Allahabad High Court
Smt. Sundari And Ors. vs Bhola Nath And Ors. on 5 April, 2004
Equivalent citations: AIR2004ALL293, AIR 2004 ALLAHABAD 293, 2004 ALL. L. J. 2793, 2005 (3) LANDLR 399, 2004 (96) REVDEC 578, 2004 (5) ALL WC 4106, 2005 (1) RECCIVR 526
Author: Tarun Agarwala
Bench: Tarun Agarwala
ORDER Tarun Agarwala, J.
1. One Bachai (hereinafter referred to as the judgment Debtor) had taken a loan from Raja Ram (hereinafter referred to as the Decree holder) Since the loan was not repaid, Raja Ram filed Suit No. 261 of 1966, which was decreed by judgment dated 13-12-1966. The appeal of Bachai was dismissed. Thereafter, the decree was put in execution. Before the property of the judgment debtor could be attached in execution proceedings, the judgment debtor sold his property by sale-deed dated 28-4-1967 to Ganga, plaintiff and to Basdeo, defendant No. 1. By order dated 29-5-1967, the property in question was attached in execution proceedings. The plaintiff filed an objection under Order 21, Rule 58 of the Code of Civil Procedure praying that the order of attachment was illegal. The objection of the plaintiff was rejected by the executing Court vide order dated 12-7-1969. Immediately thereafter, the plaintiff Ganga filed a suit under Order 21, Rule 63 of the Code of Civil Procedure praying that the plaitiff and defendant No. 4 be declared as Bhumidhars of the plot in question. During the pendency of the suit the executing Court auctioned the property to one Sukku (hereinafter referred to as the Auction Purchaser). Consequently, the plaintiff made a further prayer that the auction be declared illegal and the plaintiff and defendant No. 4 be put back in possession. The plaintiff alleged that he had purchased the property vide sale deed dated 28-4-1967 prior to the attachment order passed by the executing Court and that he is the Bhumidhar of the land in question and that the said property cannot be attached nor can it be auctioned in execution proceedings.
2. The decree holder, Raja Ram, filed his written statement and submitted that the sale deed had been executed by the judgment debtor in order to defraud the creditor and to defeat the decree passed in Suit No. 261 of 1966. It was also contended that the executing Court auctioned the property in favour of the auction purchaser Sukku and that the auction purchaser had been put in possession on the land in question and therefore, the attachment and the auction proceedings have come to an end and the present suit of the plaintiff had become infructuous.
3. The auction purchaser also filed his written statement and submitted that he was the auction purchaser having purchased the property through auction in the executing proceedings conducted by the executing Court and that he had been put in possession of the land in question. It may be stated here that the judgment debtor Bachai was also arrayed as a defendant, but he neither filed his written statement nor appeared as a witness.
4. The trial Court after framing the issues, decreed the suit of the plaintiff holding that the attachment order passed by the executing Court was legal and valid. However, the auction purchaser Sukku was not a bona fide purchaser. The trial Court held that if the auction purchaser had made enquiries in the Registrar's office, he would have found out that the judgment debtor had already sold his property to the plaintiff and that the name of the plaintiff had been mutated in the records. The trial Court further held that there was no evidence to show that the judgment debtor had sold the property to the plaintiff in order to defeat the execution proceedings. Thus, the trial Court decreed the suit holding that the plaintiff and defendant No. 4 were bhumidhars on the basis of the sale deed dated 28-4-1967 and that the auction purchaser Sukku had no right on the basis of the auction conducted by the executing Court.
5. Aggrieved by the judgment of the trial Court, the decree-holder and the auction purchaser filed an appeal which was allowed and the suit was dismissed with costs. The lower appellate Court held that the plaintiff had implied notice of the fact that the judgment debtor, was selling all his land to avoid the execution of the money decree. The appellate Court further found that the plaintiff had knowledge of the money decree on account of the fact that both the plaintiff and the judgment debtor resided in the same village. The appellate Court further found that no consideration was paid by the plaintiff at the time of the execution of the sale deed before the Sub-Registrar and the fact that the sale consideration was paid earlier had not been proved, inasmuch as, neither the judgment-debtor appeared to prove this fact that he had received the money nor the defendant No. 4 was produced in whose presence the consideration was alleged to have been paid, coupled with the fact that no receipt of the advance payment was filed by the plaintiff. The trial Court held that the plaintiff failed to prove that he had paid the actual consideration to the judgment-debtor. The appellate Court further found that the plaintiff was not a bona fide purchaser and that the defendants had proved that all the ingredients of Section 53 of the Transfer of Property Act existed and that the execution of the sale deed was made with the intent to defeat the money decree.
