S.S.S. Latchumanan Chettiar vs M.L.N.RM. Veerappa Chettiar and others

Krishnaswami Nayudu, J.—The plaintiff is the appellant. His suit was for partition of two items of immovable properties in which his claim

was for 1/6th share. He obtained a money decree in O.S. No. 160 of 1933 on the file of the District Munsif''s Court, Periakulam, against one

Palanisami Chetti.

The firm of which the second and third defendants were partners also obtained a money decree in another suit O.S. No. 44 of 1933, on the file of

the same Court against the said Palanisami Chetti. The suit properties were attached in execution of both the decrees by the respective decree-

holders and proceedings for bringing the properties to sale were taken.

The properties were put up for sale on 9-11-1933 and 7-12-1933 in execution of the decree in O.S. No. 160 of 1933 and 44 of 1933

respectively. On the date of the first sale, that is, on 9-11-1933, an agreement Ex. A. 5, was entered into between the plaintiff''s agent representing

the plaintiff and the agent of defendants 2 and 3 on their behalf. The substance of the agreement is whomsoever of the two decree-holders may

take in auction the properties the plaintiffs would be entitled to 1/6th share and defendants 2 and 3 to a 5/6th share, (the 1/6th and 5/6th shares

being arrived at in proportion to the respective amounts of their decrees) and that the expenses of the sale should be met in the same proportion.

In pursuance of the said agreement, item 2, which is of an extent of 69 cents, was purchased by the plaintiff in his name for a sum of Rs. 71 and

item 1 measuring 2 acres 671/2 cents was purchased by defendants 2 and 3 in their names for Rs. 1001. Possession of the properties was

delivered to the respective parties, item 2 on 20-3-1924 and item 1 on 30-7-1934. The accounts in respect of the sales appear to have been

looked into by the parties and each has been claiming and receiving from the other his share of the expenses in the proportion of 1/6 and 5/6th as

originally agreed upon.

Ex. A. 21 dated 15-2-1934 is an endorsement of payment of Rs. 166-13-4 to defendants 2 and 3 as and for the 1/6th share out of the sale price

of Rs. 1001 for item 1. Ex. A. 12 dated 23-7-1944 is the copy of the account sent by the plaintiff to defendants 2 and 3 in respect of the sale

price and expenses as regards item 2 and defendants 2 and 3 pay the 5/6th share payable by them. Ex. A.7 is a similar extract of account of

defendants 2 and 8 furnishing the details of the expenses relating to the sale of item 1 and evidencing the receipt of 1/6th share payable by the

plaintiff of those expenses.

Ex. A. 8 dated 13-4-1935 is a further list of expenses in respect of which the plaintiff pays his 1/6th share. Exs. A. 9, A. 10 and A. 11 are similar

further extracts of accounts relating to the expenses. There is also the evidence of the plaintiffs witnesses that the produce of both the items of land

were divided in 1936 in the proportion agreed upon. There is, therefore, no doubt that the parties had acted on the agreement excepting that the

properties were not partitioned as per the shares agreed upon.

On 5-3-1937, the second defendant on behalf of his firm assigned the entire item 1 under Ex. B. 1 to one Kodumudi Alagappa Chetti claiming that

the firm was solely entitled to the property and without reference to the agreement entered into with the plaintiff. Alagappa Chetti in his turn sold

item 1 along with his other properties to the first defendant under Ex. B. 2 dated 6-2-1939. The purchases made by Alagappa Chetti and by the

first defendant, who was a minor on the date of the sale in his favour, have been found to have been made with the knowledge of the agreement,

Ex.A. 5.

The truth and the binding nature of the agreement was denied by the defendants. But both the Courts have found that the agreement was true and

was executed by the agent of the plaintiff and the agent of defendants 2 and 3 and that it was acted upon and that till 1936 they adjusted their rights

relating to their proportionate share of the income. The suit was, however, dismissed as being barred u/s 66 C.P.C. and confirmed in appeal by the

learned Subordinate Judge of Dindigul.

