Sunday, 26 May 2019

Whether Mortgagor has right to redeem mortgage even after sale of mortgaged property

 It would be necessary to examine as to when the right of the petitioner in the present case could be said to be extinguished by application of Section 60 of the Transfer of Property Act, 1882. In the case of Allokam Peddabbayya .vs. Allahabad Bank - MANU/SC/0700/2017 : (2017) 8 S.C.C. 272, the Hon'ble Supreme Court has taken into consideration Section 60 and proviso thereto of the Transfer of Property Act, 1882 and earlier judgments on the said provision have been taken into consideration. In the said judgment, the Hon'ble Supreme Court has concluded as follows:-

"22. In Mhadagonda Ramgonda Patil it was observed that the mortgagor has a right of redemption even after sale has taken place pursuant to the final decree, but before the confirmation of sale.


23. Therefore, the crucial aspect even under the said provision is "confirmation of sale". The mortgagor has a right of redemption even after sale has taken place but before confirmation of sale. In the present case, the fact remains that there was no confirmation of sale in favour of respondent no. 5 under the provisions of the said Act and Rules particularly sub-rule (14) of Rules 107 of the said Rules.

IN THE HIGH COURT OF BOMBAY (NAGPUR BENCH)

Writ Petition No. 2564 of 2016

Decided On: 12.09.2018

Aniruddha Vs. The Divisional Joint Registrar Co-operative Societies, Amravati and Ors.

Hon'ble Judges/Coram:
Manish Pitale, J.

Citation: 2019(2) MHLJ 478


1. Rule, returnable forthwith. Heard finally with the consent of the learned counsel appearing for the parties.

2. The subject matter of challenge in this writ petition is order dated 13.04.2016 passed by the respondent no. 1- the Divisional Joint Registrar Cooperative Societies, Amravati, whereby revision application filed by respondent no. 5 was allowed and it was directed that sale of property (plot) be confirmed in favour of respondent no. 5 as the auction purchaser who had deposited the entire amount offered by him in an auction conducted by the respondent no. 3- the Yavatmal Urban Cooperative Bank Ltd. Yavatmal. The said auction was conducted to recover dues payable by the petitioner herein to the respondent no. 3-Bank for a loan that he had taken from the Bank. The central question that arises for consideration in the present writ petition is, as to whether a vested right had accrued in favour of respondent no. 5 in the present case whereby it could be said that sale through the aforesaid process of auction stood confirmed in his favour and in that context whether the respondent no. 2-the District Deputy Register of Cooperative Societies was justified in permitting the petitioner to deposit the entire amount due from him with 5% of purchase amount (referred to as commission amount in the proceedings before the authorities below) to avoid the sale of the subject plot in favour of respondent no. 5.

3. The facts leading to the fling of the present writ petition in brief are that the petitioner had taken a loan of Rs. 3,00,000/- from the respondent no. 3 Bank and he had been irregular in repayment of the said loan. As a consequence, the respondent no. 3- Bank was constrained to undertake steps for recovery of dues from the petitioner, in pursuance of which a recovery certificate under Section 101 of the Maharashtra Cooperative Societies Act, 1960 (for short the "aforesaid Act") was issued on 30.09.2004 for an amount of Rs. 3,83,250/-. Thereafter, a proclamation was issued on 28.12.2010 for sale of the plot in question admeasuring 3640 sq. ft., belonging to the petitioner, for recovery of dues in terms of the said recovery certificate. The respondent no. 3 Bank issued an advertisement on 28.01.2011 for auction of the said plot. The auction was conducted on the very next day i.e. 29.01.2011, in which the bid offered by the respondent no. 5 was highest.

