Patna High Court
Devji Shivji vs Karsandas Ramji And Anr. on 25 September, 1953
Equivalent citations: 1954(2)BLJR82, AIR 1954 PATNA 280
Author: Chief Justice
Bench: Chief Justice
JUDGMENT Narayan, J.
1. This is an appeal by the plaintiff in a suit in which a declaration was sought that a registered deed of assignment dated 7-8-1948, executed by the plaintiff in favour of the defendant No. 1 with regard to the assets and the goodwill of the business, which was carried on in the name and, style of Devji Shivji & Sons, was a mere benami document. The plaintiff had further prayed that a decree be passed in his favour against the defendants declaring that the sum of Rs. 52,308/10/6 standing to the credit of Devji Shivji & Sons in the Lloyds Bank Limited, Calcutta, belongs to him. The defendant No. 1 is the son-in-law of the plaintiff, and the defendant No. 2 is the Lloyds Bank with whom the money is in deposit.
2. The case put forward by the plaintiff was that under the advice of the defendant No. 1, who since May, 1947, had been looking after his affairs and managing his business known as Devji Shivji & Sons, he executed the deed of assignment and also a power of attorney dated 21-8-1947 constituting the defendant No. 1, one Mohanlal Odhabji Thacker and his wife Kamla, Bai as his attorney and authorising them to manage the affairs and the property including the business known as Devji Shivji & Sons. According, to the plaintiff's allegation, shortly before the institution of this suit he had come to know that the defendant No. 1 had opened an account in the name of Devji Shivji & Sons in the Bank of India Limited, Calcutta, and had deposited, with the bank some cheques which had been received from customers as the price of the coal business of the plaintiff which was carried on under the name and style of Devji Shivji & Sons and that after closing the said account he had opened another account with the Lloyds Bank Limited in the name of Devji Shivji & Sons and had deposited with them cheques received from the customers as the price of coal and had been operating the same account.
A cheque for Rs. 42,637/10/- had been received; from the plaintiff's customer Messrs. Indian General Navigation and Railway Company Limited, Calcutta, for the value of coal supplied to them in April, 1948, and this cheque had been deposited with the Lloyds Bank in the name of Devji Shivji & Sons by the defendant. The amount now standing to the credit of Devji Shivji & Sons in the said account in Rs. 52,308/10/6p. which the plaintiff seeks to recover in this suit. He has further prayed for an injunction restraining the defendant No. 1 from receiving the said amount and the defendant No. 2 from paying the said amount to the defendant No. 1.
3. The defendant No. 1 resisted the plaintiff's claim, and his contention was that the deed of assignment was not a farzi or a benami document and that it had been executed by the plaintiff as he had great affection for the wife of this defendant who was his daughter by his first wife. He alleged that he had paid a consideration of Rs. 1000/- for this document and that it had been operative ever since the date of its execution. The amount sought to be recovered was alleged to be in deposit with the Lloyds Bank with whom the defendant, after the transfer in his favour, had opened an account in the name of Devji Shivji & Sons.
4. The learned Subordinate Judge came to the conclusion that the deed of assignment was a genuine and a valid document, and he accordingly dismissed the claim of the plaintiff.
5. The plaintiff has, therefore, preferred this appeal against the decision of the learned Subordinate Judge, and Mr. R.S. Chatterji, the Counsel for the plaintiff-appellant has urged the following two main contentions before us: (1) that the deed of assignment was not intended to be operative; and (2) that the deed is inoperative according to law.
