Madras High Court
G.K.Gokulraj vs S.Gurunathan on 29 October, 2021
S.A.No.497 of 2012
IN THE HIGH COURT OF JUDICATURE AT MADRAS
DATED: 29.10.2021
CORAM:
THE HONOURABLE MR.JUSTICE M.GOVINDARAJ
S.A.No.497 of 2012
and M.P.No.1 of 2012
G.K.Gokulraj,
S/o.G.Kanakaraj,
Rep.by Sathyababa Nidhi Limited. ... Appellant
Vs.
1. S.Gurunathan
2. C.Mani,
S/o.M.Chokalingam,
Rep.by his Power agent,
G.Prabakar ... Respondents
PRAYER: The Second Appeal filed under Section 100 of the Civil Procedure
Code against the Judgment and Decree, dated 18.08.2011 passed in A.S.No.95
of 2010 on the file of the Principal District Court, Cuddalore, reversing the
Judgment and Decree, dated 30.10.2010 passed in O.S.No.90 of 2008 on the file
of the I Additional Subordinate Court, Cuddalore.
For Appellants : Mr.P.Mathivanan
For Respondents : Mr.R.Gururaj (for R1)
JUDGMENT
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S.A.No.497 of 2012
The 2nd defendant is the appellant in the present Second Appeal. The
respondent/plaintiff filed a suit for declaration of title, injunction and in
alternative for recovery of possession.
2. According to the plaintiff, the Central Bank of India, initiated
action against the 1st defendant under the Securitisation and Reconstruction of
Financial Assets and Enforcement of Security Interest Act, 2002 (hereinafter
referred to as SARFAESI Act, 2002) for recovery of due credited under the
mortgage by deposit of title deeds by the 1st defendant. Pursuant to the initiation
of recovery proceedings, auction was conducted on 19.02.2007 in which the
plaintiff became a successful bidder for a sum of Rs.4,10,000/- on 26.03.2007.
A sale certificate was issued and the same was registered on 09.07.2008.
Possession was handed over to him. The suit property being a vacant site,
handing over the vacant possession was recorded by the bank. While the matter
stood this, the 1st defendant through his Power of Attorney registered the sale
deed on 26.03.2007, which according to the plaintiff, is not correct and the 1st
defendant is not entitled to do so and the sale made was not for a valid
consideration as it was sold only for a nominal sum of Rs.50,000/- and hence,
the sale was collusive and fraudulent. Further, the 2nd defendant is a resident of
Chennai and has no connection with Cuddalore and hence he has not taken
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S.A.No.497 of 2012
possession and the sale deed is sham and nominal and therefore, the plaintiff
filed a suit for declaration and injunction and in the alternative for recovery of
possession.
3. The 1st defendant remained exparte. The 2nd defendant filed a
written statement, in which he has denied all the averments made in the plaint
and that the conduct of the 1st defendant in executing the Memorandum of title
deeds is fraudulent and the recovery proceedings said to have been initiated by
the bank is only an imagination and no such proceedings were initiated on the
date of purchase. While he approached the Registrar's office to find out the
encumbrance, it was found that there is no encumbrance with respect to the
property and the alleged mortgage by deposit of title deed was not reflected in
the Encumbrance Certificate. The original title deed, dated 16.03.1989 of the 1st
defendant was handed over to the 2nd defendant and therefore, following the
procedure, he purchased the property with bonafide intention. Therefore, the
sale deed made in favour of the plaintiff is fraudulent and collusive and on that
ground, he sought for dismissal of the suit.
4. The trial Court framed appropriate issues. The plaintiff has entered
into the box, let in evidence as P.W.1 and marked documents as Exs.A1 to A12.
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S.A.No.497 of 2012
On the side of the defendants, Exs.B1 to B3 were marked and no evidence was
adduced.
5. After trial, the trial Court dismissed the suit on the ground that the
plaintiff has not proved his title and that he became the owner of the property as
per the SARFAESI Act, 2002. When the 2nd defendant has purchased the
property by following Section 58 of the Transfer of Property Act, the sale
cannot be found fault with. The trial Court further found that marking of the
original Title Deeds, Ex.B3 probablise the case of the 2nd defendant and
therefore, the plaintiff is not entitled to the relief sought for.
6. Upon appeal, the first appellate Court found that the SARFAESI
proceedings were followed, and as per the procedure laid down in SARFAESI
Act, the property was sold in auction in accordance with law in favour of the
plaintiff and that the plaintiff is entitled to equity and the relief sought for by
him. The 1st defendant /1st respondent remained exparte in the appellate
proceedings also. Aggrieved over the reversal finding of the first appellate
Court, the 2nd defendant has preferred this Second Appeal.
