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Nandipalli Appalaraju Vs. G. Pannalal Sowcar and ors. - Court Judgment

LegalCrystal Citation
SubjectProperty;Civil
CourtOrissa High Court
Decided On
Case NumberA.H.O. Nos. 48 and 49 of 1975
Judge
Reported inAIR1982Ori131
ActsEvidence Act, 1872 - Sections 101 to 104
AppellantNandipalli Appalaraju
RespondentG. Pannalal Sowcar and ors.
Appellant AdvocateY.S.N. Murty, Adv.
Respondent AdvocateB.R. Rao, ;B.L.N. Swamy and ;N.V. Ramdas, Advs.
DispositionAppeals allowed
Cases ReferredBhim Singh v. Kan Singh
Excerpt:
.....v birendra mohan de, 1995 (2) gau lt 218 (db) and union of india v smt gita banik, 1996 (2) glt 246, are not good law]. - absence of any reliable evidence to prove that n. in fact, no such contention could be advanced inasmuch as the money had really been collected in the certificate proceeding and the public demand had been satisfied. --6. it is well settled that the burden of proving that a particular sale is benami and the apparent purchaser is not the real owner, always rests on the person asserting it to be so. the only evidence on which strong reliance has been placed is the oral statement of one of the judgment-debtors. once we come to the conclusion that the plaintiffs have failed to establish the benami character of the property, it must follow that absolute title had..........tax the certificate sale was held, appalaraju was set up by the certificate-debtors to bid in the auction sale. the auction money was paid not by appalaraju but was advanced by the certificate-debtors. this device was adopted to defeat the creditors of the certificate-debtors. the true owners of the property thus were the certificate-debtors who later became the judgment-debtors in the two suits. the right, title and interest in the properties thus continued to be with the family of the judgment-debtors and were liable to be attached. the claims should not have been allowed and the properties should have been found liable for attachment and to be proceeded against for satisfaction of the decrees, appalaraju, the auction-purchaser, took the stand that the family of the.....
Judgment:

R.N. Misra, C.J.

1. The appellant in both these appeals seeks to challenge the affirming common judgment of a learned single Judge of this Court in First Appeals Nos. 65 and 66 of 1977. The said First Appeals were directed against a common judgment in Title Suits Nos. 71 and 72 of 1964. First Appeal No. 65 of 1967 arose out of Title Suit No. 72 of 1964 while First Appeal No. 66 of 1967 was out of Title Suit No. 71 of 1964-

2. The short facts are the following :

One Pannalal Sowcar carried on business in the name and style of 'Baughmal Pannalal Sowcar'. He obtained a money decree against defendants 2 to 13 of Title Suit No. 71 of 1964 and levied execution of the said decree in E. P. No. 4 of 1958 in the court of the Subordinate Judge, Jeypore. In execution, he brought the disputed properties of Title Suit No- 71 of 1964 under attachment by contending that these properties belonged to the judgment-debtors. One Lakshmanrao, plaintiff in Title Suit No. 72 of 1964, also obtained a money decree against defendants 1 to 8 of that suit and raised execution in E. P. No. 1 of 1968 against the judgment-debtors. The decree-holder brought the disputed properties of Title Suit No. 72 of 1964 under attachment. While these execution cases were pending and attachment of properties had been effected, Appalaraju, defendant No. 1 in Title Suit No. 71 of 1964 and defendant No. 9 in Title Suit No. 72 of 1964, preferred two claim petitions in the corresponding execution cases on the footing that the properties had been purchased by him in a sale held under the Madras Revenue Recovery Act for realisation of arrears of sales tax dues outstanding against the judgment-debtors who were defendants 2 to 13 in Title Suit No. 71 of 1964, some of whom were also defendants 1 to 8 in Title Suit No. 72 of 1964. The auction-purchaser maintained that the sale in his favour had been duly confirmed; the sale certificate had been issued and possession had been made over through court and he was hi possession and enjoyment of the properties as absolute owner thereof; and, therefore, attachment of such properties which did not belong to the defendant-judgment-debtors for satisfying the decrees was not valid. The executing court allowed both the claims. Therefore, the two separate plaintiffs instituted these two Title Suits by impleading the claimant along with the other defendants for a declaration that the properties were liable to be proceeded against for satisfaction of the respective decrees.