4. The respondent no. 5 had made an offer of Rs. 8,02,000/- in the said auction and he deposited 25% of the said amount i.e. Rs. 2,00,500/- on the very day of the auction i.e. 29.01.2011 with the respondent no. 3 Bank. As the respondent no. 5 was required to deposit the balance amount within 15 days of the date of the auction, on 12.02.2011, he deposited the balance amount i.e. Rs. 6,01,500/-. On 03.03.2011, the respondent no. 3 Bank sent a proposal to the District Deputy Registrar Cooperative Societies for confirmation of sale so as to facilitate the execution of documents pertaining to sale of the said plot by the respondent no. 4 - Special Recovery Officer of the Bank in favour of respondent no. 5.

5. Thereafter, while the said proposal was awaiting approval of the District Deputy Registrar Cooperative Societies (respondent no. 2 herein), the petitioner deposited the entire amount towards recovery of dues along with 5% commission amount on 02.08.2011 with the respondent no. 3-Bank. Consequently, the respondent no. 2 District Deputy Registrar Cooperative Societies passed an order dated 26.08.2011, holding that since the petitioner had deposited the entire amount, the case was closed against the petitioner. On 15.10.2011, the respondent no. 3 Bank sent demand drafts towards refund of entire amount deposited by respondent no. 5 along with 5% commission amount, but he refused to accept the same.

6. The respondent no. 5 was aggrieved by the said order of the respondent no. 2 District Deputy Registrar Cooperative Societies and, therefore, he filed a revision application before the Divisional Joint Registrar Cooperative Societies (respondent no. 1), praying for quashing and setting aside of the said order dated 26.08.2011 passed by the respondent no. 2 District Deputy Registrar Cooperative Societies and a further direction for issuance of certificate for confirmation of sale in his favour. The respondent no. 5 claimed that when he had deposited the entire bid amount within the stipulated time period with the respondent no. 3-Bank, the petitioner who was a defaulter could not be permitted to thereafter deposit the dues with the Bank for jeopardizing the process of auction and sale completed in his favour.

7. The respondent no. 1 Divisional Joint Registrar passed the impugned order dated 13.04.2016, holding that when the auction had been conducted and the respondent no. 5 had deposited bid amount with the respondent no. 3 Bank, there was no reason for not confirming the sale. Accordingly, the revision application of respondent no. 5 was allowed and direction was given for confirmation of sale in favour of the respondent no. 5.

8. The petitioner filed the instant writ petition challenging the said order, wherein notice was issued and interim stay was granted to the said order of the Divisional Joint Registrar till the returnable date. But later, it appears that the interim order was not continued and according to the respondent no. 5, despite the interim order not being continued, the respondent no. 3 Bank failed to abide by the directions given in the order of the Divisional Joint Registrar. Be that as it may, even till date the plot in question has continued with the petitioner herein.

9. Mr. Subodh Dharmadhikari, learned senior counsel appeared for the petitioner and contended that the impugned order passed by the Divisional Joint Registrar was unsustainable because there was no confirmation of sale or issuance of sale certificate in favour of respondent no. 5 pursuant to the auction that took place on 29.01.2011 and that when the petitioner had deposited the entire amount due along with 5% commission amount, the District Deputy Registrar Cooperative Societies was justified in closing the case in favour of the petitioner. It was submitted that when the respondent no. 3 Bank was satisfied with its dues and when no vested interest had been created in favour of respondent no. 5, there was no justification for setting aside of the order of the District Deputy Registrar Cooperative Societies and directing the respondent no. 4 Special Recovery Officer of the Bank to take steps for execution of documents of sale in favour of respondent no. 5. The learned senior counsel placed reliance on Section 60 of the Transfer of Property Act, 1882, particularly the proviso appended to the said provision to contend that the right of the petitioner was not extinguished in the present case in the property in question and that when the petitioner had deposited the entire amount due with the respondent no. 3 Bank during the existence of his right, there was no reason why the petitioner could be deprived of his right in the said property. It was further contended that there was no confirmation of sale in favour of respondent no. 5 in the present case because the proposal for confirmation of sale was still pending before the District Deputy Registrar Cooperative Societies when the petitioner deposited the entire amount due and the case was closed. It was contended that the respondent no. 5 had only a nebulous right in pursuance of the auction proceedings and that a right would have crystallized in his favour only if the sale had been confirmed.

