Kerala High Court
Appu vs Bhaskaran on 26 September, 2001
JUDGMENT K.A. Mohamed Shafi, J.
1. The plaintiff in O.S. 269 of 1989 on the file of the Subordinate Judge's Court, Kozhikode is the appellant. The suit is filed for declaration of title and possession of the plaint schedule property as per the registered assignment deed dated 23.5.89 and the defendant has got only a tenancy right to reside in the house situated in the plaint schedule property and for permanent prohibitory injunction against the defendants from trespassing upon the plaint schedule property or doing anything detrimental to the plaintiff's right in and possession of the plaint schedule property.
2. According to the plaintiff/appellant, the defendant/respondent assigned the plaint schedule property for a consideration of Rs. 53,000/- in his favour as per Ext. A1 assignment deed dated 23.5.89 and executed Ext. A2 rent agreement in favour of the appellant for residence in the house situated in the plaint schedule property on a monthly rent of Rs. 150/-. It is also contended that since the respondent's son in law demanded for brokerage and the appellant refused to pay the same, the respondents did not give possession of the property to the appellant. Thereafter, the respondent executed Ext. B1 revocation deed of the assignment on 29.5.89. Hence the appellant sent Ext. A3 registered lawyer notice dated 7.6.1989 and instituted the above suit for necessary reliefs.
3. The defendant/respondent contended that there was no intention to sell the plaint schedule property to the appellant. When the respondent approached the appellant for a loan of Rs. 53,000/-, the appellant insisted execution of a registered document as security for the loan. Therefore the respondent executed Ext. A1 assignment deed, but the appellant refused to pay the consideration as promised and therefore he has executed Ext. B1 revocation deed. He has also contended that Ext. B2 rent bond is fabricated by the appellant on blank signed stamp papers obtained by him.
4. After trial, the lower court found that the evidence revealed that the defendant has not received consideration and the plaintiff has not paid consideration as alleged in the plaint and therefore the plaintiff has not obtained any right in or possession of the plaint schedule property and accordingly dismissed the suit. Hence the plaintiff has come up with the above appeal before this court.
5. Eventhough, the respondent has contended that Ext. A2 rent bond is concocted in some blank signed stamp papers obtained by the appellant from the respondent, the lower court negatived that contention of the respondent. That finding of the lower court is not challenged by the respondent.
6. The counsel for the appellant submitted that eventhough the burden is heavy upon the respondent, who contended that Ext. A1 assignment deed dated 23.5.89 executed by him is a document not intended to sell the property, but only a security for the loan to be advanced by the appellant as against the specific recitals in the document, to establish those contentions, the lower court wrongly cast the burden upon the appellant without placing the burden upon the respondent who seeks to cancel the registered document. But the counsel for the respondent submitted that the respondent had pleaded total lack of consideration in this case which is the specific and valid plea available to him under proviso 1 to Section 92 of the Evidence Act and therefore the lower court is perfectly justified in finding that the assignment deed is not supported by any consideration from the available evidence on record.
7. In Ext. A1 assignment deed it is clearly recited that the entire genm, possessory and improvement rights in the property scheduled to the document are assigned by the respondent in favour of the appellant for a consideration of Rs. 53,000/- which is received by the respondent from the appellant in cash. Ext. B1 is the first document executed after Ext. A1. Ext. B1 is executed by respondent on 29.5.89 cancelling Ext. A1 assignment deed. In Ext. B1 it is stated that the consideration of Rs. 53,000/- as mentioned in Ext. A1 is not paid by the appellant to the respondent and even though the appellant misrepresented that he will pay the amount from his residence, he did not pay the amount after taking the respondent to his house and taking about certain matters. Therefore, he cancelled the assignment deed. There is absolutely no mention in Ext. B1 cancellation deed Ext. A1 assignment deed was executed only as a security for the loan to be advanced by the appellant to the respondent and after execution of the document, the appellant refused to advance the consideration as stated in Ext. A1.
