Sonalal vs Goerge

Thomas P. Joseph, J.—The substantial question of law framed for a decision is as under: When the plaintiff has specifically contended that Ext.A3 was executed only as a security document to ensure repayment of Rs. 50,000/- borrowed by the plaintiff and it was not a sale deed and it was not intended to be acted upon as a sale deed and in fact was not acted upon also, can the defendant discharge his burden to prove the bona fides and genuineness of the transaction by merely producing Ext.A3 document? Is the plaintiff precluded from proving the actual nature of the document by adducing other evidence by applying the principles contained in S. 92 of the Indian Evidence Act?

Second Appeal arises from the judgment and decree of learned Sub Judge, Irinjalakuda in O.S. No. 16 of 2000 as confirmed by the learned First Additional District Judge, Thrissur in A.S. No. 10 of 2004. 2. A total of 62 cents belonged to the father of appellant. 31 cents towards western side of that property was obtained by one Vinaya Raj, brother of appellant. Appellant got absolute right over the eastern 31 cents as per release deed No. 2276 of 1997. The property described in the plaint schedule is the said 31 cents.

According to the appellant, he had entered into Ext.A1, agreement for exchange dated 16.07.1997 with his brother, Madhu (P.W.4) as per which the suit property was to be exchanged with the property of the said Madhu. It is the further case of appellant that pursuant to that agreement, the suit property was put in the possession of the said Madhu and appellant got possession of property of the said Madhu. He started residence in the building in that property. It is also his case that he wanted a loan of Rs. 50,000/-, approached the respondent-defendant and on the respondent advancing the loan he executed Ext.A3 (Ext.B1), assignment deed No. 2528 of 1998 in favour of respondent as security for due repayment of the said amount. Appellant contended that the said document is a sham document, which has not taken effect and is ab initio void. He claimed that notwithstanding the recital in the said document possession of property was not given to the respondent. Hence the suit for a declaration that Ext.A3 (Ext.B1) sale deed No. 2528 of 1998 is void and for other reliefs.

Respondent denied that he lent Rs. 50,000/- to the appellant. He claimed to have purchased the suit property for Rs. 12,500/-as per Ext.A3 (Ext.B1). He claimed that he got possession of the suit property pursuant to the said assignment deed. He contended that when Madhu and Vinaya Raj, brothers of appellant attempted to trespass into the suit property, he filed O.S. No. 14 of 2000 and during the pendency of that suit, appellant, Madhu and Vinaya Raj trespassed into the suit property and took possession thereof.

Based on Ext.A1, agreement for exchange appellant had filed O.S. No. 70 of 1998 against Madhu for specific performance of the said agreement. Though appellant filed T.O.P No. 106 of 1999 in the District Court, Thrissur for transfer of the said suit to the court where O.S. Nos. 14 and 16 of 2000 were pending to facilitate joint trial, that petition was dismissed against which appellant filed C.R.P. No. 238 of 1999 in this Court. That Civil Revision was allowed and joint trial was ordered. In the meantime there was a settlement between appellant and Madhu (P.W.4) as regards Ext.A1, agreement and O.S. No. 70 of 1998 was not pursued. Learned Sub Judge tried O.S. Nos. 14 and 16 of 2000 jointly. O.S. No. 14 of 2000 was dismissed on the finding that on the date of that suit, respondent was not in possession of the suit property. O.S. No. 16 of 2000 also ended in a dismissal. Learned District Judge has confirmed the judgment and decree. Hence this Appeal on the substantial question of law framed above.

Learned counsel for appellant contends that though courts below found against due execution of Ext.A1, exchange agreement dated 16.07.1997 the said finding is erroneous. It is contended that Ext.A2, copy of report submitted by the Commissioner in O.S. No. 70 of 1998 would show that pursuant to Ext.A1, agreement appellant got possession of the property of Madhu and was residing in the building therein. That would lend credence to the due execution of Ext.A1, agreement dated 16.07.1997. It is contended that evidence of P.W.4 also would prove due execution of Ext.A1. A further contention learned counsel has advanced is that the broad circumstance of the case would show that there was no possibility of the appellant executing Ext.A3(Ext.B1) in favour of the respondent. It is contended that Ext.A3 is a photocopy of assignment deed No. 2528 of 1998 and respondent was not able to explain how appellant got custody of the said photocopy. Custody of photocopy of the impugned assignment deed with the appellant is a definite indication that there was no intention to convey, right, title and possession of the suit property to the respondent by Ext.A3 (Ext.B1). It is also contended by the learned counsel that evidence of P.Ws.2, 3, 4 and 7 would show that respondent is a money lender. According to the learned counsel, evidence on record would also show that appellant was in possession of the suit property even as on the date on which Exts.A3(Ext.B1) was executed. Learned counsel has placed reliance on the decision in Subhra Mukherjee and Another Vs. Bharat Coking Coal Ltd. and Others, to contend that where the question before court is whether the transaction in question was bona fide and genuine the party relying on the transaction had to prove its genuineness first and only thereafter would the opposite party be required to dislodge such proof and show that the transaction was sham and fictitious. It is argued by learned counsel that therefore the burden to prove that Ext.A3(Ext.B1) is bona fide and genuine was on the respondent. Respondent has not discharged that burden. On the other hand the evidence let in by the appellant is consistent with his case that the said document was executed nominally as a security for due repayment of the loan.

