RAJA BAHADUR MOTILAL BOMBAY MILLS LTD Vs. LIFE INSURANCE CORPORATION OF INDIA

JUDGEMENT

(1.) This is appeal against the Order dated 2-11-1970 made by Mr. Justice Nain as Chamber Judge dismissing the appellant's Chamber Summons dated 12th October 1970, the reliefs prayed whereby we will set out a little later.

(2.) The appellant which was the owner of an immovable property in Bombay, mortgaged that property in favour of the first respondent by an Indenture of Mortgage dated 20th April 1946. The second respondent, who has at all material times been a director of the appellant Mills guaranteed the said mortgage debt. Thereafter, the appellant created a second mortgage on that property in favour of the third respondent. The first respondent thereafter filed a suit, begin suit No. 454 of 1950 in this court for realising the debt and the security under the said Mortgage making the appellant and respondents Nos. 2 and 3 as defendants to that suit. On the 9th of August 1949 a Preliminary Mortgage Decree was passed and thereafter on the 28th of June 1950 a Decree absolute for sale was passed. Under the decree absolute for sale liberty was given to the first respondent to bid and set off the purchase money against the debt declared due to it under the Mortgage Decree. Thereafter there followed eighteen infructuous auction sales. The nineteenth auction sale was held on the 11th of September 1970 where the first respondent's bid of Rs. 20,00,000/- was accepted by the Commissioner subject to the sanction of the court. Although the conditions under which the auction sale was held required a deposit being made of 25 per cent of the purchase price, no deposit was made. The purchase price well exceeded the amount due to the first respondent under the Decree absolute for sale and the first respondent paid the amount of the excess to the Commissioner after retaining out of the said amount a sum of Rs. 75,000/- being its estimated costs of the suit and of the sale. The appellant thereafter took out the said Chamber summons praying that it may be declared that there was no sale in favour of the first respondent which in other words means that the sale was a nullity and that the said sale be set aside. Mr. Justice Nain dismissed that Chamber summons by his said Order dated 2nd November, 1970. The appellant has hence appealed against that Order.

(3.) Before dealing with the rival contentions of the parties, it is necessary to first set out all the necessary facts in greater detail.