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Mohamed Ali and anr. Vs. M.K. Abdul Salam Saheb and ors. - Court Judgment

LegalCrystal Citation
SubjectProperty
CourtChennai High Court
Decided On
Reported in(1982)1MLJ425
AppellantMohamed Ali and anr.
RespondentM.K. Abdul Salam Saheb and ors.
Cases ReferredN. Ramakrishna Mudali v. Official Assignee
Excerpt:
- - the trial court also found that the conditions for exercise of power under section 69 were present and satisfied, that the auction sale by the auctioneers was legal and valid, that the entire property, namely, door nos. the sale is perfectly valid and binding on the plaintiff. 390 (2), that- the doctrine embodied in section 52 of the transfer of property act, has no application whatever to a mortgagor who has been given under the mortgage an express power of sale and that he cannot, by starting a suit, perhaps a perfectly hopeless suit for redemption derogate from that which he has on express terms conferred upon the mortgagee by the instalment, namely, the power of sale......for a decree for specific performance of the agreement of sale, dated 2nd july, 1967, and for sale of door no. 19-a. when this suit was pending, since the mortgage money due under the mortgage, dated 13th february, 1960 in javour of the first defendant had become due and had not been paid, the mortgagee exercised his power of sale under section 69 of the transfer of property act, under the document and brought the property to sale through the 8th defendant-auctioneers'. the property was sold by auction on 13th february, 1969 and the 14th defendant purchased the same. thereafter this suit was filed on 17th march, 1969 praying for redemption of the mortgage, dated 14th february, 1960. pending the present suit the suit, o.s. no. 441 of 1967 for specific performance was also decreed and.....
Judgment:

V. Ramaswami, J.

1. The first respondent-plaintiff filed O.S. No. 1665 of 1969 on the file of the Third Assistant Judge, City Civil Court, Madras, for redemption of a mortgage, dated 13th February, 1960 executed in favour of the first defendant in respect of the property originally known as door No. 19, Mohammed Hussain Khan Lane, Royapettah, Madras. The mortgaged property originally belonged to defendants 4 to 7 in the suit and they had executed the mortgage, dated 13th February, 1960, for a sum of Rs. 4,000. There was a partition of door No. 19 in the family of the owners and the property was renumbered as door Nos. 19-A, 19-B and 19-C. Door Nos. 19-A and 19-B were allotted to defendants 4 to 6 and door No. 19-C to the seventh defendant, who died pending suit and whose legal representatives are defendants 9 to 13 in the suit. On 2nd July, 1967, defendants 4 to 6 agreed to sell to the plaintiff the equity of redemption in the property, door No. 19-A, measuring 800 sq. ft. for Rs, 9,000 and received an advance of Rs. 250. As per the recitals in this agreement of sale, a sum of Rs. 4,000 out of the sale consideration will have to be in discharge of the mortgage, dated 13th February, 1960. Subsequent to this agreement in favour of the plaintiff the plaintiff also got a mortgage over the same property, namely, door No. 19-A on 19th July, 1967. The amount is supposed to have been borrowed by defendants 4 to 7 under the mortgage for the purpose of discharging an earlier mortgage in favour of the third defendant. When defendants 4 to 6 refused to execute the sale deed in pursuance of the agreement of sale, dated 2nd July, 1967, the plaintiff herein filed O.S. No. 441 of 1967, on the file of the City Civil Court, Madras, praying for a decree for specific performance of the agreement of sale, dated 2nd July, 1967, and for sale of door No. 19-A. When this suit was pending, since the mortgage money due under the mortgage, dated 13th February, 1960 in javour of the first defendant had become due and had not been paid, the mortgagee exercised his power of sale under Section 69 of the Transfer of Property Act, under the document and brought the property to sale through the 8th defendant-auctioneers'. The property was sold by auction on 13th February, 1969 and the 14th defendant purchased the same. Thereafter this suit was filed on 17th March, 1969 praying for redemption of the mortgage, dated 14th February, 1960. Pending the present suit the suit, O.S. No. 441 of 1967 for specific performance was also decreed and on 4th December, 1970 the sale deed was executed in favour of (he plaintiff herein in respect of door No. 19-A. The plaintiff in the present suit had pleaded that the sale held on 13th March, 1969, was not valid and that the plaintiff is entitled to redeem the mortgage in favour of the first defendant. The plaintiff also contended that only a sum of Rs. 2,450 was due under the mortgage and that he is entitled to a decree for redemption on payment of that money. The second defendant had been impleaded in the suit, since he was the party who bid at Ihe auction on behalf of the 14th defendant purchaser. The 3rd defendant had been impleaded as a party on the ground that he is the second mortgagee in respect of the original door No. 19, which included the present door Nos. 19-A, 19-B and 19-C and he also happened to be the husband of the auction purchaser. As already stated, defendants 4 to 7 were the original owners of door No. 19 which was later sub-divided into door Nos. 19-A, 19-B and 19-C among themselves. Pending the suit, the 7th defendant died and his legal representatives are defendants 9 to 13. The 8th defendant is the auctioneering firm and the 14th defendant is the real auction-purchaser.