6. The plaintiff, according to the statement of his second wife Kamla Bai alias Kamla Devi, is a gentleman who was aged 50 years in March, 1949. Parbati Bai, the wife of defendant No.l, is his daughter born of his first wife, who is dead. By his first wife he had also a son named Pranjivan, who fell ill in the early part of the year 1947 and died in March, 1948, of tuberculosis. The statement in the plaint is that because of the distressed condition of the plaintiff after the death of Pranjivan, the defendant No. 1, who is his eldest son-in-law, came to the plaintiff's house in or about the month of May, 1947 and began to look after his affairs, and on 7-8-1947 the deed of assignment sought to be set aside was executed in favour of the said defendant No. 1. On 21-8-1947 the plaintiff executed a power of attorney appointing not only the defendant No. 1 but also Mohanlal Odhabji Thacker, son of Odhabji Narsi Thacker and his wife Kamla Bai, as attorney to do for him and on his behalf and in his name and also in the name of Devji Shivji & Sons the acts and deeds specified in the document.
The deed of assignment and the power of attorney were registered on one and the same date, that is, on 21-8-1947. Mr. R.S. Chatterji placed strong reliance on this power of attorney which, in his opinion, supports the plaintiff's allegation that the deed of assignment, which had been executed earlier, was a sham and a benami document. The points which really arise are, (1) whether the deed was intended to be farzi or benami; (2) whether it is operative in law; and (3) whether the plaintiff is entitled to a decree for the amount of Rs. 52,308/10/6p, which consists of the following two items; (i) Rs. 967l/0/6p and (ii) 42,637/107. The defendant had produced the draft of a document which purports to be a deed of gift and which, according to the defendant, the plaintiff wanted to execute in favour of his daughter Parbati Bai.
The properties, which, according to the defendant's allegation, the plaintiff wanted to convey by this deed of gift, were his house properties of considerable value, and it has been further stated by the defendant that after the deed of gift had been engrossed on stamp paper Kamla Bai came from Bombay and objected to the execution of this document, and that it was on her objection that the plaintiff gave up the idea of executing any deed of gift. There does not seem to be any reasonable ground for not accepting the version of the defendant that the plaintiff wanted to make some provision for his daughter Parbati Devi and that his original intention was to make a gift of his house properties to her. One Mr. Surendra Natha Chakraverti, who is a practising lawyer at Dhanbad, has been examined as a witness on behalf of the defendant, and he has stated that the draft of the deed of gift had been prepared by him. He says that two or three days after the deed of gift had been drafted he drafted the power-of attorney which came to be executed on 21-8-1947.
The lady Kamla Bai was questioned as to whether Devji had intended to make a gift of his house properties and that on objection raised by her he had to give up the idea. Of course, she did not admit that Devji Babu first intended to make a gift of his house properties, but when the question noted below was put to the witness she: gave a very incomplete answer which was to the effect that the transfer was a benami document;
"I put it to you that after the idea of making gift of the house property was abandoned, plaintiff made a gift of the business by the deed of transfer referred to above to defendant No. 1?"
One cannot but accept the case of the defendant No. 1 that this lady, the young wife of Devji Shivji who is a fairly old man, is now completely dominating his will and that this litigation is the result of her influence over her husband. She has admitted in her cross-examination that the present suit had been instituted according to her instructions, as her husband was mentally disturbed and that the injunction petition had been filed according to the instructions given by her to her lawyer. That a young lady aged only about 33 years should have so much influence over her husband, who is a shrewd businessman, is a very significant circumstance in the case which; lends considerable support to the defendant's version that the document executed in his favour was intended to be an operative document and has been operative ever since the date of its execution, but that the lady has now prevailed upon her husband to institute this suit for setting aside the deed.
It is curious to hear from the lady that her husband did not even know that she was deposing in this case. It is a bit difficult to accept her statement that the plaintiff was not aware of her deposition in this case, but it is very strange to have this statement from her that her husband would be mentally upset if he knows about her deposition in this case. There are certain other statements also in her deposition which deserve a serious notice, e.g., she says that the defendant No. 1 and his father came to her husband with stamp paper for writing a deed of transfer of the house property. She has further stated that the benami transfer of the goodwill-of the business took place before the talk about the transfer of the house property and that the stamp in respect of the transfer of the house-property might have been purchased a few days before or later than the date of the purchase of the stamp for the transfer of the goodwill.
