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1927 Supreme(Mad) 392

IN THE HIGH COURT OF MADRAS
Ramesam, Cornish
T.S. Ramaswami Ayyangar,
Versus
M.L.M. Rama Nathan Chettiar
Decided On : 15 August, 1927

The court emphasized that irregularities in the sale process must result in substantial injury to the petitioner to warrant setting aside the sale, and undervaluation must be substantial enough to vitiate the sale.

Headnote:

Mortgage Sale - Irregularities - O.S. No. 11 of 1917 - Order XXI, Rule 90, Civil Procedure Code

Fact of the Case:

The appeal arises from an application to set aside a sale in execution of a mortgage decree. The sale was challenged on the grounds of irregularities in the proclamation and sale process, substantial undervaluation of the properties, and alleged jurisdictional issues.

Finding of the Court:

The court found that the irregularities in the sale process did not lead to substantial injury to the petitioner, the undervaluation was not substantial enough to vitiate the sale, and the alleged jurisdictional issue was not supported by the facts.

Issues: The issues revolved around irregularities in the sale process, undervaluation of properties, and alleged jurisdictional issues.

Ratio Decidendi: The court held that the irregularities did not result in substantial injury, the undervaluation was not significant enough to invalidate the sale, and the alleged jurisdictional issue lacked merit.

Final Decision: The appeal was dismissed with costs.

JUDGMENT

Ramesam, J.

1. This is an appeal arising out of an application to set abide a sale in execution of the mortgage decree in O.S. No. 11 of 1917, under Order XXI, Rule 90, Civil Procedure Code. The mortgage itself being subsequent to a prior mortgage, the decree directed the sale subject to the prior mortgage. The Subordinate Judge dismissed the petition without enquiring into the petitioners allegations. There was an appeal to the High Court and the case was sent back for further enquiry by Spencer and Venkatasubba Rao, JJ. The matter has been fully enquired into by the present Subordinate Judge of Dindigul and the petition has been again dismissed. The petitioner appeals.

2. The sale is sought to be set aside on account of the following material irregularities in making the proclamation and effecting the sale:

1. the property consists of various parcels of land situated in six villages and it was directed to be sold in one lot instead of being sold separately thus reducing the number of possible bidders, and as the whole property is certainly worth about three lakhs a number of purchasers were deterred from joining in the sale and bidding;.

2. the proclamation was not properly published in all the six villages; and.

3. the market value fixed in the proclamation was too low.

3. It is said that these irregularities have led to substantial injury to the petitioner as the properties were sold for a gross undervalue. The appellants have also taken another question which, it is alleged, is a question of jurisdiction and makes the sale null and void. It is said that the property that was advertised for sale was only the equity of redemption of the first mortgage, where as what was sold was the whole property free of all encumbrances and it is contended that this irregularity is so gross as to make the sale a nullity.

4. On the first point it is now contended that the properties ought to have been sold in separate parcels. The execution petition was filed in April, 1919. On 29th April, the 1st defendant was declared insolvent and the properties were vested in the Official Receiver. In August, the Official Receiver applied for the adjournment for four months on the ground that a private sale at the spot would be more advantageous than the Court sale. Though the petition was not granted, practically the petitioner had the four months time he sought, for the sale ultimately took place only in January, 1920. Anyhow, in this petition no request was made to sell the property by separate parcels. Notice was ordered, but none of the judgment-debtors appeared, nor did the Official Receiver appear. On 3rd December, 1919, it was ordered that all the properties should be sold in one lot subject to the first encumbrance the principal of which was Rs. 1,10,000 and the market value of the equity of redemption was estimated to be Rs. 40,000. The reason for directing the sale of all properties together is that they were all subject to one prior mortgage and if parcels were sold separately and purchased by different purchasers there will be numberless suits for contribution among the purchasers if the amount of the prior mortgage is recovered from some of them only, a course open to the prior mortgagee. These considerations might deter purchasers and, therefore, all were directed to be sold together. On the other hand, it is now urged that there is a way of selling separately without the inconvenience of giving rise to numerous suits for contribution. It is suggested that all the parcels should be sold free of encumbrances and that a reservation should be made in the proclamation that the bids will be accepted only if the total price realised on all the parcels exceeded the amount due on the first mortgage. In this way the inconvenience resulting from the sale of several parcels subject to one common mortgage is avoided and the payment of the first mortgage is ensured while the purchasers secure an unencumbered title. The suggestion is, no doubt, good








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