Madras High Court
Ramasami vs Krishnasami Alias Krishnan And Ors. on 27 February, 1996
Equivalent citations: (1996)2MLJ267
JUDGMENT S.S. Subramani, J.
1. Plaintiff in O.S. No. 2556 of 1979, on the file of the District Munsif's Court, Karur, is the appellant herein. Defendants 1 to 6 are the respondents.
2. For the sake of convenience, reference to the parties in this appeal is made as per their array in the suit.
3. Plaintiff and the 6th defendant are sons of late Nachimuthu Gounder. Nachimuthu Gounder was the owner of all the plaint items. Plaint Item 1 is having an extent of 2 acres 8 cents. Item 2 is having 2 acres 48 cents, and Item 3 is having 36 cents, altogether 4 acres 92 cents. It is averred in the plaint that Nachimuthu Gounder was in possession of all these items, having obtained the same as per partition deed dated 24.12.1959. It is said that there was same proposal to form a house building society in Pallappatti under the Chairmanship of one Koolayappa Rowther. First defendant opposed the formation of the Society under the Chairmanship of Koolayappa Rowther, and he also wanted Nachimuthu Gounder not to give any property or sell the suit properties to the Society. On his advice, the acquirer executed Ex.A-2 sale deed for an extent of 23 1/2 cents. The purpose of the sale was only to shield the property from acquisition, and the plaintiff alleges that it is a sham document and never came into effect. It is also said that the document is not supported by consideration. Nachimuthu Gounder continued in possession in spite of the document dated 13.6.1963. Nachimuthu Gounder died in 1966 and thereafter plaintiff and 6th defendant, along with his widow and daughters were in joint possession. As per Ex.A-5, the widow and daughters executed a release in favour of the plaintiff regarding their right in the property. It is said that the first defendant executed a document in favour of defendants 2 to 5 on 22.11.1979 stating that he is the owner of the 23 1/2 cents covered by Ex.A-2. According to the plaintiff, the sale deed in favour of the first defendant is not valid because title did not pass as per Ex.A-2. It is a sham transaction intended to shield the properties from acquisition. The suit is filed for declaration of title and consequential injunction. Even though the subject matter of the dispute is only 23 1/2 cents as per Ex.A-2, the plaint schedule is the entire 4 acres 92 cents.
4. In the written statement filed by defendants 1, 2 and 4, they contended that Ex.A-2 is supported by consideration and has come into effect. They also said that the Housing Society was not formed, and there was no proposal for any, acquisition. The first defendant did not advise the original owner Nachimuthu Gounder to sell any property to any person and Ex.A-2 is only one such deed executed by him. Nachimuthu Gounder himself wanted to sell the property in many plots and one such building was purchased by the firs defendant for proper consideration. He also said that similar documents were executed by Nachimuthu Gounder on 21.10. 1963 and 8.10.1964 respectively, as per Exs.A-3 and A-4. They were executed in favour of strangers, and they are also in possession of the property. According to them Ex.A-2 was not a nominal document. But, after the sale, first defendant also wanted to put up a construction, but due to paucity of funds, he could not do it. Second defendant purchased the property for valuable consideration and he was also put in possession. He also said that eversince the date of Ex.A-2, he was the pattaholder for the property and he was paying kist for that area. He also said that since he is in possession of the (property pursuant to Ex.A-2, plaintiff cannot also acquire title by adverse possession and limitation. They prayed for dismissal of the suit.
5. The 6th defendant, who is the brother of the plaintiff, filed a separate written statement. He pleaded ignorance about Ex.A-2. He said in paragraph 8 of the written statement that eversince the death of their father, no cultivating was going on in any portion of the property and the property was lying fallow, and none of the sharers is enjoying the property by cultivating the same.
6. The suit was filed on 30.11.1979, and on the very same date, an ex parte commission was issued to verify the nature of the property. A commissioner inspected the same at 5.30 p.m. on that date without notice to any one. even though the commissioner inspected the suit properties on 30.11.1979, subsequently, when the defendants came to know about the inspection, they wanted the commissioner to inspect the properties once again. The advocate-commissioner also expressed his willingness to inspect the same according to the convenience of the defendants, but, due to some reason or other, the same was postponed and finally he did not inspect for a second time. On the basis of the ex parte order, and, on the basis of the first visit, he filed a Report wherein he said that there are no plots or house sites, and no portion of the suit property is lying as plot or house-site. There were no roads or pathways as described in the plaintiff's documents. According to the commissioner, all the properties are lying in one block without any demarcation.
