T.K. Joseph, J.
1. The third defendant is the appellant. The contentions of the parties have been correctly stated in paragraphs 1 to 5 of the Judgment of the learned judge and are extracted below:
'Suit for declaration of benami and other reliefs. The plaintiff's case is as follows: Plaint property item 1, 1 acre 22 cents of paddy land in S. No. 141/2 belonged to the 1st defendant. She along with her husband the 2nd defendant, sold the property to the plaintiff under Ext. A dated 28-8-1118 for a consideration of Rs. 2000/-. The money was left with the plaintiff for the discharge of two encumbrances on the property. One was a chitty hypothecation bond of 1103 which had matured into a decree in O. S. 132 of 1117. The other also was a similar hypothecation bond of 1104. Plaintiff got possession on 28-8-1118 itself and has paid off the two encumbrances as directed. There was yet another charge on the property created by a hypothecation bond of 1105 in favour of a Bank called, Sri Vallabha Vilasom Bank, But it was stated in Ext. A that defendants 1 and 2 had not received any money thereunder. For securing the interests of the plaintiff, a charge was created by means of an indemnity clause in Ext. A itself over plaint Items 2, 3 and 4. Items' 2 and 3 are immovable properties while item 4 is a sum of Rs. 500 which was due to the 1st defendant from the 4th defendant under a partition deed.
The recital in Ext. A that the 3rd hypothecation was not supported by consideration was a false statement to the knowledge of the executants because it had been sued upon in O. S. 217 of 111 (sic) by the Central Banking Corporation Ltd., who were transferees from Sri Vallabha - Vilasom Bank and as receivers they had obtained a decree for sale in O. S. 94 of 1116. One Raman Valiathan who had taken an assignment of the said decree from the Central Banking Corporation Ltd., caused the properties to be sold.
After the sale, the 3rd defendant took an assignment of the rights of Raman Valiathan for and on behalf of the 1st defendant and is trying to take delivery of plaint item 1 from the plaintiff. The plaint avers that this is a fraud upon the plaintiff. The 3rd defendant is a son-in-law of the 4th defendant who is a brother of the 1st defendant. The purchase in the name of D3 was really for the benefit of the first defendant. The money that was utilised for the purchase was the money due by D4 to Dl under the partition deed mentioned above.
Raman Valiathan was paid only Rs. 601 which was a grossly inadequate consideration in view Df the real value of the properties. The 3rd defendant is only a name lender for the 1st defendant. The plaintiff is a bona fide purchaser for valuable consideration. He had discharged the prior encumbrances as enjoined by Ex. A. Defendants 1 and 2 had intentionally inserted a false statement about the reality of the 3rd charge in Ext. A with a view to deceive the plaintiff. The property has now come back to the 1st defendant. The sale deed in the name of the 3rd defendant is only a cloak to hide the real nature of the transaction. The 1st defendant is the real 'beneficiary.' On these grounds, the plaintiff prays for the following reliefs:
2. (1) That it be declared that the purchase by the 3rd defendant from Raman Valiathan was benami for the 1st defendant.
(2) The 3rd defendant be restrained by an injunction from taking delivery in pursuance of the decree in O. S. 94 of 1116.
(3) That in case 3rd defendant takes delivery, recovery of the property with mesne profits at the rate of 125 standard paras of paddy may be decreed in plaintiff's favour.
3. These are the main reliefs. Reliefs (d), (e) and (f) are in the nature of alternative reliefs. Relief (d) asks for redemption of the 3rd charge in favour of Sri Vallabha Vilasom Bank on tn'e footing that the plaintiff is a prior purchaser who had paid off earlier encumbrances. Relief (e) asks for a money decree for Rs. 2,000 and interest charged on item l and from defendants 1 and 2 personally. Relief (f) seeks to enforce the indemnity clause contained in Ext. A. According to plaintiff the last mentioned relief is the least that he is entitled to.
4. Defendants 1 and 2 remain ex parte. 4th defendant filed a written statement but has taken no further part in the case. The 3rd defendant alone contests the suit. His contentions in the main are these: The sale deed Ext, A has been brought about by fraud and collusion between the plaintiff and defendants 1 and 2 with a 'view to defeat the rights of the decree-holder in O. S. No. 94 of 1116. The plaintiff has paid nothing towards the earlier hypothecations mentioned In Ext. A.