10. The learned senior counsel referred to Section 156 of the aforesaid Act and Rule 107 of the Rules framed thereunder to contend that the Special Recovery Officer was required to seek approval of the District Deputy Registrar Cooperative Societies for confirming the sale and that when such confirmation was never granted, there was no right created in respondent no. 5. Reliance was placed on order dated 01.07.2010 passed by the District Deputy Registrar Cooperative Societies, whereby certain powers of the Registrar under Section 156 of the aforesaid Act for attachment and sale of property were delegated to Special Recovery Officers. It was pointed out that by the said order powers under specific sub rules of Rule 107 of the said Rules were delegated, but, power for confirmation of sale under sub-rule (14) thereof was not delegated to Special Recovery Officers. It was contended that such power was retained by the District Deputy Registrar Cooperative Societies, as a result of which it was necessary in the present case also for the Special Recovery officer to have sought approval of the District Deputy Registrar Cooperative Societies for confirmation of sale. On this basis, it was contended that there was no confirmation of sale in favour of respondent no. 5, as a result of which he could not claim any vested right in his favour in respect of the said property. It was further contended that the impugned order deserved to be set aside and the writ petition deserved to be allowed. Reliance was placed on judgments of Hon'ble Supreme Court in the case of Desh Bandhu Gupta .vs. N.L. Anand & Rajinder Singh - MANU/SC/0562/1994 : (1994) 1 S.C.C. 131 and Kancherla Lakshminarayana .vs. Mattaparthi Syamala and ors. - MANU/SC/1357/2008 : (2008) 14 S.C.C. 258.

11. Per contra, Mr. Abhay Sambre, learned counsel appearing on behalf of the respondent no. 5 contended that the impugned order passed by the Divisional Joint Registrar Cooperative Societies (respondent no. 1) was based on correct interpretation of the said Act and the Rules, particularly Rule 107 (12)(13) and (14) of the said Rules. It was contended that when the petitioner had failed to deposit the arrears with the respondent no. 3 Bank along with 5% commission amount within 30 days of the date of the auction sale i.e. 29.01.2011, under sub-rule (13) of Rule 107 of the said Rules, he had lost all his right in the said property. It was further contended that when the petitioner had failed to make such deposit within the aforesaid period of 30 days, under sub-rule (14) of Rule 107 of the said Rules, the Special Recovery Officer was bound to confirm the sale. It was contended that in the present case, the respondent no. 3 Bank and its Special Recovery Officer i.e. respondent no. 4 had acted in collusion with the petitioner, only to deprive the respondent no. 5 of the right that was created in his favour in the said property. It was contended that the District Deputy Registrar Cooperative Societies had no authority after expiry of the aforesaid period of 30 days, to close the case on the basis that the petitioner had deposited the amount of arrears with 5% commission amount and that the Divisional Joint Registrar Cooperative Societies was fully justified in setting aside the order of the District Deputy Registrar Cooperative Societies. It was further contended that the respondent no. 5 was put to unnecessary hardship despite the fact that he had deposited the entire bid amount. The learned counsel for respondent no. 5 placed reliance on the judgment of the Hon'ble Supreme Court in the case of Ram Karan Gupta .vs. J.S. Exim and ors. - MANU/SC/1049/2012 : (2012) 13 S.C.C. 568, judgments of this Court in the case of Meera Unnikrishnan .vs. Aashutosh Dyeing Mills Pvt. Ltd. - MANU/MH/1535/2014 : 2015 (2) Mh.L.J. 331 and in the case of The Manager, Adarsha Mahila Nagari Sahakari Bank Ltd. .vs. State of Maharashtra - MANU/MH/1592/2011 : 2012 (2) ALL M.R. 566.