7. On the basis of the above pleading, parties went on trial. The trial court, after summarising the case, came to the conclusion that the intention of defendants 1 and 2 was only to shield the property from acquisition; that it (Ex.A-2) is a sham document, and title did not pass either to the first defendant or to defendants 2 to 5; and also found that the plaintiff was in possession of the property. It further came to the conclusion that the second defendant is estopped from claiming the benefit of bona fide purchaser for value. Since he was an attestor to Ex.A-5 settlement deed executed by the widow and daughters of Nachimuthu Gounder in favour of the plaintiff. Second defendant is none other than the younger brother of Nachimuthu Gounder and, therefore, a close relation.
8. Against the decree passed by the trial court, defendants 2 and 4 preferred A.S. No. 80 of 1981, on the file of the Subordinate Judge's Court, Karur. Lower Appellate Court held that the argument is not sham and that it did come into effect, and that title passed to the first defendant as per Ex.A-2 and consequently defendants 2 to 5 are also owners of 25 cents. The case of shielding the property from the Society cannot be believed. While allowing the appeal, the lower appellate court dismissed the suit. It is against the said decision, plaintiff has preferred this second appeal.
9. At the time of admission of the second appeal, the following substantial questions of law were raised for consideration:
(1) Whether the lower appellate court committed an error in granting a decree in respect of an extent of 23 1/2 cents only when there has been no dispute with regard to the title from others with respect to the rest of the property?
(2) Whether the finding of the lower appellate court with regard to the sham and nominal nature of Ex.B-1 sale deed can stand the test of the principles laid down on the question by this Court and the Supreme Court?
(3) Whether the finding of the lower appellate court on the question of adverse possession is vitiated by wrong inferences drawn from the facts and circumstances of the case?
10. On the first question of law, I find fault only with the plaintiff in scheduling the entire property and seeking a declaration in respect thereof. In fact the dispute is confined to 23 1/2 cents conveyed under Ex.A-2. Instead of scheduling that property, plaintiff has scheduled the entire 4 and odd acres and has asked for declaration against the defendants. The parties were aware as to the nature and extent of dispute. That is related only to 23 1/2 cents. But when the suit was disposed of, it has affected the entire property, i.e., the lower appellate court dismissed the entire suit, i.e., plaintiff lost title to the entire property i.e., 4 acres 92 cents. The dismissal of the entire suit is, therefore, not correct. Regarding the remaining portion, plaintiff has no cause of action against the defendants, and naturally no decision is called for.
11. Question Nos. 2 and 3 can be decided together. The plaintiff's case is that Ex.A-2 is sham and nominal, and the same has not into effect for the reasons mentioned in paragraph 6 of the plaint. It reads as follows:
While Nachimuthu Gounder was alive, he purported to have executed a sale deed in favour of the 1st defendant in respect of a portion of the suit property. The sale deed is dated 13-6-1963. It was executed by him under the following circumstances:
(a) A house building society was formed under the Chairmanship of one Koolayappa Rowther in Pallappatti.
(b) The House Building Society proposed to acquire the suit properties from Nachimuthu Gounder.
(c) The 1st defendant opposed the formation of the House Building Society under the Chairmanship of Koolayappa Rowther.
(d) The 1st defendant instigated Nachimuthu Gounder not to give or sell the suit properties to the House Building Society.
(e) The 1st defendant advised Nachimuthu Gounder to execute sale deed in respect of portions of the suit properties as house sites with a view to prevent the House Building Society from acquiring or purchasing the suit properties from Nachimuthu Gounder.
(f) Nachimuthu Gounder acting on the advice of the 1st defendant executed the sale deed in question in favour of the 1st defendant and two other sale deeds in favour of one Margampatti Mohammed Hapifa Rowther and Matharasa Rowther.
