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PETITIONER: R.   SANTHANKUMAR NADAR

       Vs.

RESPONDENT: INDIAN BANK LTD., MADRAS & ORS.

DATE OF JUDGMENT: 06/02/1967

BENCH: MITTER, G.K. BENCH: MITTER, G.K. SHAH, J.C.

CITATION:  1967 AIR 1296            1967 SCR  (2) 613

ACT: Transfer  of  Property  Act (4 of 1882),,  ss,  51  and  69- Applicabiltly  of s. 51 to purchaser of  mortgaged  property with knowledge of mortgage Notice to assignee of exercise of right of sale under s. 69-If necessary.

HEADNOTE: A mortgage was created over property situate in the City  of Madras  and the mortgage-deed conferred on the mortgage  the power  under S. 69 of the Trinsfer of Property Act, to  sell the   property  without  the  intervention  of  the   Court. Thereafter,  the appellant purchased a small portion of  the property  from the mortgagors.  The sale-deed provided  that the  mortgagors  (vendors)  should  get  the  property  sold released from  the mortgage within one year, that in default thereof the. appellant   (vendee)  would  be at  liberty  to enforce his to compel the vendors    to  do so, and  that the vendors should internfor all expenses and  damages; but, no such steps were 1the  vendors  or  the  vendee. After  the  appellant’s  purchase, a notice  was  issued  on behalf  of the mortgage, to the mortgagors, in terms of  the mortgage  deed, as required by s. 69(2), but no  notice  was serve  on  the appellant.  The property mortgaged  was  then widely  advertised  for  sale and was bought  by  the  first respondent  bank.   The  bank  then filed  the  suit  for  v possession, mesne profits and other reliefs.  The  appellant contended that : (1) the sale was invalid and not binding on his  portion in-the absence of notice to him, and (2)  as  a bona  tide purchaser he was entitle ad, under s. 51  of  the Act,  to the value of improvements effected by him The  High Court rejected the contentions and decreed the suit.. In appeal to this Court, HELD : (1) Section 69(2) lays down that the notice requiring payment of the mortgage money may be given to the  mortgagor or  to one of several mortgagors, where there are more  than one.   In the present case, the mortem had not  parted  with their  entire  interest in the property, and  the  appellant stood  am  the shoes of the mortgagors with respect  to  the portion  purchased  by him.  Therefore, notice  having  been issued  to the mortgagors the appellant was not entitled  to such  notice.  Since he knew of the Power of sale  contained in the mortgage deed and there was. no fraud or collusion-in

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the  sale of the property to the bank, the appellant had  no cause for complaint. [615 E-F; 61-6 G] Muncherji  Furdoonji  Mehta v. Noor  Mahomedbhoy  Jairaibhoy Pirbhoy,  I.L.R. 17 Bom. 711 and Hoole v. Snuth, 17 Ch.   D. 434, explained. (2)Section  51  of  the  Act has  no  application  to  the appellant  at all as, in the circumstances of the  case,  he could  not have believed that he was absolutely entitled  to the, property [617 E]

