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Talakchand Bheraji Vs. Atmaram Keshav Vaidya - Court Judgment

LegalCrystal Citation
SubjectProperty
CourtMumbai
Decided On
Case NumberSecond Appeal No. 658 of 1921
Judge
Reported inAIR1924Bom58; (1923)25BOMLR818
AppellantTalakchand Bheraji
RespondentAtmaram Keshav Vaidya
DispositionAppeal allowed
Excerpt:
.....the property ; and the other moiety was retained by the plaintiffs. the property sold remained in plaintiffs' possession. in 1912, defendant no. 1 sold the property to defendant no. 2 for rs. 399. out of the amount rs. 200 were paid to defendant no. 1 and the balance was paid to plaintiffs. one of the plaintiffs engrossed the deed of sale and the rest attested it. the plaintiffs, who were all along in possession, transferred the possession to defendant no. 2. in 1919, the plaintiffs sued to have it declared that the transactions of 1910 and 1912 were in reality mortgages : they also prayed to redeem the mortgages and recover possession of the property. the plaintiffs alleged that in 1912 there was a contemporaneous oral agreement by the vendee to reconvey the property to them on payment..........rs. 8,500 at 1-8-0 per cent per month granted an out and out conveyance of a and b to kyin and his wife. no possession passed, interest was paid and rs. 3,500 out of the loan were repaid leaving a balance of rs. 5,000. on march 4, 1903, kyin and his wife obtained payment of rs. 5,000 from u shwe pe and his wife and conveyed a and b to them. on february 13, 1902, kyin and his wife having advanced rs. 11,565 to myaing purchased properties c and d by public auction but no possession passed. on march 4, 1903, kyin and his wife transferred their properties to u shwe pe and his wife for rs. 11,000, re. 565 having been paid in the meantime by myaing. u shwe pe and his wife therefore became by ex facie conveyances from kyin and his wife vested in all the properties in suit. myaing was no party.....
Judgment:

Norman Macleod, Kt., C.J.

1. The facts leading up to this suit are as follows : The plaintiff's who are four brothers executed a deed on May 30, 1907, purporting to convey the suit property to one Ramchandra Ganesh for Rs. 99. The sale-deed provided that if the vendors returned the sum of Rs. 99 with compound interest at the rate of one per cent, per mensem within one year the vendee should return the property and pass a legal document for the same with possession.

2. On August 12, 1910, the plaintiff's executed a sale-deed of the same property in favour of one Kesrichand Hiraji. The consideration was Rs. 150 which was made up by paying Rs. 72-8-0 the balance owing under the transaction of May 30, 1907, to Ramchandra and Rs. 77-8-0 to the plaintiffs, who still remained in possession. Kesrichand died leaving a minor son Fatehchand.

3. On August 10, 1912, Navalmal Hiraji, as guardian for the minor, conveyed the property to Talakchand Bheraji for Rs. 399 with possession. The four plaintiffs attested the deed.

4. The plaintiffs alleged that plaintiff No. 2 was an agriculturist at the dates of all these transactions. They further alleged that the sale-deed of August 12, 1910, was really a mortgage, that as they wanted further moneys and Navalmal was pressing for the money due to the minor Futehchand, an agreement was entered into with Talakchand, defendant No. 2, to mortgage the properties to him for Rs. 399 of which Rs. 200 was to be paid to Navalmal and Rs. 199 to the plaintiffs. Defendant No. 2 was to be put in possession of the properties and out of the profits he was to deduct interest at twelve per cent, per annum and appropriate the surplus towards paying off the principal.

5. Accordingly they sued for a declaration that the sale-deeds of August 12, 1910, and August 10, 1912, were really mortgagee, for accounts under the Dekkhan Agriculturists' Belief Act of the mortgage in favour of defendant No. 2 and for redemption. Both the lower Courts have found that plaintiff No. 2 was not an agriculturist.

