Madras High Court
B.Narasimah Sastry @ vs The Purasawalkam Permanent Fund ... on 5 January, 2018
Author: R.Subramanian
Bench: R.Subramanian
IN THE HIGH COURT OF JUDICATURE AT MADRAS
JUDGMENT RESERVED ON :19.12.2017
JUDGMENT PRONOUNCED ON : 05 .01.2018
CORAM
THE HONOURABLE MR.JUSTICE R.SUBRAMANIAN
C.S.No.160 of 2005
1.B.Narasimah Sastry @
B.Babu Narasimha Rao
2.B.Babu Kesava Rao
3.B.Babu Narayana Rao (deceased)
[1st plaintiff recorded as L.R of the deceased 3rd plaintiff as per order in Memo dated 15.03.2012.]
4.B.Vishnu Varadhan
5.B.Madhusudan
6.B.Rama Krishna Bai
[6th plaintiff impleaded as per order in OSA.No.27 of 2016 dated 21.03.2016]
... Plaintiffs
Vs.
1.The Purasawalkam Permanent Fund Limited,
Rep. by its Managing Director,
No.173, Vellala Street,
Purasawalkam, Chennai 600 084.
2.M/s.Balajee & Co.,
Auctioneers,
No.180, Thambu Chetty Street,
Chennai 600 001.
3.Pramila Jain
4.M/s.Prakash Gold Palace,
Rep. by its Proprietor,
Prakash Chand Jain
Old No.134, New No.210, N.S.C.Bose Road,
Ground Floor, Sowcarpet, Chennai 600 079.
5.M/s.Jothi Jewellers,
Rep. by its Proprietor,
Lalith Kumar
Old No.134, New No.210, N.S.C.Bose Road,
Ground Floor, Sowcarpet, Chennai 600 079.
6.M/s.Avanthika Jewellers
Rep. by its Proprietrix
Avanthika
Old No.134, New No.210, N.S.C.Bose Road,
Ground Floor, Sowcarpet, Chennai 600 079.
7.M/s.R.D.Agencies
Rep. by its Proprietor
B.Venkatarathinam
Old No.134, New No.210, N.S.C.Bose Road,
Ground Floor, Sowcarpet, Chennai 600 079.
8.M/s.S.S.Jewllery
Rep. by its Proprietor
Ugam Chand Jain
Old No.134, New No.210, N.S.C.Bose Road,
I Floor, Sowcarpet, Chennai 600 079.
9.M/s.S.R.Refinery
Rep. by its Proprietor
S.Ramesh Salunkha
Old No.134, New No.210, N.S.C.Bose Road,
I Floor, Sowcarpet, Chennai 600 079.
10.M/s.Kaizen Impex
Rep. by its Proprietor
M.A.Mubarak
Old No.134, New No.210, N.S.C.Bose Road,
I Floor, Sowcarpet, Chennai 600 079.
11.M/s.Anisha Overseas Services
Rep. by its Proprietor
I.A.Shaik Ismail Jelani
Old No.134, New No.210, N.S.C.Bose Road,
I Floor, Sowcarpet, Chennai 600 079.
12.M/s.Bansali & Co.,
Rep. by its Proprietor
Praveen Agra
Old No.134, New No.210, N.S.C.Bose Road,
I Floor, Sowcarpet, Chennai 600 079.
13.Mrs.Hilda, Correspondent,
Kinder Garden School,
Old No.134, New No.210, N.S.C.Bose Road,
II Floor, Sowcarpet, Chennai 600 079.
... Defendants
PRAYER : Plaint filed under Order XXXVII, Rule 1 of Original Side Rules, read with Order XXXIV, Rule 1 of Code of Civil Procedure, praying for the following judgment and decree:-
(a)For a direction that an account may be taken of the amounts due to the 1st defendant by the plaintiffs 2 to 5 herein towards the Principal and interest in respect of 2 loan accounts, viz. (i) Long Term Special Loan A/c.No.TSL 5281 dated 02.12.1996 for Rs.30,00,000/- and (ii) Long Term Special Loan A/c. No.TSL 5282 dated 07.04.1997 for Rs.10,00,000/- and on payment of the same by the plaintiffs 2 to 5 herein the defendant 1 to 3 herein may be directed to deliver to the plaintiffs the mortgage instruments, viz. The Mortgage deed dated 02.12.1996 and registered as document No.1185/96 in the Office of the Sub Registrar, Sowcarpet and the Mortgage Deed dated 07.04.1997 and registered as document No.426/97 in the office of the Sub Registrar, Sowcarpet and all the documents in their possession or power relating to the suit property situate at Old Door No.134, New Door No.210, N.S.C.Bose Road, Sowcarpet, Chennai 600 079, more fully described in the Schedule and also execute and register an acknowledgment in writing to the effect that the mortgages created by the plaintiffs 2 to 5 herein in favour of 1st defendant herein has been extinguished and also cancel the Deeds of Simple Mortgages dated 02.12.1996 and 07.04.1997 by clearing any encumbrance over the suit schedule mentioned property including the cancellation of sale deed dated 25.11.2002 executed by the 1st defendant in favour of 3rd defendant herein, in accordance with law;
(b)For a declaration that the alleged auction sale held in respect of the suit property on 11.03.2002 is illegal, invalid and void abi-nitio and declare the same as illegal invalid and non-est in the eyes of law and consequently, set aside the Sale Deed, dated 25.11.2002 and registered as document No.1177/02 in the Office of the Sub Registrar, Sowcarpet, Chennai purported to have been executed by the mortgagee Vendor, viz. The 1st defendant in favour of the 3rd defendant herein;
(c)For a permanent injunction restraining the defendants 1 to 4 herein their, men, agents, servants or any other person or persons claiming through them or authorized by them from interfering with the right and entitlement of the plaintiffs 2 to 5 herein to collect and enjoy the rental income derived from the suit property situate at Od Door No.134, New Door No.210, N.S.C.Bose Road, Sowcarpet, Chennai 600 079, more fully described in the Schedule and
(d)for costs of the suit.
For Plaintiffs : Mrs.Chitra Sampath,
Senior Counsel
for Mr.T.S.Baskaran
For Defendants : Mr.K.Sridhar for D1
Mr.B.S.Sundaramurthy for D2
Mr.ARL.Sundaresan,
Senior Counsel
for Mr.V.Ralph Manohar for D3 and D4
Mr.M.Balasubramanian for D5
M/s.Shah & Shah for D7, D8, D10 and D12
Mr.J.R.K.Bhavanantham for D11
J U D G M E N T
Suit for redemption, declaration that the auction held on 11.03.2002 is legally invalid and to set aside the sale deed dated 25.11.2002 executed by the 1st defendant in favour of the 3rd defendant and for permanent injunction restraining the defendants 1 to 4 from interfering with the right of the plaintiffs 2 to 5 to collect and enjoy the rental income derived from the suit property.
The summary of the plaint is as follows:-
2. The plaintiffs 2 to 5 are the absolute owners of the property situate at Old Door No.134, New Door No.210 N.S.C Bose Road, Sowcarpet, Chennai - 79. By virtue of a settlement deed dated 05.02.1961 executed by their grandfather B.Venkatarathinam, the 1st plaintiff claims that he is a trustee and was directed to hold the property as a trustee till such time the children born to him attain majority.
3. The plaintiffs 2 to 5 had borrowed monies from the 1st defendant, which is a Mutual Benefit Fund and had executed a deed of simple mortgage on 02.12.1996 registered as Doc.No.1185/1996 in the Office of the Sub-Registrar, Sowcarpet. The said mortgage was executed as security for repayment of a long term special loan of Rs.30,00,000/- together with interest at 21.6% pa. It was also agreed that the mortgage loan is to be repaid at equated monthly installments of Rs.66,000/- each over a period of 96 months.
4. It is also stated that the plaintiffs 2 to 5 had borrowed another sum of Rs.10,00,000/- from the 1st defendant herein and subjected the property to further mortgage by a deed of mortgage dated 07.04.1997 registered as Doc.No.426/1997. The interest rate for the said loan was also at Rs.21.6% p.a and the same was to be repaid at equated monthly installments at Rs.22,000/- over a period of 96 months.
5. Thus according to the plaintiffs 2 to 5, they had borrowed a sum of Rs.40,00,000/- from the 1st defendant and had executed the mortgage deeds stated above as security for repayment of the said sum of Rs.40,00,000/-. It is also claimed that the loan amount was utilized by the plaintiffs 2 to 5 for renovation of the building in the suit property, to enable them to let it out to the defendants 4 to 12. On behalf of the plaintiffs, the 1st plaintiff Mr.Babu Narasimha Rao had inducted tenants in respect of various portions and had received a sum of Rs.38,90,000/- as rental advance cum security deposit.
6. The plaintiffs would further submit that they had been repaying the loan from and out of the monthly rents as well as the security deposits. According to the plaintiffs, till May 2001 they had repaid a sum of around Rs.29,00,000/- as against the above two loans. It is the further claim of the plaintiffs that they had specifically instructed to the 1st defendant to appropriate the amounts paid by them towards the principal, so that the liability in respect of both the loan account could be brought down substantially. It is also claimed that the plaintiffs are unable to state the details of the exact amount paid by them, since the documents were lost by the 1st plaintiff when he travelled from Andhra Pradesh to Chennai by train. A complaint regarding loss of documents was also lodged by him to the Railway Police.
7. The plaintiffs would claim that they were carrying out Aqua Culture Business by setting up a Shrimp Processing Unit at Ongole in Andhra Pradesh in 1996. The said business ran into rough weather and this had resulted in heavy financial burden causing involuntary default in payment of dues to the 1st defendant. Even though the plaintiffs made all legitimate attempts to liquidate the entire liability in a phased manner they were unable to do so. The request made by the plaintiffs for rescheduling the repayment of loan amounts was not acceded to by the 1st defendant.
8. It is also claimed that the plaintiffs 2 to 5 had in February 2001 written to the 1st defendant requesting for waiver of the interest as well as the penal interest so as to enable them to arrive at an onetime settlement. The plaintiffs would further contend that the value of the property mortgaged would be worth about 2.5 to 3 crores when the loan was taken and as per the market value as on the date of the plaint, the property would be worth about 3 to 3.5 crores.
9. The plaintiffs would state that the mortgage deeds executed by them in favour of the 1st defendant had authorized the 1st defendant to sell the property in the event of default exercising power under Section 69 of the Transfer of Property Act. It is stated that in exercising of such power the 1st defendant made several attempts to sell property in public auction, but, the sale did not fructify and the 1st defendant had advertised for sale on 12.08.2001, fixing the auction on 20.08.2001. It is however stated that the auction did not take place for want of bidders on 20.08.2001.
10. According to the plaintiffs, subsequently without effecting wide publicity, the 1st defendant brought the mortgaged property for sale through the 2nd defendant auctioneer on 11.03.2002 at 11.00 am. It is claimed that the said auction was held without proper paper publication, advertisement or prior notice to the plaintiffs. It is also claimed that contrary to the general practice of conducting the auction in the front portion of the property in the ground floor, the alleged auction on 11.03.2002 is purported to have taken place at the balcony of the 1st floor which cannot even accommodate more than 10 to 15 people.
11. It is also claimed that the alleged auction on 11.03.2002 was not concluded in the presence of all the bidders who had participated in the auction. It is further claimed that the 2nd defendant at the instance of the 1st defendant and the 4th defendant had purported to have concluded the sale privately in favour of a person who has not even participated in the auction viz., 3rd defendant who is none other than the daughter-in-law of the 4th defendant. It is stated that the records of the 2nd defendant have been manipulated at a later date to show that the 3rd defendant had participated in the auction that held on 11.03.2002 and in that auction the property which is worth about 2.5 to 3 crores was sold for a paltry sum of Rs.50,00,000/- in favour of the 3rd defendant.
12. The plaintiffs would claim that the 4th defendant who had participated in the auction had scared away the general public by issuing hand bills to the effect that the plaintiffs 2 to 5 herein had collected huge amounts as advance/ security deposit from the tenants who are in occupation of the premises.
