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SUPREME COURT OF INDIA
A.N. RAY, C.J.I., M.H. BEG AND JASWANT SINGH, JJ.
Narandas Karsondas, Appellant
Versus
S. A. Kamtam and another, Respondents.
Civil Appeal No. 1020 of 1975,
D/- 7-12-1976.
Advocates appeared
M/s. J. L. Nain and U. R. Lalit, Sr. Advocates. (Mr. V. N. Ganpule, Advocate with them), for Appellant; Mr. V. M. Tarkunde, Sr. Advocate, (Mr. Sharad Manohar, Mr. P. H. Parekh and Miss Manju Jetley, Advocates with him), (for No. 1) and Mr. M. C. Bhandare, Sr. Advocate, (Mr. S. Bhandare, M/s. S. Narasinhan, (K. C. Sharma, A. K. Mathur and A. K. Sharma, Advocates, with him) (for No. 2), for Respondents.
Maharashtra Co-operative Societies Act, 1960 - Section 102 - Transfer of Property Act - Section 69 - Registration Act - Order of appointment of liquidator - Mortgagee for injunction - Possession of property - Whether a mortgagor can exercise his right of redemption after a mortgagee under an English Mortgage with power to sell mortgaged property without the intervention of the court gives notice to the mortgagor to sell the mortgaged property by public auction and sells it by public auction - whether the right to redemption has been extinguished by any act of the parties - appellant is the auction purchaser. The respondents are Flora Co-operative Housing Society in liquidation the mortgagors (hereinafter referred to as the Society) and the Maharashtra Co-operative Housing Finance Society Ltd., the mortgagee - Society was registered as a Housing Society with 12 members. The paid up capital of the Society was Rs. 21,000/-. The society wanted 12 flats to be constructed in one structure of ground and two upper floors. The Society purchased plot No. 153 in Santa Cruz at Bombay, measuring 1002 sq. yards - Society mortgaged the land and the incomplete structure in favour of the mortgagee. The mortgage was for the sum of Rs. 70,000/-. It was an English mortgage. In 1968 the mortgagee advanced a further sum - Fair Deal Builders entered into a contract with Society to build. The work was stopped. Thereafter in 1967 the Society entrusted the work to Maharaja Builders. In 1968 the contract with Maharaja Builders was terminated. The work was given in 1969 to Kamal Construction Company, who abandoned it is incomplete stage - On divers dates between 29 August 1967 and 29 November 1970, notice was given by the mortgagee to the Society for non-payment to the mortgagee and to sell the property by public auction – Held, Right of redemption which is embodied in Section 60 of the Transfer of Property Act is available to the Mortgagor unless it has been extinguished by the act of parties. The combined effect of Section 54 of the Transfer of Property Act and Section 17 of the Indian Registration Act is that a contract for sale in respect of immoveable property of the value of more than one hundred rupees without registration cannot extinguish the equity of redemption. In India it is only on execution of the conveyance and registration of transfer of the mortgagors interest by registered instrument that the mortgagors right of redemption will be extinguished. The conferment of power to sell without intervention of the Court in a Mortgage Deed by itself will not deprive the mortgagor of his right to redemption. The extinction of the right of redemption has to be subsequent to the deed conferring such power. The right of redemption is not extinguished at the expiry of the period. The equity of redemption is not extinguished by mere contract for sale - Mortgagors right to redeem will survive until there has been completion of sale of by the mortgagee by a registered deed. In England a sale of property takes place by agreement but it is not so in our country. The power to sell shall not be exercised unless and until notice in writing requiring payment of the principal money has been served on the mortgagor. Further Section 69 (3) of the Transfer of Property Act shows that when a sale has been made in professed exercise of such a power, the title of the purchaser shall not be impeachable on the ground that no case had arisen to authorise the sale. Therefore, until the sale is complete by registration the mortgagor does not lose right of redemption - It is erroneous to suggest that the mortgagee is acting as the agent of the mortgagor in selling the property. The mortgagor exercises his right under a different claim. The mortgagees right is different from the mortgagors. The mortgagee exercises his right under a totally superior claim which is not under the mortgagor, but against him. In other words, the sale is against the mortgagors wishes. Rights and interests of the mortgagor and the mortgagee in regard to sale are conflicting - In view of the fact that only on execution, of conveyance, ownership passes from one party to another it cannot be held that the mortgagor lost the right of redemption just because the property was put to auction. The mortgagor has a right to redeem unless the sale of the property was complete by registration in accordance with the provisions of the Registration Act - Appeal is dismissed
Key Points: - The judgment holds that the mortgagor's right of redemption under Section 60 of the Transfer of Property Act survives unless extinguished by the act of the parties, and that completion of sale by a registered conveyance is necessary to extinguish redemption rights. (!) (!) - It states that mere contract for sale or power to sell (without registration of conveyance) does not extinguish the mortgagor's equity of redemption; extinction occurs only after proper registration of the conveyance. (!) (!) - It explains that the mortgagee’s power to sell without court intervention does not automatically deprive the mortgagor of redemption, and the sale is not complete until registration, preserving redemption until then. (!) (!) - The decision notes that there must be a complete sale by registration for the title transfer to affect the mortgagor’s right to redeem; otherwise, redemption can still be exercised. (!) (!) - It clarifies that the mortgagee’s actions as an agent of sale do not extinguish the mortgagor’s right; the right to redeem arises from the mortgagor’s own claim and survives until registration completes. (!) (!) - The appellate court’s finding that there was no complete sale within the meaning of the statute, so equity of redemption was not lost, is affirmed. (!) - The judgment aligns with the Bombay decision’s view that the right to redeem is not extinguished by a contract of sale in the exercise of the power of sale; it is not extinguished until a registered conveyance is completed. (!)