The only question therefore that requires to be determined in this suit is whether the suit for partition is not maintainable in respect of item 1 of

the suit properties u/s 66 C.P.C. The plaintiff claims title to 1/6th share on the strength of the agreement, Ex. A. 5. The case in the plaint is that,

since the amounts due under their respective decrees were not paid, both of them had to attach the same properties belonging to the judgment-

debtor and bring them to sale, then they entered into an agreement, Ex. A. 5 that in order to recover the said debts both of them should jointly

execute the decrees and that in case the properties were brought to sale and the same purchased by either of them both should be entitled in the

proportion of 1/6th and 5/6th respectively and, in pursuance of this arrangement, they brought the properties to sale and the plaintiff was only

asking for a share consequent on me arrangement between himself and the second and third defendants.

Section 66 clause (I), C.P.C., which is the relevant provision is in the following terms:

''No suit shall be maintained against any person claiming title under a purchase certified by the Court in such manner as may be prescribed on the

ground that the purchase was made on behalf of the plaintiff or on behalf of some one through whom the plaintiff claims.''

The bar under this provision arises if the suit is laid on the ground that the purchase was made on behalf of the plaintiff or on behalf of some one

through whom the plaintiff claims. The case set up by the plaintiff in answer to this objection in the lower Court was that this was not a case of a

benami transaction but that the plaintiff and defendants 2 and 3 became partners in a joint venture to purchase the properties and a suit by a

partner to get his share was not therefore affected.

There has been a series of judicial decisions on the subject. The corresponding provisions in the earlier Codes are Section 260 of the Act of

1859 and S. 317 of the Act or 1882. The earliest case is - ''Mt. Buhuns Kowur v. Lala Buhooree Lall'', 14 Moo Ind App 496 (PC) (A), where a

purchaser in a Court sale was resisted by the defendant in possession who pleaded that he was the real purchaser and that the purchase was made

benami by the certified purchaser, it was found that the fact of the plaintiff''s title being certified as purchaser was not conclusive by S. 260 of that

Act and that Section 260 was confined to a suit brought against a certified purchaser and did not embrace a suit brought by him against a party in

possession.

The plea of benami therefore was found to be permissible as a defence, though it could not found a cause of action for a suit for possession against

the Court auction purchaser. The Privy Council observed at page 525:

The object which the framers of the Code probably had in view was to prevent judgment debtors becoming secret purchasers at the judicial sales

of their property, and to empower the Court selling under a decree to give effect to its own sale, without contention on the ground of benami

purchase, by placing the ostensible purchaser in possession of what it had sold, and of insuring respect to that possession by enacting that any suit

brought against him on the ground of benami shall be dismissed.

It was pointed out by the Privy Council that the Code has not made benami purchase unlawful and that therefore the real owner may set up his

right against the benamidar when his possession as interfered with, as in that case. It was also observed that there was no reason for giving the

provisions of the Code a larger operation than the language imported.

In - ''Bodh Singh Doodbooria v. Gunesh Chunder Sen'', 12 Beng LR 317, (PC) (B), it was held that the provisions of Section 260 of the Code

of 1859 applied to ordinary benami purchases at execution sales but did not affect purchases of property by one member of a joint Hindu family in

his own name with the joint funds. As regards the object of the provisions, the Privy Council observed at page 329.

They were designed to check the practice of making what are known as benami purchases at execution sales - i.e., transactions in which A

secretly purchases on his own account in the name of B. Their Lordships think that they cannot be taken to affect the rights of members of a joint

Hindu family, who by the operation of law, and not by virtue of any private agreement or understanding, are entitled to treat as part of their

common property an acquisition, however made, by a member of the family in his sole name if made by the use of the family funds.

In ''Monappa v. Surappa'', 11 Mad 234 (C), where a purchaser acted benami in buying the property, the initial deposit for the purchase having

been paid by the person claiming to be the real owner, the balance having been found by the purchaser, and after the sale the real owner was

allowed to continue in possession with an understanding that the purchaser would transfer the property on repayment of the balance of the

purchase money, it was held, following the dictum of the Privy Council in - '' 14 Moo Ind App 496 (A)'', that, since the purchaser acknowledged

that his purchase was benami and gave up possession on the understanding that he would transfer the property, Section 317 of the Code was no

bar to the institution of the suit and that Section 317 contains only a statutory direction that a benami purchase at an auction sale in execution of a

decree shall not be accepted as the sole ground of a suit against the certified purchaser.

