Madras High Court
R.Chandrasekar vs B.Gopalakrishnamurthy on 12 March, 2018
Bench: A.Selvam, P.Kalaiyarasan
IN THE HIGH COURT OF JUDICATURE AT MADRAS
Dated : 12.03.2018
CORAM:
THE HONOURABLE MR.JUSTICE A.SELVAM
and
THE HONOURABLE MR.JUSTICE P.KALAIYARASAN
A.S.No.848 of 2014
and M.P.No.1 of 2014 and
C.M.P.No.11289 of 2017
1. R.Chandrasekar
2. C.Sheela ... Appellants / Defendants 2 and 3
Vs.
1. B.Gopalakrishnamurthy
2. B.Prathaban ... Respondents / Plaintiffs
3. Oriental Benefit and Deposit
Society Ltd., Rep. by its President
Mr.K.Krishnakumar
No.108, Audiyappa Naicken Street,
Chennai - 600 079.
4. Sri Ganesh Auctioneers & Co.,
Rep. by its authorized Officer,
No.5 C/2, Valluvar Street,
Krishnamurthy Nagar,
Chennai - 600 118. ... Respondents / Defendants 1 & 4
Appeal Suit filed under Section 96 and Order 41 Rule 1 r/w Section 151 of the Code of Civil Procedure, to set aside the Judgment and Decree, dated 30.10.2014 passed in O.S.No.10771 of 2010 on the file of the II Additional City Civil Court, Chennai and allow the Appeal Suit with costs.
For appellants : Mr.S.V.Jayaraman, Senior Counsel
for Mr.G.Veerapathiran
For respondents : Mr.S.Sadasharam for R1 and R2
No Appearance for R3
R4 - Given up
JUDGMENT
(Judgment of the Court was delivered by P.KALAIYARASAN, J ) This Appeal Suit has been filed by the defendants 2 and 3 as appellants against the Judgment and Decree passed by the II Additional City Civil Court, Chennai, dated 30.10.2004 in O.S.No.10771 of 2010, decreeing the suit as prayed for.
2. The plaint averments are as follows :
(i) The suit property was acquired by the plaintiffs through the Will, dated 14.02.1980 executed by their father and probated by order, dated 25.11.1982 in O.P.No.192 of 1982. The plaintiffs availed a loan of Rs.7,00,000/- from the first defendant and executed a simple mortgage deed mortgaging the suit property as collateral security for the loan. The period of repayment was fixed as 96 months and the mortgagee had reserved the right to sell the property under Section 69 of the Transfer of Property Act, in the event of default in the repayment of interest for 3 consecutive months.
(ii) The first defendant purporting to act under the clause in the mortgage deed engaged the fourth defendant to conduct auction to sell the property without notice to the plaintiff and without following any of the procedure laid down under Section 69 of the Transfer of Property Act and with the sole intention of grabbing the property worth more than Rs.2 crores for a meagre amount by colluding with the second defendant. The first defendant anticipating action by the Economic Offences Wing colluded with second and fourth defendants and fourth defendant had come out with the false claim as if auction was held on 19.02.2005. But no auction was held on 19.02.2005 and the plaintiffs have not received any notice of the alleged auction. The alleged payment towards sale is also a make believe affair concocted by the defendants 1, 2 and 4.
(iii) The plaintiffs received notice in Crl.M.P.No.3188 of 2005 in Crl.M.P.No.2708 of 2015 in Cr.No.12 and 267 of 2005 filed by the second defendant seeking permission of the Special Court under "TNPID Act" to deposit Rs.15,00,000/- towards auction sale. The plaintiffs filed their counter and the Special Court on 17.04.2006 closed the Criminal Miscellaneous Petitions filed for permission. This Court in the writ petition filed by the first defendant already granted injunction restraining the respondents therein from proceeding further pursuant to the said two complaints.
(iv) The fourth defendant enacted a fake auction as if an auction was conducted on 19.02.2005. No notice was issued to the plaintiffs and there was no publication in any prominent newspaper regarding alleged auction. Only in the first week of August 2008, the plaintiffs came to know about the execution of the sale deed in favour of the second defendant by the first defendant through reliable sources. The plaintiffs applied for Encumbrance Certificate and came to know the registration of the sale deed in favour of the second defendant and then settlement deed in favour of the third defendant.
(v) The sale deed is vitiated by fraud, collusion and conspiracy among the first, second and fourth defendants. The defendants 2 and 3 taking advantage of the alleged sale and consequent settlement are trying to disturb the possession of the suit property by the plaintiffs. Therefore the plaintiffs have come forward with the suit seeking to set aside the sale deed, dated 22.01.2007 and for consequential permanent injunction.
