Madras High Court
RAMAMURTI,MAHARAJAN
P.L.Chakrapani Naidu - Appellant
Versus
T.Gopal Mudaliar - Respondent
Decided On : 03/27/1972
AUCTION SALE - TRANSFER OF PROPERTY ACT, 1882 - SECTION 69 - VALIDITY OF AUCTION SALE - BURDEN OF PROOF - INADEQUACY OF PRICE - MOTIVE OF MORTGAGEE - MEANS OF PURCHASER - EVIDENCE - SUFFICIENCY.
Fact of the Case:
The mortgagors filed a suit to impeach an auction sale held by the mortgagee under Section 69 of the Transfer of Property Act, 1882, alleging that there was no actual sale and that the sale was conducted in a fraudulent and collusive manner. The auction purchaser filed a suit to establish his rights and recover possession of the property.
Finding of the Court:
The court held that the burden of proof was on the mortgagee and the auction purchaser to establish that a sale actually took place on the date in question and that the sale was conducted in a valid and proper manner in accordance with the provisions of Section 69 of the Transfer of Property Act, 1882. The court further held that the mortgagors had failed to discharge the burden of proving that the sale was invalid by reason of any infirmity or by reason of any fraud or collusion.
Issues: 1. Whether there was a valid auction sale on the date in question? 2. Whether the sale was conducted in a fraudulent and collusive manner?
Ratio Decidendi: 1. The court held that the evidence adduced by the mortgagors was insufficient to establish that there was no sale on the date in question. The court noted that the mortgagors had created obstacles and threatened prospective purchasers, and that they could not take advantage of their own wrong by complaining that the property was sold for an inadequate price. 2. The court held that the mere use of the words "fraud and collusion" was not sufficient to establish that there was collusion between the mortgagee and the auction purchaser. The court noted that the mortgagee was not a trustee for the mortgagor of his power of sale and that the court would not enquire into the motives of the mortgagee in exercising it, so long as he acted with bona fides.
Final Decision: The court allowed both appeals, decreed the suit filed by the auction purchaser, and dismissed the suit filed by the mortgagors.
RAMAMURTI, J. :- These two appeals arise out of two suits which were heard and tried together and disposed of by a common judgment of the City Civil Court, Madras, as the subject-matter in dispute and the points in controversy are the same and identical. The suit property involved is door No. 78 Paper Mills Road, Perambur and the main question in controversy relates to the truth and validity and the legality of the auction sale said to have been held by the auctioneer on behalf of the mortgagee exercising the powers under Section 69 of the Transfer of Property Act. The suit, O. S. No. 2701 of 1959 has been filed by the three plaintiffs the mortgagors, impeaching the auction sale. The first defendant, Rajeswari Ammal, is the assignee from the original mortgagee. Lokambal, the second defendant Chandramani and Co., is the auctioneer, the third defendant Chakrapani Naidu is the successful bidder and purchaser in the auction and the fourth defendant Natesa Mudaliar is a subsequent mortgagee. The other suit, O. S. 992 of 1959 has been filed by the auction purchaser to establish his rights and to recover possession of the property as the mortgagors would not surrender possession of the property. The three mortgagors are the three contesting defendants in this suit. The learned City Civil Judge accepted the contentions of the mortgagors and held that there was really no auction sale on 12-2-1959. The result was that O. S. 2701 of 1959 was decreed as prayed for and O. S. 992 of 1959 was dismissed.
The auction purchaser has preferred the App. No. 737 of 1963 against the decision dismissing the suit O. S. 992 of 1959 and he has also preferred the appeal No. 132 of 1965 against the decision decreeing the mortgagors' suit O. S. 2701 of 1959 aforesaid. For purposes of convenience, in the trial Court, the parties were referred to according to their array in O. S. 2701 of 1959 (the suit by the mortgagors) and we are adopting the same course in these two appeals. The point for decision lies in a very narrow compass, the only point arising for decision being a pure question of fact, whether any auction was held is a fact on 12-2-1959, and whether the third defendant became the highest and successful bidder. The trial of both the suits has been very protracted and a lot of useless and irrelevant material had been let in in the trial of both the suits. In the course of the appeal, we noticed that the oral evidence is unnecessarily voluminous and the result was that the irrelevant portion of the evidence has clouded the relevant portion of the evidence resulting in the learned Judge himself getting involved in a discussion of unnecessary details and irrelevant particulars.
2. The brief facts which led to this litigation may be stated :- . .. ... ... ... ... ... ... ... ... ...
(His Lordship discussed the facts and evidence in the case and proceeded).
The only question is whether there was a sale on 12-2-1959 and whether the sale was conducted in a valid and proper manner in accordance with the provisions of Section 69 of the Transfer of Property Act. The burden of proof of establishing that a sale actually took place on 12-2-1959 is upon the mortgagee and the auction
purchaser. But the burden of proving that the sale is invalid by reason of any infirmity or by reason of any fraud
or collusion is, undoubtedly, on the mortgagors. As we gather from the judgment, the three circumstances on the basis of which the trial judge mainly held that there was no sale and everything was vitiated by fraud and collusion, are as follows :-
1. The property is a valuable property worth about Rs. 12,000 to Rupees 13,000. The property has been sold for a grossly inadequate price of Rs. 5,000/-and that itself is evidence of fraud and collusion.
2. There is no proof that the 3rd defendant had the means to pay the bid amount of Rs. 5.000/-.
3. The evidence of the auctioneer and the entries in his records, the day books and the ledger, and the concerned receipts and the c
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