No monies were due to these hypothecates and their rights had also become barred on the date of Ext. A.
The suit O. S. 132 of 1117 on the 1st hypothecation bond was a collusive suit calculated to defraud the plaintiff in O. S. 94 of 1116. The latter had not been impleaded as a party purposely to avoid a contest. The hypothecation in favour of Sri Vallabha Vilasom Bank was fully supported by consideration. The statement to the contra in Exhibit A is fraudulent. The decree in O. S. 94 of 1116 obtained on the basis of it is not liable to be impeached.
The rights of defendants 1 and 2 in plaint items 1 and 2 have been extinguished by the court sale in O. S. 94 of 1116. They cannot put forward any contention which was not available to defendants 1 and 2. None of the reliefs asked for can be granted against him. The present suit has been filed by the plaintiff in collusion with defendants 1 and 2 to obstruct delivery of the properties in O. S. 94 of 1116 after their efforts directed to the same and, in the course of the execution proceedings, had proved futile.
The suit is barred under Section 40 C. P. C. and by res judicata. Ext. A is also vitiated by lis pendens. No decree can be granted for realisation of the amounts due under the earlier hypothecations because they are barred by limitation. He is not liable for mesne profits. The mesne profits claimed are excessive. He cannot be restrained from taking possession of the property. In the result, he prays that the suit may be dismissed with costs.
5. The plaintiff has filed a replication refuting the allegation of fraud and collusion. He reaffirms his case that the transfer in favour of the 3rd defendant was benami for defendants 1 and 2 and hence the latter cannot be allowed to recover the property. He further states that the pleas of lis pendens and res judicata are all without substance'.
2. The learned Judge came to the conclusion that the third defendant was only a benamidar of the first defendant and accordingly decreed the suit. The third defendant has preferred this appeal from the decree.
3. The main point for decision is that covered by issue No. 7:
'Whether the sale deed in favour of the third defendant (document No. 28 of 1123) is benami for first defendant as plaintiff contends?' In deciding the question of benami the source of funds for the acquisition is an important test. The plaintiff's case is that the fourth defendant owed a, sum of Rs. 500/- to the first defendant as per the provision in a deed of partition, Ext. VII. dated 22-6-1103 and that this sum was utilised for payment of the consideration under the sale deed, Ext. IV, taken by the third defendant. The consideration paid under Ext. IV was a sum of Rs. 60l/-. Even if the plaintiff's case is true, the rest of the consideration is not accounted for. It is no doubt true that a sum of Rs. 500/- was due to the first defendant under Ext. VII but this amount was payable only after the death of the parents of defendants 1 and 4. It is in evidence that their mother died in the year 1125 and the father in the year 1126. There was thus no need to pay the amount before the year 1126. Ext. IV was executed on 28-9-1123. Another circumstance that goes against the plaintiff is that, besides the 4th defendant, there were four others who were also liable to pay the sum of Rs. 500/-. It is. therefore not reasonable to infer that the 4th defendant paid the entire sum himself and that, long before itbecame due. Thus, the specific case regarding the source of funds for the acquisition stands not proved:
There is no scope for applying some of the other tests such as possession of the property, possession of the title deeds, etc., because at the time of the sale the property was in the Possession of the plaintiff and it was only during the course of the suit that the third defendant recovered possession through court. The third defendant is not directly related to the first defendant so that it cannot be said that Ext. IV is a deed taken by the first defendant in the name of a near relative.
The main circumstance on which the learned Judge based his conclusion is that the third defendant was residing with his wife in a property belonging to the fourth defendant. The third defendant's case was that the property had been given to his wife by the fourth defendant who was residing elsewhere. The amount required for taking Ext. IV was only a sum of Rs. 601/-.
The third defendant deposed that he owned one item of immovable property, that he was entitled to two other items which stood in the name of his mother and that he was cultivating other people's land as lessee. His failure to produce tax receipts for the property owned by him or documents evidencing his leasehold interest in other properties is not very material because except for a question put in cross examination as to whether he could produce such records, no attempt was made by the plaintiff to cause their, production.
