Gauhati High Court
Maheshpur Tea And Industries Pvt. Ltd. vs Mantala Tea Co. Ltd. And Ors. on 1 February, 2001
Equivalent citations: AIR 2001 GAUHATI 152, (2002) 2 CIVLJ 111 (2002) 1 GAU LR 53, (2002) 1 GAU LR 53
Author: A.K. Patnaik
Bench: A.K. Patnaik
JUDGMENT A.K. Patnaik, J.
1. 1. These Second Appeals under Section 100 of the Civil Procedure Code, 1908 are against the judgment and decree dated 12.12.1997 of the learned District Judge, West Tripura, Agartala in Title Appeal No. 15/96.
2. On 13.5.1977 M/s Mantala Tea Company Ltd. (hereinafter referred to as the plaintiff) filed Title Suit No.49/77 in the Court of the learned Sadar Munsiff, Agartala. The case of the plaintiff in the said suit was that the plaintiff was the owner of Mantala Tea Estate and was carrying on the business of cultivation, manufacture and sale of black tea. The plaintiff borrowed a sum of Rs. 3.00 lakhs from the Assam Financial Corporation (hereinafter referred to as Defendant No. 1) and mortgaged its tea estate and factory described in the Schedule to the plaint (hereinafter referred to as suit property) as security for the loan under mortgage bond on 7th April, 1969. The mortgage bond stipulated inter alia that the plaintiff will be at liberty to mortgage and hyopthecate the suit property in favour of the United Bank of India Limited (hereinafter referred to as Defendant No. 6) and the Defendant Nos. 1 and 6 would have Paripassu charge over the suit property. The plaintiff took loan from the Defendant No. 6 against hypothecation of seasonal tea during the years 1969 to 1976. In 1976, the Defendant No. 1 put pressure on the plaintiff to clear the outstanding mortgage debt and without giving time to the plaintiff to pay up the arrear or mortgage debt out of its surplus income during the year 1976 invited tenders for sale of the suit property. The plaintiff made representation to the Defendant No. 1 for withdrawal of the said notice for sale, but the Defendant No. 1 for withdrawal of the said notice for sale, but the Defendant No. 1 did not reply, the plaintiff then received a letter dated 24.3.1977 from the Defendant No. 1 Intimating sale of the suit property to Maheshpur Tea and Industries (P) Ltd. (hereinafter referred to as the Defendant No. 2) by the registered sale deed dated 24.3.1977. The plaintiff alleged that the sale of the suit property was made in collusion amongst Defendant Nos. 1, 2 and 6 and the sale was unjust, arbitrary, malicious and fraudulent. The plaintiff prayed for a declaration that the registered sale deed dated 24.3.1977 executed by the Defendant No. 1 in favour of the Defendant No. 2 was Illegal, void, ineffective and not binding against the plaintiff and for a permanent injunction restraining the Defendant Nos. 1 and 2 and Defendant Nos. 3, 4 and 5 (Officers of the Defendant No. 2 Company) and their servants or agents from entering the suit property and from disturbing the plaintiffs possession over the suit property.
3. On 3.6.1979, the Defendant No. 2 filed its written statement and on 19.6.1981, the Defendant No. 1 filed its written statement in the said suit. On 8.11.1983, the learned Munsiff framed a preliminary issue on the question as to whether the Court had jurisdiction to try the suit and heard the parties on the preliminary issue on 6.8.1985 and by order dated 19.8.1985 held that the Court had jurisdiction to try the suit. On 7.2.1990, the learned Munsiff framed the other issues for trail. On 14.11.1990 and 27.4.1992, the plaintiff filed petitions for amendment of the plaint and by order dated 28.4.1993 the learned Munsiff allowed the amendments. On 31.7.1993, the plaintiff filed the amended plaint. On 3.9.1993, written statement/ additional written statement was filed by the Defendant Na6. On 27.11.1993, additional written statement was filed by the Defendant No. 2 and on 20.12.1993, additional written statement was filed by the Defendant No. 1 in reply to the amendments to the plaint. On 21.3.1994, the learned Munsiff recast the issues. Thereafter the parties adduced both oral and documentary evidence. By judgment and decree dated 20.2.1996, the learned Munsiff decreed the suit with costs in favour of the plaintiff and declared the registered sale deed dated 24.3.1977 executed by the Defendant No. 1 in favour of the Defendant No. 2 as illegal, void, ineffective and not binding against the plaintiff. The learned Munsiff also ordered that if an amount of Rs. 12.75 lakhs is deposited by the plaintiff on or before 20.4.1996, the Defendant No. 2 will put the plaintiff in possession of the suit property within 15 days from the date of the said deposit of the amount failing which the plaintiff would be put into possession in due course of law. The learned Munsiff also ordered that if the plaintiff fails to make the deposit of the said sum of Rs. 12.75 lakhs within the time allowed, the registered deed of sale would stand validated and the entire suit would stand dismissed with costs to the Defendant.
4. Against the said judgment and decree of the learned Munsiff, the Defendant No. 2 filed TA No. 15/96, Defendant No. 6 filed TA No. 20/ 96 and Defendant No. 1 filed TA No. 21 /96 in the Court of the learned District Judge, West Tripura, Agartala. But by judgment and decree dated 12.12.1997, the learned District. Judge, dismissed the appeals and affirmed the judgment and decree of the learned Munsiff. Aggrieved by the said Judgment and decree of the learned District Judge dismissing the Title Appeals, the Defendant Nos. 1, 2 and 3 have filed these Second Appeals before this Court. On 13.2.1998, Second Appeal No.5/98 filed by the Defendant No. 2 was admitted and on 19.2.1998, Second Appeal No.7/98 filed by the Defendant No. 1 and Second Appeal No.8/98 filed by the Defendant No. 6 were admitted. When the appeals were taken up for hearing on 23.7.1999. 27.7.1999 and 28.7.1999, the Court felt the necessity of formulating precisely the Civil substantial questions of law which arose for decision in the Second Appeals and after hearing the parties on 29.7.1999 and 30.8.1999 passed orders on 30.8.1999 formulating the following substantial questions of law:
(i) Whether the learned Courts below committed error of law in holding that the suit was within the pecuniary jurisdiction of the learned Munsiff?
(ii) Whether the first appellate Court ignored material and relevant evidence such as the letter dated 5th January, 1977 of the plaintiff Ext-M in coming to the conclusion that the sale of the industrial unit of the plaintiff by the Defendant No. 1 to the Defendant No. 2 was arbitrary, unfair and contrary to the guidelines laid down by the Supreme Court in Mahesh Chandra v. Regional Manager, UP Financial Corporation. AIR 1993 SC 935?
(iii) Whether on the facts as established before the Courts below, the conclusion of the Courts below that the sale of the industrial unit of the plaintiff by the Defendant No. 1 to the Defendant No. 2 was arbitrary, unfair and contrary to the guidelines laid down by the Supreme Court in Mahesh Chandra y. Regional Manager, UP Financial Corporation, AIR 1993 SC 935 is correct ?
(iv) Whether on the facts as established before the Courts below, the Court could interfere with the sale of the Industrial unit of the plaintiff by the Defendant No. 1 to the Defendant No. 2 under Section 29 of the STC Act, 1951, in view of the decisions of the Supreme Court that the power of judicial review in such matters is limited?
(v) Whether the Courts below were correct in law in determining the rights of the parties under the mortgage deed dated 7th April, 1969 and under Sections 58(e), 69 and other relevant provisions of the Transfer of Property Act?
(vi) Whether the Courts below could have under law granted the relief of declaring the sale deed dated 24.3.1977 void on the plaintiff depositing the amount of Rs. 12.75 lakhs and the relief of restoration of possession?
On 30.7.1999, CM Application No.54/99 was filed by the appellant in SA No. 5/98 praying for framing a further substantial question of law on the point of limitation and the Court after hearing passed orders on 1.9.1999 formulating the following seventh substantial question of law:
(vii) Whether the suit of the plaintiff for mandatory injunction for restoration of possession of the Tea estate was barred by the law of limitation?
5. At the hearing of the Second Appeals, an objection was raised by Mr. G. Chakravorty to the formulation of the aforesaid substantial questions of law by the Court by the orders dated 30.8.1999 and 1-9-1999. He argued that the Second Appeals were admitted without formulating the substantial questions of law involved in the appeals and the hearing of the appeals then commenced and when the appellants had virtually completed their submissions, the substantial questions of law were formulated by the Court in the order dated 30.8.1999. According to Mr. Chakravorty, the formulation of the questions by the order dated 30.8.1999 was uncalled for and was without jurisdiction. Mr. Chakravorty submitted that similarly the formulation of the substantial question of law on the point of limitation by the order dated 1.9.1999 in CM Application No.54/99 was not warranted. He contended that the appellants do not have any Inherent right or natural right to prefer any appeal against the judgment and decree of the first appellate Court and that they had only a statutory right conferred by a statute and that the procedure prescribed by the statute for such appeal cannot be exceeded by the Court. According to Mr. Chakravorty, since no substantial question of law had been formulated by the Court at the time of admission, the appeal was liable to be dismissed in llmine. In support of his aforesaid submission, he cited the decisions of the Supreme Court in Kshitish Ch. Purkait v. Santosh Kumar Purkait, (1997) 5 SCC 438, Dnyanoba B Hourao Shemada v. Maroti Bhaurao Manor, AIR 1999 SC 864, Kondiba Dahadu Kadam v. Savitribai Sopal Gujar, (1999) 3 SCC 722 and Taherakhatoon v. Salambin Mahammad, (1999) 2 SCC 635.
6. In reply to the aforesaid submission of Mr. Chakravorty, Mr. Chatterjee submitted that by order dated 13.2.1998 passed in the said Second Appeal, the High Court after being satisfied that a substantial question of law arose for consideration, admitted the appeal and this is not a case where no substantial question of law was formulated by the Court at the time of admission of the appeal on 13.2.1998. He, however, referred to the order dated 30.4.1998 passed by the Court wherein the prayer for the appellants that all other substantial questions raised in the memo of appeal was allowed to be raised in the Second Appeal. According to Mr. Chatterjee the Court can always reformulate the substantial questions of law involved in the appeal more precisely and accurately at the time of hearing of the appeal. Similarly, Mr. B.K. Goswami and Mr D.R. Choudhury submitted that the orders dated 19.2.1998 passed in the said Second Appeal Nos.7/98 and 8/98 would show that the Court admitted the appeals after being satisfied that the same substantial questions of law on which Second Appeal No. 5/98 had been admitted also arose in Second Appeal Nos.7/98 and 8/98. Mr. Goswami cited the decision of the Supreme Court in the case of Panchugopal Barua v. Umesh Chandra Goswami, (1997) 4 SCC 713, for the proposition that the High Court can entertain a Second Appeal if the appeal involves a substantial question of law stated in the memo of appeal. He contended that the memo of appeal in Second Appeal No. 7/98 would show that substantial questions of law have been raised in the Second Appeal. According to Mr. Goswami, it was the duty of the Court to have formulated the substantial questions of law raised in the memo of appeal at the time of admission of the appeal and in case the Court had not precisely formulated the said substantial questions of law, the appellant cannot be made to suffer on account of such mistake on the part of the Court. He relied on the decisions of the Supreme Court in the case of Kshitish Ch Purlait v.
