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Yuvarajan (Minor) and ors. Vs. the Mylapore Hindu Permanent Fund Ltd. Represented by Its Secretary and ors. - Court Judgment

LegalCrystal Citation
SubjectProperty
CourtChennai High Court
Decided On
Reported in(1975)2MLJ414
AppellantYuvarajan (Minor) and ors.
RespondentThe Mylapore Hindu Permanent Fund Ltd. Represented by Its Secretary and ors.
Cases ReferredIn K. Narayana Rao v. Meenakshi Velu and Ors.
Excerpt:
- .....1971, has held that section 69 of the transfer of property act is constitutional, that the power of sale conferred on the first defendant-mortgagee by the mortgage deeds was a valid power, that it has been validly exercised and that consequently the appellants are not entitled to the reliefs they have prayed for, with the result the suit instituted by the appellants was dismissed with costs. it is against this dismissal that the present appeal has been filed.3. mr. g. t. ramanujachari, learned counsel for the appellants, apart from the contention that section 69 of the transfer of property act is unconstitutional, put forward only one argument on merits in support of this appeal.4. as far as the constitutional validity of section 69 of the transfer of property act is concerned,.....
Judgment:

M.M. Ismail, J.

1. The plaintiffs in O.S. No. 1114 of 1967 on the file of the City Civil Court, Madras, are the appellants herein. The suit property is a house in Madras City and it admittedly belonged to defendants 11 and 12, two brothers, in moieties. Defendants 13 to 16 are the sons of the 11th defendant, while plaintiffs 1 to 3 are the sons of the 15th defendant. The fourth plaintiff is the son of the 14th defendant. The sons of the 13th defendant are also shown in the plaint genealogy. Defendants 11, 12, 13, 14 and 15 and the 13th defendant acting on behalf of three minor sons, who are no* impleaded as parties to the suit, created two mortgages over the suit property under Exhibits A-1 and A-2, both, dated 9th October, 1954, in favour of the first defendant. The mortgage deeds conferred a power of private sale on the first defendant. In exercise of that power the first defendant brought the property to sale and the second defendant was declared to be successful bidder for Rs. 36,350 and the sale was confirmed in his favour Defendants 3 to 10 are the legal representatives of the second defendant who died pending suit and of them the 9th defendant also died pending suit and the 3rd defendant died pending appeal. Respondents 15 to 18 have been brought on record as the legal representatives of the third defendant 2nd respondent in this appeal. Admittedly the plaintiffs were not born on the date of Exhibit A-1 and A-2, that is, 9th October, 1954 After the property was sold in favour of the second defendant and sale-deed had been taken in the name of his wife, the purchasers filed a suit, G.S. No. 238 of 1965 on the file of this Court for the purpose of obtaining possession of the property. Under these circumstances, the plaintiffs have filed the present suit praying for a permanent injunction restraining defendants 2 to 10 from executing the decree for possession obtained in G.S. No. 238 of 1965 on the file of this Court and for a declaration that the shares of the plaintiffs in the suit property were not affected by the said decree and also for a decree for redemption of both the mortgages. According to the appellant what was sold was only the interest of the mortgagors, namely, defendants 11 to 15 and the minor sons of the 13th defendant, that the interest of the plaintiffs had not been sold by the mortgagee and that therefore their right to redeem the property continued to remain in force, with the result they have got a right to redeem both the mortgages in question. The suit was resisted by defendants 3 to 10 and the contentions put forward by them are reflected in the following issues framed by the trial Court for trial:

(1) Whether the. plaintiffs are, entitled to any share in the suit property?

(2) Whether the plaintiffs are not affected by the sale in public auction by the 1st defendant ?

(3) Whether the plaintiffs are entitled to the injunction prayed for ?

(4) Whether the plaintiffs are entitled to redeem the mortgages in favour of the 1st defendant ?

(5) Whether the suit is not maintainable and whether the plaintiffs have any subsisting right in the suit property ?

