Sheoshankarprasad and Another vs Mahabir Prasad and Another

Manohar Lall, J.—In this appeal by the plaintiff the only question for determination is whether the Additional District Judge of Gay a was right in holding that the suit of the plaintiff was barred under the provisions of Section 66, Civil P.C., in the following circumstances.

The property in dispute is 3 annas and 12 dams odd share in Mahal Rupau, tauzi No. 4382. In execution of a certificate for realisation of case against the proprietors, the property was purchased on 20-4-1931 by Mahabir Prasad alias Bakhori Lai, defendant 1, The Courts below have concurrently found that Mahabir Prasad was the benamidar but the real purchaser was Bipat Earn, the father of the plaintiffs and the pro forma defendant--he died in 1933. They have also found that ever since the delivery of possession, Bipat Ram and thereafter his sons continued in possession, i.e., the benamidar was not in possession for a single day and all the rent suits for the recovery of hak hazri from the usufructuary mortgagee, who was in possession of the property, were instituted by the plaintiffs and the pro forma defendant though in the name of the benamidar; they made all the pairvis and realised all the decrees after putting them into execution.

It has also been found, as is the plaintiff''s case, that the plaintiffs and the pro forma defendant negotiated with Mahant Ramdhan Puri of Budhauli for the sale of the property together with the arrears of the hak hazris due from the usufructuary mortgagee, Munshi Deonath Sahay for 1947 Fasli, and the consideration was settled at Rs. 4383-12-0 and a sale deed was executed on 30-9-1940. The, sale deed was signed by defendant 1, Mahabir Prasad, as the executants, as the sale certificate stood in his name, but the plain, tiffs and the pro forma defendant also attested as marginal witnesses.

The plaintiff''s case is that after the money was paid before the Registrar into the hands of defendant 1 who had agreed to hand the money over to the plaintiffs and the pro forma defendant a dispute arose between the plaintiffs and the pro forma defendant as to the exact amount of the shares of each of the vendors. Therefore the money remained with defendant 1 who later on disappeared and would not make over the sum to the plaintiffs and the pro forma defendant. Hence the plaintiffs instituted the suit on 19.5.1942 for recovery of the money, namely the consideration for the sale deed of the property. The trial Court in a careful and well-reasoned judgment disbelieved the defendant''s case that he was the true owner in possession of the property and also repelled his alternative argument based upon Section 66, Civil P.C. Accordingly, he decreed the plaintiff''s suit.

Against this decision there was an appeal which was disposed of by the learned Additional District Judge of Gaya who in an equally careful and well considered judgment while agreeing with the findings of fact of the trial Court, as I have already stated, came to the conclusion that the plaintiff''s suit was hit by the provisions of Section 66, Civil P.C. allowed the appeal and dismissed the suit. Hence the second appeal to this Court.

The cases which are usually cited on such occasions were placed before us including a Division Bench decision of this Court reported in Keshri Mull v. Sukhan Ram AIR 1933 Pat. 264 and some cases from the other High Courts. I propose to review those cases in the first instance and then to apply the principles deducible there from to the facts of the present case.

Patna--In Keshri Mull v. Sukhan Ram AIR 1933 Pat. 264 Khwaja Mohammad Noor J., made these observations at p. 624:

The general result of the ease law on Section 66, Civil P.C. and on the corresponding section of the old Codes is that the suit of a plaintiff, who bases it on the ground that he was the real purchaser at a court sale and that the certified purchaser was not really so, must fail. Bat it the real owner is in possession of the property and the certified purchaser wants to take advantage of his name being in the sale certificate and brings the suit on that basis, the real owner can successfully defend it on the ground of his being the real purchaser...if the plaintiff does not base his suit upon the title which, in my opinion, he undoubtedly has on account of his being the real purchaser at the court sale, but on some other title subsequently acquired, his suit does not come within the mischief of Section 66, Civil P.C. If, for instance, the plaintiff continues in possession for more than 12 years, this possession by itself gives him a title independent of the title winch he had on account of his being the real purchaser at the court sale, and if he is subsequently dispossessed his suit based upon this possessory title will, as was pointed out in Mahomed Abdul Jalil Khan v. Md. Obaid Ullah Khan AIR 1929 P.C. 228 succeed.

In the same case Scroope J. held that the case in Sasti Churn Nundi v. Annapurna (96) 23 Cal. 699 must be regarded as obsolete and no longer good law as it has not been followed in two later Calcutta cases, e.g. Hanuman Prasad v. Jadu Nandan AIR 1916 Cal. 762 and Umashashi Debi v. Akrurchandra AIR 1926 Cal. 542 and Bishan Dial v. Ghaziuddin (01) 23 All. 175.

