The Hon'ble Supreme Court of India, in Sheela Gehlot v. Mohini Hardayal Singh & Ors.¹, has held that once execution proceedings stand transferred to a Debts Recovery Tribunal (“DRT”) under Section 31 of the Recovery of Debts and Bankruptcy Act, 1993 (“the 1993 Act”), the procedure under the Code of Civil Procedure, 1908 (“CPC”) stands superseded by the Second Schedule to the Income-tax Act, 1961, and that the exemption available to a judgment-debtor's main residential house under Section 60(1)(ccc) of the CPC is a personal right that cannot be claimed by his legal representatives.

Brief Facts
The judgment-debtor and another director had furnished personal guarantees for credit facilities availed by M/s. Sterling Malt & Foods Pvt. Ltd. from Punjab & Sind Bank (“the Bank”), secured over the company's factory land, building, plant and machinery at Banmore, Madhya Pradesh. The judgment-debtor's residential house at Panchsheel Park, New Delhi (“the Delhi Property”), was furnished only as collateral and was never mortgaged for the loan. Upon the company's default, the Bank's recovery suit culminated in a compromise decree dated 15.10.1991 before the District Court, Morena, releasing the title deeds of the Delhi Property as collateral while preserving the judgment-debtor's personal liability for the decretal amount.

Following the judgment-debtor's death in 1994 and the subsequent default of the investors who had taken over the company, the Bank initiated execution proceedings against his widow (respondent no. 1) and children before the Morena court. These proceedings stood transferred to the DRT, Jabalpur upon its constitution in 1998. Notices issued between 1995 and 1997 could not be served on respondent no. 1 and her children despite repeated attempts. In 2004, the Recovery Officer, DRT ordered attachment and auction of the Delhi Property, which was eventually sold in 2006 to the Auction-Purchaser and a sale certificate issued. After protracted rounds of litigation before the DRT, the Debts Recovery Appellate Tribunal (“DRAT”) and the High Court, the DRT set aside the auction on the ground that no notice under Rule 2 of the Second Schedule to the Income-tax Act, 1961 had been served on respondent no. 1 a finding reversed by the DRAT. The High Court, in the impugned judgment, held that non-service of notice was not fatal to the execution but remitted the matter to the DRT for a fresh inquiry into whether respondent no. 1 had suffered substantial prejudice on account of non-service, and whether the Delhi Property qualified for exemption under Section 60(1)(ccc) of the CPC as her main residential house. The Auction-Purchaser, the Bank, and the son of the judgment-debtor separately appealed to the Supreme Court against the remand.

Issue
Whether non-issuance of notice under Order XXI Rule 22 of the CPC affected the validity of the auction; whether the failure to serve notice under Rule 2 of the Second Schedule to the Income-tax Act, 1961 rendered the execution or sale void; and whether the Delhi Property was exempt from attachment under Rule 10 of the Second Schedule read with Section 60(1)(ccc) of the CPC.

Decision
On the first issue, the Court held that Order XXI Rule 22 of the CPC had no bearing on the sale, since the Delhi Property was never attached or sold in execution of the decree while the proceedings remained before the Morena court. The transfer of the execution to the DRT under Section 31 of the 1993 Act did not merely shift the forum it substituted the CPC procedure with that prescribed under Section 29 of the 1993 Act read with the Second Schedule to the Income-tax Act, 1961, which alone required notice under Rule 2 of that Schedule.

On the second issue, although notice under Rule 2 of the Second Schedule was admittedly not served, respondent no. 1 and her children were already parties to the execution and had actual knowledge of the proceedings respondent no. 1 had herself referred to the pending execution in an application filed before the DRT, Delhi in 2003, and had separately sought recall of the attachment order in 2004. Given this knowledge, and her failure to invoke the remedy available under Rule 61 of the Second Schedule, no substantial injury was shown, and the absence of notice did not render the execution or the sale void.

On the third issue, the Court held that Section 60(1)(ccc) of the CPC introduced for Delhi, Punjab and Haryana through the Punjab Relief of Indebtedness Act, 1934 exempts a judgment-debtor's residential house from attachment, but the protection is personal to the judgment-debtor and does not extend to his legal representatives, affirming the settled view of the Delhi High Court in Yogesh Sharma v. Devi Dayal² and of the Punjab & Haryana High Court³, which had held the field for nearly four decades. Independently, since respondent no. 1 never pleaded or led evidence of the exemption before the Recovery Officer or the DRT, and raised it only belatedly, the plea being a mixed question of law and fact could not be entertained for the first time in a writ petition, applying Greater Mohali Area Development Authority v. Manju Jain⁴. The High Court, therefore, erred in remitting the matter for a fresh inquiry. Accordingly, the Supreme Court quashed the High Court's judgment, allowed the appeals of the Auction-Purchaser and the Bank, and dismissed the appeal filed by the judgment-debtor's son.

Conclusion
The ruling clarifies that once execution proceedings validly stand transferred to a DRT under Section 31 of the 1993 Act, the procedure prescribed under the Second Schedule to the Income-tax Act, 1961 supersedes the CPC's notice requirements, and objections regarding non-service must be tested for substantial prejudice rather than treated as a jurisdictional defect. It further settles that the exemption for a judgment-debtor's main residential house under Section 60(1)(ccc) of the CPC is a personal protection that cannot be claimed by his legal heirs, and reinforces that mixed questions of law and fact such as a claim to statutory exemption cannot be raised for the first time in writ proceedings without a factual foundation first being laid before the executing authority.

By - Debayan Dutta and Yedik Purohit