1. This is a second appeal preferred by the original plaintiffs against the judgment of the District Judge at Ahmeda-bad, who reversed, so far as plaintiffs Nos. 2, 3 and 4 were concerned, the decree of the Second Joint Subordinate Judge at Ahmedabad and dismissed their claim to redeem the property in suit from respondent No. 2.
2. The suit was brought by the plaintiffs against one Bai Ishwari and defendant No. 2 (respondent No. 1 herein) as the heir and legal representative of one Shuklal Oghad Dosabhai claiming to redeem from Bai Ishwari on payment to her of Rs. 599 the property in suit which was in her possession as mortgagee and for a declaration against respondent No. 1 that a certain sale deed obtained by his father Shuklal Oghad Dosabhai in respect of the property was nominal and null and void.
3. Bai Ishwari having died during the pendency of the suit respondent No. 2 and his father Govindlal, were' substituted as her heirs and legal representatives, Govindlal having since died respondent No. 2 is now the sole representative of the interest of the original mortgagee in the property.
4. The property in suit was owned by one Bhupatrai Lallubhai. The original defendant No. 1, Bai Ishwari, was Bhupatrai's full sister, She was married to one Govindlal. Bhupatrai had two sons, Trikamlal and Jivanlal and a daughter Atilaxmi. Plaintiffs Nos. 2, 8, and 4 are the sons of Atilaxmi. Trikamlal died on April 11, 1911, leaving no issue but a widow Bai Devmani, plaintiff No. 1. By a registered rent note, dated December 5, 1910, Bhupatrai had leased the property in suit to Govindlal for five years. On October 12, 1911, Bhupatrai exe? euted in favour of his sister Bai lshwari a usufructuary mortgage of the property in suit for five years for Rs. 599. The deed was executed by Bhupatrai and his surviving son Jivanlal, and Bai Ishwari was put in possession under the deed. Jivanlal died early in 1912 unmarried and childless. On June 23, 1912, Bhupatrai made a will whereby he appointed his grandsons, plaintiffs Nos. 2, 3 and 4 his heirs and universal legatees. The will was registered. In 1914 plaintiff No. 1 filed a suit against Bhupatrai,: being suit No. 678 of 1914, claiming from him suitable provision, for residence and maintenance. In that suit a compromise was arrived at and the Court passed a decree on January 6, 1915, in; terms of the compromise. The decree inter alia provided that Bhupatrai was to give to plaintiff No. 1 for her residence for her lifetime the property in suit on the expiry of the term of the mortgage-the remaining term of the mortgage was put down in the decree as being two years. The property was to become redeemable on and after October 12, 1916. Before the expiry of the mortgage period, Bhupatrai, by a sale deed dated June 1, 1916, conveyed the property to the father of respondent No. 1 for a consideration of Rs. 1,499 therein mentioned. The consideration was made up as follows :-Rs. 599 to be paid to the mart-gagee in possession for redemption of the mortgage, Rs. 145 to be paid to the mortgagee for expenses she had incurred for repairs of the property, Rs. 400 to be paid to the vendor or heirs on the death of plaintiff No. 1 who had a right of residence in the property during her life and the balance of Rs. 355 was acknowledged by Bhupatrai as having been received by him in cash from the vendee.
5. After the expiry of the mortgage period Bhupatrai having failed to put plaintiff No. 1 in possession of the property as provided by the terms of the compromise decree, plaintiff No. 1 applied for execution of the decree. Bnupatrai appeared and showed cause in the darkhast proceedings. He alleged that the property consisted of two compartments under separate census numbers and that plaintiff No. 1 was entitled to reside in one compartment only. The vendee, according to Bhupatrai, had kept that compartment vacant and ready to be delivered over to plaintiff No. 1 and the other compartment was in possession of the vendee. He contended that plaintiff No. 1's remedy in respect of the other compartment was not against him but against the vendee who was the owner of it. The execution Court decided that plaintiff' No. 1 was entitled to residence in the whole house comprising both the census numbers and added : 'on the whole it appears that the just demand of the plaintiff (plaintiff No. 1) is sought to be thwarted by his (Bhupatrai's) ingenious device.' Bhupatrai appealed against the decision of the execution Court. On October 30, 1918, Bhupatrai's appeal was dismissed, the appeal Court remarking : 'This is clearly an unfair attempt to thwart the respondent in executing her decree.' The execution proceedings being thereafter resumed plaintiff No. 1 was obstructed in obtaining possession of the property. She, therefore, on January 30, 1919, put in an application to have Bhupatrai arrested and his property attached. Bhupatrai showed cause against the application and by his reply, dated June 23, 1919, stated that he was unable to redeem the property, that he could not be forced to redeem the property in execution proceedings and that plaintiff No. 1 might be asked to file a suit if so advised to enforce her alleged right. By its order dated September 27, 1919, the execution Court held that plaintiff No. 1 could not get relief of the kind she sought in execution proceedings and dismissed the application. Bhupatrai died soon thereafter and plaintiff No. 1 in conjunction with plaintiffs Nos. 2, 3 and 4, who are the heirs and universal legatees under the will of Bhupatrai, filed this suit.
