specific performance suit - Vs- the Securitisation and Reconstruction of Financial Assets and Enforcement Act = The appellant filed O.S.No.371 of 2011 against the 1st respondent in the Court of I Additional District Judge, Visakhapatnam for the relief of specific performance of an agreement of sale, dated 23.08.2008 in respect of the suit schedule property. The property was mortgaged by the 1st respondent with the 2nd respondent. During the pendecny of the suit, the 2ndrespondent initiated proceedings under the Securitisation and Reconstruction of Financial Assets and Enforcement Act (for short ‘the Act’) against the 1st respondent. In view of this development, the appellant filed I.A.No.1045 of 2011 under Order 39 Rules 1 and 2 C.P.C. with a prayer to restrain the 2nd respondent from proceeding against the property, including by way of sale. = It is a matter of record that the property is under mortgage to the 2nd respondent. The mere pendency of the suit cannot disable the 2nd respondent from enforcing the mortgage. At the same time, the 1st respondent cannot be permitted to defeat the rights of the appellant by permitting the property to be sold in favour of third parties. The appellant expressed his bona fides by stating that he is prepared to liquidate the loan, for which the property is offered as security. He has also made a deposit of Rs.20,00,000/- in compliance with the interim order passed by this Court.= Hence, the appeal is allowed and the order under appeal is set aside. The I.A. is partly allowed directing that it shall be the obligation of the 1st respondent to settle the dispute pertaining to the mortgage of the property with the 2nd respondent, in such a way, that the property is not put to sale. In case, it becomes inevitable to sell the property, it shall be open to the appellant to negotiate with the 2nd respondent within three months and clear the debt to protect the property. Such arrangement shall be without prejudice to the rights of the parties. The trial Court shall endeavour to dispose of the suit as early as possible, preferably within six months from the date of receipt of a copy of this order.

THE HON’BLE SRI JUSTICE L.NARASIMHA REDDY

AND

THE HON’BLE SRI JUSTICE K.G.SHANKAR

C.M.A.No.363 of 2013

JUDGMENT: (Per LNR, J)

          The appellant filed O.S.No.371 of 2011 against the 1^st respondent in the Court of I Additional District Judge, Visakhapatnam for the relief of specific performance of an agreement of sale, dated 23.08.2008 in respect of the suit schedule property. The property was mortgaged by the 1^st respondent with the 2^nd respondent.  During the pendecny of the suit, the 2^ndrespondent initiated proceedings under the Securitisation and Reconstruction of Financial Assets and Enforcement Act (for short ‘the Act’) against the 1^st respondent. 

In view of this development, the appellant filed I.A.No.1045 of 2011 under Order 39 Rules 1 and 2 C.P.C. with a prayer to restrain the 2^nd respondent from proceeding against the property, including by way of sale.  It was pleaded that if there exists any liability towards the 2^nd respondent, the consideration for the property can be adjusted towards it and that in the process of enforcing the mortgage, his rights cannot be defeated.  The I.A. was contested by respondents 1 and 2. The trial Court dismissed the I.A., through its order, dated 12.10.2011.  Hence, this appeal under Rule 1 of Order 43 C.P.C.

          Heard learned counsel for the appellant and learned counsel for the respondents.

          The appellant bases his claim upon an agreement of sale.  The 1^st respondent however has seriously disputed the very existence of such an agreement.  The question as to whether the agreement of sale, pleaded by the appellant is genuine; needs to be considered at the trial of the suit.

          It is a matter of record that the property is under mortgage to the 2^nd respondent.  The mere pendency of the suit cannot disable the 2^nd respondent from enforcing the mortgage.  At the same time, the 1^st respondent cannot be permitted to defeat the rights of the appellant by permitting the property to be sold in favour of third parties. The appellant expressed his bona fides by stating that he is prepared to liquidate the loan, for which the property is offered as security.  He has also made a deposit of Rs.20,00,000/- in compliance with the interim order passed by this Court.

          We ascertained from the 1^st respondent as to whether he is prepared to pay the mortgage debt and ensure that the property is not sold in favour of third parties.  He stated that he would liquidate the loan by himself without taking any help from the appellant.

          Hence, the appeal is allowed and the order under appeal is set aside.  

The I.A. is partly allowed directing that it shall be the obligation of the 1^st respondent to settle the dispute pertaining to the mortgage of the property with the 2^nd respondent, in such a way, that the property is not put to sale.  

In case, it becomes inevitable to sell the property, it shall be open to the appellant to negotiate with the 2^nd respondent within three months and clear the debt to protect the property.  

Such arrangement shall be without prejudice to the rights of the parties.  The trial Court shall endeavour to dispose of the suit as early as possible, preferably within six months from the date of receipt of a copy of this order. 

          The miscellaneous petition filed in this appeal shall also stand disposed of.  There shall be no order as to costs.

______________________

L.NARASIMHA REDDY, J

_________________
K.G.SHANKAR, J

Date: 12.04.2013

JSU

THE HON’BLE SRI JUSTICE L.NARASIMHA REDDY

AND

THE HON’BLE SRI JUSTICE K.G.SHANKAR

 

 

 

 

 

 

 

 

 

 

 

 

C.M.A.No.363 of 2013

Date: 12.04.2013

JSU