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Devathi Subbarayudu and ors. Vs. Puvvadi Chinna Venkatasubbiah - Court Judgment

LegalCrystal Citation
SubjectProperty
CourtAndhra Pradesh High Court
Decided On
Case NumberLetters Patent Appeal No. 30 of 1958
Judge
Reported inAIR1960AP592
ActsTransfer of Property Act, 1882 - Sections 43; Code of Civil Procedure (CPC) , 1908 - Order 34, Rule 1
AppellantDevathi Subbarayudu and ors.
RespondentPuvvadi Chinna Venkatasubbiah
Appellant AdvocateG. Ramanujulu Naidu, Adv.
Respondent AdvocateJ. Sitamahalakshmi, Adv.
DispositionAppeal allowed
Excerpt:
property - mortgage proceedings - section 43 of transfer of property act, 1882 and order 34 rule 1 of code of civil procedure, 1908 - suit by x against y on promissory note - attachment before judgment of suit house belonging to y - suit decreed - prior to decree y mortgaged house to z - y subsequently adjudicated as insolvent - during pendency of insolvency x and z reached agreement that z was to purchase house in auction by official subject to mortgage in his favour and thereafter give half of house to x free of mortgage liability - mortgage enforced and z's son purchased house - z's son obtained possession of house after forcibly ejecting x - x not made part of mortgage proceedings - suit by x for repossession of house - held, z and his son estopped by reason of conduct in prior.....sanjeeva row nayudu, j. 1. this appeal is directed against the judgment of our learned brother srinivasachari, j., dated 6-12-1957 in s. a. no. 310 of 1955, on leave grantedby the learned judge under clause 15 of the letters patent. 2. the facts out of which this appeal has arisen may be briefly stated : 3. the appellants before us brought o. s. 74 of 1949 in the subordinate judge's court, cuddapah, foe setting aside the order dated 4-5-1949 made in e. a. no. 366 of 1948 in o. s. no. 235 of 1943 on the file of the district munsiff's court, nandalur, and for re-delivery of possession of the suit properties to the appellants-plaintiffs, hereinafter referred to as the plaintiffs. the suit property consists of the northern portion of a terraced house in the town of badvel in cuddapah.....
Judgment:

Sanjeeva Row Nayudu, J.

1. This appeal is directed against the judgment of our learned brother Srinivasachari, J., dated 6-12-1957 in S. A. No. 310 of 1955, on leave grantedby the learned Judge under Clause 15 of the Letters Patent.

2. The facts out of which this appeal has arisen may be briefly stated :

3. The appellants before us brought O. S. 74 of 1949 in the Subordinate Judge's Court, Cuddapah, foe setting aside the order dated 4-5-1949 made in E. A. No. 366 of 1948 in O. S. No. 235 of 1943 on the file of the District Munsiff's Court, Nandalur, and for re-delivery of possession of the suit properties to the appellants-plaintiffs, hereinafter referred to as the plaintiffs. The suit property consists of the northern portion of a terraced house in the town of Badvel in Cuddapah District. The 2nd plaintiff is the mother of the 1st plaintiff. The latter as minor represented by his guardian, the 2nd plaintiff filed O. S. No. 396 of 1931 in the District Munsif's Court, Mandalur, on a promissory note, against one Chinni Venkata Subbayya and his sons and also obtained an attachment before Judgment of the suit house, which then belonged to the defendants in that suit. This suit was decreed on 10-12-1931. Some fifteen days before this, on 25-11-1931, the defendant in O. S. No. 396 of 1931 i.e., Chinni Venkata Subbayya and his sons, executed a mortgage, Ex. B. 1, in favour of Puwadi Venkata Subbaiah the father of the respondent in this appeal.

Subsequently, the said Chinni Venkata Subbayya and his sons were adjudicated insolvents in their own petition on 25-7-1934 in I. P. 126 of 1933, on the file of the District Judge's Court Cuddapah. After this adjudication, and during the pendency of the insolvency, the present 2nd plaintiff us the mother and guardian of the 1st plaintiff, filed I. A. 168 of 1935 in the court of the Official Receiver, requesting the latter to move the District Court for an annulment of the aforesaid mortgage as fraudulent and not binding on the general body of creditors of the said Chinni Venkata Subbayya and his sons.

At this stage, mediators intervened, and there was a settlement between the plaintiffs and the mortgagee, that is, the father of the present respondent by which it was settled that the respondent's father should purchase the house in the auction to be held by the Official Receiver, subject to the mortgage in his favour, and thereafter, according to the plaintiffs herein, give a half portion of that house to the plaintiffs free of the mortgage liability, towards the decree debt in favour of the plaintiffs; and as part of this arrangement I. A. 168 of 1935 was withdrawn by the plaintiffs and was dismissed on 27-2-1936.

4. The Official Receiver held the sale in auction of the house in question, and according to the arrangement reached between the said Puwadi Venkata Subbaiah, the mortgagee and the plaintiffs, the said Puwadi Venkata Subbiah bid and purchased the same in the auction, for a sum of Rs. 150/- subject to the mortgage in his favour above referred to. In pursuance of this sale in auction, the Official Receiver executed a sale deed (Ex. B. 2) on 7-7-1939 which was actually taken in the name of the present respondent's father and one Vadlaputi Chinna Subbayya who is the maternal uncle of the 1st plaintiff and the brother of the 2nd plaintiff, it having been understood, that the said Vadlaputi Chinna Subbayya should be a benamidar for the plaintiffs.

