not entitled to the interest accrued on the deposit amount, from the date of sale till

the date of confirmation or delivery of possession.

I have heard the rival submissions.

The fact remains that in O.S. No. 47 of 1991, the property belonging to the defendants was brought to court-auction sale by the Commissioner

appointed by the court on 23-3-1994 and the sale was confirmed on 23.5.94. On 1-7-1994, delivery of the property was given to the auction-

purchaser. From the date of deposit till the date of handing over possession for a period of 97 days a sum of Rs. 24,00,000/- which was

deposited in bank by the Commissioner accrued interest at the rate of Rs. 645/- per day, amounting to Rs. 62,565/-. According to the auction

purchaser, he is entitled to the interest accrued for the period of 97 days since he will become the legal owner when the sale was confirmed, made

absolute and possessions was handed over to him. It was therefore submitted that from the date of sale till the date of confirmation of sale or till the

date of handing over of possession, the property sold was in the possession of the judgment-debtor and they were enjoying the income from the

property which is a theatre. Hence it was submitted by the auction-purchaser that he is entitled to the interest accrued for the above said period of

97 days.

The relevant provisions that are applicable in a matter like this contained in S. 65 of C.P.C, which reads as follows:-

Where an immovable property is sold in execution of a decree and such sale become absolute, the property shall be deemed to have vested in

the purchaser from the time when the properly is sold and not from the time when the sale becomes absolute.

Similar question came up for consideration before this Court in the case of S.T.M. Vyravan Chettiar Vs. R.M. Rayalu Ayyar Nagaswami Ayyar

and Co., , wherein while considering the provisions of Sec. 65 of C.P.C, a Division Bench of this Court held as under:-

As the purchaser becomes the owner of a property from the date of the sale itself it follows that the debt is ''pro tanto'' reduced from that date,

and the sale price should be credited towards the decree on the date of the sale itself and not on the date when the sale becomes absolute. The

fact that the purchaser did not take possession could nor confer on him higher right than that which follows from the provisions of S. 65. As he

became the owner of the properties on the date of the sale it may be open to him to take appropriate proceedings for the mesne profits from the

date of the sale itself.

So also, while considering the provisions of Sec. 65 of C.P.C, and Order 21, Rule 91 of C.P.C, a Full Bench of the Allahabad High Court in

Nidhpal v. Union of India (AIR 1966 All. 360) held as under:

On the sale becoming absolute, the Court grants a certificate specifying the property sold and the name of the person who at the time of sale is

declared to be the purchaser (Vide O. 21,R. 94 C.P.C.) and the certificate bears the date on which the sale become absolute. However, under S.

65, C.P.C, on the sale becoming absolute, the property shall be deemed to have been vested in the purchaser from the time when the property

was sold and not from the time when the sale become absolute. These provisions make it clear that the auction purchaser has no absolute right of

ownership or title to the immovable property sold till the confirmation of the sale and on confirmation, that is, the sale becoming absolute, the

auction purchaser requires an interest in the immovable property sold,

Similarly, in Chimanlal Narsibhai Vs. Amratlal Chhotalal Shah and Another, while considering the provisions of S. 65, O. 21, Rr.92, 94 and 95 of

C.P.C, the Gujarat High Court held as under:-

It is obvious from the provisions of S. 65 read with O.21, Rr.89 to 92 and 94 and 95, Civil P.C. and Art. 180 of the Limitation Act of 1908 that

the title as well as the possession as regards the property sold in execution of a decree is acquired by the auction purchaser only after the sale

becomes absolute as per the provisions of R. 92 of O.21 C.P.C. Till the sale become absolute, the judgment-debtor continued to be the landlord

and as such was entitled to collect rent from the defendants as his tenants. The payment of that the rent to the judgment-debtor by the defendants,

therefore, cannot be considered either wrongful or mala fide.

The Supreme Court in Jagdish Sugar Mills Ltd. Vs. Commissioner of Income Tax, Lucknow, held that."" therefore it is only after the sale is

confirmed and a certificate is granted that the property stands transferred and the purchaser becomes the owner of the property, since the

certificate operates as a transfer of the property."" In the said decision it was further held that, "" the procedure incorporated in U.P. Zamindari

Abolition and Land Requirements Act and the rules made- under it specifically exclude the operation of S. 65 of C.P.C. When the sale certificate

itself operates as effecting the transfer of the property, no question arises relating the transfer back to the date of auction in view of Sec. 65 of

C.P.C.11 Therefore on facts this decision will not be applicable to the facts of this case. In the decision reported in Varied Porinchukutty and

Another Vs. The State of Kerala and Others, while considering the provisions of Sec. 65 and O.21 R. 92, C.P.C, The Kerala High Court held

that,"" the principle of the above decisions also leads to the conclusion that court sale does not become absolute on the passing of a more order of

confirmation enjoined by the provisions of 0. 21 R. 92(1) of the C.P.C, but it acquires the attribute of finality or becomes absolute only on the

termination of the proceedings started to set aside the court sale or to set aside the order confirming the sate."" Attention of this Court was also

drawn to a decision of the Patna High Court in the decision reported in Bishun Prasad Vs. The Central Bank of India and Others, (wherein while

considering Art. 134 Limitation Act and 0. 21 Rr. 92 & 83 of the C.P.C, it was held that while determining. ""when the sale becomes absolute

within the meaning of Art.134 regard must be had not only to the provisions of O.21, R.92 of the Civil P.C. but also to the other material sections

and Orders of the Code. Thus where a suit under O. 21 R.63 C.P.C, is filed the sale within the meaning of Art. 134 of the Limitation Act becomes

absolute after the suit under O.21 R. 63 C.P.C, is finally disposed of. Where the application for delivery of possession is filed within one year from

the date of the disposal of the title suit under O.21 R. 63 the same is certainly within the period prescribed by Art. 134 of the limitation Act."" This

decision has no relevance to the facts arising in the present case.

A plain reading of Sec. 65 of Civil P.C. and a combined reading of the decisions cited supra, would go to show that the sale confirmed

subsequently would take effect from the date of auction. In the present case, the auction sale was held on 23.3.1994 and the sale price was also

paid by the auction purchaser on the same date, which was deposited by the Commissioner in the Indian Bank. The sale was confirmed on

23.5.1994. Possession was stated to be handed over on 1.7.1994. In between the date of sale and the date of possession for a period of 97 days

the interest accrued on the sale price deposited in the bank. Since the auction purchaser would become the legal owner of the property from the

date of sale. i.e. from 23.3.1994 and since the order of confirmation was passed on 23.5.1994 would relate back to the date of sale, the auction

purchaser is not entitled to the interest amount as prayed for. Therefore, the lower court was not correct in ordering payment of the interest

accrued amounting to Rs. 62,565/- in favour of the auction purchaser. Accordingly, the order passed by the lower court is set aside. In the result,

the revision is allowed with costs. In view of the disposal of the revision, the orders are necessary in the connected C.M.P. No. 18644 of 1994.

Accordingly,C.M.P. is rejected.