13. The plaintiffs would further contend that the 4th defendant in collusion with the defendants 1 and 2 had managed to get the name of the highest bidder changed as 3rd defendant herein. Therefore, according to the plaintiffs, the alleged auction sale said to have taken place on 11.03.2002 having not been conducted in a fair and transparent manner could only be construed as a private sale. It is also claimed that the plaintiffs have the necessary evidence to substantiate this claim. They would also point out that the 3rd defendant is none other than the daughter in law of the 4th defendant who is a tenant in a portion of the ground floor in the suit property itself.
14. The plaintiffs would further claim that the 3rd defendant had not paid the 25% of the bid amount on 11.03.2002 when the auction was conducted, but had chosen to issue a cheque on 11.03.2002. It is also the claim of the plaintiffs that the balance sale consideration viz., 75% of the bid amount was not paid within 15 days time stipulated under the conditions of auction. The plaintiffs would state that the sale was confirmed by a resolution of the 1st defendant dated 31.03.2002. Relying upon the conditions of auction, the plaintiffs would contend that the non-payment of balance purchased money within 15 days would render the auction invalid and the earnest money of 25% of the paid amount is liable to be forfeited.
15. It is also claimed that on the date of the auction the amount due to the 1st defendant was about Rs.69,00,000/-. Though the plaintiffs were willing to pay the sum of Rs.50,00,000/- in full quit of the claims of the 1st defendant during July 2001, the 1st defendant had adopted a very rigid attitude and refused to waive any interest. However, nearly after one year the 1st defendant in active collusion and connivance with the 2nd and the 4th defendants had sold the very same property of the plaintiffs for a meager sum of Rs.50,00,000/- to the 3rd defendant surreptitiously and fraudulently.
16. It is claimed that there was no wide publicity before effecting auction sale on 11.03.2002. The property is a building consisting of ground + three floors situate in the area of land measuring about 1470 sq.ft. It is also submitted that the entire area has been built up and the property being situate in a prime commercial area, the suit property would have definitely fetched more that Rs.2,00,00,000/- having regard to the market potential. Pointing out the fact that, the 3rd defendant after purchase of the property had launched proceedings for fixation of fair rent against various tenants, wherein, the value of the property shown to be about Rs.2,00,00,000/-. The plaintiffs would claim that the sale price viz., highest bid amount does not reflect the true and correct market value of the property.
17. The plaintiffs would contend that even the sale of portion of the property would have fetched the sum of Rs.69,00,000/- that the plaintiffs owe to the 1st defendant on the date of the auction. It is also claimed that the 4th defendant carried out a malicious propaganda against the plaintiffs stating that they have collected huge amount of rental advance as well as security deposits from the tenants and there was also other sundry creditors. Thus according to the plaintiffs, in view of the malicious propaganda, bonafide persons who wanted to bid at the auction were prevented from doing so. It is claimed that the 1st defendant had committed material irregularity in conduct of the auction sale and as such the entire auction process restored to by the instance of the 1st defendant is vitiated by fraud.
18. According to the plaintiffs, the auction which was to be held on 20.08.2001 did not materialize for want of the bidders and the maximum amount offered is only 43,25,000/- as against the demand of Rs.70,00,000/- made by the 1st defendant against the plaintiffs. However, without the knowledge of the plaintiffs, the 1st defendant brought about the so called auction on 11.03.2002. The plaintiffs would state that they were not aware of the auction held on 11.03.2002 and they came to know about it only when the tenants stopped payment of the rent.
19. It is also the further contention of the plaintiffs that the 3rd defendant is a Benami of the 4th defendant who is a tenant in respect of two shop portions in the ground floor of the building. Contending that the provisions of Section 69(2)(a) of the Transfer of Property Act have been violated and the entire sale is vitiated on the account of fraud perpetrated by the 1st and 2nd defendants in collusion and connivance with the 3rd and 4th defendants, the plaintiffs would claim that the auction sale is vitiated.
20. The delay in execution of the sale deed on 25.11.2002 for an auction which was concluded on 11.03.2002 is also projected as a ground by the plaintiffs to claim that all was not well with the auction dated 11.03.2002. On the above submissions the plaintiffs sought for the reliefs of redemption and declaration that the auction held on 11.03.2002 is illegal. Consequential relief of setting aside the sale deed dated 25.11.2002 was also prayed for.
The 1st defendant filed the written statement resisting the suit contending as follows:-
21. While the execution of the mortgage deed and the borrowing was admitted, the 1st defendant would submit that the plaintiffs were not regular in repayment of the loan. The property was originally brought for sale on 16.10.1998 itself and it was at the instance of the plaintiffs, the auction was stopped by the 1st defendant with a view to enable the plaintiffs to redeem the property. It is claimed by the 1st defendant that the property was again brought for auction on 16.05.2000, 23.05.2000 and 08.11.2000. It is also submitted that the 1st defendant had brought the mortgaged property to sale on 20.08.2001 at about 3.00 pm. The upset price was fixed at Rs.72,00,000/- and the highest bid was only Rs.43,25,000/-. Hence the 1st defendant rejected the said bid as it was insufficient to even discharge the mortgage loan.
22. Upon instruction of the 1st defendant, the 2nd defendant brought the property to sale on 11.03.2002, before fixing the date of auction, the 2nd defendant had sent notices to the plaintiffs and thereafter fixed the date of auction on 11.03.2002 at 11.00 am. Though the plaintiffs had received all the notices addressed to them at the suit property, the notice sent to them with reference to the auction dated 11.03.2002 were returned to the 2nd defendant with an endorsement left. The 1st defendant would claim that a notice of the auction was published in one issue of Dhina Thandhi on 05.03.2002 and hand bills were also distributed in the area. There was wide publicity for the auction and there were a number of bidders who took part in the auction.
23. The opening bid was announced at Rs.50,00,000/-, since there was no bidders, the opening bid was reduced to Rs.43,25,000/-. The proprietor of the 4th defendant Mr.Prakash Chand Jain was declared the successful bidder at a bid of Rs.50,00,000/-. The auction purchaser had paid a sum of Rs.5,000/- in cash before participating in the auction as per the conditions of auction and after the final bid was knocked down in his favour he paid a sum of Rs.12,45,000/- viz., 25% of the paid amount by way of cheque. The 1st defendant would deny the allegations that there was any collusion between the 1st defendant, 2nd defendant and the 4th defendant.
24. The claim of the plaintiffs that the auction was held in the balcony of the 1st floor was also denied. Equally the claim of the plaintiffs that the defendant 1, 2 and 4 colluded together and brought about the private sale of the property without conducting an auction was also denied. It was claimed by the 1st defendant that the 4th defendant had nominated the 3rd defendant, his daughter-in-law, as the purchaser and had requested the 1st defendant to execute the sale deed in her favour. Therefore, the 1st defendant had executed the sale deed in favour of the 3rd defendant as requested by the 4th defendant. It is also claimed by the 1st defendant that the auction was held in a proper manner and about 23 persons participated in the auction. According to the 1st defendant, even during the auction process the 4th defendant had made it clear that he should be allowed to nominate a person if he is successful in the bidding process.
25. The 1st defendant would further submit that the delay in execution of the sale deed occurred, because the 4th defendant wanted to clear the air regarding the title to the entire property. Inasmuch as the plaintiffs had sold the portion of the property to one Rajasekar on 29.11.2001. It is also claimed that in view of the requirement of clearance under Chapter 20 of the Income Tax Act, the execution of the sale deed was delayed. The 1st defendant would also rely upon the mortgagors estimated value of the property in the mortgage deed at Rs.61,50,000/- and claim that, in view of the fact that the plaintiffs had collected huge amounts, as admitted by them, as security deposit/ rental advance, the sale price of Rs.50,00,000/- is commensurate with the value of the suit property.
26. The 1st defendant would further contend that it was not necessary for the 1st defendant to take the consent of the plaintiffs inasmuch as the mortgage deed authorized the 1st defendant to sell the property by way of public auction. The claim of the plaintiffs that the property is worth more than Rs.3,00,00,000/- was also stoutly denied by the 1st defendant. On the above contentions the 1st defendant had sought for dismissal of the suit.
The 2nd defendant auctioneer would, in its written statement, contend as follows:-
27. The property was originally brought for auction on 10.10.1998 at 5.00 pm, though hand bills were issued with a view to publicize the sale, the 2nd defendant did not go ahead with the auction as per the instructions of the 1st defendant. Subsequently, the property was attempted to be sold on 16.05.2000, 23.08.2000 and 08.11.2000. Though, the auction was notified the same was deferred at the instance of the plaintiffs who had offered to pay the entire amount due under the mortgage and settle the dues to the 1st defendant. Upon instructions from the 1st defendant, the 2nd defendant had brought the property to sale by public auction on 21.08.2000 at 3.00 pm the upset price was fixed at Rs.72,00,000/-, since there was no bidders and the highest bid was only Rs.43,25,000/- made by one Jayanthilal, the 1st defendant did not agree to accept the said highest bid. Thereafter, upon instructions from the 1st defendant the 2nd defendant notified the auction on 11.03.2002. A public notice was issued in one issue of Dhina Thandhi and hand bills were also circulated in the locality. The auction was held in front of the premises after beat of tom tom. The opening bid was fixed at Rs.50,00,000/- and since there were no bidders, the same was reduced to Rs.43,25,000/- which was the highest bid in the auction that held on 21.08.2000.
28. It is also claimed that 23 persons participated in the auction by depositing a sum of Rs.5,000/- as cash deposit and the proprietor of the 4th defendant one Prakash Chand Jain was the highest bidder, whose bid was at Rs.50,00,000/-. The 1st defendant had accepted the said offer and upon such acceptance the 4th defendant had paid 1/4th of the bid amount viz., 12.5 lakhs by way of cheque on the same day. It is also claimed by the 2nd defendant that immediately after the auction the 2nd defendant had sent letters by registered post to the plaintiffs intimating them about the auction held on 11.03.2002 those notices dated 13.03.2002 were returned with an endorsement always not available intimation delivered.
29. Therefore, the auction sale was confirmed by the 1st defendant and the 4th defendant nominated the 3rd defendant to take the sale deed. The 2nd defendant would deny the claim of the plaintiffs that the auction was conducted without proper publicity and that the proprietor of the 4th defendant Mr.Prakash Chand Jain scared away bonafide bidders. The claim of the plaintiffs that there was fraud and collusion between the defendants 1, 2, 3 and 4 in bringing about the auction process was also denied by the 2nd defendant.
The 3rd and 4th defendants would in their written statement contend as follows:-
30. The 3rd and 4th defendants filed a common written statement. According to them, the auction was advertised for 11.03.2002 and the proprietor of the 4th defendant Prakash Chand Jain participated in the said auction. Even at the time of bidding, the proprietor of the 4th defendant Prakash Chand Jain had made it clear that he would be bidding for himself or for his nominee and the same was accepted. After declaring the highest bidder an endorsement was made in the auction proceedings itself as Prakash Chand Jain or nominee. It is also stated that Prakash Chand Jain has paid a sum of Rs.5,000/- in cash and the 25% of the bid amount viz., Rs.12,50,000/- [Rs.12,45,000/- by cheque dated 11.03.2002 + Rs.5,000/-in cash] on 11.03.2002 itself. Since it was found that the plaintiffs had sold away a portion of the property in favour of one Rajasekar during the year 2001, the proprietor of the 4th defendant viz., Prakash Chand Jain had sought for clarifications from the 1st defendant. The 1st defendant was also addressed regarding the need for obtaining permission from the appropriate Authority under Chapter XX of the Income Tax Act. The execution of the sale deed in favour of Mr.Rajasekar on 20.05.2001 by the plaintiffs with reference to a portion of the suit property and the requirement of clearance by the Income Tax Department delayed the execution of the sale deed and finally the 3rd defendant paid the balance amount of Rs.37,50,000/- and upon the request of the proprietor of the 4th defendant, a sale deed was executed by the 1st defendant in favour of the 3rd defendant .
31. It is also claimed by the defendants 3 and 4 that the plaintiffs had acknowledged the sale as well as title of the 3rd defendant and had required that they should be recognized as tenants of a portion of the ground floor occupied by M/s.Poojitha Telephone Services. It is also claimed that by a notice dated 09.03.2003 the 5th plaintiff had acknowledged the ownership of the 3rd defendant. While the plaintiffs 2 to 4 would claim that they also had an interest in the business called M/s.Poojitha Telephone Services run by the 5th plaintiff and one Saravanan, the 5th plaintiff would claim that he alone is a partner of the said business with the said Saravanan and the other plaintiffs have nothing to do with the said business.
