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Judgment
413 paragraphs · 9,138 wordsSwamikkannu, J
The Defendant Rajammal in O.S. No. 389 of 1976 on the file of the Court of the learned Principal Subordinate Judge, Salem, is the appellant in
A.S. No. 597 of 1978. The defendant Palaniappan in O.S. No. 391 of 1976 on the file of the Court of the learned Principal Subordinate Judge,
Salem, is the appellant in A. S. No. 598 of 1978.
O.S. No. 389 of 1976 is a suit filed by the plaintiff Raman Kutty, in form a pauperis, against the defendant Rajammal for a decree declaring the
sale deed executed in favour of the defendant as nominal and for directing the defendant to deliver possession of the suit property.
O.S. No. 391 of 1976 is a suit filed by the same plaintiff Raman Kutty, in forma pauperis, against the defendant Palaniappan for a decree
declaring the sale deed executed in favour of the defendant as nominal and for directing the defendant to deliver possession of the suit property.
Both the suits 0. S. No. 389 of 1976 and O.S. No. 391 of 1976 were disposed of by the Court of the learned Principal Subordinate Judge,
Salem, by a common judgment dated 30th June, 1978. These two suits were jointly tried by the learned Principal Subordinate Judge, Salem, as
the parties to both the suits filed a memo to that effect, and evidence was recorded in O.S. No. 389 of 1976.
The two suits have been filed by the same plaintiff as against the defendants in the two suits, namely, Rajammal in O.S. No. 389 of 1976, and
Palaniappan in O.S. No. 391 of 1976, who are husband and wife respectively, and the properties involved in both the suits and comprised in the
two disputed sale deeds, both dated 7-3-1973, are practically the common property. The mortgage deeds executed by the plaintiff in favour of the
mortgages, referred in the pleadings in the two suits, are to the extent of Rs. 60,000/- for the principal amount. The matters covered by the two
suits for consideration and decision also are practically the same, though there are two sale deeds executed. Therefore, the trial court clubbed the
two suits together and tried jointly. The issues framed in the two suits were taken up together by the trial Court for consideration as the disputes
are relating to the sale deeds, both dated 7-3-1973 marked as Exhibits A.2 and A.3 in this case executed by the plaintiff in favour of the two
defendants. So, we are also disposing of both these appeals A.S. Nos. 597 and 598 of 1978 together by a common judgment.
The case of the plaintiff in O.S. No. 389 of 1976, as stated in the amended plaint, is as follows : -
The suit properties originally belonged to the plaintiff. The plaintiff sold the property to the defendant on 7-3-1973 for Rs. 40,000/- under a
registered sale deed. The plaintiff had mortgaged the property to one Krishnan Chettiar for Rs. 28,000/- and to one Palaniammal for Rs. 10,000/-.
There was municipal tax due of Rs. 1192-02 on the property. At the time of the sale it was clearly agreed by the defendant in this suit that she
should discharge the above said mortgages to the mortgages above mentioned, and only on that condition the sale deed was executed. But the
defendant failed to fulfil the sale condition. The mortgages- Krishnan Chettiar and Palaniammal have issued registered notices on 5-10-1974 and
2-10-1974 respectively to the plaintiff stating that the mortgage amounts have not yet been cleared. The plaintiff approached the defendant and
asked her to clear the mortgage debts as agreed by her in the sale deed. In spite of his repeated demands and a registered notice dated 10- 12-
1975 the defendant has not chosen to clear the debts. Now the defendant has neither means nor the intention to clear the above said mortgage
loans and her entry into the deed is only a fraud committed on the plaintiff to grab his property for a much lesser value. Therefore the plaintiff has
come forward with a suit to set aside the sale deed dated 7-3-1973 by the plaintiff in favour of the defendant''. The suit property was worth more
than Rs. 1.5 lakhs on the date of sale. As the mortgages started insisting on the payment of the mortgage amounts, this sale in favour of the
defendant was executed nominally as the defendant agreed to discharge the mortgage debts immediately and reconvey the property back to the
plaintiff formally on the payment of the amounts discharged towards the mortgage. The property was also put in possession of the defendant for
enjoyment in lieu of interest for the amounts to be paid by the defendant to the mortgages. As against this agreement, the defendant has not
discharged the mortgage debts and is in unlawful possession of the suit property. The sale in favour of the defendant is only nominal and no title
passed to the defendant in the circumstances mentioned above,
In her written statement, the defendant appellant herein inter alia, contended as follows: - It is true that the suit properties originally belonged to the
plaintiff and that fie has sold them to this defendant by means of a registered sale deed dated 7-3-1973 for Rs. 40,000/-. Prior to the above said
sale, the plaintiff had borrowed amounts on mortgages from Krishna Chetty and Palaniammal. It is also true that there were arrears of municipal
house-tax in respect of the suit properties. The debts are secured debts and the sale transaction between the plaintiff and the defendant fructified
with the knowledge and consent of the mortgages. It is also true that the defendant had undertaken as per the recitals of the sale deed to discharge
the mortgage debts and also to pay the arrears of municipal tax. The defendant is bound by the recitals of the sale deed. Besides the consideration
mentioned in the sale, deed, the plaintiff has been for quite sometime before the sale deed the recipient of benefits from t lie defendant. If the
interest has been paid to the mortgages till the date of sale deed it was only out of the funds of the defendant. They are not made part of the
consideration for sale as it was felt not necessary. The plaintiff had no stake in the sale transaction. The burden is on the defendant to have the
debts discharged and as the debts ore secured ones, the plaintiff has no personal obligation or liability. It is the look out of the mortgages to realise
their money due, if any, from out of the mortgage properties. As the plaintiff has transferred all his interest in the suit properties to the defendant, he
has no concern whatsoever about the discharge of debts. It is a matter between the mortgages and the defendant. One of the mortgages has filed a
suit on mortgage against the defendant and another in O.S. No. 285 of 1975. The suit stands stayed in pursuance of the Debt Relief Act of the
Tamil Nadu Government. The defendant is entitled to the benefits of the Debt Relief Act as she is an agriculturist. The mortgages cannot harass the
defendant as long as the Act is in force. Having failed in their attempts to coerce and harass the defendant to discharge the debts. I hey have set up
the plaintiff to file the frivolous suit. The allegation that the defendant has no means to discharge debts is denied. The defendant has other properties
also, besides the suit properties; further the plaintiff has no business or concern about the capacity of the defendant to discharge the debt. After the
purchase, the defendant had made improvements to the suit properties and she has spent a lot on account of that. Due to the best upkeep and
improvements effected by the defendant, the suit properties are now worth more. So it is nothing but a futile attempt on the part of the plaintiff to
make unlawful gains at the cost of the defendant, through the suit.