2. The first defendant contended that the suit for redemption was not maintainable, that he was entitled to bring the property to sale in exercise of his powers under Section 69 conferred under the document without recourse to a suit in a civil Court, that the sale held by the 8th defendant was valid and binding on the plaintiff and that the suit was liable to be dismissed. The first defendant also contended that the alleged payment of Rs. 2,000 bv the plaintiff to the first defendant towards the morteage was not true and that it was not correct to state that only Rs. 2.450 was due under the mortgage. The 14th defendant stressed that she was the bona Me purchaser for valua in the auction held by the auctioneers and the sale cannot be questioned on anv p-round. The defence of the other defendants wore almost the same.

3. The trial Court found that the entire amount of Rs. 4,000 was due towards principal under the mortgage, that interest as and from 1st September, 1967, amounting to Rs. 950 and additional interest of Rs. 90 together with charges payable to the auctioneers were due under the mortgage and that the plaintiff's contention that only a sum of Rs. 2,450 was due under the mortgage, is not correct. The trial Court also found that the conditions for exercise of power under Section 69 were present and satisfied, that the auction sale by the auctioneers was legal and valid, that the entire property, namely, door Nos. 19-A, 19-B and 19-C, which were, originally comprised in door No. 19 described in the mortgage was sold in the auction and purchased by the 14th defendant and that, since the sale was valid, the suit for redemption is not maintainable. On these findings, the suit was dismissed.

4. The plaintiff preferred an appeal before the First Additional Judge, City Civil Court, Madras. The lower appellate Court held, concurring with the trial Court, that the allegation of the plaintiff that he had paid Rs. 2,000 towards the mortgage to the first defendant was not true. The lower appellate Court further held that the auction sale was collusive ' and not valid and binding on the plaintiff. The lower appellate Court then proceeded to consider as to whether the plaintiff is entitled to redemption, but, held that he was entitled to redeem door No. 19-A alone and that too on payment of the two-third share of Rs. 4,000 with interest. The reasonings for these findings are as follows: The plaintiff had purchased door No. 19-A alone and he is also put in possession. By permitting the plaintiff to redeem his property alone, the defendants will not be in any way prejudiced. Since the property door No. 19-A was of an extent of 800 sq. ft., which is approximately two-third of the total extent the plaintiff should be permitted to redeem the mortgage over door No. 19-A on payment of the two-third of the mortgage money.

5. Curiously, though the suit was not for redemption of the second mortgage in favour of the 3rd defendant. and, though the parties did not go to suit in respect of any of the rights under the second mortgage, the lower appellate Court also held that the plaintiff is entitled to redeem the second mortgage in favour of the 3rd defendant also on payment of two-third of the mortgage money due under the mortgage in favour of the 3rd defendant. A decree for redemption was accordingly given in favour of the plaintiff enabling him to redeem door No. 19-A, Mohamed Hussain Khan Lane, Royapettah, Madras on payment of the two-third share of the mortgage in favour of the first defendant with interest from September, 1967, till payment and two-third share of Rs. 2,000 to the 3rd defendant.