(6) Whether the plaintiffs are entitled to challenge the power of private sale granted by their fathers to the 1st defendant under the mortgages ?

(7) Whether the plaintiffs are not bound by the sale by the 1st defendant under Section 69 of the Transfer of Property Act and the decree passed in C.S. No. 233 of 1965 on the file of the High Court, Madras ?

(8) Whether the property was sold for an under-value ?

(9) Whether Section 69 of the Transfer of Property Act is a clog on the equity of redemption and does it offend Articles 13 and 14 of the Constitution ?

(10) Whether the plaint claim is barred by res judicata by reason of the decision in O.S. No. 3471 of 1962 on the file of the City Civil Court, Madras?

(11) Whether the plaintiffs are entitled to claim any relief without setting aside the sale-deed held in public auction at the instance of the 1st defendant ?

(12) Whether the plaint has been properly valued and correct Court-fee been paid ?

(13) To what reliefs are the plaintiffs entitled ?

2. I have not set out the defence in detail and I do not propose to set out the findings on each one of the issues separately in view of the narrow scope within which the appeal was argued before me. All that is necessary to point out in this context is that the learned IIIrd Assistant Judge, City Civil Court, Madras, by his judgment and decree, dated 10th February, 1971, has held that Section 69 of the Transfer of Property Act is constitutional, that the power of sale conferred on the first defendant-mortgagee by the mortgage deeds was a valid power, that it has been validly exercised and that consequently the appellants are not entitled to the reliefs they have prayed for, with the result the suit instituted by the appellants was dismissed with costs. It is against this dismissal that the present appeal has been filed.

3. Mr. G. T. Ramanujachari, learned Counsel for the appellants, apart from the contention that Section 69 of the Transfer of Property Act is unconstitutional, put forward only one argument on merits in support of this appeal.

4. As far as the constitutional validity of Section 69 of the Transfer of Property Act is concerned, it is conceded that its validity has been upheld by a judgment of this Court in V. Narasimhachariar v. Egmore Benejit Society, 3rd Branch Ltd. : AIR1955Mad135 . This judgment is binding on me and in view of this, no further consideration is called for with regard to this question.

5. As far as the other question on merits is concerned admittedly the plaintiffs herein were not born on the date of Exhibits A-1 and A-2 mortgages and they were born only subsequent to the mortgages and before the actual sale of the mortgaged property by the first defendant. The mortgaged property was sought to be sold pursuant to a notice, a printed copy of which has been marked as Exhibit A-3. This notice contemplates an auction being held on nth November, 1962 at 4-00 p.m.

This notice states:

Under instructions from

The Mylapore Hindu Permanent Fund Limited.,

At the risk and responsibility of1. T. Sambanda Mudaliar2. T. Sundaravadivelu Mudaliar.3. T. S. Rajarathnam.4. S. Thangavelu.5. S. Subramaniam.6. Bhaskaran. | 6 to 8 are minors re-7. Jayavelu. | presented by their8. Duraikannu | father and natural| guardian T. S. Raja-| rathnam.

6. M/s. Galley & Co., Government Auctioneers, Madras-1 will sell by public auction at the premises on Sunday the nth November, 1962 at 4-00 P.M.

Schedule of the Property

House and Ground No. 133, Veeraraghava Mudaly Street, Triplicane, Madras, bearing O.S. No. 1313, R.S. No. 2737, C.C. No. 6508, Patta No. G.A. 724 of 1954 measuring about 2 grounds and 671 sq. ft. bounded on the south by S. No. 2736, on the North by S. No. 2738 on the West by S. No. 2725/5 and 2725/7 on the East by S. No. 2714 situate in the Sub-Registration District of Triplicane and in the Registration District of Madras--Chingleput.