6. Aggrieved by the reversal of the decree, the plaintiff has now filed the present second appeal before this Court. At the time of the admission of the appeal the following substantial questions of law was formulated namely, "Whether the finding of the lower appellate Court while setting aside the finding of the trial Court on the question of the appellant being the bona fide purchaser without notice seems to be based not on evidence but on conjectures?"
7. Heard Sri Kshltish Shailendra, the learned counsel for the appellant and Sri Haider Husain, the learned counsel for the auction purchaser and decree-holder.
8. The learned counsel for the appellant submitted that the appellate Court committed a manifest error of law in reversing the decree of the trial Court by drawing an adverse inference against the appellant, which was based on surmises and conjectures. The findings of the appellate Court was not supported by any evidence on the record. The learned counsel for the appellant submitted that the appellant was a bona fide purchaser for value and had no notice, and therefore, the property could not be attached or auctioned in favour of the auction purchaser. The appellant purchased the property in good faith and had no knowledge about the indebtedness of the judgment debtor. The learned counsel submitted that it was not possible for the plaintiff to investigate the financial status and indebtedness of the judgment-debtor and that the sale deed was not made with the intention to defeat the money decree and that the plaintiff was liable for protection as envisaged under Section 53 of the Transfer of Property Act. In support of his submission the learned counsel for the appellant has relied upon 1979 ALJ 1302, Shyam Behari Lal v. Pati Ram, AIR 1947 Calcutta 154, Rajbari Bank Ltd. v. Rani Harshamukhi Sinha in which it was held that merely because the transferor was in a financial embarrassment, the same does not establish want of good faith on the part of the transferee. The learned counsel for the appellant further submitted that the amount towards the consideration of the sale price had been paid by the plaintiff and this fact had been proved by the endorsement made by the Sub Registrar in the sale deed. The learned counsel submitted that even though the sale consideration had not been paid before the Registrar, nonetheless, the sale deed was valid and that the plaintiffs right was protected under Section 53 of the Transfer of Property Act read with Sections 58, 59 and 60 of the Registration Act and Rule 241 of the Rules framed under the Registration Act. The learned counsel for the appellant further submitted that since the plaintiff was a bona fide purchaser for value and had no notice coupled with the fact that the sale deed was executed and registered before the attachment, the plaintiff had discharged the burden of proof and that the onus was upon the defendant to prove that the sale deed was void or voidable on the ground that the sale deed was executed with the sole intention to defeat the money decree. In support of the submission the learned counsel for the appellant had relied upon Abdul Sattar v. Hira Dei, 1933 All LJ 1612 : (AIR 1933 All 198).
9. On the other hand, the learned counsel for the defendants submitted that the sale deed in favour of the plaintiff was a sham transaction with the sole purpose of defeating the money decree. The sale deed was not supported by any consideration and that the sale in favour of the plaintiff was vitiated by fraud against the decree holder falling within Section 53(1) of the Transfer of Property Act and was, therefore, voidable.
10. In order to deal with the points raised by the learned counsel for the appellant, it is necessary to look into the provisions of Order 21, Rule 58 and Order 21, Rule 63 of the Code of Civil Procedure as it exised before the amendment in 1976, which reads as under :
"58(1) Where any claim is preferred to, or any objection is, made to the attachment of, any property attached in execution of a decree on the ground that such property is not liable to such attachment, the Court shall proceed to investigate the claim or objection with the like power as regards the examination of the claimant or objector, and in all other respects, as if he was a party to the suit :
Provided that no such investigation shall be made where the Court considers that the claim or objection was designedly or unnecessarily delayed.
(2) Where the property to which the claim or objection applies has been advertised for sale, the Court ordering the sale may postpone it pending the investigation of the claim or objection."
"63. Where a claim or an objection is preferred, the party against whom an order is made may institute a suit to establish the right which he claims to the property in dispute, but, subject to the result of such suit, if any, the order shall be conclusive."
11. From a perusal of the aforesaid, provisions, it is clear that where a third party has a claim or an objection to the attachment of the property attached in execution proceedings, the third party may file an application to the Court executing the decree and upon the rejection of his objection, may file a suit for a declaration of his right. The object of Order 21, Rule 63 of the Code of Civil Procedure is to file a declaratory suit to establish the right which has been negatived by the claim order and in substance to set it aside. Thus, in order to establish his right, the burden of proof squarely falls upon the plaintiff. The plaintiff has to prove that on the date of the attachment, he had some interest in it or was in possession of the property attached. In AIR 1916 Cal 666 at 667, Jamahar Kumari Bibi v. Askaran Bold, it was held as follows :
"The plaintiff in the circumstances of this case cannot discharge the burden of proof cast on her by merely pointing to the innocent appearance of the instruments under which she claims; she must show that they are as good as they look."
