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Legal Rights of the Auction Purchaser under the Artha Rin Adalat Ain, 2003

An auction purchaser's rights grow in stages. Acceptance of the bid gives a valuable right that cannot be taken away without a hearing. Confirmation makes the sale absolute, and the property then vests from the date of sale (s.65 CPC). Full title passes only on a registered sale certificate, and possession follows through the court.

Once the sale is absolute, the purchaser is protected against the bank's late attempts to vest the property in itself, against a resale in another execution, and against summary stays. The purchaser is entitled to notice and a hearing in any challenge to the sale, whether by Order XXI rule 90 application, appeal or writ.

The main weakness is that good faith does not save a sale that is void or procured by fraud. Courts have set aside sales after payment, sale certificate and possession. What the purchaser then gets is money: return of the price with interest, solatium, or compensation (in one Appellate Division case, four times the bid).

This note is drawn from the sixteen Artha Rin judgments supplied earlier in this conversation. CPC rule numbers not discussed in those judgments are marked "to verify".

How the purchaser's rights build up

Each stage adds protection; the purchaser is safest only after the sale certificate is registered and possession delivered.

Until stage 4, the judgment-debtor and the bank can still settle under s.45 and end the execution, leaving the purchaser with a refund and solatium (Habibur Rahman Miah).

The purchaser's rights

1. Title and vesting

When the sale is confirmed and made absolute under O.XXI r.92, the property vests in the purchaser from the date of sale, not the date of confirmation (s.65 CPC, applied in ABBL v Artha Rin Adalat No. 3, 2007). Title is completed by the registered sale certificate, which works as the purchaser's deed (Habibur Rahman Miah, 2019). A purchaser at the bank's own pre-suit sale under s.12 gets legal title under s.12(8), and that sale cannot be challenged; the owner's remedy is damages against the bank (Banesa Bibi, 63 DLR (AD) 160).

2. Possession

The purchaser is entitled to delivery of possession through the executing court once the certificate issues. In Agrani Bank (2019) the boinama issued on 07.01.2014, the writ of possession on 12.01.2014 and possession was delivered the next day.

3. Protection against the decree-holder bank

A bank that did not object when the bid was accepted cannot, after the sale becomes absolute, apply under s.33(7) for a title certificate in its own favour; it has waived that right and must first have the sale set aside (ABBL, 2007). The bank's late application under s.33(2) and s.57, filed a month after acceptance, was "misconceived".

4. Protection against a second execution

Property already sold and vested in the purchaser cannot be put up for sale, or vested in the bank, in a later execution case, even on a decree by the same bank against the same debtors. In ABBL (2007) the purchasers' writ succeeded and the s.33(7) order in the second execution was declared without jurisdiction.

5. Right to notice and a hearing

Once the bid is accepted, the purchaser has acquired a valuable right and must be heard before the sale is stayed or disturbed. The High Court Division cannot stay the sale or let the debtor pay by instalments without issuing a Rule and hearing the purchaser (Fariduddin Mahmud, 2010). Courts in the cases supplied consistently joined the purchaser as respondent: in Sonali Bank v Asa Tex (2014) the highest bidder added himself to the bank's s.41 appeal.

6. Right to defend the sale

The purchaser can resist a challenge on the grounds that defeat most challenges:

the challenger skipped O.XXI r.90 and came straight to writ (Mohd. Junayed Quader, 2009, where the purchaser had paid 25% and the writ failed);

fraud and irregularity are questions of fact unsuited to writ (Antibiotic Stores, 55 DLR (AD) 13);

delay, waiver, serial petitions and unclean hands (Fariduddin Mahmud; Banesa Bibi);

a separate civil suit against the execution sale is barred by s.20 (Agrani Bank v Rina Humayun, 14 ADC 872);

holding more than two auctions is lawful (ABBL, 2007).

7. Right to challenge a refusal of the bid

A highest bidder whose bid is refused can challenge the refusal; in National Engineers v Jubak Housing (AD 2014) the bidder did so by writ. But the Adalat may refuse a bid it finds too low, and the writ bench must hear the judgment-debtors and review the Adalat's reasons; the bank's consent to the bid is not enough.

