A) ABSTRACT / HEADNOTE
This Supreme Court judgment in Jibon Krishna Mukherjee & Anr. v. New Bheerbhum Coal Co. Ltd. & Anr. (AIR 1960 SC 214) clarifies a pivotal legal issue concerning the applicability of Order 21 Rule 89 of the Code of Civil Procedure, 1908 to a sale conducted by a court-appointed receiver. The case arises from the execution of a consent decree where the judgment-debtor defaulted on instalment payments. Upon this default, the decree-holder moved for execution, and a receiver was appointed with authority to sell the judgment-debtor’s charged assets. The receiver executed a sale agreement with a third party. When the judgment-debtor sought to deposit the remaining decree amount belatedly and requested cancellation of the sale, both the Single Judge and the Division Bench of the Calcutta High Court denied relief. The Supreme Court upheld the High Court’s interpretation that Order 21 Rule 89, which allows for the setting aside of a court sale upon deposit of dues and compensation, does not apply to sales executed by a receiver. The Court further declined to exercise discretion under Section 151 CPC, emphasizing the debtor’s repeated defaults and the fairness of the receiver’s conduct. The ruling distinguishes the receiver’s sale from judicial sales under Rule 66 CPC, thereby excluding it from Rule 89’s ambit.

Keywords:
Receiver Sale, Order 21 Rule 89 CPC, Decree Execution, Court’s Inherent Powers, Receiver Appointment, Conditional Sale, Discretion under Section 151 CPC.

B) CASE DETAILS

i) Judgement Cause Title
Jibon Krishna Mukherjee & Another v. New Bheerbhum Coal Co. Ltd. & Another

ii) Case Number
Civil Appeal No. 342 of 1959

iii) Judgement Date
10 November 1959

iv) Court
Supreme Court of India

v) Quorum
Justice P. B. Gajendragadkar, Justice K. Subba Rao, and Justice J. C. Shah

vi) Author
Justice P. B. Gajendragadkar

vii) Citation
AIR 1960 SC 214; (1960) 2 SCR 198

viii) Legal Provisions Involved

• Order 21 Rule 89 of the Code of Civil Procedure, 1908

• Order 40 Rule 1(d) CPC

• Section 51 CPC

• Section 151 CPC

ix) Judgments Overruled by the Case
None explicitly overruled

x) Case is Related to which Law Subjects

• Civil Procedure Law

• Execution Proceedings

• Receivership and Judicial Sale

C) INTRODUCTION AND BACKGROUND OF JUDGEMENT

This case emerged from a decree passed on the Original Side of the Calcutta High Court in favour of New Bheerbhum Coal Co. Ltd. against Benares Ice Factory Ltd., for Rs. 18,497-15-0. The decree stipulated payment in six instalments and established a first charge on plant and machinery. Following a default on instalments, execution proceedings ensued. The decree-holder requested appointment of a receiver under Section 51 CPC with liberty to sell the charged properties. The receiver, empowered under Order 40 Rule 1(d) CPC, entered into a sale agreement with a third-party purchaser, Sukhlal Amarchand Vadnagra, for Rs. 30,000, exceeding the decretal dues. The sale was contingent upon confirmation by the High Court.

Despite several chances, the judgment-debtor failed to pay the entire decree amount. Seeking to invoke Order 21 Rule 89 CPC, the debtor attempted to deposit the outstanding dues late and set aside the sale. The High Court refused to entertain the plea, asserting the inapplicability of Rule 89 to a receiver’s sale. The Supreme Court granted special leave and addressed the central legal question: whether a court-appointed receiver’s sale falls under the purview of Order 21 Rule 89 CPC.

D) FACTS OF THE CASE

• The original suit resulted in a consent decree dated 5 December 1955 awarding Rs. 18,497-15-0 in favour of New Bheerbhum Coal Co. Ltd.

• Decree was to be satisfied in six instalments; default triggered immediate liability for the entire balance.

• The court appointed a receiver on 30 May 1956 under Section 51 CPC, authorized to sell the charged property.

• Receiver entered into a sale agreement on 10 March 1958 with Sukhlal Amarchand Vadnagra for Rs. 30,000, subject to High Court confirmation.

• High Court allowed confirmation conditionally on 9 May 1958, giving time to the judgment-debtor to pay the balance.

• The debtor paid Rs. 6,500 in total but failed to deposit the full amount within time.

• Application seeking cancellation of sale agreement was dismissed on 29 July 1958.

• The debtor then moved a fresh application under Order 21 Rule 89 and Section 151 CPC, offering to deposit the balance.

• Respondent 2, the purchaser, paid Rs. 30,000 in cash to the receiver on 1 September 1958.

• High Court confirmed the sale, and appeal to Supreme Court followed.

E) LEGAL ISSUES RAISED

i) Whether a sale by a receiver appointed in execution under Section 51 CPC can be set aside under Order 21 Rule 89 of the CPC?

ii) Whether inherent powers under Section 151 CPC could be invoked by the judgment-debtor to nullify such a sale despite repeated defaults?

