Court held that transactions made during the subsistence of a mortgage are void under the SARFAESI Act; the auction purchaser's rights were upheld despite challenges to the validity of earlier transfers.

JUDGMENT :

S.S. SUNDAR, J.

The above Original Side Appeals have been preferred by M/s.Dinakar Trading Company, the 2^nd defendant, and defendants 5 and 6, respectively, as against the judgment and decree of the learned Single Judge of this Court dated 04.10.2019 in C.S.No.1134 of 2008. While the Appeal in O.S.A.No.22 of 2020 is preferred by the 2^nd defendant in the suit, the Appeal in O.S.A.No.25 of 2020 is preferred by defendants 5 and 6 in the suit.

2.The 1^st respondent, as plaintiff, filed the suit in C.S.No.1134 of 2008 for the following reliefs :

“[a] for a declaration declaring that the sale deed dated 07/04/2005, registered as Document No. 1121 of 2005 in Book I in the office of the Sub Registrar, Mylapore, executed by the 2^nd defendant and others in favour of the 3rd Defendant herein, in so far as it relates to the suit schedule mentioned property, as sham and nominal;

[b] for a declaration, declaring that the power of Attorney dated 18/02/2008, registered as document No. 325 of 2008 in Book IV in the office of the District Registrar, South Chennai, executed by the 3rd Defendant in favour of the 4^th Defendant as null and void in so far as it relates to the suit schedule mentioned property;

[c] for a consequential declaration, declaring that the sale deed 20/02/2008 Registered as document No.379 of 2008 in Book I in the office of the Sub Registrar, Mylapore, executed by the 4^th Defendant in his Capacity as power Agent of 3rd Defendant in favour of 5th and 6th Defendants is null and void, Sham and nominal and not binding on the plaintiff in so far as it is relates to the suit schedule mentioned property;

[d] consequently direct the defendants 5 and 6 herein to handover vacant possession of the suit schedule mentioned property to the plaintiff herein;

[e] directing the Defendants 5 and 6 herein to pay damages for use and occupation at Rs.1,00,000/- per month from the date of plaint till handing over possession;

[f] direct the 1st Defendant to pay interest at commercial rate of interest towards the entire sale consideration held by them from the date of issuing the sale Certificate to till the date the plaintiff is put in vacant peaceful possession of the suit property;

[g] for the cost of the suit; and

[f] for any other relief or reliefs as this Hon'ble Court may deem fit and proper in the circumstances of the case and thus render justice.”

The suit property is described as 50% of Undivided Share and interest over the land measuring an extent of 7,518 sq.ft. along with entire First Floor of the entire superstructure bearing Old No.53, New No.152, Ganesh Bhavan, Greenways Road, Kesavaperumalpuram, Chennai – 28.

3.Since both the Appeals arise out of the judgment and decree in the suit in C.S.No.1134 of 2008, they are disposed of by this common judgment.

4.Brief facts that are necessary for the disposal of these Appeals are as follows :

4.1.The appellant in O.S.A.No.22 of 2020, who is the 2^nd defendant in the suit, availed certain credit facilities from the 1^st defendant Bank with its Branch at Broadway. Since the 2^nd defendant committed default in repaying the loan, the 1^st defendant Bank declared the account as NPA. The loan advanced to the 2^nd defendant was secured by the suit property belongs to the Proprietor of the 2^nd defendant. Hereinafter, reference to 2^nd defendant would mean the 2^nd defendant and its Proprietor. Hence, the 1^st defendant inv