6. The trial Court held that the sale deed dated June 1, 1916, was a nominal and collusive transaction between Bhupatrai, Bai Ishwari represented by her husband and agent Govindlal and the vendee, the object of the collusion being to keep plaintiff No. 1 out of her right under the compromise decree to reside during her lifetime in the property and to enable Bai Iehwari to remain in possession of the property during the lifetime of plaintiff No. 1.
7. From an examination of the evidence in the case the first Court came to the conclusion that the consideration of Rs. 355 acknowledged in the deed to have been received in cash by Bhupatrai was not paid to him. The Court also came to the conclusion that the sum of Rs. 145 recited in the deed as being due to the mortgagee for repairs of the property was not so due and that the recital was false. With regard to the sum of Rs. 400 to be paid to the vendor or his heirs after the death of plaintiff No. 1 the Court expressed an opinion that the excuse for not receiving the amount immediately was not a substantial one. The Court held that no consideration passed under the deed and that it was a sham and collusive transaction in which the vendor, the vendee and the mortgagee had participated.
8. The lower appellate Court came to the conclusion that the sale deed was collusive but that it was not a nominal transaction. The lower appellate Court held that the defendants, meaning the mortgagee and the vendee, had colluded with each other and with Bhupatrai in order to defeat plaintiff No. 1's, rights. For that reason the lower appellate Court awarded costs of both Courts to plaintiffs Nos. 2, 3 and 4 against the defendants although it dismissed their claim. The lower appellate Court agreed with the finding of the first Court that the sum of Rs. 145 recited in the sale deed as due to the mortgagee was not due to her and added that had the amount for repairs been satisfactorily proved it would appear that the repairs were in the nature of ordinary current repairs for keeping the house in proper condition-the kind of repairs for which a mortgagee in possession is bound to spend money without being entitled to claim a refund from the mortgagor. The lower appellate Court thought it unnecessary to find whether the cash payment of Rs. 355 was or was not made. The learned Judge remarks :- 'Assuming for the sake of argument that the cash payment was not made, the other items were real and the mortgagee at least could have, and can, claim that money from the vendee. The learned Judge seems to have lost sight of the fact found both by himself and by the first Court that the mortgagee herself was a party to the collusive arrangement. If that finding is to be regarded as correct the mortgagee would not by the arrangement arrived at between the parties enforce any rights which might ostensibly be given to her on the face of the deed. One of the objects of the collusion, as found by the first Court, undoubtedly, was that the mortgagee may be enabled to remain in possession of the property during the lifetime of plaintiff No. 1 in order to thwart her right of residence. Where collusion and fraud have been established by evidence the Court would very strictly scrutinise the payment of any consideration that may be evidenced by the transaction. The first Court has very carefully gone into the matter of the alleged payment of Rs. 355. The vendee was a professional beggar and a man of no means. His son had received free education at Dholka on the recommendation of Govindlal and was a signaller employed on the railway on Rs. 35 per month. The vendee was a resident of Dholka. There was no occasion for a man of his means and position in life at Dholka to purchase a valuable property at Ahmedabad. The vendee has not been shown to have derived any benefit from the alleged payment in 1916. The property has not been transferred to the name of the vendee and the mortgagee and her heirs have continued in possession and enjoyment of it. The circumstances of the case make it clear that no consideration could have passed as alleged. Bai Iahwari and after her, her representatives have throughout these proceedings made common cause with respondent No. 1 and have strongly resisted the claim not only of plaintiffs Nos. 2, 8 and 4 but also, except in this Court, that of plaintiff No. 1 to redeem the property. The respondent No. 1 and his father the vendee before him never made any attempt to redeem the property nor has respondent No. 1 in these proceedings at any time offered to do so. It is apparent that the respondents are still in collusion with each other with the object of keeping out plaintiff No. 1 from the possession of the property in her lifetime and to enable respondent No. 2 to continue in possession with the help and connivance of respondent No. 1.