3. The short facts relevant for appreciating the contentions advanced are these:--

The plaintiffs claimed that Appalaraju was the brother-in-law of Satyanarayana, the 3rd defendant in Title Suit No. 71 of 1964, who was also the 2nd defendant in the connected suit. The auction-purchaser was not a resident of Koraput district. The property belonged to the family of the judgment-debtors and when for satisfying the demand of arrears of sales tax the certificate sale was held, Appalaraju was set up by the certificate-debtors to bid in the auction sale. The auction money was paid not by Appalaraju but was advanced by the certificate-debtors. This device was adopted to defeat the creditors of the certificate-debtors. The true owners of the property thus were the certificate-debtors who later became the judgment-debtors in the two suits. The right, title and interest in the properties thus continued to be with the family of the judgment-debtors and were liable to be attached. The claims should not have been allowed and the properties should have been found liable for attachment and to be proceeded against for satisfaction of the decrees,

Appalaraju, the auction-purchaser, took the stand that the family of the certificate-debtors was heavily indebted and all their properties which formed the subject-matter of the two suits were under attachment in the earlier cases including the certificate case under the Madras Revenue Recovery Act. There were several bidders when in the certificate case the property was put to sale, and he was the highest bidder in the sale held on 15-5-58. The sale was duly confirmed on 6-8-60 and possession was delivered on 12-8-61. The sale became final and absolute title was acquired in the purchased property by the auction-purchaser.

4. The judgment-debtors remained ex parte in both the suits.

5. The trial Court, on the basis of the evidence led before it, came to hold that the sale in favour of Appalaraju in the certificate proceedings was sham and the consideration money paid therein came from the judgment-debtors' family; the sale certificate in favour of the auction-purchaser did not confer any title on him and the delivery of possession in favour of the auction-purchaser was a mere paper transaction; the members of the family of the judgment-debtors continued to be in possession of the property and Appalaraju was a mere name-lender or Benamdar. The trial Court further found that the suits were maintainable and were not barred by limitation. On the findings that the judgment-debtors had subsisting interest, the properties were liable to attachment and sale for satisfaction of the decrees against the judgment-debtors.

6. In First Appeals, the auction-purchaser's counsel contended that heavy burden lay on the decree-holder of both the suits to establish that the auction sale was a Benami one and did not confer title on the auction-purchaser; there was no evidence worthy of credence to discharge that heavy burden and to enable the court to hold that the transactions were either Benami or sham and that title had not vested in the auction-purchaser.

The learned single Judge analysed the evidence led on both sides and came to hold:--