6. The first defendant has preferred Section A. No. 1703 of 1977 questioning the decree for redemption of the mortgage in his favour and the finding of the lower appellate Court that the auction is not valid. The 14th defendant along with her nominee, who bid at the auction, namely, the 2nd defendant, has filed Section A. No. 1685 of 1977 questioning the finding of the lower appellate Court that the auction sale was collusive and not valid and they have contended that subsequent to the dismissal of the suit on 22nd July, 1975, the 14th defendant in fact had got the sale deed executed and registered in her favour on 11th August, 1975. They therefore, contended that the suit for redemption is not maintainable. The plaintiff has not filed any appeal questioning his right nor his liability to redeem the second mortgage in favour of the third defendant.

7. The appellants in S.A. No. 1685 of 1977 have produced the original sale deed executed in favour of the 14th defendant in pursuance of the auction held under Section 69, with a petition CM.P. No. 9877 of 1977, to receive the same as an additional document. Since, the document came into existence subsequent to the dismissal of the original suit, I have ordered that petition to receive the additional document and the same would now become part of the evidence.

8. These two second appeals filed by the first and 14th defendants, therefore, relate and could relate to the rights of the plaintiff to redeem door No. 19-A alone and the discussion hereafter only relates to that door number and the decree dismissing the suit for redemption so far as door Nos. 19-B and 19-C are concerned, has become final.

9. It will be useful now first to discuss as to whether the auction held by the auctioneers was collusive and not valid, There is no dispute that the conditions necessary for invoking the power under Section 69 were present and, therefore the sale itself cannot be questioned on the ground that it is violative of Section 69. The sale was held by the auctioneers after notice to the plaintiff and defendants 4 to 7. Wide publicity was given and the sale was also advertised in the Hindu. The plaintiff objected to the sale and he did not plead that he had no notice of it. In fact, there was no allegation of any procedural irregularity in the conduct of the sale. The sale has been held to be collusive and not valid and binding on the plaintiff on the ground that the plaintiff had objected to the auction:, that the auction-purchaser is the wife of the second mortgagee, that the sale was held 'after knowing that the plaintiff had taken sale of the properties of the defendants 4 to 6' and that out of the six persons who bid at the auction and who have attested the auction proceedings, none were examined to show that the second bidder in the auction was no other, than the plaintiff's wife. It may be mentioned that the defendants also contended that the plaintiff's wife also took part in the auction but was not a successful bidder. I am wholly at a loss to understand as to how on these grounds the learned appellate Judge could have come to the conclusion that the auction-sale was collusive and not valid. I may also point out that there was no allegation in the plaint that the auctioneers colluded with the mortgagee or anybody against the interest of the plaintiff or that any fraud was committed by the auctioneers. Since there was no allegation against the auctioneers of any fraud or malpractice or collusiveness the auctioneers had also not filed any written statement. There was also no issue relating to the fraud or collusiveness of the auctioneers. The lower appellate Court seems to have imagined such an allegation and posed the same as one of the points for determination in the appeal. Apart from these facts, I am unable to see as to how the fact that the wife of the second mortgagee is the auction-purchaser or the fact that the second bidder was the plaintiff's wife could in any wav establish that there was collusion between the auctioneers and the mortgagee-first defendant. Even the judgment does not state what was the collusion or fraud that was committed by the auctioneers in this regard, The statement that the sale was held 'after knowing that the plaintiff had taken sale of the properties of the defendants 4 to 7' was also factually incorrect. As already stated the suit for specific performance was filed on 7th August, 1968 and it was pending when the sale in exercise of the power under Section 69 was held on 13th March, 1969. It was only on 4th December, 1979, long subsequent to the auction-sale, that the sale deed in respect of door No. 19-A was executed in favour of the plaintiff. To say the least, the point posed and the reasonings are all imaginary and the finding is perverse. I accordingly set aside the finding that the auction sale held by the 8th defendant or the purchase by the 14th defendant is not valid. The sale is perfectly valid and binding on the plaintiff.

