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S. Parthasarathy Aiyar Vs. M. Subbaroya Gramany and anr. - Court Judgment

LegalCrystal Citation
SubjectProperty
CourtChennai
Decided On
Reported inAIR1924Mad67; (1923)45MLJ175
AppellantS. Parthasarathy Aiyar
RespondentM. Subbaroya Gramany and anr.
Cases ReferredLuchman Chunder Geer Gossain v. Kallichurn Singh
Excerpt:
.....on the strength of his documents, coupled with his payment of good consideration for his mortgage, until it is otherwise shown that he had not obtained a good title to eject. d is not benami and she gets no title even under the will, she can maintain her possession as a trespasser against the plaintiff unless he is able to prove a better title. it cannot be said that the transferee in such a case has not a better title to possession than the trespasser, and the lack of probate is insufficient, under the authorities quoted, to bar the ejectment of such a trespasser. d or his ability to hand on a good title to first defendant and through him to plaintiff. it is only if her claim is a good one in law that it is worth while contending that plaintiff, a mortgagee for value, was guilty..........original mortgage to subbusami by jambulinga himself was not a real transaction. i agree that the sale by rajagopal to subbaraya gramany was not a real transaction. i am prepared also to accept his view of the character and credibility of rajagopal that he was an impecunious and unscrupulous person. but i do not agree with the inference that he has drawn from the facts put before him in relation to the sale by mylathammal, the widow. nor do i agree that on the facts as found by him, the plaintiff is not a bona fide mortgagee for value. no rational explanation has been offered to the court as to why mylathammal should have gone through the form of selling the property to her brother rajagopal. it is suggested that she did so either, so that, rajagopal might be trustee for meenakshi, her.....
Judgment:

Walter Salis Schwabe, K.C., C.J.

1. One Jambulinga owned two adjoining houses in Mylapore. He purported to mortgage them to one Subbusami who was a brother of the husband of Meenakshi, Jainbulinga's daughter. He then died and left a Will appointing his widow Mylathammal executrix and giving her power to sell his property for the purpose of paying debts and to enjoy what was left during her life, and bequeathing after her death what was left to Meenakshi. Probate has never been taken out of the Will. Some-years later, the widow purported to sell the property to Rajagopal her brother for Rs. 1,000. The documents of title were handed over to him, the sale deed was registered and in the presence of the Registrar a thousand rupees were handed over by Rajagopal to the widow. Subbusami joined in that sale by acknowledging the discharge of his mortgage which was for a larger amount, the sale deed providing that the sale was for the purpose of discharging that mortgage. Many years afterwards, Rajagopal purported to sell the property to Subbaroya Gramany for Rs. 4,000 and he, with the assistance of Rajagopal, mortgaged the premises to the plaintiff for Rs. 2,000, it being stated that Rs. 2,000 was required for the purpose of providing part of the purchase money. This suit has been brought by this mortgagee to obtain possession of the premises. Meenakshi who has been forborne time in occupation of part of one of the two houses resists the claim for ejectment alleging that the property is hers.

2. The learned Judge, who tried the case, has held that defendant Meenakshi has made out her case. He holds that all the transactions relating to this property from the time of the mortgage to Subbusami down to the sale to Subbaraya Gramany and including that sale, were benami transactions and mere shams. He holds too that the plaintiff is in no better position than Rajagopal or Subbaraya Gramany, because he is not a bona fide mortgagee for value without notice.