In her additional written statement, the defendant-appellant therein further contended as follows : - The allegations in para 4-A of the amended
plaint are not admitted. They are falsely made to suit the case of the plaintiff as an afterthought. The defendant does not admit that the suit property
was worth more than Rs. 1.5 lakhs on the date of sale. It is false to allege that the said sale was nominal. The defendant denies the allegations that
there was agreement to reconvey the property to the plaintiff on payment of the amounts discharged towards the mortgage. It is false to say that
possession of the property was given to the defendant for enjoyment in lieu of interest. The sale is an outright, absolute and perfect one supported
by valid and valuable consideration. There was no agreement, either oral or written, outside the purview of the document of sale. The defendant is
in possession and enjoyment of the suit property as absolute owner. The plaintiff has no interest or right whatsoever over the suit properties. In
para 3 of the plaint, the plaintiff has admitted execution of the sale deed in favour of the defendant for Rs. 40,000/-. The allegation of some
agreement outside the document to reconvey the property is made for the first time in the amendment. It was not the case of the plaintiff either in
his original pleadings or in any of the notices exchanged between them. The plaintiff has never alleged in any of the notice or in the original
pleadings that the sale was nominal and that the defendant''s enjoyment of the property is in lieu of interest. The allegations in Paras 3 and 4 of the
plaint are conflicting and contradictory to each other. The plaintiff asserts that the suit property (was) worth more than Rs. 1.5 lakhs in March,
1973 itself. So the market value should necessarily be much more than that according to the plaintiff himself. The court fee ought to have been paid
as per the assessment of the market value by the plaintiff. The plaintiff has no cause of action to file the suit.
On the above pleadings, the trial court framed the following issues for trial : -
(1) Whether the sale deed dated 7-3-1973 in favour of the defendant is nominal and was not acted upon?
(2) Whether the plaintiff is entitled to the declaration prayed for?
(3) Whether the plaintiff is entitled to possession of the suit property?
(4) To what relief is the plaintiff entitled?
The case of the plaintiff in O.S. No. 391 of 1976 as stated in the amended plaint, is as follows :- The suit property originally belonged to the
plaintiff. The plaintiff sold the property to the defendant on 7-3-1973 for Rs. 20,000/- under a registered sale deed. The plaintiff had mortgaged
the property to (1) Sundarambal for Rs. 12,000/- and (2) Natesan for Rs. 8,000/-. At the time of the sale it was clearly, agreed by the defendant
that he should pay the above said mortgage amounts to the mortgages abovementioned. Only on that condition the sale deed was executed. But
the defendant failed to fulfil the sale condition. The said mortgage Sundarambal has issued a registered notice to the plaintiff on 30-9-1974 stating
that the mortgage amount has not yet been cleared. The other mortgage debt has not yet been cleared. The plaintiff approached the defendant and
asked him to clear the mortgage debts as agreed by him in the said deed. In spite of his repeated demands and a registered notice dated 10-12-
1973 the defendant has not chosen to clear the debts. Now the plaintiff understands that the defendant has neither means nor the intention to clear
the above said mortgage debts and his entry into the deeds is only a fraud committed on the plaintiff to grab his property for a much lesser value.
Therefore the plaintiff has come forward with a suit to set aside the sale dated 7-3-1973 by the plaintiff in favour of the defendant. The property
was worth more than Rs. 75,000/- on the date of sale. As the mortgages started insisting on the payment of the mortgage amounts, this sale in
favour of the defendant was executed nominally as the defendant agreed to discharge the mortgage debt immediately and reconvey the property
back to the plaintiff formally on the payment of the amounts discharged towards the mortgage. The property was also put in possession of the
defendant for enjoyment in lieu of interest for the amounts to be paid by the defendant to the mortgages. As against this agreement, the defendant
has not discharged the mortgage debts and is in unlawful possession of the suit property. Hence the defendant is bound to redeliver the suit
property to the plaintiff. The sale in favour of the defendant is only nominal and no title passed to the defendant in the circumstances mentioned
above, and the sale deed was executed in the circumstances mentioned supra.
