Civil Procedure Code / Execution of Decrees

Order XXI Rule 86 CPC - Procedure in Default of Payment

Order XXI Rule 86 of the Code of Civil Procedure, 1908 (CPC) governs the consequences when the successful purchaser at a court auction of immovable property fails to pay the balance purchase money within the period prescribed by Rule 85.

Key point: The property must be re-sold on default. Forfeiture of the purchaser's deposit, after deducting sale expenses, is discretionary and depends on the court's decision.

Text of Order XXI Rule 86 CPC

In default of payment within the period mentioned in the last preceding rule, the deposit may, if the Court thinks fit, after defraying the expenses of the sale, be forfeited to the Government, and the property shall be re-sold, and the defaulting purchaser shall forfeit all claim to the property or to any part of the sum for which it may subsequently be sold.

Meaning and scope of Rule 86

The provision applies to execution sales of immovable property conducted under Order XXI of the CPC. It follows Rule 85, which requires the purchaser to pay the full purchase money into court before the court closes on the fifteenth day from the sale, subject to any permissible set-off under Rule 72.

1. Default in payment

A purchaser who fails to deposit the required balance within the Rule 85 period is in default. The 25 percent initial deposit under Rule 84 does not replace the obligation to complete payment under Rule 85.

2. Re-sale of the property

Rule 86 directs that the property shall be re-sold. Rule 87 addresses the fresh proclamation and related requirements for a re-sale.

3. Forfeiture of deposit

The court may, if it thinks fit, forfeit the deposit to the Government after defraying the expenses of sale. The wording makes forfeiture discretionary, unlike the direction to re-sell the property.

4. Loss of purchaser's claims

The defaulting purchaser forfeits any claim to the property and to any part of the amount realised on its subsequent sale. The purchaser cannot claim ownership merely because the highest bid was accepted.

  • Order XXI Rule 84: ordinarily requires the declared purchaser to deposit 25 percent of the purchase money immediately; the property is to be re-sold forthwith if this initial deposit is not made, subject to the rule's exception for qualifying decree-holders.
  • Order XXI Rule 85: fixes the deadline for full payment of the purchase money and recognises the Rule 72 set-off where available.
  • Order XXI Rule 86: sets out the consequences of non-payment within the Rule 85 period.
  • Order XXI Rule 87: deals with notification of a re-sale.
  • Order XXI Rule 72: governs bidding or purchasing by a decree-holder and set-off subject to the court's permission and statutory conditions.

Illustrative example

Suppose a bidder purchases immovable property at a court auction for Rs. 10,00,000 and immediately deposits Rs. 2,50,000 under Rule 84. If the bidder does not pay the remaining Rs. 7,50,000 within the time specified by Rule 85, Rule 86 requires re-sale of the property. The court may also order forfeiture of the initial deposit after meeting sale expenses.

Frequently asked questions

Is forfeiture of the deposit automatic under Rule 86?

No. The rule uses the words "may, if the Court thinks fit". The decision to forfeit the deposit is discretionary.

Is re-sale mandatory if the balance is not paid?

Rule 86 uses the words "shall be re-sold". Its operation must be considered with the applicable statutory provisions, procedural rules and binding judicial decisions.

Can the purchaser claim the property after default?

Rule 86 expressly states that the defaulting purchaser forfeits all claim to the property and to any part of the sum for which it is subsequently sold.

Official legal source

Consult the Code of Civil Procedure, 1908 on India Code and the applicable High Court amendments or court rules for the governing text in a particular jurisdiction. This article provides general legal information, not advice on a specific execution proceeding.