3. I agree with the findings of fact of the learned Judge except on two material points. I agree that the original mortgage to Subbusami by Jambulinga himself was not a real transaction. I agree that the sale by Rajagopal to Subbaraya Gramany was not a real transaction. I am prepared also to accept his view of the character and credibility of Rajagopal that he was an impecunious and unscrupulous person. But I do not agree with the inference that he has drawn from the facts put before him in relation to the sale by Mylathammal, the widow. Nor do I agree that on the facts as found by him, the plaintiff is not a bona fide mortgagee for value. No rational explanation has been offered to the Court as to why Mylathammal should have gone through the form of selling the property to her brother Rajagopal. It is suggested that she did so either, so that, Rajagopal might be trustee for Meenakshi, her daughter, and after her own death, protect the property for the benefit of the daughter against her husband; or as an alternative, that she went through a form of a real sale in order to frighten her son-in-law and make him more careful in the future in his conduct towards her and her daughter. The first of these alternatives seems to me to be incredible, for one cannot believe that the mother would hand over her property to her brother in trust after her death for her daughter in the form of an absolute conveyance without informing her daughter of the fact, and it is admitted that the daughter was never told anything about it. In doing so, she would leave her daughter at the mercy of her uncle and if the uncle died, she would leave her without evidence to attempt to recover her inheritance from the uncle's heirs. The other alternative seems to me to be equally incredible. Because, in order to have the desired salutary effect upon the conduct of the son-in-law, he would have to be told of the sale, that there was a real sale, and one would have thought that he would ascertain at once that it was not a real sale because his brother Subbusami who was a party to the transaction would tell him not to be alarmed, as the whole thing was benami and could be disregarded. And again, if he knew about it, how is it possible that his wife Meenakshi did not know about it? I cannot accept either alternative as a possible motive for this curious. transaction. It is not the case of a person buying the property and putting it in the name of somebody else as benami. It is suggested to be the case of a person who has a life interest and whose daughter has a reversionary right to her property, voluntarily parting with the property in the sense of transferring it to somebody else. It is a much more likely view in my Judgment that Rajagopal being of the character attributed to him, in some way defrauded or tricked his sister into selling the property to him at an under value and probably also knowing full well that under the terms of the Will she was exceeding her authority in effecting the sale, because at that time there were no debts of the testator which required to be paid. I find on the facts that the sale to Rajagopal was a real sale though induced by fraud and voidable therefore on discovery of fraud by Mylathammal and consequently also by Meenakshi. But a person who has acquired property under a voidable title can himself give a good title to that property to a bona fide purchaser or mortgagee from him, who deals for value and has no notice of the defects in the title. In this case the plaintiff admittedly dealt for value. He had in fact no notice at all of anything being wrong from the beginning to the end of these transactions. He had before him the original mortgage, the Will, title deeds to the property the conveyance to Rajagopal and the endorsement by the original mortgagee. He knew nothing of Meenakshi or that, she had ever resided on the premises. But it is argued that he had constructive notice of all Meenakshi's claims by reason of the fact that, unknown to him, she was at the date of the sale in possession of a part of the premises. Now the doctrine of constructive notice is one that applies here as well as in England and here the requisites for it are stated in Section 3 of the Transfer of Property Act which runs thus : 'A. person is said to have notice of a fact when he actually knows that fact, or when, but for wilful abstention from an enquiry or search which He ought to have made, or gross negligence, he would have known it,* * * * In England as here it has been held that constructive notice of all the rights of a person in possession of property sold or mortgaged is to be imputed to purchasers or mortgagees who made no enquiry of the persons in occupation. But that rule depends on the principle that where another is in exclusive possession of the property and such possession would prima facie be inconsistent with the full rights of ownership of the vendor or mortgagor, and the purchaser does not choose to ask what that possession is, he must be taken to have got the information that he would have obtained if he had asked. It has, however, frequently been laid down that that doctrine has gone to its full length and must not be extended, and it has never been held that it is the duty of a proposed purchaser or mortgagee to enquire of every person who may be on the premises or any part of those premises. Nor has it been suggested that the unknown occupation of a part of the premises would put him on enquiry as to the possible rights of the occupier of that portion over the remainder of the premises. There is indeed strong authority to the contrary. That master of equity Farwell, J. as he then was, in Hunt v. Luck (1901) 1 Ch. 45 affirmed on appeal in (1902) 1 Ch. 428 , with whose judgment the Court of Appeal agreed, said thus : 'If a vendor or mortgagor offers property stated to be subject to tenancies, there is nothing in the fact that tenants are all in occupation to give rise to any suspicion. * * *' In Hunter v. Walters (1871) L.R. 7 Ch. 75 , it was held that if further enquiry as to title of a small part of the estate would have revealed a defect in title as to the whole estate, the purchaser was not to be held to have constructive notice of that defect, in Manji Karimbhai v. Hoorbai I.L.R. 35 B. 342 it was held that the fact that a person was in occupation of a small part of a house did not put a purchaser on constructive notice of that person's rights as to the whole house. But apart from authority, one has to see here whether there has been wilful abstention from enquiry or gross negligence, and I fail to see how there can be wilful abstention or gross negligence in a failure to enquire from everybody on the premises what their title might be. In the case of tenement houses, there may be on the premises the actual sub-tenants, their wives, families, friends, guests and so forth. To suggest that it is the duty of the proposed mortgagee or purchaser to attend on these premises and examine narrowly every one of those persons would be casting upon him an intolerable burden, and to hold that he was affected by constructive notice of all these person's possible equitable rights over any part of the premises would be an extension of the doctrine of constructive notice, which, as I have pointed out, has long been held, must be kept within the limits which have been fixed. I find nothing in this case to put the plaintiff upon any enquiry as to Meenakshi's rights and I hold that he is a mortgagee for value without notice.

4. An attempt was made before us to contend that the defendant had a prescriptive title as against plaintiff, that she and her mother had been in adverse possession of this property for over 12 years. No such defence was set up in the Court below and no such issue was before that Court. In my Judgment it is much too late to raise such a point now when it is obvious all the materials which would be required to decide that question properly are not before the Court.