After the said purchase and by way of completing the implementation of the settlements to which reference has been made above, there was an actual partition of the house in September, 1940, between the plaintiffs and the present respondent who succeeded to his father, the latter having died meanwhile. In this partition, the 1st plaintiff obtained and was placed in possession of the northern half of the house, while the present respondent obtained the southern half. As a result of this partition, it was found that the 1st plaintiff had to pay an owelty of Rs. 75/- to the respondent, and in this regard a kararnama Ex. A-18 was executed by the 1st plaintiff as minor represented by his mother and guardian and 2nd plaintiff, in favour of the respondent.

Subsequently, on 10-1-1944, this amount of Rs. 75 was paid by and on behalf of the 1st plaintiff to the respondent and the same was duly endorsed on the back of Ex. A. 18 by the respondent (Vide Ex. A. 19). Thus, from the date of Ex. A. 18 i.e., 5-9-1940, the first plaintiff was in possession and enjoyment of the property as per the partition that took place between the 1st plaintiff and the respondent and this fact is also confirmed by the 1st plaintiff's name having been entered in the accounts of the Panchayat Board and by his paying the taxes payable thereon, thereunder.

5. Meanwhile, one Puwadi Subbarayudu, the brother's son of the respondent's father, filed O. S. 235 of 1943 on the file of the District. Munsif's Court, Nandalur, seeking to enforce the mortgage on the suit house above referred to, which was in the name of the respondent's father, on the ground that the mortgage debt represented a joint debt belonging to the joint family of the respondent's father and his brother, the father of the plaintiff inO. S. 235 of 1943.

In that suit, the present respondent was impleaded as the 1st defendant, Vadluputi Chinna Subbayya, the maternal uncle of the 1st plaintiff as the second defendant, the surviving son of the mortgagor's Chinna Subbayya as the 3rd defendant, and the vendee from the respondent of the portion of the suit house which fell to his share in the partition between the respondent and the first plaintiff, indicated earlier, as the fourth defendant, and the Official Receiver as the fifth defendant. The present plaintiffs were not, however, made parties to that suit.

In his written statement, Vadulaputi Chinna Subbayya, the maternal uncle of the 1st plaintiff, pleaded, inter alia, that he was a mere benamidar for the present plaintiffs, and that he had no beneficial interest whatsoever in the suit property. He also set up the settlement that took place between the present plaintiffs and the present respondent's father, in respect of the debt owing to the 1st plaintiff, and pleaded that in pursuance of that settlement, the sale deed was taken in the names of himself and the present respondent, that subsequently there was a division of the suit house in equal shares between the plaintiffs and the respondent and that the 2nd plaintiff, the mother of the minor 1st plaintiff, was uninterruptedly in enjoyment of that half share, and that he, Vadlaputi Chinna Subbayya was merely acting as a benamidar for the plaintiffs.

To that suit, namely O. S. 234 of 1943, the plaintiffs were not impleaded as parties, even after Vadlaputi Chinna Subbayya disclosed the fact that the real interest in the suit house was vesting in the plaintiffs, and that he was a mere benamidar for the plaintiffs. This suit was referred to arbitration and a mortgage decree was passed, in pursuance of the award given therein, in favour of the plaintiffs therein and the present respondent.

It was in execution of this decree the entire suit house was put up for sale and was purchased by the present respondent himself, on 5-4-1948 under Ex. B. 3. It was in pursuance of this purchase that the respondent applied to the District Munsiff's Court, Nandalur, for the delivery of the suit house, and obtained the same through Court after forcibly ejecting the present plaintiffs therefrom.

6. It is contended by the plaintiffs that there was a bona fide settlement between the present respondent's father and the plaintiffs in pursuance whereof the suit house was purchased jointly by the present respondent's father and Vadlaputi Chinna Subbayya, the maternal uncle of the 1st plaintiff as the benamidar for the 1st plaintiff and that as the 1st plaintiff was actually put in possession of the northern half of the house in a partition between the 1st plaintiff and the respondent herein, the latter also having received the owelty of Rs. 75 the title of the plaintiffs must be deemed to have been perfected and that the respondent, having thus had the benefit of the settlement in pursuance whereof the plaintiffs were given a half share in the house, should be estopped from contending to the contrary, and that, in any event, as the plaintiffs who have the beneficial interest in the northern half of the suit house had not been made parties to the suit O. S. 235 of 1943, the provisions of Order XXXIV, Rule I, Civil Procedure Code had not been complied with and that the said decree in consequences, is not binding on the plaintiffs and cannot be used to defeat the rights of the plaintiffs In and to eject them from the suit property.