32. The 3rd and 4th defendants would contend that the plaintiffs who were fighting among themselves with reference to the interest in the partnership business viz., M/s.Poojitha Telephone Services had joined hands to file the present suit to defeat the rights of defendants 3 and 4. The claims of the plaintiffs relating to the irregularities in conduct of the auction sale were also denied by the defendants 3 and 4. While dealing with the claim of the plaintiffs that the suit property had been sold for a meager sum of Rs.50,00,000/-, the 3rd and 4th defendants would contend that the plaintiffs had received huge amount of monies from various tenants who were in occupation of the suit property. Therefore, the said liability also should be taken into account in arriving at the value of the property.
33. It is also the contention of the defendants 3 and 4 that the property infested with tenants would fetch only a lower value in a public auction. The fact that the plaintiffs had also created a encumbrance over the property by executing the sale in favour of one Rajasekar during the year 2001, when the mortgage in favour of the 1st defendant was still in force is also be taken into consideration while dealing with the question of valuation of the property. On the above contentions the defendants 3 and 4 sought for dismissal of the suit.
34. The 5th defendant which is tenant filed a written statement but the 5th defendant did not participate during trial. The plaintiffs had filed a reply statement reiterating the contentions in the plaint.
35. On the above pleadings this court had framed the following issues for determination in the suit:
1. Whether the alleged auction sale held on 11.03.2002 is illegal, invalid and void abinito?
2. Whether the auction sale of the suit property had been effected for a grossly inadequate price?
3. Whether the 3rd defendant had participated in the alleged auction held on 11.03.2002?
4. Whether the 3rd defendant had made the payments to the 1st defendant as per the terms and conditions of auction?
5. Whether the 1st defendant had caused effective and wide publication for the auction held on 11.03.2002?
6. Whether the auction sale alleged to have been held on 11.03.2002 was in force?
7. Whether the alleged auction held on 11.03.2002 is vitiated for want of fixation of upset price, non disclosure of the liabilities on the property, the advances payable to the tenements, etc.?
8. Whether the plaintiffs had no notice of alleged auction held on 11.03.2002?
9. Whether the plaintiffs are entitled to set aside the sale deed dated 25.11.2002 executed by the 1st defendant in favour of 3rd defendant?
10. Whether the plaintiffs are entitled to accounts of the loan transactions with the 1st defendant?
11. Whether the plaintiffs are entitled to redeem the mortgages dated 02.12.1996 and 07.04.1997 over the suit property?
12. Whether the 4th defendant is the successful bidder in the auction hled on 11.03.2002?
13. Whether the successful bid of Rs.50,00,000/- of the 4th defendant was fair and reasonable in the cirucmstances of the case?
14. Were not the plaintiffs 1 to 6 defaulters in payment of the des under two loan accounts TSL A/c No.5281 and TSL A/c. No.5282 to the 1st defendant?
15. Is not the 1st defendant entitled to invoke their power under Section 69 of the Transfer of Property Act, 1882 to bring the suit property to public auction?
16. Whether the suit for redemption of mortgage, maintainable in law?
17. Is not the right to redemption extinguished in view of the confirmation of auction sale held on 11.03.2002 in favour of the 4th defendant and the consequential execution of sale deed document bearing No.177 of 2002 dated 25.11.2002 on the file of the Sub Registrar, Sowcarpet, Chennai in favour of the 3rd defendant?
18. Whether a suit for permanent injunction against the real owners maintainable in law?
36. Pending suit, the 3rd plaintiff died unmarried, the 6th plaintiff as mother was brought on record as legal representative. At trial, the 1st plaintiff was examined as PW1 and Exs.P1 to P32 were marked on the side of the plaintiffs. Exs.P30, P31 and P32 were marked during cross examination of DW3 by the plaintiffs. On the side of the defendants, the Manager of the 1st defendant one J.Mohan was examined as DW1 and Exs.D1 to D10 were marked through him. The partner of the 2nd defendant was examined as DW2 and Exs.D11 to D30 were marked through the said witness. Prakash Chand Jain the proprietor of the 4th defendant was examined as DW3 and Exs.D31 to D115 were marked through him.
37. Upon hearing the learned counsel for the parties the issues are recast as follows:
1. Whether there was a public auction on 11.03.2002?
2. Whether the said auction alleged to have been held on 11.03.2002 is vitiated by fraud and collusion on the part of the defendants 1, 2, 3 and 4?
3. Whether the property was sold for a grossly inadequate price?
4. Whether the 3rd defendant had made payments to the 1st defendant as per the terms and conditions of the auction?
5. Whether there was wide publicity for the auction?
6. Whether the irregularities in publishing and conducting the auction alleged by the plaintiffs would vitiate the same?
7. Whether the plaintiffs are entitled to reliefs of redemption, declaration and setting aside of the sale deed dated 25.11.2002?
8. Whether the plaintiffs would be entitled to seek redemption after the property having been sold in the auction which results in extinguishment of the right of redemption?
9. Whether the plaintiffs are entitled to decree for permanent injunction sought for?
10. To what reliefs are the parties entitled?
38. I have heard Mrs.Chitra Sampath, learned Senior Counsel appearing for the plaintiffs, Mr.K.Sridhar learned counsel appearing for the 1st defendant, Mr.B.S.Sundaramurthy, learned counsel appearing for the 2nd defendant and Mr.ARL.Sundaresan, learned Senior Counsel for the defendants 3 and 4.
Issue No.1:-
39. This issue relates to the factum of auction. The entire plaint averments would proceed basically on the footing that the auction that was held on 11.03.2002 was not conducted in a free and fair manner. Throughout the plaint the plaintiffs would allege various irregularities said to have taken place in publishing and conducting the auction. Despite her best efforts Mrs.Chitra Sampath, learned Senior Counsel appearing for the plaintiffs could not point out an allegation in the plaint to the effect that there was no auction at all. On the other hand it is seen from the plaint that the plaintiffs had specifically pleaded in paragraph 16 of the plaint as follows:
16. The plaintiffs state that subsequently, the 1st defendant, without effecting wide publicity, brought the mortgaged property belonging to the plaintiffs to sale once again through the 2nd defendant herein on 11.03.2002 at 11.00 a.m without paper advertisement or prior notice to the plaintiffs regarding the auction sale. It is further alleged in the plaint that, it also appears that the alleged auction on the above date has not been concluded in the presence of all the bidders who had participated in the auction, but however, the 2nd defendant at the instance of the 1st defendant and the 4th defendant had purported to have concluded the sale privately in favour of the person who has not even participated in the auction viz., the 3rd defendant herein who is none other than the daughter-in-law of the 4th defendant.
40. The plaint also refers to the conditions of auction in the auction notice issued by the 2nd defendant. The 1st plaintiff as PW1 would admit that under the mortgage deeds dated 02.12.1996 and 07.04.1997, the 1st defendant is authorized to bring the property to sale without intervention of Court under Section 69 of the Transfer of Property Act. The 1st plaintiff also stated that one Jayanthilal who is related to the proprietor of the 4th defendant Prakash Chand Jain is a Benami bidder of the 4th defendant.
41. Even in his proof affidavit, PW1 would claim that the plaintiffs were informed by the tenants during February - March 2003 that the 3rd defendant had issued letters to them requiring them to attorn the tenancy in their favour based on the sale deed dated 25.11.2002. According to the version of PW1, it was only thereafter, the plaintiffs upon enquiry came to know that the 1st defendant claiming to have conducted auction of property through 2nd defendant, on 11.03.2002 without publicity and without notice to the plaintiffs had entered into a private negotiation with the 4th defendant to execute and register an alleged sale deed in favour of the 3rd defendant for grossly inadequate price. The proof affidavit of the 1st defendant proceeds on the footing that there was no actual auction on 11.03.2002 and the defendants 1, 2 and 4 colluded together and brought about an auction.
42. Contrary to the allegations in the plaint, PW1 in the proof affidavit would claim that the 4th defendant concluded the sale with the 1st and 2nd defendants and there were no 3rd party bidders. It is also claimed by PW1 that neither he nor the other plaintiffs were present in the premises at the time of the auction. The evidence of PW1, with reference to the conduct of the auction on 11.03.2002 could at best be termed as hearsay. PW1 would attempt to make it appear that the 2nd defendant had sent notices of the auction to the plaintiffs, giving their address as the address of the suit property itself, though the 1st defendant had knowledge of the fact that they were not residing in the suit property.
43. But the evidence on record shows that the said claim of the plaintiffs is not true. PW1 in his cross examination would admit that he had not informed the 1st defendant about the change of address in writing. He would claim that he had orally informed the managing director of the 1st defendant Mr.P.Sukamar. As could be seen from the documents marked in the suit all the correspondence prior to the auction dated 11.03.2002 were received by the plaintiffs at the suit property. Even in the sale deed dated 29.05.2001, executed by the plaintiffs in favour of Rajasekar, the address of the plaintiffs is given as No.134, N.S.C. Bose Road, Chennai 79 i.e., the suit property.
44. The 1st defendant has produced Ex.D8, which contains 3 enclosures. Ex.D8 contains a letter addressed by the 2nd defendant to the 1st defendant dated 11.03.2002, wherein, the 2nd defendant had confirmed that an auction was held on 11.03.2002 at 11.00 am and 23 persons had participated in the said auction and the highest bid of Rs.50 lakhs made by D.B.Prakash Chand Jain was accepted by the representative of the 1st defendant present at the auction. The details of the bids made by various persons at the auction is also annexed to the said letter. The Said Ex.D8 also contains an unsigned list which reads as Purchaser Names and address, Auction held on 11.03.2002. This list contains names of about 30 persons who are said to have participated in the auction held on 11.03.2002. The original of the bidders list has been marked by the 2nd defendant as Ex.D27, that gives the details as to how the bidding progressed on 11.03.2002. In the final bid for Rs.50,00,000/- the bidders name is written as Prakash Chand Jain or nominee.
45. Mrs.Chitra Sampath, learned Senior Counsel appearing for the plaintiffs would submit that there are several discrepancies in the documents evidencing auction produced by the defendants 1 and 2. According to her, a cumulative effect of these discrepancies would be that there was no auction held on 11.03.2002 and all those documents that are now sought to be produced as proof of an auction have been prepared by the defendants 1, 2 and 4 in collusion with each other.
46. Therefore, according to the learned Senior Counsel, the claim of the defendants 1 and 2 that there was a public auction on 11.03.2002 and about 23 persons participated in the said auction is a farce and the same cannot be accepted by this Court. In attacking the auction Mrs.Chitra Sampath, learned Senior Counsel appearing for the plaintiffs would point out many discrepancies in the claim of the defendants 1 and 2 that there was actually an auction held on 11.03.2002.
47. The discrepancies pointed out by her are as follows:
(i) The list of names contained in the 3rd enclosure to Ex.D8 does not tally with the receipts produced by the 2nd defendant showing deposit of Rs.5,000/- by the intended bidders on 11.03.2002. The said bunch of receipts showing the deposit of Rs.5,000/- for the auction held on 11.03.2002 has been produced by the 2nd defendant through its witness DW2 and the same has been marked as Ex.D26(series).
(ii) The bidding sheet which is the 2nd enclosure shows that the auction has been held on 11.03.2002 at 11.00 am. Mrs.Chitra Sampath, learned Senior Counsel appearing for the plaintiffs would point out that the 2nd defendant in its written statement had stated that the auction was held at 3.00 pm on 11.03.2002.
(iii) Though it is stated that 23 persons have participated in the auction as per the receipts produced as Ex.D26(Series), there are 21 receipts out of which 2 receipts are for a sum of Rs.10,000/- each and the receipt issued to the 4th defendant has not been produced. Therefore, according to her the number of persons who had participated in the auction is 24 and not 23 and in the absence of any evidence to show that the 4th defendant had paid the sum of Rs.5,000/- his participation in the auction itself is doubtful.