12. If the statement in paragraph 6 cannot be believed or proved, naturally, the finding can only be that Ex.A-2 has come into effect. Nachimuthu Gounder and the first defendant belong to different communities. Plaintiff has no case that Ex.A-2 was executed due to undue influence or vitiating circumstance exercised by the 1st defendant. The only reason given is that a Housing Society was formed in Pallappatti, and with a view to shield the property from acquisition, Ex.A-2 was executed. It is further stated that no consideration passed and that the document is only nominal. Even though in the written statement, it is contended that no such society was formed in Pallappatti, Ex.A-17 shows that even in 1957, such a Society was formed. But that by itself will not show that the property was sought to be acquired. Plaintiff has also no case that the first defendant was put in possession to stall any proposed acquisition since the property stands transferred in his name. Further, Ex.A-2 covers only 23 1/2 cents in a large area of nearly 5 acres. The total extent is 4 acres 92 cents. So, even excluding the 23 1/2 cents, if the Society wanted to acquire any property, they could acquire from the remaining portion. Merely because the property is transferred in the name of the first defendant, if there was a proposal for acquisition, the same cannot also be stopped, for, the acquisition is said to be for a Housing Society, a valid public purpose.
13. Though a society was formed in 1957, till 1963, when Ex.A-2 was executed, there is no proposal for acquiring any property. In fact, the evidence is that till the date of suit in 1979, the property was not acquired at all. The acquisition can only be by the Government even if it is for the purpose of Society. No attempt was made by the plaintiff to prove whether even a Resolution was passed by the Society for the acquisition. One more circumstance against the plaintiff is that even though Ex.A-2 is dated 13.6.1963, Exs.A-3 and A-4 are long thereafter. They are respectively dated 21.10.1963 and 8.10.1964. The same reasons are mentioned in the plaint in respect of Exs.A-3 and A-4 also and it is also stated that they are invalid. But since they are not the subject-matter of the suit, further discussion regarding the same is not necessary. Exs.A-3 and A-4 are in favour of two other persons and they have no connection with the first defendant.
14. The original of Ex.A-2 is produced by the first defendant as Ex.B-1. If it is a sham transaction not intended to come into effect the title deed can only be with the plaintiff or with Nachimuthu Gounder. When the plaintiff was examined as P.W.1, he said that the documents were entrusted to the respective purchasers on condition that the same has to be returned as and when it was demanded back. So from the date of the document itself, the originals are in the hands of the respective purchasers, is admitted by P.W.1. That the document is also fully supported by consideration is evident from the endorsement of the Sub-Registrar. In Ex.A-2 the consideration is paid before the Sub-Registrar. He has certified that before him the consideration of Rs. 2,000 was paid by the first defendant to late Nachimuthu Gounder. If it was only a sham transaction such an endorsement by the Sub-Registrar was not necessary. That apart, the description of property shows that late Nachimuthu Gounder wanted to sell the property in plots and so far as Ex.A-2 property is concerned, it is described with a plot number.
15. If there was a proposed acquisition, how the property could be shielded from the same if a document is executed in favour of the first defendant is not even spoken to by P.W.1. There is one statement in his evidence that the first defendant and the President of the Society were not on good terms. The first defendant from the very beginning was opposing the formation of the Society and, therefore, the plaint property could not have been transferred in his name to shield, the property from acquisition, under normal circumstances, for, any such transfer would only expedite the acquisition, instead of exemption. None of these circumstances has been taken into consideration by the trial court before deciding the transaction as sham. Whether title had passed or not, or whether there was such an intention or not, depends upon the various circumstances which have to be pleaded and proved. We may also note that Nachimuthu Gounder died only in the year 1966, nearly three years after Ex.A-2. During his lifetime, he did not think of getting back Ex.A-1 the original, from the first defendant. Immediately after Ex.A-2 was executed; patta was also transferred in the name of the first defendant. If the title did not pass, how could the first defendant change his patta to the knowledge of deceased Nachimuthu Gounder. We find that even before his death, kist was being paid in the name of the first defendant. From 1974 on wards, plaintiff is continuously paying the same. Long before the institution of the suit, he also executed a mortgage in favour of the plaintiff and subsequently redeemed it. All these things will show that the document was intended to come into effect, and in fact, a valid title passed under Ex.A-2.