7. Mr. Ramanujachari, concedes that because the plaintiffs--appellants were, not born on the date of the mortgages Exhibits A-1 and A-2, they cannot challenge the validity of the mortgages and they are bound by the mortgages. But what he contends is that subsequent to the mortgages the plaintiffs were born as members of the joint family, that consequently they acquired an interest in the equity of redemption in the suit property, and that the said equity to redeem had not been sold pursuant to Exhibit A-3. This contention is sought to be rested oil the terms of Exhibit A-3 itself which I have already extracted in full, according to which the property was sold ' at the risk and responsibility of' the persons mentioned therein. It may be noticed that the persons mentioned therein are no other than the mortgagors themselves. Mr. Ramanujachari contends that the private sale pursuant to the power conferred on the mortgagee in terms of Section 69 of the Transfer of Property Act is a sale which is brought about by offer and acceptance between the mortgagee and the purchaser, that in this case the mortgagee offered to sell only the interest of the mortgagors and not the interest of the appellant who were in existence by that time and that therefore the second defendant did not acquire the interests of the appellants and that he acquired only the interest of the mortgagors. I am unable to accept this argument. In the first place, Section 69 of the Transfer of Property Act does ot contemplate any such distinction. All that Section 69(1) says is that a mortgagee or any person acting on his behalf, shall, subject to the provisions of this section, have power to sell or concur in selling the mortgaged property, or any part thereof, in default of the payment of the mortgage money, without the intervention of the Court and it specifies the cases where that power can be exercised. Sub-section (2) of Section 69 states that no such power shall be exercised unless and until, among others, notice in writing requiring payment of the principal money has been served on the mortgagor, or o one of several mortgagors, and default has been made in payment of the principal money or part thereof, for three months after such service. The significant thing to e noticed in this section is, what is authorised to be sold pursuant to this provision is the mortgaged property itself and not any smaller or lesser or limited interest carved out of the mortgaged property. Another significant thing to be noticed is that under Sub-section (2), notice must be given to the mortgagor or one of several mortgagors, if the mortgage has been created by more required that notice must be given to all the morgagors and it provides that it is enough if notice is given to one of the mortgagors, since that mortgagor will constitute an agent for the other mortgagors also, in absence of any fraud in that behalf. When the section itself contemplates giving of notice under Sub-section (2) thereof, to any one of the mortgagors, it is too much to contend that simply because pursuant to the sub-section notice is given only to one of the mortgagors, and a sale is held thereafter it is only that mortgagor's interest that is passed by the sale and not the interest of all the mortgagors in question. I have already referred to the terms of Section 69(1) of the Act which contemplates selling of the mortgaged property itself and not any particular interest in the property. Sub-section (4) of Section 69 contemplates that any surplus money after appropriation of the amount due to the mortgagee -will have to be paid over to the persons who are entitled to the mortgaged property. All these things taken together contemplate the power of sale of the mortgaged property as such or any part thereof and not sale of interest of any one of the mortgagors in the property in question. Therefore, the, legal position flowing from the language of Section 69 is that what is contemplated by that section is the sale of the mortgaged property itself and not the interest of any one particular mortgagor. The section itself does not contemplate any such thing and does not insist upon any notice mentioning that it is only the particular mortgagor's interest or even a particular person's interest that will be sold. On the other hand, the section contemplates the sale of the mortgaged property itself.

9. Secondly, as far as the present case is concerned, I have extracted the relevant portion of Exhibit A-3 in full. It does not state that it is only the interest of the mortgagors in the property whose names have been mentioned in the notice which is proposed to be sold. On the other hand the notice clearly says that the mortgaged property itself will be sold. Simply because the notice states that the property will be sold ' at the risk and responsibility of' the persons whose names are mentioned therein and who are really the mortgagors, it cannot be stated that the notice contemplated sale of interest of the specified individuals in the property and not the property as a whole. The stand for which Mr. Ramanujachari, is contending, namely, that what was sold pursuant to Exhibit A-3 was only the interest of the persons mentioned therein is not borne out by the language of Exhibit A-3 itself. Consequently, a combined reading of Section 69 of the Transfer of Property Act as well as the language of Exhibit A-3 will clearly show that what was sold was only the mortgaged property and not the interest of the individuals, whose names have been specified in Exhibit A-3.