(iv) Pointing out the plea in the written statement of the 1st defendant that, for the auction, wide publicity was made by the auction purchaser by distributing hand bills and also effecting publication in one issue of Dhina Thandhi, she would contend that the fact that the auction purchaser had taken part in publication of the auction would render the auction highly doubtful.
48. She would also contend that in Ex.D26 (series), the names of some of the bidders in the auction held on 11.03.2002 is not reflected. The above irregularities, according to her, are very serious nature and the same would render the very auction highly doubtful. According to her, these irregularities would atleast establish the fact that the auction itself was not conducted and all these documents were prepared by the defendants 1 and 2 in collusion with the 4th defendant, in order to snatch away the property at a very low price.
49. Countering the said submissions of Mrs.Chitra Sampath, learned Senior Counsel appearing for the plaintiffs, Mr.K.Sridhar, learned counsel appearing for the 1st defendant would contend that the 3rd enclosure to Ex.D8 relates to the auction that was to be held on 21.08.2001 and he would take me through the bunch of receipts filed as Ex.D20 series relating to the auction held on 21.08.2001 and contended that the 3rd enclosure to Ex.D8 only reflects the names of persons who had participated in the auction held on 21.08.2001.
50. According to the learned counsel for the 1st defendant, the annexure of the said list of persons which is unsigned does not relate with the auction dated 11.03.2002. He would further submit that the same got appended to Ex.D8 by mistake and in the light of concrete evidence available in the form of Ex.D20 to show that it is a mistake, the contention of the learned counsel appearing for the plaintiffs based on the said unsigned list cannot be countenanced by this Court. As regards the claim relating to the time of auction Mr.K.Sridhar, learned counsel for the 1st defendant would contend that the 1st defendant in its written statement had very clearly stated that the auction was held at 11.00 am on 11.03.2002 in the mortgaged premises.
51.Insofar as the contents of paragraph 5 of the written statement of the 2nd defendant, learned counsel would urge that the entire paragraph 5 must be read together, wherein, in line 3, the 2nd defendant had very clearly stated that as per the instruction from the 1st defendant it has brought the property for sale on 11.03.2002 by publishing about the auction on 11.03.2002 at 11.00 am, in one issue of Dhina Thandhi and by issuing hand bills in the locality. The further statement at lines 8 and 9 of paragraph 5 to the effect that In the auction held on 11.03.2002 at 3.00 pm is again a mistake committed by the 2nd defendant. He would also point out that the earlier auction on 28.01.2001 was held at 3.00 pm probably there was a mixup regarding the time of auction and therefore, the mistake in the written statement is sought to be projected to contend that there was no auction on 11.03.2002. The learned counsel would contend that the plaintiffs are attempting to make a mountain out of mole hill, in order to substantiate their otherwise flimsy claim of absence of auction.
52. On the contention relating to the auction purchaser distributing hand bills and making publication, paragraph 31 of the written statement of the 1st defendant reads as follows:
This defendant denies the allegation made in paragraph 22 that there was no wide publicity. This defendant states that there was wide publicity made by the auction purchaser by distributing hand bills and also effecting publication in one issue of Dhina Thandhi
53. Again the learned counsel for the 1st defendant would contend that the words auction and purchaser have crept in due to over sight and it should only be auctioneer. The learned counsel would contend that a reading of the sentence as a whole would give an impression that the auction purchaser had distributed hand bills regarding the auction as well as effected the publication in one issue of Dhina Thandhi. The learned counsel would rely upon the fact that the publication made in one issue of Dhina Thandhi dated 05.03.2002 with reference to the auction dated 11.03.2002 has been produced as Ex.D24 and the same would show that it has been done by the 2nd defendant, auctioneer and not by the auction purchaser.
54. Relying upon the said publication, as well as the hand bills which have been produced by the plaintiffs themselves, the learned counsel would contend that the said claim in paragraph 31 that publicity was made by the auction purchaser is only a mistake and the same cannot be construed as a vitiating factor as contended by the learned counsel for the plaintiffs. May be that the pleadings regarding the time of the auction in paragraph 5 of the written statement of the 2nd defendant as well as the pleadings relating to the publicity made by the auction purchaser in paragraph 31 of the written statement of the 1st defendant could be ignored as mistakes but the list which is enclosed as annexure 3 to Ex.D8, which shows the names of several persons as purchasers whose names are not found in Ex.D26(series) definitely creates a suspicion in the mind of the Court regarding the manner in which the auction was conducted on 11.03.2002. This 3rd enclosure to Ex.D8 has been made subject matter of cross examination of the witnesses viz., DW1 and DW2. Both of them seem to have deposed on the premise that the list appended to Ex.D8 reflects the names of persons who had participated in the auction on 11.03.2002.
55. Mrs.Chitra Sampath, learned Senior Counsel appearing for the plaintiffs would point out that both DW1 and DW2 have not claimed that the 3rd enclosure annexed to Ex.D8 does not relate to the auction dated 11.03.2002. Therefore, according to her, the learned counsel for the 1st defendant cannot be heard to contend that the list has nothing to do with the persons who have participated in the auction.
56. As rightly contended by the learned counsel for the plaintiffs, both DW1 and DW2 have deposed on the basis that the 3rd annexure is also relating to the persons who had participated in the auction on 11.03.2002. It is rather strange and surprising that both the said witnesses had not applied their mind to the documents in question and had mechanically answered the questions relating to enclosure No.3 stating that it is the list of persons who had attended the auction dated 11.03.2002. A comparison of the said list with the receipts viz., Ex.D26, shows that it is not the list of persons who had participated in the auction on 11.03.2002.
57. As rightly pointed out by Mr.K.Sridhar, learned counsel for the 1st defendant, the list in fact contains the names of all persons found in the receipts marked as Ex.D20 (series) which relate to the auction held on 20.08.2001. It is not known as to how such a list got appended to Ex.D8, but the available documentary evidence would dispel the claim of the plaintiffs counsel that there had been monumental irregularities in the conduct of auction on 11.03.2002, therefore, it should be construed that there was no auction at all.
58. It is also seen from the cross examination of DW2 that the discrepancies relating to the time of auction in the written statement of the 2nd defendant has not been put to him. However, DW1 had deposed that he cannot dispute what the 2nd defendant says about the auction or about the time of the auction, since several years are passed by, he is unable to tell the correct time of auction. He would also state that the auctioneer will be right since he has the records. Cleverly, the inconsistency in the time of auction has not been put to DW2 who was the auctioneer instead cross examination on that has been done while DW1 and DW3 were in the box. The 2nd defendant has produced the list of bidders as Ex.D27 that shows that the auction was held at 11.00 am on 11.03.2002 and not at 3.00 pm. I am inclined to agree with the learned counsel for the 1st defendant in his submission that mistakes had occurred in the pleadings of the 1st defendant wherein, it is stated that the auction purchaser given wide publicity for the auction to be held on 11.03.2002, for the reason that, no person who intends to purchase a property in an auction would be interested in giving wide publicity to the auction.
59. The auction notice has been published in Dhina Thandhi which is a renowned tamil daily having wide circulation. It is also seen from the evidence that hand bills were circulated in the area regarding the auction. Of course, the plaintiffs would claim that they had nothing to do with the suit property after 11.05.2001 on which date they had entered into a partnership arrangement with one Mr.Saravanan in respect of M/s.Poojitha Telephone Services business. That claim of the plaintiffs appears to be highly laconic in view of the notices that had been issued by the 5th plaintiff as well as plaintiffs 1, 2 and 3 to the learned counsel for the 3rd defendant.
60. It is seen from the Exs.D11, D13, D15, D16 and D17 that all the notices issued by the 2nd defendant auctioneer addressed to the plaintiffs were sent only to the suit property and they were acknowledged by the plaintiffs at the suit property. In fact Ex.D17(series) which are acknowledgments demonstrate that notice sent in July 2001 had been received by the plaintiffs at the suit property. Apart from the above, the plaintiffs 2, 3 and 4 have issued a notice through their counsel Mr.K.Sudarsharam on 09.09.2003, wherein they call upon the 3rd defendant to recognize them as tenant along with Madhusudhanan viz., the 5th plaintiff. In the said notice, they acknowledge the title of the 3rd defendant pursuant to the auction sale. In Ex.D83 there is also a reference to a notice dated 09.03.2003 issued by the 5th plaintiff Madhusudhanan, the said notice has been marked as Ex.D54. In the said notice Madhusudhanan states as follows:
My client has now understood that you have purchased the property viz., house, ground and premises bearing Door No.134, NSC Bose Road, Chennai 79 in which my clients shop Poojitha Telephone Services in situate
61. The said notice further demands that the 3rd defendant shall recognize him as a tenant in respect of the said portion occupied by M/s.Poojitah Telephone Services. It should be pointed out that neither in Ex.D54 nor in Ex.D83 there is any claim that the auction sale is vitiated by fraud or otherwise. Another notice addressed to the 5th plaintiff by the counsel for the 3rd defendant dated 26.08.2003 has been marked as Ex.D80. From the said notice it is seen that the 5th plaintiff had even paid the rent at the rate of Rs.450/- for the portion in his occupation.
62. Ex.D96 is another notice dated 08.07.2004 issued by one A.Subramaniyam, Advocate under instruction from the plaintiffs 2 and 4 claiming that they are also entitled to tenancy rights in respect of the shop portion and if the 3rd defendant chooses to enter into any compromise with either Saravanan or the 5th plaintiff Madhusudhana the same will not be binding on them. A reply has been sent on behalf of the 3rd defendant to the said notice on 20.07.2004. it is only after all these correspondence, the plaintiffs have on 27.07.2004, sent another notice through a different counsel raising serious doubts about the validity of the auction said to have been held on 11.03.2002 in which the proprietor of the 4th defendant Prakash Chand Jain was declared the highest bidder.
63. Though, in order to justify the claim of the plaintiffs that they were not aware about the auction held on 11.03.2002, Mrs.Chitra Sampath, learned Senior Counsel appearing for the plaintiffs would contend that in none of the notices referred to supra, the plaintiffs had claimed that the 3rd defendant has become the owner of the property by virtue of a public auction held on 11.03.2002. The 1st plaintiff as PW1 would admit that he had obtained the copy of the sale deed on 06.03.2003 and the 5th plaintiff has issued a notice under Ex.D54 on 09.03.2003. The sale deed which has been marked as Ex.P13 contains a reference to the auction held on 11.03.2002. The plaintiffs had, after obtaining a copy of the sale deed, had admitted the title of the 3rd defendant in Ex.D54 dated 09.03.2003, Ex.D83 dated 09.09.2003, Ex.D98 dated 27.07.2003, Ex.D77 dated 20.06.2003 and Ex.D38 which is an order dated 25.06.2002 made in IA.No.5907 of 2002 in OS.No.1928 of 2002 filed by the 5th plaintiff against Saravanan and the deceased 3rd plaintiff. In the said order it is seen that there is a specific reference to the auction, in the counter affidavit filed by the 1st respondent Saravanan.
64. PW1 in his oral evidence also admits that Jayanthilal, who is shown as bidder is a benami bidder on behalf of the 4th defendant. To a specific suggestion put to him regarding the averment in paragraph 23 of the plaint wherein the plaintiffs have alleged that they made an attempt to stop the auction. PW1 has denied such a statement and he has asserted that he was not aware of the auction and were not present at the time of the auction.
65. A combined reading of the oral and documentary evidence on record as well as the pleadings of the parties would go to show that, an auction was in fact held on 11.03.2002, all the circumstances pointed out by the learned Senior Counsel for the plaintiffs, extracted above may at best show that there were some irregularities on the part of the defendants 1 and 2 while publishing and conducting the auction. The fact that there was wide publicity for auction cannot be denied, inasmuch as the publication has been effected in a very widely circulated tamil daily viz., Dhina Thandhi. It is also seen that nearly about 25 persons have paid a deposit of Rs.5,000/- and have participated in the auction.
66. Of course Mrs.Chitra Sampath, learned Senior Counsel appearing for the plaintiffs would contend that the irregularities and the discrepancies pointed out by her regarding the role of the 4th defendant in publishing the auction, difference between the pleadings evidence on the time of auction, the oral evidence of DW3 with reference to the writing Prakash Chand Jain or nominee found in Ex.D27, the discrepancy regarding the place of auction, would be clinchingly prove that there was no auction on 11.03.2002 and all these documents evidencing an auction have been created by the defendants 1 and 2 in collusion with the 4th defendant to make it appear that there was an auction. The learned counsel would urge the court to draw the inference that there was no auction on the basis of the discrepancies pointed out by her.