In the written statement filed by the defendant in this suit, it is, inter alia, contended as follows : - It is true that the suit properties originally
belonged to the plaintiff and that he has sold them to this defendant by means of a registered sale deed dated 7-3-1973 for Rs. 20,000/-. Prior to
the above said sale, the plaintiff had borrowed amounts on mortgages from Krishnan Chetty and Palaniammal. It is also true that there were arrears
of municipal house-tax in respect of the suit properties. The debts are secured debts and the sale transaction between the plaintiff and the
defendant fructified with the knowledge and consent of the mortgages. It is also true that the defendant undertook as per the recitals of the sale
deed to discharge the mortgage debts and also to pay the arrears of municipal tax. The defendant is bound by the recitals of the sale deed, Besides
the consideration mentioned in the sale deed, the plaintiff has been for quite some time before the sale deed the recipient of benefits from the
defendant. If the interest has been paid to the mortgages till the date of sale deed, it was only out of the funds of the defendant. They are not made
part of the consideration for sale as it was felt not necessary. The plaintiff had no stake in the sale transaction. The burden is on the defendant to
have the debts discharged, and as the debts are secured ones, the plaintiff has no personal obligation or liability. It is the lookout of the mortgages
to realise their money due if any from out of the mortgage properties. As the plaintiff has transferred all his interest in the suit properties to the
defendant, he has no concern whatsoever in the discharge of debts. It is a matter between the mortgages and the defendant. As a matter of fact
one of the mortgages has filed a suit on mortgage against the defendant and another in O.S. No. 285 of 1975. The suit stands stayed in pursuance
of the Debt Relief Act of the Tamil Nadu Government. The defendant is entitled to the benefits of the Debt Relief Act as he is an agriculturist. The
mortgages cannot harass the defendant as long as the Act is in force. Having failed in their attempts to coerce and harass the defendant to
discharge the debts, they have set up the plaintiff to file the frivolous suit, The allegation that the defendants has no means to discharge the mortgage
debts is denied. The defendant has other properties, besides the suit properties. The plaintiff has no business or concern about the capacity of the
defendant to discharge the debts. After the purchase the defendant has made improvements to the suit properties and he has spent a lot on account
of that. Due to the best upkeep and improvements effected by the defendant, the suit properties are now worth more. So it is nothing but futile
attempt on the part of the plaintiff to make unlawful gains at the cost of. the defendant, through this suit. There is no cause of action for the suit.
1h his additional written statement, the defendant, inter alia, contended as follows :- The allegations in para 4A of the amended plaint are not
admitted. They are falsely made to suit the case of the plaintiff as an afterthought. The defendant does not admit that the suit property was worth
more than Rs. 1.5 lakhs on the date of sale. It is false to allege that the sale deed was nominal. The defendant denies the allegation that there was
agreement to reconvey the property to the plaintiff on payment of the amounts discharged towards the mortgages. It is false to say that possession
of the property was given to the defendant for enjoyment in lieu of interest. The sale is an outright, absolute and perfect one, supported by valid
and valuable consideration. There was no agreement, either oral or '' written, outside the purview of the document of sale. The defendant is in
possession and enjoyment of the suit property as absolute owner. The plaintiff has no interest or right whatsoever in the suit properties. In para 3 of
the plaint, the plaintiff has admitted the execution of the sale deed in favour of the defendant for Rs. 40,000/-. The allegation of some agreement
outside the document to reconvey the property is made for the first time in the amendment. It was not the case of the plaintiff either in his original
pleadings or in any of the notices exchanged between them. The plaintiff has never alleged in any of the notice or iii the original pleadings that the
sale was nominal and that the defendant''s enjoyment of the property is in lieu of interest. The allegations in paras 3 and 4A of the plaint are
conflicting and contradictory. The plaintiff asserts that the suit property was worth more than Rs. 75,000/- in March, 1973 itself. So the market
value should necessarily be much more than that, according to the plaintiff himself. Court-fee ought to have been paid as per the assessment of the
market value by the plaintiff. The suit as framed is not maintainable.
On the above pleadings in the suit O.S. No. 391 of 1976, the following issues were framed for trial by the trial court : -
(1) Whether the sale deed dated 7-3-1973 in favour of the defendant is nominal and was not acted upon?
(2) Whether the plaintiff is entitled to the declaration prayed for?
(3) Whether the n1aintiff is entitled to possession of the suit property?
(4) To what relief is the plaintiff entitled?
On behalf of the plaintiff in both the suits, the plaintiff-Raman Kutty was examined as P.W.I. P.W.2 Sheik Khadar, P.W.3. R. Swarninathan,
and P.W.4 Sadasivam Pillai were also examined on behalf of the plaintiff. On behalf of the defendants D.W.1 Arumugham and DAV.2
Palaniappan (defendant in O.S. No. 39 1 of 1976) were examined. On behalf of the plaintiffs. Ex.A. I registration copy of the sale deed dated 7-
3-1973 for Rs. 40,000/executed by the plaintiff in favour of Rajammal, and Ex.A.2 registration copy of sale deed dated 7-3-1973 for Rs.
20,000/-'' executed by the plaintiff in favour of the Palaniappan were filed. Exhibits A.3 to A.10 were also filed on behalf of the plaintiff. Exhibits
B.1 to B.15 were filed on behalf of the defendants. Ex.13.2 is the registration copy of sale deed dated 7-3-1973 for Rs. 40,000/- executed by
Ram-an Kutty in favour of Rajammal, and Ex.13.3 is the registration copy of sale deed dated 7-3-1973 for Rs. 20,0(X)/- executed by Raman
Kutty in favour of Palaniappan.