9. As far as the legal position is concerned, it is settled. I have already referred to the concession of Mr. Ramanujachari, himself that the appellants were not born on the date of Exhibits A-1 and A-2 mortgages, that they are not questioning the mortgages and that is why they are seeking to redeem the mortgages. It is contended that since they came into existence in between the date of execution of the mortgages and the date of sale of the property, they acquired an interest in the equity of redemption and that the said interest did not pass under the sale to the second defendant pursuant to Exhibit A-3. In my opinion, once it is conceded that the appellants were not born on the date of the mortgages, Exhibits A-1 and A-2, and consequently the mortgages are binding on them, it will as a matter of corollary, follow that the conferment of the power on the mortgagee to sell the property is equally valid and binding on the appellants herein and the subsequent exercise of that power also is binding on the appellants herein. This conclusion flows from the general principles underlying the provisions contained in Section 69 of the Transfer of Property Act. That question came to be considered by a Bench of this Court in Paramanand Doss Chota Dass and Sons, A Firm of Merchants at Madras and Ors. v. Nanniilal Kanji and Ors. : AIR1942Mad232 . In that case, a learned Judge of this Court on the original side held that Section 69 of the Transfer of Property Act did not apply to a manager of a joint Hindu family. That conclusion of the learned Judge was reversed on appeal by a Bench of this Court in the judgment referred to above. The Bench pointed out that the power to authorise private sale of the property for realising the mortgage amount is a power incidential to the creation of the mortgage itself. The Bench quoted the observation of Romilly, M.R., in Russell v. Plaice (1854) 52 E.R. 9 where the learned Master of the Rolls had stated that the right to create a power to sell a property is incidental to the authority of the executor to mortgage the property itself. The same view was expressed by the same learned Master of the Rolls in another case Bridges v. Longmead (1857) 53 E.R. 267, wherein it is stated:

I think that no objection can be taken before me that the power of mortgaging was executed by means of a mortgage, which contained a power of sale, because I think that such a power is incident to the power to mortgage unless expressly excluded.

These views of the English Courts were approved and applied by the Privy Council in Niamal Rai v. Din Dayal . In Kanhayalal v. The National Bank of India Ltd. 45 M.L.J. 497 : 75 Ind.Cas. 7 : (1923) 50 I.A. 162 .A.I.R. 1923 P.C. 114 the Privy Council held that a power of sale embodied in a mortgage of property situate in a part of India where the Transfer of Property Act did not apply was a lawful provision and that this was on the basis that a power to authorise a mortgagee to sell the property privately for the purpose of realising the mortgage money was a power incidental to the creation of the mortgage itself. After referring to these judgments the Bench of this Court summarised the legal position in the following terms:

Therefore, we have these facts in favour of the contentions of the appellants . (1) Section 69 applies to Hindus and there is no indication in the Act that the Legislature intended to exclude a mortgage created by the managing member of an undivided Hindu family; (2) the power to mortgage in itself implies a power in the mortgagor to confer upon the mortgagee a right to sell the mortgaged property without the intervention of the Court; and (3) the manager of an undivided Hindu family has the power to sell as well as to mortgage.

Consequently, the inference to be drawn from the above discussion and the above observation is that the power to authorise a mortgagee to sell the property privately for realising the mortgage money being a power incidental to the creation of the mortgage and being implied in the power to create the mortgage itself, the appellants herein cannot question the power conferred on the first defendant mortgagee to sell the property privately any more than they can challenge the creation of the mortgage itself, since admittedly they were not in existence on the relevant date. If the conferment of the power on the mortgagee to sell the property is valid, and beyond challenge by the appellants, since they were not born at the time of the mortgages, it logically follows that the exercise of that power so long as that power has been properly exercised according to the procedure prescribed by law, cannot be called in question by the appellants.