In - ''Sankumni Nayar v. Narayanan Nambudri'', 17 Mad 282 (D), - ""Kumbalinga Pillai v. Ariaputra Padiachi'', 18 Mad 436 (E) and -

Patrachariar v. Ramaswami Chettiar'', AIR 1919 Mad 942 (F), where the purchases have been found to have been made by agents, suits for

recovery of the properties were held not to be barred u/s 317.

In ''Venkatappa v. Jalayya'', AIR 1919 Mad 94 (FB) (G), in a suit against the auction purchaser for specific performance of an agreement to

convey half a share of the immovable property, which was purchased in court auction under an agreement subsequent to the purchase, but in

pursuance of an arrangement even before the sale, that the property should be purchased in his name and one half of it should be conveyed to the

plaintiff after the sale certificate was obtained, a Full Bench of our High Court held that such a suit was not barred on the ground that the purchase

was made on behalf of the plaintiff within the meaning of Section 66, C.P.C.

It was also held that it was not a benami transaction at all and the allegation in the plaint that the auction purchaser was a benamidar had not the

effect of debarring the plaintiff u/s 66, C.P.C., from maintaining the suit for specific performance.

The decision was cited with approval by the Privy Council in- AIR 1920 30 (Privy Council) . Here as well, there was an agreement prior to the

sale that after the purchase the property will be conveyed by the appellant, in whose name the properties were allowed to be purchased. After the

sales were made in the name of the appellant, the appellant bound himself by agreements to carry out the original agreement with the respondents.

In suits by the respondents against the appellant for specific performance, the defence was that the suits were barred u/s 66 sub-section (1).

It was held that the fresh agreements made after the sale, though carrying out those made before the sale, were not affected by Section 66 and the

suits were therefore not barred. The Privy Council took the view that the subsequent agreements were unaffected by the section.

In '' Vadrevu Suryanarayana Vs. Kocherlakota Venkata Subbarao and Another, the plaintiff''s property was sold in execution of a decree

against him and it was bought by the defendant in his name but the entire amount of the sale price and expenses of the sale was admittedly

furnished by the plaintiff, part of it on the day of sale and the balance four days after the sale.

On the latter date the defendant addressed a letter to the plaintiff where he referred to the fact of the sale and of the plaintiff having got the

defendant to bid at the sale at the plaintiff''s cost and concluded by stating that the said land shall be reconvened to the plaintiff whenever required

by him without demanding any consideration therefore .In a suit for specific performance of the agreement contained in the letter the defendant

pleaded Section 66 (1), C.P.C., in bar of the suit. It was held that the facts fell directly within the scope of S. 66 (1) C.P.C.

The decisions in - '' AIR 1920 30 (Privy Council) were distinguished. In that case it will be seen that the judgment-debtor himself entered into an

agreement with a third party for purchase of the properties benami, he having provided the entire consideration and the fact that the agreement was

subsequent to the sale was held not to make difference on the facts of the case, and if such a transaction were to be allowed, it would be frustrating

the object of Section 66 (1) provisions of which, in the view of the Privy Council in _ ''Ganga Sahai v. Kesri'', AIR 1915 PC 81 (J) ""were

designed to create some check on the practice of making what are called benami purchases at execution sales for the benefits of the judgment-

debtors"".

In the present case, however, the suit was not for specific performance of any agreement subsequent to the sale and these decisions may not have

any direct application though subsequent to the sale the conduct of the parties would justify the conclusion that they confirmed the arrangement

entered into and acted upon it and intended to stand by it.

In - '' AIR 1915 PC 81 (J)'', one of the three joint decree-holders of a mortgage decree alone took out execution u/s 231 of the Code stating

that the other decree-holders had died, and praying that execution might be subject to the rights of their heirs and representatives. He obtained

leave to bid at the sale, purchased the property in his own name, and furnished with a certificate of sale, got possession of the property.