9. So far as the right to redeem of plaintiff No. 1 is concerned both the Courts have held in her favour and the respondents are not now questioning the right. With regard to plaintiffs Nos. 2, 3 and 4 they were not members of any joint Hindu family Consisting of themselves and Bhupatrai and they cannot be said to have any independent right to avoid the bale deed passed by Bhupatrai. As heirs and universal legatees of Bhupatrai they stand in the shoes of Bhupatrai and can avoid the sale deed only if Bhupatrai could have avoided it in his lifetime.
10. It is contended on behalf of the respondents that the sale deed is for consideration and is valid as between the respondents and plaintiffs Nos. 2, 8 and 4. Reliance is placed upon the definition of 'sale' in Section 54 of the Transfer of Property Act, where 'sale' is described as a transfer of ownership in exchange for & price paid or promised or part-paid and part-promised. Mr Shingne urges that plaintiffs Nos. 2, 3 and 4 are debarred from contending that Bhupatrai did not receive the cash payment of Rs. 355, The fact is recited in the sale deed and is confirmed by Bhupatrai in the subsequent execution proceedings between himself and plaintiff No. 1. The latter argument found weight with the lower appellate Court. The learned Judge remarks :- 'The question, however, is not important as Bhupatrui in his lifetime admitted in a Court of law the validity of the sale and thus made it almost impossible for himself to resist the claim of the vendee for possession.... The sale deed was binding on Bhupatrai in his lifetime and the legatees under the will have no right to challenge it.' The last proposition in the above observations of the learned Judge does not seem to follow from the first. An admission made in a Court of law no doubt carries with it great weight but it is not conclusive and binding on the party making it, unless it operates as an estoppel. No case of estoppel has been pleaded or proved in the present case. Having regard to the recital in the deed and the admission is the Court proceedings the burden of proof would rest heavily upon Bhupatrai and after him his heirs to show that the admissions were untrue. Plaintiff's Nos. 2, 8 and 4, in my opinion, have discharged the onus probandi which lay on them regarding the non-payment of Rs. 355 recited in the deed as paid by the vendee to Bhupatrai, That is the finding of the first Court and there is no finding to the contrary on this point by the lower appellate Court.
11. Mr. Shingne next contends that if no part of the consideration recited in the sale deed has been paid by the vendee to Bhupatrai it would be open to Bhupatrai and his legal representatives to claim the amount from the vendee and that they would not be entitled on that ground to set aside the sale. No doubt, refusal by the vendee to pay the price to the vendor would not by itself be a reason for setting aside a sale. It is a well established pro-position of law that once a sale is completed it cannot be rescinded for failure of consideration unless that right is expressly reserved, in which case an action would lie not in consequence of any general right vested in the vendor but on the express covenant made in the deed. In any other case all that the vendor could claim would be damages for the breach of promise to pay the price: see Sagaji v. Namdev I.L.R (1899) Bom. 525: Bom. L.R. 5. The argument would be valid if this were a genuine and not a nominal transaction. The heirs and universal legatees of Bhupatrai are seeking not to set aside the sale for failure of consideration, but they are asking for a declaration that the transaction was collusive and nominal and, therefore, null and void.
12. If the transaction was only nominal the vendee would be deemed to hold the property for the benefit of the transferor as provided by Section 84 of the Indian Trusts Act. The point for consideration is whether plaintiffs Nos. 2, 3 and 4 as heirs and universal legatees of Bhupatrai are entitled to the benefit of Section 84 of the Indian Trusts Act, if the sale deed was executed by Bhupatrai in pursuance of a fraud, The finding of both the Courts is that the sale deed was a fraudulent transaction between the vendor, the vendee and the mortgagee. If the fraudulent object is accomplished or is accomplished even substantially though not in its entirety, the general rule of equity is that the transferee would not be disturbed. The authorities were fully considered in Jadu Nath Poddar v. Rup Lal Poddar I.L.R (1906) Cal, 967. In Petherpermal Chetty v. Muniandi Servai (1908) L.R. 35 IndAp 98, : 10 Bom. L.R. 590. their Lordships of the Privy Council held that the purpose of the fraud not having been effected, there was nothing to prevent the plaintiff from repudiating the transaction as being benami, and recovering possession of the property. The plaintiff in that case had purported to execute a sale deed in order to defeat the claim of an equitable mortgagee of the property and had thereafter brought a suit for a declaration that the deed was merely a benami transaction and to recover possession of the property. It was held that the deed was benami and fraudulent. Their Lordships remarked (p. 102):-.it is contended on behalf of the appellant that so much confusion would be imported into the law if the maxim ' In pari dolicto potior eat conditio possidentis' were not rigorously applied to this case, and, apparently, that the cause of commercial morality would be so much prejudiced if debtors who desired to defraud their creditors were not deterred from trusting knaves like defendant, that in the interest of the public good, as it were, he ought to be permitted to keep for himself the property into the possession which he was so unrighteously and unwisely put.