'11. On the evidence as led by, the parties, the following facts are found to have been established; the suit lands together with the mill belonging to the judgment-debtors were under attachment in a certificate case initiated for recovery of arrears of sales tax dues. The judgment-debtors were taking time to pay up the certificate dues, were paying by instalments and were getting the sale of the attached properties adjourned from time to time. After payment of some instalments, they defaulted and at their instance the suit lands were put up for sale. K. Rama Rao, their clerk, was all along taking steps for the judgment-debtors in the certificate case. The sale of the suit properties was once fixed to 25-3-1958 and the order sheet of the case reveals that due to non-availability of the officer concerned, the sale was adjourned to 12-5-58. N. Appalaraju is the brother-in-law of S. Satyanarayana, one of the judgment-debtors (defendant No. 3 in Title Suit No. 71 of 1964), and N. Appala-raju's daughter has been staying since her childhood with S. Satyanarayana who has no issue. N. Appalaraju belongs to Vizianagaram and has no residence or property either at Jeypore or within the district of Koraput at the time of auction-purchase. N. Appalaraju authorised K. Rama Rao, clerk of the judgment-debtors, who was taking all steps in the certificate case for the judgment-debtors in writing to offer bid for him (N. Appalaraju). Although N. Appalaraju says that he was present at the auction sale and was instructing K. Rama Rao, he cannot be believed, because if he was really present, he himself should have signed the bid sheet and not K. Rama Rao. The written authority appears to have been in possession of the judgment-debtors on 25-3-58 to which date the sale had been fixed originally, because the written authority shows that it originally bore the date 25-3-58 which was changed to 12-5-1958, a date three days prior to the date when the auction sale actually took place. The assertion of N. Appalaraju that he was actually present at the place of auction is ought to be established through D.W. 1 who is alleged to be another bidder taking part in the auction. A reading of his evidence does not inspire confidence. That apart, D.W. 7, one of the judgment-debtors, who supports the case of N. Appalaraju admits that he joined Bijoy Traders as the Manager in 1958 and that D.W. 1, the bidder referred to above, was a partner pf Bijoy Traders. Thus, the evidence of D.W. 1 cannot be said to be independent in nature. No other bidder has been examined. Absence of any reliable evidence to prove that N. Appalaraju was present at the time of auction coupled with the fact that the date of written authority has been changed from 25-3-58 to 12-5-58 and that N. Appalaraju has not signed the bid sheet conclusively establish that N. Appalaraju was not actually present; that to oblige the judgment-debtors he had given a written authority to their clerk K. Rama Rao on 25-3-58 which date was subsequently changed to 12-5-58 and that K. Rama Rao was alone participating in the auction. The documents further reveal that K. Rama Rao deposited Rs. 250 on the date of sale and the balance subsequently. He also took delivery of possession in the absence of N. Appalaraju. The records further show that one of the judgment-debtors figured as a witness to the writ of delivery of possession. The story given by N. Appalaraju that he was ready with the full sale price on the date of sale; that after depositing Rs. 250 on that day he left for his own place with the balance money and that two days thereafter he again sent money through his son is very difficult to believe. On the question of possession, the evidence led by N. Appalaraju is very unsatisfactory. None of the tenants examined by him who says that he is in possession as a tenant under N. Appalaraju, has produced either the lease deed or any rent receipts showing payment of rent. Even N. Appalaraju does not name all the lessees who have been examined on his side. The evidence of D.W. 4 that every year after harvest he writes to N. Appalaraju to come and take delivery of paddy has been contradicted by N. Appalaraju himself. K. Rama Rao who is admittedly the clerk of the judgment-debtors is a very material witness Evidence has been led on the side of the plaintiffs that dusti summons was taken to this witness who refused to accept the same saying that he had been instructed by the judgment-debtors not to appear in court. This evidence is not challenged When K. Rama Rao is admittedly the clerk of the judgment-debtors and figured as an agent of N. Appalaraju, it is for N. Appalaraju to examine him to prove his case. An adverse inference must therefore be drawn against N. Appalaraju for non-examination of this witness. In these circumstances, there can be no escape from the conclusion that the purchase of the suit properties in the name of N. Appalaraju is a sham transaction and is a device by the judgment-debtors to save their properties from the hands of their other creditors. On the aforesaid analysis of the evidence, therefore, I confirm the finding of the trial court on this point.'