It was held in a suit by the heirs of the other decree-holders for the shares they were entitled to under the decree that Section 317 of the Code was

not applicable as a defence to the suit, and that the plaintiffs were entitled to recover their shares of the mortgaged property. After referring to

Section 317 corresponding to Section 66 of the present Code, it was observed in that decision as follows at page 82:

In their Lordships'' opinion the provisions of that section have no application to the present case. They were designed to create some check on the

practice of making what are called benami purchases at execution sales for the benefit of judgment debtors and in no way affect the title of persons

otherwise beneficially interested in the purchase,

In ''Achhaibar Dube v. Tapasi Dube'', 29 All 557 (K), in execution of a joint decree on a mortgage one of the decree-holders obtained leave

to bid at the auction sale and purchased the mortgaged property for the exact amount of the decree, namely, the mortgage debt interest and costs.

Satisfaction of the decree was entered up and the purchaser took possession of the property. It was held that Section 317 C.P.C., did not

preclude the other joint decree-holder from suing for a declaration that the property so purchased was the joint property of himself and the actual

purchaser. After referring to the decision in '' 12 Beng LR 317 (B)'', Richards J. observed as follows at page 560:

It seems to me, however, that the principle of the reasoning of their Lordships of the Privy Council goes somewhat further than the case of a Joint

Hindu family. For example, the reasoning would apply with equal force to the case of a partnership under the circumstances I have supposed

above. I think also if the allegations of the plaintiff were proved, that is to say, that the plaintiff being entitled to half of the debt and interest

recovered against Babu Janaki Prasad, the defendants purchased the property by means of setting off the amount of the joint decree, and that the

property so purchased from the date of purchase upto the commencement of the proceeding for partition was treated as joint property, that the

plaintiff would, notwithstanding the provisions of Section 317, be entitled to a declaration that the purchased property was under the circumstances

joint property and must be treated as such in the partition proceedings.

In - Vishvanath Dhondihaj Gayadhani Vs. Pandharinath Ganesh, a house was sold in execution of a decree. The first defendant was the certified

purchaser, but half the money was supplied by the plaintiff. The plaintiff brought a suit claiming to recover half of the house by partition. The lower

Courts dismissed the suit on the ground that it was a case of a joint venture to buy property at a court sale and as the sale certificate was issued in

the name of one only the suit was not maintainable u/s 66, C.P.C.

On appeal to the High Court, it was held that the case was one of partnership in a single transaction for the purpose of purchasing the property and

that Section 66 had no application to the facts of that case. Macleod, C.J. after referring to the case in '' 29 All 557 (K)'', observed as follows at

page 526: ""I do not think there is any difference between the case where one of the partners in a partnership, which is in existence for other

purposes, buys property from the joint funds in his own name, and the case where there is a partnership in a single adventure in which two or more

persons agree to unite their funds for the purpose of purchasing the pro party. There is no intention then of a secret purchase by one person in the

name of another. It is a joint transaction. The fact that it is conducted by one partner on behalf of himself and as agent of the other partner or

partners, takes it out of the range altogether of benami transactions"".

Reliance was placed by the lower Court on the decision in - Umrai Ali Khan and Others Vs. Intizami Begam and Others, , where the plaintiff

sued for possession of a half share of a certain property, of which the defendant was the certified purchaser at an auction sate in execution of some

other persons decree. The plaintiff alleged that the bid at the auction was made by the defendant on behalf of both the plaintiff and the defendant

and the plaintiff was accordingly the owner of half the property. The parties were not members of a joint Hindu family, or of a partnership firm.

It was held that the suit was barred by Section 66, C.P.C. Sulaiman, C.J. and Bajpai J. in dealing with the Privy Council case in - '' AIR 1915 PC

81 (J)'' observed at page 178 as follows:

It is urged before us that their Lordships intended to lay down that the rights of persons who are otherwise beneficially interested in the purchase

can never be affected by the provisions of the section. We think that their Lordships intended to protect the interest of persons beneficially

interested in the property purchased, other than those who claim to have made a benami purchase in the name of the auction purchaser, who are

not entitled to maintain the suit contrary to the provisions of Section 66. Further, the title of persons otherwise beneficially interested would not be

affected....