12. Mr. Parijat Pande, learned counsel appeared on behalf of the respondent no. 3 Bank and its Special Recovery Officer i.e. respondent no. 4 and he submitted that the Bank was essentially interested in recovery of its dues and not in the sale of the property in question. It was submitted that when the petitioner deposited the entire arrears with 5% commission amount, the Bank accepted the same and released the said property from mortgage by issuing no dues certificate in favour of the petitioner. It was submitted that on 15.10.2011 itself, the Bank sent demand drafts of the entire amount deposited by respondent no. 5 along with 5% commission amount, but the said respondent refused to accept the same. It was submitted that the Bank was ready to hand over the said amount to the respondent no. 5 even today along with 8% interest.

13. In order to appreciate the contentions raised on behalf of the parties, it would be useful to refer to the relevant provisions of the aforesaid Act and Rules. Section 156 of the said Act, provides for powers of the Registrar to recover amounts by attachment and sale of property. The said provision reads as follows:-

"Section 156. Registrar's power to recover certain sums by attachment and sale of property:

(1) The Registrar or any officer subordinate to him and empowered by him in this behalf [or an officer of such society as may be notified by the State Government, who is empowered by the Registrar in this behalf] may, subject to such rules as may be made by the State Government, but without prejudice, to any other mode of recovery provided by or under this Act, recover

(a) any amount due under a decree or order of a Civil Court obtained by a society;

(b) any amount due under a decision, award or order of the Registrar, 2[Co-operative Court] or Liquidator or 3[Co-operative Appellate Court];

(c) any sum awarded by way of costs under this Act;

(d) any sum ordered to be paid under this Act as a contribution to the assets of the Society;

[(e) any amount due under a certificate granted by the Registrar under sub-section (1) or (2) of section 101 or under sub-section (1) of section 137;] together with interest, if any, due on such amount or sum and the costs of process [according to the scales of fees laid down by the Registrar from time to time.] by the attachment and sale or by sale without attachment of the property of the person against whom such decree, decision, award or order has been obtained or passed.

(2) The Registrar or the officer empowered by him shall be deemed, when exercising the powers under the foregoing sub-section, or when passing any orders on any application made to him for such recovery, to be Civil Court for the purpose of [Article 136 in the Schedule to the Limitation Act, 1963].

A perusal of the said provision clearly shows that it is the Registrar who exercises his power under the said provision and he may delegate the same to officers subordinate to him or an officer of the society empowered by him to exercise powers under Section 156 of the said Act.

14. Rule 107 of the Rules framed under the aforesaid Act pertains to procedure for attachment and sale of property under Section 156 of the Act. Sub rules (12), (13) and (14) are relevant for the present case. It is necessary to note that the Rules were amended in August, 2014 and we are concerned with the un-amended Rules and accordingly the unamended Rules are being quoted. Sub-rules (12) (13) and (14) of Rule 107 of the said Rules prior to amendment in August, 2014, read as follows:-

"12. Where prior to the date fixed for a sale, the defaulter or any person acting on his behalf or any person claiming an interest in the property sought to be sold tenders payment of the full amount due together with interest, batta and other expenses incurred in bringing the property to sale, including the expenses of attachment, if any, the Sale Officer shall forthwith release the property after cancelling, where the property has been attached, the order of attachment.

13. (i) Where immovable property has been sold by the Sale Officer, any person either owning such property or holding any interest therein by virtue of a title acquired before such sale may apply to have the sale set aside on his depositing with the Recovery Officer:-

(a) for payment to the purchaser a sum equal to 5 per cent of the purchase money; and

(b) for payment to the applicant, the amount of arrears specified in the proclamation of sale as that for the recovery of which the sale was order together with interest thereon and the expenses of attachment, if any, and sale and other costs due in respect of such amount, less amount which may since the date of such proclamation have been received by the applicant.