Under Issues Nos. (1) and ( 2) in both the suits, the trial court held that for Exhibits B.2 and B.3, no cash consideration passed from the
named respective vendees therefore to the plaintiff, the named vendor. The trial Court further held that the municipal tax registry and the receipts
for the payment of tax by each of the defendants after the alleged sales have to be only in the name of the vendees as the apparent owners thereof
as the apparent intention was to execute some sort of a document though nominally and without any intention to transfer title, to make some sort of
arrangement to pay off the debts. According to the trial Court, the two sale deeds, Exhibits B.2 and B.3, are not Supported by any consideration,
except that the two documents have been executed, as such sale deeds. The trial court also held that possession was not given in pursuance of
Exhibits B.2 and B.3. It has also observed that the properties were worth at least double the value of the consideration recited in Exhibits B.2 and
B.3, and that the case of the plaintiff is probabilised regarding the nominality of the sale deeds Exhibits B.2 and B.3. The trial Court further
observed that it is clear that the real intention of executing the sale deeds by the plaintiff in favour of the two defendants was only to make up for
that sort of arrangement, without any intention to transfer the title to the properties, and by that discharge the debts under the mortgages. In other
words, the trial Court found the two issues in favour of the plaintiff respondent herein in both these appeals. The relief of declaration prayed for
regarding the two sale deeds was granted by the trial Court.
Under issue No. (3), in both the suits, the trial Court found that the plaintiff is the owner of the property, and not the two defendants, and
consequently the plaintiff will be entitled to recover possession of the properties as well.
Under issue No. (4) in both the suits, the trial Court decreed the two suits as prayed for in favour of the plaintiff with costs as against the
defendants in the two suits. The defendants in the two suits were directed to pay the court-fees due on the plaints to the Government.
Aggrieved by the above common judgment and decree of the trial Court, the defendant - Rajammal in O.S. No. 389 of 1976 has preferred
A.S. No. 597 of 1978, and the defendant - Palaniappan in O.S. No. 391 of 1976 has preferred N.S. No. 598 of 1978 before this Court.
On behalf of the defendants -appellants in both these appeals, Mr. Sivasubramaniam, contends that there is consideration for the two sale
deeds, Exhibits B.2 and B.3, and as such the respective sale deeds cannot be held to be sham or nominal. Merely on the ground that the price is
disproportionate to the real market value, the sale cannot be set aside. It is further contended that the trial Court erred in holding that possession
has not passed to the respective defendants. The trial Court erred in brushing aside, without any reason whatsoever, the recitals in the two sale
deeds Exhibits B.2 and B.3 to the effect that possession had been delivered to the vendees.
On the other hand, Mr. N. C. Raghavachari, learned counsel for the respondent plaintiff in both the appeals contends that the trial Court had
properly appreciated the evidence and came to the correct conclusion that the sale transactions under Exhibits B.2 and B.3 sale deeds, are
nominal.
The following points arise for determination in both these appeals :-
(1) Whether the sale deeds - Exhibits B.2 and B.3 dated 7-3-1973 in favour of the respective defendants are nominal and were not acted upon;
and
(ii) Whether the plaintiff in both the suits is entitled to the declaration prayed for.
Points Nos. (i) and (ii).
The matter concerning these two points are regarding the two sale deeds -Exhibits B.2 and B.3 admittedly executed by the plaintiff in the two
suits in favour of the defendants in the two suits who are husband and wife viz., the defendant in O.S. No. 389 of 1976 being the wife of the
defendant in O.S. No. 391 of 1976. The execution of the two sale deeds are admitted. The plaintiff contends that the documents namely the sale
deeds were nominally executed in the names of the two defendants in the two suits only in order to pay off the mortgage debts over the suit
properties. admittedly, borrowed by the plaintiff in respect of the entirety of the property by executing mortgage deeds and covered by the two
sale deeds - Exhibits B.2 and B.3 which property is the subject matter of the suits. On the other hand, the defendants appellants in the two appeals
would contend that the sale deeds are true and valid sale deeds and have been executed as'' such, that they are supported by consideration and
that they were not executed nominally. It is relevant to note that the property is but one common property though two sale deeds have been
executed, one in the name of Palaniappan, and another in the name of his wife Rajammal.
The relevant portion of Exhibit B.2 registration copy of sale deed dated 7-3-1973 for Rs. 40,000/- executed by Raman Kutty in favour. of
Rajammal defendant-appellant in A.S. No. 597 of 1978 reads as follows
(Matter in vernacular omitted - Ed)
The relevant portion of Ex. B3 registration copy of sale deed, dated 7-3-1973 for Rs. 20.00 executed by Raman Kutty in favour of
Palaniappan defendant-appellant in A.S. no. 598 of 1978 reads as follows : -
(Matter in vernacular omitted - Ed)
In the document Ex.B.2, apart from mentioning, the mortgage debts of Rs. 38,000/due to Krishna Chettiar and another, it is also stated that
there is a balance of Rs. 1, 192.02 payable as arrears of municipal tax and that the balance of Rs. 807.98 is paid on the date of two sale deeds.
The sum of Rs. 807.98 is shown as money having been paid by Palaniappan, appellant in A.S. No. 598 of 1978 to the plaintiff-respondent herein.
D.W.2 states in his evidence that he paid the said sum of Rs. 807.98 on the date of sale.
P.W. I Raman Kutty states in his evidence that it was he who purchased stamp papers for Exhibits B.2 and B.3 and he paid registration
charges. The stamp papers stand in the name of Rajammal and Palaniappan respectively. The payment of registration expenses appear to have
been made by Palaniappan and Rajammal, the appellants herein.