7. It is contended by the respondent, among other things, that the arrangement relied on by the plaintiffs is not true, that even assuming that there was any such arrangement, the rights acquired thereunder had been wiped out having regard to the decree made in the mortgage suit filed under Order XXXIV, Rule 1, Civil Procedure Code, so that the mortgagor's interest must be deemed to have been extinguished by the final decree in O. S. No. 235 of 1941 and the Court sale held in pursuance thereof and that the plaintiffs not having any title to the suit property, they could not rely on any estoped so as to defeat the title of the respondent law fully acquired, as the purchaser of the suit house in Court auction, in enforcement of a valid mortgage decree.

8. The present suit O. S. 74 of 1949 was decreed by the learned Subordinate Judge, Cuddapah, who held that the settlement pleaded by the plaintiffs with the respondent's father and the subsequent division of the house in 1940 between the plaintiffs and the respondent, whereby the suit property fell to the share of the plaintiffs is true, that the disparity in the values was adjusted by the payment of owelty of Rs. 75 by the plaintiffs to the respondent, that under this settlement the respondent's father had agreed to give to the 1st plaintiff a half share of the house free of mortgage, that Vadlaputi Chinna Subbayya, the maternal uncle of the 1st plaintiff was a mere benamidar for the plaintiffs and that the plaintiffs were in enjoyment of the suit property from that day onwards till they were dispossessed by the respondent under the orders of the Court in execution of the decree in O. S. 235 of 1943.

The learned Subordinate Judge further held that once a plaintiff in a suit had the knowledge as to who the real owner was, any decree obtained by him against the benamidar could not bind the real owner and that, therefore, the decree in O. S. 235 of 1943 as well as the Court sale held to execution of that decree could not bind the plaintiffs who had not been impleaded as parties thereto, notwithstanding that Vadlaputi Chinna Subbayya, the benamidar was impleaded as a party.

The learned Subordinate Judge further held, that the respondent herein was estopped from claiming the suit property from the plaintiffs, by reason of the fact that the respondent's father under the settlement agreed to between him and the plaintiffs gave the suit property to the plaintiffs free of the mortgage as per Ex. B. 1, and on the strength of the representation of his, the plaintiffs had desisted from prosecuting their petition before the Official Receiver for the annulment of the mortgage and that therefore the respondent could not be permitted to set up a title against the plaintiffs, derived under that very mortgage subsequently. So holding the learned Subordinate Judge decreed the suit of the plaintiffs.

9. On appeal, the learned District Judge of Cuddapah reversed this decision and dismissed the suit, holding that the plaintiffs neither held a title to the suit house, nor did they acquire tide to it. by adverse possession, and that there was nothing to show that the northern portion of the house claimed by the plaintiffs was released from the mortgage by reason of a vapidly executed document. It may be noticed that the learned District Judge in framing the points for determination in the appeal, strangely enough, omitted to include the one based on estoppel, that arose for consideration in the case, and on which the learned Subordinate Judge had given specific finding to which reference has already been made above.

10. On Second Appeal, our learned brother Srinivasachari, J., confirmed the decision of the learned District Judge on appeal, relying on the decision of the Privy Council reported in Gur Narayan v. Sheo Lal Singh, 49 Ind App 1: (AIR 1918 PC 140), and also on the decision of the Calcutta High Court reported in Prakash Chandra v. Mahima Ranjan, AIR 1947 Cal 320, and held that a suit brought against a benamidar would affect and bind the person holding a beneficial interest in the property, and that therefore the present plaintiffs were bound by the decree in O. S. 235 of 1943.

The learned Judge also held that the underlying principle in the decision in Dhiyan Singh v. Jugal Kishore, : [1952]1SCR478 , as well as the one reported in Kanhai Lal v. Brij Lal, 45 Ind App 418: (AIR 1918 PC 70), was that one who had derived the benefit under an award or compromise, as the case may be, was estopped from contending that the award or compromise was not binding on him and that the person pleading the estoppel must show that he had been led to do something detrimental to his interest and that in the instant case nothing had happened to the detriment of the plaintiffs.

On the facts, the learned Judge held that the sale by the Official Receiver did not in terms make it clear that the property was being sold free of the mortgage, nor did the arrangement come to between the plaintiffs and the respondent's father show as to what the understanding was with regard to the mortgage, that it was hard to believe, in the absence of any evidence, that the subsisting mortgage was wiped out by the plaintiffs paying a sum of Rs. 75 to the respondent and observed that :

'Equity may hold people bound by a contract which though deficient in regard to form, was nevertheless a contract, but equity cannot override the provisions of a statute and confer a right which he cannot have without the formalities enjoined by the statute being gone through.'

So holding, our learned brother Srinivasachari J., dismissed the second appeal, confirming the judgment of the learned District Judge, Cuddapah.

11-13) Two main points arise for consideration before us in this appeal :

Firstly, whether the respondent is estopped by reason of the representations and the conduct of his father, and subsequently of himself, in the prior proceedings, and otherwise, from disputing the right and title of the plaintiffs to the northern half of the suit house derived by them under the settlement between the plaintiffs on the one hand and the respondent's father on the other :

Secondly, whether the mortgage decree in O. S. 235 of 1943 would have any binding effect on the plaintiffs, who were not made parties thereto, particularly when the benamidar Vadlaputi Chinna Subbayya had disclosed who the real owner was and disclaimed all interest in the mortgage property.