8. In the written statement, in paragraphs 3 and 4 the respondent has stated that as he was in dire need of Rs. 53,000/- for his purposes, he demanded a loan of Rs. 53,000/- from the appellant for a term of 2 years and the appellant promised to pay the amount as loan on condition that the respondent should execute an assignment deed being security, thorough one Balan Master and as per the decision taken through him respondent executed Ext. A1 registered assignment deed. It is also stated that due to the cordial relationship between the appellant and the respondent, that document was executed. It is further stated that after the execution of Ext. A1, the appellant refused to pay Rs. 53,000/- as loan contending that the loan amount should be treated as security for the loan obtained by the respondent from K.S.F.E. with the appellant as surety. Therefore the respondent executed Ext. B1 cancellation deed. But apart from stating that no consideration is paid for Ext. A1 and therefore the document was cancelled as per Ext. B1, absolutely no recital with regard to the demand for loan, the appellant's insistence for execution of assignment deed as security and his refusal to pay the amount after execution of Ext. A1 contending that it will be treated as security for discharge of the loan obtained by the respondent from the K.S.F.E. is made in Ext. B1.
9. The counsel for the respondent submitted that even though no oral evidence can be adduced to contradict, vary, add or subtract from the terms of the registered documents under Section 92 of the Evidence Act, under proviso 1 to that Section oral evidence regarding fraud, intimidation, illegality, want of due execution, want of capacity in any contracting party, want or failure of consideration, mistake in fact or law can be adduced. Therefore according to him the plea of total lack or failure of consideration for Ext. A1 is perfectly sustainable in this case. The counsel also submitted that the appellant failed to prove that he was possessed of means to pay consideration as alleged by him. He further submitted that the appellant was surety to the respondent for the loan obtained by him from K.S.F.E. by offering two properties as security and out of these two items of properties, one of them was sold to the appellant as per Ext. A1, but the appellant did not pay the consideration saying that he will not pay the amount before discharging the debt due to K.S.F.E. He also submitted that the appellant has stated in the plaint as well as in his evidence that he borrowed Rs. 20,000/- from one Sivadasan, his brother as per a promote. But no evidence is adduced to prove that he has borrowed Rs. 20,000/- from his brother. He also submitted that he withdrew Rs. 20,000/- from State Bank of India, but much prior to the date of Ext. A1 that account was closed. But Ext. A4 pass book and the entries in Ext. A4(a) establish that the appellant had the amount to his credit in the Bank at the time of execution of Ext. A1, though the amount lying to his credit as on 29.5.89 was Rs. 10,000/- and not Rs. 20,000/-. The counsel for the respondent submitted that the appellant has contended that he has raised Rs. 7500/- by kurikalyanam and no document is produced to prove the same. But the appellant has produced Ext. A5 book relating to kurikalyanam and Ext. A6 invitation for kurikalyanam on 30.4.89. Though the respondent contended that Exts. A4 to A6 were produced after the evidence was closed in the suit they cannot be looked into, since those documents were accepted in evidence by the lower court and the respondent has not raised any objection before the lower court against the reception of those documents in evidence such a contention cannot be raised by the respondent regarding admissibility of Exts. A4 to A6 in this appeal. It is also pertinent to note that DW2 has deposed that the appellant has got sufficient means to advance the amount. Therefore the contention of the respondent that the appellant is a person who has no means to raise the amount of Rs. 53,000/- to pay consideration for Ext. A1 assignment deed is not sustainable.
10. Since the dispute between the appellant and the respondent started immediately after the execution of Ext. A1, the fact that the respondent paid building tax in respect of the building situated in the property and land revenue in respect of the property as evidenced by Ext. B2 and B3 and the appellant has not paid any building tax or basic tax in respect of the property if of no significance. Likewise the fact that the appellant has not taken any steps for mutation in the revenue records and he has not demanded any rent for the house from the respondent are also of no significance since the dispute between the appellant and the respondent started immediately after execution of Ext. A1. The contention of the respondent that the appellant has not inspected the property and he has not asked for encumbrance certificate in respect of the property before execution of Ext. A1 also are of no significance since Ext. A1 assignment deed contains clear recital regarding the assignment of the property and passing of consideration.
11. Section 54 of the Transfer of Property Act defines sale as follows:
"Sale is a transfer of ownership in exchange for a price paid or promised or part-paid and part-promised".
From the above definition of sale in the T.P. Act it is clear that transfer of ownership can be in exchange for a price paid or promised or part paid and part promised. Hence passing of the consideration is not a prerequisite or condition precedent for sale or transfer or ownership or immovable property.