In a case of this nature the burden of proof is heavy on the plaintiff who sets up the case of benami. The plaintiff has not given the best evidence possible under the circumstances. No doubt, the vendor of the property was dead; but the plaintiff could have examined at least the document writer who prepared Ext, IV and attested the same. The plaintiff also did not attempt to examine defendants 1, 2 or 4. The learned judge relied on the testimony of P. W. 3 who deposed that he 'negotiated' with the vendor at the instance of the 2nd defendant and that defendants 2 and 4 were present when the amount was paid. Even if P. VV. 2 is believed, it is seen that the 3rd defendant was also present on the occasion. P. W. 2 was not able to say whether the second defendant or the fourth defendant paid the amount. We are not prepared to place any reliance on the testimony of P. W. 2 who is not an attestor to the deed. The third defendant was examined earlier and the plaintiff could have brought out that P. W. 2 negotiated for the purchase of the property and that he was present when the amount was paid.
Other circumstances relied on by the learned Judge such as that the third defendant did not inspect the property or enquire about prior encumbrances can at best create' only a doubt or suspicion. 'Besides, these circumstances are not incapable of explanation. The property admittedly belonged to the third defendant's father-in-law's sister so that he could easily collect necessary information without directly inspecting the property or personally making enquiries.
The learned Judge has also pointed out that the consideration paid under Ext. IV was even lower than the amount paid by the vender when he purchased the property in court sale. It is in evidence that this was not the only property purchased by the auction purchaser in the court sale. The vendor was not available to give evidence, and it is idle to speculate on the reason, which influenced him in selling the property for a consideration lower than that paid by him.
Learned counsel for the respondent pointed out that Exts. II and III showed that defendantsI and 2 were fighting the third defendant's vendor at every stage of the litigation and that they desisted only after the execution of Ext. IV. When the application for setting aside the sale was dismissed and the order became final it was not open for defendants 1 and 2 who were the judgment-debtors to raise any other contention and no inference can be drawn from this circumstance.
As observed by Lord Westbury in Sreemanchunder Dey v. Gopaulchunder Chukerbutty,11 Moo Ind App 28 (A), circumstances may create suspicion and doubt may be entertained with regard to the truth of the case made by the alleged benamidar but in matters of this discription it is essential to take care that the decision of the court rests not upon suspicion but upon legal ground established by legal testimony. The same view has been expressed by the Federal Court in Gangadhara Ayyar v. Subramania Sastrigal, AIR 1949 FC 88 (B). Mahajan, J., observed:
'It is settled law that the onus of establishing that a transaction is benami is on the plaintiff and it must be strictly made out. The decision of the court cannot rest on mere suspicion but must rest on legal grounds and legal testimony. In the absence of evidence the apparent title must prevail'.
It is the sentence which follows this passage that is extracted in the judgment of the court below. The learned Judge however appears to have overlooked the fact that in the passage relied on by him it is observed that the case must be dealt with on reasonable probabilities and legal inferences arising from 'proved or admitted facts,' as pointed out earlier, the plaintiff has failed to prove the source of funds for the acquisition. The learned Judge, in our opinion, was not justified in holding that the transaction was a benami one and that the third defendant took the sale deed for the benefit of the first defendant.
4. Learned Counsel for the plaintiff-respondent argued that in case he failed on the questionof benami, the third defendant should be directed to pay the amounts under the prior encumbrances which were paid by the plaintiff. We do not feel justified in granting this prayer. The sale deed taken by the plaintiff is one vitiated by lis pendens. If the plaintiff had purchased the property in court sale in execution of the decree obtained on the prior encumbrance and was in possession, it would have been open for him to urge such a plea.
But a transferee pendente lite he is not entitled to ask for such relief. Another prayer of the plaintiff is that he should be given a decree against defendants 1 and 2 and the property given as security in Ext. A for damages sustained by him. It is not possible to grant such a decree now as the second defendant died when the suit was pending in the court below and as his legal representativeswere not brought on record. The plaintiff may seek appropriate reliefs, if any, against his vendors or their estate in other proceedings.
5. In the view that we take, the memorandum, of objections filed by the plaintiff-respondent regarding the income of the property collected by the court has only to be dismissed.
6. In the result the decree of the court below is reversed . and the appeal is allowed. Thememoransum of objections is dismissed. In thecircumstances of the case we direct both sides tobear their costs throughout.