# R. SANTHANKUMAR NADAR v. INDIAN BANK LTD., MADRAS & ORS

- **Citation:** [1967] 2 S.C.R. 613
- **Court:** Supreme Court of India
- **Decided:** 1964-03-11
- **Case number:** Civil Appeal No. 505of1965
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/r-santhankumar-nadar-v-indian-bank-ltd-madras-ors-4164
- **Pages:** 5

## Headnote

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R. SANTHANKUMAR NADAR
v.
INDIAN BANK LTD., MADRAS & ORS.
F'ebruary, 6, 1967
[J.C. SHAH AND G. K. MITTER, JI.)
Transfer of Property Act (4 o/ 1882), :rs. 51 and 69-Applicabi/Jty of
•· 51 to purchar<r of mortgaged proptrtY with know/edge of mortgag.-
Notice to assignee of exercise of right of sale under s. 69-lf necessary.
A mortgage was created over property situate in ihe City of Madras
and the mortgagc..deed conferred on the
mortgage the power
under
s. 69 of the Transfer of Property Act, to sell the property without the
intervention of the Court. Thereafter, the appellant purchased a smlll
portion of the property from the mortgagors. The sole-deed provided
that the mortga,ors (vendors) should get the property sold released from
the mortgage within one year, that In default thereof the appellant
( vendee) would be at liberty to enforce his rights to compel the vendors
to do so, and that the vendors should indemnify the vendee for all expenses and damages; but, no such steps were taken either by the vendors
or the vendee.
After the appellant's purchase, a notice was issued on
behalf of the mortgage, to the mortgagors, in terms of the mortgage deed,
as required by s. 69(2), but no notice was served on the appellant. The
property mortgaged was then widely advertised for sale and was bought
by the first respondent bank. The bank then filed the suit for vacant
possession, mesne profits and other reliefs. The appellant contended
that : (I ) the sale was invalid and not binding on his portion in the
absence of notice to him, and (2) as a bona fide purchaser he was entitled, under s. 51 of the Act, to the value of improvements effected by him
The High Court rejected the contentions and decreed the suit.
In appeal to this Court,
HELD: (1) Section 69(2) lays down that the notice requiring payment of the mortgage money may be given to the mortgagor or to one of
several mortgagors, where there are more than one. In the present case,
the mortgagors had not parted with their entire interest in the property,
and the appellant stood in the shoes of the mortgagors with respect to the
portion purchased by him. Therefore, notice having been issued to the
mortgagors the appellant was not entitled to such notice. Since he knew
of the power of sale contained in the mortgage deed and there was no
fraud or collusion in the sale of the property to the bank, the appellant
had no cause fur complaint. [615 E-F; 616 G]
Muncherji Furdoonji Mehta v. Noor Mahomedbhoy lairajblwy
Pirbhoy, I.LR. 17 Born. 711 and Hoo/e v. Smith, 17 Ch. D. 434 explained.
( 2) Section 51 of the Act bas no application to the appellant at all, u,
in the circumstances of the case, be could not have bebeved that he wu
absolutely entitled to the property. [617 El

## Text

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G
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R. SANTHANKUMAR NADAR
v.
INDIAN BANK LTD., MADRAS & ORS.
F'ebruary, 6, 1967
[J.C. SHAH AND G. K. MITTER, JI.)
Transfer of Property Act (4 o/ 1882), :rs. 51 and 69-Applicabi/Jty of
•· 51 to purchar<r of mortgaged proptrtY with know/edge of mortgag.-
Notice to assignee of exercise of right of sale under s. 69-lf necessary.
A mortgage was created over property situate in ihe City of Madras
and the mortgagc..deed conferred on the
mortgage the power
under
s. 69 of the Transfer of Property Act, to sell the property without the
intervention of the Court. Thereafter, the appellant purchased a smlll
portion of the property from the mortgagors. The sole-deed provided
that the mortga,ors (vendors) should get the property sold released from
the mortgage within one year, that In default thereof the appellant
( vendee) would be at liberty to enforce his rights to compel the vendors
to do so, and that the vendors should indemnify the vendee for all expenses and damages; but, no such steps were taken either by the vendors
or the vendee.
