Section 60(1)(ccc) Exemption Is Personal to Judgment-Debtor, Cannot Be Claimed by Legal Representatives, Supreme Court Holds
A Division Bench of the Supreme Court upheld the auction of a Delhi residential property, ruling that the exemption from attachment under Section 60(1)(ccc) of the Civil Procedure Code belongs exclusively to the judgment-debtor and does not extend to his heirs or legal representatives.
The Supreme Court on 14 August 2026 set aside a Madhya Pradesh High Court order that had remitted the matter of an auctioned Delhi property for fresh inquiry into whether the widow of a deceased judgment-debtor could claim the residential property exemption under Section 60(1)(ccc) of the Code of Civil Procedure, 1908. The Court, comprising Justice Pamidighantam Sri Narasimha and Justice Alok Aradhe, allowed the appeals filed by the auction-purchaser and Punjab & Sind Bank, and dismissed the appeal of the judgment-debtor's son. It held that the exemption is personal to the judgment-debtor, that the absence of notice under Rule 2 of the Second Schedule to the Income Tax Act, 1961 did not void the sale in the circumstances of this case, and that Order XXI Rule 22 of the Code had no bearing on proceedings conducted under the Recovery of Debts Due to Banks and Financial Institutions Act, 1993.
How the Dispute Reached the Supreme Court
M/s. Sterling Malt & Foods Pvt. Ltd. availed credit facilities from Punjab & Sind Bank in the 1980s, secured by a charge over its factory at Banmore, District Morena, Madhya Pradesh, and personal guarantees from its two Managing Directors, one of whom was the husband of respondent no. 1, Smt. Mohini Hardayal Singh. The house at S-246, Panchsheel Park, New Delhi — the Delhi property — was not mortgaged for the loan.
The manufacturing unit ceased operations in 1983. The Bank filed a suit under Section 34 of the Code before the High Court of Delhi in 1986, which was transferred to the Debts Recovery Tribunal, Delhi in 1996. A separate recovery suit was filed before the District Court, Morena in 1987 for Rs. 3,84,29,670 with interest. L.K. Trust and its trustees subsequently acquired the majority shareholding in the Company and a compromise decree was passed on 15 October 1991 by the Morena Court. The Trust was to pay Rs. 1.80 crores in half-yearly instalments over seven years from December 1991. The compromise also released the title deeds of the Delhi property furnished as collateral, but expressly preserved the judgment-debtor's personal liability.
The judgment-debtor died on 17 November 1994. The Trust paid approximately Rs. 82 lakhs between September 1992 and September 1998, then defaulted. The Bank filed an execution petition before the Morena Court in 1995, impleading respondent no. 1 and her children as judgment-debtors. From 1995 to 1997, notice could not be served on them despite repeated attempts on seven separate dates. The Debts Recovery Tribunal was established at Jabalpur on 7 April 1998 and the execution proceedings were transferred there under Section 31 of the 1993 Act.
The Recovery Officer, DRT ordered the auction of the Delhi property on 20 September 2004. Respondent no. 1 filed an application to recall that order, raising lack of notice and the Trust's default being attributable to the Bank. Before that application was decided, the factory premises at Banmore were auctioned on 13 July 2006 for Rs. 40,51,111. The Recovery Officer rejected respondent no. 1's recall application on 10 October 2006 and directed the Delhi property be put to auction with a reserve price of Rs. 928.85 lakhs. An auction was held on 27 November 2006 and the bid of the auction-purchaser, Ms. Sheela Gehlot, was accepted. A sale certificate was issued on 1 March 2007.
Respondent no. 1 pursued multiple rounds of litigation before the DRT, the DRAT, and the High Court. The DRT by order dated 29 May 2007 set aside the Recovery Officer's orders and directed a fresh inquiry. The DRAT reversed the DRT by order dated 1 February 2008. The High Court of Madhya Pradesh at Jabalpur, in Writ Petition No. 2199 of 2008, then set aside the DRAT's order by its judgment dated 15 May 2009 and remitted the matter to the DRT for a fresh inquiry, holding that non-issuance of notice under Order XXI Rule 22 of the Code went to the root of jurisdiction, and that respondent no. 1 was entitled to an opportunity to lead evidence on the Section 60(1)(ccc) exemption plea. Three appeals from that judgment reached the Supreme Court.
Three Questions Framed by the Court
The Court framed three questions: first, whether non-compliance with Order XXI Rule 22 of the Code affected the validity of the auction sale; second, whether failure to serve notice under Rule 2 of the Second Schedule to the 1961 Act rendered the execution or sale void; and third, whether the Delhi property was exempt from attachment under Rule 10 of the Second Schedule read with Section 60(1)(ccc) of the Code.