14. On the first question, it is necessary to examine the exact nature of the settlement reached between the plaintiffs and the respondent's father on the materials available on record. The learned Advocate-General contended that the mortgage fa question was executed only fifteen days before the decree passed in favour of the 1st plaintiff in O. S. 390 of 1931, and presumably after the order of attachment before judgment was obtained in that suit, that the plaintiffs had filed I. A. No. 168 of 1935 in the insolvency proceedings that followed, for the annulment of the mortgage, and that it was at that stage, that mediators intervened, and attempted to settle the claim of the plaintiffs in respect of the mortgage property, by virtue of the decree that was obtained by them in O. S. 390 of 1931 and also in regard to their attempts to annul the mortgage by filing I. A. 168 of 1935 as aforesaid, which resulted in the settlement of which reference had been made earlier.

It is seen that the evidence of P. W, 5 one of the mediators who brought about the settlement, and who speaks in support thereof, receives corroboration from Ex, A-18 the Karamama executed by the plaintiffs in favour of the respondent immediately after the partition between them of the suit house, and Ex. A-19, the endorsement on Ex. A-18, evidencing the receipt of Rs. 75 by the respondent from the plaintiffs. On this issue, the respondent himself admitted in the evidence he gave in O. S. 235 of 1943 referred to above, marked as Ex. A. 22 (Exs. A. 22 (a) to (g) ), wherein he admitted in unequivocal terms that the half interest in the suit house of Vadlaputi Chinna Subbayya was given for the debt due to Devathi Subbamma (2nd plaintiff) by Chinni Venkata Subbayya and that at that time the 2nd plaintiff had claimed about Rs. 600 including the expenses, as due to her under the debt owed by Chinni Venkata Subbayya. There is also the further admission extracted below (Ex. A. 22 (f)):

'My father gave half of the mortgaged property free of mortgage to Vadlaputi China Subbayya for Devathi Subbamma's son towards their debt due by Chinni Venkata Subbaiah.'

It may thus be seen that the evidence of P. W. 5 is fully corroborated by the admissions made by the respondent as well as the execution of Exs. A. 18 and A. 19 and by the admitted fact that the plaintiffs had been in possession of the northern half of the suit house ever since the division in 1940, a fact evidenced by Ex. A-9. an extract from the Demand Register of the Panchayat Board Office, Badvel. We have, therefore, no doubt whatsoever, that the respondent's father representing that he was and acting as, the sole mortgagee interested in the mortgage debt, got over, by this settlement, the possible effects of the plaintiffs pursuing their claim and enforcing their rights in respect of the debt owing to them from the mortgagors under an earlier attachment of the mortgage property as well as under the proceedings started by them for the annulment of the mortgage.

It is thus clear that the plaintiffs gave up all their claims, and instead, received the northern half of the suit house free of the mortgage by virtue of the settlement reached between them and the respondent's father. It may thus be seen that by reason of this division of the suit house between the plaintiffs and the respondent, not only did the plaintiffs give up all their claims and contentions which were to the prejudice of the respondent's father, but had also received the northern portion of the house towards and in discharge of the decree debt owed to them from the mortgagors Chinni Venkata Subbayya and his sons.

The learned Advocate-General contends that having thus induced the plaintiffs to accept a situation on the basis of a representation that what was being given to them namely, the northern portion of the house was being given free of mortgage towards their debt, and also to give up their contest as to the validity of the mortgage, the respondent is clearly estopped from now setting up a contention totally repugnant and contrary to the stand taken by him and his father in the earlier proceedings as per the settlement between them. The learned Advocate-General placed reliance on : [1952]1SCR478 and on Section 43 of the Transfer of Property Act.

15. The relevant portion of Section 43 of the Transfer of Property Act, which embodies the principle of estoppel by representation, is as follows :

'Where a person fraudulently or erroneously represents that he is authorised to transfer certain immoveable property and professes to transfer such property for consideration, such transfer shall, at the option of the transferee, operate on any interest which the transferor may acquire in such property at any time during which the contract of transfer subsists.''

In this connection, it would be useful to refer to the English Law of estoppel, the principle whereof had been incorporated in this section. The following passage from Rajapakse v. Fernando, 1920 AC 892 at p. 897: (AIR 1920 PC 216 at pp. 217-218), is instructive :

'Where a grantor has purported to grant an interest in land which he did not at the time possess but subsequently acquires, the benefit of his subsequent acquisition goes automatically to the earlier grantee, or, as it is usually expressed, 'Feeds The Estoppel''

This principle has been given effect to in : [1952]1SCR478 . In that case the property belonged to one Shankar Lal on whose death disputes arose between Shankar Lal's father's brother's son Brijlal (Plain-tiff's grand father) and the defendant's grandmother, Mst. Mohan Dei, Brijlal claiming the entire estate by survivorship on the ground that Shanker Lal died in a state of jointness with him and that all the properties were the joint family properties.