Learned counsel for respondent contends that respondent is not in any way connected with Ext.A1, agreement of exchange dated 16.07.1997. According to the learned counsel, though an agreement is said to be executed between the appellant and P.W.4 who is none other than the brother of the former it is contended that circumstance would show that Ext.A1 was clandestinely created to defeat the right of respondent as per Ext.A3. It is contended that recital in Ext.A3 would show that possession of the suit property was given to the respondent on the date of sale though subsequently respondent lost it due to appellant, P.W.4 and Vinaya Raj trespassing into the said property. Respondent filed O.S. No. 804 of 2004 for recovery of possession of the suit property from appellant, P.W.4 and Vinaya Raj. That suit was decreed as per judgment dated 20.11.2007 and now the matter is pending in appeal - A.S. No. 17 of 2008 at the instance of appellant. Learned counsel has placed reliance on the decision in Shivaraj v. Patil (2003 KHC 1498 - paragraphs 22, 23, 28 & 29).

That Ext.A3(Ext.B1) assignment deed is executed in favour of the respondent is not denied. Case of appellant is that the said document was executed nominally as security for due repayment of the loan and that it was not intended to convey right, title, interest or possession to the respondent nor did it happen. In other words, according to the appellant Ext.A3(Ext.B1) is a sham document. When a plea is raised that a document is sham, the burden of proof is on the person who alleges it. In Vimal Chand Ghevarchand Jain and Others Vs. Ramakant Eknath Jajoo, the Supreme Court held that when a registered sale deed is stated to be a sham document, the burden of proof is on the person who contends so. Subhara Mukherjee v. Bharat Coaking Coal Ltd. (2000) 33 SCC 312 relied by the learned counsel for appellant is on a different set of facts. There, what is held is that when the question is whether the transaction is bona fide and genuine the party relying on the transaction had to prove "genuineness first" and only thereafter would the opposite party be required to dislodge that presumption and prove that the transaction was sham and fictitious. Here, there is a document executed by the appellant, contention being that it was not intended to take effect as it was only a security for due repayment of the loan. I am inclined to think that the burden of proving that, was on the appellant.

No doubt, notwithstanding Ext.A3(Ext.B1) it is open to the appellant to show that there was no intention to transfer the property and the document was intended merely as a security for due repayment of the loan. Section 92 of the Evidence Act (for short, "the Act") does not prevent the appellant from adducing evidence against the recitals in Ext.A3 (Ext.B1).

Then the question is whether on the materials on record finding of the l courts below is justified.

So far As Ext.A1, is concerned it is an agreement said to be executed between the appellant and P.W.4, his brother. That agreement is dated 16.07.1997. No doubt even before Ext.A3 (Ext.B1) appellant had filed O.S. No. 70 of 1998 seeking specific performance of Ext.A1, agreement (that suit was filed on 17.03.1998) and as pointed out by learned counsel until the suit was settled between the appellant and P.W.4 it would appear that the appellant was prosecuting that suit. But I must also remember that respondent is not a party to Ext.A1 and hence whatever stated in Ext.A1 cannot bind him.

It is the case of appellant that pursuant to Ext.A1, agreement possession of the suit property was given to P.W.4, Madhu and in exchange, he got possession of the property of the said Madhu. In support of that contention Ext.A2, report of the Advocate Commissioner in O.S. No. 70 of 1998 is relied upon. Commissioner could not speak about possession of the property but the statement of the Advocate Commissioner in Ext.A2 that at the time of inspection appellant was either occupying or residing in the building in the property of Madhu can be considered. But I find myself unable to accept the contention that by virtue of Ext.A1, the suit property was given to the possession of P.W.4 and appellant got possession of property of P.W.4. For, not only that Ext.A1 does not speak about exchange of possession but, what is stated in Ext.A1 is that while the exchange deed is executed, parties are to get possession of the properties. Hence the contention of appellant that by virtue of Ext.A1 he got possession of property of Madhu and vice versa cannot be accepted.

