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2025 Supreme(Mad) 5581
IN THE HIGH COURT OF JUDICATURE AT MADRAS
ANITA SUMANTH, N.SENTHILKUMAR, JJ.
K.Vijaya Sree - Appellant
versus
The Madras Purasawalkam Hindu Janopakara Saswatha Nidhi – Respondent
O.S.A.Nos.31 & 97 of 2025 and C.M.P.Nos.10283, 2940, 5826, 5822 of 2025 and O.S.A.SR.No.23741 of 2025
Decided on : 25-10-2025
For the Appellant : Mr.K.V.Babu Mrs.Chitra Sampath, Senior Counsel For Ms.P.Buvaneswari Mr.R.Manickavel Mr.Sri Charan Rangarajan, Mr.Nallasenapathy
For the Respondent: Mr.R.Ramanlaal, Senior Counsel For Ms.B.Sripadmaja Mr.N.Suresh Mr.Muthucharan Sundresh
Earlier mortgages take precedence over subsequent claims when multiple rights exist, reinforcing the superior lien of mortgage holders.
Headnote:(A) Transfer of Property Act - Section 48; Contract Act - Section 171 - Mortgage - Permitted sale of mortgaged properties of debts; priority of rights; Nidhi holds superior lien over property; overlapping claims by vendor of mortgage property, whose title is subject to Nidhi's rights. (Paras 17, 24, 41)
(B) Natural Justice - Violations alleged in auction process; procedural correctness in sales conducted. (Paras 15, 40)
Facts of the case:
Original Side Appeals challenge order permitting Nidhi to sell mortgaged properties amid competing claims regarding ownership between vendor and purchaser; historic context of settlement deeds and claims from legal heirs influencing property rights.
Findings of Court:
The court upheld Nidhi's superior claim and ruled the sales of properties lawful; the claims made by appellant and vendor were rendered void due to existing mortgages.
Issues: The primary question was whether the Nidhi's right superseded the claims made by the vendor and third-party purchasers.
Ratio Decidendi: The court affirmed that rights created by earlier mortgages take precedence over subsequent claims, supporting this with established legal precedents and statutory provisions while inducting that Nidhi's lien remained unaffected.
Result: Appeals dismissed with auction sales confirmed.
| Table of Content |
|---|
| 1. challenge to sale order by nidhi. (Para 1 , 2 , 3 , 6) |
| 2. vendor's right in property sale. (Para 4 , 15) |
| 3. vendor's claim and auction details. (Para 5 , 10 , 32) |
| 4. injunction orders related to transaction. (Para 12 , 13 , 14) |
| 5. legal standing on mortgage priority. (Para 21 , 22 , 23 , 26 , 27) |
| 6. dismissal of appeals and confirmation of sales. (Para 35 , 44) |
JUDGMENT :
Dr. ANITA SUMANTH.,J
1. O.S.A.No.31 of 2025 challenges order dated 21.01.2025 passed in Application No. 233 of 2025 in C.S.No.721 of 1998. C.S.No.721 of 1998 was filed by three plaintiffs with the following prayers:-
For permanent injunction restraining the defendants from convening or holding any requisition meeting or any Extraordi- nary General Meeting pursuant to their notice dated 24.08.1998 until normalcy is restored in the functioning of Nidhi.
2. Pending suit, Application No. 233 of 2025 came to be filed by The Madras Purasawalkam Hindu Janapokara Saswatha Nidhi/ the Permanent General Benefit Fund Limited (‘Nidhi’) seeking permission to sell various properties that had been mortgaged to the Nidhi and as described in the suit schedule, by way of public auction.
3. That application came to be allowed by way of the impugned order dated 21.01.2025, where the learned Judge notes that the Nidhi is the mortgage holder of the property and hence the money due to it would have to be recovered in a manner known to law. The Court also records that in the event of third parties who had entered into private contracts with individuals whose title is itself doubtful, such parties would have no say in respect of the sale of the property by the Court. Aggrieved, the present appeals have been filed.
4. O.S.A.No.97 of 2025 has been filed by Mrs.Shantha Rajabather/vendor who challenges order dated 21.01.2025, and is represented by Mrs.Chitra Sampath, learned Senior Counsel for Ms.P.Buvaneswari. The vendor claims to be the owner of the property sold to Mrs.K.Vijaya Sree/purchaser, represented by Mr.K.V.Babu. The property in question is situated at Old No. 37, New No. 85, 1st Main Road, Gandhi Nagar, Adyar, Chennai – 600 020 (‘property’/ ‘property in question’).
5. The brief facts are as follows. The two Original Side Appeals have been filed by individuals claiming to be the owner and successful purchaser of the property in question. The vendor claims that the property in question was owned by her husband/Mr.E.S.Rajabather, who admittedly mortgaged the same with the Nidhi.
6. Her husband had executed a settlement deed in respect of the property in question vide Document No. 1978 of 2015 dated 15.07.2015, which the vendor claims is in her favour. He had filed C.S.No.738 of 2002 seeking a declaration for a One Time Settlement (OTS) for the discharge of mortgage at a sum of Rs. 1,50,00,000/-(Rupees One Crore and Fifty Lakhs Only).
7. According to the vendor, a sum of Rs.75,00,000/- (Rupees Seventy Five Lakhs only) has been deposited as a pre-condition for the grant of injunction in an application filed in C.S.No.738 of 2002. The settlement deed dated 15.07.2015 has been challenged in W.P.No.21374 of 2018 by one of the legal heirs of E.S.Rajabather and that writ petition was allowed on 21.09.2023, as against which W.A.No. 1923 of 2024 has been preferred, which is pending.
8. According to the vendor, the Commissioner appointed by this Court as well as herself, had negotiated an OTS for discharge of the liability on payment of a sum of Rs. 7,50,00,000/- (Rupees Seven Crore and Fifty Lakhs Rupees). The settlement was recorded under letter dated 09.01.2023. The settlement did not go through for the reason that the vendor was unable to find an appropriate purchaser for the whole of the property in question.
9. While so, she was able to secure a purchaser for the second floor of the property alone, to Mr.Gunasekaran and Mrs. Durgalakshmi, who are tenants on that floor and the sale deed was registered on 15.02.2023, the consideration remitted to the credit of the mortgage account wi