16. The dispute was referred to arbitration and an award was delivered under which Mst. Mohan Dei was given the suit properties as the absolute owner and the rest of the estate then in dispute was given to Brijlal. The division, was effected accordingly, and ever since, that is to say from 21-12-1884, the date of the award, down to 26-3-1941, the date of the suit, each branch had been in separate and uninterrupted possession of the properties respectively allotted to it, and each had been deal-ing with them as absolute owner. The defendants claimed that the plaintiffs were bound by the award and ace, in any event estopped. The award was also sought to be attacked on various grounds. It was in this context their Lordships made the following observations :

'But we need not examine these points because we do not need to proceed on the binding nature of the award. Even if the award be invalid we are of opinion that the plaintiff's claim is completely answered by the plea of estoppel. Now ft can be conceded that before an estoppel can arise, there must be first a representation of an existing fact as distinct from a mere promise de future made by one party to the other; second, that the Other party, believing it, must have been induced to act on the faith of it; and third; that he must have so acted to his detriment.'

Their Lordships proceeded to consider these points on the material available in the case before them and observed as follows:

'It is beyond dispute that he (Brijlal) laid serious claim to the property in 1884. He claimed that he was joint with Shanker Lal and so on Shanker Lal's death he became entitled to the whole of the estate and that Mt. Mohan Del had only a right of maintenance. Whether he would have had difficulty in establishing such a claim, or indeed whether it would have been impossible for him to do so, is wholly immaterial. The fact remains that he pressed his claim and was serious about it, so much so that he was able to persuade the arbitrator that he had an immediate right to part of the estate. Mt. Mohan Dei, on the other hand, resisted this claim and contended that she was entitled to separate and exclusive possession, and in any event, that she was entitled in absolute right to a part of the property. On the facts which now emerge it is evident that Brijlal had no right and that his hopes of one day succeeding as reversioner were remote.

Mt. Mohan Dei had a son Shri Krishan Das who was the next presumptive reversioner and as the boy was a good deal younger than Brijlal, Brijlal's chances were slim. Actually, the boy survived Brijlal by nearly forty years. Brijlal died in 1889 or 1890 and the boy did not the till March 1929. Had he lived another eight or nine months he would have succeeded and the plaintiffs would have been nowhere. Now this dispute, seriously pressed by both sides was referred to arbitration. It is neither here nor there where the award was valid (sic), whether decision fell within the scope of the reference or whether it had any binding character in itself. Even if it was wholly Invalid, it was still open to the parties to say: Never mind whether the arbitrator was right or wrong, his decision is fair and sensible, so instead of wasting further time and money in useless litigation we will accept it and divide the estate in accordance with his findings.

That would have been a perfectly right and proper settlement of the dispute, and whether it bound third parties or not it would certainly bind the immediate parries; and that in effect is what they did. By his conduct Brijlal induced Mt. Mo-Lan Dei to believe that this would be the case and on the faith of that representation, namely the acceptance of the award, he induced Mt. Mohan Dei to act greatly to her detriment and to after her position by accepting the award and parting with an appreciable portion of the estate, and he himself obtained a substantial advantage to which he would not otherwise have been entitled and enjoyed the benefit of it for the rest of his life; and to his credit be it said, he never attempted to go behind his decision. In any event we are clear that that created an estoppel as against Brijlal.'

It was in this context that their Lordships made the following further observations :

'It is true that in one sense a question of title is one of law and it is equally true that there can be no estoppel on a question of law. But every question of law must be grounded on facts and when Brijlal's conduct is analysed it will be found to entail an assertion by him that he admitted and recognised facts which would in law give Mt. Mohan Dei an absolute interest in the lands awarded to her. It was because of that assertion of fact namely his recognition and admission of the existence of facts which would give Mt. Mohan Dei an absolute interest, that she was induced to part with about one-third of the property to which Brijlal, on a true estimate of the facts as now known, had no right. There can be no doubt that she acted to her detriment and there can, we think, be equally no doubt that she was induced to do so on the faith of Brijlal's statements and conduct which induced her to believe that he accepted all the implications of the award.

But in any event, we are clear that Brijlal would have been estopped. The nature of the dispute and the description of it given in the award show that there was considerable doubt and certainly much dispute, about the true state of affairs. Even if the arbitrator was wholly wrong and even if he had no power to decide as he did, it was open to both sides to accept the decision and by their acceptance recognise the existence of facts which would in law give the other an absolute estate in the properties they agreed to divide among themselves and did divide. That, in our opinion, is a representation of an existing fact or set of facts. Each would consequently be estopped as against the other and Brijlal in particular would have been estopped from denying the existence of facts which would give Mt. Mohan Dei an absolute interest in the suit property.'

17. Applying the above principles to the present case we are satisfied that the plaintiffs had acted to their detriment in giving up their rights under the decree in their favour in O. S. No. 390 of 1931 and also in giving up their contentions against the validity of the mortgage in I. A. 168 of 1935. The respondent's father at the time of the settlement in question had obviously to choose between the consequence of the plaintiffs' pursuing the remedies open to them in law both under the decree in their favour as well as in I. A. 168 of 1935, with the off-chance of the mortgage being annulled or declared not binding on the plaintiffs, and a settlement with the plaintiffs, so that his claims under, the mortgage may be to some extent secured.

It was in this situation that the respondent's father agreed to the settlement effected by the mediators and to the property being brought to sale 'subject to the mortgage and to purchase the same for the joint benefit of himself and the plaintiffs, and it was in consequence of this that the sale deed, Ex. B.2, came to be taken in the joint names of the respondent's father and Vadlaputi Chinna Subbayya, the maternal uncle of the first plaintiff for and on behalf of the plaintiffs, as benamidar, and it was in pursuance of this settlement that, following the joint purchase, the suit house was divided between the plaintiffs and their respondent in equal shares, the plaintiffs taking the northern half.