All these statements cumulatively go to establish the case that has been put forward by the defendant, and after a perusal of her deposition there can be no doubt left that it is she who has got this suit instituted for setting aside the deed of assignment with regard to the assets and the goodwill of the coal business. In no case can the evidence of this lady be preferred to the evidence of the defendant No. 1, and it was a fatal mistake on the part of the plaintiff to avoid coming as a witness in this case. Certain very important allegations had been made in the written statement, and the plaintiff having personally executed the deed of assignment sought to be set aside, he could not keep himself away from the witness box, and if he has chosen to keep himself away, he has taken the heavy risk of the court accepting the allegation made by the defendant No. 1.
In 'Gurbakhsh Singh v. Gurdial Singh', AIR 1927 PC 230 (A) the Judicial Committee pointed out that the true object to be achieved by a Court of Justice can only be furthered with propriety by the testimony of the party who personally knowing the whole circumstances of the case can dispel the suspicion attaching to it. In this case it is the plaintiff who had to show that the apparent state of things is not the real state of things. If the impugned document is regarded as a document invalid in law, then it has to be rejected on legal grounds. But if it is not a document which can be rejected as illegal and void, then the onus is certainly on the plaintiff to show that the deed is not actually what it purports to be. The person impugning the apparent character of the deed has to show something or Mother to establish that it is a benami or a sham transaction. And in several decisions of the Privy Council it has been said that even if there are suspicious circumstances, it is essential to take care that the decision of the Court rests not upon suspicion, but upon legal grounds, established by legal testimony, I fail to understand how the plaintiff or his intelligent wife Kamala Bai with her advisers thought of succeeding in this case if the plaintiff himself was not called to swear to all the statements which he had made in his plaint and to refute the allegations which had been made by the defendant in his written statement and which he had sought to prove by his own evidence. I think we must refuse to entertain the plea that the document was intended to be a benami document and that the plaintiff had no intention of making any provision for his daughter Parbati when the plaintiff has not come forward to depose as a witness in this case, and when the defendant has put forward certain circumstances which go strongly to support his allegation that out of love and affection for Parbati the plaintiff had at first thought of gifting his house properties to her and, later on, alter his wife objected to the gift of the house properties, conveyed to his son-in-law the goodwill and the assets of his fairly flourishing business, namely, the coal business.
7. The plaintiff has miserably failed to show the motive for a benami transaction of this nature. The plaint says that in August, 1947, the defendant No. 1 advised the plaintiff to execute a farzi and a benami deed of assignment in his name in respect of the business of Devji Shivji and Sons and represented to the plaintiff that the deed would enable him to manage the business in case of long and continuous absence of the plaintiff from Jharia on account of the illness of his son. This is the only reason given in the plaint for executing the deed of assignment dated 7-8-1947. The plaintiff never appeared before the Court for proving this allegation, and his wife gave an entirely different reason for executing a benami deed. She says that during the illness of his son the plaintiff was very much worried on account of income tax assessment and that a consideration of Rs. 1000/- was mentioned in the deed for income tax purposes. The motive given by the lady in her deposition is not the same which is stated in the plaint, and this inconsistency on the point of motive cannot be ignored as an inconsistency of a minor nature.
8. The evidence establishes beyond all doubt that the original intention was to execute a deed of gift and that a deed of gift had actually been drafted. One cannot reasonably reject the statement of the defendant that Kamala Bai who had been exercising so much influence over her husband stood in the way of the execution of the deed of gift, and her husband who was, most probably, torn between his affection for his children by his former wife and the dominating influence of his new wife upon him ultimately decided to execute a deed of assignment with regard to his coal business known as Devji Shivji & Sons. The plaintiff had intended to execute a power of attorney as well, and this power of attorney was actually executed about two weeks after the execution of the deed of assignment.