The learned Judges, however, were unable to agree with the view expressed by the Bombay High Court in - Vishvanath Dhondihaj Gayadhani Vs.

Pandharinath Ganesh,

The decision in '' Bishen Dayal Vs. Kesho Prasad and Another '', went up to the Privy Council and it was confirmed (vide) - AIR 1940 202

(Privy Council) , the Judicial Committee observing that it was sufficient to say that the only case pleaded by the plaintiff was that Ram Dayal

derived his right to half of the village from the auction purchase having been made in part on his behalf by Kesho Prasad, and no case independent

of this purchase and basing title upon subsequent possession was traceable in the memorandum of appeal.

The decision in Bishen Dayal Vs. Kesho Prasad and Another was followed by the Patna High Court in - Shiva Shankar Sah and Another Vs.

Manbharan Rai and Others, , where it was held that Section 66, C.P.C. operates as a bar to a claim by a person who alleges that the actual

purchase was either on behalf of himself exclusively or of himself jointly with the certified purchaser, whether the purchase is alleged to be in

execution of an express agreement or otherwise and the fact that the principal claims only to have provided a part of the purchase money and to be

entitled to only a share in the property does not make any difference in principle.

In - Iswar Chandra Pal and Others Vs. Kabiruddin Ahmed and Others, , where the plaintiffs and three others had all decrees against a

common judgment-debtor, and when the properties of the judgment-debtor were put up for sate, the decree-holders agreed that the properties

would be purchased in the name of two of them and subsequently the properties would be divided in certain proportions, the parties having

contributed towards the purchase in the said proportions, and when a suit was instituted for recovery of the plaintiffs share, it was held that Section

66 was a bar.

The learned Judges were of opinion that the operation of Section 66 cannot be ousted by the existence of any private agreement or undertaking

and that the only cases in which Section 66 could not come in are those where, independent of any agreement or undertaking, the plaintiffs had a

right to the purchase by operation of law.

In another case of the Calcutta High Court in Durga Das De Vs. Bagalananda De and Others, , where the purchase was made by a member of

the Dayabhaga family not being the karta, out of joint family funds and a suit was instituted by a member for recovering the share, the suit was held

to be maintainable and the defence raised u/s 66, C.P.C., was rejected. The object with which the section was enacted as observed by the Privy

Council in '' 12 Beng LR 317 (B)'' and '' AIR 1915 PC 81 (I)'' was approved.

The Bombay High Court in - Nimalchand Gulabsa and Others Vs. Madanlal Jagannath Shet and Others, did not agree with the view taken by

the Calcutta High Court in Iswar Chandra Pal and Others Vs. Kabiruddin Ahmed and Others, , that the operation of Section 66 cannot be ousted

by the existence of any private agreement or undertaking. In the Bombay case the facts are these: Two items of properties belonging to one Buda

Vanjari in survey numbers 21 and 71 were mortgaged to the defendants in 1919. The plaintiffs purchased the equity of redemption in S. No. 21 in

1923.

The defendants instituted a suit on the mortgage. An agreement was then entered into between the plain tiffs and the defendants on 14-7-1940

under which possession of S. No. 21 was to be given to the defendants. In execution of his decree the defendants brought to sale and purchased

both the items. The plaintiffs claimed half a share in S. No. 71 as per the terms of the agreement entered on 14-7-1940.

A defence u/s 66 C.P.C., was taken relying on the observations of the Privy Council in - '' AIR 1915 PC 81 (J)'', that the provisions ""''were

designed to create some check on the practice of making what are called benami purchases at execution sales for the benefit of judgment-debtors

and it was contended that the plaintiffs having purchased the equity of redemption in respect of one of the properties were in position of judgment-

debtors and therefore it was a pure and simple benami transaction, which was sought to be prevented by the enactment of Section 66.

The learned Judges were of the opinion that it was not every private agreement or undertaking that necessarily attracted the application of Section

66, nor could it be said that every private agreement or undertaking affecting the property sold at an auction sale was within the mischief of Section

66.