It must also be noticed in this connection that throughout these proceedings the respondent's father had represented that he was the mortgagee and that he was solely entitled to the rights under the mortgage and it was this representation also that must have been taken into consideration in the plaintiffs being induced to accept the settlement of the mediators. We are, therefore, satisfied that the principle of estoppel as laid down by their Lordships of the Supreme Court as well as by the Judicial Committee in 45 Ind App 118 : (AIR 1918 PC 70), is fully applicable on the facts of the in-stant case.

The respondent's father as well as the respondent are, therefore clearly estopped from questioning or contesting the validity of the settlement reached between the plaintiffs on the one hand and the respondent's father and subsequently the respondent on the other. In this connection, the contention that it was the respondent's father that entered into the arrangement and not the respondent himself and that consequently the respondent is not bound by it may be straightway repelled, as the estoppel must be regarded as having descend-ed to the respondent himself, from his father. In this connection the following observations of their Lordships of the Supreme Court in the above quoted decision are pertinent, dealing with the contention of Brijlal's sor who took possession and claimed through their father :

'They did not claim an independent title in themselves, and, as we know, they had no other title at that date. They were therefore in no better position than Brij'al and as Brijlal would have been estopped, the estoppel descended to them also because they stepped into his shoes.'

It may thus be seen that the respondent is in no way better position than his father and cannot claim any different or better rights. As a matter of fact, on the death of the respondent's father, the respondent himself continued the representations of his father and adopted the compromise by taking Ex. A-18, the kararnama, evidencing division between the plaintiffs and his father and also accepting the sum of Rs. 75/- which was payable by the plaintiffs to him as owelty and of which he acknowledged receipt under Ex. A-19.

18. Thus, even on an assumption that the respondent had, in fact, only a half interest in the mortgage security, he as well as his father, are estopped as indicated above from disputing the claim of the plaintiffs and as the respondent had by subsequent events become fully entitled to the property, he would in terms of Section 43 of the Transfer of Property Act be estopped -from disputing the claim of the plaintiffs to the northern half of the suit house.

In this context, Srimathi Sithamahalakshmi, the learned counsel for the respondent fairly conceded that once it is found that the transfer of the northern portion of the suit house in favour of the plaintiff had been effected towards their decree debt, free from mortgage and not subject to the mortgage, the respondent would not be able to maintain his present claim in respect of that property.

19. In the view we have taken, it may not strictly be necessary to go into the other question as to whether the decision in O. S. 235 of 1943 is binding on the plaintiffs. But as the matter had been dealt with by the Courts below at some length, we shall advert to the same in brief.

20. The learned Advocate-General contends that as the plaintiffs were directly interested in the half portion of the suit house, which was the subject matter of the mortgage suit in O. S. 235 of 1943, and as the 2nd defendant i.e., the maternal uncle of the first plaintiff Vedlaputi Chinna Sub-bayya disclosed in his written statement that he had no interest in the property at all, and that the beneficial interest vested in the present plaintiffs who were in possession of the mortgage house, it was the plain duty of the plaintiff in O. S. 235 of 1943, to have impleaded the plaintiffs as party-defendants, as they were the persons interested in the equity of redemption as well as in the mortgage property, and not having done this, any decree passed against the second defendant, a mere benamidar, who has disclaimed any Interest in the property and disclosed the real owners, would be ineffective and cannot bind the plaintiffs. In support of this proposition; the learned Advocate-General relied on the following decisions: Mata Prasad v. Ram Charan Sahu, ILR 36 All 446 : (AIR 1914 All 173) and Mdhunt Das v. Nil Komul Dewan, 4 Cal WN 283.

21. Before we deal with these decisions, it would be useful to refer to the relevant portion of Order XXXIV, Rule 1, C. P. C. which is as follows :

'Subject to the provisions of this Code, all persons having an interest either in the mortgage-security or in the right of redemption shall be joined as parties to any suit relating to the mortgage. xx xx xx '

This rule enjoins that all persons interested eitherin the mortgage security or in the equity ofredemption are to be joined as parties to any suiton the mortgage. The object of doing so is notmerely to avoid multiplicity of suits, but also to enable the interested parties to raise necessarydefences open to them in law. so that the samemay be taken into consideration in dealing withthe claim under the mortgage and in passing thepreliminary decree thereon.

That this is imperative is also inferable from the fact that Order XXXTV. Rule 4, C. P. C. provides for the passing of a preliminary decree fixing a time for payment into court of the amount for which the preliminary decree had been made, and in default whereof giving of a right to the plaintiff therein, to apply for a final decree directing that the mortgage property or sufficient part thereof be sold and the proceeds of sale paid into Court and applied in payment of what has been found due under the preliminary decree. This is an opportunity which is given to all persons interested in the equity of. redemption who are in the position of the present plaintiffs', and since the plaintiffs had not been made parties to the suit, O. S. No. 235 of 1943, the decree passed therein does not bind them.

