TMI Blog1992 (4) TMI 265X X X X Extracts X X X X X X X X Extracts X X X X ..... t along with interest on or before 20th day of October, 1962. In the event of the mortgagor defaulting in the payment of the principal sum of interest amounting to at least Rs. 500/-, the mortgagee was authorised to bring the property to sale under Section 69 of the Transfer of Property Act (T.P. Act). A further sum of Rs. 18,000/- was required by the plaintiff in the year 1971. Defendant No. 1 provided the required sum and obtained from plaintiff on 5th April, 1971 the document at Exh. S-3. This document recited that the time for repayment of the mortgage debt of Rupees 22,000/- plus the advance secured under document at Exh. S-3 would be repaid by 5th April, 1972, the rate of interest being enhanced to 12% per annum. In the meantime the plaintiff had fallen in arrears in the payment of property taxes on the acquired property together with such additions as had been made by him. Defendant No. 1 on 7-4-1972 gave a notice to the plaintiff calling upon him to pay Rs. 40,000/- plus interest within 3 months, failing which she threatened to put the property to sale without the intervention of a Court as provided for by Exh. S-1. The Bombay Municipal Corporation had noticed defendant No. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... property as a tenant by the plaintiff. He had defaulted in the payment of rent and the arrears payable by him came to more than Rs.40,000/-. Plaintiff had filed a suit in the Court of a Small Causes against defendant No. 2 for recovery of unpaid rent and ejectment. Defendant No. 1 was aware of the suit instituted in, the Small Causes Court by the plaintiff against the 2nd defendant. Defendant No. 2 was also aware of steps being taken by defendant No. 1 to realise her dues under Exhs. S-1 and S-3. The two defendants had joined hands and on 6-7-1974 indulged in the show of an auction. No person other than defendant No. 1's husband, the auctioneer, and the representative of defendant No. 1's Solicitor was present when defendant No. 2 was said to have offered the highest bid. The process was objected to by the plaintiff's representative who had gone to the spot at the behest of the plaintiff. No bids were invited and no one was allowed to enter the room where the document purporting to show defendant No. 2's success in the auction was drawn up. In addition to the total absence of inviting bids at the site, so-called public auction was vitiated by material irregularitie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ation for himself, so as to be satisfied that all relevant factors were brought to the notice of the intending purchasers. This offer was not availed of by the plaintiff and he should not now be heard to complain of the proclamation being defective in this or that respect. It was not true to say that a mere show of a public auction was made at the site on 6-7-1974. The notice given attracted a fairly sizeable number of bidders at the site and defendant No. 2 succeeded against a fairly strenuous contest by other bidders. The sale proclamation did not omit the material particulars and did not recite anything contrary to the factual position. It was not true to say that the proclamation was so worked as to depress the price and keep off from the auction those who would be normally interested in the purchase of the suit property. Neither defendant was guilty of fraud nor collusion. Defendant No. 2's title was not impeachable for the lapses, if any, attributable to defendant No. 1 and plaintiff's only remedy would be an action for damages against defendant No. 1. 5. Pleadings aforestated gave rise to the following issues. These are given below with my findings recorded against e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sum of Rs. 40,000/- plus interest was owing from the plaintiff to defendant No. 1; that plaintiff was in severe financial difficulties; that apart from being indebted to defendant No. 1, plaintiff was in arrears of property tax; that the non-payment of property tax had led to a threat by the BMC to put the suit property to auction and that added to the severe financial crash faced by plaintiff was the commencement of a feud between plaintiff and defendant No. 1. Plaintiff first attempts to show that no auction had actually taken place on 6-7-1974. Plaintiff has examined his brother-in-law in support of this plea. The said brother-in-law P.W. 2 Ashutosh Arora testifies that following a request made by plaintiff and the said person's wife --the lady being the sister of the witness -- he had been to the site when the auction was scheduled to take place. He came to the spot at about 3.30 to 3.45 p.m. Standing at the site were some 7-8 persons who included defendant No. 1's husband and defendant No. 2. After sometime the assembled persons moved into the passage. Here, Arora picked up the courage to approach defendant No. 1 's husband with a request that he postpone the aucti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... outstanding. In an unguarded moment Arora comes out with the admission that the persons assembled in front of the property had so assembled for the auction. Witness was asked by defendant No. 2 to leave the place and not to interfere in matters which did not concern him. Yet he would have us believe that he followed defendant No. 2 and Bandukwala to the second floor of the rear-most building. From the evidence on record, it does not appear that defendant No. 2 is the sort of person who could be trifled with. He is running what are plain and simple gambling done and making a good living out of this nefarious trade. Plaintiff of course is not innocent for he appears to have been trafficking in drugs. But nothing is to the discredit of Arora and it is not possible to believe that he would be allowed to follow the party which included defendant No, 2 to the said defendant's lair. An attempt was made to show that the auction could not have taken place because of the heavy rains on 6-7-1974. The depositions of Bandukwala, Solicitor Dadla and the auctioneer's representative Sanghavi do not invite asceticism on this point. It was raining because the month was July and the rain inte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nderground auction tank had been put up under the supervision of Wadke on behalf of the plaintiff. The said work was sanctioned under Ex. S-144. Persuant to take sanctioned plan, details as regards R.C.C. and structural designs were submitted by Wadke vide Exh. S-45. Whether work was done or not in consonance with Ex. S-45, is not known to the witness. The witness has been cross-examined at great length but without in any way shaking his credibility or the stand taken by him vis-a-vis the completion of the work left unfinished by Sodawala. What he concedes is that