SATYAPAL Vs. RUKAYYABAI

JUDGEMENT

(1.) THIS is a suit for a declaration that the sale of property described in Exh. A appended to the plaint in favour of defendant No. 2 brought about by defendant No. 1 is void and reliefs incidental to the declaration.

(2.) PLAINTIFF on 20-10-1961 acquired the suit land together with some structures thereon from one Krupal Khetsay. The price agreed to be paid to the vendor was Rupees 40,000/- and plaintiff raised a loan of Rupees 22,000/- from defendant No. 1 to make the purchase - the balance coming from his own sources. To ensure repayment of the sum borrowed from defendant No. 1 together with interest agreed to be paid thereupon, plaintiff passed Exh. S-1 which is a registered mortgage deed. In the document, plaintiff undertook to repay the mortgage debt 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. 00, 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. 00 was required by the plaintiff in the year 1971. Defendant No. 1 provided the required sum and obtained from plaintiff on 5/04/1971 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 5/04/1972, 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. 00 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. 1 about the property tax having run up to more than Rs. 7,000. 00 and their having been a statutory right of priority over the suit property for the realisation of the same. A copy of this notice was sent by defendant No. 1 to the plaintiff. A second notice threatening the sale by public auction was given by defendant No. 1 to plaintiff on 22/11/1972. The 1st defendant intimated the Bombay Municipal Corporation on the 3/01/1973 of her rights under Exhs. S-1 and S-3 and requested that the encumbrances in her favour be mentioned in the proclamation of sale which sale had been threatened by the BMC. The BMC gave an affirmative response to this communication of the 1st defendant. Pursuant to a request made by the plaintiff to postpone the intended sale, the BMC postponed the auction. On 11-4-1973, defendant No. 1 gave one more notice to the plaintiff calling upon him to pay the mortgage debt together with interest within 3 months, failing which the property would be put to sale by public auction. On 11/03/1974, one more notice was given to the plaintiff intimating that the property would be put to sale by public auction on 11-4-1974. The intended public auction was advertised in various newspapers including the Free Press Journal and Mumbai Samachar. The sale kept on being postponed and in June, 1974, it was re-advertised as scheduled to take place later. Plaintiff then filed Suit No. 4643 of 1974 in the Bombay City Civil Court and an ad interim order restraining the auction was passed on condition that plaintiff deposited a sum of Rs. 10,000. 00 on or before 24-6-1974. The deposit not having been made the injunction stood vacated. Eventually the sale was postponed to 6-7-1974. Pursuant to an alleged auction which took place on 6-7-1974, defendant No. 1 has kept ready a draft of a conveyance dated 18-7-1974. This document at Exh. S-35 purports to show defendant No. 2 as having purchased the suit property on 6-7-1974 being the highest bidder at the auction, the sum agreed to be paid by him being Rs. 61,000. 00. The document shows him to have paid Rs. 15,250. 00 by way of earnest money.

(3.) SHORTLY stated, plaintiff's case is that no auction took place on 6-7-1974. What was done on that day was a stage-managed farce to enable defendant No. 2 to grab plaintiff's valuable property for a pittance. Defendant No. 2 was inducted into a part of the suit 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. 00. 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 irregularities and illegalities which has affected the rights of the plaintiff. No proclamation or the terms and conditions of sale were pasted on the premises of the property or the vicinity thereof. Plaintiff was not given notice of the auction intended to be held on 6-7-1974. The sale proclamation did not mention the estimated value of the property, the rent which it was fetching, and particulars in regard to the built-up area etc. etc. Portions of the structures constructed subsequent to the mortgage and charge were included in the mortgaged property as being proclaimed for sale. The rateable value of the property tax assessed on the said property by the BMC was not mentioned in the sale proclamation. As said earlier, plaintiff's representative was prevented from coming into the room where the papers showing the auction having taken place were drawn up. As a consequence of the acts and omissions of the defendants, property which was worth nearly Rs. 2 lakhs had been sold at a price of Rs. 61,000. 00. Such a sale was a fraud upon the powers conferred by the statute upon the mortgagee. The auction was void and not binding on the plaintiff. Defendant No. 2 could not take the benefit of the sale being in his favour as he was a party to the fraud. The sale proclamation falsely described the rear parts most building consisted of ground and two upper floors as an "additional incomplete structure". This was patently a false statement and was incorporated dishonestly with intent to mislead intending purchaser and occasion wrongful loss to the plaintiff. Plaintiff was therefore entitled to the relief of a declaration about the sale in favour of defendant No. 2 being void and incapable of affecting his title to the property.