The answer to that is that the plaintiff, in suing to recover possession of his property, is not carrying out the illegal transaction, but is seeking to put everyone, as far as possible, in the same position as they were in before that transaction was determined upon. It is the defendant who is relying upon the fraud and is seeking to make title to the lands through and by means of it; and, despite his anxiety to effect great moral ends, he cannot be permitted to do this. And, further, the purpose of the fraud having not only not been effected, bet absolutely defeated, there is nothing to prevent the plaintiff from repudiating the entire transaction, revoking all authority of his confederate to carry out the fraudulent scheme, and recovering possession of his property. The decision of the Court of Appeal in Taylor v. Bowers (1876) 1 Q.B.D. 291, and the authorities upon which that decision is based clearly establish this. Byrnes v. Hughes(1870) L.R. 75. and In re Great Berlin Steamboat Company(1884) 26 Ch.D. 616. are to the same effect. And the authority of these decisions, as applied to a case like the present, is not, in their Lordships' opinion, shaken by the observations of Fry L.J. in Kearley v. Thomson (1890) 24 Q.D.B. 472.
13. On the facts found, no doubt, Bhupatrai in his lifetime had by means of this collusive transaction succeeded in delaying plaintiff No. 1 in realising her right of residence in the property under the compromise decree. The fraud contemplated on plaintiff No. 1, however, was in the nature of a continuous act whereby she would be defrauded of her right to reside in the property during her lifetime. Had Bhupatrai lived it would have been open to him to retract from his fraudulent purpose and revoke the authority he had given to his confederates the vendee and the mortgages for carrying on the fraud. Plaintiffs Nos. 2 to 4 who now stand in the shoes of Bhupatrai have by their pleadings repudiated the fraud perpetrated by Bhupatrai and propose to redeem the property from the mortgagee which would carry out the intention of the compromise decree and enable plaintiff No. 1 to enjoy the right of residence conferred on her by the decree. On the evidence in the case it appears that plaintiff No. 1 is still a young widow and it would be a matter of speculation to Bay how many more years she is likely to live and enjoy the right of residence given to her under the compromise decree. Bhupatrai by his fraud kept plaintiff No. 1 out of that right from October 12, 1916, when the property should have been redeemed by him, until this suit was filed when Bhupatrai's heirs and universal legatees repudiated the fraud and offered to undo the wrong. In these circumstances, in my opinion, it cannot be said that the fraud has been substantially accomplished. Further, the position as between plaintiffs Nos. 2 to 4 on the one hand and the respondents on the other appears now to be this: that although plaintiffs Nos. 2 to 4 have resiled from the fraud as originally contemplated and are offering to act rightly and justly in respect of the property in suit, the respondents are to benefit by the fraud to the detriment not only of the heirs and universal legatees of Bhupatrai but also of plaintiff No. 1. There is no offer even now by respondent No. 1 to undo the wrong done to plaintiff No. 1 by redeeming the property and putting her in possession of it as contemplated by the compromise decree. The right given by the lower appellate Court to plaintiff No. 1 to redeem the property is not as substantial as that which would accrue to her if the heirs and universal legatees of Bhupatrai were to redeem the property and let plaintiff No. 1 reside in it in terms of the compromise decree. By redeeming the property herself all that plaintiff No. 1 would get would be the right which the mortgagee in possession now enjoys. Her residence in the property would be in virtue of the right of the mortgagee in possession and not in virtue of the compromise decree. By giving her the right to redeem the property the lower appellate Court has not effectively undone the fraud which was practised on plaintiff No. 1 by means of the sale deed, but has left that sale deed intact and operative and has allowed plaintiff No. 1 to get possession of the property only if she chooses to redeem the mortgage. That must necessarily mean that a widow who admittedly has no independent means of her own must find a sum of Rs. 599 to redeem the property. Under the decree of the lower appellate Court it would not be to the interest of plaintiffs Nos. 2 to 4 to find the money for plaintiff No. 1 to redeem the property, for on her death the property would go to the vendee on payment by him of Rs. 599 to the heirs of plaintiff No. 1. In my opinion the equities seem to be in favour of the plaintiffs and it has not been shown that the defendants are entitled to benefit by a transaction which has been proved to be fraudulent and collusive.
