Order 21 Rule 71 CPC - Defaulting Purchaser Answerable for Loss on Resale
Order XXI Rule 71 of the Code of Civil Procedure, 1908 (CPC) makes a defaulting purchaser at a court-ordered execution sale liable for a shortfall in the resale price caused by the default and the expenses of that resale.
Text of Order XXI Rule 71 CPC
71. Defaulting purchaser answerable for loss on re-sale.
Any deficiency of price which may happen on a re-sale by reason of the purchaser's default, and all expenses attending such re-sale, shall be certified to the Court by the officer or other person holding the sale, and shall, at the instance of either the decree-holder or the judgment-debtor, be recoverable from the defaulting purchaser under the provisions relating to the execution of a decree for the payment of money.
Official statutory reference: India Code - Code of Civil Procedure, 1908; official CPC text (PDF).
Meaning and scope of Rule 71
Defaulting purchaser means an auction purchaser who fails to meet an applicable obligation of the court sale, such as a required payment, leading to a resale. Deficiency of price is the shortfall between the price at the defaulted sale and the price obtained on resale, to the extent it arises because of that default. Expenses attending resale are the costs associated with conducting the resale.
The rule protects the interests of the decree-holder (the person entitled to enforce the decree) and the judgment-debtor (the person against whom the decree is being executed). Either may seek recovery from the defaulting purchaser. The loss and expenses must be certified to the executing court by the officer or person holding the sale.
When can the purchaser be held liable?
- A court sale purchaser defaults on an obligation applicable to the sale.
- The property is resold as a consequence of that default.
- A deficiency in the resale price or expenses attending resale result.
- The officer or other person holding the sale certifies the relevant amounts to the court.
- The decree-holder or judgment-debtor seeks recovery through execution procedures applicable to a money decree.
Illustration of resale loss
Suppose property is initially auctioned for Rs. 10,00,000. The purchaser defaults, and a subsequent sale yields Rs. 8,80,000, with Rs. 20,000 in resale expenses. The potential amount attributable to the default is Rs. 1,40,000 (Rs. 1,20,000 deficiency plus Rs. 20,000 expenses), subject to certification, proof of causation and the executing court's determination.
Related CPC provisions
Order XXI Rule 64 concerns sale of attached property; Rules 66 to 69 address sale proclamation, timing, adjournment and stoppage. For sales of immovable property, Rule 84 addresses the initial deposit and immediate resale on default, Rule 85 specifies the time for full payment, Rule 86 concerns consequences of non-payment, and Rule 87 requires a fresh proclamation on resale following default in payment.
Rule 71 concerns recovery of the deficiency and resale expenses; it should not be confused with Rule 86, which deals with forfeiture and resale following failure to pay the purchase money. Applicable High Court amendments and local procedural rules should also be checked in individual proceedings.
Frequently asked questions
Who can apply to recover the loss under Rule 71?
Either the decree-holder or the judgment-debtor may seek recovery from the defaulting purchaser.
Is every difference between two auction prices recoverable?
No. The deficiency must arise by reason of the purchaser's default. The relevant amount and resale expenses are certified to the court and dealt with under the applicable execution procedure.
Does Rule 71 require a separate civil suit?
The rule provides for recovery under the provisions relating to execution of a decree for payment of money, rather than prescribing a separate suit as the ordinary recovery mechanism.
This article explains the central CPC provision for general legal information. State amendments, High Court rules and case-specific court orders may affect its application.