12. In the book Transfer of Property Act 9th Edition, the learned Author H.S. Gour has observed at page 592 as follows:
"Now, the general law is that title passes on the execution and registration of 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".
13. The learned Author Mulla, in his book Transfer of Property Act, 8th Edition, at page 368 has observed as follows:
"The answer to the question whether the transferor intends to transfer ownership by mere execution or registration or whether he intends to do only after receipt of consideration would depend on the intention of the parties. The intention is primarily to be determined from the recitals of the sale deed. It is only when the recitals are ambiguous that extraneous evidence is admissible."
14. In the decision reported in Kemta Prasad v. Lachmi Sah (AIR 1929 Patna, 550), a Division Bench of the Patna High Court has held as follows:
"A sale once registered passes title unless it is established to the satisfaction of the Court that the intention of the parties was that title should not pass until the payment of consideration".
15. In the decision reported in State of Kerala v. Cochin Chemical Refineries Ltd. (AIR 1968 SC 1361), the Supreme Court has observed as follows:
"A transaction of mortgage formally executed does not becomes void or ineffective merely because the mortgagee fails to advance the amount of money undertakes to be advanced by him. It without advancing the amount agreed to be advanced, he sues on the title created under the deed or mortgage, the court will not award him a decree for anything more than what he has advanced. But that is not to say that the mortgage is invalid".
Though the Supreme Court made the above observations in respect of mortgage the same principle is applicable to sale also.
16. In the decision reported in Narayan Moopil v. Narayanan Prabhakaran (1993 (1) KLT 41), a Singly Judge of this Court has observed as follows:-
"The contention of the learned counsel for the appellant that once the price of the property which is the subject matter of a registered sale deed is shown to have been not paid, the document would become void, cannot be accepted. A conveyance by a registered deed cannot be placed in the same category as agreements void for want of consideration. If the price of the property which is the subject matter of a registered sale deed is not paid, the vendor cannot on that account get the sale deed avoided. All that he can do in such circumstance is only to sue for purchase price and that amount will get a charge on the property as unpaid purchase money under Section 55(4)(b) of the Transfer of Property Act".
17. In the decision reported in Vidhyadhar v. Manikikrao (AIR 1999 SC 1441), the Supreme Court has observed as follows:
35. The definition indicates that in order to constitute a sale, there must be a transfer of ownership from one person to another, i.e., transfer of all rights and interest in the properties which are possessed by that person are transferred by him to another person. The transferor cannot retain any part of his interest or right in that property or else it would not be a sale. The definition further says that the transfer of ownership has to be for a "price paid or promised or part-paid and part-promised". Price thus constitutes an essential ingredient of the transaction of sale. The words "price paid or promised or part-paid and part-promised" indicate the actual payment of whole of the price at the time of the execution of sale deed is not a sine qua non to the completion of the sale. Even if the whole of the price is not paid but the document is executed and thereafter registered, if the property is of the value of ore than Rs. 100/- the sale would be complete".
18. Therefore, it is clear that on the basis of the mere contention of the respondent that the consideration for Ext. A1 is not passed from the appellant to the respondent it cannot be held that the registered assignment deed Ext. A1 is void or ineffective.
19. At page 367 of 8th Edition of the book, Transfer of Property Act, the learned Author Mulla has observed as follows:
"On the other hand, it does not follow that property passes as soon as the instrument is registered for the true test is the intention of the parties(v). Registration is prima facie proof of an intention to transfer but it is no proof of an operative transfer if there is a condition precedent (Which must be strictly proved) as to payment for consideration or delivery of the deed. Thus the seller may retain the deed pending payment of price and in that case, there is no transfer until the price is paid and the deed delivered. The words "price paid or promised" in the definition show that the payment of price is not necessarily a sine qua non to the completion of the sale".