Ex.B.4 dated 30-6-1977 is a patta transfer proceeding of the Special Tahsildar, Salem, to the defendants in both the suits. The relevant
portion of the said document reads as follows : -
(Matter in vernacular omitted - Ed)
Ex.B.5 dated 30-6-1977 is a patta transfer proceeding of the Special Tahsildar, Salem, to the defendants in both the suits. The relevant
portion of the said document leads as follows :
(Matter in vernacular omitted - Ed)
It is pointed out on behalf of the appellants that P.W. I Raman Kutty stated in his evidence that there was a panchayat in which one Sheik
Khader, A.V.M. Ramaswami Chettiar, and Sukumar took part and in that panchayat it was decided that the properties have to be sold nominally
in favour of Palniappan, yet with respect to the same there is no specific mention in the plaints. It is also contended on behalf of the appellants that
though P.W.1 Raman Kutty stated in his evidence that no cash was paid to him with respect to Exhibits B.2 and B.3 as consideration, inasmuch as
there is undertaking on the part of the appellants for discharging the mortgage debts, the said undertaking would serve as sufficient consideration
for the respective . sales. .According to P.W.2 on the date of panchayat itself Exhibits B.2 and B.3 were written. The plaintiff was residing in the
property sold under r:''x.13.3 and that the plaintiff had vacated the said premises and delivered possession to the appellants.
P.W.4 Sadasivam Pillai had attested Fxhibits B.2 and B.3. According to him, the sale deeds were executed only nominally and no cash was
given to the vendor by the vendees as price. He is a document writer by profession.
D.W.1 Arumugham states in his evidence that he is a document-writer and that he wroto Exhibit6 B.2 and B.3. As per the details given by
P.W.1 Raman Kutty, the contents of the documents were written by D.W.1 Arumugham, The documents were written in the lodge belonging to P.
W. 1 Raman Kutty. At that time, apart from the parties to the documents, attesters; of the documents were also available at that place. The stamp
papers were purchased and brought by Palaniappan, appellant in A.S. No. 598/1978. The specific evidence of D.W. I is that a sum of Rs. 800/-
and odd was paid in cash by Palaniappan to Raman Kutty.
D.W. 2 Palaniappan, appellant in A.S. No. 598 of 1978 states in his evidence that Ex. B.2 sale deed was executed in favour of his wife by
Raman Kutty, respondent herein. and that Ex. B. 3 sale deed was also executed in his favour by Raman Kutty, respondent herein. The price for
which these two sale deeds were executed is Rs. 60,000/-. At the time of the execution of the sale deeds. D.W. 2 Palaniappan gave Rs. 800/- and
odd in cash to the respondent herein. At that time there were arrears of municipal taxes to the tune of Rs. 1000/- and odd.
With respect to the properties sold under Exhibits B.2 and B.3, a sum of Rs. 58,000/- was payable to the mortgages towards the mortgage
debts incurred by the respondent herein. There is no undertaking on the part of the appellants to re-convey the properties in favour of the
respondent herein, after the mortgage debts are paid by the respondent herein. At the time of Exhibits B.2 and B.3 the respondent herein was in
occupation of the property in question. On the (late of the sale deeds the respondent herein vacated the property in question and gave possession
to the assailants. At the time of execution of the sale deeds, one Kamal Batcha was having a factory in a portion of the suit property. D.W.2
Palaniappan paid the advance amount of Rs. 1,000/- to the said Kamal Batcha and obtained Ex.13.1 receipt. The registration charges for Exhibits
B.2 and B.3 were paid by D.W.2 Palaniappan. When the respondent asked money for payment of interest, D.W.2 paid Rs. 1,000/- to P.W.1
Raman Kutty. The mortgages told D.W.2 that towards mortgage debts, if a sum of Rs. 58,000/- is paid they would be satisfied.
Mr: Sivasubramaniam, learned counsel for the appellants refers to the provisions under Ss. 54 and 55 of the T.P. Act, 1882. S. 54 of the T. P.
Act, 1882 reads as follows : -
""Sale"" is a transfer of ownership in exchange for a price paid of promised or part paid and part promised.
Such transfer, in the case of tangible immovable property of the value of one hundred rupees and upwards, or in the case of a reversion or other
intangible thing, can be made only by a registered instrument.
In the case of tangible immovable property, of a value less than one hundred rupees, such transfer may be made either by a registered instrument
or by delivery of the property.
Delivery of tangible Immovable property takes place when the seller places the buyer, or such person as he directs, in possession of the property.
A contract for the sale of Immovable property is a contract that a sale of such property shall take place on terms settled between the parties.
It does not, of itself, create any interest. in or charge on such property.
Section 55(4)(b) of the T.P. Act, 1882reads as follows : -
55(4)(b). The seller is entitled.... where the ownership of the property has passed to the buyer before payment of the whole of the purchase-
money, to a charge upon the property in the hands of the buyer, any transferee without consideration or any transferee with notice of the non-
payment, for the amount of purchase money or any part thereof remaining unpaid, and for interest on such amount or part from the date on which
possession has been delivered.
The learned counsel for the appellants refers to the decision in Official Receiver of Salem Vs. Chinna Goundan and Another, , for the following
propositions (at p. 63 1) : --
. The mere fact that there is a recital that the consideration had been received while as a matter of fact it has not been received is not enough to
show that no consideration was intended to pass and that the document was a bogus one executed gratuitously. Specific evidence of a convincing
nature must be adduced to show that a document reciting the payment of consideration was really executed for no consideration and that no
consideration was intended to be paid.
