JUDGMENT:- This Chamber Summons has been taken out by the Applicant who has sought to purchase the suit property initially mortgaged by the Defendant in the suit in favour of the Plaintiff Bank and later purchased by one K. D. Shah at an auction held by the Bombay Municipal Corporation (BMC). The Applicant has applied for condonation of delay in depositing Rs.2.75 Crores in the Office of the Commissioner for taking accounts and for the Court to confirm the sale in favour of the Applicant or its nominee.

2. The property has had a chequered history. The Defendants mortgaged their property (suit property) which is open land at Bhandup in favour of the Plaintiff- Bank. The Plaintiff sued on the mortgage in 1974. The Defendants and the Plaintiffs entered into a consent decree. The Plaintiffs sought to sell the mortgaged property in the execution of the said decree. There is also another mortgage of the said property in favour of the Plaintiff which is the subject matter of any another in the D.R.T. Court.

3. After the mortgage was executed, the Defendants defaulted in payment of charges and taxes of the B.M.C. The B.M.C. sold the property to the HUF of Mahendra Popat Shah (Shah) who purchased the property at the auction and was issued the Certificate of Sale under the public auction. He was declared the purchaser of the said property for a price of Rs.6.12 lakhs. He made payment of price on 7.12.1984 and became owner of the property with effect from 8.12.1984. The Certificate of Sale was issued in his favour on 2.4.1985. He is deemed to have knowledge of the mortgages already created by the Defendant in favour of the Plaintiff. He is taken to have purchased the said property subject to the encumbrances thereupon being the said mortgages. The Certificate of Sale does not specify that the property has been sold subject to encumbrances, though in law' it is so.

4. Shah filed the suit being suit No.3307 of 1989 for declaration of his legal right in the said property and claiming relief against the Plaintiff - Bank in which he has not obtained any relief and which is still pending. Shah is therefore bound to accept the mortgages of the Bank. He would have an equity of redemption thereupon.

5. Such equity of redemption is the right of the mortgagor under Section 60 of the Transfer of Property Act, 1882. However, since the Defendants to the suit who are the mortgagors have failed to exercise their right to redeem the mortgage and their property has been sold at an auction, the said Shah would be entitled to the equity of redemption. He would, therefore, require to make payment to the Plaintiff - Bank as the mortgagee to remove the said encumbrances upon the property purchased by him at the auction sale which was subject to the said two encumbrances of the said two mortgages. He has been declared the owner and purchaser of the said property for valuable consideration. The property therefore no longer vests in the Defendants. Their right, title and interest in the property came to an end upon it being sold at the auction sale by the B.M.C. Nevertheless, the right of the Plaintiff - Bank remained under the two mortgages in their favour.

6. Shah not having redeemed the mortgage, the Bank rightly desired to sell the property in the execution application taken out by them on 14.11.1994 to execute the consent decree obtained by them in the suit as far back on 16.06.1974 and later modified on 3.11.1976. The Applicant sought to purchase the property thereon. Two meetings came to be held for bidding in respect of the suit property.

7. On 10.2.1995, the Applicant made an offer of Rs.2.75 Crores for the said property. He was declared the highest bidder. His bid was accepted by the Court Officer subject to the deposit being made by him as per the provisions contained in Order XXI Rule 84 of the C.P.C.

8. Under Order XXI, Rule 84 of C.P.C. and Rule 547 of the High Court Rules, which are Pari Materia, the Applicant, as the purchaser other than the decree hold

Click Here to Read the rest of this document