22. In ILR 36 All 446 ; (AIR 1914 All 173), a suit for sale on a mortgage was brought against the ostensible purchaser of the mortgaged property. The latter pleaded that she was not the real purchaser but was merely a benamidar for her three sons. The Court, however, declined to accept this plea and gave a decree against the defendant up-on the record treating him as the real purchaser. Subsequently, the sons sued for possession of the same property and it was therein held that the previous decision in the mortgage suit did not operate as res judicata. The following observations of their Lordships of the Allahabad High Court at page 450 (of ILR All): (at pp. 174-175 of AIR) are apposite:

'It is argued on behalf of the appellants that, on the admitted statements of the plaintiffs-respon-dents in their plaint, their mother Musammat Sheo-lagna was a benamidar for them, and if she was a benamidar for the plaintiffs-respondents, a decree passed against her in that capacity is binding upon the plaintiffs also, if the parties in the present litigation are the same who were parties in the former litigation and the questions in issue were the same ..................... We do not think that the rule of res judicata is applicable to the circumstances of the present case. It appears to us that the rule has been made applicable in cases of decrees in favour of or against a benamidar, where the real owner has allowed the dispute to be fought out between his benamidar and a third party and has abstained from coming forward. The principle upon which the rule has been applied to cases fought in the name of a benamidar is well expressed in Gopi Nath v. Rhugwat Pershad, ILR 10 Cal 697, where the learned Judges held that:

'the proper rule is that in the absence ofany evidence to the contrary it is to be presumed that the benamidar has instituted the suit withthe full authority of the beneficial owner, and Ifhe does so, any decision come to in his presencewould be as much binding upon the real owneras if the suit had been brought by the real ownerhimself.' In other words, if the litigation is carried on with the full knowledge and authority of the real owner and the latter does not wish to come forward he is bound by the decree. In the present case Musammat Sheolagna protested that she was a benamidar and she did not want to carry on the litigation which the defendants first party, brought against her, though not in her capacity as a benamidar, but wanted her sons to be brought on the record as defendants in the case. She gave information of the real state of the transaction of the 10th of January. 1891. to the defendants, first party who not only failed to take advantage of this information but contradicted it.

It cannot, therefore, be said that the rule contended for by the learned Advocate for the appellants is applicable to the circumstances of the present case. Moreover, the decree against Musammat Sheolagna was not passed as benamidar for her sons but on an express finding that she was the real owner and not a benamidar of her sons, The rule, therefore, that a decree against the benamidar binds the real owner does not hold good in the present case.'

23. In 4 Cal WN 283, a son, against whom a suit ought to have been instituted, conducted on behalf of his mother a suit wrongly brought against her, knowing all the time that he and not the mother should have been sued, but there being nothing to show that it was by reason of any representative or conduct of the son that the plaintiff was led to think that the mother was the right person to be sued. In the circumstances, it was held that the decree in that suit was not binding on the son, and did not estop him, in the subsequent suit against him, from contesting the validity of that decree. What has been propounded in this case was a principle similar to the one in ILR 36 All 446 : (AIR 1914 All 173), referred to earlier. Their Lordships of the Calcutta High Court observed as follows :

'Now, the rule of Jaw applicable to judgments and decrees inter partes is that they bind only parties and privies. The only extension, given to this rule by our Courts, is that a decree against a bena-midar binds also the beneficial owner.

XX XX XX XX But the rule which makes a decree against a be-namidar binding on the beneficial owner is based upon the ground that the benamidar acts in concert with the beneficial owner, or rather that the beneficial owner acts through the.......benamidar, and on the further ground that it is by the act and conduct of the beneficial owner that the benamidar is held out to the world as the rightful owner; so that the beneficial owner cannot fully complain, if a decree made in a suit which the plaintiff was led to institute against the benamidar by reason of the acts and representations of tRe beneficial owner is sought to be used as binding against him.'

Applying the principles laid down in these two cases to the facts of the present case, we find that there are clear indications of the benamidar protesting against his having been made a party to the suit and indicating in his written statement who the real owner was and in whom the beneficial interest vested and disclaimed any interest in the suit property.

In these circumstances, if it was intended by the plaintiff in O. S. No. 235 of 1943 that the mortgage decree passed in that suit should bind the plaintiffs, it was clearly his duty to implead them as party-defendants to the suit, in which case it would have been open to the plaintiffs to raise the appropriate defences and resisted the passing of a decree, and in the event of a preliminary decree being passed, take necessary steps either to prefer an appeal or make, a deposit of the decree amount so as to prevent a sale of the mortgage property in which they were interested. On this one ground could be distinguished the two decisions relied on by Srimathi Sithamalakshmi, the learned counsel for the respondent, namely, 46 Ind App 1: (AIR 1918 PC 140) and AIR 1947 Cal 320.

24. In 46 Ind App 1 : (AIR 1918 PC 140) their Lordships of the Privy Council were dealing with a case which involved the rights of a benamidar to maintain an action in his name as plaintiff in cespect of the property which stood in his name although benami, for a beneficial owner other than himself. In that connection, their Lordships held:

'that the benamidar represents in fact the real owner and so far as their relative legal position is concerned he is a mere trustee for him.'