A careful scrutiny should be made of the circumstances to see whether the purchaser is a lucky purchaser or a fraudulent purchaser. Inadequacy of
consideration by itself will not prove any fraud
The learned counsel for the appellants refers to the decision in Hiralal Agarwala Vs. Bhagirathi Gore and Others, for the following proposition
(at p. 449) : -
Merely showing the difference in price between the two sale deeds relating to the same property, executed at different times, it cannot be said that
the subsequent purchase at a reduced price must be collusive and as such it cannot be said to be a bona fide one. On the contrary, the mala fide
purchaser generally inflates the price...
The learned counsel for the appellants refers to the decision in Ramdhari Rai Vs. Gorakh Rai, . for the following proposition : -
......The title passes, on the execution and registration of a sale deed, though the purchase money may remain wholly or partly unpaid except
where there is an agreement that the sale should take effect only if the consideration is first paid. After registration, the purchaser can maintain a suit
against the vendor for possession of the property sold notwithstanding non-payment of the purchase money.
The decision in Nagar Khan and Others Vs. Gopi Ram Agarwala, , is relied on for the following propositions (at p. 4) : -
..... Under, the contract, to transfer under S. 53A it is not necessary that the consideration mentioned for the transfer of the property must pass in
presents. All that is necessary is that the contract must be a lawful anti enforceable contract.
It is open to the parties to settle the terms with respect to the payment of the consideration which can be agreed by parties to be paid either at the
time of (i) the agreement itself, (ii) execution of the sale deed, (iii) re6stration of the sale deed, (iv) exchange of equivalent or by several other
modes or at any future time subsequent to the execution and the registration of the document itself. If the title has been intended to pass on the
execution of the sale deed, the only remedy in case of non-payment of the consideration available to a vendor is to bring a suit for recovery of the
consideration. It is, therefore, not possible to read the expression ""contracts to transfer for consideration"" occurring in S. 53A in violation of the
provision contained in S. 54A .........
The decision in Ramaswami v. Jagarnnadha Rao AIR 1962 Andh.Pra 94 is relied on by the learned counsel for the appellants for the following
proposition (at p. 97) : -
........ When once execution is proved, recitals of payment of consideration are prima facie proof of it against the executants or persons claiming
under him.
The decision in Chandrasekhar Praharaj and Others Vs. Pitambari Dibya, is relied on by the learned counsel for the appellants for the
following proposition (at pp. 323 & 325) :-
........When a sale deed is executed and registered there is a ''prima facie'' completion of transfer of title to the vendee. The mere non-payment of
consideration will not arrest the passing of the title as a sale of immovable property may be effected in exchange for the price paid, or promised to
be paid. But whether the vendor really intended to transfer ownership by mere execution and registration, or contracted to do so only after receipt
of consideration as a condition precedent, would depend upon the terms of the contract between the parties. If there is a stipulation in the sale
deed, itself that title to and ownership of the property would vest in vendee after payment of the purchase money the reasonable inference would
be that until the condition is fulfilled there is no effective transfer of ownership. In such cases. intention is not to transfer ownership unless
consideration is paid. To gather the intention of the parties the court is bound to took to the terms of the contract and not to speculate as to the
intention from evidence ''dehors'' the instrument. The only evidence that the Court will took into is that afforded by what the parties have said and
evidence aliened is not admissible to prove their intention if the language employed is un ambiguous.
But, if the recital is clear that the receipt of consideration and the transfer of title should be simultaneous or that the sale is made in exchange for the
price and the vendee is made the owner and put in possession after realization of the entire consideration the only inference should be that one is
dependent on the other. If the recital about the receipt of consideration is proved to be incorrect a latent ambiguity arises and if the circumstances
show that the consideration was not, in fact, paid it would follow that the intention of the parties was not to affect a transfer of ownership by the
mere execution or registration of the document ....."".
Mr. Sivasubramaniam, learned counsel for the appellants, refers to the decision in Gurubari v. Dulani AIR 1971 Orissa 147 for the following
proposition : -
Where the parties agree that the title would pass even though the payment is deferred, the title must be deemed to have passed even without
passing of consideration.
The decision in Bai Asmalbai Vs. Esmailji Abdulali and Others, is relied on by the learned counsel for the following proposition : -
The finding that the particular sale deed is sham or fictitious is a finding of fact. It is, therefore, open to the Court to hold that notwithstanding the
execution and registration of a particular document purporting to he a sale deed, there is, in fact, no sale, in view of the definition of sale in S. 54 of
the T. P. Act. But the idea that there can be no sale unless the consideration is fully paid, is contrary to the provisions of S. 54 of the T.P. Act. If
there was an intention to transfer the ownership to the transferee, one cannot call the transfer sham and bogus. The burden is on the plaintiff who
avers the sale to be sham to prove that there was no transfer and that there was no intention to transfer the ownership. On both these points, the
question of consideration is immaterial. Where the executants of a sale deed had no child and he was desirous of providing for his wife in
preference to his other heirs, merely because the wife had allowed a sickly husband to continue to stay in the house, it cannot be said that there
was no intention to transfer the ownership of the house. The fact, that it is not likely that the ''transfer had money or the fact that the executants of
the document was not in need of money are irrelevant under the Evidence Act. S. 11 of the Evidence Act has no application because it requires
high degree of probability or improbability"".