In the present case, the plaintiff attached the suit properties in execution of his decree and, it the properties had been sold, he would be

entitled, at any rate to ratable distribution of the proceeds of the sale along with the defendants, die other attaching decree-holders, and, to that

extent, it cannot be said that he is not interested in the result of sale or would not be affected by allowing the properties to be sold without his

interest being sufficiently protected.

Though it cannot be that he had a beneficial interest in the properties sold just, as a member of a Hindu joint family where the court auction

purchase is out of joint family funds, in the name of one of the members or in the case of a purchase of property in the name of the partners out of

partnership funds, the plaintiff has certainly or interest to the extent of getting his decree satisfied out of the sale proceeds. His position, therefore,

though not identical with is analogous at least to that of the joint decree-holders.

This is therefore a case where it could not be said that the plaintiff''s claim is based on an agreement and solely for the reason that the purchase by

the defendant was benami for him, though in respect of a share in the properties. He cannot be considered to be an absolute stranger to the

transaction having no connection or interest in the properties, which were brought to sale.

This will be sufficient to take this case away from the mischief of Section 66, which, as laid down by the Privy Council, has been enacted to cheek

benami purchases at execution sales for the benefit of or at the instance of judgment-debtors. The object is to discourage not only purchases for

the benefit of the judgment-debtors, but also to discharge secret purchases, with a view to secure the best price for the properties in an open

public auction and ensure the decree-holders the full benefit of their decrees.

But the scope of the section should not be extended so as to apply to cases like the present, where the decree-holders have, by an arrangement

among themselves, sought to safeguard their interests without being defeated by the judgment-debtors. Such arrangements must be upheld and

Section 66 cannot be invoked to defeat such arrangements.

It has been seen that Section 66, C.P.C., has been held not a bar to suits instituted for recovery of possession of the properties, or for a.-.hare

therein where, by operation of law, the plaintiff has been held to possess an interest, for instance, in cases of purchase by a manager of the joint

family in the name of a member out of joint family funds, as was the case in - '' 12 Beng LR 317 (B)'', and Durga Das De Vs. Bagalananda De and

Others, or of purchase by agent for the principal as in - '' 17 Mad 282 (D)'', - '' 18 Mad 436 (E)''and - '' AIR 1919 Mad 942 (F)'' or purchase by

a partner as in - Vishvanath Dhondihaj Gayadhani Vs. Pandharinath Ganesh, and - AIR 1940 1 (Nagpur)

The decisions in - '' AIR 1920 30 (Privy Council) are instances where the purchase was in pursuance of an agreement prior to the sale and ratified

by a subsequent arrangement to re-sell, where also Section 66 has been held to have had no application.

The preponderance of authority of the various Courts in India tends towards the view that Section 66, C.P.C., could be applied only when the

suit is based on the sole ground that the purchase at the auction by the certificated purchaser is on behalf of the plaintiff, that is when the purchase

is an ordinary benami transaction as it is commonly understood in this country, where the section purchaser is a benamidar of the plaintiff and

where no other circumstances exist as to any antecedent relationship existing between the parties or any pre-existing interest in the properties

arising under law or under any arrangement.

What has to be discouraged is a pure and simple benami transaction in court auction purchase by virtue of this provision. If it is shown that there is

some independent pre-existing interest in the properties sold or the plaintiff is otherwise interested in the result of the sale and, if in these

circumstances, an arrangement is entered into whereby the property is purchased in the name of one and subsequently the plaintiff was to be given

a share or an interest in the same, it cannot be held that such a transaction is a benami transaction which is hit by Section 66, C.P.C.

It must be borne in mind that benami transactions are not as such held to be illegal. On the other hand, in cases where the real owner claims title on

the ground that the property was purchased benami, Courts have endeavoured to give effect to the real title notwithstanding that the ''ex facie'' title

was in another. It is necessary to apply section 66, C.P.C., strictly and confine it to cases which come within the specific language of the provision

and not extend its scope to cases where it would be necessary in the interests of justice to give effect to the real nature of the transaction.

In the result the appeal is allowed with costs throughout. No leave.