Calcutta--The Calcutta cases which have been cited before us have all been reviewed in Keshri Mull v. Sukhan Ram AIR 1933 Pat. 264 with the exception of Moulavi Ali Ahmed Vs. Sm. Shamsunnessa and Others, which is on the line with the earlier Calcutta cases and expressly dissents from Sasti Churn Nandi v. Annapurna (96) 23 Cal. 699 and follows Keshri Mull v. Sukhan Ram AIR 1933 Pat. 264.

Madras--The Full Bench judgment in Amrutam Venkatappa v. Vavila Jalayya AIR 1920 P.C. 30 was affirmed by their Lordships of the Judicial Committee in Ramathahi Vahivelu Mudalliar v. Peria Manicka Mudaliar AIR 1920 P.C. 30. The short judgment of Wallis C.J. may be quoted here:

We do not think that this is a suit against the auction purchaser on the ground that the purchase was made on behalf of the plaintiff within the meaning of Section 66, Civil P.C. The finding is that the defendant agreed that the property should be purchased in the name of the defendant and that one-half of it should be conveyed by the defendant to the plaintiff after the Bale certificate had been obtained. This in our opinion is not a benami transaction at all. The mere fact that the plaintiff alleges in the plaint that the auction purchaser was the benamidar for him has not in our opinion the effect of debarring the plaintiff u/s 66, Civil P.C. from maintaining his suit for specific performance of an agreement by the auction purchaser subsequent to the purchase to convey the property to the plaintiff. Such an agreement is not inconsistent with auction purchaser''s own title, but rather the reverse.

In Muniappa Mudali v. Thangavelu Mudali AIR 1937 Mad. 362, Venkataramana Rao J. observed regarding the ambit of Section 66, at P: 363:

The section has to be strictly applied. Its object is to prohibit on grounds of public policy a suit against the certified purchaser on the ground specified in the section. It does not render benami transactions illegal. If the cause of action is not based on the benami purchase but on a contract, or title acquired subsequent thereto, Section 66 is not a bar.

and pointed out that in the case before him the case of the plaintiff was not rested on the fact of the benami purchase or a mere prior agreement by the defendant to convey but on a conveyance subsequent to the court sale and the relief sought for was the rectification of that conveyance. The learned Judge emphasised to wards the end of his judgment that the cause of action was the title under the conveyance, an event which happened sub sequert to the court sale and the fact that the basis of the contract embodied in the sale deed was the prior benami purchase did not affect the title obtained under the convey, once.

Bombay--The Bombay view is well expressed by Allibhai Mahomed v. Dada Alli Isap AIR 1931 Bom. 578 and is to the same effect, namely that Section 66 must be strictly construed and it will apply only to a suit in which the cause of action is given by the benami purchase and not to a suit which is based on a contract which is separate from the transfer.

Allahabad--The case in Bishan Dial v. Ghaziuddin (01) 23 All. 175 is the leading case and has already been referred to.

Privy Council, cases.--The leading decision is the case in Mt. Bubuns Koonwur v. Lalla Buhoree Lall (72) 14 M.I.A. 496 in which it was held that the effect of the corresponding section of the Code of 1859 was not to make these benami transactions illegal, but only to prohibit for reasons of public policy a suit against the certified purchaser on the grounds specified in the section. The case in Lokhee Narain Roy v. Kalupuddo (75) 2 I.A. 154 expressly followed Mt. Buhuns Koonwur v. Lalla Buhoree Lall (72) 14 M.I.A. 496 and it was further observed by Sir Montague Smith that the real owner for whom the purchase was made if in possession, and-if that possession had been honestly obtained, might defend notwithstanding this corresponding Section. 260 a suit brought by the holder of the certificate to show that he was the true owner and the apparent owner only a mere trustee. In Ganga Sahai v. Keshri AIR 1915 P.C. 81 their Lordships held that the provisions of Section 317, the corresponding section of the Code of 1882, were designed to create some check on the practice of making what are called benami purchases at execution sales for the benefit of the judgment-debtors, and in no way affect the title of the persons otherwise beneficially interested in the purchase in this case it was held that the co-decree-holders of Ganga Sahai in whose name the sale certificate was granted by the Court were not precluded by the section from showing that the purchase was on behalf of them also, and the heirs and representatives of Bahadur Singh were held entitled to recover from Ganga Sahai one-third share of the properties which were purchased by him in execution of a joint mortgage decree. In Suraj Narayan v. Ratanlal AIR 1917 P.C. 12 the joint family was held barred by the provisions of Section 317, Civil P.C. 1882, to lay claim to the properties of which the son-in-law of the karta was the certificate auction purchaser, Ramathahi Vadivelu Mudaliar v. Peria Manicka Mudaliar AIR 1933 Pat. 264 is the first case under the present Code. This was a suit for specific performance of an agreement entered into before the auction sale and also after the auction sale by the certificate purchaser to convey the property to the real owner. It was argued that Section 66 was a bar, but their Lordships overruled the contention in these words at p. 115:

