Madras High Court
Rahima Bi And Ors. vs R. Menezez And Anr. on 5 January, 1990
Equivalent citations: (1990)1MLJ323
JUDGMENT E.J. Bellie, J.
1. This second appeal is by the mortgagors who filed the suit. It appears the mortgaged property has been sold in auction under Section 69-A of the Transfer of Property Act and in that auction it was sold to the second defendant. The mortgagee, is the first defendant.
2. The plaintiff-mortgagors filed the suit before the auction sale was registered for the relief of redemption after scaling down the debt under the Provisions of the Tamil Nadu Debt Relief Acts and for a declaration that the auction sale held on 8.10.1977 is null and void and for consequential relief of injunction restraining the first defendant mortgagee from executing a sale deed. According to the plaintiffs they are joint owners of the mortgaged property; it was mortgaged under a registered deed on 20.10.1965 in favour of the first defendant for a sum of Rs. 3,500 agreeing to pay interest at 12 per cent per annum; the plaintiffs have till 20.9.1977 paid to the first defendant-mortgages several sums in monthly instalments agreggating to in all Rs. 7,025; from the date of mortgage till 20.9.1977 the interest works out to Rs. 5,005 and it fell short of Rs. 1,480; for recovery of this the first defendant without the requisite statutory notice had brought the property to auction through the auctioners' Galley and Company; the auction sale was not properly or adequately advertised and therefore there was only a solitiery bidder viz., the second defendant and he in collusion with the auctioneers knocked down the property for Rs. 11,000 which is too small an amount when compared to the real worth of the property; and the plaintiffs are debtors within the meaning of Tamil Nadu Debt Relief Act 38 of 1972 and Act 16 of 1976 as amended by. Act 40 of 1978 and by virtue of these Acts on the date of auction i.e., 8.10.1977 there was no amount due from the plaintiffs to the first defendant. Therefore the auction sale was without any legal justification.
3. The first defendant-mortgagee filed a written statement in which he has admitted receipt of Rs. 7,025 as alleged in the plaint. He stated that he is a lay man and he did not know about the legal technicalities and the mode of calculating interest. He did not know that statutory notice must be sent. He would admit that the price fetched in the auction is too low. He does not know whether the plaintiffs are debtors with in the meaning of Debt Relief Acts. He has no objection for the debt being scaled down and he has no objection for the suit being decreed as prayed for.
4. The second defendant in his written statement contended that there was notice of publication. It is contended that there were number of bidders in the auction. The plaintiffs were already aware of the auction but they did not make any attempt to prevent it. He further contended that the plaintiffs are not debtors within the meaning of the Debt Relief Acts. The worth of the property is only Rs. 10,000 Hence the suit is liable to be dismissed.
5. The trial Court (IV Assistant Judge, City Civil Court, Madras) framed three issues as follows:
1. Are not the plaintiffs entitled to scaling down of the mortgage debt?
2. Is not the mortgage discharged?
3. Are not the plaintiffs entitled to the relief prayed for?
It held that the plaintiffs are not entitled to scale down the mortgage debt and the mortgage debt is not discharged and that the plaintiffs are not entitled to any relief. In the result it dismissed the suit.
6. On appeal by the plaintiffs the first appellate Court (XI Additional Judge, City Civil Court, Madras) concurred with the findings of the trial Court and held that the auction sale was quite valid. In the result it discussed the appeal.
7. In this second appeal it is contended that there was no statutory notice by the mortgagee to the mortgagors as required under Section 69 of the Transfer of Property Act and therefore the sale is invalid. Secondly it is argued that the mortgages himself has filed a written statement that he has received Rs. 7,025 and he has no objection for scaling down and decreeing the suit.