67. Per contra Mr.K.Sridhar, learned counsel appearing for the 1st defendant and Mr.B.S.Sundaramurthy, learned counsel appearing for the 2nd defendant, auctioneer would contend that the property had been brought to sale on several occasions and on all occasions notices have been served on the plaintiffs at the suit property. PW1 had admitted that the plaintiffs had not informed about the change of address in writing to the 1st defendant, and the plaintiffs had in their pleadings as well as several documents had admitted that the auction had taken place on 11.03.2002. They would also contend that the powers of the Court to interfere with an auction sale under Section 69 of the Transfer of Property Act is limited and therefore, unless the plaintiffs prove that there was no sale at all or that there was fraud in publishing and conducting the sale the sale cannot be set aside.
68. Mr.ARL.Sundaresan, learned Senior Counsel appearing for the 3rd and the 4th defendants would contend that a reading of the written statement filed by the 1st defendant and the 2nd defendant would show that they had a consistent case regarding the date, time and place of the auction. The so called contradictions or discrepancies pointed out by the learned Senior Counsel appearing for the plaintiffs are bonafide mistakes and if the pleadings as a whole are taken into account it will be obvious that such mistakes had crept in in the pleadings. He would also submit that, if only the documents have been prepared as pointed out by the learned senior Counsel, such clerical errors would not have occurred.
69. He would also point out that sub-Section 3 of Section 69 provides that when a sale has been made in exercise of power under Section 69, the title of the purchaser cannot be impeached on the ground that no case had arisen to authorize the sale or that due notice was not given or that power was otherwise improperly or irregularly exercised. At the same time, the provision entitles the mortgagors to seek damages against the persons who had exercised such power viz., the defendants 1 and 2 for damages. Heavily relying upon the said provision Mr.ARL.Sundaresan, learned Senior Counsel appearing for the defendants 3 and 4 would submit that the suit as framed for setting aside the sale, for redemption and injunction cannot be maintained. He would also draw the attention of this Court to the judgments in Shri Bhagwanaas and another Vs.K.G.Purushothaman and 6 others reported in 1996 (1) LW 372 and the judgment in A.Arunagiri Vs. The Egmore Benefit Society Ltd., and others reported in MANU/TN/1024/2013.
70. In support of her contention that fraud would vitiate the sale Mrs.Chitra Sampath, learned Senior Counsel appearing for the plaintiffs would rely upon the judgment of this Court in Clara Mookerjea alias Smt.Mathuri Devi and another Vs. Surendra Manilal Mehta and others reported in 1963 AIR (Madras) 208, wherein, it is held that a purchaser under sale under section 69 of the Act cannot avoid its setting aside by a court on the ground of fraud. This Court had further observed that 'bonafide' is the essence of the matter and any oblique motive or any underhand dealing or anything inconsistent with the honest realization of the secured money on the part of the mortgagee would sufficiently be destructive of all pretensions on bonafide.
71. In the case on hand, it is seen that the property had been brought to sale on several occasions and on all these occasions, the 1st defendant had at the instance of the plaintiffs postponed the auction in order to enable the plaintiffs to redeem the property. It is obvious that the plaintiffs have not chosen to redeem the property and the fact that they had committed default in payment of the mortgage money is in fact admitted.
72. The plaintiffs would in paragraph 23 of the plaint would admit that their attempts to stop the sale were not successful. Therefore, it is clear that there was an auction sale held on 11.03.2002. The claim of the learned counsel for the plaintiffs that the discrepancies or variations pointed out by her in the evidence as well as the pleadings should be construed as a pointer to the fact that there was no sale at all and all these documents were create by the defendants 1 and 2 is too far fetched and I am afraid such an inference of absence of a sale cannot be drawn on the basis of the so called inconsistencies or variations pointed out by the learned Senior Counsel appearing for the plaintiffs. Hence, issue No.1 is answered in favour of the defendants and against the plaintiffs to the effect that there was an auction sale held on 11.03.2002.
Issue No.2:
73. The next question that falls for consideration is whether there was fraud and collusion in conduct of the auction on 11.03.2002. Again the learned Senior Counsel appearing for the plaintiffs would point out to the discrepancies which had already been noted to contend that there was fraud in conduct of the sale. In order to countenance the plea of fraud, the details of fraud must be available in the pleadings. All that is stated in the plaint regarding fraud is that the 4th defendant had indulged in a malicious campaign about the encumbrance over the property and liabilities of the plaintiffs 2 to 5 herein in relation to the suit property and had prevented the intending purchasers from bidding at the alleged auction sale held on 11.03.2002.
74. Though it is claimed that the valuable property of the plaintiffs have been sold for a precisely paltry sum of Rs.50,00,000/- by the 1st defendant in active collusion and connivance with the defendants 2 and 4, there is no pleading on the details of such fraud. It is settled law that a person who attacks the auction on the ground of fraud must plead the details and modus operandi of the fraudulent nature of the transaction. He cannot come to Court with bald allegations of fraud and seek the Court to conclude that there was fraud in publishing and conducting the sale.
75. What is pleaded as a ground of fraud in the entire plaint is that the 3rd defendant was not the auction purchaser she was nominated at a subsequent date as the auction purchaser by the 4th defendant, the auction purchaser did not pay the balance of sale consideration of Rs.37,50,000/- within the time stipulated by the auction notice, the property was sold for Rs.50,00,000/- which is less than the guideline value, the 4th defendant had carried out a malicious propaganda regarding the liabilities of the plaintiffs 1 to 5 which had dissuaded the purchasers from participating in the auction.
76. Apart from the above allegations made in the plaint Mrs.Chitra Sampath, learned Senior Counsel appearing for the plaintiffs would contend that the discrepancies in the list of purchasers appended to Ex.D8, in the written statement of the defendants 1 and 2 regarding the time of auction, the evidence regarding the place of auction as well as the evidence regarding writing of the words Prakash Chand Jain or nominee in Ex.D27 would establish or strengthen the pleading regarding fraud.
77. Insofar as the discrepancies pointed out by the learned Counsel are concerned they have been adverted to while deciding the issue regarding the factum of auction. I find that the defendants have explained the alleged discrepancies and brought home their case that the inconsistencies in the pleading viz., the written statements had arisen due to oversight and they are in fact mistakes committed in the course of drafting. As regards the contention that DW3 had admitted having written the words Prakash Chand Jain or nominee in Ex.D27. The learned counsel appearing for the defendants 3 and 4 would point out that the evidence of DW3 cannot be read in the manner in which it is sought to be read by the learned counsel for the plaintiffs.
78. As far as the writing in Ex.D27 is concerned, DW3 in his chief examination affidavit has stated that he had made the endorsement saying for himself or nominee. The relevant portion in the proof affidavit reads as follows:
"As stated above the fourth defendant had participated in the auction and in the presence of all bidders and his bid was declared as highest and the fourth defendant had made an endorsement by saying for himself or nominee"
In his cross examination with reference to Ex.D27/ 2nd annexure to Ex.D8, DW3 has said the words Prakash Chand Jain or nominee found in those documents had not been written by him. He has also said that he does not know who wrote it.
79. A perusal of Ex.D27 which is the original bid list for the auction that had taken place on 11.03.2002, it is seen that all the names of the bidders are written by the one and the same person and is in the same hand writing. Therefore, it is obvious that the reference to the endorsement in the proof affidavit does not relate to the 2nd annexure to Ex.D8 or Ex.D27. Once the plaintiffs come forward with a case of fraud it is for the plaintiffs, to plead and prove fraud. There is no evidence except the interested testimony of PW1 to establish the fraud pleaded by the plaintiffs.
80. Though, it is the claimed that there are several tenants in the property and it was the tenants who informed the plaintiffs that the defendants 1, 2 and 4 sat in the balcony of the suit property and brought about the auction none of their tenants have been examined. PW1 in his evidence would state that he came to know that the farce of an auction was conducted on 11.03.2002 through one Sampath Kumar, the said Sampath Kumar has not been examined.
81. The evidence in cross examination of PW1 is far from satisfactory, his answers to most of the questions in later half of the cross examination has been mono syllabic and one could see an attempt to project a false case. A close reading of the cross examination of PW1 would show that he is unwilling to give proper answers. The only other circumstance that is sought to be relied upon by the plaintiffs is the value of the property. It is seen from the sale Deed dated 25.11.2002, executed by the 1st defendant in favour of the 3rd defendant, that the same was subject matter of a reference under Section 47A of the Indian Stamp Act and the value of the property was fixed at Rs.66,60,037/- by the Special Deputy Collector Stamps. Pointing out the same, it is contended by the learned counsel for the plaintiffs that the property has been sold for a substantially low price.
82. Per contra Mr.ARL.Sundaresan, learned Senior Counsel appearing for the defendants 3 and 4 would contend that the property is infested with tenants and even according to the plaintiffs there were about 11 tenants in the suit property and the plaintiffs had collected a huge sum of Rs.38,90,000/- from the tenants, of which a sum of Rs.6,10,000/- has been paid by the proprietor of the 4th defendant Mr.Prakash Chand Jain. Therefore, according to the learned Senior Counsel the price that the property has fetched in the public auction is just and reasonable. He would also point out the attempted auctions earlier did not fetch more than Rs.43,25,000/-.
83. The learned counsel would also buttress the submissions by stating that the mere fact that the auction has fetched a low price cannot be a ground for setting aside the same. In support of his submissions, he would again refer to the 2 decisions cited supra, wherein both the Hon'ble Division Bench as well as the Hon'ble Single Judge of this Court considered the scope of the power of the Court to interfere with the auction held under Section 69 of the Transfer of Property Act. Of course in 1963 AIR (Madras) 208 this Court has held that fraud would be a ground to set aside the sale under Section 69. There are no two opinions about the position of law. If fraud is proved it will have the effect of rendering the sale invalid.
84. On the facts pleaded and proved I am constrained to observe that the plaintiffs have miserably failed to establish the case of fraud pleaded by them. In the light of Sub Section 3 of Section 69 of the Transfer of Property Act, which prohibits the mortgagor from impeaching the title of the purchaser on the ground of irregularities in the publishing and conducting of the sale, the scope of the suit is very limited and an irregularity may not amount to fraud. May be that the plaintiffs are able to establish certain irregularities in the attempt of the defendants 1 and 2 to prove the auction sale. But, that alone in my considered opinion would not be sufficient to conclude that the auction sale itself is vitiated by fraud.
85. The fraud that is required to be proved is not only a mere irregularity on the part of the defendants 1 and 2 in conduct of auction, the plaintiffs should go one step further and prove that the highest bidder viz., the proprietor of the 4th defendant was part of the scheme. I am afraid that such evidence is totally absent in the case on hand. Of course, the plaintiffs would allege in the pleadings that DW3 had circulated hand bills stating that the plaintiffs are heavily indebted and had collected huge advances from the tenants thereby dissuading the intending purchaser from bidding the property. There is no proof of such attempts having been made by the proprietor of the 4th defendant. In considering the question of fraud the Division Bench of this Court in Shri Bhagwanaas and another Vs.K.G.Purushothaman and 6 others reported in 1996 (1) LW 372, after referring to various pronouncements on Section 69 of the Act, at paragraph 25 of the judgment had observed as follows:
25. Thus, the settled position of law is that a mortgagee is not a trustee for the mortgagee and that the sale under section 69 of the Transfer of the Property Act cannot be attacked by the mortgagor except when there is fraud or collusion between the mortgagee and purchaser. If the price for which the property is sold is so low as by itself will lead to an inference of fraud on the part of the mortgagee and the purchaser, the Court can interfere, But, the burden is on the mortgagor to plead and prove such fraud or the gross inadequacy of price from which an inference can be drawn by the Court of the fraud. In the absence of such proof, the Court cannot and will not interfere with the sale even if the sale price is lesser than the market value of the property or there was want of publicity or want of notice as required by the instrument or that many bidders had not participated in the auction. On the ground of nomination the Division Bench had observed as follows in paragraph 47 and 48 of the said judgment.