(ii) If such deposit and application are made within thirty days from the date of sale, the Recovery Officer shall pass an order setting aside the sale and shall repay to the purchaser, the purchase money so far as it has been deposited, together with the 5 per cent deposited by the applicant:

Provided that if more persons than one have made deposit and application under this sub-rule, the application of the first depositor to the officer authorised to set aside the sale, shall be accepted.

(iii) If a person applies under sub-rule (14) to set aside the sale of immovable property, he shall not be entitled to make an application under this sub-rule.

14. (i) At any time within thirty days from the date of the sale of immovable property, the applicant or any person entitled to share in a rateable distribution of the assets or whose interests are affected by the sale, may apply to the Recovery Officer to set aside the sale on the ground of a material irregularity or mistake or fraud in publishing or conducing it:

Provided that no sale shall be set aside on the ground or irregularity or fraud unless the Recovery Officer is satisfied that the applicant has sustained substantial injury by reason of such irregularity, mistake or fraud.

(ii) If the application be allowed, the Recovery shall set aside the sale and may direct a fresh one.

(iii) On the expiration of thirty days from the date of sale, if no application to have the sale set aside is made or if such application has been made and rejected, the Recovery Officer shall make an order confirming the sale:

Provided that, if he shall have reason to believe that the sale ought to be set aside notwithstanding that no such application has been made or on grounds other than those alleged in any application which has been made and rejected, he may after recording his reasons in writing, set aside the sale.

(iv) Whenever the sale of any immovable property is not so confirmed or is set aside, the deposit or the purchase money, as the case may be, shall be returned to the purchaser.

(v) After the confirmation of any such sale, the Recovery Officer shall grant a certificate of sale bearing his seal and signature to the purchaser, and such certificate shall state the property sold and the name of the purchaser."

15. In the context of the submissions made on behalf of the parties, definition of Recovery Officer also assumes significance, which is provided in Rule 2(h) of the said Rules. It reads as follows:-

"Rule 2(h) "recovery officer" means any person empowered to exercise in any district the powers of the Registrar under Section 156."

16. In the present case, the learned senior counsel for the petitioner has contended that there was no confirmation of sale in favour of respondent no. 5 and, therefore, the said respondent had no vested right as auction purchaser to challenge the order of the District Deputy Registrar closing the case against the petitioner on the basis that entire dues of the Bank had been deposited by him. On the other hand, the learned counsel for the respondent no. 5 has contended that since the petitioner failed to deposit the said due amount with the Bank within 30 days of auction that took place on 29.01.2011, the sale was as good as confirmed and the District Deputy Registrar could not have closed the case against the petitioner, which had the consequence of depriving the respondent no. 5 of the fruits of the said auction that culminated in his favour. A perusal of Section 156 of the aforesaid Act along with Rule 107 of the Rules framed thereunder shows that the power and procedure for sale of property for recovery of dues, is given to the Registrar and such other officers to whom the Registrar may delegate such powers under Section 156 of the said Act. In the present case, the order dated 01.07.2010 issued by the District Deputy Registrar under Section 156 of the said Act assumes significance because it specifies the powers delegated to Special Recovery Officers. The said order specifically delegates powers to Special Recovery Officers pertaining only to sub-rules (3) (5) (6) (7) (9) (10) (11) (12) (13) (15) (17) (18) and (20) of Rule 107 of the said Rules. There is no delegation of power under the said order in favour of Special Recovery Officers as regards sub-rule (14) of Rule 107 of the Rules. The said sub-rule (14) (quoted above) pertains to confirmation of sale on expiry of 30 days from the date of sale and when no application for setting aside of the sale is made. Thus, the power to confirm sale was not delegated to Special Recovery Officers and it was retained by the District Deputy Registrar as per the aforesaid order dated 01.07.2010 issued under Section 156 of the said Act.