10. It was next contended by the learned Counsel for the plaintiff-respondent relying on a decision reported in Narandas v. Section Kamtam : [1977]2SCR341 , that the plaintiff is entitled to file a suit for redemption and that the suit could not be dismissed solely on the ground that, pending the suit, the property was sold under Section 69 of the Transfer of Property Act. In this case, the Supreme Court held:-

The right of redemption which is embodied in Section 60 of the Transfer of Property Act is available to the mortgagor unless it has been extinguished by the act of parties. The, combined effect of Section 54 of the Transfer of Property Act and Section 17 of the Indian Registration Act, is that a contract for sale in respect of immovable property of the value of more than one hundred rupees without registration cannot extinguish the equity of redemption. In India it is only on execution of the conveyance and registration of transfer of the mortgagor's interest by registered instrument that the mortgagor's right of redemption will be extinguished. The conferment of power to sell without intervention of Court in a mortgage deed by itself will not deprive the 1 mortgagor of his right to redemption. The extinction of the right of redemption has to be subsequent to the deed conferring such power. The right of redemption is not extinguished at the expiry of the period. The equity of redemption is not extinguished by mere contract for sale.

The mortgagor's right to redeem will survive until there has been completion of sale by the mortgagee by a registered deed. In England, a sale of property takes place by agreement but it is not so in our country. The power to sell shall not be exercised unless and until notice in writing requiring payment of the principal money has been served on the mortgagor. Further Section 69(3) of the Transfer of Property Act shows that when a sale has been made in professed exercise of such a power, the title of the purchaser shall not be impeachable on the ground that no case had arisen to authorise the sale. Therefore, until the sale is completed by registration the mortgagor does not lose his right of redemption.

It is erroneous to suggest that the mortgagee is acting as the agent of the mortgagor in selling the property. The mortgagor exercises his right under a different claim. The mortgagee's right is different from the mortgagor's. The mortgagee exercises his right under a totally superior claim which is not under the mortgagor, but against him. ' In other words, the sale is against the mortgagor's wishes. Rights and interests of the mortgagor and the mortgagee in regard to sale are conflicting.

In view of the fact that only on execution of conveyance, ownership passes from one party to another it cannot be held that the mortgagor lost the right of redemption just because the property was put to auction. The mortgagor has a right to redeem unless the sale of the property was complete by registration in accordance with the provisions of the Registration Act.

11. It may be seen from the facts in that case that the mortgagee brought the property to sale on 14th April, 1971 for, recovery of a sum of Rs. 1,22,888-22. The highest bid was for Rs. 1,31,001.25 per cent, of the sale consideration was paid on the date of auction and the remaining was paid to the attorneys of the mortgagee and the auction-purchaser took possession of the property on 17th April, 1971. But no sale deed as such had been executed. On 13th August, 1971, the mortgagor filed a suit on the file of the Officer on Special duty, under the Co-operative Societies Act, who is the competent authority, for redemption of the mortgage against the auction-purchaser and the mortgagee. The mortgagor obtained an ex parte injunction against the execution of the sale deed, which was later, of course, vacated but, in the meantime, the auction-purchaser filed a writ petition in the Bombay High Court under Article 226 of the Constitution and, by an order, dated 16th June, 1971, the Bombay High Court directed that the status quo should be continued and that the auction-purchaser shall not be dispossessed pending disposal of the redemption suit. The mortgagor society borrowed a sum of Rs. 1,31.000 and paid the sum to the mortgagee on 15th October, 1972, when the suit for redemption was pending with the officer on special duty. On 16th January, 1975, the Officer on special duty delivered the judgment holding that the dispute was maintainable under Section 91 of the Maharashtra Co-operative Societies Act, and that the mortgagor was not entitled to challenge the auction, sate held on 14th April, 1971. However, since the conveyance itself had not been executed and registered in pursuance of the auction sale, the mortp-aeor to sell the mortgaged property perty. Tt is in these circumstances, the question came up for consideration before the Supreme Court as to whether the mortgagor can exercise his right of redemption after the mortgagee, with power of sale gives notice to;the mortgagor to sell 'the mortgaged property by public auction and sells it by public auction. As may be seen from the facts stated above, the right of redemption could subsist only in a case where the conveyance was not completed by execution of the sale deed and registration of the same in pursuance of ihe anrfvin. The ratio of the Judgment in my opinion, is that only on such completion by execution and registration, the mortagee could be said to have been extinguished or discharped and. so Ion? as the mortgage is not extinguished, the right of redemption is always available to the mortgagor.