47.The statutory provisions relating to contracts and enforceability thereof by persons other than the contracting parties are found in Sections 37, 40 and 41 of the Contract Act and Section 15(b) of the Specific Relief Act (47 of 1963). A perusal of those Sections would show that contracts could be performed by the promisor or his representatives by employing competent persons to perform the same unless it appears from the nature of the case that it was the intention of the parties that the promise contained in it should be performed by the promisor himself. Section 2(d) of the Contract Act shows that consideration for a contract could be provided by third party thereto. In Sakalaguna Nayadu v.Chinna Munuswami Nayakar (I.L.R51 Madras 533= (1928) 28 L.W.51,P.C) the Privy Council held that a contract for reconveyance is enforceable by the assignee of the vendor against the sons of the purchaser. In Rangiah Chettiyar v.Parthasarathy (AIR 1947 Madras 258 =(1946)59 L.W.695) referred to by the learned judge in the impugned judgment, it was held that the contract to sell goods can be assigned by the seller so as to enable the assignee to sue for damages for breach of contract on tender of performance by him. In N.Pattay Gounder v.P.L.Bapuswami (AIR 1961 Madras 276 = 74 L.W.23) it was held that prima facie the right and liabilities under a contract like an agreement for repurchase are assignable unless it has been prohibited in the deed itself. It must be noticed that the judgment of this Court was reversed by the Supreme Court in P.L.Bapuswami v.N.Patty Gounder (AIR 1966 SC 902) on another point. There was no necessity for the Supreme Court to deal with the proposition referred to above. In Khardah Company Ltd v.Raymon & Co (AIR 1962 SC 1810) it was held that rights under a contract are assignable unless the contract is personal in nature or the rights are in capable of assignment, either under law or under agreement between the parties. In Umar Noor Mohammad v.Dayal Saran Darbari, (AIR 1967 Allahabad 253) it was held that except in some special circumstances, a contract to sell property is not dependent upon any personal qualifications of the individual who agrees to purchase and it is a matter of no consequence to the vendor that the person who is going to be the vendee is not the same person with whom he had entered into a contract for sale. It was also held that such a contract is enforceable not only by the person to whom the property was agreed to be sold but also by his representatives in interest and assignees, unless of course, the contract itself prohibits assignment either expressly or by clear implication. Reliance was placed on the judgment if this Court in Munuswami Nayadu V.Sagalaguna Nayudu (ILR 49 Madras 387) and the judgment of the Privy Council confirming the same in Sakalaguna Nayudu v.Chinna Munuswami Nayaar (I.L.R 51 Madras 533= 28 L.W.51) referred to by us earlier. Making a reference to section 40 of the Contract Ac, the Court said that except in very special circumstances a person agreeing to purchase a property is not bound to purchase it himself and he may arrange to purchase the property by some other person as his nominee on the strength of the agreement entered into by him.
48. Thus, the law on the subject is very clear that a person who agreed to purchase a property could nominate another person to complete the contract, unless there is an express or implied prohibition in the contract itself against the same. In the present case, there is nothing whatever to warrant an interference or conclusion that the contract between the second defendant and the fifth defendant was personal to the fifth defendant and the latter was not entitled to nominate another person to purchase the property. We have held on the facts that even at the time of conclusion of contract, there was an agreement that the purchase could be either by the fifth defendant of his nominee.
86. In A.Arunagiri Vs. The Egmore Benefit Society Ltd., and others reported in MANU/TN/1024/2013, similar questions came up before the Honble Justice V.Ramasubramanian who had after reviewing the entire case law on the point had after enlisting the grounds of attack which are very similar to the grounds of attack raise by the learned Senior Counsel for the plaintiffs in the case on hand had rejected the contentions after adverting to the Division Bench judgment of this Court in P.S.Duraikannoo Vs.M.Saravana Chettiar and another reported in AIR 1963 Madras 468 and had pointed out that the only restrictions formulated both in England and in India on the mortgagee who purports to exercise the power under Section 69 who purports to sell the property of the mortgagor who purports to exercise the power under Section 69 of the Transfer of property Act as follows:
(i) that the mortgagee should act bonafide.
(ii) that the mortgagee should act as a prudent man.
(iii) the mortgagee can take care of himself, first and also to take care of the mortgagor next.
87. Whether the mortgagee acted as prudent man and bonafide is to be seen in the light of the evidence and the pleadings in each case. After quoting Shri Bhagwanaas case cited supra and after referring to the claim of the plaintiffs in the suit for invalidating the auction the learned Judge had referred to the judgment of this Court in V.Narasimhachariar Vs. Egmore Benefit Society reported in AIR 1955 Madras 135. In the said case the learned judge has listed the rights, duties and obligations for mortgagee under Section 69 in the form of certain Do's and Dont's they are as follows:
(1) It is incumbent on the mortgagee exercising his power of sale to act in good faith:--'Kennedy v. De Trafford', 1897 AC 180 (Z30). He must sell as a prudent owner, intending to sell his own property with reasonable conditions and if the state of the title justifies, to offer a marketable title. The power is to be regarded as a sacred thing, for it is only a security:-- 'Jenkins v. Jones', (1860) 66 FR 43 (Z31);-- 'Chablldas Lallubhoy v. Mowji Dayal', 26 Bom 82 (Z32).
(2). The motives actuating a mortgagee in exercising his power of sale will not be considered by a Court:-- 'Colson v. Williams', (1889) 58 LJ Ch.539 (Z33).
(3) He is not at liberty to look after his own interests alone and it is not right or proper or legal for him, either fraudulently or wilfully or recklessly, to sacrifice the property of the mortgagor: (1987 AC 180 (Z30). The exercise of the power of sale shall not be oppressive or depreciatory:--'Dance v. Goldingham', (1873) 8 Ch.App 902 (Z34).
(4) He must not sell after tender made to him of the mortgage-money and his costs, charges and expenses, though the latter be under protest.
(5) A mortgagee may sell under special circumstances even of a stringent character, if not un-reasonably depreciatory:-- 'Falkner v. Equitable Reversionary Society', (1858) 62 ER 138 (Z35). But the conditions however must be such as an owner will use in the sale of his own property and should not be depreciatory:-- "Mc Hugh v. Union Bank of Canada', (1913) 108 LT 273 (PC) (Can)(Z36).
(6) He must hold the balance of the sale proceeds in trust for the mortgagor and if there are subsequent encumbrances, in trust for them and ultimately for the mortgagors:-- 'Warner v.Jacob', (1882) 20 Ch D 220 (Z37);- Abdul Bahman Vs. Noor Mohamed, 16 Bom 141 (Z38);- 'Rajah Kishendutt Rajah v. Mumtaz All Khan', 5 Cal 198 (PC) (Z39).
(7) He must not buy himself or through his solicitors or agent, for such a sale would be vitiated even though there be no fraud or under value:-- "National Bank of Australasia v. United Hand-in-Hand and Bond of Hope Co.', (1879)4 AC 391(Z40);--"Downes v. Grazebrook', (1817) 36 ER 77 (Z41);--'Henderson v. Astwood', 1894 AC 150 at p.158 (Z42).
(8) He must hold the sale strictly adhering to the conditions which give him the right to exercise his power:-- 'Devey v. Durrant', (1857) 44 ER 830 (Z43).
(9) He must not sell by private treaty if the mortgage deed allows him to sell by public auction only (--'Brouard v. Dumaresque', (1841) 3 Moo PC 457 (Z44)'.
(10) He is not bound to advertise the sale. But he must give reasonable publicity. And though the mortgagee is not a trustee for the mortgagor he is something more than a perfunctory agent and must at least see that in subserving his own interest he does not sacrifice the interest of those equally interested in the property. He must not do anything which would scare away the bidders:-- 'Chabildas v. Dayal Mowji', MANU/MH/0134/1907: 31 Bom 566(PC)(Z45).
(11) He must use every exertion to sell the property at the best price for he is chargeable with the full value of the mortgaged property sold, if for want of due care and diligence it has been sold at an undervalue:-- 'Orme v. Wright', (1839) 3 Jur 972 (z46): '(1879) 4 AC 391 (Z40)'.
(12) He must not sell before the mortgage money has become due:--'Jarup Tejaa & Co. v. Peerboy Adamji', AIR 1921 Bom 421 (Z47).
(13) He must not sell without giving to the mortgagor a written notice for payment of the principal money and before default has been made for three months after service in payment.
(14) He must not sell unless some interest amounting to at least Rs.500 is in arrear and unpaid for three months after becoming due.
(15) His particulars of sale, even if inserted by his auctioneer, should give a correct description of the property.
(16) If he exercises the power bona fide without corruption or collusion with the purchaser, the Court will not interfere even though the sale is very disadvantageous unless, indeed, the price is so low as in itself to be evidence of fraud: '(1882) 20 Ch D 220 (Z37)';-- 'Haddington Island Quarry Co. Ltd. v. Alden Wesley', 10 Mad LT 554 (PC) (Z48). (See Darashaw Vakil Commentaries on the Transfer of Property Act (1938) for an exhaustive discussion of duties of mortgagees on sale pp, 632-641).
88. We have already adverted to the discrepancies and the inconsistencies pointed out by the learned counsel for the plaintiffs, the Division Bench in Shri Bhagwanaas cited supra had pointed out that nomination of another person for purchase of property by the highest bidder cannot be a ground for setting aside the sale.
89. Yet another ground that is urged by Mrs.Chitra Sampath, learned Senior Counsel for the plaintiffs is that there was an unduly long extension of time granted to the 4th defendant to pay the balance sale consideration by the 1st defendant. The auction sale was concluded on 11.03.2002 and the sale deed came to be executed on 25.11.2002. Of course there is a gap of eight months.
90. Considering the evidence let in, I am of the opinion that the eight months period is justifiable. The reasons for my conclusions are as follows:
(i) there was a dispute raised by one Rajasekar who had purchased a portion of the property which was subject matter of the mortgage and the 4th defendant had raised the question as to competence of the 1st defendant to bring the entire property to sale when the plaintiffs have sold a portion of the property during the subsistence of the mortgage.
(ii) It is not in dispute that a clearance under Section 269 UC of the Income Tax Act was required as on that date and the question as to who should obtain such clearance was a subject matter of certain correspondence between the 4th and 5th defendant. Therefore, in the light of the above said issues that were to be sorted out prior to the conclusion of the sale the delay in execution of the sale deed cannot be a vitiating factor.
91. This very question regarding extension has been considered by the Hon'ble Justice V.Ramasubramanian in A.Arunagiri Vs. The Egmore Benefit Society Ltd., and others reported in MANU/TN/1024/2013 case, where, the learned Judge has concluded that the fact that 269 UC was in force and the appropriate authority was approached for grant of permission would itself is a sufficient ground for extension of time.
92. In the case on hand apart from the above requirement under Section 269 UC, the purchaser of a portion of the property viz., Mr.Rajasekar was also claiming independent rights and therefore, I do not think the delay or the extension of time granted to the highest bidder to pay the balance amount cannot be said to be unduly long so as to enable the Court to presume fraud. Hence, issue No.2 is answered against the plaintiffs.
Issue Nos.3 and 4:
93. The next question that arises is whether the price was inadequate or that the inadequacy in price would lead to the conclusion that the sale is vitiated by fraud. As already pointed the property has been sold in the auction for Rs.50,00,000/-, which is admittedly more than the highest bid in the auction attempted earlier on 20.08.2001. Though the plaintiffs would claim that the property is worth over Rs.2.5 to 3 crores they have not produced any tangible evidence to show such high value for the property. On the other hand the sale deed itself shows that the document was referred to under Section 47(A) of the Stamp Act and the special Deputy Collector, Stamps had fixed the value of the property at Rs.66,60,037/-. The plaintiffs themselves had admitted that they have collected a sum of Rs.38,90,000/- as security deposit or rental advance. The fact that there were 11 tenants in the property at the time of sale, the fact that the plaintiffs had calculated a huge rental advance nearly Rs.39,00,000/- from those tenants and the fact that the portion of the property was sold to a 3rd party subject to a mortgage would definitely have a baring on the sale price of the property. Considering the above I do not think that the contentions of the plaintiffs that the property have been sold at absimally low price which will have the effect of vitiating the auction. Issue No.3 is answered against the plaintiffs.