10. There is another way of looking at the matter. The appellants have prayed for a decree for redeeming the mortgages. It is settled law that once the power of sale has been exercised and the sale has been concluded the mortgage has come to an end and the equity of redemption has been extinguished and there is nothing to be redeemed thereafter. That is the view taken by a Bench of this Court which went to the extent of stating that even if there is no regular deed of conveyance in respect of the mortgaged property in favour of the purchaser, once the purchaser has paid the money and the mortgagee has received the money due to him, the mortgage stands discharged and therefore is no mortgage to be redeemed thereafter. In K. Narayana Rao v. Meenakshi Velu and Ors. : AIR1974Mad158 , a Bench of this Court stated:

We are, however, unable to subscribe to the view that, only as and when the sale is completed by a registered instrument, extinguishment of the right to redemption is brought about. That certainly is one way by which the right to redemption may be extinguished. But there may be other acts of parties which, in the light of facts and circumstances, may well be held to have extinguished the right to redemption. The right to redemption is not always controlled by conveyance in accordance with law. Section 60 of the Transfer of Property Act defines the right of a mortgagor to redemption. But the proviso to this section suggests that the right conferred by the section may be extinguished by act of parties or by decree of Court....When the mortgagor gave the power of sale to the mortgagee under Section 69 of the Transfer of Property Act, the mortgagee exercised that power and, when the purchaser paid the money which, as we said, has been distributed, that would certainly have the effect of discharging the mortgage. The mortgagee having been paid the mortgage debt, the mortgage came to an end and with that, the mortgagor's right to redemption.

If by the sale of the property and the second defendant paying the amount and the first defendant receiving the money, the mortgage has been discharged, there is no question of redeeming such a discharged mortgage and therefore the appellants cannot claim a decree for redemption in the present suit.

11. There is one other circumstance which has to be noticed in this behalf. In the plaint, the appellants in this case prayed for the redemption of the entire mortgages, both under Exhibits A-1 and A-2. As I have pointed out already, the learned Counsel for the appellants conceded that the mortgages were binding on the appellants but he was questioning the sale and seeking to redeem the mortgages only on the ground that what was sold pursuant to the power exercised under Section 69 of the Transfer of Property Act was the interest of the mortgagors and not the interest of the appellants in the equity of redemption, since the appellants were born in between the creation of the mortgages and the sale of the property. Once it is conceded by the learned Counsel for the appellants that what was sold under the sale in exercise of the power under Section 69 was only the interest of the enumerated mortgagors and not the interest of the appellants, it will clearly follow that the appellants will not be entitled to claim to redeem the mortgages to the extent of the share of the said enumerated mortgagors in the equity of redemption. Mr. G. T. Ramanujachari, the learned Counsel for the appellants, submitted that since the appellants cannot claim to redeem the mortgages partially, they have prayed for redemption of the entire mortgages. I am of the opinion that this argument is against the appellants rather than in favour of them. Simply because the mortgages cannot be redeemed in part and have to be redeemed in whole, it does not follow that the appellants will have a right to ignore even the valid sale of the interest of those mortgagors in the mortgaged property and to purport to claim redemption of the entire mortgages. If the contention that the appellants cannot redeem the entire mortgages is sound, it will only follow that since a portion of the property had been validly sold, even on the assumption that their interests were not sold, the appellants cannot claim to redeem the mortgages at all and the only right of the appellants, if at all, would be to share the surplus or the sale proceeds, if any, as provided for in Sub-section (4) of Section 69 of the Transfer of Property Act.

12. Hence, looked at from any point of view, the appellants cannot succeed with regard to the relief of redemption of the mortgages which, they have prayed for.

13. No other point was urged before me.

14. Under these circumstances, the appeal fails and is dismissed with costs,, counsel's fee--separate sets.


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