GEMINI FOUNDATION Vs. V B GIRI

JUDGEMENT

(1.) THE appellant herein has challenged the order dated 18. 2. 1998, passed on Application No. 321 of 1998 in C. S. No. 201 of 1981, by the learned single Judge on the Original Civil Jurisdiction of this Court, refusing permission to withdraw the amount deposited, as the highest bidder for the purchase of two of the suit properties, viz. (i) House Property bearing Door no. 1/110, III Block, Jaya Nagar, Bangalore-II, for Rs. 80 lakhs; and (ii) a landed property situated in Old mahabalipuram Road for Rs 1 lakh. THE Court accepted this offer for the above-mentioned properties and also laid down conditions to deposit 25% of the bid amount within four weeks from 30. 4. 1997 and to deposit the remaining amount within eight weeks thereafter and complete the sale.

(2.) THE appellant on 28. 5. 1997 deposited a sum of Rs. 20,00,000 being the 25% value for the Bangalore property and a sum of Rs. 1,00,000 being the 100% bid amount for the property situated at Old Mahabalipuram Road , he sought for further extension of time till 4. 9. 1997. Since he did not muster the required balance amount within the time granted, the learned Judge was pleased to cancel the sale order, by his order dated 9. 1. 1998.

(3.) IN order to appreciate the question, it is appropriate to set out Rule 86 of Order 21 CPC, which reads thus: "86. Procedure in default of payment:- IN default of payment within the period mentioned in the last preceding rule, the deposit may, if the Court thinks fit, after defraying the expenses of the sale, be forfeited to the Government, and the property shall be re-sold, and the defaulting purchaser shall forfeit all claim to the property or to any part of the sum for which it may subsequently be sold. " Where the auction-purchaser failed to deposit the full amount of purchase-money payable by him, then under Rule 86, the sale by which the auction-purchaser purchased the property is automatically cancelled and he can have no interest in the property which was the subject of the sale. Since the sale was nevertheless null and void, the Executing Court was allowed to set it aside and resell the property. The words employed in R. 86, "may, if the Court thinks fit," gives discretion to the Executing Court after taking the circumstances into consideration, to exercise the discretion judiciously in the matter of forfeiture. The words, "if the Court thinks fit" are inserted to remove the hardship caused in certain circumstances. This implies certain amount of discretion about the quantum of amount to be forfeited, commensurate with the loss or damage suffered or expenses incurred on account of the breach or default committed by the purchaser.