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IN THE HIGH COURT OF JUDICATURE AT MADRAS
M.V. MURALIDARAN, J.
O.N.K. Sabapathy - Petitioner
Vs.
K. Chandrasekaran and Ors. - Respondents
C.R.P. (NPD) No. 2055 of 2005 and CMP. No. 18159 of 2005
Decided On : 18-07-2018
Code of Civil Procedure, 1908 - Section 47- Mortgage of property – Auction Sale – Civil Revision - Petitioner is that the petitioner, who is a third party, had filed R.E.A. before the Executing Court stating that the property brought for sale in the Execution Petition originally belonged to the second respondent, who entered into an agreement of sale on 01.12.1990 for a sum of Rs.6.50 lakhs with the petitioner herein, and after paying the considerable amount, there was only a balance of Rs.60,000/- to be paid. The petitioner was always ready and willing to perform his part of contract by paying the balance sale consideration. But the second respondent failed to comply with the same – Held, Since the debt being one which was a secured debt on a mortgage, no sale agreement or even sale can upset or override the decree obtained by the first respondent. Any such transaction of sale can be only subject to the mortgage and the decree. Mere agreement to purchase does not confer title or right in the property.It is the admitted case of the petitioner that there was a resistance to possession and in that regard a petition was filed. After the second respondent adjudicated as insolvent, the property of the insolvent cannot be delivered to the petitioner.Though the petitioner had produced Exs.A1 to A12 to show transactions between the first respondent and the second respondent and also suit proceedings in O.S.No.797 of 1992, those documents would not in any way help the case of the petitioner. The first respondent has a legitimate right to initiate and/or execute the decree obtained by him and the petitioner has no right to object the execution proceedings - Civil Revision Petition is dismissed
Certainly. Based on the provided legal document, here are the key points:
The petitioner, a third party, filed a claim (R.E.A.) asserting that the property in question originally belonged to the second respondent, with whom the petitioner had entered into an agreement of sale. The petitioner claimed to have paid a substantial part of the sale consideration and was ready to pay the remaining amount, but the second respondent failed to comply (!) .
The petitioner had obtained a decree for specific performance of the sale agreement and had executed a sale deed, claiming absolute ownership of the property. The petitioner also contended that the property was subject to a mortgage and that the decree in the mortgage suit was obtained prior to the sale agreement and sale deed (!) .
The first respondent had obtained a mortgage decree against the second respondent and was executing that decree to recover the secured debt. The first respondent argued that the debt secured by the mortgage could not be questioned, even if the second respondent was adjudicated insolvent, and that the petitioner had no locus standi to challenge the mortgage decree (!) .
The executing court dismissed the petitioner’s claim, holding that the mortgage decree was valid and prior to the sale agreement, and that the petitioner’s rights did not supersede the mortgage rights. The court also noted that the property of an insolvent cannot be delivered to the petitioner, and that the documents produced by the petitioner did not assist his case (!) (!) .
The petitioner appealed, but the revision was dismissed. The appellate court emphasized that the mortgage decree had precedence and that the agreement of sale did not confer title or right that could override the mortgage or the decree. It also upheld that the first respondent had a legitimate right to execute his decree and that the petitioner had no valid grounds to interfere (!) (!) .
The court reaffirmed that the secured debt, being secured by a mortgage, remains enforceable despite insolvency proceedings and that the execution of the mortgage decree was proper. The court also highlighted that a mere agreement to purchase does not alter the status of the property or its encumbrances (!) (!) .
Overall, the court found no merit in the petitioner’s objections and upheld the validity of the mortgage decree and the execution proceedings, dismissing the revision petition accordingly (!) (!) .
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This revision is directed against the order dated 07.10.2005 in R.E.A.No.203 of 2000 in R.E.P.No.94 of 1998 in O.S.No.441 of 1992 on the file of the learned Additional Sub-Court, Salem, dismissing the petition filed under Section 47 of the Code of Civil Procedure, 1908.
2. Briefly stated, the case of the petitioner is that the petitioner, who is a third party, had filed R.E.A.No.203 of 2003 before the Executing Court stating that the property brought for sale in the Execution Petition originally belonged to the second respondent, who entered into an agreement of sale on 01.12.1990 for a sum of Rs.6.50 lakhs with the petitioner herein, and after paying the considerable amount, there was only a balance of Rs.60,000/- to be paid. The petitioner was always ready and willing to perform his part of contract by paying the balance sale consideration. But the second respondent failed to comply with the same.
3. The petitioner has filed the suit being O.S.No.797 of 1992 for specific performance and the same was decreed on 04.03.1993. Pursuant to the decree, sale deed was executed and the petitioner had taken delivery of the property. According to the petitioner, the respondents in cahoots with other creditors filed I.P.No.36 of 1993 and obtained collusive decree on 03.02.1994. The Official Receiver filed I.A.No.92 of 1994 in I.P.No.36 of 1993 to set aside the sale deed executed in favour of the petitioner and the same was pending.
4. According to the petitioner, the first respondent obtained decree against the second respondent and based upon the decree, the first respondent brought the property purchased by the petitioner for sale. As per the decree obtained by the petitioner, the property is his absolute property and neither the first respondent, nor the second respondent has any right over the same. Hence, the petitioner has filed petition seeking to set aside the decree and judgment passed in O.S.No.441 of 1992 and also not binding on the petitioner.
5. The first respondent has filed counter stating that by depositing title deeds, the second respondent borrowed a loan and since he failed to repay the same in time, the first respondent filed the suit O.S.No.441 of 1992 to recover the mortgage amount and the same was decreed on 25.09.1992. It is stated that as per Section 22 of the Insolvency Act, the debt secured by mortgage of title deeds cannot be questioned. Even though the second respondent was adjudicated as Insolvent, there is no bar on the part of the first respondent to proceed to execute the mortgage decree. The petitioner has no locus standi to question the decree obtained by the first respondent against the second respondent for the reason that the debt is a secured one and prayed for dismissal of the petition.
6. Before the Executing Court, the petitioner examined himself as P.W.1 and marked Exs.A1 to A11 were marked. The first respondent examined himself as R.W.1 and no document was marked.
7. Upon consideration of the rival submissions, the Executing Court dismissed the petition filed by the petitioner. Aggrieved by the same, the petitioner has filed this revision.
8. I heard Mr. R.Siddharta for M/s. T.R. Rajaraman, learned counsel appearing for the petitioner and Mr. T.D. Vasu, learned counsel appearing for the 1st respondent and also perused the materials available on record.
9. The learned counsel for the petitioner submitted that the Executing Court had failed to see that the admission of the first respondent about the receipt of amounts pursuant to the agreement by the second respondent from the petitioner would dis-entitle the first respondent from claiming any relief. He submitted that the moment the deed of sale was executed, the rights flow to the purchaser from the date of agreement of sale. The Executing Court should have considered whether the first respondent would obtain any right pursuant to the deposit of title deeds especially when an insolvency application viz., I.P.No.36 of 1993 was pending. He argued
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