12. Subsequent to the dismissal of the suit for redemption, on 22nd July, 1975, the sale deed was in fact executed and registered on 11th August, 1975, in pursuance of the auction sale held on 13th March, 1969. Since, at the time when the appellate Court considered the question of the right of redemption of the plaintiff, the sale had been completed and the conveyance had been effected, the mortgage itself had become extinguished and there was nothing for the plaintiff to redeem. The decision of the Supreme Court referred to above, therefore, should not have been relied on by the plaintiff in support of his plea that he was entitled to redeem in spite of the auction sale.

13. The next question that calls for a decision is as to whether by reason of Section 52 of the Act, and the doctrine of lis pendens contained therein, the sale deed executed on 11th August, 1975, would be hit by lis pendens and therefore is not binding on the plaintiff. The suit shall be deemed to be pending, under the Explanation to Section 52, from the date of presentation of the plaint till the date of expiration of any period of limitation prescribed for execution of any decree in these proceedings. When the appeal is filed in time against the decree dismissing the suit, there is a continuation of the proceedings and, therefore, certainly, the sale deed executed on 11th August, 1975, shall be deemed to have been done when the suit for redemption was pending.

14. But, it has been held by a Division Bench of this Court in N. Ramakrishna Mudali v. Official Assignee, Madras 43 M.L.J. 566 : I.L.R. 45 Mad. 774 : 16 L.W. 133 : A.I.R. 1922 Mad. 390 (2), that-.the doctrine embodied in Section 52 of the Transfer of Property Act, has no application whatever to a mortgagor who has been given under the mortgage an express power of sale and that he cannot, by starting a suit, perhaps a perfectly hopeless suit for redemption derogate from that which he has on express terms conferred upon the mortgagee by the instalment, namely, the power of sale.

It appears to us that that is the only logical result that can be arrived at and we agree with the view of the Bombay High Court that to hold otherwise would simply be to tear up the instrument which contains the contract agreed upon between the parties.

Though the learned Judges have stated that this principle has been held in a series of cases of the Bombay High Court, reference to these judgments has not been given. The ratio of this judgment is clear and it is this. The doctrine of lis pendens cannot be applied in a case where the assertions of the right during the pendency of the proceedings is with reference to the right that existed prior to the institution of the suit. In other words, the doctrine applied to proceedings or creation of rights pending the suit and it will not affect a right existing before the suit. In this particular case, the sale was held on 13th March, 1969. It might be argued that the right dates back to 13th March, 1969, prior to the suit but it is not necessary for me to decide it for the purpose of this case, since the right to bring the property by private sale is contained in the document and the right was not created during the pendency of the suit itself. In these circumstances, the doctrine of lis pendens could not be applied to the case of a mortgage executed prior to the suit wherein the right of private sale was conferred on the mortgagee. The result, therefore, is that, though the suit for redemption was maintainable in spite of the right conferred on the mortgagee to bring the property to sale under Section 69 of the Act, the suit itself cannot be decreed as the property had subsequently been sold and the sale deed had been executed and registered pending disposal of the suit, extinguishing the mortgage itself. Accordingly, the suit for redemption is liable to be dismissed. The second appeals are allowed, the judgment and decree of the lower appellate Court are set aside, in so far as it related to door No. 19-A, Mohammed Hussain Khan lane, Royapettah, Madras and (hose of the trial Court are restored. There will be no order as to costs.


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