94. For all the above reasons, I conclude that there was no fraud or collusion in conduct of the sale. The 1st defendant being a non-Banking Finance Company/ a Mutual fund having collected deposits from the public cannot also afford to wait till the defaulting mortgagors pay up. Necessarily the 1st defendant has to safeguard the interest of its depositors also.
95. I have already found that the extension of time granted by the 1st defendant to the highest bidder for payment of the balance of sale consideration had arisen due to certain bonafide disputes and hence the same cannot be taken as a ground for setting aside the same. Therefore, issue No.4 is answered against the plaintiffs in favour of the defendants.
Issue Nos.5 and 6:-
96. The plaintiffs have also claimed that the sale was not publicized and there were several irregularities in the conduct of the sale. Insofar as the publicity given to the sale is concerned, there cannot be any fraud, because the publication was effected in one of the leading news papers which has a maximum circulation in the State apart from that hand bills have also been issued. The plaintiffs themselves have produced the hand bills which contain the terms of the auction.
97. The only ground on which the plaintiffs seek to attack the publicity is that they were not given notice. While discussing the question of service of notice under issue No.1, I have found that the claim of the plaintiffs that they were not issued notices for the sale dated 11.03.2002 is not convincing. Therefore, I do not think the plaintiffs can claim that there was no publicity for the auction sale and from the proceedings of the auction it could be seen that nearly 23 persons have participated in the auction and they have made several bids and the highest bid was at Rs.50,00,000/- was accepted on the same day by the representatives of the plaintiffs.
98. Mrs.Chitra Sampath, learned Senior Counsel appearing for the plaintiffs would however plead that the inconsistencies and the irregularities in the conduct of auction would have the effect of rendering the auction a nullity. She would invite me to draw inference that there was no such auction. The alleged inconsistencies or irregularities are already been dealt with.
99. I must here point out that the conduct of the 2nd defendant auctioneer is far from satisfactory. He would admit having prepared the list of purchasers which is annexed as 3rd document to Ex.D8. But a comparison of the said documents with the bunch of receipts in Ex.D26 which are the bunch of receipts issued by the 2nd defendant to those persons who paid Rs.5,000/- for participating in the auction on 11.03.2002. It is seen that they are at variance, but fortunately for the 2nd defendant, the 2nd defendant has also produced the bunch of deposit receipts for auction held on 20.08.2001 as Ex.D20. On a comparison, it is actually found that the names of persons who had participated in the auction on 20.08.2001 has been shown in the 3rd annexure to Ex.D8 as persons who had participated in the auction on 11.03.2002. This is a glaring omission on the part of the 2nd defendant.
100. Even in the pleadings the 2nd defendant had messed up things. In the written statement in paragraph 5 the 2nd defendant would in line No.3 state that a notice publishing about the auction on 11.03.2002 at 11.00 am was made in one issue of Dhina Thandhi and by issuing hand bills in the locality. In the same paragraph lower down after referring to the auction held on 20.08.2001 [sic] 23.08.2001, the 2nd defendant would state that in the auction held on 11.03.2002 at 3.00 pm, 23 persons have participated in the auction by depositing a sum of Rs.5,000/- as cash deposit.
101. Pointing out this discrepancy Mrs.Chitra Sampath, learned Senior Counsel appearing for the plaintiffs would vehemently contend that the entire auction proceedings are vitiated. She would also invite my attention to the evidence of the witnesses who have been examined on the side of the 1st defendant as well as the 2nd defendant who had affirmed the correctness of the 3rd annexure to Ex.D8 Mrs.Chitra Sampath, learned Senior Counsel would submit that this is nothing but an attempt to burck facts and project an auction having taken place.
102. She would also draw my attention to the pleadings in the written statement of the 1st defendant to the effect that wide publicity to the auction was given by the auction purchaser by distributing the hand bills. I am unable to the countenance the said submission of the learned Senior Counsel because it is very clear from paragraph 31 that the term auction purchaser used therein is only a mistake and it should be auctioneer. Paragraph 31 of the written statement of the 1st defendant reads as follows:
This defendant denies the allegation made in paragraph 22 that there was no wide publicity. This defendant states that there was wide publicity made by the auction purchaser by distributing hand bills and also effecting publication in one issue of Dhina Thandhi This paragraph refers to both the modes of publication viz., distribution of hand bills as well as effecting a publication in one issue of Dhina Thandhi. It is seen from the records that the publication in one issue of Dhina Thandhi has been effected by the 2nd defendant. Therefore, it is clear that the term auction purchaser used in that paragraph 31 is a mistake and it should have been auctioneer I find that the attempt of the Senior Counsel to take advantage of the mistake is only to make a mountain out of the mole hill.
103. DW2 who has been examined on the side of the 2nd defendant has also, unfortunately not taken case to project the case in a proper manner. The pleadings as well as the evidence of the auctioneer are far from satisfactory. The manner in which the documents have been projected before the Court have given the opportunity to the plaintiffs who were otherwise groping in dark to catch hold of the mistakes committed by the 2nd defendant to contend that the sale is vitiated. It is rather an unfortunate situation for the 1st defendant mortgagee, as well as the 3rd and the 4th defendants, the purchasers to be dependent on the irresponsible actions of the 2nd defendant. Section 69 of the Transfer of Property Act empowers the mortgagee to sell properties, at times very valuable properties, by way of public auction and the auctioneers like the 2nd defendant who venture to perform the said statutory function cannot by their shear negligence play with the valuable rights of the parties. It is high time the business of such auctioneers is regulated by the authorities concerned. I am informed that there is no provision for licensing these auctioneers or to keep a tab on their activities.
104. I genuinely feel that such procedure should be envisaged and put in place, so that the auctioneers who deal with very valuable property of people also have a sense of responsibility and do not act in the manner in which the 2nd defendant had acted. At one point of time, the manner in which the 2nd defendant had chosen to plead its case as well as project its evidence gave an impression that the 2nd defendant is attempting to collude with the plaintiffs.
105. However, fortunately for the 3rd and 4th defendants, the learned counsel for the 1st defendant in fact brought to the notice of this Court as to how the bungling has happened in the preparation of the 3rd annexure to Ex.D8. Of course Mr.K.Sridhar, learned counsel appearing for the 1st defendant would contend that the source of the document is unknown. I am unable to accept such theory, because I find that both DW1 and DW2 have accepted that the 3rd annexure to Ex.D8 forms part of the records of the 2nd defendant.
106. Therefore, I conclude that the irregularities alleged are only after the sale and not at the time of sale. The sale that had taken place in bonafide manner cannot be said to be fraudulent or vitiated by the actions of the people while attempting to prove it. Hence, issue Nos.5 and 6 are also answered against the plaintiffs.
Issue Nos.7 to 9:-
107. Once the power of sale has been exercised, the plaintiffs have lost the right of redemption, if at all the plaintiffs are able to prove any irregularity in the conduct of sale in terms of section 69, Sub-Section 3 of the Transfer of Property Act they may be entitled to damages. This suit being one for setting aside sale and redemption, I am not going into the question as to whether the plaintiffs have suffered any damages or not. Since the plaintiffs have lost the right of redemption, I do not think that they are entitled to the relief of redemption prayed for in the suit.
108. In fine, all the issues are answered against the plaintiffs and the suit is dismissed with the costs of the defendants 3 and 4 and the defendants 1 and 2 are not entitled to costs because of the careless attitude exhibited by them in defending the proceedings.
05.01.2018 dsa Index : yes Internet : Yes Speaking order List of the Witnesses examined on the side of the Plaintiffs:
PW1 - B.Babu Narasimha Rao List of Exhibits marked on the side of the Plaintiffs:
Sl.No. Exhibits Description of documents Date 1 Ex.P1 Copy of the Sale Deed in favour of the 1st plaintiff's father 21.02.1984 2 Ex.P2 Settlement Deed executed in favour of the plaintiff.
05.02.1961 3 Ex.P3 Copy of the Supplement Deed executed in favour of the plaintiff.
26.06.1964 4 Ex.P4 Copy of the Mortgage Deed executed in favour of the 1st defendant.
02.12.1996 5 Ex.P5 Copy of the Mortgage deed.
07.04.1997 6 Ex.P6 Copy of the Patta in respect of the suit property.
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7Ex.P7 Receipts (6 nos) issued by the 1st defendant for the repayment of loan. (Series)
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8Ex.P8 The Letter written by the 2nd defendant to the plaintiffs 2 to 5.
05.07.2001 9 Ex.P9 News Paper advertisements in Hindu dated 12.08.2001 and Daily Thanthi dated 12.08.2001. 12.08.2001 10 Ex.P10 Copy of the Auction Notice issued by the 2nd defendant.
20.08.2001 11 Ex.P11 Copy of the Complaint given to the Railway Protection Force along with train ticket and the Certificate issued by the Police dated 20.09.2001. 19.09.2001 12 Ex.P12 Copy of the Auction Notice issued by the 2nd defendant.
11.03.2002 13 Ex.P13 Copy of the Sale Deed executed by the 1st defendant in favour of the 3rd defendant.
25.11.2002 14 Ex.P14 Copy of the Legal Notice issued by the plaintiffs to the defendants 1 to 4.
27.07.2004 15 Ex.P15 Copy of the Reply Notice.
10.08.2004 16 Ex.P16 Copy of the encumbrance Certificate in respect of the suit property.
19.01.2005 17 Ex.P17 Copy of the Lease Agreement executed by the 1st plaintiff and on behalf of the other plaintiffs in favour of the 10th defendant. 05.07.2001 18 Ex.P18 Copy of the Letter written by the 2nd plaintiff to the 1st defendant.
01.02.2001 19 Ex.P19 Copy of the Letters written by 3rd defendant to the tenants. (Series 4 Nos).
01.08.200324.03.2003 20 Ex.P20 Original Statement of Accounts relating to the loan No.1.
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21Ex.P21 Original Statement of Accounts relating to the loan No.2.
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22Ex.P22 Copy of Letter of the 7th defendant along with enclosures. (Series) 10.02.2012 23 Ex.P23 Copy of the Letter of the 4th defendant.
05.02.2012 24 Ex.P24 Copy of the petition in RCOP.No.1081/2004.
01.07.2010 25 Ex.P25 Copy of the Letter of the 4th defendant to the 1st plaintiff.
08.06.2001 26 Ex.P26 Copy of the Letter by the Sub-Registrar Sowcarpet.
23.11.2011 27 Ex.P27 Website Download guideline value for the suit property for the Period April 2002 to March 2003.
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28Ex.P28 Electricity Consumer Cards and bills. (Series)
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29Ex.P29 Copy of the Letter by the 2nd defendant to the 1st defendant.
11.03.2002 30 Ex.P30 Copy of the Letter by the 4th defendant to the plaintiffs.
29.06.2001 31 Ex.P31 Copy of the reply sent by the 4th defendant.
06.07.2001 32 Ex.P32 Building Plan of the suit property.
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List of the Witnesses examined on the side of the Defendants:
DW1 - J.Mohan DW2 - K.Raghunathan DW3 - D.B.Prakash Chand Jain List of Exhibits marked on the side of the Defendants:
Sl.No. Exhibits Description of documents Date 1 Ex.D1 Proposal and decision of Board Resolution No.6124 and authorization letter.
23.12.2009 and 01.02.2014 2 Ex.D2 Copy of the Mortgage Deed executed by the plaintiffs in favour of the defendant.
02.12.1995 3 Ex.D3 Copy of the Mortgage Deed executed by the plaintiffs in favour of the defendant.
07.04.1997 4 Ex.D4 Computerized Copy of Statement of Accounts for account No.5482.
April 1997 to March 2002 5 Ex.D5 Computerized Copy of Statement of Accounts for account No.5281.
December 1996 to March 2003 6 Ex.D6 Copy of the Letter sent by the second defendant to the plaintiff.
11.03.2002 7 Ex.D7 Copy of the Letter sent by the second defendant to the plaintiff.
11.03.2002 8 Ex.D8 Copy of the Letter sent by the second defendant to the 1st defendant.