Mr. Chatterji rightly contended that because a power of attorney was given with regard to the coal business as well, its terms would be regarded as inconsistent with the terms of the deed of assignment by which the coal business had been conveyed entirely to the defendant No. 1. The explanation, however, is a very plausible one, and it is this that there would have been complications and difficulties if the defendant would have attempted to deal with the respectable firms as the sole proprietor of the business known as Devji Shivji & Sons ignoring his father-in-law completely. When the defendant No. 1 was called upon to explain why by the power of attorney the right to manage the business was given to him after he had been the malik of the business, he stated as follows :
"I was representing the firm Devji Shivji and Jardine & Company as its Attorney and not as malik. It seems doing so because had Jardine and Company known that I was the malik, they would stop the business with me. I used to fill up the cheques and look after the business. Devji Babu only signed the cheques. It is not a fact that Devji Babu signed the cheques as he continued to be the malik of the firm."
Devji Shivji used to purchase coal from big firms like Jardine Henderson Ltd.; Andrew Yule Ltd.; Shaw Wallace and Company and Barari Coke Company Ltd. and it is really very doubtful that these firms would have shown the same regard for the defendant No. 1 which they had for Devji Shivji. After all, there was the relationship of father-in-law and son-in-law, and the plaintiff who is a fairly rich man had not been treating his children by his first wife with indifference. Even according to the statement in the plaint the defendant No. 1 had been looking after the business of the plaintiff, and it is for the conduct of the business that the deed of assignment was executed in his favour. I find it a bit difficult to accept the version of the plaintiff that the deed of assignment was executed because the defendant No. 1 represented to the plaintiff that this deed would be useful for the purpose of managing the business.
A deed of assignment would not be of any use for the purpose of management, though a power of attorney would have been of great use in this respect, and the firms with which the plaintiff was dealing will not have the same confidence in the young son-in-law as in the father-in-law whom they all knew very well and who was certainly a businessman of experience. The explanation which has been put forward in the plaint, unsupported as it is by the sworn testimony of the plaintiff, is therefore not fit to be accepted; on the other hand, there appears to be much substance in the allegation of the defendant, supported as it is by his sworn testimony and by the circumstances, that out of love and affection the plaintiff had made this provision for his daughter, her husband and their children but that it was still considered necessary to have a power of attorney, so that the business with the big firms mentioned above might be carried on smoothly.
So far as the deed of assignment is concerned, there are two important factors to be noted: (1) that the deed was really made on account of natural love and affection between the parties standing in a very near relation to each other; and (2) that it is a document for consideration. The defendant No. 1 has stated in his deposition that he had paid Rs. 1000/- to Devji Babu. This being the consideration mentioned in the deed, it would not be correct and sound not to accept this statement when the plaintiff himself has not come forward to state that, in fact, no consideration passed and that the entry in the document showing the payment of a consideration of Rs. 1000/- is a fictitious entry. I cannot but accept the statement of the defendant that he had paid the consideration money when the plaintiff has not examined himself in this case for proving that the statement in the deed that the firm having received the consideration money had conveyed and transferred its goodwill with all assets to the assignee is incorrect. The evidence unmistakably goes to show that the delivery of the document was taken by the defendant No. 1 who had signed his name on the back of the counterfoil kept in the Registration office.
The receipt had been endorsed in favour of the defendant by the executant Devji Shivji, and the Registration delivery receipt undoubtedly shows that the defendant No. 1 had withdrawn the document from the Registration office. As such, one has to accept the further statement of the defendant No. 1 that when he was absent at Calcutta in April or May, 1948, the deed of assignment was removed from his suit case. The presumption which ordinarily attaches to the production of the original document by one who claims that it is a farzi and a benami document would vanish, if there is evidence to show that the document was originally in the custody of the intended beneficiary. As a matter of fact, if the case has to be decided on the evidence, certainly the statement of the defendant No. 1 as to the loss of the document should be accepted, and there is no reason for supposing in this case that the document had never come in the custody of the defendant No. 1. I am, therefore, of the opinion that the production of the original document by the plaintiff in this case does not at all advance his case of farzi. (His Lordship discussed other evidence and concluded :)
9. Thus, on a consideration of the entire circumstances, the conclusion seems to be irresistible that the deed of assignment was intended to be an operative document.