17. In the present case, the respondent no. 4 Special Recovery Officer of the respondent no. 3 Bank conducted the auction sale in terms of the powers delegated to him under the said order dated 01.07.2010 on 29.01.2011 and after the respondent no. 5 had deposited the entire bid amount, he forwarded proposal dated 03.03.2011 to the respondent no. 2-District Deputy Registrar for approval and for confirmation of sale pursuant to the auction proceedings. In the light of the aforesaid order dated 01.07.2010 issued by the District Deputy Registrar under Section 156 of the said Act, wherein the power for confirmation of sale under sub-rule (14) of Rule 107 of the Rules, was retained by the District Deputy Registrar, there was no alternative with the respondent no. 4 Special Recovery Officer of the Bank but to seek approval of the District Deputy Registrar. In other words, there could have been no confirmation of sale in favour of respondent no. 5 in the absence of grant of approval by the District Deputy Registrar. The facts of the present case show that before sale was confirmed by the District Deputy Registrar, on 02.08.2011 the petitioner deposited the entire amount due with the respondent no. 3 Bank along with 5% commission amount before confirmation of sale. In this situation, on 26.08.2011 the District Deputy Registrar recorded the said fact of deposit of amounts by the petitioner and directed that the case be closed. Thereupon, on 15.10.2011, the respondent no. 3 Bank sent demand drafts of Rs. 8,15,000/- and Rs. 40,100/- to the respondent no. 5 towards return of the amount deposited by him along with 5% commission amount. This was clearly in terms of sub-rule (14) (iv) of Rule 107 of the said Rules, which states that whenever sale of any immovable property is not confirmed, deposit or purchase money shall be returned to the purchaser. It is an admitted position that the respondent no. 5 refused to accept the said amount and that the same is still lying with the respondent no. 3 Bank.

18. Instead of accepting the refund of amount, the respondent no. 5 challenged the said order of the District Deputy Registrar dated 26.08.2011 by fling revision application before the Divisional Joint Registrar, who passed the impugned order, setting aside the order of the District Deputy Registrar. The learned counsel for the respondent no. 5 placed heavy reliance on judgment of the Hon'ble Supreme Court in the case of Ram Karan Gupta .vs. J.S. Exim (supra) to contend that when the petitioner had failed to deposit the amount due within 30 days as required under sub-rule (13) of Rule 107 of the said Rules, the sale stood confirmed and a vested right was created in favour of respondent no. 5. The learned counsel further relied upon judgment of this Court in the case of The Manager, Adarsha Mahila Nagari Sahakari Bank Ltd. .vs. State of Maharashtra (supra) to contend that the Special Recovery Officer i.e. respondent no. 4 was not required to seek approval of the District Deputy Registrar (respondent no. 2) for confirmation of sale and, therefore, the proposal sent by the Special Recovery Officer in the present case for approval to the District Deputy Registrar was unnecessary and that the sale stood confirmed when the Special Recovery Officer recorded the fact that the respondent no. 5 had indeed deposited the entire bid amount within 15 days of the auction.