at the stage of his leaving plaintiff's work, what only remained in regard to the additional structure was the obtaining of a water and electric connection, a bit of tiling, plastering work and fixing of shutters to doors and windows to the said additional structure. It is not as if we are restricted to what Wadke has to say on the subject. Defendant No. 2 in his testimony starts with a denial about getting possession of the first and second floors though he had paid an advance of Rs. 85,000/- to the plaintiff. He would have us believe that he came into possession of the property after 6-7-1974. At that time the struc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t No. 2, the lease agreement at Exh. G-2 would have made a reference thereto. By now defendant No. 2 was prepared to concede that Exh. S-2 made no reference to the unfinished work because it was so minor as not to warrant a reference in the lease agreement. According to defendant No. 2, plaintiff did not carry out the undertaking to complete the work. Had this really been true, defendant No. 2 would have brought it to the notice of the plaintiff by means of a notice. Defendant No. 2 had parted with good money when Exh. S-2 was executed. Having regard to defendant No. 2's native shrewdness it is not conceivable that he would enter into the agreement at Exh. S-2 without eg. assuring himself that the plaintiff had obtained a completion certificate. That defendant No. 2 had been kept out of possession till as late as June, 1972 was not mentioned by him in his written statement filed in the Small Cause Court suit. For this defendant No. 2, throws the blame upon his Advocate representing him in that suit. A lodge was functioning in the 1st and 2nd floors of the additional structure. In fact a sign-board for that purpose had been put up as is admitted by defendant No. 2. He now wants ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e further advance of Rs. 18,000/- being required for making additions to the structure, one cannot lose sight of the fact that defendant No. 1 was aware of an addition having been made. There is no evidence to show that an Architect had been commissioned to verify the condition and value of the additional structure put up by the plaintiff subsequent to the purchase made in 1961. Regard being had to the admissions wrenched out of defendant No. 2, it would follow that the plaintiff had added near about 3 times the sums spent in acquiring the property, in putting up an additional structure. The inference is that at about the time of the auction a sum of about Rs. 1,60,000/- had been invested in the property. 9. Plaintiff takes exception to the sale proclamation for not giving the estate of the value of the property as also the reserve price fixed therefor. The estimated value of the property is not given in the sale proclamation and no reserve price has been set up therein. One of the conditions of the auction recites that the reserve price would be specified at the commencement of the auction by the auctioneers. It is said that such a reserve price was fixed at Rs. 25,000/- by the au ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing up to a frightful sum. It was not enough to offer to the intending bidders an inspection of the notice received from the Bombay Municipal Corporation. The least that was expected of the mortgagee was to specify in the sale proclamation the amount demanded in the notice referred to in the sale proclamation. Of course the intending purchasers could have applied to the Vendor's Attorneys for an inspection of the notice sent by the BMC. But this would be the position in respect of only such persons as had set their hearts upon purchasing the said property. It was not only this class but a wider one had to be attracted to the auction site. The purpose behind the advertisement was or should have been to attract to the site as many persons as possible so that the bidding would lead to the property being sold for the best possible price. The manner in which the sale proclamation referred to a notice of the BMC gave the impression of the property being seriously encumbered. 11. Plaintiff's last grievance is in regard to the sale proclamation saying nothing about the rental income that the property was fetching. On this subject an attempt has been: made by defendants to show as i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... done nothing to lessen the draconian nature of the measure. Said the learned Judge:-- We have no hesitation in observing that S. 69 of T.P. Act is a drastic provision and places bona fide mortgagors who have a real defence to any action on the mortgage, in a very disadvantageous and helpless position. S. 69 empowers the mortgagee in whom the power of sale without the intervention of the Court is expressly conferred by the terms of the mortgage deed and where the properties are situated in certain important towns including the city of Madras, to sell either giving 3 months' time in writing and calling upon the mortgagors to pay the principal sum; and when once the sale has been effected in exercise of such a power S. 69(3) provides that the title of the purchaser shall not be impeached 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 and the only remedy of a person who is dignified by an unauthorised or improper or irregular exercise of the power is to sue the mortgagee for damages. It will be argued that these observations are inappropriate to the facts of the prese ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e. property in suit, would exceed Rs. 1000/- per month. Plaintiffs witness Sam Rao (P.W. 4) testifies that the value of the property had increased to Rs. 2,84,321.00 after the coming into existence of the newly added portions. Witness has been subjected to a somewhat strenuous cross-examination, but has remained unshaken. His report is at Exh. S-14. The land on which the property stands measures 920 sq. yards. There are near about 3 multi-storeyed structures in it. Good reasons have been given in Exh. S-14 to justify the price estimated by the witness. Taking Mr. Rao's report as the basis, it would follow that the auction held on 6-7-1974 fetched only near about 25% of the real value. By any reckoning, the pittance at which the property was acquired is itself evidence of a fraud. It may be argued that the plaintiff had run up huge debts and had enjoyed the property for near about 14 years before it was sold. But judicial notice has to be taken of the fact that the prices of real estate are going up right since the Commencement of the second world war and that the increase has been by leaps and bounds. Though the plaintiff purchased the property for Rs. 40,000/- in 1961 and thou ..... X X X X Extracts X X X X X X X X Extracts X X X X
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