3. The averments in the written statement and additional written statement filed by the second defendant and adopted by the third defendant are as follows :
(i) Title to the suit property and mortgage of the same by the plaintiffs in favour of the first defendant are admitted. It is denied that the second defendant in collusion and conspiracy with the fourth defendant enacted a false auction as if an auction was conducted on 19.02.2005 as false. In the auction three other bidders participated and the sale was confirmed in favour of the second defendant being the highest bidder for a sale consideration of Rs.20,10,000/-. The sale deed was executed on 22.01.2007. From the date of auction, 19.02.2005 till the sale, dated 22.01.2007 several events happened. After execution of sale deed there was Rent Control Proceedings taken against the tenants by the second defendant and the possession was taken through the Court.
(ii) Patta was issued in the name of the second defendant on 23.11.2007 and there was mutation of records in his name for the suit property. The second defendant has executed registered settlement deed dated 28.02.2008 in favour of his wife, third defendant. After execution of the settlement deed, third defendant paid a sum of Rs.31,930/- on 26.11.2008 towards planning permit fee for demolition of the suit property.
(iii) The second defendant sought permission to deposit a sum of Rs.15,00,000/- towards sale consideration in the criminal case pending before the Special Court under TNPID Act. The Special Court closed permission petition as the High Court has already granted interim injunction. Accordingly, the sale deed was executed on 22.01.2007 in view of the High Court injunction order. The plaintiffs have got knowledge about the auction sale in the year 2005 and the suit was filed on 18.09.2008. Hence the suit is barred by limitation and therefore the suit is liable to be dismissed.
4. The trial Court framed necessary issues and after analysing both oral and documentary evidence of both sides, decreed the suit as prayed for. Aggrieved by the same, the defendants 2 and 3 have come forward with this Appeal Suit.
5. The learned Senior counsel appearing for the appellants / defendants 2 and 3 strenuously argued that the suit is barred under Article 59 of the Limitation Act as the plaintiffs had the knowledge about the auction sale even prior to the date of auction sale; that the first defendant only after following the procedure under Section 69 of the Transfer of Property Act conducted auction sale, through D4, after issuing notice to the plaintiffs / mortgagors and subsequent to the sale, D2 executed settlement deed in favour of his wife D3 and that there was mutation of records and delivery was also obtained through Court from the tenants and therefore the Judgment of the trial Court is liable to be reversed and the suit is to be dismissed.
6. The learned counsel appearing for the respondents / plaintiffs inter alia argued that no auction was held as alleged by the defendants and no notice was issued as contemplated in the mortgage deed and Section 69 of the Transfer of Property Act, 1882 and the defendants 1 and 2 colluded with each other, prepared the sale deed as if auction was held on 19.02.2005 and the trial Court after analysing the evidence of both sides has rightly decreed the suit as prayed for. It is further argued that the alleged delivery through Court is not correct and re-delivery has been ordered to the actual tenants as the Court found the collusion between D2 and the alleged tenants. It is also further argued that the suit was filed well within time from the date of knowledge of the sale and the judgment and decree of the trial Court does not require any interference.
7. There is no dispute that the property belonging to the plaintiffs under the Will, dated 14.02.1980 executed by their father and probated as per order, dated 25.04.1982 in O.P.No.185 of 1982 by this Court was mortgaged on 17.10.1994 under Ex.A.1 in favour of the first defendant for a loan of Rs.7,00,000/-. The main contention of the appellants / defendants 2 and 3 is that the suit is barred under Article 59 of the Limitation Act. There is absolutely no documentary evidence to establish that the plaintiffs had knowledge about the sale deed, dated 22.01.2007 in favour of the first appellant / second defendant prior to adding the plaintiffs as parties in Crl.M.P.No.3188 of 2005 in Crl.M.P.No.2708 of 2005 in Cr.No.12 and 267 of 2005 on the file of the Special Court, TNPID, Chennai. The petition copy of the above Crl.M.P and copy of the counter filed by the plaintiffs herein who are arrayed as fifth and sixth respondent in Crl.M.P are marked as Ex.B.9 and Ex.B.10. It is not known whether the plaintiffs as fifth and sixth respondents in the above proceedings before the Special Court received the copy of the petition. They filed counter under Ex.B.10 before the Special Court on 26.09.2005 as could be seen from the Court seal. Therefore, it could be inferred that the plaintiffs had knowledge about the sale deed on 26.09.2005. The present suit has been filed on 18.09.2008. Therefore, the plaintiffs have filed the suit within three years from the date of knowledge. Since the suit has been filed well within time, the contention of the learned Senior counsel appearing for the appellants is sans merit.