10. The next question is whether the deed is valid and operative according to law. Though the learned Subordinate Judge has observed that "when the idea of the deed of gift was given up, the plaintiff executed a genuine deed of gift in respect of the goodwill of the firm Devji Shivji & Sons in favour of his son-in-law", this document cannot be regarded as a deed of gift. It is a deed of transfer, and the consideration of Rs. 1000/- was paid for it. Whatever might have been the original motive behind the deed, it purports to be a deed of transfer, and it must be treated as an effective deed of transfer. The goodwill and the assets were transferred to the assignee, and the agreement was that the assignee from the date of the transfer shall use the name and style of the assignor firm for trading in coal business and other allied commodities and shall enjoy the same right as the firm had enjoyed without any objection whatsoever. It was further agreed that the assignee shall realise all its outstanding dues from the customers of the assignor firm, and the assignor firm shall help the assignee to realise the same. I have already referred to the recital that "the assignor firm having received the consideration money conveys and transfers its goodwill with all assets to the assignee for ever."
The business might have been carried on in the name of Devji Shivji and Sons, but the sole proprietor of it was Devji Shivji, and he could assign the assets standing in his own name and in the name of the firm. The assignee has been described in the document as the son-in-law of the proprietor of the assignor firm, and about the proprietor it is stated that he is an old man unwilling to continue the business. It was, therefore, really a transfer by Devji Shivji to his son-in-law, the defendant No. 1, and it (sic) a transfer for consideration. I had some difficulty in understanding the contention raised by Mr. Chatterji about the position of this document in law. Mr. Chatterji had to concede that the inadequacy of the price is immaterial and that want of adequate consideration would not of itself affect the title of the vendee.
According to Section 25, Contract Act, an agreement made without consideration is void unless it is expressed in writing and registered under the law for the time being in force for the registration of documents and is made on account of natural love and affection between parties standing in a near relation to each other, there being two other clauses in the section which are not relevant to our present consideration. Explanation 1 of the section says that nothing in the section shall affect the validity; as between the donor and donee, of any gift actually made. And Explanation 2 runs as follows :
"An agreement to which the consent of the promisor is freely given is not void merely because the consideration is inadequate; but the inadequacy of the consideration may be taken into account by the Court in determining the question whether the consent of the promisor was freely given."
There are two illustrations given in the section which must be referred to in this connection. And they are Illustrations (f) and (g). "(f) A agrees to sell a horse worth Rs. 1,000 for Rs. 10. A's consent to the agreement was freely given. The agreement is a contract notwithstanding the inadequacy of the consideration. (g) A agrees to sell a horse worth Rs. 1,000 for Rs. 10. A denies that his consent to the agreement was freely given. The inadequacy of the consideration is a fact which the court should take into account in considering whether or not ' A's consent was freely given."
The position in this case is that the agreement is made on account of natural love and affection, and that is a factor which has to be considered in considering the allegation of the plaintiff that the document was intended to be a farzi document. The plaintiff has not alleged any undue influence or pressure as against the defendant, his statement being that for facility in carrying on the business he executed that document. His consent to the agreement must, therefore, be deemed to have been freely given, and the agreement is a contract notwithstanding the inadequacy of the consideration. There is no question of a fraud on any third party in this case. If fraud is meditated and if the necessary effect of a transfer, founded even on natural love and affection, is to perpetrate a fraud on a third party such a transfer may not be regarded as a transfer in good faith and for value. But even when there is a transfer by a debtor in favour of a creditor, presumption of fraud cannot be raised from the mere inadequacy of consideration.
