Exemption from seizure – To benefit from Article 64(2) CPC, the subsequent purchaser must plead and prove that he is a bona fide purchaser: Supreme Court

The Supreme Court recently observed that in order to benefit from section 64(2) of the Code of Civil Procedure 1908, the opponent and/or the subsequent purchaser must plead and prove that he is the authentic the buyer, who concluded the transaction before the seizure order.

The observation was made by the bench of Judges MR Shah and BV Nagarathna while considering an SLP attacking the Andhra Pradesh High Court Order dated 4th January 2022 passed by the Bench of Justice R. Raghunandan Rao.

The Superior Court of Dokala Hari Babu V. Kotra Appa Rao & Anr. while confirming the view of the High Court noted that,

“We have reviewed Petitioner’s filing under Ordinance XXI, CPC Rule 58. Throughout the petition, there is no murmuring and/or assertion and/or pleading that Petitioner is the bona fide buyer and that there was a verbal agreement before the seizure order and that the partial sale consideration/sale consideration of Rs.4,00,000/- has been paid before the To benefit from paragraph (2) of article 64 of the CPC, the objector and/or the subsequent purchaser must plead and prove that he is the purchaser in good faith, who entered into the transaction before the seizure order. In the present case, the same thing is missing.”

In accordance with Article 64(1) CPC, the transfer of ownership after the completion of a seizure is void. However, Section 64(2) provides an exemption for transfer of title under an agreement registered prior to seizure.

Appearing for the petitioner, lawyer R Chandrachud, while referring to Article 64(2) of the CPC, argued that the petitioner was a authentic purchaser, who purchased the property in question before the seizure order. He also argued that the sale agreement was an oral agreement and based on this the petitioner purchased the property on 26.12.2014 and the deed of sale was registered on 06.01.2015. The lawyer, to further support his assertion that the petitioner is a bona fide buyer, relied on the books of accounts to show that the amount of Rs.4,00,000/- for the sale consideration was paid before the seizure order.

The bench, while rejecting the petition, said: In these circumstances, the Enforcement Court as well as the High Court cannot be said to have erred in dismissing the objection/obstruction brought by the petitioner under CCP Order XXI Rule 58. We fully agree with the High Court’s view. The request for special leave is rejected.”

Case Title: Dokala Hari Babu V. Kotra Appa Rao & Anr.| Special Authorization to Appeal (C) No(s). 4382/2022

Coram: Judges MR Shah and BV Nagarathna

Reference: 2022 LiveLaw (SC) 342

Click here to read/download the order