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S.R. Singharavelu, J.—O.A. No. 643 and 644 of 2006 are filed by the applicant/plaintiff to pass an order of interim injunction restraining the
respondents from disturbing and interfering with the peaceful possession of the applicant in the suit property and from alienating, leasing or dealing
in any manner of the suit: property, A. No. 2946 of 2006 is filed by the 2nd defendant to vacate the order of interim injunction granted on
17,08.2006 in 0.A. No. 644 of 2006.
The above Original Applications are filed by the mortgagor of a property situate in No. 76 (Old No. 11-B), Eldams Road, Teynampet,
Chennai-18, which was constructed in ground plus two floors with plinth area of 2550 sq.ft. The remedy sought for is to grant interim injunction
against alienation and any encumbrance in the above property. The 1 st respondent is a Nidhi and the 2nd respondent is the purchaser in the public
auction held on 27.03.2003. The mortgage was dated 01.08.1994 for a sum of Rs. 20 lakhs upon the above property, which was obtained by the
applicant, by a Partition Deed of the year 1985 with his parents and coborns. Excepting a sum of Rs. 2,22,381/-, the debt remains unpaid and so
the mortgagee has brought it in the public auction wherein 2nd respondent, one of the subscribers of 1 st. respondent, had purchased it for a sum
of Rs. 35 lakhs. On payment of the balance of Rs. 21.50 lakhs, after making initial payment of Rs. 13.50 lakhs by 2nd respondent, the sale was
confirmed on 21.07.2004 and sale deed was also executed in his favour. This sale was resisted by applicant/plaintiff as devoid of statutory notice
u/s 69 of Transfer of Property Act (hereinafter referred to as ""the Act"") and so, it was contended that the sale is bad.
Mr. P.L. Narayanan, learned senior counsel for the respondents submitted that in spite of notice sent to the applicant/mortgagor, as it went
''unclaimed'', publication was made in a Tamil daily DHINA THANTHI dated 23.03.2003 and there was also a publication in the office of the
auctioneer and so, it was submitted that the auction was held only in accordance with law. It was further submitted that the 1st respondent
mortgagor had already spent Rs. 6,83,009/- for payment of various taxes due upon the building.
Reliance was also placed upon The Puraswalkam Hindu Jannoakara Saswatha Nidhi Ltd., by its Secretary K. Chinnathambi Pillai v. Kuddus
Mean Sahib and Ors. 1926 L.W. 476, wherein it was mentioned at page 491 as follows:
I am inclined to think that the argument is correct that in cases falling u/s 69, if interest amounting at least to Rs. 500 is in arrears and unpaid for
three months the mortgagee if he has got the power of sale under the mortgage, can exercise the power without notice to the mortgagor.
Mr. P.L. Narayanan, learned senior counsel also drew my attention to Section 69(2)(a) and (2)(b) of the Act. The Terminology in Section
69(2) beginning as ""No such power shall be exercised unless and until"" is common to both Sub-sections (2)a) and (2(b). If we read Sub-section
(2)(b) with, such common words, it would mean that, no such power of sale shall be exercised by the mortgagee unless and until some interest
under the mortgage amounting at least to five hundred rupees is in arrear and unpaid for three months after becoming due. There was no
contemplation of notice in writing to be issued to the mortgagor, which will only be applicable to Section 69(2)(a) of the Act, regarding
nonpayment of principal and interest of mortgage amount, for a period of three months. But it is to be mentioned that both in the above cited case
as well as in this case, it is nobody''s case that interest on mortgage amount alone was in arrears and that power of sals was exercised only
therefor. That is why, it was observed in the above cited case as follows;
Now, in this case, reading Section 69 with the Articles of Association and the mortgage deed, I am clearly of opinion that before the sale is held
for the purpose of recovering principal and interest due on the mortgage, notice has to be given and the learned Judge was right in coming to the
conclusion that the want of notice was an irregularity because the fund did not act in a manner that would entitle them to have sold the property
right.
That is why in the above case law it was observed as below at page 483:
It is unnecessary in this case to decide the wider question raised whether in case of interest alone being due notice is necessary.
When principal also was due, even in that case law, it was clearly mentioned that notice u/s 69 is necessary. As mentioned supra, here also it is
nobody''s case that power of sale was exercised only for interest that was due. If that be so, the entire property could not have been sold for a sum
of Rs. 35 lakhs, as it may not represent the amount of interest alone (principal mortgage amount in this case is Rs. 20 lakhs). That apart similar to
certain Articles of Association in that case law, here also Clause 7 (iii) of the Hyptjecatopm Dead necessitates a notice to mortgagor before ever
power of sale of mortgaee is exercised. The fact remains that no service of such statutory notice u/s 69(2) of the act was ever made upon the
applicant plantiff/mortgagor.
Again to say that notice was unclaimed by the mortgagor is not an answer for compliance of Section 69(2) because the statutory obligation on
the part of mortgagee is to serve such notice upon the mortgagor Further, the copy of unclaimed endorsment was found only for the earlier auction
sale of the year 2001-2002. Similalry, the copies of publication in DHINA THANTHI dated 23.03.2003 may not also amount to service of notice
as required u/s 69(2) of the Act. It has been held in Babamiya Mohidin Shakkar Vs. Jehangir Dinshaw Belgaumwalla, that advertisement of sale of
mortgaged property in newspaper is not sufficient intimation. In that case, it was held as follows
The notice required by Section 69(2)(a) is not only necessary but is imperative, and even the period of three months cannot be curtailed by
agreement of the parties...there must be an appropriate action by the mortgagee such as a notice of demand or some other action indicating to the
mortgagor the exercise of that option so as to enable the mortgagor to realise his position and save his equity of redemption if possible... The
advertisement of sale of mortgaged property in the newspaper is not a sufficient intimation to the mortgagor.