After the appellant's purchase, a notice was issued on
behalf of the mortgage, to the mortgagors, in terms of the mortgage deed,
as required by s. 69(2), but no notice was served on the appellant. The
property mortgaged was then widely advertised for sale and was bought
by the first respondent bank. The bank then filed the suit for vacant
possession, mesne profits and other reliefs. The appellant contended
that : (I ) the sale was invalid and not binding on his portion in the
absence of notice to him, and (2) as a bona fide purchaser he was entitled, under s. 51 of the Act, to the value of improvements effected by him
The High Court rejected the contentions and decreed the suit.
In appeal to this Court,
HELD: (1) Section 69(2) lays down that the notice requiring payment of the mortgage money may be given to the mortgagor or to one of
several mortgagors, where there are more than one. In the present case,
the mortgagors had not parted with their entire interest in the property,
and the appellant stood in the shoes of the mortgagors with respect to the
portion purchased by him. Therefore, notice having been issued to the
mortgagors the appellant was not entitled to such notice. Since he knew
of the power of sale contained in the mortgage deed and there was no
fraud or collusion in the sale of the property to the bank, the appellant
had no cause fur complaint. [615 E-F; 616 G]
Muncherji Furdoonji Mehta v. Noor Mahomedbhoy lairajblwy
Pirbhoy, I.LR. 17 Born. 711 and Hoo/e v. Smith, 17 Ch. D. 434 explained.
( 2) Section 51 of the Act bas no application to the appellant at all, u,
in the circumstances of the case, be could not have bebeved that he wu
absolutely entitled to the property. [617 El
CIVIL APPELLATE JURISDICTION : Civil Appeal No. 505of1965.
Appeal by special leave from the judgment and decree dated
March 11, 1964 of the Madras High Court in Original Side Appeal
No. 11 of 1960.
614
SUPREME COUltT REPORTS
[1967] 2 S.C.R
R. Thiagarajan and R. Ganapathy Iyer, for the appellant.
A
M. S. K. Sastri and M. S. Narasimhan, for respondent No. I.
The Judgment of the Court was delivered by
Mitter, J.
This is an appeal from a judgment and decree of
the High Court of Judicature at Madras on special leave granted by
this Court.
The owners of the properly situate in the City of Madras
cr~<lted a mortgage over it in 1944 i,1 favour of one Jagmohan
Pra;ad Bhalla with power to him to sell the mortgaged property
without the intervention of the Court. On April 22, 1950 the appellant before us purchased a small portion of the properly from the
mortgagors. the vendors covenanting to get th~ property mentioned
in the schedule to the document released from the mortgages mcnti'>ned within a period of one year, in default whereof the vendee
was to be at liberty to enforce his rights to compel the vendors to do
so in appropriate proceedings and the vendors agreed to indemnify
the purchaser for all such expenses and damages. The original
mortgagee died on March 14, 1950 lca\ing a will and bequc1thing
the entire prc,perty in equal shares to several persons. The ~xecut_or
to the will of:h~ deceased executed a deed of transfer ia favo~r of the
said legatee> on May 14. 1951.
The legatees executed a genaal
power of attorney in favour of one Gangadhar Bhalla. the 8th
defendant, c;onfcrring on him all powers including the power to
realise the amounts due under the mortgage dated s~rtcmber 2J,
1944 and to take other necessary sters. On May 28, 1952 a notice
was issued in terms of the mortgage deed under s. 69 of the Transfer
of Property Act. There is ·no dispute that it was not served on the
appellant. The sale was widely advertised and was adjourned
from time to time till April 26, 1953 when the property was purchased by the 1st respondent, the Indian Bank Ltd., for a sum of
Rs. 1,12,500. The sale-deed in favour of the bank was executed
on July 4, 1953.