San tosh Kr. Purkait (supra) for his submission that formulation of substantial questions of law by the High Court under Sub-section (4) of Section 100 of the CPC is for the purpose of giving a fair and proper opportunity to the respondents consistent with the principles of natural justice.
7. The Court considered the decisions of the Supreme Court cited by the learned counsel for the parties and the provisions of Section 100, CPC, and by order dated 30.8.1999 the Court held that Subsection (1) of Section 100, CPC, made it clear that an appeal shall lie to High Court from every decree passed in an appeal by any Court subordinate to the High Court, if the High Court is satisfied that the case involves a substantial question of law. Therefore, once the High Court is satisfied that the case involves a substantial question of law, an appeal can be entertained by the High Court under Section 100, CPC. In the said order dated 30.8.1999 the Court held that the existence of substantial question of law is the basis of the jurisdiction of the High Court under Section 100, CPC. The High Court should frame substantial questions of law which arise in the case at the time of admission of the appeal, but this does not mean that if substantial questions of law have not been specifically formulated by the High Court at the time of admission of the appeal, the High Court would cease to have jurisdiction to hear and decide the Second Appeal under Section 100, CPC. Conversely, when the High Court entertains Second Appeal on being prima facie satisfied that substantial question of law arose for decision and also formulates that substantial question of law at the time of admission of the appeal, the High Court can after hearing the respondents in the Second Appeal dismiss the appeal after recording a finding that no substantial question of law has arisen for decision of the Second Appeal in the order dated 30.8.1999, This would be clear from a joint reading of Sub-sections (1), (3), (4) and (5) of Section 100, CPC. After taking the aforesaid view, the Court formulated the six substantial questions of law in its order dated 30.8.1999.
8. Coming now to the order dated 1.9.1999, CM Application No. 54/ 99 was filed by the appellant in Second Appeal No. 5/98 on 28.9.1999 with a prayer to allow the appellant to raise a substantial question of law on the point of limitation. It was argued by Mr. B Bhattacharjee, learned counsel for the appellant in the Second Appeal No.5/98 that even though the aforesaid substantial question of law had not been raised in the memo of appeal, the Court had sufficient power to allow the appellant to raise a substantial question of law not stated in the memo of appeal under Order 42 Rule 1, CPC, and cited a decision of a Division Bench of this Court in Collector v.
Wardington Lyngdoh, (1992) 2 CLR 369, wherein it had been held that the appellate Court can take cognizance and pass its decision on any ground not set forth in the memo of appeal, but the party affected must be given an opportunity of meeting the point. Mr. Chakravorty further submitted that in the instant case the trail Court had already recorded a finding in para-33 of its judgment dated 20.2.1996 that the Defendant No. 2 in the suit had been in possession of the suit property since 1977 and on the basis of such finding of fact as recorded by the trial Court the question of limitation could be decided by this Court in the Second Appeal. Mr. Chakravorty argued that under Section 3 of the Limitation Act, 1963, every suit instituted after the prescribed period had to be dismissed though limitation had not been set up as a defence, in reply to the aforesaid submissions, Mr. Chakravorty, learned counsel for the respondent No. 1, contended that Section 3 of the Limitation Act, 1963, could not override Sub-section (3) of Section 100, CPC which provided that in an appeal under Section 100, CPC, the memo of appeal was to precisely state the question of law involved in the appeal. Mr. Chakravorty submitted that since the point of limitation had not been raised in the memo of appeal and the hearing on the appeal had commenced, the appellant could not be permitted to raise a new plea of limitation just before the close of his argument. In support of his submission he cited the decision of the Supreme Court in Kshitish Ch. Purkait v. Santosh Kr. Purkait, (1997) 5 SCC 438.
9. In the order dated 1.9.1999, the Court held that on a reading of Order 42 Rule 1, CPC, it was clear that the rules of Order 41 also apply, so far as may be, to appeal from appellate decree and hence the provisions Order 41 Rule 2 also apply to appellate decrees under Section 100, CPC. Thus, where a substantial question of law involved in the appeal had not been precisely stated in the memo of appeal as required by Sub-section (3) of Section 100, CPC, the High Court can still grant leave under Order 41 Rule 2, CPC, to the appellant to urge that substantial question of law provided sufficient opportunity was given to the respondent who will be affected by the decision to contest the case on such new ground. This view was taken by the Court following the Division Bench's judgment of this Court in the Collector v. Wardington Lyngdoh (supra). The Court further held in the said order dated 1.9.1999 that it was clear from Section 3 of the Limitation Act, 1963, that every suit instituted after the prescribed period had to be dismissed by the Court even though limitation had not been set up as defence and the case of the appellant was that the suit for mandatory injunction for restraining of possession to tea estate was barred by law of limitation and this question of limitation could be decided on the basis of the finding of fact as recorded by the trail Court in para-33 of its judgment that the Defendant No. 2 in the suit has been in possession of the suit property since 1977. Therefore, no fresh enquiry into the facts was called for and to refuse the appellant to raise this new ground of limitation would cause serious injustice to the appellant. After recording the aforesaid reasons in the order dated 1.9.1999, the Court framed the aforesaid seventh substantial question of law on the question of limitation.
10. After the said orders were passed on 30.8.1999 and 1.9.1999 framing the seven substantial questions of law, opportunity was given to the appellant in the three appeals as well as the respondents in the said appeals to make their submissions on each of the aforesaid substantial question of law framed by the Court by the orders dated 3.8.1999 and 1.9.1999. Opportunity was also given to the respondent No. 1 to argue that no such substantial question of law as formulated by the Court by the orders dated 30.8.1999 arose for decision in the appeals. After about eleven months the substantial questions of law were formulated on 30.8.1999 and 1.9.1999, on 31.7.2000, 1.8.2000, 2.8.2000 and 3.8.2000, the learned counsel for the appellants and the respondents including the learned counsel for the respondent No. 1 in the appeals were heard at length on each of the aforesaid seven substantial questions of law framed by the Court on 30.8.1999 and 1.9.1999 and the hearing was concluded on 3.8.2000. Thus, none of the parties including the respondent No. 1 has suffered any prejudice whatsoever by formulation of the substantial questions of law by the Court by orders dated 30.8.1999 and 1.9.1999. For the aforesaid reasons I am unable to accept the contention of Mr. Chakravorty, learned counsel for the respondent No. 1, that the Second Appeals should be dismissed in limine on the ground that none of the aforesaid seven substantial questions of law were formulated at the time of admission of the appeals.
SUBSTANTIAL QUESTION NO. (i)
11. Mr. Goswami, learned counsel for the appellant in Second Appeal No. 7/98, submitted that in para-10 of the plaint, the plaintiff had valued the suit at Rs. 100 under Section 7(iv)(c) of the Court Fees Act, but had not stated the valuation of suit for the purpose of jurisdiction. The Defendant No. 1 in paras 2 to 4 of Its written statement had taken a plea that learned Munsiff had no pecuniary jurisdiction, but this point of pecuniary jurisdiction was decided by the learned Munsiff in favour of the plaintiff in paras-12 to 16 of its judgment. In the Title Appeal, the learned District Judge also decided the point of pecuniary jurisdiction in favour of the plaintiff in para-12 of the judgment. Mr. Goswami vehemently argued that according to plaintiffs own case in the plaint the value of suit property was Rs. 20.00 to Rs. 25.00 lakhs and the suit property had been sold by the Defendant No. 1 to the Defendant No. 2 at Rs. 5.49 lakhs. Since the pecuniary limit of the jurisdiction of the learned Munsiff was only Rs. 5,000 the suit was beyond the pecuniary jurisdiction of the learned Munsiff. He submitted that for coming to this conclusion the learned Munsiff and the learned District Judge relied on a decision of this Court in the case of Batuk Chandra Patwari and Ors. v. Kirti Ram Das and Ors., AIR 1972 Can 69, in which it was held that in a suit for declaration with consequential relief covered under Section 7(iv)(c) of the Court Fees Act, the plaintiff had been given the liberty to value his relief and such value stated by the plaintiff in the plaint will be the valuation for the purposes of jurisdiction as provided in Section 8 of the Suits Valuation Act. Mr. Goswami argued that the learned Courts below have accepted the valuation given by the plaintiff in the suit but under Sections 7(A) to 7(D) inserted in the Court Fees Act as made applicable to Tripura by a notification dated 1.7.1963, if the Court was of the opinion that the subject-matter of any suit has been wrongly valued it may revise the valuation and determine the correct valuation after holding such enquiry as it deems fit and proper. This view has been taken by a learned Single Judge in the case of Industrial Cooperative Bank Ltd v. Bhubaneswar Borthakur and Ors., AIR 1988 Gau 71, and a Division Bench of this Court in Md. Hafiz alias Hafizuddin Ahmed v. Mustt. Noorjahan, AIR 1989 Gau 3. According to Mr. Goswami, the decision of the learned Single Judge of this Court in Batuk Chandra Patwari and Ors. v. Kirti Ram Das and Ors. (supra) is no longer good law in view of the subsequent decisions of the learned Single Judge of this Court in Industrial Cooperative Bank Ltd. v. Bhubaneswar Barthakur and Ors. (supra) and the decision of the Division Bench in Md. Hafiz alias Hafizuddin Ahmed v. Musstt. Noorjahan (supra). Mr. Goswami further submitted that actually the suit filed by the plaintiff was not governed by Section 7(iv)(c) of the Court Fees Act but was governed by Section 7(iii) and Section 7(v) of the Court Fees Act inasmuch as the suit was for recovery of possession of land, building, factory, structures, plantations and machineries. He submitted that Section 3 of the Suits Valuation Act empowers the State Government to make rules for determining the value of land for the purpose of jurisdiction of the suit mentioned In Section 7(v) and (vi) of the Court Fees Act. No such rules under Section 3 of the Suit Valuation Act have been framed by the State Government of Triprua. He cited the decision of the Orissa High Court in the case of Indrajit Bohera and another v. Bhaja Meher and another, AIR 1969 Orissa 257 in which it has been held following decision of the Calcutta High Court in Sisir Kr. Dutta v. Sushil Kr Dutta, AIR 1961 Cal 229(SB) that in the absence of rules being framed under Section 3 of the Suits Valuation Act, the market value of the land determined for the purpose of Court Fees under Section 7(v)(c) of the Court Fees Act would be the market value of the subject-matter of the suit for the purpose of jurisdiction. Mr. Goswami submitted that the market value of the land measuring 10 Drones 3 Kanies 1 Ganda 2 Karas and 15 Dhurs comprised in the suit property was in excess of the pecuniary limit of Rs. 5,000 fixed for the learned Munsiff. He argued that Section 6, CPC, provided that nothing in the CPC would operate to give any Court jurisdiction for a suit the amount or value of the subject-matter of which exceeds the pecuniary limits (if any) of its ordinary jurisdiction. Therefore, the learned Munsiff had no jurisdiction to try a suit the value of which exceeds its pecuniary limits. Reiving on the Full Bench decision of the Orissa High Court in the case of Land Acquisition Officer v. Mst. Rahim Rat, AIR 1971 Orissa 71, he submitted that the decree passed by the learned Munsiff being beyond his jurisdiction was a nullity and was liable to be set aside.