12. The same view was reiterated in AIR 1939 Cal 578, Dhirendra Nath Das v. Indra Chandra Kisriwala.
13. In 1933 All LJ 1612 : (AIR 1933 All 198), Abdul Sattar v. Hira Dei it was held as follows :
"The initial onus undoubtedly rests on the plaintiff. He has to establish his title to the property but having established the due execution of the deed of conveyance by one who admittedly owned the property the apparent tenor of the deed must prevail, unless it is established by the defendant that the ostensible owner is only a benamidar. The onus cannot rest on the plaintiff and infinitem and shifts according to the ordinary rules of evidence."
14. However, in AIR 1945 All 42, Amar nath v. Dwarka Das Jai Kishun Das, their Lordship held as follows :
"The plaintiff discharges his initial burden by showing that there has been in his favour a transfer which makes him the ostensible owner of the property in suit. If there is nothing else, there is no reason why a Court should make a presumption in favour of fraud. On the other hand, if circumstances are made to appear from which a reasonable inference of fraud can be drawn, there would doubtless be a burden upon the plaintiff to rebut the inference and that we think is what their Lordships of the Privy Council meant by their remarks in the cases in AIR 1930 PC 255 and 17 ALJ 410 (sic).
15. From the aforesaid, it is clear that the initial burden is upon the plaintiff to establish his right by showing that there is a sale deed in his favour, which makes him the ostensible owner of the property in suit. But the plaintiff cannot discharge the burden of proof merely by pointing out the sale deed under which he claims. The plaintiff must show that the sale deed is good as they look and where fraud is alleged to the effect that the sale deed was executed with the intent to defeat the money decree, the onus shifts back to the plaintiff to rebut the inference of fraud and a greater burden falls upon the plaintiff to establish that the transaction was entered in good faith.
16. The plaintiff in his plaint had only alleged that he was the owner of the property in question vide sale deed dated 28-4-1967 and that the executing Court had wrongly attached the property in question. The plaintiff had nowhere pleaded that he was a bona fide purchaser for value and that he had no notice of the execution proceedings. On the other hand the decree holder had categorically stated that the sale deed was executed by the judgment debtor in order to defeat the money decree. The auction purchaser in his written statement had categorically stated that he had purchased the property through auction proceedings conducted by the executing Court and that he was put in possession of the land in question. It is thus, clear that the initial burden that the plaintiff was the ostensible owner of the property in suit had not been established by the plaintiff.
17. The main point that falls for consideration in this appeal is whether the sale deed in favour of the plaintiff was a ge(sic)ine transaction supported by consideration or whether the sale deed was executed in order to defeat the money decree. Further, if the transaction is found to be a fraud on the creditors, another question that would arise for consideration is whether the plaintiff could claim to be the purchaser in good faith for consideration so, as to claim the benefit of the exemption contained in Section 53 of the Transfer of Property Act.
18. In order to judge this issue, the initial burden that the transaction was genuine was upon the plaintiff appellant and that he had to satisfy that the onus had been discharged which in the present case has not been discharged. However, the onus of proof becomes academic at this stage inasmuch as the entire evidence has been led and the issue regarding the genuineness of the transaction has to be culled out from the evidence on record.
19. The circumstances, which are relevant to the aforesaid issue is that the judgment-debtor was undoubtefully in a financial embarrassment. There was a money decree against him. The judgment-debtor after having lost in appeal knew that he was placed with the burden of satisfying the decree. It has come in evidence that he had sold all his land through various sale deeds. Two sale deeds were executed in favour of the plaintiff and another sale deed was made in favour of Ghulam Mohammad. Another circumstance which comes out is that the decree-holder and the plaintiff-appellant were the members of the same community and that they were also residing in the same village. Therefore, the presumption was that the plaintiff knew about the money decree which was against the plaintiff. The Supreme Court in the case of Abdul Shukoor Saheb v. Arji Papa Rao., AIR 1963 SC 1150 at page 1155 held as follows :
"The significance of the plaintiff and his vendors being members of the same community and well-known to each other consists in this, that the plaintiff might have been chosen because of his willingness to take the sale without any searching enquiry as to the circumstances necessitating it, and because there would be less publicity in the transaction being put through between them-such as for instance inspection of the property or enquiries in the locality as regards value etc. which would take place if the sale was to be to a total stranger which would attract the attention of the firm's creditors."