7. We agree with Mr. Murty, the learned counsel for the appellants, that both the trial Judge as also the learned single Judge lost sight of the distinction between a sham transaction and a Benami transaction. The distinction was very cogently drawn in the celebrated decision of the Supreme Court in the case of Sree Meenakshi Mills Ltd. v. Commr. of Income-tax, Madras, AIR 1957 SC 49 (at p. 66), Venkatarama Ayyar, J., speaking for the Court, stated:--

'..... In this connection, it is necessary to note that the word 'Benami' is used to denote two classes of transactions which differ from each other in their legal character and incidents. In one sense, it signifies a transaction which is real, as for example, when A sells properties to B but the sale deed mentions X as the purchaser. Here the sale itself is genuine, but the real purchaser is B, X being his benamidar. This is the class of transactions which is usually termed as benami. But the word 'benami' is also occasionally used, perhaps not quite accurately, to refer to a sham transaction, as for example, when A purports to sell his property to B without intending that his title should cease or pass to B. The fundamental difference between these two classes of transactions is that whereas in the former there is an operative transfer resulting in the vesting of title in the transferee, in the latter there is none such, the transferor continuing to retain the title notwithstanding the execution of the transfer deed. It is only in the former class of cases that it would be necessary, when a dispute arises as to whether the person named in the deed is the real transferee or B, to enquire into the question as to who paid the consideration for the transfer, X or B. But in the latter class of cases, when the question is whether the transfer is genuine or sham, the point for decision would be, not who paid the consideration but whether any consideration was paid, x x x x'

In the present case, it was not the contention: of any party that the purchase was sham. In fact, no such contention could be advanced inasmuch as the money had really been collected in the certificate proceeding and the public demand had been satisfied. That being so, the real point of contest was whether the purchases were Benami, i.e. Appalaraju was not the real owner but the judgment-debtors, who were also the certificate-debtors, had purchased the property and had obtained title to the same in the auction purchase only in the name of Appalaraju.

Undoubtedly, the burden to establish 'Benami' character of the transaction is heavy on the person who pleads 'Benami' as law presumes the apparent to be the real state of affairs. Mr. Murty placed reliance on a single Judge decision of this Court in the case of Madan Mohan Das Babaji v. Brundaban Pal, (1972) 38 Cut LT 1323, where one of us dealing with the tests of 'Benami' indicated in paragraph 10 of the judgment thus:--

'10. In dealing with a case of benami, the Court takes into consideration the following facts and circumstances:--

(1) the source from which the purchase money was delivered;

(2) Possession of the property-

(a) the party in possession oi and not the nature and character of his possession;

(b) whether possession was taken after the purchase;

(3) the position of the parties and their relationship;

(4) the circumstances of the parties;

(5) the motive for resorting to the benami transaction;

(6) custody and production of the title deeds; and

(7) previous and subsequent conduct of the parties.

While ordinarily these are the features which enter into the arena of consideration in deciding whether a transaction is benami or not, right conclusion can only be reached by adopting a cumulative appreciation of the entire evidence. A combination, of some or all of them and a proper weighing and appreciation of their value may in a given case go a great way towards indicating as to where the real title lies.'

We may also refer to two recent decisions of the Supreme Court on this question. In the case of Jaydayal Poddar v. Bibi Hazra, (1974) 1 SCC 3: (AIR 1974 SC 171), a Division Court pointed out:--

'6. It is well settled that the burden of proving that a particular sale is benami and the apparent purchaser is not the real owner, always rests on the person asserting it to be so. This burden has to be strictly discharged by adducing legal evidence of a definite character which would either directly prove the fact of benami or establish circumstances unerringly and reasonably raising an inference of that fact. The essence of a benami is the intention of the party or parties concerned; and not unoften, such intention is shrouded in a thick veil which cannot be easily pierced through. But such difficulties do not relieve the person asserting the transaction to be benami of any part of the serious onus that rests on him; nor justify the acceptance of mere conjectures or surmises, as a substitute for proof. The reason is that a deed is a solemn document prepared and executed after considerable deliberation, and the person expressly shown as the purchaser or transferee in the deed starts with the initial presumption in his favour that the apparent state of affairs is the real state of affairs. Though the question, whether a particular sale is benami or not, is largely one of fact, and for determining this question, no absolute formulae or acid test, uniformly applicable in all situations, can be laid down; yet in weighing the probabilities and for gathering the relevant indicia, the Courts are usually guided by these circumstances (1) the source from which the purchase money came; (2) the nature and possession of the property, after the purchase; (3) motive, if any, for giving the transaction a benami colour; (4) the position of the parties and the relationship, if any, between the claimant and the alleged benamidar; (5) the custody of the title deeds after the sale and (6) the conduct of the parties concerned in dealing with the property after the sale.

