The Supreme Court has ruled that Order XXI Rule 22 of the Civil Procedure Code, 1908 (CPC) does not govern recovery proceedings before the Debt Recovery Tribunal (DRT) after execution proceedings have been transferred to it under the Recovery of Debts and Bankruptcy Act, 1993 (1993 Act). Consequently, non-service of notice under Order XXI Rule 22 CPC did not invalidate the auction sale conducted by the DRT's Recovery Officer in the present case.
In Sheela Gehlot v. Mohini Hardayal Singh & Ors., along with related appeals, the dispute arises over the recovery proceedings against M/s. Sterling Malt & Foods Pvt. Ltd. The company has taken a loan from Punjab & Sind Bank, and a compromise decree was issued by the Morena Court on 15th October 1991. The execution proceedings in default of payment began in 1995. After the establishment of the DRT, the execution proceedings were transferred to it under Section 31 of the 1993 Act.
The Recovery Officer thereupon ordered for auction of the property in Delhi. The auction was held on 27.11.2006 and the bid of Sheela Gehlot was accepted. The sale was confirmed and she was issued with the sale certificate. The judgment-debtor’s legal representatives challenged the proceedings, including on the ground that they had not been served notice under Order XXI Rule 22 CPC.
The Supreme Court held that Order XXI Rule 22 is mandatory in a case to which it applies but distinguished the proceedings before the Morena Court from the proceedings before the DRT. It held that the Delhi property was attached and sold by the Recovery Officer in exercise of his powers under the 1993 Act. It empowered the Recovery Officer to proceed under Section 29 of the 1993 Act read with the Second Schedule to the Income-tax Act, 1961, in place of the CPC procedure applicable before the Morena Court. Thus, while Order XXI Rule 22 CPC remained mandatory in proceedings to which it applied, it was not the applicable procedural provision governing the recovery proceedings conducted by the DRT after their transfer.
Furthermore, it was held by the Court that the proper procedure under Rule 2, Second Schedule, Income-tax Act, 1961, required giving notice under that rule; although no notice under Rule 2 had been served, the Court found that the respondents had actual knowledge of the execution proceedings and auction and had participated in the proceedings. On this basis, it was held that the execution and auction sale were not rendered void by the failure to give notice as required by Rule 2.
In addition, exemption of the main house enjoyed by the judgment-debtor under Section 60(1)(ccc) of CPC was held to be personal to him, and not available to his legal representatives. The Madhya Pradesh High Court’s judgment was accordingly set aside, and the appeals by both the auction-purchaser and the Bank were allowed; the appeal by the judgment-debtor’s son was dismissed.
Source:
Case: Sheela Gehlot v. Mohini Hardayal Singh & Ors.
Case Reference Number: 18149/2009
Civil Appeal No.: 182/2016
Case Citation: 2026 INSC 863
Bench: Justice Pamidighantam Sri Narasimha and Justice Alok Aradhe
Date of Judgement: 14 August 2026