The bank filed a suit on April 26, 1954 praying for
vacant possession of portions of the property, decree for mesne
profits against some of the defendants and other reliefs.
Before the
Ir.arncd single Judge of the Madras High Court who heard the suit,
it was contended on behalf of the present appellant that the sale "as
invalid in the absence of notice thaeof to him. The learned Judge
turned down the contention that the sale was fraudulent as alle.11ed
by the appellant.
He also rejected the contention put forward on
behalf of the appellant that he was a bona fide purchaser within. the
meaning of s. 51 of the Transfer of Property Act and as such en tr tied
to the improvements effected by him, namely, the cost of erecting
the structures he had put up thereon. The aprellant filed an appeal
before the High Court of Madras alleging identical grounds in appeal.
After los111g in the High Court. the appellant applied for special
Je31•e to th;s Court wh;rJ1 was gramcd raising six grounds in hts
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SANTHANKUMAR v. INDfAN BANK (Mitter, !.)
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petition. By his statement of case filed in this court, the appellant
sought to contend that the provisions of s. 69 of the Transfer of
Property Act allowing the exercise of the power of sale after notice
to any one of the mortgagors offended Arts. 19 and 14 of the
Constitution and as such were liable to be struck down.
In paragraph 2 of his written statement he had raised the plea that the power
of sale in terms of s. 69 of the Transfer of Property Act was ultra
vires the Constitution of India as being discriminatory and oppo;ed
to the fundamental rights of citizens. Apparently the plea was
abandoned at the hearing because no issue was raised thereon at
the trial of the suit or in appeal to the Division Bench. We indicated that we could not allow the appellant to urge this plea at this
stage.
The point that the sale under the provisions of the mortgage
deed was invalid because of want of notice to the 16th defendant is
not one of substance. Section 69 sub-s. (I) gives a mortgagee or any
person acting on his behalf the power to sell or concur in selling the
mortgaged property or any part thereof in default of payment of the
m<Jrtgage money, without the intervention of the court in the cases
specified in sub-els. (a), (b) and (c) of that sub-section. Sub-s.
(2) of s. 69 lays down inter a/ia that no such power shall be exercised
unless and until notice in writing requiring payment of the principal
money has been served on the mortgagor, or on one of several
mortgagors and default has been made in payment of the principal
money or of part thereof, for three months after such service. The
language of this sub-section is clear and unambiguous. The section
lays down in no uncertain terms that the requisite notice may be
given to the mortgagor or one of several mortgagors where there is a
number of them, the obvious idea being that the mortgagor who is
given the notice is constituted the agent of the other mortgagors to
receive the same. It may be hard on a person in the position of a
mortgagor to get no notice under this section if he comes to learn
that the property has been sold without any notice to him. But if
there has been no fraud or collusion in the matter, he has no cause
for complaint. Our attention was however drawn to a decision of
the Bombay High Court in Muncherji Furdoonji Mehta v. Noor
Mahomedbhoy Jairabjhoy Pirbhoy(I) and it was contended on the
strength thereof that an assignee from a mortgagor must be served
with a notice of sale if he is to be bound thereby. The facts there
were as follows. The defendants in the suit before the Bombay
High Court were the jlrst mortgagees. The plaintiffs were puisne
mortgagees of the property. The property had been advertised for
sale by the defendants several times before the plaintiffs took any
step in the matter. ln April 1893, the defendants advertised the
mortgaged property for sale and the plaintiffs filed a suit and obtained a rule nisi with an interim injunction restraining the defendants.
{\)I.L.R.17 Bombay 711, 715.