The decision in Michhu Kuanr and Others Vs. Raghu Jena and Others, , is relied on by the learned counsel for the following proposition : -
The onus is normally on the plaintiffs to prove their title and the plaintiffs can recover only on the strength of their own title and not by the weakness
of that of the defendants. But where in a suit for possession the plaintiff based his title on a registered sale deed executed in his favour and the
defendant based his title on subsequent sale deed in his favour alleging that the previous sale deed in favour of the plaintiff was without
consideration and that the same was subsequently cancelled by the vendor, it was held that the onus was on the defendant to prove the absence of
consideration for the sale in favour of the plaintiff the defendant having admitted the execution of the sale deed.""''
The decision in Meenakshi Mills, Madurai Vs. The Commissioner of Income Tax, Madras, , is relied on by the learned counsel for the
appellants for the following propositions (paras 30 & 32) : -
........The word ''benami'' is used to denote two classes of transactions which differ from each other in their legal character and incidents. In one
sense, it signifies a transaction which is real, as for example, when a sells properties to B but the sale deed mentions X as the purchaser. Here the
sale itself is genuine, but the real purchaser is B, X being his benamidar. This is the class of transactions which is usually termed as benami. But the
word ''benami'' is also occasionally used perhaps not quite accurately, to refer to a sham transaction, as for example, when A purports to sell his
property to B without intending that his title should cease or pass to B. The fundamental difference between these two classes of transactions is that
whereas in the former there is an operative transfer resulting in the vesting of title in the transferee, in the latter there is none such, the transferor
continuing to retain the title notwithstanding the execution of the transfer deed. It is only in the former class of cases that it would be necessary,
when a dispute arises as to whether the person named in the deed is the real transferee or B, to enquire into the question as to who paid the
consideration for the transfer, X or B.
But in the latter class of cases, when the question is whether the transfer is genuine or sham, the point for decision would be, not who paid the
consideration but whether any consideration was paid.
It is a most unreal question to raise of firms and companies whose only business consists of sham transactions as to who found the capital for them
or who was running them"".
The decisions referred to above by the learned counsel for the appellants show that a transaction of sale is neither nominal nor sham if the
intention of the vendor is to confer title on the vendee. It is further laid down in the above decisions that consideration must be real so as to transfer
ownership in the property sold. In the instant case, it is contended by the learned counsel for the appellants that the sales under Exhibits B.2 and
B.3 are real and supported by consideration.
Mr. N. C. Raghavachariar, learned counsel for the respondent, refers to the decision in Rangappa Nayakar Vs. Rangaswami Nayakar and
Others, , for the following proposition : -
The essence of a sham transaction is that though a deed of transfer is brought into existence, no title of any kind either legal or beneficial is
intended to be passed thereby to any person whatsoever, that is, the deed of transfer of property. The difference between sham and benami
transactions is one of intention. If the deed of transfer is made with the intention of placing the property in the name of the third person, the intention
clear y amounts to a transfer of the legal title and such transaction cannot be called a sham transaction; but comes directly within the meaning of
benami transactions properly so-called.
The decision in Union of India (UOI) Vs. Moksh Builders and Financiers Ltd. and Others, , is relied on by Mr. N. C. Raghavachariar, learned
counsel for the respondent, for the following proposition (at P. 413) -. -
.... although the onus of establishing that a transaction is benami is on the plaintiff. Where it is not possible to obtain evidence which conclusively
establishes or rebuts the allegation, the case must be dealt with on reasonable probabilities and legal inferences arising from proved or admitted
facts. While the burden initially rests on the party who would fail if no evidence is led at all, after the evidence is recorded, it rests upon the party
against whom judgment would be given if no further evidence were adduced by either side. Thus, the burden of proof is not static, and may shift
during the course of the trial. Where the entire evidence has been led by the contesting parties on the question in issue, abstract considerations of
onus are out of place, and the truth or otherwise of the case must always be adjudged on the evidence led by the parties. It is therefore necessary
to weigh the evidence in this case and to decide whether, even if it were assumed that there was no conclusive evidence to establish or rebut the
benami allegation what would, on a careful assessment of the evidence, be a reasonable probability and a legal inference from relevant and
admissible evidence.
The learned counsel for the respondent relies on the decision in Thakur Bhim Singh (Dead) by Lrs and Another Vs. Thakur Kan Singh, , for
the following proposition (paras 14 & 18) : -
Two kinds of benami transactions are generally recognised in India. Where a person buys a property with his own money but in the name of
another person without any intention to benefit such other person. transaction is called benami. In that case, the transferee holds the property for
the benefit of the person who has contributed the purchase money, and he is the real owner. The second case which is loosely terms as a benami
transaction is a case where a person who is the owner of the property executes a conveyance in favour of another without the intention of
transferring the title to the property thereunder. In this case, the transferor continues to be the real owner. The question whether a transaction is a
benami transaction or not mainly depends upon the intention of the person who has contributed the purchase money in the former case and upon
the intention of the person who has executed the conveyance in the latter case. The principle underlying the former case is also statutorily
recognized in S. 82 of the Indian Trusts Act, 1882"".
The principle governing the determination of the question whether a transfer is a benami transaction or not may be summed up thus : (1) The
burden of showing that a transfer is a benami transaction lies on the person who asserts that it is such a transaction, (2) if it is proved that he
purchase money came from a person other than the person in whose favour the property is transferred, the purchase is prima facie assumed to be
for the benefit of the person who supplied the purchase money, unless there is evidence to the contrary, (3) the true character of the transaction is
governed by, the intention of the person who has contributed the purchase money and (4) the question as to what his intention was has to be
decided on the basis of the surrounding circumstances, the relationship of parties the motive governing their action in bringing about the transaction
and their subsequent; conduct, etc.,
The learned counsel for the respondent also refers to the following observation at page 487 in the decision in Padmavathi v. Muthuswami, ILR
(1964) Mad 483.