12. Mr. B Chatterjee, learned counsel for the appellant in Second Appeal No. 5/98, submitted that the plaintiff has prayed for a declaration that the registered Sale Deed dated 24.3.1977 be declared void. In the said Sale Deed, the value of the property was stated as Rs. 5.49 lakhs, in addition to the said sum of Rs. 5.49 lakhs, a further sum of Rs. 7.45 lakhs was to be paid by the Defendant No. 1 to the Defendant No. 6. Hence the aggregate amount to be paid by the Defendant No. 2 for purchase of the suit property was Rs. 12.49 lakhs. Further the plaintiff had himself alleged in the plaint that the market price of the suit property was between Rs. 20.00 to Rs. 25.00 lakhs. Thus the value of the suit property was far in excess of Rs. 5,000 which was the pecuniary limit of the learned Munsiff when the suit was filed on 19.5.1977. Mr Chattarjee submitted that even in a suit for declaration of title to a property, the value of the suit will be same as the value of the property in respect of which relief is claimed and in support of this submission he relied on the decisions of the Patna High Court in Mohini Mohan Misir v. Gour Chandra Rai, AIR 1921 Patna 32 and Ram Pravesh Singh v. Maneshwari Prasad, AIR 1958 Patna 129. He further argued that in a suit for declaration with consequential relief covered under Section 7(iv)(c) of the Court Fees Act, the plaintiff does not have the absolute right to value the suit. He cited the decisions of the Supreme Court in Samsher Singh v. Rajindar Prasad and Ors., AIR 1973 SC 2384, Meenakshi Sundaram Chettiar v. Venkatchalam Chettiar, AIR 1979 SC 989. Smt Tara Devi v. Sri Thakur Radhakrishna Maharaj, AIR 1987 SC 2085, Abdul Hamid Shamai v. Abdul Majid, AIR 1988 SC 1150 and Sujir Keshar Nayak v. Sujir Ganesh Nayar, AIR 1992 SC 1526 in support of his argument that the valuation of the suit put by the plaintiff cannot be arbitrary and unreasonable. Both Mr. Goswami and Mr. Chattarjee submitted that had the suit been valued properly, the plaint would have been returned for filing in the appropriate Court having pecuniary jurisdiction and against the decree passed by such appropriate Court the appellant would have been entitled to come up in first appeal to the High Court on both questions of fact and questions oflaw and the appeal would not have been confined to substantial questions of law. According to Mr. Goswami and Mr Chattarjee, the appellants have suffered substantial prejudice by the findings of the Court below that the suit was within the pecuniary jurisdiction of the learned Munsiff.
13. Mr. Chakravorty, learned counsel for the respondent No. 1, on the other hand, submitted that only the Defendant No. 1 raised preliminary issue in the written statement that the value of the suit was beyond the pecuniary jurisdiction of the learned Munsiff and such issue raised by the Defendant No. 1 was decided by the learned Munsiff as a preliminary issue and against the decision of the learned Munsiff no appeal was filed by the Defendant No. 1 before the learned District Judge. He submitted that Section 11 of the Suits Valuation Act provided that an objection to the over valuation or under valuation of the suit shall not be entertained by the appellate Court unless the objection was taken in the Court of first instance at or before the hearing which issues were framed and recorded and also the appellate Court is satisfied for the reasons to be recorded in writing that the suit was over valued or under valued and that the over valuation or under valuation thereof has prejudicially affected the disposal of the suit on its merits. Mr. Chakravorty submitted that similarly Section 21 of CPC specifically provided that no objection as to the competence with reference to the pecuniary limitation of the Court shall be allowed by any appellate or revisional Court unless such objection was taken in the Court of first instance at the earliest possible opportunity and in all cases where issues are settled at or before hearing and unless there has been consequent failure of justice. Mr. Chakravorty further contended that after the amendment of the plaint was allowed by the learned Munsiff by order dated 28.4.1993, none of the Defendants raised any objection that on account of the amendment to the plaint the valuation of the suit has gone beyond the pecuniary limit of the learned Munsiff and as a result no issue was framed that the suit was beyond the pecuniary limit of the Munsiff. Mr. Chakravorty argued that the Defendants cannot now be allowed to raise the Issue relating to the pecuniary limit of the learned Munsiff before this Court. He submitted that in any case, the question of valuation of property is a question of fact and the High Court is not entitled to go into this question in a Second Appeal and in support of this submission he relied on the decision of the Supreme Court in P.L. Bapuswami v. N. Pattay, AIR 1966 SC 902.
14. On a perusal of the written statement field by the Defendant No. 1 on 19.6.1981, I find that in para-7 of the said written statement the Defendant No. 1 had taken a plea that the suit was not properly valued and stamped. In para-9 of the said written statement the Defendant No. 1 had further taken a plea that the Court had no jurisdiction to try the said suit. Similarly, in the written statement field by the Defendant No. 2 on 3.6.1979, the Defendant No. 2 had taken a plea in para-5 of the said written statement that the Court had no jurisdiction to try and determine the suit and in para-6 had taken a plea that the suit was under valued and not properly stamped. On 8.3.1983 the learned Munsiff framed a preliminary issue as to whether the Court had jurisdiction to try the suit and held in its order dated 19.8.1985 that the Court had jurisdiction to try the suit. But on examination of the said order dated 19.8.1985 of the learned Munsiff, I find that the questions as to whether the suit was properly valued and the Court of the learned Munsiff had pecuniary jurisdiction to try the suit have not been dealt with at all in the said order dated 19.8.1985. Instead, the Court has gone into the questions as to whether the mortgage was an English mortgage or a simple mortgage and as to whether Section 69 of the TP Act applied to the case, and has taken note of the grievance of the plaintiff in the suit that no opportunity was given to the plaintiff for payment of defaulted amount and its property was sold by the Defendant No. 1 in collusion with other defendants and has finally held that the Court had jurisdiction to try the suit. Thus, by the said order dated 19.8.1985, the learned Munsiff had not decided the question as to whether he had the pecuniary Jurisdiction to try the suit. After the written statement was amended and the amended plaint was filed on 31.7.1993, in the additional written statement of the Defendant No.1 field on 20.12.1993, the Defendant No. 1 again raised a plea in para-2 of the said additional written statement that the learned Court had no jurisdiction to try the suit as the value of the suit land exceeded the power of the Court. In para-4 of the said additional written statement, the Defendant No. 1 further stated that the plaintiff had intentionally suppressed the value of the suit land which was essential for the purpose of ascertaining the pecuniary jurisdiction of the Court and that the learned Court had no jurisdiction to try the case and the suit be returned for the purpose of filing in the appropriate court. The Defendant No. 2 in his additional written statement field on 27.11.1993 similarly pleaded at the end of para-7 of the said additional written statement that the suit had not been properly valued by the plaintiff. Though no specific issue was framed as to whether the Court had pecuniary jurisdiction to try the suit, the learned Munsiff in Paras 12to 16 of his judgment dated 20.2.1996 dealt at length the contentions raised by the learned counsel for the parties on the question of pecuniary jurisdiction of the Court to try the suit, and held that the Court had pecuniary jurisdiction to try the suit. While coming to the aforesaid conclusion, the learned Munsiff relied on the decision of the Supreme Court in Sathappa Chettiarv. Ramnathan Chettiar, AIR 1958 SC 245, and the decision of this Court in B.D Patwari v. KR Das, AIR 1972 Gau 69 as well as the provisions of Section 7(iv)(c) of the Court Fees Act and Section 8 of the Suits Valuation Act, and held that in a suit for declaration and consequential relief, the plaintiff had the option to value the suit and, therefore, the valuation of the reliefs by the plaintiff at Rs. 100 had to be accepted. In the Title Appeals, the learned District Judge also dealt at length with the contentions of the learned counsel for the parties on the point as to whether the learned Munsiff had pecuniary jurisdiction to try the suit, and held that there was no reason to interfere with the findings of the learned Munsiff that the suit of the plaintiff was covered by Section 7(iv)(c) of the Court Fees Act and that the suit was within the pecuniary jurisdiction of the learned Munsiff. The aforesaid discussion would show that the argument of Mr. Chakravorty that the Defendant No. 2 had not raised any objection to the pecuniary jurisdiction of the learned Munsiff to try the suit before the issues were settled is not correct. Similarly his submission that the learned Munsiff in his order dated 19.8.1985 decided this question as a preliminary issue is also not correct. Since the learned Munsiff had not decided the question of pecuniary jurisdiction of the Court to try the suit, there was no occasion for any of the defendants to file any appeal/revision against the said order dated 19.8.1985. The aforesaid discussion would also show that after the plaint was amended, the Defendant Nos. 1 and 2 reiterated their pleas in their additional written statements that the suit had not been properly valued and the learned Munsiff had no pecuniary jurisdiction to try the suit. Hence it is not correct as submitted by Mr. Chakravorty that after amendment of the plaint, the defendants did not raise any plea with regard to the pecuniary jurisdiction of the learned Munsiff to try the suit. The aforesaid discussion further shows that the learned Munsiff dealt at length the question as to whether he had pecuniary jurisdiction to try the suit and answered the said question in the affirmative in his judgment and decree dated 20.2.1996. Since the findings on the point that the learned Munsiff had pecuniary jurisdiction to try the suit was recorded for the first time by the learned Munsiff in his judgment and decree dated 20.2.1996, it was at that stage that the defendants were required to assail the said findings in appeal. In fact, the Defendant Nos. 1 and 2 did challenge the said findings of the learned Munsiff in the Title Appeals before the learned District Judge and the learned District Judge dealt with the said challenge at length, but held in his impugned judgment that the learned Munsiff did have the pecuniary jurisdiction to try the suit. Since these Second Appeal are against the said judgment and decree of the learned District Judge in Title Appeals, the appellants are entitled to raise the aforesaid point before this Court relating to pecuniary jurisdiction of the learned Munsiff to try the suit.