6. The trial Judge decided that the transactions of August 12, 1910, and August 10, 1912, were not proved to be mortgages and dismissed the suit.

7. The Joint Judge in appeal held that the plaintiffs were entitled to prove the real nature of the transactions and came to the conclusion on the evidence that all the three transactions referred to above were mortgages, and allowed plaintiffs to redeem on paying to defendant No. 2 Rs. 276-6-5 for principal and interest and Rs. 750 for improvements. The second defendant has appealed.

8. The Joint Judge in discussing the evidence in para 10 of his judgment says that the evidence coupled with the conduct of the parties proved beyond doubt that the transactions with Kesrichand of August 1910 and with defendant of August 1912 were mortgages. The object of the transfer by Navalmal to defendant No. 2 was no other than to pay off the prior debt which was demanded and to obtain a further advance on the same security. There would be no doubt that defendant No. 2 was aware of that intention, because otherwise there would be no necessity to ask the plaintiff No. 2 to engross the deed and obtain the signatures of his brothers to the document. That conduct was incompatible with the ignorance of defendant No. 2 of the real nature of the transaction with Kesrichand. The amount paid was distributed as alleged by the plaintiffs. If, therefore, knowing the relationship between Kesrichand and the plaintiffs defendant No. 2 obtained a sale out and out from Navalmal, it would be to the knowledge of both parties a transfer non domino as was held in Maung Kyin v. Ma Shwe La (1917) L.R. 44 IndAp 236 : 20 Bom. L.R. 278, the facts of which case the learned Judge thought to be on all fours with the facts in this case. It would be tantamount to fraud on the plaintiffs.

9. The flaw in this argument is apparent when we point out that, assuming for the moment that plaintiffs wished to sell the propertied to defendant No. 2 for Rs. 399 to enable them to pay off Kesrichund's mortgage and keep the balance of the consideration for themselves, the transaction would have been effected in the same way as the transaction of August 10, 1912. As Kesrichand'e son was the ostensible owner he would be the party to convey through his guardian and the plaintiffs by attesting the deed could be taken as giving their assent as owners of the equity of redemption. An attesting witness need not as such be considered as being aware of the contents of the document he attests, but this document was actually engrossed by plaintiff No. 2. The plaintiffs gave possession to defendant No. 2 and it is difficult to see in what other manner they could have acted, if they had, as a matter of fact, intended that defendant No. 2 should become full owner of the properties. Taking it for granted that defendant No. 2 knew that the transaction of August 12, 1910, was a mortgage, there could be no fraud on the part of defendant No. 2, unless it could be proved that defendant No. 2 agreed to recovery on the understanding that possession was given to him to pay himself principal and interest out of the profits. If defendant No. 2 had got possession from Navalmal's guardian knowing that Navalmal was a mortgagee, then undoubtedly the plaintiff would have the right to redeem the mortgage within twelve years under Article 134. The learned Judge does not seem to have realised the importance of the fact that plaintiffs themselves gave possession to defendant No. 2 and so became in effect parties to the transaction of August 10, 1912, and it would lie upon them to prove that it was a mortgage. At any rate it would be difficult to contend that the defendant No. 2 took the property from one who was not the owner when by giving possession they could be taken as representing to defendant No. 2 that he was the owner.

10. It would be different if the plaintiffs were suing to redeem the mortgage of 1910 on the ground that their mortgagee had purported to sell as owner to defendant No. 2, the latter knowing that he was not the owner. But plaintiffs are suing to redeem on the footing that the transaction of August 1912 was a mortgage, and they are the mortgagors to defendant No. 2. It would seem, therefore, that in the peculiar circumstances of the case the provisions of Section 92 of the Indian Evidence Act would apply and plaintiffs would be debarred from proving the agreement they alleged was entered into when the sale-deed of August 1912 was executed. We now turn to the case cited by the learned Judge to see whether the decision therein can assist the plaintiffs. The facts were as follows:

11. Myaing was the owner of four plots of land A, B, C and D. On November 30, 1901, Myaing having borrowed from Maung Kyin and Ma Ngwe Zan his wife, Rs. 8,500 at 1-8-0 per cent per month granted an out and out conveyance of A and B to Kyin and his wife. No possession passed, interest was paid and Rs. 3,500 out of the loan were repaid leaving a balance of Rs. 5,000. On March 4, 1903, Kyin and his wife obtained payment of Rs. 5,000 from U Shwe Pe and his wife and conveyed A and B to them. On February 13, 1902, Kyin and his wife having advanced Rs. 11,565 to Myaing purchased properties C and D by public auction but no possession passed. On March 4, 1903, Kyin and his wife transferred their properties to U Shwe Pe and his wife for Rs. 11,000, Re. 565 having been paid in the meantime by Myaing. U Shwe Pe and his wife therefore became by ex facie conveyances from Kyin and his wife vested in all the properties in suit. Myaing was no party to these transactions, but there was correspondence showing that he was desirous of having and obtained the benefit of a reduction in the rate of interest from one-eighth per cent, per month to one per cent.

12. On November 20, 1905, Myaing conveyed his equity of redemption to Kyin and his wife on the footing that he considered he had only granted mortgages over his property.

13. U Shwe Pe having died his widow and children brought the suit for possession of the lands against Kyin and his wife. They resisted possession being given on the ground that U Shwe Pe and his wife well knew that in spite of the absolute conveyance to them, the true nature of the transaction was one of mortgage upon the security of the properties, in particular that they knew that Kyin and his wife were not in fact the owners, but themselves only lenders thereon. So that the transfer, although absolute in form was in truth and to the knowledge of both parties a transfer a non domino and the Kyins were purporting to sell and the Shwe Pes were purporting to buy what they both knew belonged to Myaing, When the case first came before the Board on appeal from the Chief Court of Burma which had granted a decree for possession, it was held that the plaintiffs-appellants' case disclosed a charge of fraud against the respondents in relation to matters antecedent to the deeds of March 4, 1903, upon which charge much of the evidence tendered would be material, and that Section 92 did not preclude evidence of fraudulent dealing with a third person's property, nor proof of notice that the property purporting to be conveyed absolutely belonged to a third party who was not a party to the conveyance. Accordingly a new trial was ordered with the directions that the evidence should be admitted subject to objection. The trial Judge held that Myaing and the Kyins intended the transfers between them to be mortgages, that Myaing's object in the negotiations which resulted in the deeds of March 4, 1908, was to transfer the mortgages to U Shwe Pe and that the latter knew this and agreed to take over the mortgages and so were guilty of fraud in taking absolute conveyances. So the suit was dismissed. In appeal the learned Judge a agreed with the findings as to the knowledge of U Shwe Pe and the intention of the parties, but were of opinion that as Myaing knew the nature of the instruments there was no antecedent fraud, nor was fraud at the time of, or antecedent to, the deeds of March 4, 1903, alleged, and accordingly passed a decree for possession. The defendants appealed to the Privy Council. Their Lordships on the finding of fact that when Shwe Pe took the conveyance from the Kyins he knew that it was a conveyance of property which belonged to Myaing held that the fraud proceeded a non domino. If Section 92 of the Indian Evidence Act applied, proviso I would be in point because it would be a fraud to insist upon a claim to property arising under such a transaction, the claimant knowing that the true owner had never parted with it. But in their Lordships' opinion Section 92 did not apply because the evidence, the admissibility of which was in question, was evidence going to show what were the rights of a third person, namely, Myaing, in the property. The language of Section 92 in terms applied and applied alone ' as between the parties to any such instrument or their representatives in interest. 