The Supreme Court on Monday (December 15) held that once an auction sale has been confirmed and the aggrieved party has not taken steps to have it set aside, a separate civil suit challenging the order of confirmation is expressly barred under Order XXI Rule 92(3) of the Code of Civil Procedure (CPC). The Court clarified that in such circumstances, the only permissible remedy is to approach the executing court under Section 47 CPC, and that too on limited grounds such as lack of jurisdiction or the sale being a nullity.

The case was heard by a Bench comprising Justice J.B. Pardiwala and Justice R. Mahadevan and arose out of a mortgage created in 1970 by one Duli Chand in favour of New Bank of India (now Respondent No. 6) for securing a tractor loan. Upon default, the bank obtained an ex parte decree in 1984. During the pendency of the suit and even after the decree, two purchasers (Respondent Nos. 1 and 2) purchased portions of the mortgaged land from one of the judgment debtors in 1985.

In the execution proceedings, the entire mortgaged property was put to auction in 1988. The appellants, who were sons of one of the judgment debtors, emerged as the highest bidders for a sum of ₹35,000. The auction sale was confirmed in August 1988, and possession of the property was handed over to them in June 1989.

Thereafter, in July 1989, the respondents instituted a separate civil suit seeking a declaration that the auction sale, insofar as it related to the land purchased by them, was void. They alleged fraud and material irregularities in the conduct of the auction. The Trial Court, the First Appellate Court, and subsequently the Punjab and Haryana High Court ruled in favour of the respondents, declared them owners, and granted joint possession. Aggrieved by these concurrent findings, the appellants approached the Supreme Court.

Allowing the appeal and setting aside the judgments of the courts below, the Bench, in a judgment authored by Justice Pardiwala, held that since Respondent Nos. 1 and 2 claimed to be aggrieved by the auction sale of the mortgaged property, the separate suit filed by them was not maintainable in view of the express statutory bar under Order XXI Rule 92(3) CPC. This bar came into operation once the auction sale stood confirmed under Rule 92(1) and no application was filed to set aside the sale under Rules 89 or 90 of Order XXI.

The Court further held that the separate suit was also barred by Section 47 CPC, which mandates that all questions arising between the parties relating to execution, discharge or satisfaction of a decree must be determined by the executing court alone and not by a separate suit.

Accordingly, the Court held that instead of filing an independent civil suit, the respondents ought to have pursued their remedy by filing an application under Section 47 CPC before the executing court, if they wished to raise objections regarding the legality of the auction sale.

Explaining the interplay between Order XXI Rule 92(3) and Section 47 CPC, the Court observed that although a separate suit is barred once the sale is confirmed, there may still be limited situations where an application under Section 47 CPC is maintainable. Such an application can be entertained only where the challenge is that the entire execution sale was without jurisdiction or was a nullity in law.

The Court illustrated this distinction by observing that if a judgment debtor had already discharged the decretal amount but his property was nevertheless sold in execution and the sale was confirmed, he would be barred from filing a separate suit under Rule 92(3). However, he could still approach the executing court under Section 47 CPC on the ground that the sale itself was a nullity. In such cases, while both Rule 92(3) and Section 47 bar a separate suit, Section 47 preserves a limited remedy by way of an application before the executing court.

At the same time, the Court cautioned that Section 47 CPC cannot be invoked as a backdoor mechanism to circumvent the limitation prescribed for applications under Order XXI Rules 89, 90 or 91 CPC. If an application under Section 47 is, in substance, founded on grounds that properly fall within Rules 89, 90 or 91, the executing court is duty-bound to treat it as such, irrespective of its label. Once so treated, the application would fail if it is barred by limitation under Article 127 of the Limitation Act, 1963.

The Court emphasised that a party cannot revive a time-barred challenge to an execution sale by merely styling it as an application under Section 47 CPC. Only where the plea is that the entire execution sale was void ab initio, for want of jurisdiction, can a simpliciter application under Section 47 be entertained even after confirmation of sale.

Summarising the legal position, the Court held that although Order XXI Rule 92(3) imposes a clear bar on separate suits against confirmed auction sales, there exists a very narrow exception where a separate suit may still lie—namely, where the execution proceedings and the sale are alleged to be wholly without jurisdiction and therefore a nullity. Even in such cases, courts must be vigilant to ensure that the plaintiff was not a party to the original decree or a representative thereof. If the plaintiff falls within that category, Section 47 CPC would apply, and the bar against a separate suit would operate with full force.

Cause Title: Danesh Singh & Ors. v. Har Pyari (Dead) through LRs & Ors.