16. In Rangappa Nayakar v. Rangasami Nayakar A.I.R. 1925 Mad. 1005 their Lordships made a distinction between sham transaction and benami transaction. The learned Judges held thus:
The essence of a sham transaction is that though a registered deed is brought into existence no title of any kind, either legal or beneficial, is intended to be passed thereby to any person whatsoever, i.e., the deed of transfer is not intended to effect any transfer of property. The difference between sham transactions and benami transactions is one of intention. If the deed of transfer is made with the intention of placing the property in the name of a third person, the intention clearly amounts to a transfer of the legal title, and such a transaction can scarely be called a sham transaction, but comes directly within the meaning of benami transactions properly so called.
If a sale-deed is got up to fight certain third parties, the intention to be drawn from the transaction is irresistible that the legal title at any rate was intended to be passed by the transaction from the transferor to the transferee; otherwise the very object of the transfer fails.
17. In Sree Meenakshi Mills Limited, Madurai v. Commissioner of IT. : (1957)1 M.L.J. (S.C.) 1 : (1957)1 An.W.R. (S.C.) 1 : 1957 S.C.J. 1 : 1956 S.C.R. 691 : (1957)31 I.T.R. 28 : 1956 S.C.A. 1139 it was held thus:
The word 'benami' is used to denote two classes of transactions which differ from each other in their legal character and incidents. In one sense, it signifies a transaction which is real, as for example, when A sells properties to B but the sale deed mentions X as the purchaser. Here the sale itself is genuine, but the real purchaser is B, X being his benamidar. This is the class of transactions which is usually termed as benami. But the word benami, is also occasionally used, perhaps not quite accurately, to refer to a sham transaction, as for example, when A purports to sell his property to B without intending that his title should cease or pass to B. The fundamental difference between these two classes of transactions is that whereas in the former there is an operative transfer resulting in the vesting of title in the transferee, in the latter there is none such, the transferor continuing to retain the title notwithstanding the execution of the transfer deed. It is only in the former class of cases that it would be necessary, when a dispute arises as to whether the person named in the deed is the real transferee or B, to enquire into the question as to who paid the consideration for the transfer, X or B. But in the latter class of cases, when the question is whether the transfer is genuine or sham, the point for decision would be, not who paid the consideration but whether any consideration was paid.
[Italics supplied]
18. The said decision was followed in Thakur Bhim Singh v. Thakur Kan Singh (1980)2 S.C.C. 72 wherein it was held thus:
Two kinds of benami transactions are generally recognised in India. Where a person buys a property with his own money but in the name of another person without any intention to benefit such other person, the transaction is called benami. In that case, the transferee holds the property for the benefit the purchase money, and he is the real owner. The second case which is loosely termed as a benami transaction is a case where a person who is the owner of the property executes a conveyance in favour of another without the intention of transferring the title to the property thereunder. In this case, the transferor continues to be the real owner. The difference between the two kinds of benami transactions referred to above lies in the fact that whereas in the former case, there is an operative transfer from the transferor to the transferee though the transferee holds the property for the benefit of the person who has contributed the purchase money; in the latter case, there is no operative transfer at all and the title with the transferor notwithstanding the execution of the conveyance. One, common feature, however, in both these cases is that the real title is divorced from the ostensible title and they are vested in different persons.
[Italics supplied]
19. In Nathuni Lal's 'Law of Benami Transactions' -Fourth Edition (1983), the difference between a sham and benami transaction has been detailed in Chapter II at page 38 thus:
The essence of benami transaction is that there should be a real purchaser as well as an ostensible purchaser and the real owner should be in a position to enforce the rights of a beneficiary in trust against the ostensible owner. The essence of a sham transaction is that though a deed of transfer is brought into existence, no title of any kind, either legal or beneficial, is intended to be passed thereby to any person, whatsoever, that is, the deed of transfer is not intended to effect any transfer of property.
Therefore, the difference between a sham and benami transaction is one of intention. If the deed of transfer is made with an intention of placing the property in the name of a third person, the intention clearly amounts to a transfer of the legal title and such a transaction cannot be called a sham transaction but comes directly within the meaning of benami transaction. To put the idea in different words, in a sham transfer, there is no intention to transfer to one's nominee, so that he will hold property for himself openly but secretly for transferor using the document as a cloak to save it from creditors.