If the agreement entered into before the auction stood alone, there would be considerable force in this contention. The object of Section 66 was to put an end to purchases by one person in the name of another; and the distinction between a purchase on behalf of another, and a purchase coupled with an undertaking to convey to another at the price of purchase is somewhat narrow. But whatever doubt might be caused by the character of the original agreement is removed by the events which happened after the sale. It was decided in Amrutam Venkatappa v. Vavila Jalayya AIR 1919 Mad. 94 that an agreement subsequent to a purchase is not affected by the section, and there can be no question as to the correction of that decision. In the present case, agreements were entered into after the sale...by which the appellant bound himself to carry out the original contract with the respondents with certain variations which were then agreed to and accepted by all parties. These subsequent agreements are unaffected by the section and are accordingly enforceable against the appellant.

Balaram v. Naktu AIR 1928 P.C. 75. In this case the property, a village, was purchased by Naktu. The allegation in the plaint was that Naktu had purchased the village in his own name and contrary to the directions given to him by Bhikha, but no evidence was adduced with regard to this but on the contrary in the Courts below the basis of Bhikha''s case was that Naktu''s name was entered in the sale certificate with his consent. Their Lordships observed:

This is tantamount to the purchase being benami, and both Courts held that Bhikha was precluded by Section 66, Civil P.C. from claiming the property on the ground that Naktu was not the real purchaser.

The sale was held on 28th October 1907 and confirmed on 5th December 1907 in favour of Naktu who after obtaining the sale certificate got possession on 5th June 1908. It was urged by Bhikha that there was an agreement dated 4th November 1907 by which Naktu promised to convey the property whenever asked to do so by Bhikha. It was on these allegations that Bhikha instituted a suit for recovery of possession from Naktu and his sons. Although the trial Court took the view that the letter evidencing the agreement was genuine, but the appellate Court held that the letter was unreliable and their Lordships accepted that finding of fact and pointed out that the suit had been brought one day less than the expiry of 12 years from the date of the auction sale in favour of Naktu. This case was decided mostly on fact. The case in Mahomed Abdul Jalil Khan v. Md. Obaid Ullah Khan AIR 1929 P.C. 228 contains a full discussion of the ambit of Section 66 of the present Code of Civil Procedure. After referring to the case in Mt. Buhuns Koonwur v. Lalla Buhoree Lall (72) 14 M.I.A. 496 and Lodhee Narain Roy v. Kalypuddo (75) 2 I.A. 154, their Lordships observed at p. 837:

Now it is clear under these rulings that, while the section protects the certified purchaser, so long as he retains the possession given him by the Court, from a suit by the true owner, if he allows the real purchaser, ''being the true owner'' to get possession, the section does not enable him to sue for possession, because possession has come into the hands of the true owner who is entitled to it.

If then the true owner is subsequently dispossessed by the certified purchaser, is he precluded by the section from suing for recovery of possession? That must depend on the question whether he is to be regarded as suing ''on the ground that the purchase was made on behalf of the plaintiff or on behalf of some one through whom the plaintiff claims within the meaning of the section. In such a case, if the true owner has been in possession, for less than twelve years, he will no doubt have to aver and prove as part of his cause of action that the auction purchase was made on his behalf, but that is not the case here, and their Lordships express no opinion about this question, as it has not been argued before them.

Where, however, as in the present case, the real purchasers have been allowed to remain in adverse possession for more than twelve years before dispossession, they are entitled to sue for possession on the title so acquired under the Limitation Act.

and their Lordships pointed out that a suit based on such a dispossession after over twelve years cannot become a suit on the ground, that the purchase was made on behalf of the plaintiff merely because the plaintiff as part of an alternative cause of action sets up and proves that the purchases were, in fact, benami.

The following principles can be extracted from this review of authorities: (1) Section 66 must be construed strictly as it encroaches upon the rights of the true'' owner remembering that benami transactions are only being discouraged by the legislature but are not being made illegal. (2) Where a true owner recovers possession or has always been in possession and he bases his relief in the suit (other than that of possession or confirmation of possession) upon a title obtained by the purchase, the provisions of Section 66 have no application. (3) The real owner, if he is in possession, can always resist a suit by the certificate auction purchaser as a plaintiff. (4) The real owner is entitled to maintain a suit for specific performance of an agreement by the ostensible owner to transfer the property to him provided such an agreement is made after the auction purchase. (5) Where the true owner has dispossessed the certificate holder and is adversely in possession for over 12 years, he can maintain a suit for recovery of possession even against the certificate purchaser because his claim is now based upon a different title and it is immaterial for him to allege or prove that he was the real owner at the date of the auction sale.