15. This point relating to the valuation of the suit however cannot be decided by this Court in these Second Appeals if the questions of fact will have to be determined for the purpose of arriving at the valuation of the suit as has been held in P.L. Bapuswami v. N. Pattay, AIR 1966 SC 902. But in that case the Supreme Court found that the High Court in the Second Appeal had dealt with the question of valuation of facts and arrived at its own finding on the valuation of the suit property. The Supreme Court, therefore, held that the question of valuation was one of fact and the High Court was not entitled to go into the question in the Second Appeal. But in the present case, this Court need noi determine any question of fact for recording a finding on the valuation of the suit property. The plaintiffs own case in paragraph-7 .p. of the plaint was that the market price of the suit property was between Rs. 20.00 to Rs. 25.00 lakhs, but it had been sold at a nominal price of Rs. 5.49 lakhs. Thus, the plaintiff's own valuation of the suit property was more than Rs. 5,000 which was the pecuniary limit of jurisdiction of the learned Munsiff. In Sathappa Chettiar v. Ramnathan Chettiar, AIR 1958 SC 245, after considering the provisions of Section 7(iv)(c) of the Court Fees Act, the Supreme Court held that in respect of suits falling under Section 7(iv) of the Court Fees Act, a departure has been made and liberty has been given to the plaintiff to value his claim for the purpose of court fees. But in Shamsher Singh v. Rajinder Prasad, AIR 1973 SC 2384, the Supreme Court observed that the Court in deciding the question of Court fees should look into the allegations in the plaint. After making the aforesaid observations, the Supreme Court went on to examine the reliefs asked for in that case, and found that the plaintiff had not correctly valued his suit under Section 7(iv)(c) of the Court Fees Act, and upheld the order of the learned Subordinate Judge on the preliminary issue directing the plaintiff to pay the correct court fee. In Meenakshi Sundaram Chettiar v. Venkatachalam Chettiar, AIR 1979 SC 989, the Supreme Court held that Order 7, Rule 11, CPC, casts a duty on the Court to reject a plaint where the relief claimed is undervalued, and if on the materials available before it, the Court is satisfied that the value of relief as estimated by the plaintiff in a suit for accounts is undervalued, the plaint is liable to be rejected. The Supreme Court further observed in the said case that it is therefore necessary that the plaintiff should take care that the valuation is adequate and reasonable taking into account the circumstances of the case. In that case, however, the Supreme Court was not satisfied on a consideration of the entire circumstances of the case that the estimate of relief as given by the plaintiff was inadequate and unreasonable. In Smt. Tara Dew v. Sri Thakur Radha Krishna Maharaj, AIR 1987 SC 2085, the Supreme Court observed that where it appears to the Court on a consideration of the facts and circumstances of the case that the valuation is arbitrary, unreasonable and the plaint has been demonstratively undervalued the Court can examine the valuation and revise the same. In Sujir Keshav Nayak v. Sujir Ganesh Nayak, AIR 1992 SC 1526, the Supreme Court reiterated that if on perusal of plaint the Court is prima facie satisfied that the plaintiff has not been fair and valued the suit or relief arbitrarily, it is not precluded from directing the plaintiff to value it properly and pay court fee on it.
16. In B.C. Patwari v. K.R. Das. AIR 1972 Gau 69, the learned Judge has only relied on the earlier decision of the Supreme Court in Sathappa Chettiar v. Ramnathan Chettiar. AIR 1958 SC 245, In the later decision of this Court in Industrial Cooperative Bank Ltd v. Bhubaneswar, AIR 1983 Gau 71, this Court held that the Court is not bound by the valuation put by the plaintiff in a suit for declaration and consequential relief falling under Section 7(iv)(c) of the Court Fees Act. On corning to the aforesaid conclusion, the Court has taken into consideration the provisions of Section 7-A. 7-B. 7-C and 7-D inserted in the Court Fees Act by the Assam Act No. XVIII of 1947 which provided for an enquiry in cases where the suit has been wrongly valued and for determination of correct valuation and revision of valuation by the Court. Similar provisions in Sections 7-A. 7-B, 7-C and 7-D have been inserted in the Court Fees Act as applicable to Tripura. It is thus clear that valuation given by the plaintiff in any suit including a suit covered under Section 7(iv)(c) of the Court Fees Act is not final and binding on the Court, and if the Court is of the opinion that the subject-matter of any suit has been wrongly valued, it may revise the valuation and determine the correct valuation, and may hold such inquiry as it may think fit for such purpose. In my considered opinion, therefore, the view taken by the learned Munsiff and the learned District Judge in the present case that the valuation of relief by the plaintiff at Rs. 100 was to be accepted, the suit being one under Section 7(iv)(c) of the Court Fees Act, was not correct in law. Since the plaintiff had valued the suit property in the plaint between Rs. 20.00 to Rs. 25.00 lakhs and it was clear from the facts as stated in the plaint that the registered Sale Deed in respect of which relief had been claimed by the plaintiff was itself valued at Rs. 5.49 lakhs, the suit had been grossly undervalued by the plaintiff.
17. Sub-section (2) of Section 21, CPC, however, provides that even where an objection as to the competence of a Court with reference to the pecuniary limits of its jurisdiction was taken in the Court of first instance at the earliest possible opportunity at or before settlement of issues, the appellate Court would not allow such objection unless there has been a failure of justice. Sub-sections (1) and (2) of Section 11 of the Suits Valuation Act which makes somewhat similar provisions is quoted hererineblow:
"11. Procedure where objection is taken on appeal or revision that a suit or appeal was not properly valued for jurisdictional purposes.-
(1) Notwithstanding anything in Section 578 of the Code of Civil Procedure, an objection that by reason of the over-valuation or under-valuation of a suit or appeal a Court of first instance or lower appellate Court which had no jurisdiction with respect to the suit or appeal exercised Jurisdiction with respect thereto shall not be entertained by an appellate Court unless-
(a) the objection was taken in the Court of first instance at or before the hearing at which issues were first framed and recorded, or in the lower appellate Court in the memorandum of appeal to that Court, or
(b) the appellate Court is satisfied, for reasons to be recorded by it in writing, that the suit or appeal was over-valued or undervalued, and that the over-valuation or under-valuation thereof has prejudicially affected the disposal of the suit or appeal on its merits.
(2) If the objection was taken in the manner mentioned in Clause (a) of Sub-section (1), but the appellate Court is not satisfied as to both the matters mentioned in Clause (b) of that sub-section and has before it the materials necessary for the determination of the other grounds of appeal to itself, it shall dispose of the appeal as if there had been no defect of jurisdiction in the Court of first instance or lower appellate Court.".
Sub-section (1) of Section 11 of the Suits Valuation Act quoted above would show that the appellate Court can entertain an objection that the Court of first instance had no jurisdiction with respect to a suit by reason of under-valuation of the suit if the conditions in Clause (a) of Sub-section (1) or the conditions in Clause (b) of the Sub-section (1) are satisfied. But Sub-section (2) of Section 11 of the Suits Valuation Act further provides that if such objection was taken as mentioned in Clause (a) of Sub-section (1), but the appellate Court was not satisfied as to both the matters in Clause (b) of Sub-section (1) and has before it materials necessary for determination of other grounds of appeal to itself, it shall dispose of the appeal as if there had been no defect of jurisdiction in the Court of first instance. Clause (5) of Sub-section (1) provides that the appellate Court has to be satisfied for reasons to be recorded by it in writing that the suit was under-valued and that the under-valuation thereof has prejudicially affected the disposal of the suit on its merits. In the present case, I have recorded reasons to show that the suit was under-valued, but the appellants must further show that such under-valuation of the suit has prejudicially affected the disposal of the suit on its merits. The contention of Mr. Chattarjee and Mr. Goswami, learned counsel for the appellants, however, is that had the suit been properly valued and had suit been decided by the appropriate Court, an appeal would have been available to the appellants on facts and law before the High Court and thus the disposal of the suit by the learned Munsiff in the instant case has caused prejudice to the appellants. The fact that the appellants could have challenged the decree of the trail Court both on facts and law before the High Court in a First Appeal if the suit had the been decreed by the appropriate Court does not show that the under-valuation of the suit has prejudicially affected the disposal of the suit on its merits. As a matter of fact, the appellants have not suffered any such prejudice. They have challenged the decree passed by the learned Munsiff before the learned District Judge in Title Appeals both on facts and law. In Kiran Singh v. Chaman Paswan, AIR 1954 SC 340, the Supreme Court had the occasion to consider a similar contention as has been raised by Mr. Chattarjee and Mr. Goswami, and the Supreme Court on a construction of the provisions of Section 11 of the Suits Valuation Act held that a decree passed by a Court without Jurisdiction is liable to be interfered with in an appellate Court, not in all cases and as a matter of course, but only if prejudice such as is mentioned in the section results. The Supreme Court further held that prejudice contemplated by the section is something different from the fact of the appeal having been heard in a forum which would not have been competent to hear it on a correct valuation of the suit as ultimately determined. Thus, my conclusion on the first substantial question of law is that although the suit has been under-valued, there is nothing on record to show that such under-valuation has prejudicially affected the disposal of the suit by the learned Munsiff on its merits. Since there are materials before the Court necessary for determination of the other substantial questions of law which arise for decision in these Second appeal, I proceed to decide these Second Appeals as if there had been no defect of jurisdiction in the Court of the learned Munsiff to try the suit.