Order XXI Rule 22 Has No Impact Once Proceedings Transfer Under the 1993 Act
The Court accepted that the requirement in Order XXI Rule 22 is mandatory. The word “shall” in Order XXI Rule 22 admits of no ambiguity.” However, it found that the Delhi property was neither attached nor brought to sale before the Morena Court. It was attached and sold in exercise of powers under the 1993 Act, a special enactment for expeditious recovery of bank debts.
The Court held that the transfer of execution proceedings from the Morena Court to the DRT under Section 31 of the 1993 Act did not merely change the forum. It clothed the Recovery Officer with power to recover the amount under Section 29 of the 1993 Act read with the Second Schedule to the 1961 Act, in supersession of the procedure under the Code that had applied before the Morena Court. The procedure governing execution before the Recovery Officer required only the notice under Rule 2 of the Second Schedule to the 1961 Act. Therefore, Order XXI Rule 22 of the Code had no impact on the validity of the auction sale.
The Court also noted the additional dimension introduced by the Punjab-specific proviso to Order XXI Rule 22(2), applicable to Delhi, which provides that failure to record reasons for proceeding without notice “shall be considered an irregularity not amounting to a defect in jurisdiction.” The Morena Court had attempted service on respondent no. 1 and her children on seven dates over more than two years and would have been justified in proceeding without further notice.
Absence of Rule 2 Notice Did Not Void the Sale
The Court acknowledged that no notice under Rule 2 of the Second Schedule to the 1961 Act was served on respondent no. 1 or her children. Rule 2 incorporates principles of natural justice into the recovery procedure. However, the Court pointed to Rule 61 of the same Schedule, which provides the specific remedy: an application to set aside an immovable property sale on grounds of non-service or irregularity, to be made within 30 days of the sale, and which requires the applicant to show substantial injury.
On the facts, the Court found that respondent no. 1 had actual notice of the execution proceedings well before the auction. She had filed M.A. No. 65 of 2003 before the DRT, Delhi seeking release of the original title deeds of the Delhi property, and in that application she had herself mentioned the pendency of the execution proceedings. She had also filed an application seeking recall of the Recovery Officer's order dated 20 September 2004 directing the auction. No substantial injury from non-service of Rule 2 notice could, therefore, be made out. Further, even after the sale, respondent no. 1 and her children did not avail of the remedy under Rule 61. The second question was answered in the negative: absence of Rule 2 notice did not render the execution or sale void.
Section 60(1)(ccc) Exemption Is Personal to the Judgment-Debtor
The Court examined Section 60(1)(ccc) of the Code, inserted through Section 35 of the Punjab Relief of Indebtedness Act, 1934, as amended, and extended to Delhi by a notification dated 8 June 1956. The provision exempts “one main residential house and other buildings attached to it” belonging to a judgment-debtor other than an agriculturist and occupied by him from attachment and sale in execution. The proviso to the clause expressly excludes property specifically charged with the debt sought to be recovered.
The Court held that the protection, by its own text, is personal to the judgment-debtor: it is confined to a house belonging to and occupied by the judgment-debtor. It does not extend to legal representatives. The Delhi High Court had held to the same effect in Yogesh Sharma v. Devi Dayal & Ors. (AIR 1977 Delhi 270), reasoning that a legal representative is a distinct juridical concept from the judgment-debtor and that liability devolving on a legal representative is limited to the estate in his hands. He cannot claim personal exemption merely by virtue of residing in a house that belonged to the deceased judgment-debtor. The Punjab & Haryana High Court had taken the same view in two decisions. The Supreme Court found no reason to differ from a position that had held the field for thirty-seven years.
A separate and independent ground reinforced this conclusion. The Court reiterated the settled proposition that a mixed question of law and fact cannot be raised for the first time in a writ petition without any factual foundation having been laid at the appropriate stage. Respondent no. 1 had not raised the Section 60(1)(ccc) plea before the Recovery Officer in her application dated 24 October 2004, nor in M.A. No. 65 of 2003, nor in her appeal against the order dated 10 October 2006, nor in the writ petition against the DRT's order dated 13 November 2006. The plea surfaced for the first time in a writ petition challenging the rejection of her stay application, and even then was not pleaded or supported by any evidence before the DRT in the proceedings leading to the order of 29 May 2007. The High Court erred in entertaining it and in remitting the matter for evidence to be led on a question that had never been factually grounded.
Outcome
The Supreme Court quashed and set aside the judgment dated 15 May 2009 of the High Court of Madhya Pradesh at Jabalpur in Writ Petition No. 2199 of 2008. Civil Appeal No. 182 of 2016 filed by auction-purchaser Sheela Gehlot and Civil Appeal No. 190 of 2016 filed by Punjab & Sind Bank were allowed. Civil Appeal No. 191 of 2016 filed by Jagminder Singh, the son of the judgment-debtor, was dismissed. There was no order as to costs.