Even the publication in the auctioneering office contained no required particulars excepting mentioning that other particulars will be made available
in the office of the auctioneering company.
Mr. Sivam Sivanandaraj, learned Counsel appearing for the applicant/plaintiff relied upon C.M.K. Ramu Mudaliar Vs. Kanthamani Natarajan
and Another, and submitted that as found in Babamiya Mohidin Shakkar Vs. Jehangir Dinshaw Belgaumwalla, , notice u/s 69 of the Act is
imperative and that the service of the same notice is also to be effectively made. While dealing with notice u/s 106 of the Act, the following was
observed in that case;
The different mode of service permitted by Section 106 had been enacted only to the end that the landlord could choose the most appropriate and
the best practicable means of getting at his tenant.
The Provisions were meant to ensure effective service and not to countenance non-service.
Similarly, here also, it must be proved that the notice was effectively served upon the mortgagor. Even for refusal as unclaimed, as stated in
Jitendra Barai v. Chairman Regional Transport Authority, Bolongir and Anr. AIR 1971 Orissa 120. It should be proved by the person who sent
the notice. But no such endeavour was made in proof of the same. The importance of service of notice was very much mentioned in Kamalambal
Vs. M. Purushotam Naidu, by stating that the power of sale was not to be exercised unless and until statutory notice was served.
It was so also observed in R. Santhankumar Nadar Vs. Indian Bank Ltd., Madras and Others, wherein it was held as follows:
Sub-section (2) of Section 69 lays down inter alia that no such power shall be ecercised unless and until notice in writing requiring payment of the
principal money has been served on the mortgagor, ... and default has been made in payment of the principal money or of part thereof, for three
months after such service. The language of this sub-section is clear and unambiguous. The Section lays down in no uncertain terms that the requisite
notice may be given to the mortgagor.... It may be hard on a person in the position of a mortgagor to get no notice under this Section if he comes
to learn that the property has been sold without any notice to him. But if there has been no fraud or collusion in the matter, he has no cause for
complaint.
In Pichai Moideen Rowthar Vs. Chathurbuja Das Kushal Das and Sons and Others, . it was held as follows:
A mortgagee with a power of sale is strictly speaking, not a trustee of the power of sale. It is, a power given to him for his own benefit, to enable
him the better, to realise his mortgage debt. If he exercises it bona fide for that purpose, without corruption or collusion with the purchaser, the
Court will not interfere, even through the sale be very disadvantageous, unless indeed the price is so low as in itself to be evidence of fraud.
In this case, the valuation of the property bearing door No. 76 (old No. 11-B) Eldams Road, Teynampet, Chennai-18, with ground plus two
floors in a plinth area of 2550 sq.ft. was at Rs 1,30,40 000/- valued in a detailed valuation report dated 27.07.2006 by JMR Consultants,
Chartered Engineers and Registered Valuers. That contains ail particulars of method of valuation, extent of land, process of valuation, building and
its features along with a conclusion that value of the land and building respectively amounting to Rs. 1,06,25,000/- and Rs. 24,15,000/- making a
total of Rs. 1,3.0,40,000/-. But the sale was made in March, 2003 only for Rs. 35 lakhs, which is obviously for a lower price and without notice
to the mortgagor. So there is serious prejudice caused to the applicant/mortgagor,
The second defendant has filed a suit in C.S. No. 919 of 2004 for possession from the applicant/plaintiff, who is presumably in possession. If
the sale/is had the applicant''s possession is to be protected.
The last contention made on the side of the respondents/defendants that as per Section 69(3) of the Act the suit is not maintainable, is also
unacceptable. What Section 69(3) provides is that the title of the purchaser shall not be impeachable on the ground,
(i) that no case had arisen to authorise the sale; or
(ii) that due notice was not given; or.
(iii) that the power was otherwise improperly irregularly exercise and if the owner of the property is damnified by such unauthorised. improper or
irregular exercise of power, he shall have remedy in damages;
but all these will be applicable only when a sale has been made in professed exercise of such a power of sale as expressed in the Deed of
Mortgage and as contemplated in Section 69(1)(b) of the Act; but according to Clause 7(iii) of the Hypothecation Deed, the power of sale without
the intervention of the Court was conferred on the mortgagee only upon mortgagor failing to pay within three months of the date of service of the
aforesaid notice. Therefore, the power of sals, as mentioned in Section 69(1)(b) of the Act,. is clothed upon the mortgagee by the Hypothecation
Deed only upon issuance of notice. This notice contemplated in Bilateral Agreement is different from statutory noticed. De hors the statutory
notice, the power of sale will be available for mortgagee only if there is a notice as expressed in the deed of Mortgage.
Even leaving the point of failure of notice to call the sale as was made in professed exercise of such notice of sale, there should be a procedure
in the process of auction and reasonability for the price it was sold and both of which are lacking in the case, inasmuch as the price of the property
is proved to be very low and that procedure of. auction is not proper inasmuch as it contains no proper descriptions of the extent of the property
as well as these is no mention made in the advertisement about the value of the property and other particulars.
For the reasons stated above, 0.A. No. 643. and 644 of 2006 ore allowed by granting the relief mentioned in the applications. Consequently,
A. No. 2946 of 2006 is dismissed