The borrower paid first 25 installments out of 40 and thereafter failed to pay the remaining installments. The lender filed a petition under section 64(1-A) of the Chit Funds Act, 1982 and got an ex parte award directing the guarantor to pay. The guarantor claimed that he was unaware of the ex parte award. On receipt of notice of the execution proceedings, the guarantor started to repay the amount in installments. However, in the meantime the suit property was auctioned, in which appellant was the highest bidder. The guarantor preferred a revision under Order 21 Rule 89 and sec 151 for setting aside the auction of suit property. In the meantime the guarantor sold the suit property to third party The revision filed was dismissed after four years and sale certificate was issued in the name of auction purchaser.  When he made an attempt to take the possession of the property the third party filed a complaint against guarantor and his family and they were arrested. It was only after the guarantor was out on bail that he came to know that the revision petition was dismissed and he preferred civil revision petition before High Court.

The hon’ble high Court set aside the auction sale. Held that the present case was that of a real fraud committed by the borrower, and the guarantor had lost his property and was knocking doors of the High Court to save his righto hold the suit property. The High Court noticed that there would be substantial injury caused to guarantor, if his property was allowed to be taken away. The Supreme Court held that we are of the opinion that the view taken by the High Court is not such, which would call for interference under Article 136 of the Constitution of India, as in our view , substantial justice between the parties has already been done.

 

(2020) 5 SCC 138- Paul v. T. Mohan and Another

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