20. In A. Ghosh's 'The Law of Benami Transactions' - 6th Edition (1987), at page 32, the learned Author has said thus:
...The essence of a sham transaction is that though a deed of transfer brought into existence, no title of any kind, either legal or beneficial, is intended to be passed thereby to any person whatever, that is, the deed of transfer is not intended to effect any transfer of property, xxxx xxxx When there is a fictitious transaction with regard to a property, no title passes, notwithstanding the execution and registration of the documents; the transaction may fittingly be described as essentially a mark of the real ownership....
21. P.W.1 said that he is an attestor to Ex.A-2 and, therefore, he is aware as to what all transpired at the time Ex.A-2 was executed. He was asked specifically about the consideration. In chief-examination, he said that there is no consideration at all and no consideration was paid at the time when the document was executed. But in cross-examination, he was confronted with the endorsement of the Sub Registrar. At that time, he said that the money belonging to his father was handed over to the first defendant, and at the time of executing the document, he returned it to his father. So, one thing is clear from his evidence, that there was a money transaction or passing of money at the time when Ex.A-2 was executed. In this connection, it may also be worthwhile to consider the presumption under law when an endorsement is made by the Sub Registrar regarding passing of consideration. Section 58(1)(c) of the Indian Registration Act says that 'any payment of money or delivery of goods made in the presence of the registering officer in reference to the execution of the document, and any admission of receipt of consideration, in whole or in part, made in his presence in reference to such execution shall be endorsed by the Registrar'.
22. Committing on the same, Sanjiva Rao, in Registration Act, 8th Edition (1995), at page 577, has said thus:
Under Section 58(1)(c) it is the duty of the Sub Registrar to make an endorsement of any payment of money made in his presence in reference to the execution of a document. Section 60, Clause 2, further provides that the endorsement of Sub Registrar shall be admissible in evidence for proving that the facts mentioned in such endorsement occurred as mentioned therein. In such circumstances, the onus lies on the person so denying the receipt of the consideration. When there is no evidence given on this behalf to prove that the endorsement was incorrect and no payment was actually made, or to show that the money which was paid before the Sub-Registrar was afterwards returned, it must be taken that the sum alleged to have been paid at the time of registration before the Sub Registrar and endorsed by him was paid and that consideration to that extent did pass....
In this case, we have only the interested testimony of P.W.1 to say that there was no consideration at all. The presumption under Section 58(1) still holds good, and the same is not rebutted. The circumstances show that the reasons mentioned in paragraph 6 of the plaint cannot be true for the purpose of executing Ex.A-2.
23. It is seen that an argument was put forward before the lower appellate court that in the documents Exs.A-2 to A-4, it has been described as house sites with plot numbers, and the intention was to get good compensation. If that was the intention, according to me, the plaintiff has to fail for that reason alone. In that case, the intention was to create evidence for getting higher compensation by executing sham documents. The same can only be considered as fraudulent intention on the part of the plaintiff and his father to defeat the rights of the Government. If that be so, plaintiff and his father who themselves are parties to the fraud, are not entitled to get the assistance of court.
24. Once I hold that Ex.A-2 is valid and the same has been acted upon and title has passed, nothing survives in this appeal. But an argument was taken that second defendant and others are not bona fide purchasers for value and they were aware of the real nature of the transaction. The argument is that long after Ex.A-2, Ex.A-5 was executed by the widow and daughters of Nachimuthu Gounder, releasing all their rights in favour of the plaintiff wherein the plaint property is also included. The second defendant is an attestor to the document. It is alleged that he being an attestor, is estopped from putting forward title against the plaintiff. The said argument also cannot hold good for the following reason: In Ex.A-5, neither the widow nor the daughters say what their rights age. In the entire property, they have got an undivided right. That right has been released. While describing the same, the total extent of the survey number is also mentioned. That does not follow that the widow and daughters were exercising right over Ex.A-2 property. The question of estoppel also will not arise in this case since the second defendant had no interest on that date. If only the second defendant had an interest and that was adverse to his claim, the consequences of an attestation will arise. Further, there is no evidence in this case to show that the second defendant attested with full knowledge of the contents of Ex.A-5. The attestation by itself will not amount to estoppel, nor can it be presumed that the attestor had knowledge of the contents of the documents. Years after the second defendant purchased the property from the first defendant. We find that consideration was also paid. Before executing the document, we find that the first defendant was dealing with the property by executing a mortgage, redeeming the same in his name, and has been paying tax. Under the above circumstances, it is not unusual on the part of the second defendant to believe that the first defendant is the owner and he purchased the property for valuable consideration thinking that he can get ownership over the same. Merely because he happens to be an attestor to Ex.A-5, it cannot be said that he is not a bona fide purchaser, for value.