7. The above indicia are not a exhaustive and their efficacy varies according to the facts of each case. Nevertheless No. 1, viz., the source whence the purchase money came, is by far the most important test for determining whether the sale standing in the name of one person, Is in reality for the benefit of another.'

In the case of Bhim Singh v. Kan Singh, (1980) 3 SCC 72; (AIR 1980 SC 727), the same question again came up for consideration before a Division Court. In paragraph 18 of the judgment it was stated;--

'18. The principle governing the determination of the question whether a transfer is a benami transaction or not may be summed up thus; (1) the burden of showing that a transfer is a benami transaction lies on the person who asserts that it is such a transaction; (2) if it is proved that the purchase money came from a person other than the person in whose favour the property is transferred, the purchase is prima facie assumed to be for the benefit of the person who supplied the purchase money, unless there is evidence to the contrary; (3) the true character of the transaction is governed by the intention of the person who has contributed the purchase money and (4) the question as to what his intention was has to be decided on the basis of the surrounding circumstances, the relationship of the parties, the motives governing their action in bringing about the transaction and their subsequent conduct, etc.'

8. The tests are thus very clear and there is no scope for the proposition that as both the parties have led evidence the question as to on whom burden lay loses importance.

9. Appalaraju admittedly obtained the sale certificate and possession was taken in the proceeding through the Revenue Court. It is not disputed that Appalaraju was the brother-in-law of Satya-narayana, one of the judgment-debtors. It is also not disputed that Appalaraju was a man of a different area and did not have property in the vicinity of the disputed property. These are, however, not very material considerations. It is quite possible that when the family was losing the property, they wanted these items which were being put to auction sale in the certificate proceeding to be purchased by a near relation. It is also possible that Appalaraju in his own way and independent of the judgment-debtors wanted to buy the property with a view to having an asset at his brother-in-law's place. As has been appropriately indicated by the Supreme Court in the reported decisions, the source of the consideration is almost the deciding feature. In the instant case, there is no document to support the plea that the judgment-debtors advanced the consideration money. Admittedly, the judgment-debtors were in heavy debts and there were several creditors. The property was put to sale in the certificate proceeding only when the judgment-debtors were not in a position to pay the instalments. There is no evidence worthy of acceptance that the judgment-debtors were in a position to advance the auction price. The only evidence on which strong reliance has been placed is the oral statement of one of the judgment-debtors. Admittedly, Appalaraju was a relation of the family being the brother-in-law of Satyanarayana. Ifthe property had been attempted to be saved from the clutches of the creditors by the Benami process, it is not known as to why one of the judgment-debtors would come forward to say that not Appalaraju but the judgment-debtors were the real owners of the properties so that the properties could be followed by the decree-holder for satisfying his decree at the peril of the judgment-debtors' interest. There is an admission of one of the judgment-debtors in his cross-examination that his relationship with Satyanarayana had become strained. Therefore, he seems to have come to court to support the decree-holder. This aspect has been completely lost sight of both by the learned Subordinate Judge as also the learned single Judge. The trial court as also the learned single Judge here should have found that in case the transaction was intended to be a Benami one, in view of the fact that Appalaraju was virtually an outsider though related as brother-in-law to one of the members, some documents should have been taken at least in evidence of the fact that the consideration money had come from the family of the judgment-debtors. No such document is in existence. Ordinarily, when such a substantial amount was being advanced for purchasing the property in the certificate case, the judgment-debtors would certainly have made an attempt to secure their interest in obtaining an admission from Appalaraju that not he but the judgment-debtors were the real owners of the property.

