Sheela Gehlot v. Mohini Hardayal Singh & Ors., 2026

The appellants had initiated execution proceedings in a civil court against the respondents for recovery of amounts due under a decree.

During the course of the proceedings, the execution proceedings were transferred to the Debt Recovery Tribunal (DRT).

The transfer was effected under Section 31 of the Recovery of Debts and Bankruptcy Act, 1993.

After the transfer, the DRT proceeded to recover the outstanding debt.

The Recovery Officer exercised the statutory recovery powers available under the 1993 Act.

The DRT ultimately auctioned the subject property belonging to the respondents to realise the outstanding debt.

The respondents resisted the auction sale.

They contended that the auction was invalid because they had not been served with a notice under Order XXI Rule 22 CPC.

They argued that the legal representatives/judgment debtors were required to receive notice before the execution process could proceed against the property.

The appellants disputed the applicability of Order XXI Rule 22 CPC after the execution proceedings had been transferred to the DRT.

The matter eventually reached the Supreme Court.

The principal question before the Court was whether the procedural requirement under Order XXI Rule 22 CPC continued to govern the DRT's auction proceedings after transfer under the Recovery of Debts and Bankruptcy Act, 1993.

The Supreme Court allowed the appeal.

The Court upheld the auction sale conducted by the DRT.

The Court rejected the respondents' argument that failure to serve notice under Order XXI Rule 22 CPC invalidated the auction.

The Court held that once the execution proceedings were transferred to the DRT under Section 31 of the 1993 Act, the procedural regime governing the proceedings changed.

The transfer did not merely change the forum in which the proceedings were being conducted.

It also vested the Recovery Officer with statutory powers to recover the amount under the procedure prescribed by the 1993 Act.

The applicable procedure was under Section 29 of the 1993 Act read with the Second Schedule to the Income-tax Act, 1961.

This statutory recovery procedure operated in place of the ordinary execution procedure under the CPC.

Consequently, Order XXI Rule 22 CPC had no application to the DRT auction sale.

The absence of a notice under that provision therefore did not affect the validity of the auction.

The Court accordingly upheld the DRT's auction sale and allowed the appeal.

Special statutory procedure prevails: The judgment emphasises that once proceedings enter the statutory DRT recovery mechanism, the procedure specifically prescribed by the Recovery of Debts and Bankruptcy Act takes precedence over ordinary CPC execution procedure.

Transfer changes more than the forum: The Court clarified that transfer under Section 31 is not merely an administrative change of forum. It also changes the legal machinery through which recovery is carried out.

Order XXI Rule 22 CPC becomes inapplicable: The central consequence of the transfer is that the DRT is not required to follow every procedural requirement applicable to execution before a civil court.

Recovery Officer's statutory powers: The Recovery Officer operates under the recovery framework incorporated through Section 29 and the Second Schedule to the Income-tax Act. This provides the legal basis for measures such as recovery and auction.

Auction validity: The respondents could not invalidate the auction merely by pointing to non-compliance with a CPC provision that had ceased to govern the proceedings.

Purpose of the DRT framework: The decision reinforces the specialised recovery mechanism created for expeditious recovery of debts owed to financial institutions and other eligible creditors.

Procedural distinction: The judgment demonstrates the importance of identifying the source of jurisdiction and applicable procedural law before determining whether a particular CPC requirement applies.

CPC versus special legislation: Where a special statute provides a complete or overriding recovery mechanism, procedural provisions of the CPC cannot automatically be imported into those proceedings.

Broader significance: The ruling provides clarity concerning the validity of DRT auction sales following transfer of execution proceedings from civil courts, particularly where a judgment debtor challenges the sale on the basis of CPC execution requirements.