Now, what are the facts in the present case? (1) This is not a suit by the true owner for recovery of possession of the property. (2) The certificate-holder was never in possession of the property and did not receive the hak hazri for a single day from the usufructuary mortgagee. (3) The present suit is not based upon the title of the original certificate sale but is based upon the contract to sell between the plaintiffs and the pro forma defendant and the Mahant of Badhauli on the findings that the negotiation for the sale of the property was made by the plaintiffs and the pro forma defendant and that the consideration was paid into the hands of defendant 1 before the Registrar with a clear stipulation or agreement that the money would be immediately handed over to the plaintiffs and the pro forma defendant.

It is, therefore, clear to me on the facts of the present case that the suit is based upon an agreement subsequent to the auction sale and, therefore, Section 66 can have no application to such a case. Mr. D.N. Varma vehemently argued that the present suit is in effect a suit for recovery of possession of the very property which has now been converted into cash by reason of the private sale. The argument may appear to be plausible, but when the facts are clearly remembered, the argument must be held to be of no substance.

Here, as I have already observed, the plaintiff is not seeking to recover possession of the property because the property was always in his possession. He is merely suing to recover the proceeds of the sale which he himself made with the Mahant of Badhauli. In the present case I would hold that defendant 1 was a trustee for the money which was paid by the Mahant in the presence of the Registrar, defendant 1 having agreed to pay the sum to the plaintiffs and the pro forma defendant, but later on committed fraud by running away with the money. The matter would have been entirely different if it had been found that the defendant himself was in possession of the property, that he himself negotiated for the sale and received the consideration from the Mahant of Badhauli and then the plaintiffs made a claim for the payment to them of the consideration. Mr. D.N. Varma relied strongly on the Calcutta cases which I have already referred to above and specially to the observations in the Calcutta case in Moulavi Ali Ahmed Vs. Sm. Shamsunnessa and Others, where reliance was placed upon the case in Bhagchand Dagadusa v. Secy. Of State (27) 54 I.A. 338. But that was a case u/s 80, Civil P.C, and their Lordships held that the section applies to suits which may be instituted against the Secretary of State, whether the suits are for declaration of possession or whether the suits are for injunction also. That decision is of no material help in the present case because we have to see the ambit of Section 66 and the nature of the suit.

Mr. D.N. Varma also relied upon the case of the Allahabad High Court of the year 1910 in Raghunandan Lal v. Matru Mal 6 Ind.Cas. 404. In that case the plaintiffs claimed specific performance of a contract of a sale of land and in the alternative to recover a sum of Rs. 2600 together with interest alleging that the defendant had borrowed Rs. 2600 from the plaintiffs and purchased the lands agreeing at the same time that he would resell the property to the plaintiffs. The facts found, however, were that the plaintiff. decree. holder was refused leave to bid at the auction sale and then he adopted the device to evade the provisions of the law and as the defendant was then in his confidence, he purchased the property with his own funds but in the name of the defendant expecting that he would execute a formal transfer in his favour. Before, however, this could be done, the parties had a quarrel, and the defendant being the certified purchaser set up his own title to the property. The learned Judges held that the suit for return of the money was based upon the allegation that there was a contract of loan between the plaintiffs and the defendant, but on the finding there was no loan at all and observed:

On the facts as found all that they (the plaintiffs} can ask the Court to hold is that in the events which have happened the defendant must be considered to-hold the purchase money in trust for them. We think there are two reasons why the plaintiffs ought not to be allowed to recover back this money. In the first place we must alter the nature of the suit to meet the facts and we do not think that where the plaintiffs have been guilty of conduct like the present the Court was called upon to alter the nature of the suit. It seems also to us that even if we were to treat the suit as a suit for money received by the defendant for the plaintiffs, the plaintiffs could not succeed except by showing that the defendant made the purchase on their behalf. Such a suit it seems to us is expressly prohibited by Section 317 of Act 14 [XIV] of 1882. It would be a suit against the certificate purchaser on the ground that the purchase, was made on behalf of another person.

This case has no it application to-the facts of the present case where the suit, as I have endeavoured to show above, is not based upon the purchase, but is based upon a different cause of action.

In these circumstances, I am of opinion that the learned Additional District Judge was-in error in reversing the decision of the Subordinate Judge. I would allow the appeal, set aside the decision of the learned Additional District Judge and restore the decision of the learned Subordinate Judge. But in the circumstances of. the case I would maintain his order that each-party will bear his own costs in the Courts below. There will be no order for costs in this Court also to mark our sense of disapprobation of the benami purchase which has led to this litigation. The cross appeal is dismissed.

Ramaswami, J.

I agree.