'Whenever, accordingly, evidence was tendered as to a transaction with a third party it was not governed by the section or by the rule of evidence which it contained, and in such a case accordingly the ordinary rules of evidence of equity and good conscience came into play unhampered by the statutory restrictions, It may also be noted that it was proved by the original Judge of the Chief Court that Myaing and the Kyins meant their transactions to be mortgages and that Myaing's object in the negotiations which resulted in the conveyances to U Shwe Pe and his wife was to transfer those mortgages at a lower rate of interest, and U Shwe Pe's letters showed he knew this and agreed to take over a mortgage, so that by deliberately getting deeds of sale executed ft gross fraud on Myaing was perpetrated. On the other hand the appellate Judges appear to have thought that Myaing was acquainted with the nature of the instruments go that the fraud could appear to be not so much the taking of absolute conveyances, but the assertions that they were absolute conveyances, and not transfers of the original mortgages from the mortgagee. But a defendant relying on a rule of evidence which prevents a Court from taking certain evidence can hardly be said to be guilty of a fraud. It may be otherwise in the case of a plaintiff. Applying the facts of that case to the facts of the case before us various discrepancies at once become apparent. The transaction of August 1912 was not in any event a transfer of the mortgage of August 1910, it was really a transaction between the owner and defendant No. 2 whereby Rs. 399 were paid out of which Rs. 200 went to the prior mortgagee thus extinguishing that mortgage. No question of fraud arises unless it be fraud to contend that a document which is on the face of it a sale-deed cannot be proved by oral evidence to be something else, in which case Section 92 would be practically useless. The plaintiffs are now asking the Court to admit evidence that at the time the conveyance of August 1912 was executed as a result of which they got free of their debt to defendant No. 1, obtained Rs. 199 for themselves and gave possession to the defendant No. 2, there was an oral agreement to recovery, defendant No. 2 agreeing to pay himself his capital and interest out of the profits. Admitting that defendant No. 2 knew that defendant No. 1 was only a mortgagee, we cannot conclude that defendant No. 2 got no title considering the other circumstances. When the learned appellate Judge says that the object of the transfer to defendant No. 2 was to pay off the prior debt to obtain a further advance on the same security he is begging the question. If a sale had been intended it would have been effected in exactly the same way, and the plaintiff has to prove, not that he can redeem the first mortgage as having been transferred to defendant No. 2, but whether he can redeem an entirely different mortgage which he alleges exists between himself and defendant No. 2. Therefore, in our opinion, though the decision in Mating Kyin v. Ma Shwe La enables the plaintiffs to prove that the transaction of August 1910 was a mortgage that alone will not entitle them to recover back the property from defendant No. 2, The learned trial Judge points out that the real transferors in August 1912 were the plaintiffs, though Navalmal, as guardian of the minor defendant No. 1, executed the conveyance in order to avoid the trouble and expense of taking a reconveyance from Navalmal, and that the whole consideration of Exhibit 32 had gone to the plaintiffs. But he seems to have thought on the strength of the evidence of certain exhibits that the value of the property in 1912 was in excess of Rs. 399 though the Government assessment was very low, and he believed the plaintiffs' story about an agreement to reconvey because defendant No. 2 only derived it by saying he had left everything to Punamchand, and Punamchand was not called as a witness though he was in Court. The Joint Judge thought that the price paid was inadequate for an absolute transfer but the whole of his reasoning by which he comes to the conclusion that the transaction of August 1912 was a mortgage is in our opinion fallacious. We do not exclude the possibility that defendant No. 2 treated the transaction as a mortgage and that if the plaintiffs are believed when they say there was an agreement to reconvey to them that would be a finding of fact which we could not refuse to acknowledge in second appeal. But if the findings are based on inference which, in the opinion of the Court, is wrong, then it becomes a question of law. The conclusion we have come to is that on the facts of this case it can be distinguished from the case of Maung Kyin v. Ma Shwe La and that the provisions of Section 92 of the Indian Evidence Act preclude the plaintiffs from proving the agreement they rely upon. We would allow the appeal and dismiss the suit with costs throughout except as against defendant No. 1.


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