SUBSTANTIAL QUESTION NO. (ii)
18. Both Mr. Goswami and Mr. Chattarjee, learned counsel for the appellants, submitted that a letter dated 5.1.1977 written by the plaintiff to the Defendant No. 2 was admitted by the learned District Judge in Title Appeals by the consent of the parties as additional evidence under Order 41, Rule 27, CPC, and marked as Exhibit-M. Exhibit-M would go to show that the plaintiff had full knowledge about the sale arrangements of the suit property between the Defendant No. 1 and the Defendant No. 2 and that the plaintiff has accepted the positing of an observer by the Defendant No. 2 at the plaintiffs Tea Estate under the authority of the Defendant No. 1. Hence, the plaintiff had notice of the proposed sale of the suit property by the Defendant No. 1 to the Defendant No. 2. After more than two months of the said letter dated 5.1.1977, the registered Sale Deed in respect of the suit property was entered into on 24.3.1977. Exhibit-M would further show that the plaintiff was not in financial position to pay of the defaulted debt due to the Defendant No. 1 and had accepted the proposed sale of the suit property to the Defendant No. 2. The learned District Judge ignored Exhibit-M in coming to his conclusion that the plaintiff was not given any opportunity to make any offer or pay by instalments of the defaulted amount. Mr. Chattarjee argued that on the facts as revealed in Exibit-M, notice to the plaintiff of the proposed sale would have been just a formality. Mr. Goswami submitted that non-consideration of material evidence by the lower Court has been held to be a substantial question of law by the Supreme Court in Jagadish Singh v. Nathu Singh, AIR J 992 SC 1604, Mr. Chattarjee also relied on the aforesaid decision in Jagadish Singh v. Nathu Singh and cited the decisions of the Supreme Court in Lockukakkada Aboobacker v. Attah Kasim. AIR 1996 SC 3111, Major Singh v. Rattan Singh, AIR 1997 SC 1906, Smt Meharunnissa v. Smt. Vishan Kanani, AIR 1998 SC 427, J.B. Sharma v. State of MP, AIR 1988 SC 703, Dilbagrai Punjabi v. Sharad Chandra, AIR 1988 SC 1858 and Sundra Nalcka Vadiyar v. Ramswamy Ayyer, J993 Supp. (4) SCC 534, in support of his submission that where relevant evidence on record having direct bearing on the disputed issue is ignored by the lower appellate Court, a substantial question of law arises for decision and the High Court can set aside the findings of the lower appellate Court on such disputed issue in a Second Appeal.
19. In reply, Mr. Chakravorty, learned counsel for the respondent No. 1, submitted that the letter dated 5.1.1977 was not produced in the trial Court and was admitted as additional evidence under Order 41, Rule 27, CPC, and marked as Exhibit-M only in the first appellate court. Hence, the first appellate Court considered the said letter dated 5.1.1977 Exhibit-M while admitting the same as an exhibit. He further submitted that various other documents which were exhibited were not discussed by the First appellate Court and, therefore, the fact that the Exhibit-M has not been discussed by the first appellate Court cannot lead to the inference that Exhibit-M was not considered by the first appellate Court. He further submitted that the conclusions of the first appellate Court on facts are based on its appreciation of evidence, both oral and documentary, and the High Court in Second Appeal cannot substitute its own opinion on facts for that of the first appellate Court. He further argued that both the trial Court and the first appellate Court had arrived at concurrent findings of fact and the High Court in a Second Appeal cannot disturb the said concurrent findings of fact of both the courts below. According to Mr. Chakravorty, this second question is not a substantial question of law.
20. Mr Chakravorty is right in his submission that the conclusion of the first appellate Court on the questions of fact normally cannot be interfered with by the High Court in a Second Appeal. But there are situations in which interference with the findings of fact by the High Court in a Second Appeal is permissible. In Ishwar Dass Jain v. Sohan Lal. 1999 AIR SCW 4573, the Supreme Court after considering its earlier decisions, has pointed out two situation in which such interference with the findings of fact is permissible in a Second Appeal by the High Court. The first one is when material or relevant evidence is not considered which, if considered would have led to an opposite conclusion. The second situation is where a finding has been arrived at by the appellate Court by placing reliance on inadmissible evidence which if it was omitted, an opposite conclusion was possible. The case of the appellants in these appeals relates to the first situation as their grievance is that the letter dated 5.1.1977 of the Constitution to the Defendant No. 2 (Ext.-M) was a material and relevant evidence and if the same was considered by the first appellate Court, an opposite conclusion would have been reached by the first appellate Court. Thus, the question to be decided is whether the first appellate Court would have reached an opposite conclusion on facts had it considered the letter dated 5.1.1977 (Ext.-M).
21. On a reading of the judgment of the first appellate Court, I find that it has held that although the sale of the suit properly has taken place prior to the guidelines laid down by the Supreme Court in Mahesh Chandra v. Regional Manager, UP Finance Corporation. AIR 1993 SC 933, to ensure fairness, reasonableness and bona fide on the part of the Defendant No. 1, the principles embodied in the said guidelines had to be followed by the Defendant No. 1. It has considered the letter dated 21.3.1976 of the plaintiff to the Defendant No. 1 to defer the sale and give him time to clear the dues (Ext.-F/1), the reply dated 28.8.1976 of the Defendant No. 1 to the plaintiff (Ext.-A/1) refusing to consider the request to defer the sale, the offer dated 30.8.1976 qfthe Defendant No. 2 to Defendant No. 1 for purchasing the suit property at Rs. 12,75,000 (Ext.-6/1), and the letter dated 14.9.1976 of the Defendant No. 1 to the Defendant No. 2 for sale of suit property (Ext.-H/1) and has held that the Defendant No. 1 did not give opportunity to the plaintiff to gradually clear up the dues and did not favourably consider the plaintiffs request for postponing the sale and did not intimate the plaintiff the highest price on which the Defendant No. 1 was going to accept the tender. The first appellate Court held that items 2 and 3 of the guidelines issued by the Supreme Court in Mahesh Chandra v. Regional Manager, UP Finance Corporation (supra) have not been followed. In the entire judgment of the first appellate Court, the first appellate Court has not considered the letter dated 5.1.1977 of the plaintiff to the Defendant No. 2, Ext.-M, even though the said letter was admitted as additional evidence in the Title Appeals. The contents of the said letter dated 5.1.1977 in exhibit-M are as follows:
"MANTALA TEA COMPANY LIMITED Phone-231129 18, Waterloo Street, Post Box No. 2642 Our Ref: HO/MTI/001/77 Your Ref: Maheshpur Tea & Industries Private Ltd. 188/3, Prince Anwar Shah Road, January 5, 1977 Calcutta - 700 045. Dear Sirs, MANTALA TEA ESTATE
Our arrangements for meeting the working finance of Mantala Tea Estate has terminated on 31.12.1976. We have also requested our Bankers, United Bank of India, to continue finance for the Season 1977-78. We do not yet know, what stand our Bankers will take in view of the sale arrangements of Mantala Tea Estate to you by Assam Financial Corporation, Shillong under Section 20 of the State Financial Corporation Act, 1951.
Since you have posted your observer at Mantala Tea Estate under the authority of Assam Financial Corporation, Shillong, it might be your interest also to see the pending finalisation of legal formalities, the working of Mantala Tea Estate, is carried out in usual manner.
Most unfortunately, we have no fund of our own, neither we have any resources to arrange working finance of Mantala Tea Estate for the Season 1977-78, in case our Bankers turn down our request to provide finance for the usual working of Mantala Tea Estate.
Under the circumstances, we are requesting you to arrange temporary unsecured loan on our behalf for meeting the working finance of Mantala Tea Estate.
Should, at any later date the sale of Mantala Tea Estate to you falls through, we shall arrange repayment of the unsecured loans arranged by you with all accrued interest at the rate of 14%.
We also confirm that the unsecured loan of Rs. 20,530.84p. given by you to Company upto 31.12.1976 will also be repaid by us with interest in the event mentioned above.