25. Plaintiff has also a case that even if Ex.A-2 has come into effect, the same is lost by long, continuous, uninterrupted, open and hostile possession and, therefore, the title of the defendant, is any, is lost. The said submission also cannot be correct. To create an adverse possession, plaintiff and his predecessor must have the animus to hold the property against the whole world, including the real owner. The same cannot be hostile to himself. In this case, the contention of the plaintiff is that title never passed to the first defendant and Nachimuthu Gounder, who was the original title holder continued to be the title-holder. If that was the case, it must be understood that they never recognised any other person as owner, so as to hold an animus. Secondly, in the pleading, there is no statement as to when the adverse possession began. For the purpose of computing limitation, they have to specifically plead and prove that the antecedent title was with the first defendant or with the third person and they have prescribed title by adverse possession from, a particular date. The acts of possession must also be open, notorious, without any concealment and to the knowledge of the whole world. In this case, there is absolutely no evidence to show that the plaintiff was exercising acts of possession. None of the adangal receipts have been filed. In the written statement of the 6th defendant, he has stated that eversince the death of their father, the properties are lying fallow without any cultivation. Atleast from 1974 onwards, we find that the first defendant has been paying kist for the property and patta has already been changed in 1964. If the case put forward by the plaintiff is that it is because of the advice of the first defendant that the document came into existence, that will show that the first defendant and their late father were very cordial and close. There is no allegation in the plaint that after the death of the father, that relationship had any change. If that be so, there cannot be any adverse possession against the first defendant. Relationship between parties has got a material bearing in cases where parties plead adverse possession.
26. The trial court came to the conclusion that the first defendant cannot have any possession, nor was he exercising any acts of possession mainly relying on the Commissioner's Report. Ex.A-2 document was executed in 1963, and the Commissioner visited the property on 30.11.1979, i.e., nearly more than 16 years after. The Commissioner visited the property without notice to the defendants. It is an ex parte commission. Though the defendants wanted a second visit, for one reason or other, it did not take place, and, on the basis of the first visit alone, the Commissioner filed the Report. What is the evidenciary value of such report? Even though the court is competent to issue ex parte Commission, the evidentiary value of the report filed in pursuance of such Commission is very little. The Commissioner has not been examined in this case to prove the result of his inspection. Being an ex parte Commission, the court must be reluctant or must be to cautious to accept the same. The provisions of Order 26, Rule 18, C.P.C., have not been followed and, therefore, much reliance cannot be placed on the same. Again the factum of possession is not a matter which the Commissioner can decide. It is for the court to decide on other evidence. Even on the basis of the admission of the 6th defendant, it is not shown that the plaintiff was exercising any act of possession. That will be sufficient to discard the entire evidence of the plaintiff. Mere payment of kist for some time will not prove possession. The lower appellate court appreciated the entire matter and came to the conclusion that the plaintiff had no possession. That finding, according to me, is legally correct and based on proper appreciation of evidence. Questions 2 and 3 are, therefore, found against the appellant. I hold that Ex.A-2 is not sham and the plaintiff has not prescribed title by adverse possession. I hold that in respect of 23 1/2 cents covered by Ex.A-2, plaintiff or the 6th defendant has not title or possession.
27. In the result, I dismiss the second appeal with costs, with the only modification that the dismissal of the suit is confined to 23 1/2 cents covered by Ex.A-2 (of which Ex.B-1 is the original). In regard to the remaining property, neither the parties are at issue, nor has the plaintiff stated any cause of action. Therefore, the question whether the plaintiff has any title or possession in respect of the remaining portion of the property i.e., excluding 23 1/2 cents covered by Ex.A-2, is not decided, though the plaintiff has scheduled the entire property.