Munisami Mudaliar vs Subbarayar and Others

Wallis, J.—I agree with the conclusion arrived at on the evidence, by the Subordinate Judge, that the deed, Exhibit G executed by the 2nd

defendant in favour of his ''son 1st defendant, and of his other son, the deceased husband of the 3rd defendant, was a benami transaction entered

into with a view to defraud the creditors of the 2nd defendant, but it does not appear that any of the creditors was in fact defrauded, and under

these circumstances the question before me is whether a suit for specific performance of a contract by the 1st defendant to sell the lands included in

Ex. G to the plaintiff can be successfully resisted by the 2nd defendant so far as regards his share in the lands is concerned on the ground that Ex.

G was a mere benami transaction? If any creditor had been defrauded be would, it is well settled, have been debarred from going behind Ex. G.

Rangammal v. Venkatachari ILR (1895) M. 378 and Yaramati Krishnayya v. Chandru Bapayya ILR (1897) M. 326 - but where the fraud has not

been carried into effect he is not so debarred according to the decision of Lord Romilly M.R. in Symes v. Hughes (1870) L.R. 9 Eq. 475 and of

the Court of Appeal in Taylor v. Bowers. (1876) 1 Q.B.D. 291. Following these decisions, Section 84 of the Indian Trusts Act provides that

where the owner of property transfers it to another for an illegal purpose, and such purpose is not carried into execution, the transferee must hold

the property for the benefit of the transferor. In my opinion this section sufficiently declares the law and policy which ought to guide us in India and

it is therefore immaterial that subsequently to the passing, doubts have been expressed by the Court of Appeal in Kearley v. Thomson (1890) 24

Q.B.D. 742 as to the soundness of the rule of law embodied in the section. This rule was recognised by Subrahmanya Aiyar J. in Rangammal v.

Venkatachari ILR (1895) M. 378. The provisions of Section 84 of the Indian Trusts Act are not referred to in the judgment of Benson J. in

Yaramati Krishnayya v. Chandru Papayya ILR (1897) M. 326 and in so far as that judgment lays down a stricter rule than is embodied in-the

section, I am unable to agree with it. That case, it should be further observed, was disposed of by Subrahmanya Aiyar J., the other judge, on other

grounds. The Indian decisions on this question have been reviewed in great detail in fadu Nath Poddar v. Rup Lal Poddar ILR (1896) C. 967

relied on for the appellant. It does not come within the rule, as there the illegal purpose had been carried into execution and a decree-holder, it was

found, had been cheated out of his just rights. The question argued in that case was whether in such case the rule, which debars a plaintiff from

obtaining relief on the ground of his own fraud, equally debars a defendant from pleading it in answer to a suit against him. The answer which was

in the affirmative does not affect the present question, and it is to be observed that the learned Chief Justice who delivered the judgment of the

Court was one of the judges who decided Goberdhan Singh v. Ritu Roy ILR (1896) C. 962 in which the distinction between cases in which the

fraud has or has not been carried into effect was recognised. For these reasons, I am of opinion that the appeal must be dismissed with costs.

Sankaran Nair J.,

I agree.