14.03.2002 9 Ex.D9 Copy of the Letter sent by the 1st defendant to the 4th defendant.
11.04.2002 10 Ex.D10 Copy of the Letter sent by the 1st defendant to the plaintiff.
10.01.2001 11 Ex.D11 Auction catalogue with Acknowledgment Cards.
10.10.1998 12 Ex.D12 Letter.
15.09.1998 13 Ex.D13 Auction Catalogue with Acknowledgment Cards.
16.05.2000 14 Ex.D14 Letter.
07.05.2000 15 Ex.D15 Auction catalogue with Acknowledgment Cards.
23.05.2000 16 Ex.D16 Auction catalogue with Acknowledgment Cards.
08.11.2000 17 Ex.D17 Auction catalogue with Acknowledgment Cards.
20.08.2001 18 Ex.D18 Paper Publication in Tamil issue "Dhinathanthi".
12.08.2001 19 Ex.D19 Paper Publication in English issue "The Hindu".
12.08.2001 20 Ex.D20 Deposit receipts.
20.08.2001 21 Ex.D21 Record Sheet.
20.08.2001 22 Ex.D22 Auction Catalogue.
11.03.2002 23 Ex.D23 Returned Postal Covers.
24Ex.D24 Paper Publication in Tamil issue "Dhinathanthi".
05.03.2002 25 Ex.D25 Returned Postal Covers.
26Ex.D26 Deposit receipts.
11.03.2002 27 Ex.D27 Record Sheet.
11.03.2002 28 Ex.D28 Letter.
11.03.2002 29 Ex.D29 Returned Postal Covers.
30Ex.D30 Letter.
22.03.2002 31 Ex.D31 Copy of the Mortgage Deed executed by the B.Babu Kesava Rao & Others in favour of 1st defendant. 02.12.1996 32 Ex.D32 Copy of the Mortgage Deed executed by the B.Babu Kesava Rao & Others in favour of 1st defendant. 07.04.1997 33 Ex.D33 Copy of the Sale Deed in favour of M.Rajasekar.
29.05.2001 34 Ex.D34 Copy of the Letter from SS.Jewellers to 3rd defendant.
03.03.2002 35 Ex.D35 Copy of the Letter from 1st defendant to 4th defendant.
11.04.2002 36 Ex.D36 Copy of the Letter from Abilasha International to 1st defendant.
17.04.2002 37 Ex.D37 Copy of the Letter from Abilasha International to 1st defendant.
06.05.2002 38 Ex.D38 Stay Order in I.A.No.5907/2002 in O.S.No.1928/2002.
25.06.2002 39 Ex.D39 Copy of the Letter from 4th defendant to 1st defendant.
05.11.2002 40 Ex.D40 Sale deed executed in favour of Pramila Jain.
25.11.2002 41 Ex.D41 Original Corporation Tax Book and Chennai Metropolitan Water Supply and Sewerage Board Water & Sewerage Tax Cum Water Charges Card.
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42Ex.D42 Original Letter from R.D.Agencies addressed to Mr.Prakash Chand Jain.
05.12.2002 43 Ex.D43 Original Letter from Mrs.Pramila Jain addressed to R.D.Agencies with acknowledgement. 31.01.2003 44 Ex.D44 Original Letter from Mrs.Pramila Jain addressed to M.Avanthika, Sri Avanthika Jwellery. 31.01.2003 45 Ex.D45 Original Letter from Mrs.Pramila Jain addressed to Mr.Lalit with acknowledgement. 31.01.2003 46 Ex.D46 Original Letter from Mrs.Pramila Jain addressed to Mr.Praveen Agarwal with acknowledgement. 31.01.2003 47 Ex.D47 Original Letter from Mrs.Pramila Jain addressed to Mr.P.Ugamchand, S.S.Jwellers. 31.01.2003 48 Ex.D48 Original Letter from Mrs.Pramila Jain addressed to M/s.Kaizen Impex with acknowledgement. 31.01.2003 49 Ex.D49 Original Letter from Mrs.Pramila Jain addressed to S.R.Refineries.
31.01.2003 50 Ex.D50 Xerox Copy of Cheque No.583605, drawn on ABN-AMRO Bank, issued in favour of Revenue Officer, Coporation of Chennai. 26.02.2003 51 Ex.D51 Xerox Copy of Tax Collection Receipt No.333759.
27.02.2003 52 Ex.D52 Copy of the Letter from Mrs. Pramila Jain addressed to Mr.Praveen Agarwal with acknowledgement. 31.01.2003 53 Ex.D53 Xerox Copy of the order for Name transfer in favour of Mrs.Pramila Jain.
04.03.2003 54 Ex.D54 Xerox Copy of legal notice from M.Sathyamoorthy, advocate to Mrs.Pramila Jain.
27.02.2003 55 Ex.D55 Original Letter from Anisha Overseas to Mrs.Pramila Jain.
12.03.2003 56 Ex.D56 Original Letter from N.Ramamurthy to Mrs.Pramila Jain.
12.03.2003 57 Ex.D57 Original Letter from M.A.Mubarak, Kaizen Impex to Mrs.Pramila Jain.
15.03.2003 58 Ex.D58 Original Letter from Jyothi Art Jwellers to Mrs.Pramila Jain.
17.03.2003 59 Ex.D59 Original Letter from R.D.Agencies to Mrs.Pramila Jain.
17.03.2003 60 Ex.D60 Original Letter from Mrs.Pramila Jain to R.D.Agencies.
24.03.2003 61 Ex.D61 Original Letter from Mrs.Pramila Jain to M.A.Mubarak, Kaizen Impex.
24.03.2003 62 Ex.D62 Original Letter from Mrs.Pramila Jain to M/s.I.A.Shaik Ismail Jelani.
24.03.2003 63 Ex.D63 Xerox Copy of Cheque No.583609, drawn on ABN-AMRO Bank, issued in favour of Revenue Officer, Corporation of Chennai. 20.03.2003 64 Ex.D64 Xerox Copy of Tax Collection Receipt No.387019.
25.03.2003 65 Ex.D65 Xerox Copy of Cheque NO.583611, drawn on ABN-AMRO Bank, issued in favour of C.M.W.SS.Board. 25.03.2003 66 Ex.D66 Original Water & Sewerage Tax Payment Receipt No.549640 for the period from 2/2000-2001 to 2/2002-2003.
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67Ex.D67 Original Water charges (flat) Payment Receipt No.549641 for the period from 2/1993-1994 to 2/1995-1996.
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68Ex.D68 Original Water charges (flat) Payment Receipt No.549642 for the period from 2/1996-1997 to 2/2000-2001.
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69Ex.D69 Original Water charges (flat) Payment Receipt No.549641 for the period from 2/2001-2002 to 2/2002-2003.
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70Ex.D70 Original Water charges (flat) Payment Receipt No.549644 for the period from 2/2003-2004.
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71Ex.D71 Original Challan for Rs.100/- paid to Chennai Metropolitan Water Supply and Sewerage Board for name transfer. 26.03.2003 72 Ex.D72 Copy of the Patta C.A.No.400/2003 in favour of Mrs.Pramila Jain.
73Ex.D73 Original Letter from R.D.Agencies to Mrs.Pramila Jain.
10.04.2003 74 Ex.D74 Orginal Letter from Kaizen Impex to Mrs.Pramila Jain.
20.05.2003 75 Ex.D75 Original Letter from Anisha Overseas to Mrs.Pramila Jain.
21.05.2003 76 Ex.D76 Legal Notice from Daramchand Jain, Advocate On behalf of Mrs.Pramila Jain to Mr.B.Madusoodanan. 11.06.2003 77 Ex.D77 Original Letter from Mr.B.Madhusoodhanan. To Mrs.Pramila Jain.
20.06.2003 78 Ex.D78 Legal Notice from Daramchand Jain, Advocate On behalf of Mrs.Pramila Jain to Mr.B.Madusoodanan. 25.06.2003 79 Ex.D79 Rejoinder from Mrs.Pramila Jain's counsel to Sri N.Sathyamoorthy, Advocate.
12.07.2003 80 Ex.D80 Legal Notice from Daramchand Jain, Advocate On behalf of Mrs.Pramila Jain to Mr.B.Madusoodanan. 26.08.2003 81 Ex.D81 Original Letter from B.Venkatraman & 5 ors to Mrs.Pramila Jain.
27.08.2003 82 Ex.D82 Original Letter from Mrs.Pramila Jain to B.Venkatraman & 5 ors.
03.09.2003 83 Ex.D83 Original Letter from K.Sudarsanam, Advocate to Mrs.Pramila Jain.
09.09.2003 84 Ex.D84 Xerox copy of cheque No.583618, drawn on ABN-AMRO Bank, issued in favour of Revenue Officer, Corporation of Chennai. 18.09.2003 85 Ex.D85 Original Property Tax Collection-Receipt No.191527.
18.09.2003 86 Ex.D86 Xerox Copy of Cheque No.583617, drawn on ABN-AMRO Bank, issued in favour of CMWSS Board. 18.09.2003 87 Ex.D87 Original Water Charges (Flat) Payment Receipt No.060739.
23.09.2003 88 Ex.D88 Legal Notice from Mr.A.Subramanian, Advocate to Mrs.Pramila Jain.
10.10.2003 89 Ex.D89 Original reply to A.Subramaniam, Advocate.
13.10.2003 90 Ex.D90 Rejoinder Notice Mr.A.Subramanian, Advocate to Mr.D.Dharamchand Jain.
29.10.2003 91 Ex.D91 Original Water & Sewerage Tax Payment Receipt No.422521.
17.12.2003 92 Ex.D92 Original Water & Sewerage Tax Payment Receipt No.0638722.
12.03.2004 93 Ex.D93 Original Water & Sewerage Tax Payment Receipt No.0638723.
12.03.2004 94 Ex.D94 Original Property Tax Collection Receipt No.429221.
13.03.2004 95 Ex.D95 Judgment and Decree in O.S.No.1386 of 2006 on the file XIV Asst. Judge, City Civil Court. 02.04.2004 96 Ex.D96 Legal Notice from A.Subramaniam, Advocate to Pramila Jain.
08.07.2004 97 Ex.D97 Reply Notice to A.Subramaniam, Advocate.
20.07.2004 98 Ex.D98 Legal Notice from Mr.M.Agni, Advocate to the Managing director of the 1st defendant. 27.07.2004 99 Ex.D99 Reply Notice to Mr.M.Agni, Advocate.
10.08.2004 100 Ex.D100 Property Tax Collection Receipt No.196692.
30.09.2004 101 Ex.D101 Original Water and Sewerage Tax Payment Receipt No.0351302.
30.09.2004 102 Ex.D102 Original Water and Sewerage Tax Payment Receipt No.0351303.
30.09.2004 103 Ex.D103 Original Letter from A.Subramaniam, Advocate to Pramila Jain.
01.12.2004 104 Ex.D104 Reply Notice to A.Subramaniam, Advocate.
15.12.2004 105 Ex.D105 Xerox Copy of Cheque No.231155, drawn on ABN-AMRO Bank, issued in favour of Revenue Officer, Corporation of Chennai. 02.03.2005 106 Ex.D106 Property Tax Collection Receipt No.464534.
10.03.2005 107 Ex.D107 Original Statement of account of Prakash Gold Palace Pvt. Ltd with State Bank of India.
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108Ex.D108 Original Statement of Account of Abilasha International Pvt. Ltd. With Scotia Bank.
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109Ex.D109 Original Memorandum of Articles of Association of Prakash Gold Palace.
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110Ex.D110 Original Payment Receipts.
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111Ex.D111 Notice to produce documents issued by the counsel for plaintiff.
25.02.2015 112 Ex.D112 Letters addresses to R.D.Agencies, Kaizon Impex, Anisha agencies (series).
01.08.2003 113 Ex.D113 Petition in RCOP.No.1084 of 2010.
21.06.2010 114 Ex.D114 Pay order in ABNAMRO BANK.
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115Ex.D115 Letter issued by the RBS confirming the issue of pay order.
07.05.2015 05.01.2018 dsa To The Sub Assistant Registrar, Original Side, High Court, Madras.
R.SUBRAMANIAN,J.
dsa Pre-Delivery Judgment in C.S.No.160 of 2005 .01.2018