19. The said contentions raised on behalf of the respondent no. 5 cannot be accepted because in the present case we are concerned with the procedure undertaken for recovery of dues of respondent no. 3 Bank from the petitioner under the provisions of the aforesaid Act, particularly under Section 156 of the said Act read with Rule 107 of the Rules framed thereunder. A proper appreciation and application of the said provisions is necessary to examine whether the sale at all stood confirmed in favour of respondent no. 5. Rule 2(h) of the said Rule quoted above defines Recovery Officer as any person empowered to exercise in any district the powers of the Registrar under Section 156 of the Act. The powers of the Registrar under the said provision include implementing the provisions of attachment, sale of property and recovery of dues. It is when the Registrar delegates his powers to the Recovery Officer that such Officer is entitled to exercise powers for sale of property and recovery of dues. As noted above, while other powers were delegated by the District Deputy Registrar by issuing order dated 01.07.2010 in favour of Special Recovery Officers, including respondent no. 4 herein, the specific power under sub-rule (14) of Rule 107 of the Rules for confirmation of the sale was not delegated and it was retained by the District Deputy Registrar. As a consequence, no confirmation of sale could have taken place in the present case, unless the sale was confirmed by the District Deputy Registrar himself. Therefore, the Special Recovery Officer of the Bank could not confirm the sale and he placed the proposal dated 03.03.2011 before the District Deputy Registrar, on which no order for confirmation of sale was passed. As a result, the sale in the present case was not complete and no vested right was created in favour of respondent no. 5. The judgment of the Hon'ble Supreme Court in the case of Ram Karan Gupta .vs. J.S. Exim (supra) relied upon by the learned counsel for respondent no. 5 would not apply to the facts of the present case because the procedure of sale of property and recovery of dues is governed by the said Act and Rules. Even in the case of Meera Unnikrishnan .vs. Aashutosh Dyeing Mills Pvt. Ltd. (supra), this Court recorded the fact that sale in that case was completed in all respects. The present case is distinguishable on facts because there was no confirmation of sale in favour of respondent no. 5 and the entire dues along with 5% commission amount were deposited by the petitioner with the respondent no. 3 Bank before such confirmation of sale could take place. Hence, the respondent no. 5 is not justified in contending that sale was virtually confirmed in his favour and that the impugned order could be justified.

20. In this context, learned senior counsel appearing on behalf of the petitioner was justified in relying upon judgments of the Hon'ble Supreme Court in the case of Desh Bandhu Gupta .vs. N.L. Anand & Rajinder Singh and Kancherla Lakshminarayana .vs. Mattaparthi Syamala (supra) to contend that the respondent no. 5 as auction purchaser had only a nebulous right as confirmation of sale was yet to take place in the present case and that sale in favour of respondent no. 5 could be said to have occurred only when there was confirmation of sale by the District Deputy Registrar. In fact, in the case of Kancherla Lakshminarayana .vs. Mattaparthi Syamala (supra), the Hon'ble Supreme Court has dealt with the question as to when could a property be said to be "sold". It has been found that a property could be said to be sold in the context of such attachment and auction when confirmation of sale took place. Till then, the auction purchaser like respondent no. 5 had only a nebulous right and there was no vested right created in his favour.

21. A perusal of Section 60 of the Transfer of Property Act, 1882, shows that the right of the mortgagor for retransfer of the mortgaged property subsists till it is extinguished by the act of parties or by a decree of Court. The said provision reads as follows:-

"Section 60 Right of mortgagor to redeem.--At any time after the principal money has become [due], the mortgagor has a right, on payment or tender, at a proper time and place, of the mortgage-money, to require the mortgagee (a) to deliver [to the mortgagor the mortgage-deed and all documents relating to the mortgaged property which are in the possession or power of the mortgagee], (b) where the mortgagee is in possession of the mortgaged property, to deliver possession thereof to the mortgagor, and (c) at the cost of the mortgagor either to re-transfer the mortgaged property to him or to such third person as he may direct, or to execute and (where the mortgage has been effected by a registered instrument) to have registered an acknowledgement in writing that any right in derogation of his interest transferred to the mortgagee has been extinguished:

Provided that the right conferred by this section has not been extinguished by act of the parties or by [decree] of a Court.

The right conferred by this section is called a right to redeem and a suit to enforce it is called a suit for redemption.

Nothing in this section shall be deemed to render invalid any provision to the effect that, if the time fixed for payment of the principal money has been allowed to pass or no such time has been fixed, the mortgagee shall be entitled to reasonable notice before payment or tender of such money.

Redemption of portion of mortgaged property.--Nothing in this section shall entitle a person interested in a share only of the mortgaged property to redeem his own share only, on payment of a proportionate part of the amount remaining due on the mortgage, except [only] where a mortgagee, or, if there are more mortgagees than one, all such mortgagees, has or have acquired, in whole or in part, the share of a mortgagor."

