What is the fate of property/ land sold by a judgment debtor prior to filling of execution? Whether the court can direct auction of such property?

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Shubham Budhiraja[1]

Mr. A filed a suit against Mr. B for specific performance of the contract. The trial court allowed the decree and directed Mr. B to perform its part otherwise return back the money. Because of Mr. A's apprehension to dispose of his properties, the court passed injunction against Mr. B to maintain the status quo.  Mr. B failed to pay the decree amount, and Mr. A field execution. In the meantime, Mr. B sold one of his property / lands to Mr. C. The executing court passes an order to auction the property and Mr. D turns out to be a successful purchaser. Mr. C filed an objection but the same were rejected. The appellate court allowed the objection. The High court in 2nd appeal refused the objection. The Hon'ble Supreme Court held that the objection was valid because: (a) suit was for specific performance of contract and not with respect of property, (b) Property was sold to Mr. C much prior to execution/ auction, (c) technically Mr. B was not the owner of property when execution was filed, (d) Mr. D has failed to deposit 75% money within the prescribed period of 15 days. Hence, objections were valid.[2]

 

 

[1] Advocate, Delhi High Court [LLB, ACS, BCOM(H)], Budhirajalawchambers@gmail.com

[2] Civil Appeal.619/2023, Gas Point Petroleum India Limited v. Rajendra, Supreme Court of India, Judgment dated 10/02/2023 

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