I must also notice that though it is the contention of appellant that he handed over possession of the suit property to P.W.4 as per Ext.A1 dated 16.07.1997, in Ext.A3(Ext.B1) dated 10.06.1998 appellant asserts that he is in possession of the suit property and the said possession is conveyed to the respondent. In the circumstances contention of appellant that possession of the property could not have been transferred to the respondent as on the date of Ext.A3(Ext.B1) cannot be accepted.

No doubt, recitals in Ext.A3(Ext.B1) that possession of the property was given to the respondent is not a term of the contract so that Sec. 92 of the Act would preclude appellant from adducing evidence to the contra. But as regards that, evidence consists of oral evidence of P.Ws.1,4, 5 and 6. P.W4 is the brother of appellant. P.W5 is an agricultural labourer and P.W.6 is a coconut climber. They stated that appellant was in possession of the suit property.

On the other hand, respondent as D.W.1 stated that he got possession of the suit property and later lost it to the appellant, Madhu and Vinaya Raj by trespass. Respondent also examined witnesses to show that he got possession of the suit property.

Learned counsel invited my attention to the evidence of D.W.1 that he has not effected agricultural operations or irrigated the suit property while Ext.A2, report of the Advocate Commissioner states about existence of an old motor pump in the suit property. But I must remember that the interval between Ext.A3 and respondent losing possession of the property (on account of alleged trespass of appellant, Madhu and Vinaya Raj) was not that much. It is relevant to note that respondent filed O.S. No. 14 of 1998 on 16.12.1998 (that suit was later transferred and renumbered as O.S. No. 14 of 2000) while Ext.A3 is dated 10.06.1998. In O.S. No. 14 of 2000 filed on 16.12.1998 respondent alleged that Madhu and Vinaya Raj are attempting to trespass into the suit property. Later accepting the fact of trespass by the appellant, Madhu and Vinaya Raj, respondent filed O.S. No. 804 of 2004 and subject of course to the decision the in the first appellate court may take in A.S. No. 17 of 2008, has obtained a decree for recovery of possession as well.

Even if it is assumed that at the time Ext.A3 sale deed was executed respondent did not get possession, that by itself does not mean that the said document is not one of sale. Delivery of possession of property is not essential ingredient of a sale going by Section 54 of the Transfer of Property Act.

Then the question is whether as contended by the learned counsel for appellant Ext.A3 (Ext.B1), assignment deed was executed as security for the loan transaction? Though there is no mention in the plaint in that way, P.Ws.2 and 3 are examined by the appellant to prove the alleged loan transaction. P.W1, appellant stated that he availed loan of Rs. 50,000/- from the respondent and executed the impugned document. P.W2 stated that on 10.06.1998 appellant borrowed Rs. 50,000/-. from the respondent through him and that the impugned assignment deed was executed as security. P.W.2 is sure that the sum of Rs. 50,000/- was paid to the appellant at the office of the Sub Registrar (where the impugned assignment deed was registered) between 1.00 and 1.30 a.m (obviously on the date of registration of that document). But P.W.3 would say that amount was paid at the residence of respondent. Evidence of P.W3 would also show that even before one month of Ext.A3 (Ext.B1) appellant had asked P.W3 to arrange the loan. But appellant has no such case. On the other hand what appellant pleaded in paragraph 4 of the plaint is that on 10.06.1998 he asked respondent loan of Rs. 50,000/-, that was agreed upon, paid by the respondent and the impugned assignment deed was executed. It also came out in evidence that PW2 is a friend of appellant. In the above circumstances having regard to the material contradiction in the evidence of P.Ws.2 and 3 as to the alleged payment of loan of Rs. 50,000/-courts below were not inclined to act upon the evidence of P.Ws1 to 3 as regards the alleged loan transaction.

Though learned counsel for appellant has referred me to the judgment in O.S. No. 14 of 2000 dismissing the suit which according to the learned counsel attained finality, that was on the finding that as on date of that suit (16.12.1998) respondent did not have possession of the property. That does not mean that as stated in Ext.A3 (Ext.B1) respondent did not get possession of the property on the date of that document.

Nor is the mere custody of photocopy of the assignment deed, Ext.A3 with the appellant not explained by the respondent by itself sufficient to show that the impugned document was executed nominally as security for the alleged loan transaction. Trial and first appellate courts in the circumstances were right in holding that the challenge made to Ext.A3 (Ext.B1) cannot stand. Substantial question of law framed is answered as above.

Regular Second Appeal is dismissed. No costs.

All pending Interlocutory Applications will stand dismissed.