The Case
SHEELA GEHLOT VS MOHINI HARDAYAL SINGH .
Case No.: C.A. No.-000182-000182 – 2016
Decided on: 08/14/2026
Diary No.: 18149/2009 ·
Supreme Court of India
The Legal Issue Before the Supreme Court
The Court formulated three questions for determination: (i) whether the plea of non-compliance of Order XXI Rule 22 of the Code of Civil Procedure could be raised; (ii) whether absence of notice under Rule 2 of the Second Schedule to the Income-tax Act, 1961 read with Section 29 of the 1993 Act rendered the execution or sale void; and (iii) whether the legal representatives of the judgment-debtor could claim exemption under Section 60(1)(ccc) of the Code of Civil Procedure. The Court also examined whether the High Court erred in remitting the matter to the Debts Recovery Tribunal for a fresh inquiry into these aspects.
Facts of the Case
M/s. Sterling Malt & Foods Pvt. Ltd. availed credit facilities from Punjab & Sind Bank, creating a charge over its factory land, building, plant and machinery; the judgment-debtor and another director furnished personal guarantees. The Delhi property was not mortgaged for the loan. The malt manufacturing unit ceased to function in 1983, leading to loan repayment irregularities. The Bank filed a suit under Section 34 of the Code for enforcement of security, which was transferred to DRT, Delhi, and another suit for recovery before the District Court, Morena. After a compromise decree dated 15.10.1991, the Trust and its trustees were to pay Rs. 1.80 crores in instalments, but they defaulted. The judgment-debtor died on 17.11.1994. Execution proceedings were transferred to DRT under Section 31 of the 1993 Act. The Recovery Officer ordered auction of the Delhi property on 20.09.2004. Respondent no. 1 filed an application seeking recall, which was rejected on 10.10.2006, and the Delhi property was ordered to be auctioned. The auction was held on 27.11.2006, and the sale was confirmed in favour of the Auction Purchaser, with a sale certificate issued on 01.03.2007. Respondent no. 1 challenged these orders before the DRT, DRAT, and the High Court, which ultimately remitted the matter to the DRT for fresh inquiry.
Summary of the Decision
The Supreme Court held that the requirement of notice under Order XXI Rule 22 of the Code is mandatory, but its non-issuance, in the circumstances, would have been an irregularity and not a defect in jurisdiction, especially since the proviso applicable to Delhi allowed execution without notice if delay would defeat justice. The Court found that the execution proceedings were transferred to the DRT under Section 31 of the 1993 Act, and thereafter the procedure under Section 29 read with the Second Schedule to the 1961 Act governed, which required only notice under Rule 2 of the Second Schedule; thus Order XXI Rule 22 had no impact on the validity of the auction sale. The Court held that although no notice under Rule 2 of the Second Schedule was served, respondent no. 1 had knowledge of the execution proceedings and the auction, and no substantial injury was caused; moreover, she did not avail the remedy under Rule 61 of the Second Schedule, so the absence of notice did not render the execution or sale void. The Court further held that the exemption under Section 60(1)(ccc) of the Code is personal to the judgment-debtor and not available to legal representatives, and respondent no. 1 had not raised this plea at the appropriate stage nor led evidence, so the High Court erred in remitting the matter for a fresh inquiry. Consequently, the impugned judgment dated 15.05.2009 was quashed and set aside. C.A. No. 182 of 2016 and C.A. No. 190 of 2016 were allowed, while C.A. No. 191 of 2016 was dismissed. No order as to costs was made.
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