616
SUPllEMB COUllT llBPOllTS
(1967] 2 S.C.R.
from proceeding with the sale. It was contended on behalf of the
A
plaintiffs that the defendants had no power to sell at all because
the mortgage deed provided that notice should be given to the
mortgagors or their assigns and the defendants had not given notice
to the plaintiffs who were assigns of the equity of redemption.
It was however found that the defendants had given a notice of sale
to the mortgagors on August 31, 1891 three days before the plainB
tiffs had any interest in the equity of redemption and Starling, J.
who decided the case observed :-
........ as that appears to me to be a proper notice,
I do not think that any further notice would be required
to be given to any person who at that time was not an
assign, in order to enable the defendants to sell under
that notice; because I am of opinion that an assign must
take things in the state in which he finds them, and cannot
claim to alter right~ which have accrued before he has
any authority to interfere."
Commenting on this case, the learned commentators of Mulla's
Transfer of Property Act (Fifth Edition) at page 500 state :
"If the mortgagor has transferred his interest, either
to a purchaser or to a subsequent mortgagee, and the mortgagee is aware of it, he should give notice to the transferee;
but not if the transfer has taken place after the mortgagee
has already given notice to the mortgagor."
Learned counsel appearing on behalf of the appellant wanted to
press this observation into service by saying that as his client ha<l
purchased a portion of the property by a registered deed two years
prior to the notice of sale it was incumbent on the mortg118111
to give him a notice. This contention cannot be accepted. It will
be noticed that in the Bombay case there was no reference to s. 69
of the Transfer of Property Act or the powers of the mortgagee
thereunder. Moreover, the mortgage deed in that case expressly
provided for notice being given to the mortgagors or their assigns.
In the present case, the mortgagors had not parted with their entire
interest in the property. At best the appellant stood in the shoes of
the mortgagors with respect to a portion of the property. He knew
of the power of sale contained in the mortgage deed and that is why
he wanted to safeguard himself against such sale by insertion of a
clause for indemnity.
The English decision in Hoole v. Smith(') referred to in the above
Bombay judgment does not help the appellant before us.
In that
case th·; mortgage deed provided that the power of sale was not to
be exercised unless and until notice had been given in writing to
(I) 17 Ch. D. 434.
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SANTHANKUMAR v. INDIAN BANK (Mitter, J.)
617
the mortgagor, his executors, administrators or assigns to pay off
the moneys for the time being due and owing on the said indenture of
mortgage. Fry, J. observed in that case :
"When I find the word 'assigns' used in the power
of sale as an alternative for Harrison, it is impossible that
I can hold that it was sufficient for the .defendants to go on
serving Harrison alone after he had assigned his equity of
redemption. The object of the proviso was that any assign
might be at liberty to intervene and pay off the mortgage,
and no one could be more interested than the second
mortgagee in this right of intervention."
The only other point raised on behalf of the appellant was that
he was entitled to the value of the improvements effected by him on
the portion of the property purchased under the provisions of s. 51
of the Transfer of Property Act. In our opinion, that section can
have no manner of application to the facts of this case. Under
that section, a transferee of immovable property making any improvement therein, believing in good faith that he is absolutely
entitled thereto, has a right to require the person subsequently
evicting him therefrom on the strength of a better title, to have the
value of the improvement estimated and paid or secured to him or
to purchase his interest in the property at the then market value
thereof. In this case, there can be no question of the appellant
believing that he was absolutely entitled to the property. He knew
that he was purchasing a small portion of it and that his vendors
stood to lose the property unless they paid up the mortgage money
on receipt of notice from the mortgagee. As already mentioned,
the appellant wanted to safeguard himself against such an eventuality
by the insertion of a clause in his deed of sale and the court directed
the setting apart of Rs. 9,000 from out of the sale proceeds for the
purpose. We do not think that the case referred to by the learned
counsel Narayana Rao v. Basavarayappa(I) has any application to
the facts of this case.
We would therefore dismiss the appeal with costs.
V.P.S.
Appeal dismissed ..
(I) A.I.R. 1956 S.C. 727.