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Satu Vithuji Vs. Dagdu Bhagu - Court Judgment

LegalCrystal Citation
SubjectProperty
CourtMumbai
Decided On
Case NumberSecond Appeal No. 242 of 1906
Judge
Reported in(1907)9BOMLR462
AppellantSatu Vithuji
RespondentDagdu Bhagu
Excerpt:
.....having failed to raise it there, he cannot raise it..........is contended that when a mortgagee purchases the property mortgaged to him in execution of his own money decree, notwithstanding the provisions of section 99 of the transfer of property act, the purchase is not void but only voidable and that if a suit is not brought by the mortgagor to set aside the sale within a year after its confirmation, as required by article 12 of schedule ii to the limitation act, the sale must be treated as binding upon the mortgagor.4. it is unnecessary to consider that contention in the present case, because it can arise only if the fifth defendant can be regarded as a mortgagee. it is true that both the lower courts have found on the evidence that he is a mere benamidar for the first defendant, to whom and to defendant no. 2 the plaintiff mortgaged the.....
Judgment:

Chandavarkar, J.

1. The facts found by both the Courts below are those:-

The plaintiff (respondent No. 1 before us) mortgaged the property in dispute to the first and the second defendant. The first defendant, who held money bonds executed in his favour by the plaintiff, assigned them to the fifth defendant (appellant in this second appeal). The fifth defendant sued the plaintiff on those money bonds and obtained a decree, in execution of which the property in dispute, mortgaged to the first and the second defendant, was attached. The fifth defendant, with the leave of the Court, purchased the property at the execution sale.

2. The plaintiff brought the present suit to redeem. Both the lower Courts have found upon the evidence that the assignment of the money bonds by the first defendant was a sham and colourable transaction, entered into by him for the purpose of defeating the provisions of Section 99 of the Transfer of Property Act and purchasing the property mortgaged, in the name of the fifth defendant. The lower Courts have held that the Court purchase by the fifth defendant is void under the provisions of that section and have allowed the plaintiff's claim to redeem.

3. Before us it is contended that when a mortgagee purchases the property mortgaged to him in execution of his own money decree, notwithstanding the provisions of Section 99 of the Transfer of Property Act, the purchase is not void but only voidable and that if a suit is not brought by the mortgagor to set aside the sale within a year after its confirmation, as required by Article 12 of Schedule II to the Limitation Act, the sale must be treated as binding upon the mortgagor.

4. It is unnecessary to consider that contention in the present case, because it can arise only if the fifth defendant can be regarded as a mortgagee. It is true that both the lower Courts have found on the evidence that he is a mere benamidar for the first defendant, to whom and to defendant No. 2 the plaintiff mortgaged the property in dispute. But the question is, whether, having regard to Sections 13 and 244 of the Code of Civil Procedure, it is open to the plaintiff to raise in this suit the question whether the assignment of the money bonds by the first to the fifth defendant is a sham and colourable transaction and whether the purchase by the latter at the Court sale in execution of his money decree is either void or voidable.

5. When the fifth defendant sued the plaintiff on the money bonds, the plaintiff might and ought to have pleaded in defence that the fifth defendant had no right to sue because the assignment from the first defendant, on which the right rested, was a sham and colourable transaction (see Expn. II, Section 13 of the Code of Civil Procedure). Not having raised that defence, it is now res judicata. Further, when the fifth defendant, after having attached the property in execution of his money decree, applied for its sale, it was open to the plaintiff to resist the sale on the same ground. It was a question relating to the execution of the decree arising between the parties to it and fell within Clause (c) of Section 244 of the Code of Civil Procedure. No such objection to the filth defendant's right to sell the property was raised. When the Court passed an order for sale of the property and subsequently when, after the sale, the Court confirmed it, both the orders bound the parties and became orders under Section 244. They cannot be questioned or litigated in a separate suit.

6. The lower appellate Court observes that the plaintiff had no reason to raise the contention in the previous suit brought by the fifth defendant, because it was a suit on money bonds and 'he could not have taken objection in that suit on the ground that the assignment was nominal and made to avoid the provision of the Transfer of Property Act.' It is no doubt the law that an assignee of a debt suing the debtor cannot be defeated by a plea of the latter that the assignment is without consideration. But that is because the question of consideration is one between the assignor and the assignee and the debtor can have nothing to do with it. It is upon that principle that decisions such as those in Gopal Ramchandra v. Gangaram Anandehet I L R (1889) 14 Bom. 72 and Kachu Bayaji v. Kachoba Vithoba (1873) 10 Bom. H.C. 491 are based. But that principle has no application where the assignment is impeached not merely on the ground of being benami but on the ground of being a sham transaction, intended to defeat the provisions of an Act and prejudice the rights of the person so impeaching it. In such a case, the transaction is substantially assailed on the ground of fraud. To such cases the principle applicable is that enunciated in-Mulji Govindji v. Nathubhai Hirachand I L R (1890) 15 Bom. 1 where Sargent C.J. said :-'The cases of Bessey v. Windham and Phillpotts v. Phillpotts are, doubtless, English authorities that where there has been an assignment by deed, the assigned property passes by force of the deed and it cannot be impeached at law by the assignor or by third parties other than creditors, on the ground of its not being a real transaction. But Bowes v. Foster shows that even in England, where the assignment is not by deed, the true nature of it as a sham transaction may be proved; and a long list of authorities in this Presidency, of which it is sufficient to cite Rajan Harji v. Ardeshir Hormusji Wadia I L R (1890) 15 Bom. 1 and the cases referred to in the foot-note, establish that in this country it is in all cases open to third parties to show that such was the case.'

7. Further, the lower appellate Court remarks :-' This is a redemption suit and Section 244 has no application. The plaintiff who comes now could not have contended in the former execution proceedings that his lands could not be sold because decree was passed against him.' But if the fifth defendant had obtained the decree under a sham and colourable assignment from the mortgagee (defendant No. 1) with the object of enabling the latter to purchase the equity of redemption in the property mortgaged and thereby defeating the provisions of Section 99 of the Transfer of Property Act, the plaintiff could and ought to have resisted the sale on that ground and asked the Court to set aside the sale and refer the fifth defendant to a suit under Section 67 of that Act. That ground was such as to raise a question relating to the execution of the decree. Having failed to raise it there, he cannot raise it now. The case falls within the principle of the Privy Council decision in Prosunno Kumar Sanyal v. Kali Dan Sanyal I L R (1892) Cal 683. There certain property having been sold by the Court in execution of a decree, the judgment-debtor impeached the sale in a suit on the ground that it had been brought about by fraud and collusion on the part of the decree-holder and the Court purchaser in that the decree-holder had brought the property to sale in breach of his agreement with the judgment-debtor and that the purchaser had purchased with notice of the agreement. The ground on which the sale was attacked was substantially that the judgment-creditor had brought the property to sale without any right to sell it. The Privy Council held that that was a question which could have been determined by the order of the Court which executed the decree and that it could not be tried in a separate suit. In the present case the sale to the fifth defendant is attacked on a similar ground-viz., that the fifth defendant had brought the property to sale although he had no right under Section 99 of the Transfer of Property Act. The question whether that section applied depended upon whether the fifth defendant represented the mortgagee (defendant No. 1)- in other words, whether his suit, the decree thereon and the execution taken out by him were all sham and colourable transactions intended for the benefit of the first defendant.

8. On these grounds the decree of the lower Court is reversed and the plaintiffs suit dismissed with costs throughout.


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