22. It would be necessary to examine as to when the right of the petitioner in the present case could be said to be extinguished by application of Section 60 of the Transfer of Property Act, 1882. In the case of Allokam Peddabbayya .vs. Allahabad Bank - MANU/SC/0700/2017 : (2017) 8 S.C.C. 272, the Hon'ble Supreme Court has taken into consideration Section 60 and proviso thereto of the Transfer of Property Act, 1882 and earlier judgments on the said provision have been taken into consideration. In the said judgment, the Hon'ble Supreme Court has concluded as follows:-

"22. In Mhadagonda Ramgonda Patil it was observed that the mortgagor has a right of redemption even after sale has taken place pursuant to the final decree, but before the confirmation of sale.

23. The aforesaid discussion leads to the conclusion that the Plaintiffs lost the right to sue for redemption of the mortgaged property by virtue of the proviso to Section 60 of the Act, no sooner that the mortgaged property was put to auction sale in a suit for foreclosure and sale certificate was issued in favour of Defendant No. 2. There remained no property mortgaged to be redeemed. The right to redemption could not be claimed in the abstract."

23. Therefore, the crucial aspect even under the said provision is "confirmation of sale". The mortgagor has a right of redemption even after sale has taken place but before confirmation of sale. In the present case, the fact remains that there was no confirmation of sale in favour of respondent no. 5 under the provisions of the said Act and Rules particularly sub-rule (14) of Rules 107 of the said Rules. It was before there was confirmation of sale in favour of respondent no. 5 that the petitioner deposited the entire amount due with the respondent no. 3 Bank along with 5% commission amount and, therefore, the case was correctly closed by the District Deputy Registrar. The Divisional Joint Registrar failed to appreciate this aspect of the matter while passing the impugned order, thereby rendering the said order liable to be set aside.

24. The learned counsel appearing for the respondent no. 5 sought to contend that the said respondent was put to a lot of hardship because of the manner in which he was deprived of the said property despite having deposited the entire bid amount within the stipulated time. In the absence of confirmation of sale, such a contention cannot be accepted. In any case, the facts of the present case show that the respondent no. 3 Bank had sent demand drafts of the entire amount deposited by the respondent no. 5 along with 5% commission amount on 15.10.2011 itself, but it was respondent no. 5 who refused to accept the said demand drafts. In the face of these facts, the argument of hardship cannot lie in the mouth of respondent no. 5. In any case, a statement has been made on behalf of the respondent no. 3 Bank before this Court that the said amount is still lying with it and that it is ready to give the said amount to respondent no. 5 along with interest @ 8 % P.A.

25. In the light of the above, it becomes clear that the Divisional Joint Registrar failed to appreciate the facts and the position of law in correct perspective while passing the impugned order. Hence, it is held to be unsustainable and liable to be set aside. Even otherwise, the Divisional Joint Registrar has failed to appreciate that the entire procedure and machinery provided under the Act and Rules is to assist the Cooperative Societies/Banks like the respondent no. 3 Bank to recover its dues from its borrower members. The thrust of the provision is not to sell the properties of such borrower members. In the absence of any vested right created in favor of purchasers like the respondent no. 5 herein, it cannot be said that the borrowers like the petitioner should be deprived of their property, by operation of the provisions of the said Act and the Rules.

26. Accordingly, this writ petition is allowed in the following terms:-

(i) The impugned order dated 13.04.2016 passed by respondent no. 1 Divisional Joint Registrar Cooperative Societies, is quashed and set aside.

(ii) The order dated 26.08.2011 passed by the respondent no. 2 District Deputy Registrar Cooperative Societies is confirmed.

(iii) The respondent no. 3- Bank is directed to refund the amount of Rs. 8,15,000/- plus Rs. 40,100/- to respondent no. 5. The said amounts shall carry interest @ 8% P.A. from 15.10.2011 i.e. the date on which demand drafts pertaining to such amounts had been sent to respondent no. 5, but they were not accepted by the said respondent.

27. Rule made absolute in the above terms. No costs.


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