On hearing from you we shall take due authorisation of our Board of Directors for such temporary borrowings and furnish you or to the party who will arrange finance, with all necessary Promossory Notes etc. Yours faithfully, for THE MATALATEA COMPANY LIMITED Sd/-
Managing Director"
The aforesaid letter dated 5.1.1977 (Ext.M) had been addressed by the plaintiff to the Defendant No. 2. It would be clear from Ext.-M that the plaintiff had full knowledge of the sale arrangements of its Tea Estate to the Defendant No. 2 by the Defendant No. 1 and of posting of an observer by the Defendant No. 2 at the Tea Estate of the plaintiff under the authority of the Defendant No. 1. In Exhibit-M, the plaintiff had also stated that it had no fund of its own nor any resources to arrange working finance of the Tea Estate for the Season 1977-78. in case its Bankers turned down the request to provide finance for the usual working of the Tea Estate. In Exhibit-M, the plaintiff had requested the Defendant No. 2 to arrange temporary unsecured loan on its behalf for meeting the working finance of the Tea Estate. In Exhibit-M, the plaintiff had also stated that the unsecured loan of Rs. 20,530.84 extended by the Defendant No. 2 to the plaintiff upto 31.12.1976 would also be repaid by the plaintiff with interest. Thus, Exhibit-M not only shows that the plaintiff was fully aware of the sale arrangements between the Defendant No. 1 and the Defendant No. 2, but also shows that the plaintiff did not have the funds or resources to pay the defaulted amount to the Defendant No. 1. The sale of the suit property took place in 1977 and the guidelines for sale of units by the State Finance Corporation were laid down by the Supreme Court in Mahesh Chandra's case (supra) in 1993. The Defendant No. 1 could not therefore strictly follow the said guidelines when it sold the suit property in 1976-77 though it was required to act in a fair, reasonable and bona fide manner while making the sale. The plaintiffs case in the plaint was not that he was not intimated the price at which the suit property was proposed to be sold by the Defendant No. 1 to the Defendant No. 2. The plaintiffs case in the suit was that though it represented to the Defendant No. 1 to withdraw the sale notice and to give it some time to pay off its dues, the Defendant No. 1 sold the suit property to the Defendant No. 2 and that the sale was collusive, unjust, arbitrary, malicious and fraudulent. The Defendant No. 1 had taken a plea of acquiescence on the part of the plaintiff in para-3 of its written statement and had also stated in para-13(f) of its written statement that the plaintiff never objected to the appointment of an observer and on the contrary confirmed such appointment by letter dated 3.1.1977. The Defendant No. 2 had similarly stated in para-9(d) of its written statement that the plaintiff rendered all assistance and cooperation to the observer posted by the Defendant No. 2 at the Tea Estate to perform the duties entrusted to him without any hindrance and that the plaintiff never objected to the appointment of the observer and on the contrary did confirm such appointment by a letter dated 5.1.1977. Thus, the said letter dated 5.1.1977 of the plaintiff Exhibit-M was a relevant and material evidence relied on by both the Defendant No. 1 and Defendant . No. 2 and had the first appellate Court considered Exhibit-M it would not have reached the conclusion that the Defendant No. 1 acted unfairly or unreasonably in not granting further opportunity to the plaintiff to pay the defaulted amount and in finally selling the suit property to the Defendant No. 2 by the registered Sale Deed on 23.3.1977 SUBSTANTIAL QUESTION NOS. (Hi) & (iv)
22. Mr. Goswami and Mr Chattarjee, learned counsel for the appellants, submitted that the guidelines laid down by the Supreme Court in Mahesh Chandar's case in the year 1993 could not be applied to the sale by the Defendant No.1 in the year 1977. Mr. Goswami argued that a civil suit 4s decided on pleadings, and there were no pleadings in the plaint in the present case that the sale was void because of the non-compliance with the guidelines laid down by the Supreme Court in Mahesh Chandra's case. He further contended that in any case in the case of Mahesh Chandra, the Supreme Court found that the action of the State Financial Corporation was not bona fide, but in the instant case the first appellate Court has held that there was no mala fide or want of bona fide on the part of the Defendant No. 1. Therefore, even if the principles laid down by the Supreme Court in Mahesh Chandra's case are applied to the present case, the sale of the suit property by the Defendant No. 1 to the Defendant No.2 could not be held to be illegal. Mr Chattarjee submitted that in Mahesh Chandra's case, the Supreme Court had found that notwithstanding the repeated attempt on the part of the borrower to repay the loan, the State Financial Corporation acted reprehenslbly in a most unreasonable and unfair manner. He further contended that unfairness and unreasonableness on the part of the State Financial Corporation in the case of Mahesh Chandra was so glaring that the Supreme Court felt it necessary that certain general guidelines should be laid down so that the State Financial Corporation did not act unfairly and unreasonably in future. But the facts of the present case would show that prior to 1976 the plaintiff repeatedly defaulted in payment of instalments and interest notwithstanding repeated demands made by the Defendant No. 1 and upto the date of sale on 24.3.1977 the plaintiff was fully aware of the steps taken by the Defendant No. 1 to sell the suit property through advertisernetn in the newspaper thrice. He pointed out that in fact the plaintiff was even aware that the Defendant No. 2 was the prospective purchaser and the plaintiff had borrowed money from the Defendant No. 2 and had also not raised any objection to the posting of an observer at the Tea Estate proposed to be sold under the authority of the Defendant No. 1. Mr. Chattarjee vehemently argued that on these facts, the learned Courts below could not have held that the sale of the industrial unit of the plaintiff by the Defendant No. 1 to the Defendant No.2 was arbitrary, unfair and contrary to the guidelines laid down by the Supreme Court in Mahesh Chandra's case. Both Mr. Goswami and Mr. Chattarjee further submitted that the decision of the Supreme Court in Mahesh Chandra's case has been subsequently explained in UP Financial Corporation v. GEM CAP (India) Private Limited, AIR 1993 SC 1435, Chairman & MD, Sipcot v. Contromix Pvt. Ltd, AIR 1995 SC 1632, Kamataka State Financial Corporation v. Micro Cast Rubber & Allied Products, JT 1996 (6) SC 37 and Orissa State Financial Corporation v. Hotel Jagendra, JT 1996(5) SC 322. He submitted that in these decisions of the Supreme Court subsequent to Mahesh Chandra's case, it has been laid down that Courts would interfere only if there was statutory violation on the part of the Corporation or where the Corporation acted unfairly, i.e., unreasonably and not otherwise, and the established facts in the present case would show that the Defendant No.l has not violated any statutory provision and has not acted arbitrarily or unreasonably. Mr. DR Choudhury, learned counsel for the appellant Bank, submitted that the first appellate Court has held that there was no mala fide or arbitrary act on the part of the Defendant No. 1 in selling the Tea Estate to the Defendant No. 2. The plaintiff had not filed any cross appeal against the said findings of the first appellate Court and thus cannot contend in the present Second Appeal that the sale was mala fide and arbitrary, and was therefore illegal.
23. Mr. Chakravorty, learned counsel for the respondent No. 1, on the other hand, submitted that in Mahesh Chandra's case, the Supreme Court has laid down certain principles which must be followed in a proceeding for sale of mortgaged property under Section 29 of the State Financial Corporation Act, 1951, (for short, "the Act, 1951"). He argued that though these provisions were laid down in a judgment delivered on 12.2.1992, the Supreme Court applied the said principles and set aside the sale in that case made prior to 1987 when the writ petition was filed in the High Court. According to Mr. Chakravorty, there was therefore nothing wrong in applying the principles laid down by the Supreme Court in Mahesh Chandra's case to the present case although the sale in the present case had been effected in the year 1976-77. He submitted that as per the decision of the Supreme Court in Mahesh Chandra's case, the State Financial Corporation was required to act cautiously, honestly, fairly and reasonably. Mr Chakravorty submitted that Exts-H-l, F-l and G-l would show that the Defendant No. 1 was not interested in the industry or the plaintiff but was only interested in the purchaser and the Bank and sold the suit property at a price which met the dues of the Defendant No. 1 and the Defendant No.6 Bank. Thus, the Defendant No. 1 acted arbitrarily and unfairly and contrary to the guidelines laid down in Mahesh Chandra's case. He further argued that whether in the present case the sale of the Tea Estate of the plaintiff by the Defendant No. Ho the Defendant No.2 was arbitrary, unfair and contrary to the guidelines laid down by the Supreme Court in Mahesh Chandra's case was not at all a substantial question of law and it was fully and wholly a question of fact. He submitted that If there was an error on the part of the first appellate Court In appreciating the facts and coming to a conclusion, this court can not interfere with such conclusion on facts in a Second Appeal. Mr. Chakravorty further submitted that Section 9, CPC, confers wide powers on civil courts to try all suit of civil nature excepting suits of which their cognizance Is either expressly or Impliedly barred. He contended that no provision of the Act, 1951, bars civil courts from entertaining a suit against any action taken under the said Act, 1951. The power of the civil court is therefore not limited in any case nor is It ousted in deciding the suit by the plaintiff. According to Mr. Chakravorty, the limitations imposed on the power of judicial review by a writ Court are all self-imposed limitations and are not limitations imposed by any statute and that these limitations will not apply to the power of the civil Court.
24. It is not necessary for this Court to decide in this case the larger question as to whether the power of civil Court in deciding suits as vested under Section 9, CPC, is wider than the power of a writ Court while exercising jurisdiction under Article 226 of the Constitution of India because the principles were laid down in Mahesh Chandra's case by the Supreme Court in respect of a matter which arose out of a writ petition filed before the High Court and the said principles have been followed by the courts below in setting aside the sale of the suit property by the Defendant No. 1 to the Defendant No.2. In Mahesh Chandra's case, the Supreme Court found on facts that the borrower wrote repeated letters to the State Financial Corporation requesting to release a plot of land so as to enable him to negotiate for private sale of it along with his two more plots to pay of Rs.5,03,165 to the Financial Corporation In full satisfaction under one time settlement scheme, but the Corporation did not release it and instead sold the mill of the borrower at a very low price of Rs.2,55,000. On these facts, the Supreme Court, Inter alia, held that the attitude of the Financial Corporation was distressing and unreasonable. The Supreme Court further observed that the power under Section 29 of the Act, 1951, to take possession of a defaulting unit and transfer It by sale required the authority to act cautiously, honestly, fairly and reasonably, and that default in payment of loan may attract Section 29 but that alone was insufficient either to assume possession or to sell the property and neither should be resorted to unless It was Imperative. In para-22 of the judgment, the Supreme Court Issued some directions to be observed by the State Financial Corporation while exercising power under Section 29 and set aside the sale of unit of the borrower.
25. In the case of UP Financial Corporation v. M/s GEM CAP (India) Pvt. Ltd., (AIR 1993 SC 1435], the Supreme Court found that the unit of the borrower had become sick and the borrower did not make any repayment as stipulated in the agreement and the hypothecation deeds and the State Financial Corporation took steps to take over the unit under Section 29 of the Act, 1951, for recovering an amount of Rs.38.57 Lakhs, but on writ petition filed by the borrower, the High Court directed the Corporation to consider rehabilitation of the sick unit, and to restore back possession of the unit to the borrower forthwith. The Supreme Court held on these facts that the State Financial Corporation is a lender with a purpose - the purpose being promoting the small and medium industries, but at the same time the relationship between the Corporation and the borrower is that of creditor and debtor, and the Corporation is not supposed to give loans once and go out of business. The Supreme Court in particular observed that the fairness required of the Corporation cannot be carried to the extent of disabling it from recovering what is due to it and that while not insisting upon the borrower to honour the commitments undertaken by him, the Corporation alone cannot be shackled hand and foot in the name of fairness. The Supreme Court finally held that in a matter between the Corporation has its debtor, a writ Court has no except in two situations : (1) there is a statutory violation on the part of the Corporation or (2) where the corporation acts unfairly, i.e., reasonably. The Supreme Court further observed that the High Court exercising its jurisdiction under Article 226 of the Constitution cannot sit as an appellate authority over the acts and deeds of the Corporation and cannot substitute its own view for that of the administrative authority and only when the action of the administrative authority is so unfair or unreasonable that no reasonable person would have taken that action, can the court intervene. With regard to the decision of the Supreme Court in Mahesh Chandra's case, the Supreme Court observed that Mahesh Chandra's case was a case where the debtor was anxious to pay off the debt and had been taking several steps to discharge his obligation, and that the said decision was not relevant in deciding the case.
