1. The Official Receiver, Kottayam, who was the ninth defendant in the suit, is the appellant; and the contesting respondents are the legal representatives of the second defendant, the wife of the first defendant who was adjudicated insolvent. A suit was brought by the fourth respondent on a dishonoured cheque issued by the first defendant on 17th July 1944. The suit was decreed; and in execution of the decree the suit property, which stood in the name of the second defendant, was sought to be proceeded against when she laid claim to the property, which was allowed. The fourth respondent then brought the present suit for setting aside the claim order; and since the first defendant was adjudicated insolvent pending suit, the Official Receiver was im-pleaded as the ninth defendant. In the trial court the second defendant contested the suit claiming that the property was purchased by her with her own funds and therefore, the same should not be proceeded against to realise the debts of the Insolvent. The fourth respondent contended, on the other hand, that the purchase of the property in the name of the second defendant under Ex. D3 was benami for the first defendant.
The trial court agreed with the fourth respondent and decreed the suit. On appeal the District Judge reversed the said decisionand held that the purchase was with the funds of the second defendant; and that even if it was with the funds of the first defendant, it was not established that the purchase was intended to benefit him. It is this decision that is being challenged in second appeal by the Official Receiver.
2. The counsel of the contesting respondents has taken a preliminary objection to the maintainability of the second appeal. The first argument is that the Official Receiver being a defendant in the suit cannot file the second appeal against the decision in favour of another defendant. In other words, the argument is that one defendant cannot file an appeal if the suit was dismissed in favour of another defendant. This question has to be viewed from two angles. The first is that if the defendant who files the appeal is in a representative position in the sense that the plaintiff and the defendant have the same interest and if the suit is dismissed, can that defendant maintain the appeal? The second aspect is that in a case where two defendants have a dispute inter se and that dispute has also been decided by the decree, can the defendant affected by the decree file an appeal even if the suit has been dismissed? The law on the subject is clear; and that is that if the decision will be res iudicata against the said defendant in a subsequent suit filed by him, he can file an appeal. In the first case, since the plaintiff and the defendant who seeks to file the appeal have the same interest, the dismissal of the suit is as much against the plaintiff as it is against him. In such a case the dismissal of the suit will be res iudicata against him: and he can file an appeal.
In the present case the fourth respondent (the plaintiff) was one of the creditors of the first defendant; and he brought the suit to establish that Ex. D3 was benami for his debtor. Pending suit the debtor was declared insolvent; and the Official Receiver was brought on record The Official Receiver represents the insolvent in the sense that the insolvent's estate vests in him; but, he also represents the entire body of creditors of the insolvent including the fourth respondent. Therefore, the dismissal of the fourth respondent's suit is not only against him, but also against the entire body of creditors represented by the Official Receiver It follows that in a subsequent suit by the Official Receiver the dismissal of the suit against the fourth respondent will be res iudicata: and therefore, the Official Receiver's appeal is competent. We may also point out that the second aspect (a dispute inter se between two defendants) does not exist in this case.
3. Another argument is also advanced by the counsel of the contesting respondents on the preliminary objection. Before the lower appellate court there were two appeals, one by the fourth defendant and the other by the second defendant; and there were also two decrees, though the litigation started inone suit. The Official Receiver has filed only one second appeal against the decision in the appeal by the second defendant. The objection is that the Official Receiver cannot impugn both the decrees in one second appeal. In this contention also the counsel is not on firm ground, because the law is that if two appeals have been filed by two parties in a litigation arising out of one suit, one second appeal alone need be filed against both the decisions. We shall remain content by citing the latest decision of the Supreme Court on the question: vide Sheodan Singh v. Daryao Kunwar, AIR 1966 SC 1332.
4. The preliminary objection raised by the counsel of the contesting respondents is overruled.
5. Now on merits. The only question to be considered is whether the purchase under Ex D3 in the name of the second defendant was benami for the first defendant. The District Judge, as already observed, has found that the funds utilised for the purchase belonged to the second defendant herself; and that even if the funds came from the first defendant, it has not been established that the purchase was made with the intention that the beneficial interest in the property should remain with the first defendant against the apparent tenor of the document in the name of the second defendant. The District Judge says that the funds came from the bank accounts in the name of the second defendant. That statement appears to be correct. But, there is no evidence to show that the second defendant had any separate source of income from which the moneys found in her bank accounts might have come. The first defendant is examined as Pw. 1; and he has admitted that the second defendant had no source of income excepting the share she obtained from her tarwad, which was only 15 cents of land. It is therefore difficult to agree with the District Judge that all the moneys that found their way to the bank accounts of the second defendant were hers. On the other hand, the first defendant was doing business of buying and selling estates earning in thousands and at least once over a lakh, so that what the evidence discloses is that the moneys found in the accounts in the name of the second defendant must have been moneys belonging to the first defendant. Therefore, we disagree with the District Judge on this question.
6. This, at any rate, does not conclude the question of benami. The law relating to benami is settled; and there cannot be much dispute regarding that. One who pleads benami must establish it; the source of consideration is a strong piece of evidence showing the nature of the transaction: the relationship of the parties is another circumstance to be considered; the existence or the absence of any motive for a benami purchase has also a bearing; the possession and enjoyment of the property is another strong circumstance; and the possession of the title deeds is yet another relevant consideration. In short, the question of benami has to be decided from all the circumstances and facts of each case. We may also observe, that benami is a question of intention to be gathered from all the facts and circumstances whether the beneficial interest was intended to be retained in one against the apparent tenor of the document vide Sm. Surasaibalini Debi v. Phanindra Mohan Majumdar AIR 1965 SC 1364.
7. It is difficult to hold in this case that the first defendant, from whom the consideration proceeded for the purchase under Ex. D3, was in insolvent circumstances, so that the purchase in his wife's name was an attempt to secrete the property from his creditors. Even in 1946 (vide Ex. D20, the credit slip) the first defendant had considerable amounts in deposit in his banks. It has also emerged from the evidence that the cheque was dishonoured not because of lack of funds in the bank of the first defendant, but because he disputed the liability to pay the money. It was ultimately found by the court that the amount under the cheque had to be paid by the first defendant. Therefore, we are of opinion that at the time when Ex. D3 was executed there was no need for the first defendant to purchase properties in the name of his wife so as to secrete them from his creditors.
8. But there is another important aspect which has to be considered. The first defendant as Pw. 1 has stated that he has not purchased any immovable property in his name; the purchases were all in the name of his wife. This circumstance, we think, is a fairly strong one, which indicates that the purchases of immovable properties in the name of the second defendant might not have been with the intention to benefit her. In other words, the purchases were made in the name of the second defendant for a rainy day to protect or secrete the properties from a possible future calamity that may arise to the first defendant in his risky business of purchasing and selling estates of high value. If the case of the first defendant were that he had been making purchases in his name and that out of love and affection he purchased some items in the name of Ms wife also, the position would have been different. In this connection we may point out the case pleaded by the first and the second defendants in their written statements. They have no case that the money for the purchase came from the first defendant and that the intention when the purchase was made was that the wife should get the property as her own. The case was only that the purchase was made with the funds of the second defendant, which, we have already pointed out, could not have been true
9. In these circumstances, we are inclined to hold that the purchase must have been benami for the first defendant, in other words, it was not intended to confer any benefit on her.
10. We therefore allow the second appeal, set aside the decision of the lower appellate court and restore the decision of thetrial court. We direct both parties to beartheir respective costs before the lower appellate court and before us. However, weretain the order of the trial court regardingcosts.