7. I have heard the submissions made by the learned counsel
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S.A.No.497 of 2012
appearing on either side and perused the materials on record.
8. At the outset, it is proved by documentary evidence that as per the
provisions of SARFAESI Act, 2002, the Central Bank of India had initiated
action for recovering debts from the 1st defendant. Ex.A3, is an affidavit filed
by the 1st defendant with the bank, dated 05.01.2000 which shows that he lost
the originals of the title deeds. Ex.A4 is the memorandum of deposit of title
deeds, dated 16.03.2000. Ex.A5 is the Quotation issued by the plaintiff, dated
14.02.2007 and Ex.A6 is the sale certificate, dated 09.07.2008. It is submitted
that on the date of auction, namely on 16.03.2007, the 2nd defendant purchased
the property vide Ex.A7.
9. From the above documents, it is clear that there was a debt
recovery proceeding under the SARFAESI Act, by the Central Bank of India.
Now, it is imperative to clarify the issues whether the recovery proceeding
initiated by the bank was proper or not and whether the proceeding had taken
place or not? The main contention is that the first defendant mortgaged the
property by deposit of title deeds and recovery proceedings were initiated
against him. Hence, the first defendant is the best person to speak about the
alleged mortgage by him is true or not. He can only clarify as to whether the
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S.A.No.497 of 2012
bank initiated recovery proceedings or not? But the first defendant remained
exparte throughout. Even though the 1st defendant remained exparte, the duty is
cast upon the 2nd defendant to bring the 1st defendant into witness box to protect
his title. Strangely, there is no witness on the side of the defendants. The 2 nd
defendant has not chosen to prove the pleadings made by him in the written
statement by letting in evidence. Production of the original documents,
Encumbrance Certificate and title deed of his vendor will not automatically
prove the conveyance made in his favour. Therefore, the non examination of
the witness on the side of the defendants is fatal to the case. In the absence of
the evidence of the 1st defendant, it is automatically proved that the plaintiff has
purchased the property pursuant to the procedure followed under the statute.
10. At this juncture, it is pertinent to note Section 13 (2) and Section
13 (3) of the SARFAESI Act which mandates notice to the borrower and
subsequent auction taken by the secured creditors. After receipt of the notice, as
per Sections 13 (2) and 13 (3) of the Act, the borrower shall not transfer the
property by way of sale, lease or otherwise of the secured asserts without the
prior written consent of the secured creditor. In that view of the matter, any sale
made by the secured debtor / borrower is illegal. Insofar as the sale in favour of
the 2nd defendant is concerned, it is pleaded that it is fraudulent and collusive
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S.A.No.497 of 2012
transaction. The sale deed which is marked as Ex.A7 was conveyed for a
nominal sum of Rs.50,000/-, whereas Ex.A6 reveals that the property was sold
for a sum of Rs.4,10,000/- in a public auction which leads us to infer the sale
deed made under Ex.A7 for a nominal sum of Rs.50,000/- on the very same date
of auction is sham and nominal and made with an intention to defeat the
plaintiff's right. In that view of the matter, the 2nd defendant cannot be said to
be a bonafide purchaser and he got the title conveyed in his favour.
11. The first appellate Court has elaborately discussed the procedure
adopted by the bank under the SARFAESI Act. The first appellant Court has
also relied on the Judgment of the Hon'ble Supreme Court in Vannarakkal
Kallalathil Sreedharan Vs. Chandramaath Balakrishnanan and anr. reported
in 1990 (3) SCC 291 and also discussed the provisions under SARFAESI Act,
2002 to set aside the Judgment of the trial Court. The Judgment and the first
appellate Court is based on reasons and I do not find any discrepancy
warranting interference with the same. The questions of law raised in the
Memorandum of grounds of appeal is mere questions of fact to be proved by the
defendants. As already stated that none of the defendants have entered into the
box to prove their stand. Therefore, I do not find any substantial question of
law much less substantial question of law arise to enable me to entertain the
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S.A.No.497 of 2012
second appeal. There is no merits in the Second Appeal and accordingly it is
dismissed at the admission stage itself. No costs. Consequently, connected
miscellaneous petition is closed.
29.10.2021
vum
Index : Yes/No
Speaking order / Non speaking order
To
1.The Principal District Court, Cuddalore.
2.The I Additional Subordinate Court, Cuddalore.
3. The Section Officer,
VR Section,
Madras High Court,
Chennai.
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S.A.No.497 of 2012
M. GOVINDARAJ, J.
vum
S.A.No.497 of 2012 and
M.P.No.1 of 2012
29.10.2021
https://www.mhc.tn.gov.in/judis