14. I would reverse the decree of the lower appellate Court and restore the preliminary decree for redemption passed by the first Court with costs throughout. The sentence 'Each party is to bear his own costs' should be deleted from the decree of the first Court.
15. I agree. The facts, which are rather complicated, are fully set out in the judgments of the Courts below. The principal contention in this appeal is as to the right of plaintiffs Nos. 2 to 4, who are the heirs of Bhupatrai under his will, to redeem the house in suit. It has been found by both Courts that the object of the sale by Bhupatrai to the father of defendant No. 2 was to defeat the claim of plaintiff No. 1, Bai Devmani, to residence in the house in suit although she had obtained a consent decree in her favour, and that the sale was a collusive transaction. The first Court found that the sale was collusive and without consideration. The lower appellate Court agreed that the sale deed was collusive, and was made with the intention of defeating Bai Devmani's claim but held that it was not nominal, He accepted the finding of the trial Court that the cash payment was not made, and the item for repairs was not proved. He, however, held that the mortgagee was entitled to claim Rs. 599 from the vendee, and further the item of Rs. 400 equivalent to Bai Devmani's right of residence. This amount was admittedly kept by the vendee, and as the vendee never redeemed the mortgage, and his reprsentative is not willing to do so, it will appear that as a matter of fact there was no actual payment of consideration at all. The sale, therefore, appears to be nominal, collusive and without consideration, a plea which is supported by the fact that the vendee was a person of no means, and made no actual attempt to get possession of the property, nor do his heirs wish to do so. The arguments of the learned pleader for the respondents founded on the question of sale and the vendor's lien for unpaid purchase money, do not, in my opinion, apply to a case like the present, where the transaction is altogether a sham. It is not shown that plaintiffs Nos. 2 to 4, the heirs of Bhupatrai, are estopped by reason of Bhupatrai's admission as to the validity of the sale, There oould be no estoppel when both parties are fully acquainted with the real state of facts, and the vendee, who was a party the a sham transaction, has not been led to change his position by reason of any admission made by Bhupatrai. The admission of Bhupatrai made in proceedings between himself and plaintiff No. 1, his daughter-in-law, was apparently intended to defeat her claims, and in the circumstances found by the lower Courts the admission was untrue in so far as it affirmed the validity of a nominal and collusive transaction. Plaintiffs Nos. 2 to 4 are not members of a joint Hindu family with Bhupatrai, but are his heirs under a will, and the principal point argued in this appeal is whether they are entitled to challenge the validity of the sale and claim redemption of the mortgage. It is contended that as they stand in the shoes of Bhupatrai, and as he could not have challenged the transaction, they could not do so either. In view of the findings as to the nature of the transaction, the equities are clearly in favour of plaintiffs, and the point is whether any provision of law prevents those equities being enforced. The law on the subject has been clearly laid down in the leading cases of Jadu, Nath Poddar v. Rup Lal Poddar I.L.R (1906) Cal, 967. and Petherpermal Chetty v. Muniandy Servai I.L.R (1908) Cal. 551: 10 Bom. L.R. 590 p.c. which is a decision of the Privy Council. The law is that when a transaction is entered into with a fraudulent object, if the fraud is successfully carried out, the transferor cannot avoid it, both parties being in pari delicto. But it is otherwise when the fraud is not accompli shed. The question then will be whether in this case the fraud was accomplished. The object of the fraud as found by both Courts was to defeat Devmani's right of residence in the house transferred. That right, however, was a continuing right to which she is entitled during her lifetime, and she is yet a young woman. That right has been delayed, but it has not yet been defeated, for, as pointed out by the learned pleader for the appellants, there is no decree of any Court by which her right of residence is negatived. On the contrary there is a decree by which the right is expressly declared. It cannot, therefore, be said that the fraud has been carried out so long as Bai Devmani is not absolutely precluded by a final decree from enforcing her right of residence. In view of the remarks of the Privy Council in Petherpermal Chetty v. Muniandy Servai I.L.R (1908) Cal 551: Bom. L.R. 590. it would appear that it would have been open to Bhupatrai to repudiate the transaction, and consequently it is equally open to his heirs, plaintiffs Nos. 2 to 4 to do so. I agree, therefore, that they should be allowed to redeem along with plaintiff No. 1, and I am also of opinion that when plaintiff No. 1, Bai Devmani, who was not a party to those transactions has a right of residence founded on a decree, it is inequitable that she should be compelled alone to redeem the mortgage, which she, a widow, is probably not in a position to do. I, therefore, agree that the decree of the lower appellate Court should be reversed, and the appeal allowed with costs throughout.