8. Right to apply where the debtor had no saleable interest

Under O.XXI r.91 CPC, applied to Artha Rin execution through s.26, the purchaser may apply to set aside the sale where the judgment-debtor had no saleable interest in the property (Fariduddin Mahmud confirms rules 89–91 apply). The consequential refund is under O.XXI r.93 (to verify).

When the sale is set aside: what the purchaser recovers

The purchaser always recovers the money paid, and courts usually add interest or solatium; where the purchaser's money was locked up for years, the award can far exceed the bid.

The principle comes from Abdul Jalil v BHBFC, 41 DLR (AD) 109, cited in Asadullah: an owner eager to keep the property by satisfying the decree may do so subject to solatium to the auction purchaser. In Jahangir Kabir Chowdhury the Appellate Division weighed the purchaser's loss from eleven years of blocked money and chose compensation over a bare refund. A purchaser defending a weak sale should therefore press for compensation, not just the return of the price.

Limits on the purchaser's rights

Good faith does not cure a void sale. The bona fide purchaser plea failed where execution was time-barred (Asadullah), against a dead debtor or without any O.XXI r.66 proclamation (Rina Humayun), or on a hartal day (Sardar Jan-A-Alam). In Sardar Jan-A-Alam the purchaser held sale certificates and possession, yet "all orders and actions" after the void sale were declared null.

Fraud reopens even a confirmed sale. Confirmation, a registered boinama and earlier judgments upholding the sale did not protect the purchaser in Jahangir Kabir Chowdhury; res judicata does not bar a fraud plea, and the Adalat may act under s.57 despite being functus officio.

Collusive bidding is held against the purchaser. Bids from relatives on serial pay orders (Agrani Bank, 2019), or token second and third bids beside the purchaser's own (Jahangir Kabir Chowdhury), lead the courts to infer that the purchaser set up the competition. A quick resale at a multiple of the bid is strong evidence of fraud (Rina Humayun: bought for Tk 1 crore, agreed to sell for Tk 5 crore days later).

No title before the registered certificate. Confirmation alone does not pass title, and the bank and debtor may settle under s.45 until the certificate is registered and possession delivered (Habibur Rahman Miah). The bank should notify the purchaser of such a settlement, but failure to do so does not invalidate it.

Delay costs the purchaser. In Habibur Rahman Miah the purchaser took no step for a sale certificate or possession for about 17 years, and lost the property.

The Adalat need not accept the highest bid. It may refuse a shockingly low bid under the proviso to s.33(2), and must consider a bank's objection under s.33(2ga) (Sonali Bank v Asa Tex; Agrani Bank, 2019; National Engineers). If the bank has applied for title under s.33(7), the Adalat cannot accept the bid at all (Jahangir Kabir Chowdhury).

A section 12 purchase is not fully secure. Despite s.12(8), a High Court Division bench set aside a s.12 sale for short notice in a title suit, ordering the owners to compensate the purchaser (Abul Khayer Mollah, 2016).

Protecting a purchase: checklist

☐ Before bidding, check the execution file: case filed within s.28, all judgment-debtors alive and served, proclamation under O.XXI r.66 with value stated, notice period counted in working days (s.48), newspaper and local publication.

☐ Check whether the bank has a s.33(7) application or s.33(2ga) objection pending; if so, the bid is at risk.

☐ Bid in your own name only; avoid related bidders or pay orders that link to other bids.

☐ Deposit the 25% and the balance strictly within the times fixed; keep challans.

☐ Press for confirmation under O.XXI r.92 once the objection period passes.

☐ Obtain the sale certificate promptly, pay poundage and tax, and follow the registration through the Sub-Registry.

☐ Apply for delivery of possession without delay, and mutate the property.

☐ Do not resell quickly at a large markup while any challenge is possible.

☐ In any r.90 case, appeal or writ, insist on being made a party and on a Rule being issued to you; oppose summary stays.

☐ If the sale is likely to fall, ask for refund with interest and compensation for the period the money was locked up.

Table of authorities

Newest first; all from the judgments supplied (Manupatra prints).

Also relied on: Abdul Jalil v BHBFC, 41 DLR (AD) 109 (solatium), and Antibiotic Stores, 55 DLR (AD) 13 (fraud is a question of fact), both as cited in the judgments above; read the reported text before relying on them.