JUDGMENT: CIVIL APPELLATE Jurisdiction : Civil Appeal No 505 of 1965. Appeal  by special leave from the judgment and decree  dated March  11,  1964 of the Madras High Court in  Original  Side Appeal No. 11 of 1960. 614 R.   Thiagaraian and R. Ganapathy Iyer, for the appellant. M.   S. K. Sastri and M. S. Narasimhah, for respondent No. 1 The Judgment of the Court was delivered by Miter,  J. This is an appeal from a judgment and  decree  of the  High  Court of Judicature at Madras  on  special  leave granted by this Court. The  owners  of the property situate in the City  of  Madras created a mortgage over it in 1944 in favour of one Jagmohan Prasad  Bhatta  with  power to him  to  sell  the  mortgaged property  without the intervention of the Court.   On  April 22,  1950 the appellant before us purchased a small  portion of the property from the mortgagors, the vendors covenanting to  get  the  property  mentioned in  the  schedule  to  the document  released  from the mortgages  mentioned  within  a period of one year, in default whereof the vendee was to  be at liberty to enforce his rights to compel the vendors to do so  in  appropriate proceedings and the  vendors  agreed  to indemnify the purchaser for all such expenses and-  damages. The original mortgagee died on March 14, 1950 leaving a will and  bequeathing  the  entire property in  equal  shares  to several  persons.  The executor to the will of the  deceased executed  a deed of transfer in favour of the said  legatees on  May 14, 1951.  The legatees executed a general power  of attorney  in  favour  of  one  Gangadhar  Bhatta,  the   8th defendant, conferring on him all powers including the power, to  realise  the  amounts  due  under  the  mortgage   dated September  21, 1944 and to take other necessary  steps.   On May  28, 1952 a notice was issued in terms of  the  mortgage deed under s. 69 of the Transfer of Property Act.  There  is no  dispute  that it was not served on the  appellant.   The sale  was widely advertised and was adjourned from  time  to time till April 26, 1953 when the property was purchased  by the  1st respondent, the Indian Bank Ltd., for a sum of  Rs. 1,12,500.  The sale-deed in favour of the bank was  executed on  July 4, 1953.  The bank filed a suit on April  26,  1954 praying  for vacant possession of portions of the  property, decree for mesne profits against some of the defendants  and other  reliefs.   Before  the learned single  Judge  of  the Madras  High Court who heard the suit, it was  contended  on behalf of the present appellant that the sale was invalid in the  absence  of notice thereof to him.  The  learned  Judge turned  down the contention that the sale was fraudulent  as alleged  by the appellant.  He also rejected the  contention put  forward on behalf of the appellant that he was  a  bona fide  purchaser within the meaning of s. 51 of the  Transfer of  Property  Act and as such entitled to  the  improvements effected by him, namely, the cost of erecting the structures

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he had put up thereon.  The appellant filed an appeal before the  High  Court  of Madras alleging  identical  grounds  in appeal.   After  losing  in the High  Court,  the  appellant applied  for special leave to this Court which  was  granted raising six grounds. in his 615 petition.   By his statement of  case filed in  this  court, the  ’appellant sought to contend that the provisions of  s. 69 of the Transfer of Property Act allowing the exercise  of the power of sale after notice to any one of the  mortgagors offended  Arts.  19 and 14 of the Constitution and  as  such were  liable  to  be struck down.  In  paragraph  2  of  his written  statement he had raised the plea that the power  of sale  in terms of s. 69 of the Transfer of Property Act  was ultra   vires   the   Constitution   of   India   as   being discriminatory  and  opposed to the  fundamental  rights  of citizens.  Apparently the plea was abandoned at the  hearing because no issue was raised thereon at the trial of the suit or  in appeal to the Division Bench.  We indicated  that  we could  not  allow the appellant to urge this  plea  at  this stage. The point that the sale under the provisions of the mortgage deed  was  invalid  because of want of notice  to  the  16th defendant  is  not one of substance.  Section 69  subs.  (1) gives  a  mortgagee  or  any person  acting  on  his  behalf the  power  to  sell  or concur  in  selling  the  mortgaged property  or-any part thereof in default of payment  of  the mortgage money, without the intervention of the court in the cases  specified in sub-cls. (a), (b) and (c) of  that  sub- section.   Sub-s. (2) of s. 69 lays down inter alia that  no such  power  shall be exercised unless and until  notice  in writing  requiring payment of the principal money  has  been served on the mortgagor, or on one of several mortgagors 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 or  one  of  several mortgagors where there is a number of them, the obvious idea being  that  the  mortgagor  who  is  given  the  notice  is constituted the agent of the other mortgagors to receive the same.   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.  Our  attention  was however  drawn  to a decision of the Bombay  High  Court  in Muncherji  Furdoonji  Mehta V. Noor  Mahomedbhoy  Jairabjhoy Pirbhoy(1) and it was contended on the strength thereof that an assignee from a mortgagor must be served with a notice of sale if he is to be bound thereby.  The facts there were  as follows.  The defendants in the suit before the Bombay  High Court were the first mortgagees.  The plaintiffs were puisne mortgagees   of  the  property.   The  property   had   been advertised  for sale by the defendants several times  before the plaintiffs took any step in the matter.  In April  1893, the  defendants advertised the mortgaged property  for  sale and  the plaintiffi filed a suit and obtain ed a  rule  nisi with an interim injunction restraining the defendants (1)  I.L.R. 17 Bombay 711, 715. from  proceeding with the sale.  It was contended on  behalf of  the plaintiffs that the defendants had no power to  sell at all because the mortgage deed provided that notice should be  given  to  the  mortgagors  or  their  assigns   and-the defendants  had not given notice to the plaintiffs who  were