20. In the decision reported in Bishundeo Narain Rai v. Anmol Devi (AIR 1998 SC 3006), the Supreme Court has observed as follows:
"A combined reading of Section 8 and Section 54 of Transfer of Property Act suggests that though on execution and registration of a sale deed, the ownership and all interests in the property pass to the transferee, yet that would be on terms and conditions embodied in the deed indicating the intention of the parties. It follows that on execution and registration of a sale deed, the ownership, title and all interest in the property pas to the purchaser unless a different intention is either expressed or necessarily implied which has to be proved by the party asserting that title has not passed on registration of the sale deed. Such intention can be gathered by intrinsic evidence, namely, from the averments in the sale deed itself or by other attending circumstances subject, of course, to the provisions of Section 92 of the Evidence Act".
21. In the decision reported in Hathika v. Padmanabhan (1994 (1) KLT 345), a Single Judge of this Court observed as follows:
"The position therefore is that the intention of the parties has to be gathered from the terms of the document when they are express and clear. Whatever be the consequence and whatever be the hardship caused to one of the parties the legal effect of those words cannot be ignored. The question is not what the parties had intended or meant but what is the legal effect of the words used by them in the deed. The court can look into the surrounding circumstances to ascertain the intention of the parties only in case of ambiguity in the language used. As observed by the Supreme Court oral evidence may guide the court in unravelling the true intention of the parties in such a case and tendering of extrinsic evidence as to acts, conduct and surrounding circumstances is permissible to enable the court to ascertain the real intention of the parties. In short, the court is concerned with the substance of the document the recitals therein and not the form and the recitals are to be construed to ascertain the real intention of the parties in the light of such recitals and other available facts and circumstances".
22. As already noted, the recitals made in Ext. A1 assignment deed make it very clear that the property is transferred by the respondent to the appellant for a consideration of Rs. 53,000/- and there is no reservation in the document either express or with necessary implication with regard to the passing of consideration or title to and possession of the property at a later time after its execution as per the assignment deed. In Ext. B1 cancellation deed, the only reason for cancellation mentioned is failure of consideration and nothing else. But in the suit, the respondent has put forward the contention that the document was not intended to be an assignment deed and it was intended to be a document to secure the debt to be advanced by the appellant. Ext. A2 rent bond executed by the respondent in favour of the appellant, the execution of which though denied by the respondent and contended to be fabricated on signed stamp papers obtained from him by the appellant, that contention is negatived by the lower court. Therefore the recitals made in Exts. A1, A2 and B1 clearly manifest the intention of the parties to transfer the ownership of the respondent in the plaint schedule property to the appellant as per Ext. A1.
23. In the decision reported in AIR 1999 SC 1441, which is already referred to above the Supreme Court has further observed as follows:
"47. The basic principle is that the form of transaction is not final is not final test and the true test is the intention of the parties in entering into the transaction. If the intention of the parties was that the transfer was by way of security, it would be a mortgage. The Privy Council as early as in Balkishan Das v. Legge, (1899) 27 Ind App. 58, had laid down that, as between the parties to the document, the intention to treat the transaction as an out and out sale or as a mortgage has to be found out on a consideration of the contents of document in the light of surrounding circumstances. The decision of this Court in Bhaskar Waman Joshi v. Shrinarayan Rambilas Agarwal, AIR 1960 SC 301 : (1960) 2 SCR 117 and P.L. Bappuswami v. N. Patty Gounder, AIR 1966 SC 902; (1966) 2 SCR 918, are also to the same effect".
24. Therefore as it is clear from the recitals made in Exts. A1, A2 and B1 that the intention of the respondent in this case was to assign his entire right in and title to the plaint schedule property to the appellant for a consideration of Rs. 53,000/- and Ext. A1 is executed and registered by the respondent in accordance with law, the contention of the respondent that Ext. A1 was intended to be executed as a security for the transaction in debt and not a sale deed is not sustainable.
25. As it is clear from the evidence on record that Ext. A1 assignment deed is executed by the appellant with the intention to assign the property in favour of the appellant, the lower court is not justified in finding that Ext. A1 is not a valid document since the appellant failed to prove that he has paid consideration as alleged in the plaint and therefore the appellant has not obtained any right, interest and possession of the plaint schedule property cannot be sustained. Hence this appeal is allowed, the decree and judgment passed by the lower court are set aside and the suit is decreed for declaration and permanent prohibitory injunction as prayed for, by the appellant. Considering the nature and circumstances of the case, I direct the parties to bear their respective costs in this appeal.