........In a sham transaction title is never intended to pass, but in a benami transaction title to the property passes till it is questioned by the real
party. There is a Bench decision of our High Court in Rangappa Nayakar Vs. Rangaswami Nayakar and Others, , where the nature of these
transactions was explained thus. The essence of a sham transaction is that though a registered deed is brought into existence no title of any kind,
either legal or beneficial, is intended to be passed thereby to any person whatsoever, that is the deed of transfer is not intended to effect any
transfer of property.
The difference between sham transactions and benami transactions is one of intention. If the deed of the transfer is made with the intention of
placing the property in the name of a third person, the intention clearly amounts to a transfer of the legal title and such a transaction can scarcely be
called a sham transaction, but comes directly within the meaning of benami transactions ...........
The decision in Rangabati Vs. United Bank of India Ltd. and Another, , is relied on by the learned counsel for the respondent, for the following
proposition :-
.........Where the husband purported to gift the property to his wife without intending that his title should cease or pass to her, such an alleged
transfer which does not result in the vesting of title in the transferee (wife) the transferor (husband) continuing to retain the title, notwithstanding the
execution of the transfer deed, is a sham transaction.
The decisions referred to above by the learned counsel for the respondent, lay down that if the intention of the vendor clearly amounts to
transfer of the legal title, such transaction cannot be called a sham transaction. It is relevant to note that in the instant case before us, consideration
for Exhibits B.2 and B.3 is the undertaking on the part of the defendant-appellants to discharge the mortgage debts, and it is also relevant to note
that certain amount in cash had also been paid to the vendor (plaintiff-respondent herein) by the defendants-appellants herein at the time of
registration of the documents.
The main contention, as we have already seen of Mr. N. C. Raghavachariar, learned counsel for the respondent-plaintiff is that the documents
Exhibits B.2 and B.3 are sham and nominal documents and that they are not supported by consideration. It is further contended by the learned
counsel for the respondent that the witnesses P.W.2, the scribe of the sale deeds Exhibits B.2 and B.3 and P.W.4 one of the panchayatdars,
speak to such facts, and specifically they would swear that not amount in cash was paid by Palaniappan or his wife to the plaintiff. It is relevant to
note that Palaniappan as D.W.2 emphatically denied that there was any panchayat and also examined D.W. I the writer of the document to say
that the sale deeds are real sale deeds and that a sum of Rs. 800/- and odd was paid by P.W. 2 to the plaintiff. In the document Ex.B.2, besides
quoting the mortgage debt of Rs. 38,000/- in favour of Krishnan Chettiar and another, it is stated that there is a balance of Rs. 1, 192.02 payable
as arrears of municipal tax and that the balance of Rs. 807.98 is paid on the date of the two sale deeds. It is relevant to note that for Exhibits .B.2
and B.3 stamp papers stand in the names of Rajammal and Palaniappan. The registration expenses also appear to have been paid by Palaniappan
and Rajammal. In the municipal tax registry, the receipts for payment of taxes by each of the defendants after the sales are entered only in the
names of the vendees.
It is well established principle of Law of Contract, as laid down in Currie v. Misa (1875) LIZ 10 Ex 153, that :-
A valuable consideration, in the sense of law, may consist either in some right, interest, profit, or benefit accruing to the one party, or some
forbearance, detriment, loss or responsibility given suffered, or undertaken by the other.
It is also a well-established principle of Law of Contract that though consideration need not be adequate, it must be real. It must be ''something
which is of some value in the eye of law''.
In Ex.13.2 it is specifically stated that the vendee Rajammal had undertaken to discharge the mortgage debts to the tune of Rs. 38,000/- and
that also forms part of the sale consideration. Similarly, in Ex.B 3 it is specifically stated that the vendee Palaniappan had undertaken to discharge
the mortgage debts to the tune of Rs. 20,000/- and that undertaking forms part of the consideration for the sale. If the mortgage debts mentioned in
Exhibits B.2 and 13.3 have to be discharged as undertaken by the vendees Rajammal and Palaniappan who are the appellants herein, there cannot
be any plea of nominality because the vendor Raman Kutty has to obtain a reconveyance on payment of the mortgage debts. Therefore, the mere
fact that the mortgage debts were not discharged would not make the sale transactions nominal. Even the case put forward by the respondent
herein in para 4(a) of the amended plaint does not improve the case of the respondent herein. In the instant case, we find that the consideration is
real. We also find that possession of the property has been delivered to the appellants herein. There is also mutation of names in the municipal
records. The stamp papers for the sale deeds stand only in the name of the appellants. It is also in evidence that a sum of Rs. 800/- and odd had
been paid by the appellants to the respondent herein as a part of the consideration. Thus we find that the sale deeds are fully supported by
consideration. We have necessarily to hold that the sale deeds Exhibits 13.2 and B.3 are real sale deeds, fully supported by consideration. Thus
we find the points in favour of the appellants.
The judgment and decree of the trial Court are set aside, and the suit O.S. No. 389 of 1976 and the suit O.S. No. 391 of 1976 are dismissed.
In the result, both the appeals A.S. Nos. 597 of 1978 and 598 of 1978 are allowed. Under the circumstances, there is no order as to costs. The
Plaintiff respondent herein will pay the court fee due and payable to Government in O.S. No. 389 of 1976 and O.S. No. 391 of 1976 on the file
of the Court of the Learned Subordinate Judge, Salem.
Appeals allowed