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assigns  of the equity of redemption.  It was however  found that  the  defendants  had given a notice  of  sale  to  the mortgagors  on August 31, 1891 three days before the  plain- tiffs  had  any  interest in the equity  of  redemption  and Starling, J. who decided the case observed.               "........ as that appears to me to be a proper               notice, I do not think that any further notice               would  be required to be given to  any  person               who  at that time was not an assign, in  order               to  enable the defendants to sell  under  that               notice; because I am of opinion that an assign               must  take  things in the state  in  which  he               finds  them, and cannot claim to alter  rights               which have accrued before he has any authority               to interfere."               Commenting   on   this   case,   the   learned               commentators of Mulla’s               Transfer  of Property Act (Fifth  Edition)  at               page 500 state               "If   the   mortgagor  has   transferred   his               interest,  either  to  a  purchaser  or  to  a               subsequent  mortgagee,  and  the  mortagee  is               aware  of  it, he should give  notice  to  the               transferee;  but  It not if the  transfer  has               taken  place after the mortgagee  has  already               given notice to the mortgagor." Learned counsel appearing on behalf of the appellant  wanted to press this observation into service by saying that as his client  had  purchased  a  portion  of  the  property  by  a registered deed two years prior to the notice of sale it was incumbent  on  the  mortgagoe to give him  a  notice.   This contention cannot be accepted.  It will. be noticed that  in the  Bombay  case  there was no reference to s.  69  of  the Transfer  of  Property Act or the powers  of  the  mortgagee thereunder.   Moreover,  the  mortgage  deed  in  that  case expressly provided for notice being given to the  mortgagors or  their assigns.  In the presont-case, the mortgagors  had not  parted with their entire interest in the property.   At best the appellant stood in the shoes of the mottgagors with respect  to  a portion of the property.  He knew IL  of  the power of sale contained in the mortgage deed and that is why he  wanted  to-  safeguard  himself  against  such  sale  by insertion of a, clause for indemnity. The English decision in Hoole v. Smith(1) referred to in the above Bombay judgment does not help the appellant before us. in  that case the mortgage deed provided that the  power  of sale  was  not to be exercised unless and until  notice  had been given in writing to (1)  17 Ch.  D. 434. 617 the  mortgagor, his executors, administrators or assigns  to pay  off the moneys for the time being due and owing on  the said indenture of mortgage.  Fry, J. observed in that case :               "When  I find the word ’assigns’ used  in  the               power of sale as an alternative for  Harrison,               it  is impossible that I can hold that it  was               sufficient for the defendants to go on serving               Harrison  alone  after  he  had  assigned  his               equity  of  redemption.   The  object  of  the               proviso  was  that  any  assign  might  be  at               liberty to intervene and pay off the mortgage,               and  no one could be more interested than  the               second    mortgagee   in   this    right    of               intervention." The  only other point raised on behalf of the appellant  was

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that  he  was  entitled to the  value  of  the  improvements effected  by  him on the portion of the  property  purchased under  the provisions of s, 51 of the Transfer  of  Property Act.   In  our opinion, that section can have no  manner  of application to the facts of this case.  Under that  section, a  transferee of immovable property making  any  improvement therein,  believing  in  good With  that  he  is  absolutely entitled  thereto,  has a right to require the person  subse quaintly  evicting him therefrom on the strength of  abetter title,  to have the value of the improvement  estimated  and paid  or secured to him or to purchase his interest  in  the property  at the then market value thereof.  In  this  case, there  can  be  no question of the  appellant  that  he  was absolutely  entitled to the property.  He know that  he  was purchasing a small portion of it and that his vendors  stood to  lose the property unless the paid up the mortgage  money on  receipt  of  notice  from  the  mortgagee.  As   already mentioned, the appellant wanted to safeguard himself against such an eventuality by the insertion of a clause in his deed of  sale  and the court directed the setting  apart  of  Rs. 9,000 from out of the sale proceeds for the purpose.  We  do not  think  that,the case referred to by the  Mined  counsel Narayana Rao v. Basavaeaydppa(1) has Viny application to the facts of this case. We would therefore dismiss the appeal with costs. V.P.S                  Appeal dismissed.. (1) A.I.R. 1956 S.C. 727. 618