8. The mortgage deed executed by the plaintiffs in favour of the first defendant is marked as Ex.B.2. Clause 8 (iv) of the deed reads thus :
"That on the Society calling in the monies as provided in subclause (iii) above and on the mortgagors failing to pay the same within three months of the date of service of the aforesaid notice, the Society, notwithstanding any part payment made by the mortgagors shall have as provided in Section 69 of the Transfer of the Property Act, the power to sell, the property described in the Schedule hereto in private sale with the consent of the mortgagors or by public auction without the consent of the mortgagors. On such sale the mortgagors shall execute and register necessary sale deed and in default of during so, within a week of the completion of the sale, the Society is hereby authorised to execute it and register the same."
9. Section 69 (2) of the Transfer of Property Act, 1882 also stipulates three months notice in writing requiring payment of the mortgage dues to the mortgagors and unless such notice is issued the mortgagee has no power to sell the mortgage property. Thus only after three months from the date of issuance of notice to the mortgagor to repay the dues under mortgage deed, the mortgagee can exercise his power to sell under Section 69 of the Transfer of Property Act.
10. The specific case of the plaintiffs is that no notice was issued to the plaintiffs / mortgagors and no auction has been held as alleged by the defendants 2 and 3. D1, the mortgagee remained exparte in the suit. In 2005 on the complaint given by the Depositors, Economic offence wing registered criminal case against the first defendant and the first defendant company was also sealed by the Economic wing on 20.06.2007. Though the defendants filed the auction sale agreement, Ex.B.6 and confirmation letter regarding the sale, Ex.B.7, the same do not bear the seal of D4 and there is also no acceptable evidence that the sale was conducted by D4, pursuant to the Board resolution of D1. The resolution of the D1 Board has also not been filed. There is also contradiction as to the conduct of the auction. The second defendant examined as D.W.1 says that the auction was conducted in D4 company and he further says that he participated in the bidding and he was the highest bidder and he does not know whether D4 company is situate, whereas the alleged auction sale notice marked as Ex.B.3, dated 19.02.2005 discloses that the auction was held in the suit property.
11. The contention of the plaintiffs that the defendants 2 and 3 acted in collusion with D1 to grab the properties of the plaintiffs cannot be brushed aside for the following reasons :
(i) The second defendant admits in his evidence that he had acquaintance with D1 and he purchased a property in Mount Road in auction from D1 long back and he knew the proposed auction of the suit property well in advance. Though he says that through public notice, he came to know such proposed auction of the suit property no such public notice is filed as a document.
(ii) Though D2 states that entire sale consideration was given to D1, D1 filed O.S.No.4141 of 2007 before the City Civil Court, Chennai, seeking permanent injunction restraining the defendants from demanding the registered sale deed, dated 22.01.2007 without paying the balance amount due to the plaintiffs and appeal has also been preferred in A.S.No.536 of 2010. No doubt the suit has been dismissed but the doubt exists as to the genuineness of the sale deed.
(iii) Though the second defendant pleads that he obtained delivery of the suit property through Court, the order of this Court in C.R.P (NPD) NOs. 736 to 741 of 2012, dated 19.04.2012 marked as Ex.A.4 depicts that delivery taken by the second defendant is not correct and therefore this Court ordered re-delivery to the real tenants, who are not parties in the RCOP filed by the second defendant herein. The main allegation of the real tenants before this Court in the above CRP is that the second defendant herein filed collusive RCOPs.
(iv) It is also pertinent to note that there is no certification of confirmation of sale by D4, who is alleged to have conducted the auction on behalf of D1. Therefore, it is clear that D2 with malafide intention colluded with D1, the benefit fund company who was about to face the criminal case for defrauding its depositors and created the sale deed, dated 22.01.2007 as if auction was conducted on 19.02.2005.
12. The contention of the learned Senior counsel appearing for the appellants about the subsequent events regarding mutation of records, settlement deed in favour of D3, payment of fee towards demolition plan by D3 are of no use, in the light of the aforesaid fraud played in executing the sale deed.
13. The trial Court has rightly decreed the suit as prayed for and this Court does not find any reason to interfere with the Judgment and Decree of the trial Court.
In fine, this Appeal Suit is dismissed with costs, confirming the Judgment and Decree, dated 30.10.2014 passed in O.S.No.10771 of 2010 on the file of the II Additional City Civil Court, Chennai. Consequently connected miscellaneous petitions are also dismissed.
(A.S.,J.) (P.K.,J)
12-03-2018
Index :Yes
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To
The II Additional City Civil Court
Chennai
A.SELVAM,J.
AND
P.KALAIYARASAN,J.
tsvn
Judgment in
A.S.No.848 of 2014
12-03-2018