26. In the case of Chairman & MD, SIPCOT v. Contromix Pvt. Ltd, AIR 1995 SC 1632 it was found that the Corporation informed the borrower that it would take possession of the unit for non-payment of a sum of Rs.56,12,406.20, and the borrower thereupon paid Rs.4.00 lakhs and filed a writ petition in the High Court and as per direction of the High Court paid a sum of Rs.3.00 lakhs. As regards the balance, the High Court passed an order directing that the first instalment of Rs.2.00 lakhs be paid by 31.12.1992, and the entire amount was to be paid by the end of August, 1993 and if there was any default in any one of the instalments it would be open to the Corporation to take proceedings under the Act, 1951. The borrower did not make payment of Rs.2.00 lakhs by 31.12.1992, and on 5.1.1993 the Corporation took possession of the mortgaged assets of the borrower and ultimately sold the unit after advertisement inviting offers and after negotiating with the purchaser at a sum of Rs.38.00 lakhs. The borrower filed a writ petition challenging the said sale on the ground that the market value of the assets was Rs.72.60 lakhs, and the sale was made for Rs.38.00 lakhs and that the sale was invalid in view of the law laid down by the Supreme Court in Mahesh Chandra's case. The learned Single Judge of the High Court quashed the sale subject to some directions for deposit various amounts on different dates by the borrower. The borrower did not comply with the said directions given by the learned Single Judge and instead filed an appeal before a Division Bench of the High Court and the Division Bench held that the sale was illegal and opposed to the judgment in Mahesh Chandra's case. The Supreme Court observed that in Mahesh Chandra 's case it has been held that if it is not possible to adopt the method for sale by public auction, the sale may be held by inviting tenders. The Supreme Court also took note of its decision in Sachidananda Pandey v. State of West Bengal, AIR 1987 SC 1109, in which it has been held that one of the modes of securing the public interest is to sell the property by public auction or by inviting tenders. Finally, the Supreme Court held that it cannot be said that sale by inviting tenders is ipso facto invalid and that the validity of such sale will have to be considered in the light of the facts and circumstances of the particular case.
27. In the case of Karnataka State Financial Corporation v. Micro Cast Rubber, JT 1996 (6) SC 37, the Supreme Court found that the borrower had initially taken a loan of Rs. 14.15 lakhs and thereafter a sum of Rs. 1.65 lakhs for purchasing a diesel generating set but the unit of the borrower became sick and a further amount of Rs.3.94 lakhs was sanctioned in favour of the borrower for revival of the unit. In spite of these facilities, the borrower continued to be a defaulter in making payment of instalments for repayment of the loan. The Corporation took over possession of the unit on 23.10.1990 and thereafter attempt was made to sell the unit after advertisement inviting offers. The borrower filed writ petition in the High Court and the writ petition was allowed by the learned Single Judge of the High Court by judgment dated 11.8.1993 whereby all proceedings subsequent to receipt of tenders were quashed and the Corporation was directed to observe the directions No.2, 3 and 4 contained in para-22 of the judgment of the Supreme Court in Mahesh Chandra's case. An appeal was filed before the Division Bench against the judgment of the learned Single Judge, but the said appeal was dismissed. The Supreme Court held that the directions contained In para-22 of the judgment of the Supreme Court in Mahesh Chandra's case are in the nature of guidelines for the exercise of power under Section 29 of the Act, 1951, and the action of the State Financial Corporation was not liable to be interfered with if it acted broadly in consonance with these guidelines. The Supreme Court further held that in the facts and circumstances of the case, the direction Nos. 2,3 and 4 in the guidelines in Mahesh Chandra's case had been substantially complied with by the Corporation. The Supreme Court further held that in the matter of a sale by the State Financial Corproation in exercise of the power conferred on It under Section 29 of the Act. 1951, the scope of judicial review Is confined to two situations, namely (1) where there is a statutory violation on the part of the State Financial Corporation or (2) where the State Financial Corporation acts unfairly, i.e., unreasonably, and the High Court was not Justified in interfering with the action of the Corproation in accepting the offers made by the proposed buyer for sale of the unit of the borrower.
28. In the case of Orissa State Financial Corporation v. Hotel Jogendra, JT 1996 (5) SC 322, the Supreme Court found that the borrower committed default in payment of loan as contracted and pursuant to a request, the Corproation had made a rephasement in November, 1989 allowing the borrower to pay the amount in 9 half yearly instalments starting from January, 1993 to January, 1997. When the borrower did not pay, the Corporation gave a notice under Section 30 of the Act, 1951, to the borrower. The borrower field writ petition in the High Court, and the High Court directed the corproation to rephase repayment of loan with Interest. The Corporation rephased the repayment of loan with interest and yet the borrower did not comply. A notice under Section 29 of the Act, 1951, was then issued by the Corproation, but the borrower approached the High Court again by a Miscellaneous case. The said Miscellaneous case was disposed of with some direction requiring the borrower to submit a proposal for rephasement. The borrower did not submit the proposal for rephasement. The Corporation Issued another letter dated 8.5.1991. The borrower again filed a writ petition seeking further direction to rephase the loan. The High Court directed the Corporation not to take any coercive action by an interim order, but ultimately dismissed the writ petition on 25.1.1994. Thereafter, the Corporation issued another notice on 17.2.1994 calling upon the borrower to pay the entire amount due amounting to Rs. 35,32,058.43 by February 28, 1994. Instead of making payment, the borrower went to civil court in a suit and obtained status quo order on 28.2.1994. On these facts, the Supreme Court held that the borrower was only interested to delay the repayment of the dues and had abused the process of the Court taking indulgence of the Court's direction, and that no further indulgence should be shown to the borrower in repayment of the loan. The Supreme Court further held that public money is meant to be recycled to all the needy entrepreneurs and that the Court would protect only honest and sincere litigants. The Court while allowing the appeal of the Corporation, granted exemplary costs of Rs.10,000 against the borrower.
29. The aforesaid discussion of the decisions of the Supreme Court would show that the action of the State Financial Corporation was not to be interfered with so long as the Corporation acted in broad or consonance with the guidelines laid down in the said case of Mahesh Chandra. Further, facts of each case are to be examined by the Court and the Court will interfere only if there is violation of statute or if the Corporation has acted unfairly, i.e., unreasonably. It has further been held in the aforesaid decisions that while deciding as to whether the Corporation has acted unreasonably, the Court will not sit as an appellate authority over the decision of the Corporation and will not substitute its own judgment for that of the Corporation and only when the action of the Corporation is so unfair or unreasonable that no reasonable person would have taken that action, can the Court intervene. In UP Financial Corporation and Ors. v. Naini Oxygen & Acetylene Gas Ltd, (1995) 2 SCC 754, cited by Mr. Goswaml, it has been held that the Corporation is an independent statutory body having its own constitution and rules to abide and in the discharge of its functions it, is free to act according to its own light and own perspective and calculations, and unless its action is mala fide, even a wrong decision taken by it is not open to challenge. In the said decision, the Supreme Court further held that whatever the wisdom (or lack of it) of the conduct of the Corporation, the same cannot be assessed and in matters commercial, the Courts should not risk their judgments for the judgment of the bodies to whom the task is assigned. Bearing in mind the aforesaid principles laid down by the Supreme Court in the decisions discussed above, the findings of the first appellate Court may now be examined.
30. The first appellate Court has held that the plaintiff had sent a letter dated 21.8.1976 (Ext.-F-1) to the Defendant No. 1 that it was surprised to see the sale notice published in the Business Standard. In the said letter dated 21.8.1976, the plaintiff informed the Defendant No. 1 that the crop was exceedingly good in that current season and the price was also favourable and the plaintiff expected that it would be getting a considerable surplus out of which reasonable amount of the dues could be paid, and thus the plaintiff prayed for reconsidering the decision of the Corporation to sell the Tea Estate. The first Appellate Court has further found that in reply to the said letter dated 21.8.1976, the Defendant No.1 sent a reply dated 28.8.1976 stating that though the plaintiff made several promises in the past to pay to the Corporation a portion of the arrear dues, the plaintiff did not keep its promises and moreover in spite of repeated requests made by the Defendant No. 1 to the plaintiff to attend the Default Committee Meeting the plaintiff did not respond. In the said letter dated 28.8.1976 (Ext.-A-1). however, the Defendant No.1 informd the plaintiff that it was not incumbent on the part of the Defendant No. 1 to give the plaintiff prior intimation of its intention to takeover the mortgaged assets and to dispose of the same in public auction, and the first appellate Court has held that this portion of the lever clearly shows the attitude of the Defendant No. 1. The first appellate Court then found that by letter dated 30.8.1976 (Ext.-G-1). the Defendant No.2 offered a sum of Rs. 12,75,000 as price for purchase of suit property and by letter in Ext.-H-l, the Defendant No. 1 replied to the said offer in Ext.-G-l. On these facts the first appellate Court has held that although the plaintiff requested the Defendant No. 1 to withdraw the sale notice and to give further opportunity to the plaintiff to gradually clear up the dues, the Defendant No. 1 did not favourably consider the plaintiffs request for postponing the sale and thus the Defendant No.1 has acted unfairly or reasonably. But in my answer to the substantial question No.(11), 1 have held that the letter dated 5.1.1977 of the plaintiff Ext. -M was a relevant and material evidence relied on both by the Defendant No. 1 and the Defendant No.2 and had the first appellate Court considered Ext.-M it would not have reached the conclusion that the Defendant No.1 acted unfairly or unreasonably in not granting further opportunity to the plaintiff to pay the defaulted amount and in finally selling the suit property to the Defendant No.2 by the registered Sale Deed on 24.3.1977. The first appellate Court observed at once place that by any estimation the price of Rs. 12,75,000 appeared to be unreasonably low for the suit property but in another part of the judgment has noted that there is no evidence except the bald statement of the plaintiff that the market value of the suit property was more than Rs. 12,75,000. The first appellate Court, on the other hand, has held that in the facts and circumstances of the case it would not be proper to hold that there was any lack of bona fide on the part of the Defendant No. 1 in choosing the method of inviting tenders by publishing the sale notices in the newspaper and has differed from the observation of the learned trial Court on this aspect. The first appellate Court has further held that in its opinion there was no just and sufficient reason for the trail Court to hold that the sale in question was bad in law or irregular or suffering from any mala fide on the ground of failure to sell the Tea Estate by public auction and that the method that has been followed by the Defendant No. 1 almost tantamounted to sale by public auction in so far as there was wide publicity by inviting tenders from all intending purchasers. The first appellate Court has held that in the present case also an objection to the sale was raised on the ground of it being opposed to fairness, reasonableness and bonafide of the Defendant No.1, but the said objection was also found to have no merit. The said findings of the first appellate Court have not been challenged before this Court by the respondent No. The first appellater Court further held that the Defendant No. 1 offered to the Defendant No. 2 to pay the price of the suit property in instalments, but did not offer the same facility to the plaintiff to pay the amount equal to such price in instalments as was given to the Defendant No. 2. But it has been held by the Supreme Court that the State Financial Corporations are free to act according to its own light and own perspective and calculations and unless its action is malafide, even a wrong decision taken by the Corporation in such commercial matters cannot be interfered by the Courts. The first appellate Court has thus decided the appeals by mechanically applying the guidelines laid down by the Supreme Court in Mahesh Chandra's case and has not applied the principles laid down by the Supreme Court in various later decisions on the limitation of the power of the Courts to interfere with the power of the Corporation under Section 29 of the Act, 1951, to takeover possession of mortgaged assets or to sell the same. Thus, on the findings of the first appellate court it is difficult to hold that the conclusions of the courts below that the sale of the suit property by the Defendant No. 1 to the Defendant No.2 was arbitrary, unfair, and contrary to the guidelines laid down by the Supreme Court in Mahesh Chandra's case were correct. Further, in the absence of any finding that the Defendant No. 1 acted in violation of the statute or acted in a manner which no reasonable person would have acted, the lower courts could not have interfered with the sale of the suit property by the Defendant No. 1 to the Defendant No. 2 under section 29 of the Act, 1951, in view of the limitations on the power of the courts in such matters indicated in the decisions of the Supreme Court discussed above.