Their Lordships further observed :

'Their Lordships find it difficult to understand why in such circumstances, an action cannot be maintained in the name of the benamidar in respect of the property although the beneficial owner is not party to it. The bulk of judicial opinion in India is in favour of the proposition that in a proceeding by or against the benamidar, the person beneficially entitled is fully affected by the rules of res judicata. With this view their Lordships concur. It is open to the latter to apply to be joined in the action; but whether he is made a party or not, a proceeding by or against his representative in its ultimate result is fully binding on him.'

In this case, their Lordships were dealing with a case of the right of a benamidar to maintain a suit in bis own name in respect of the property for which he held title is benamidar, in which capacity he effectively represented under law the real owner to the rest of the world.

25-26. In AIR 1947 Cal 320 the facts are as follows :

A mortgaged his property to B. The property was sold subject to B's mortgage to one D who purchased it on mortgage against the sons of D who had died. The major son in his written statement stated that his father was merely a benamidar for C. C himself applied for being made a party and filed a deed of release executed by the major son of D on behalf of himself and as guardian of his minor brothers. The Court rejected C's application mainly on the ground of delay. But lie court observed that by C not being made a party he would not be prejudiced beyond the fact that if his case be true he would be driven to another litigation to fight out his own case. Thereafter D's minor sons through their guardian ad litem filed their written statement which contained no disclaimer of interest or plea of benami but on the other hand challenged the mortgage as being a collusive and colourable transaction.

The suit was decreed. It was held that the decree obtained against D's sons was binding on C, that there was no break or cesser of representation, that the disclaimer of interest was not by all the sons of D but by the major son only, that the representation was only disturbed for a time, without being broken but soon the disturbance ceased and the real owner C who created it, accepted it for the further stages of the suit by placing his case before the Court through the minor sons of D. They further held that the sons of the benamidar D could represent the real owner C in the suit and that the order of the Court rejecting C's application for being made a party to the suit could not prevent the mortgage decree from operating as res judicata.

27. Referring to the decision in 4 Cal WN 283, they distinguished it on the ground that in that case the possible grounds for holding the decree to be binding upon the defendant on the principle of benami were all excluded. It must be noted that in AIR 1947 Cal 320, the benamidar did not disclaim her interest in the property in the suit, but instead, continued to represent the same notwithstanding the unsuccessful application by the major of the sons whom the benamidar represented in the litigation. Their Lordships in that case more or less assumed that had the representation by the benamidar been broken so as to prevent a benamidar effectively representing the real owner, the legal consequences would have been different.

These decisions have, therefore, no application to the facts of the present case, where not only did the benamidar disclose the fact of his not having any interest in the suit, and disclosed who the real owner was but also disclaimed all interest in the suit property so far as he was concerned. In other words, Vadlaputi Chinna Subbayya, the so-called benamidar refused to represent the real owner and could not have represented them in the suit, so that by no stretch of the principle enunciated in 46 Ind App 1 : (AIR 1918 PC 140), could we regard the said benamidar in the present case, as effectively representing the real owner so as to make the decree passed in that suit or against the benamidar binding on the plaintiffs.

28. The learned Advocate-General has drawn our attention to the decision in Pitchayya v. Ratt-amma, 55 Mad LJ 856 at p. 858 : (AIR 1929 Mad 268 at p. 269), to show that the court has power under Ordre 1, Rule 10, C. P. C. to make the real owner a party to a suit on a mortgage brought by the benamidar. in his own name. We do not think that his proposition was ever doubted, irrespective of whether the benamidar figured as the plaintiff or the defendant in the suit. It would however be useful in this context to refer to the observations of Lord Atkinson in Petherpermal Chetty v. Muni-andi Servai, 35 Ind App 98 (PC), wherein the following passage from the Mayne's Hindu Law, 7th Edition, para 446, was quoted with approval:

'where a transaction is once made out to be a mere benami, it is evident that the benamidar absolutely disappears from the title. His name is simply an alias for that of the person beneficially interested.'

28a. In reply, Srimathi Sithamahalakshmi, the learned Counsel for the respondent, relied on Yenkateswarlu v. Venkata Narasimham, AIR 1957 Andh-Pra 557. That was also a case where the benamidar purported to and in fact fully represented the real owner, and hence does not require to be further examined.

29. We are, therefore, clearly of opinion that Vadlaputi Chinna Subbayya, the so-called benamidar for the plaintiffs, having disclosed the benami nature of his interest in the mortgage property has shed his status as such, and if even thereafter, the plaintiff in O. S. No. 235 of 1943 did not care to bring the present plaintiffs, the real owners having interest in the mortgage property on record, he did so at his own risk and in the circumstances, the decision as well as the decree passed therein cannot in any manner affect the rights of the plaintiffs in this case. For this reason also, the plaintiffs could not have been lawfully evicted from the suit property, to which they were entitled in their own right.

30. In the result, we allow this appeal and set aside the judgment of our learned brother Srinivasachari, J., dismissing the second appeal and confirming the judgment of the learned District Judge, Cuddapah, and we direct that the judgment and decree of the Subordinate Judge's Court, Cuddapah be restored. In the entire circumstances of the case, we direct each party to hear his or her own costs throughout.


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