20. The ratio of the aforesaid judgment of the Supreme Court squarely applies in this case also. Further, another relevant circumstance is that the judgment debtor was arrayed as a party, but did not file any written statement nor did the plaintiff produce him as a witness. Therefore, it is not known as to what was the purpose and circumstance which existed for executing the sale deed by the judgment-debtor. No evidence has been led by the plaintiff to prove that the execution of the sale deed was for some other purpose other than that to defeat the money decree. In the present case the relevant circumstances was that there was a great deal of pressure from the decree holder to execute the decree. The execution of the sale deed by the judgment debtor in the circumstance of the present case would create two possibilities, namely, that the sale was being made in order to satisfy the money decree or that the sale was being made in order to defeat the money decree. Since no explanation or evidence on this aspect has been led by the plaintiffs, the irresistible conclusion and inference that can be drawn is that the sale deed was executed by the judgment-debtor with the sole object to convert the immovable property into cash so that the same may not be made available to the decree-holder.
21. From the aforesaid circumstances, the conclusion that can be drawn is that the object of the execution of the sale deed was mainly to defeat the money decree and therefore, the execution of the sale deed was within the terms of Section 53(1) of the Transfer of Property Act and was voidable at the instance of the decree-holder. This conclusion drawn by this Court also finds support from the judgment of the Supreme Court in Abdul Shukoor Saheb v. Arji Papa Rao (supra).
22. The next question which arises for consideration is whether the plaintiff was a bona fide purchaser for value so as to be protected by the second paragraph of Section 53(1) of the Transfer of Property Act, which reads as under :
"Nothing in the section shall impair of the rights of transferee in good faith and for consideration."
23. In the present case it has come in the evidence that the consideration amount was not paid before the Sub Registrar at the time of the execution of the sale deed. The plaintiff appellant alleged that the consideration was paid in advance at the residence of the judgment-debtor in the presence of defendant No. 3 Basdeo. This fact has not been proved by the production of any receipt showing that the amount was paid in advance, nor the judgment-debtor or defendant No. 3, Basdeo before whom the amount is alleged to have been paid has been produced in the Court. Thus, the factum of payment of consideration has not been proved and an irresistible conclusion is drawn that the sale deed was only a sham transaction in order to defeat the money decree. The sale deed was also not executed in good faith. The plaintiff appellant has failed to prove that he was not a party to the design of the decree of the judgment debtor to defeat the money decree and that the transfer was made in the ordinary course of business. The fact that the plaintiff resided in the same village leads to a conclusion that the plaintiff had knowledge of the money decree passed against the judgment-debtor.
24. In the circumstances, this Court, therefore, holds that the plainttff had notice of the fact that a money decre was issued against the judgment-debtor and that in spite of having notice of it, the plaintiff went ahead and purchased the property knowing fully well that the property was liable to be attached towards the satisfaction of the money decree. It is also clear, that the plaintiff knew that there was a money decree against the judgment-debtor, and in spite of knowing this fact, got the sale deed executed in order to defeat the money decree and therefore, the plaintiff appellant was a party to a fraud. Thus, the plaintiff appellant was not a purchaser in good faith and that the sale deed was executed with the sole intention to defeat the money decree.
25. In 1971 All LJ 734, Ajodhya Pandey v. Baboo Mangal, it has been held as follows :
"As the law stands, the initial burden no doubt is on the creditor but when the creditor is able to discharge the initial burden, the burden shifts to the other side, namely, the plaintiff to prove that the sale deed was genuinely executed and note with the intention to defraud any creditor. The reason for keeping the initial burden on the creditor is simple, a creditor cannot lead direct evidence that a certain deed was executed in order to defraud the creditors. He has only to show and prove certain circumstances from which that inference can be drawn and if he is able to prove such circumstances from which an inference adverse to the debtor can be drawn then it is for the debtor to prove that the transaction was a genuine one."
26. The same view was taken by the Supreme Court in Abdul Shukoor Saheb's case (supra).
27. In the present case the decree-holder has proved and shown the circumstances from which a clear inference has been drawn to the effect that the sale deed was executed in order to defeat the money decree.
28. In the present case, the trial Court had not considered the fact as to whether the sale deed executed in favour of the plaintiff was done in good faith and for valuable consideration. Infact, the trial Court had gone into the question as to whether the auction purchaser was a bona fide purchaser or not, which is wholly irrelevant. The appellate Court on the basis of the evidence has clearly held that a clear inference is drawn to the effect that the sale deed was executed in order to defeat the money decree and that it comes within the terms of Section 53(1) of the Transfer of Property Act. The Supreme Court in Hamida v. Mohd. Khalil, 2001 All CJ 1299 : (AIR 2001 SC 2282) had held that the finding of fact recorded by the first appellate Court based on evidence should not be interfered with by the High Court. Thus, in my view, the finding of the lower appellate Court being a finding of fact and based on appreciation of evidence, the same cannot be treated as perverse or based on no evidence, and the inference drawn by the lower appellate Court was not based on surmises and conjectures. Thus, I find no ground to interfere in the conclusion arrived at by the lower appellate Court.
29. In the result, the appeal fails and is dismissed. However, in the circumstances of the case, there shall be no order as to costs.