SUBSTANTIAL QUESTION OF LAW NO. (v) :
31. Mr. Goswami and Mr, Chatterjee, learned counsel for the appellants, submitted that the trail court held that the mortgage deed, Ext.L-1, executed by the plaintiff in favour of the Defendant No. 1 was not an English mortgage as the physical possession of the mortgaged property remained with the plaintiff, the mortgagor. They contended that Section 58(e) of the Transfer of Property Act, 1882, (hereinafter referred to as "the TP Act"), which describes an English mortgaged would show that transfer of possession of the mortgaged property by the mortgagor to the mortgagee is not an essential ingredient of an English mortgage. Mr. Goswami and Mr. Chatterjee submitted that the first appellate court however held that even if the mortgage deed, ext. L-1, was an English mortgage as described in Section 58(e) of the TP Act, the transfer of the mortgaged property to the mortgagee by the mortgagor was not absolute inasmuch as such transfer was subject to the right of the mortgagor to redeem the mortgaged property upon payment of mortgage money. They submitted that the first appellate Court also held that the mortgage deed, Ext.-L-1, was not covered under clauses (a), (b) and (c) of Section 69(1) of the TP Act and thus the mortgagee had no power to sell the mortgaged property without the intervention of the Court. According to Mr. Goswami and Mr. Chattarjee. these findings of the first appellate Court were erroneous. They contended that under the terms of the mortgage deed, Ext.-L-l, the Defendant No.1 had been expressly conferred with the power to sell the mortgaged property without the intervention of the Court and the mortgage deed was covered under Section 69(1) of the TP Act. They submitted that it would be clear from the proviso to Section 60 of the TP Act that the right of the mortgagor to redeem the mortgaged property got extinguished by the act of the parties. Thus, as soon as the mortgagee exercised its right to sell the mortgaged property and a registered sale deed was executed transferring the mortgaged property to a third party, the right of the mortgagor to redeem the mortgaged property was extinguished. Mr. Chattarjee cited the decision of the Supreme Court in Narandas v. SA Kamtam, AIR 1977 SC 774, in support of his submission. Mr. Chattarjee further submitted that sub-section (3) of Section 69 of the TP Act would show that once a sale was made by the mortgagee in professed exercise of its power to sell the mortgaged property, the title of the purchaser would not be impeachable on the ground that no case had arisen to authorise the sale, or that due notice was not given, or that the power was otherwise improperly or irregularly exercised, but any person indemnified by an unauthorised or improper or irregular exercise of the power would have his remedy in damages against the person exercising the power. He contended that the Defendant No.2 which was the purchaser of the mortgaged property was entitled to the protection of sub-section (3) of Section 69 of the TP Act, and if the plaintiff was aggrieved by the improper or irregular exercise of power of sale by the Defendant No. 1, remedy of the plaintiff was by way of damages against the Defendant No. 1. According to Mr. Goswami and Mr. Chattarjee, in view of the aforesaid respective rights of the mortgagor and mortgagee, and the purchaser of the mortgaged property under the TP Act, the plaintiff was not entitled to restoration of mortgaged property after the same was sold by registered sale deed executed on 24.3.1977 by the Defendant No. 1 in favour of the Defendant No.2. They contended that the findings of the Courts below, as indicated above, have adversely affected the rights of the Defendant No. 1 and the Defendant No.2 as mortgagee and purchaser of the mortgaged property giving rise to a substantial question of law. They cited the decision of the Supreme Court in Chunilal v. Mehta and sons Ltd v. Century Spinning and Manufacturing Co. Ltd., AIR 1962SC 1314, in support of their submission that a question of law is a substantial question when it affects the rights of the parties to the proceedings.
32. Mr. Chakravorty, learned counsel for the respondent No. 1, on the other hand, submitted that no such substantial question of law arose for decision in these Second Appeals. The lower Courts while deciding the matter may not have correctly applied the law and may have decided the matter wrongly, but every error of law of the lower Courts does not give rise to a substantial question of law. According to Mr. Chakravorty, even where the law is settled, wrong application of law is not a substantial question of law. He further submitted that it would be clear from the orders dated 8.11.1983 and 19.8.1985 of the trial Court that the trail Court held that the mortgage deed executed by the plaintiff in favour of the Defendant No.1 was not an English mortgage but a simple mortgage. Hence, Section 69 of the TP Act did not apply. But no appeal or revision has been filed against the orders of the trial Court.
33. On an examination of the orders passed by the trial Court on 8.11.1983 and 19.8.1985, I find that on 8.11.1983, the trial Court framed a preliminary issue as to whether the Court had jurisdiction to try the suit, and by order dated 19.8.1985 answered the said issue in favour of the plaintiff. In the order dated 19.8.1985, the trial Court dealt with the contention of the Defendant No. 1 that the mortgage deed executed by the plaintiff in favour of the Defendant No. 1 was an English mortgage, and held that from the covenants in the mortgage deed, the property had not been transferred absolutely and, therefore, it was not an English mortgage but a simple mortgage and that Section 69 of the TP Act could not be made applicable to the case. When the suit was taken up for trail, the trial Court again dealt with this question in para-28 of its judgment, and held that since the possession of the mortgaged property remained with the mortgagor, the plaintiff, the contention that the mortgage in question was an English mortgage was of no substance. These findings of the trial Court were challenged by the appellants in the Title Appeals before the first appellate Court, and the first appellate Court held that as per the definition of English mortgage given in Section 58(e) of the TP Act, the transfer of mortgaged property by the mortgagor to the mortgagee was not absolute because under the proviso in Section 58(e), the mortgagor has to retransfer the mortgaged property to the mortgagee upon payment of the mortgage money agreed. The first appellate Court further held that Section 69 of the TP Act was not at all applicable in the case as the mortgage was not covered under clauses (a), (b) and (c) of sub-section (1) of Section 69 of the TP Act. The first appellate Court however held that in any case in view of the decision of the Supreme Court in Mahesh Chandra's case, the Defendant No. 1 while selling the mortgaged property under Section 29 of the Act, 1951, could not act with mala fide, arbitrariness or unreasonableness. It also appears that the first appellate Court finally held that the registered sale deed dated 24.3.1976 executed by the Defendant No. 1 in favour of the Defendant No.2 was liable to be declared Illegal, void, inoperative and not binding upon the plaintiff for the reasons - (1) that the Defendant No. 1 sold the Tea Estate at a price which was far below the actual price of the suit property; (2) that the Defendant No. 1 did not intimate the plaintiff the highest price at which the tender was going to be accepted by the Defendant No. 1; (3) that the Defendant No. 1 did not give any opportunity to the plaintiff to offer the same price as the highest tenderer offered and thereby failed to give the last chance to the plaintiff company to save his Tea Estate from being sold to any other party; and (4) that the Defendant No. 1 also failed to offer to the plaintiff the facility of paying the amount equal to the price at which the Tea Estate was sold by instalments as was given to the Defendant No. 2. Thus, the registered sale deed dated 24.3.1976 executed by the Defendant No. 1 in favour of Defendant No. 2 had been declared illegal, void, inoperative and not binding on the plaintiff by the first appellate Court not on the ground that the Defendant No. 1 as the mortgagee did not have the power to sell the mortgaged property but on the ground that such power of the Defendant No. 1 to sell the mortgaged property under Section 29 of the Act, 1951, had been exercised in an arbitrary, unreasonable and unfair manner. The relief that was ultimately granted by the Courts below to the plaintiff was, in other words, not based on their determination of rights of the parties under the mortgage deed, Ext.-L-l, and under Sections 58(e), 60 and 69 of the TP Act. Therefore, the question whether the Courts below were correct in law in determining the rights 'of the parties under the mortgage deed dated 7.4.1969 and under Section 58(e), 69 and other relevant provisions of the TP Act, though a question of law is not a substantial question of law which arose for determination in this case. In Chunilal V Mehta and sons Ltd. v. Century Spinning and Manufacturing" Co. Ltd., AIR 1962 SC 1314, cited by Mr. Goswami and Mr Chattarjee, a question arose as to whether the construction of the managing agency agreement was a substantial question of law, and the Supreme Court held that it raised a substantial question of law because upon the success or the failure of the contention of the parties with regard to construction of managing agency agreement, they stand to succeed or fail with respect of their claim for nearly 26 lakhs of rupees. Applying the said test in the present case, the parties would not succeed or fails in these Second Appeals on a determination of the rights of the parties under the mortgage deed dated 7.4.1969 or under Sections 58(e), 69 and other relevant provisions of the TP Act, and their success or failure will depend upon the reversal or confirmation of the conclusions of the first appellate Court on the other points under the substantial question of law Nos.(ii), (iii) and (iv).
SUBSTANTIAL QUESTION OF LAW NOS. (vi) and (vii)
34. In view of my conclusions under substantial question of law Nos. (ii), (iii) and (iv), the judgment and decree of the learned trail Court and the first appellate Court are liable to be set aside, and the plaintiff is not entitled to any relief, and the suit of the plaintiff was liable to be dismissed. It is, therefore, not necessary to decide the substantial question of law Nos. (vi) and (vii).
35. In the result, these appeals are allowed. The judgment and decree dated 20.2.1996 of the learned Munsiff in Title Suit No.49/77 and the judgment and decree dated 12.12.1997 of the learned District Judge in Title Appeal Nos. 15, 20 and 21 of 1996 are set aside, and the aforesaid Title Suit of the plaintiff is dismissed. Considering however the entire facts and circumstances of the case, I direct that the parties will bear their respective cost although out.