F) PETITIONER/ APPELLANT’S ARGUMENTS

i) The counsels for Petitioner / Appellant submitted that
The sale by the receiver was akin to a court sale under execution and hence attracted Order 21 Rule 89 CPC. They contended that since the receiver acted under court directions and the sale required High Court confirmation, the judicial imprimatur rendered the transaction subject to the procedural safeguards under Rule 89, allowing the debtor to set aside the sale by making full payment along with compensation to the purchaser.

They relied on the equitable principle that a debtor who can now discharge the entire decree should not be deprived of his property for procedural delays. They argued that the court ought to exercise its inherent powers under Section 151 CPC to set aside the sale and prevent unjust enrichment of the purchaser.

G) RESPONDENT’S ARGUMENTS

i) The counsels for Respondent submitted that
The sale executed by a receiver under Order 40 Rule 1(d), though judicially sanctioned, is not equivalent to a sale in execution by the court under Order 21 Rule 66 CPC. Consequently, Rule 89, which presumes a formal sale proclamation under Rule 66 as a precondition, cannot apply. They emphasized that no sale proclamation had been issued, making the invocation of Rule 89 legally untenable.

The respondent also opposed the plea under Section 151 CPC, arguing that the judgment-debtor had defaulted multiple times and had received generous opportunities from the High Court. They contended that the receiver lawfully sold the property for an amount far exceeding the decree, and allowing the debtor to rescind the transaction at a belated stage would cause manifest injustice.

H) RELATED LEGAL PROVISIONS

i) Order 21 Rule 89 CPC
Permits setting aside of court sales upon deposit of full dues plus 5% of sale amount. Applicable only where sale proclamation under Rule 66 CPC exists.

ii) Order 40 Rule 1(d) CPC
Empowers receiver to manage, collect, and dispose of property under court direction.

iii) Section 51 CPC
Enables execution of decrees through various modes, including appointment of receiver.

iv) Section 151 CPC
Preserves court’s inherent powers to secure justice where procedural laws fall short.

I) JUDGEMENT

a. RATIO DECIDENDI
The Supreme Court held that Order 21 Rule 89 CPC does not apply to a receiver’s sale, as such a sale is conducted outside the mechanism of Rule 66 CPC, which mandates proclamation of sale. Since no such proclamation was made by the receiver, the conditions of Rule 89 could not be satisfied. The sale, being one conducted under Order 40 Rule 1(d) with High Court’s supervisory sanction, followed a different procedural path.

Additionally, the Court refused to exercise discretion under Section 151 CPC in favour of the judgment-debtor due to his repeated defaults and delays. The Court emphasized that judicial discretion under inherent powers cannot be extended where parties have violated express orders.

b. OBITER DICTA 
The Court observed the divergent views in Calcutta High Court jurisprudence regarding the nature of a receiver’s sale. It refrained from making a generalized ruling on whether such sales are equivalent to court sales, focusing instead solely on the inapplicability of Order 21 Rule 89.

c. GUIDELINES 

• Receiver’s sale, even when confirmed by the court, does not attract Order 21 Rule 89 CPC.

• Absence of proclamation of sale under Order 21 Rule 66 negates Rule 89’s invocation.

• Inherent powers under Section 151 CPC cannot override express procedural defaults.

• Court will not rescue a party who defaults repeatedly despite fair opportunities.

J) CONCLUSION & COMMENTS

This judgment draws a critical line between judicial sales and receiver-led sales. It preserves procedural sanctity by refusing to equate the two, thereby narrowing the scope of debtor protections under Rule 89 CPC. It also reinforces the limits of Section 151 CPC, cautioning against its misuse as a substitute for procedural compliance.

The judgment strengthens the authority of court-appointed receivers and shields bona fide purchasers from uncertainty caused by debtor delays. While it may appear harsh, the ruling serves to maintain discipline in execution proceedings and prevent abuse of court processes.

K) REFERENCES

a. Important Cases Referred

i. Minatoonnessa Bibee v. Khatoonnessa Bibi, (1898) ILR 21 Cal 479 [1]
ii. Golam Hossein Cassim Ariff v. Fatima Begam, (1910) 16 CWN 394 [2]
iii. Jogemaya Dasee v. Akhoy Coomar Das, (1912) ILR 40 Cal 140 [3]
iv. Basir Ali v. Hafiz Nazir Ali, (1916) ILR 43 Cal 124 [4]
v. Rani Bala Bose v. Hirendra Chandra Ghose, (1948) 52 CWN 739 [5]
vi. S. M. Sudevi Devi v. Sovaram Agarwallah, (1906) 10 CWN 306 [6]

b. Important Statutes Referred

i. Code of Civil Procedure, 1908

• Order 21 Rules 66 and 89

• Order 40 Rule 1(d)

• Section 51

• Section 151