We will take up the second point first for consideration. On the face of it looks quite obvious that the first defendant mortgages is colluding with the plaintiff. Both the courts below have rightly held so. It is to be seen how the mortgaged property came to be sold in auction. The only person who can bring the property for sale is the first defendant mortgagee. The sale has been conducted by auctioneers M/s Galley & Co. Naturally it is at the instance of the first defendant mortgagee the auctioneers brought the property to sale. As to this aspect of the case there is no dispute. The question therefore naturally arises is: If there is no amount due from the mortgagor why did the first defendant take steps to bring the property to sale. It is the concurrent findings of the trial Court and the first appellate Court that the alleged payment of Rs. 7.025 to the mortgagee is not true. Both the Courts have commented that not a scrap of paper has been filed by the plaintiffs to prove such payment. The first defendant has filed a written statement supporting the case of the plaintiffs but he would not dare to get into the box and face the cross examination. If really be has received Rs. 7,025 and that has got to be credited then why does he not say so giving evidence. For the mortgagee to colludge with the plaintiffs-mortgagors after the sale there may be various reasons. May be there is a secret understanding between the plaintiffs and the first defendant that if they could by joint effort avert the effect of the auction sale and the property can be sold for much higher amount as they might hope, they may share the excess amount that they may get, over and above for which the sale was held between themselves. Like this there may be other reasons. In this connection the Courts below have pointed out that in the docket sheet of the written statement of the first defendant the Advocate's name who appears for the plaintiffs is found. It looks very odd and strange that the first defendant mortgagee should state in his written statement that he is not in a position to say whether the plaintiffs are debtors within the meaning of Debt Relief Acts or not and then should say that he has no objection to scaling down of the debt. To repeat, the collusions between the plaintiffs and the first defendant is apparent and it cannot at all be delivered as the courts below have concurrently held that the plaintiffs have not made payments to the first defendant as pleaded by them. Hence the argument that the first defendant admits receipt of amounts from the plaintiffs and he has no objection to scaling down the debt cannot be countenanced when the auction sale has already taken place and only sale deed has to be executed and registered. It is not in dispute that sale consideration has passed from the second defendant. Mr. R. Gandhi, learned Counsel for the appellants-plaintiffs would rely on Harandas Karsondas v. S.A. Kantan : and Abraham Zea Issace Mansoor v. Abdul Latib Usman A.I.R. 1944 Bom. 156 for the proposition that until the time the sale deed is registered the mortgagor will have right to redeem the property. There is no quarrel with this proposition. In those cases the mortgagors paid the mortgage amount to the mortgagees before the registration of sale dead. But in our case, as the Courts below have rightly pointed out, there is collusion between the mortgagors and the mortgagees after the auction sale and the alleged payment by the mortgagors to the mortgagee is not proved. There is no plea of payment of mortgage amount subsequent to the sale. In these circumstances in the present case, the above decisions relied on for the appellants-plaintiffs will not help them.
9. Now taking up the first point argued by Mr. Gandhi that there is no statutory notice as required under Section 59 of the Transfer of Property Act, this section gives the mortgagee power to sell the mortgagor property. For us Sub-section (2) of the Section is relevant. It reads thus:
69 (2) No such power can be exercised unless and until--
(a) Notice in writting requiring payment of the principal money has been served on the mortgagor, or on one of several mortgagors, and default has ben made in payment of the principal money, or of part thereof, for three months after such service; or
(b) some interest under the mortgage amounting at least to five hundred rupees is in arrear and unpaid for three months after becoming due.
Reading of Clauses (a) and (b) clearly shows that the power of sale can be exercised subject to condition that a notice is given to the mortgagor requiring payment of principal money and the mortgagor fails to pay the principal amount for three months after service of notice, or interest of atleast Rs. 500 is in arrear and unpaid for three months after becoming due. This would show that no notice is required if there is interest of Rs. 500 due and unpaid for three months after becoming due. In the present case we have seen above that there is no proof of any payment to the mortgagee, and there is no truth in the written statement of the first defendant mortgagee. The mortgage amount is Rs. 3,500 and the date of mortgagee is 20.10.1965 and the interest rate is 12 per cent per annum In fifteen months i.e., on 20.1.1967 itself interest of more than Rs. 500 would have been due. The sale was held long after i.e., 6.10.1977. Therefore no notice as required under Section 69 (2) (a) need be sent at all. It is however pointed out that in the mortgage deed it is stated that if the mortgagee fail to pay interest for three months or the principal amount due on demand, in either case, the mortgages may bring the property to sale and therefore even in the case of interest being due a notice must be sent. But in view of Section 69 of the Transfer of Property Act this contention has no merit. Parties cannot contract out of statute. Thus there is no merit in argument that no statutory notice under Section 69 has been sent.
10. In the result there is no reason to interfere with the concurrent findings of the Courts below, Consequently the second appeal is dismissed with costs.