Judgment
A. N. RAY, C.J.I. :- This appeal by special leave is from the judgment dated 18 April 1975 of the Maharashtra State Co-operative Appellate Court.
2. The question for consideration in this appeal is whether a mortgagor can exercise his right of redemption after a mortgagee under an English Mortgage with power to sell mortgaged property without the intervention of the court gives notice to the mortgagor to sell the mortgaged property by public auction and sells it by public auction.
3. The appellant is the auction purchaser. The respondents are Flora Co-operative Housing Society in liquidation the mortgagors (hereinafter referred to as the Society) and the Maharashtra Co-operative Housing Finance Society Ltd., the mortgagee (hereinafter referred to as the mortgagee).
4. In 1964 the Society was registered as a Housing Society with 12 members. The paid up capital of the Society was Rs. 21,000/-. The society wanted 12 flats to be constructed in one structure of ground and two upper floors. The Society purchased plot No. 153 in Santa Cruz at Bombay, measuring 1002 sq. yards. The price was Rs. 1,02,000/-.
5. In 1966 the Society mortgaged the land and the incomplete structure in favour of the mortgagee. The mortgage was for the sum of Rs. 70,000/-. It was an English mortgage. In 1968 the mortgagee advanced a further sum of Rs. 42,000/-.
6. In 1966 Fair Deal Builders entered into a contract with Society to build. The work was stopped. Thereafter in 1967 the Society entrusted the work to Maharaja Builders. In 1968 the contract with Maharaja Builders was terminated. The work was given in 1969 to Kamal Construction Company, who abandoned it is incomplete stage.
7. On divers dates between 29 August 1967 and 29 November 1970, notice was given by the mortgagee to the Society for non-payment to the mortgagee and to sell the property by public auction.
8. On 9 March 1971 the Assistant Registrar of Co-operative Societies, Maharashtra, appointed a Special Liquidator of the Society under Section 102 of Maharashtra Co-operative Societies Act, 1960. The Assistant Registrar communicated the order of appointment of liquidator to the mortgagee on 22 April 1971. The order of appointment of a liquidator was published in Maharashtra Government Gazette on 29 April 1971.
9. The mortgagee advertised through Government auctioneer for public auction of the property. The auction was held on 14 April 1971. The claim was for Rs. 1,22,888.22 paise. The appellant was declared the highest bidder for Rs. 1,31,000/-. The terms of sale inter alia were that 25 per cent was to be paid in advance and the balance in 30 days. The sum of Rs. 33,000/- was paid as 25 per cent advance and the balance purchase price of Rs. 98,001/- was paid to attorneys of the mortgagee. The auction purchaser took possession on 17 April 1971.
10. On 13 August 1971 the Society filed a dispute before the Officer on Special Duty under the Maharashtra Co-operative Societies Act against the auction purchaser and the mortgagee for injunction against completing sale. The Society obtained an ex party injunction restraining transfer. On 29 September 1971, the interim injunction was vacated.
11. Thereafter the Society filed an appeal against the said order before the Appellate Tribunal.
12. In the meantime the appellant filed a writ petition in the Bombay High Court under Article 227 of the Constitution.
13. On 16 June 1972 there was an interim order by the High Court in the writ petition. The Society undertook not to dispose of property until disposal of dispute. Both parties were allowed to keep watchmen.
14. The Society borrowed a sum of Rs. 1,31,000/- and paid the same to the mortgagee on 15 October 1972.
15. On 16 January 1975 the Officer on Special Duty delivered judgment. He held that the dispute was maintainable under Sec. 91 of the Maharashtra Co-operative Societies Act. The Society was held not competent to challenge the auction sale held on 14 April 1971. It was also held that the validity of auctio
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