Mr. Rao for the respondents could not point out any other evidence in support of the plea of source of the money except the evidence of another witness (PW 5) who only said that he had heard from one of the judgment-debtors, who has not been examined that the consideration had been paid by the judgment-debtors' family. It is not known why the defendant No. 5 who is said to have been the source of the information has not been examined.

3 or 4 aspects on which the learned single Judge came to hold that it was a Benami transaction may now be considered. Appalaraju admittedly was a man from a distance. Even if he had taken assistance of the clerk of the judgment-debtors, that itself was not a deciding factor. It was reasonable for Appalaraju to look for some local man's assistance. Ramarao, who was in the employment of the judgment-debtors, might have been introduced to him by Satyanarayana, and taking of his assistance, therefore, could not be a feature to lead to any conclusion. The fact that an authority had been given by Appalaraju does not necessarily establish that he was not present. Very often, people do not want to appear before the court at the time of auction sale and bid and they appoint agents for the purpose. Ramarao seems to have been used to the court work as he was taking steps on behalf of the judgment-debtors in the several litigations. In these circumstances, picking up Ramarao could not be a feature on which any conclusive reliance should have been placed. Adverse inference should not have been drawn in our view for non-examination of Ramarao. Ramarao admittedly continued to be the clerk of the judgment-debtors and there is some evidence to show that the judgment-debtors did not want Ramarao to appear as a witness to support Appalaraju. There is no material to discard the explanation of Appalaraju for non-examination of Ramarao.

In our view, the learned single Judge went wrong in proceeding on the footing that since both parties had led evidence the question of burden of proving Benami character lost importance. This obviously was an approach contrary to the decisions indicated above, and if the burden lay on the decree-holder to establish the Benami character, the manner in which criticism has been advanced by the learned single Judge for Appalaraju not examining witnesses and his leading evidence to disprove the claim of the plaintiffs cannot be sustained in law. The affirming finding of the learned single Judge that the consideration money came from the judgment-debtors must, therefore, be set aside.

The subsequent conduct is that Appalaraju has got the land recorded in his name in the Record-of-Rights (Ext. B). There are certain registered lease deeds showing that portions of the disputed property have been tenanted out. Subsequent conduct is a material feature. The record has its own presumptive value. Registered lease deeds are evidence of exercise of title as also evidence of possession. There is oral evidence also to show possession. In these circumstances, it is difficult to agree with the affirming finding of the learned single Judge that the transaction was Benami. Once we come to the conclusion that the plaintiffs have failed to establish the Benami character of the property, it must follow that absolute title had vested in the auction-purchaser and that property was not available to be proceeded against for satisfying the decree obtained by the plaintiffs.

10. Mr. Murty had raised two other contentions, namely (i) the suit under Order 21, Rule 63, C. P. C. was not maintainable without obtaining relief of setting aside of the auction sale; and (ii) the suit not having been framed under Section 53 of the Transfer of Property Act for the benefit of all the creditors was not maintainable.

Once we have come to the conclusion that the sale is not Benami and the auction purchaser had title to the property, these aspects are wholly unnecessary for examination. We, therefore, do not propose to go into these aspects.

11. Both the appeals are allowed and the judgment and decree of the trial court which have been affirmed in appeal by the learned single Judge in the two cases are set aside. The suits are dismissed and the order of the executing court under Order 21, Rule 58, C. P. C. holding that the properties are not liable to attachment for satisfaction of the decree against the judgment-debtors must stand restored. Ordinarily, costs should have followed the result, but as we find, the decree-holder in each suit has been anxious to satisfy his own decree and certain circumstances existed which prompted him to dispute the order of the executing court. Keeping those in view, we direct parties to bear their costs throughout.

Behera, J.

12. I agree with my Lord the Chief Justice.


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