In a case in which a question under Section 53, T. P. Act arose, the Lahore High Court in -- 'Mahomed Ishaq v. Mahomed Yusaf, AIR 1927 Lah 420 (B) pointed out that on proof that the debts were actually due at the time of such transfer, the intent to defeat or delay creditors will be presumed, and if there are no debts due at the time and the transferor runs into indebtedness subsequently, the presumption will be regulated by the circumstances of each particular case. Their Lordships further pointed out that a voluntary settlement by a person, who owed no debts in favour of his children, for natural love and affection, could not be set aside merely because some years afterwards it was proved to have the effect of defeating or delaying the creditors. I have already said that this is not a case in which it can be said that one of the parties must have imposed upon the other. A case in which one of the parties has made a bad bargain is not the same as one in which one of the parties must have been imposed upon and taken advantage of by a person who had better means of knowledge than he himself possessed.
All these are really irrelevant considerations in this case, but in view of certain submissions made by Mr. Chatterji I had to say this much. There is no question of any intention to defraud any body in this case, and the Judicial Committee clearly pointed out in -- 'Administrator-General of Bengal v. Juggeswar Roy', 3 Cal 192 (PC) (C) that a party seeking to set aside a transaction on the ground of inadequacy of consideration, must show such inadequacy as would involve the conclusion that he either did not understand what he was about, or was the victim of some imposition. Their Lordships quoted with approval the following observation of Lord Westbury in --'Tennents v. Tennents', 2 Scot AR 6 (D).
"The transaction having been clearly a real one, It is impugned by the appellant on the ground that, he parted with valuable property for a most inadequate consideration. My Lords, it is true that there is an equity which may be founded upon gross inadequacy of consideration, but it can only be where the inadequacy is such as to involve the conclusion that the party either did not understand what he was about, or was the victim of some deposition."
In 'Gravely v. Barnard', (1874) 18 Eq 518 (E) it was held that a legal consideration of any value is sufficient to support a contract in partial restraint of trade and that the Court will not enquire as to its adequacy. A small consideration may support an extensive promise, and mere undervalue cannot exclude a man from the category of a purchase for valuable consideration without motive. In this case there can be no question of the inadequacy being of such a nature as to shock the conscience -of the Court, because after all the motive behind the execution of this document was natural love and affection. There being no question of fraud, misrepresentation, oppression, ignorance or weakness of understanding it is immaterial if the business of coal was transferred only for the consideration of Rs. 1000/-.
The defendant No. 1 appears to have made a straightforward statement when he says that he refused to accept the gift of the goodwill or the assets, unless some consideration was mentioned, and therefore Rs. 1000/- was fixed as the consideration. The fact that a low consideration of Rs. 1000/- was fixed cannot be regarded as a circumstance supporting the case of farzi set unby the plaintiff. The entire circumstances of the case have to be considered, and if the entire circumstances are considered, there will be no doubt left that out of natural love and affection the plaintiff wanted to make some provision for his daughter born of his deceased wife. There seems no reason why the deed should not be operative as a deed of transfer.
11. It was faintly contended that the description of the property conveyed as given in the deed of assignment is vague, and reliance was placed on the case of -- 'Heaton v. Beachey'. (1904) 1 Ch 67 (P). There is no vagueness in the description, inasmuch, as the goodwill as well as the assets of the business, which was carried on in the name and style of Devji Shivji & Sons, were transferred by this document. In the above-mentioned English case the question was whether the legal estate in the mortgaged leaseholds had passed by the transfer which purported to "convey and transfer all the benefit of the said mortgage" (it being a mortgage of leaseholds by sub-demise). Their Lordships pointed out that the words in the deed did not imply the intention to part with the possession. The following observation in the judgment appears to me to be Important for our present purpose : "It is argued that those words were intended to pass the legal estate in the mortgaged leaseholds; but, in my opinion, it is quite open to argument whether the words were not designedly used to give the transferee the pecuniary benefit of the mortgage only, without putting him in the position of an underlessee." This ruling has got no application in this case, and there is no substance in the contention that the property transferred has not been clearly described in the deed of transfer.
12. In the result, therefore, I must dismiss this appeal with costs. The petition for taking additional evidence will stand rejected.
Imam, C.J.
13. I agree.