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1975 Supreme(Mad) 82

Madras High Court
N. S. RAMASWAMI
V.P.Padmavathi Ammal - Appellant
Versus
P.S.Swaminatha Iyer - Respondent
Decided On : 02/11/1975

A sale under Section 69 of the Transfer of Property Act to the mortgagee or their nominee is void ab initio and cannot be challenged merely as an improper or irregular exercise of the power of sale.

Headnote:

TRANSFER OF PROPERTY ACT, 1882 - SECTION 69(3) - SALE UNDER SECTION 69 - MORTGAGEE CANNOT PURCHASE PROPERTY - SALE TO MORTGAGEE'S NOMINEE IS ALSO VOID - SUB-SECTION (3) OF SECTION 69 DOES NOT BAR MORTGAGOR FROM QUESTIONING TITLE IN SUCH SALE.

Fact of the Case:

A mortgagor's legal representatives challenged the validity of a sale under Section 69 of the Transfer of Property Act, claiming that the auction purchaser was a nominee of the mortgagee, rendering the private sale invalid.

Finding of the Court:

The court held that the defendants could not be prevented from cross-examining the plaintiff regarding the question of whether he was a nominee of the mortgagee, as sub-section (3) of Section 69 did not bar the mortgagor from questioning the title in such a sale.

Issues: Whether the defendants could be prevented from cross-examining the plaintiff regarding the question of whether he was a nominee of the mortgagee.

Ratio Decidendi: Sub-section (3) of Section 69 of the Transfer of Property Act does not bar the mortgagor from questioning the title in a sale under Section 69 where the purchaser is a nominee of the mortgagee, as such a sale is void ab initio and not merely an improper or irregular exercise of the power of sale.

Final Decision: The appeal and revision petition were allowed, the decree and judgment were set aside, and the suit was remitted to the trial court for fresh disposal.

JUDGMENT :- The legal representatives of a mortgagor whose property had been sold under Section 69 of the Transfer of Property Act are the appellants in the appeal and the petitioners in the revision petition. The plaintiff who is the auction purchaser of the property filed the suit for possession. It was resisted by the legal representatives of the mortgagor who have been impleaded as defendants 1 to 8 in the suit, on the ground that the plaintiff is only a nominee of the mortgagee and that therefore the private sale under Section 69 of the Transfer of Property Act is wholly invalid. An issue was framed touching the above question. However, at the time of the trial, when the defendants wanted to cross-examine the plaintiff while he was in the witness-box, regarding the question whether he was only a nominee of the mortgagee, the court below held that by virtue of sub-section (3) of Section 69, it was not open to the defendants to attack the sale in the manner in which they tried to do, and disallowed the cross-examination which was sought to be made. The learned Judge passed an order holding that the defendants cannot be permitted to put any question to the plaintiff and his witnesses regarding the question whether the plaintiff was only a nominee of the mortgagee. Against the abovesaid order, the revision petition is filed. As the defendants had been prevented from cross-examining the plaintiff, they did not take further part in the trial of the suit and the suit was decreed. Against the decree, the appeal has been filed.

2. I am satisfied that the order of the court below disallowing questions in cross-examination regarding the plea taken by the defendants is wholly wrong. Sub-section (3) of Section 69 which has been relied on by the court below is in the following terms-

"When a sale has been made in professed exercise of such power, the title of the purchaser shall not be impeachable on the ground that no case has arisen to authorise the sale, or that due notice was not given, or that the power was otherwise improperly or irregularly exercised; but any person damnified by an unauthorised or improper or irregular exercise of the power, shall have his remedy in damages against the person exercising the power."

It is contended on behalf of the plaintiff-respondent that the plea taken by the defendants amounts to saying that there had been improper or irregular exercise of the power conferred on the mortgagee under Section 69 and that therefore the provisions contained in sub-section (3) quoted above would apply. The contention is that as the defendants attack the plaintiff's title only on the ground that the exercise of the power conferred on the mortgagee had been improper and irregular, their remedy is only by way of damages as contemplated under sub-section (3) and that the title itself cannot be questioned. This contention is not correct because the defendants are not attacking the sale in favour of the plaintiff on any of the three grounds mentioned in sub-section (3). On the contrary, they attack the sale as wholly invalid on the ground that the plaintiff is only an alias for the mortgagee. It cannot be disputed and as a matter of fact it is not disputed that if the mortgagee himself purchases the property under Section 69 of the Transfer of Property Act, such a sale would be wholly void as a person cannot sell the property to himself. It is to be noted that under Section 69, the mortgagee is given the power of sale and therefore he is the seller. He cannot possibly sell the property to himself. If any such sale is purported to be made it would be wholly void. It has been held so by this Court in Egmore Benefit Society v. Aburupammal, 1943-1 Mad LJ 92 : (AIR 1943 Mad 301). Therefore, if the sale under Section 69 is in favour of the mortgagee himself, it cannot be contended that the mortgagor cannot attack the title of the purchaser. Sub-section (3) of Section 69 would not be a bar against the mortgagor questioning the t


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