5. On my findings that the plaintiff is a mortgagee for value, it follows that he is entitled to succeed in the action unless there is some infirmity in his own title and this brings me to a point which has been fully argued before us under Section 187 of the Succession Act which applies to the Will of Jambulinga in this case. By that section, no right as executor or legatee can be established in any Court of Justice, unless a Court of competent jurisdiction shall have granted probate of the Will under which the right is claimed or shall have granted letters of administration. Now the position in this case is rather curious. The defendant Meenakshi has no right to this property at all unless she takes under the Will from Jambulinga. It is not right as has been suggested in some cases to treat a Will of which probate has not been granted as non-existent and the property passing by intestacy. On the contrary, the Will is a perfectly valid document. The executor under it can deal with the property and give a perfectly good title though it may be that to complete that title it requires probate to be taken out at a later date. The defendant then having no title under the Will which she can prove, and seeing to that her right as reversioner might be affected when probate has been granted, she says that she is prepared as far as this case is concerned, to be treated as a mere trespassed in possession of the premises. She says. 'You the plaintiff cannot turn me out, because you cannot prove your title without proving that Will, and you cannot prove that Will without producing the probate of it.' Now the law as stated in Section 187, in my Judgment, is the same as the Law of England on the subject. And I think that it is that a person who in Court has to prove title and has to deduce that title from a Will, whether that person is plaintiff or defendant cannot do so without producing probate, and I do not agree with the cases which have suggested to the contrary such as Carlapatti Chinnah Cunniah v. Cota Nammalwanah I.L.R. (1909) Mad. 91, which seems to have decided that a defendant can claim as a legatee under an unproved Will. This would not prevent a defendant resisting a claim, by an heir at law by producing and proving a Will of which probate had not been granted. But the difficulty which would have been put in the plaintiff's way, if the view which I have just expressed is correct, is in this case removed because, Mylathammal who sold and conveyed to Rajagopal, she being executrix of the Will, was herself in possession of the property, and she had a right to that possession and she could give that possessory right to Rajagopal and that right to possession would be included in the conveyance by her of the property absolutely. The plaintiff in this case stands in the shoes of Rajagopal as far as title is concerned. He too has that possessory title which can be used by him to eject a trespasser See Asher v. Whillock (1865) 1 Q.B. Cas. 1 approved by the Privy Council in Perry v. Clissold (1907) A.C. 73. If on the other hand the defendant Meenakshi was entitled to rely upon the Will, it would follow that the plaintiff could equally rely upon it and then he would be able to say that he innocently took the property from a purchaser' from an executrix who had a right given by the Will of selling the property, and that he is not concerned with the fact that the executrix exceeded the authority which she in fact had, and there would also arise in that eventuality an interesting question how far the-daughter claiming as a legatee is estopped by reason of the acts of her mother, the executrix, as well as of her father, the testator.

6. For these reasons, in my Judgment, the plaintiff is entitled to succeed, for his mortgage is a good mortgage as against the defendant Meenakshi. Her rights to redeem on payment of principal, interests and costs must depend on the terms of the mortgage which she no doubt can get Rajagopal to enforce. The mortgage being a usufructuary mortgage, the plaintiff is entitled to possession. This appeal must be allowed with costs here and below. Judgment must be entered for the plaintiff for possession and for enquiry into mesne profits.

Wallace, J.

7. I agree.

8. The plaintiff is suing to eject the second defendant from certain property. He holds the title deeds for that as from the original owner Jambulinga, and is prima facie entitled to be put in possession under his usufructuary mortgage, and to eject second defendant on the strength of his documents, coupled with his payment of good consideration for his mortgage, until it is otherwise shown that he had not obtained a good title to eject.

9. As against plaintiff's case, the second defendant has put her case, as I take it, on four grounds ; firstly, that Ex. D in particular the really important document in this case is benami; secondly that if Ex. D is not benami, she is entitled to ignore her father's Will and remain on the property as the heir to her father ; thirdly that if Ex. D is not benami and the Will is accepted, she is entitled to remain on the property on the ground that her mother had no right to sell it; and fourthly that assuming that Ex. D is not benami and she gets no title even under the Will, she can maintain her possession as a trespasser against the plaintiff unless he is able to prove a better title.

10. Grounds Nos. 2 and 4 may be shortly disposed of. It is quite clear that the and defendant cannot ignore the Will. The property was the self-acquired property of her father, and he left a Will. There was no intestacy. The Will Ex. M is registered, has been attested by witnesses on both sides in this case and, although denied by the second defendant, has been accepted as genuine by the trying Court, and it does not matter whether before the suit the second defendant was aware of it or not. 1 should have been inclined to hold further that until the second defendant had taken out probate she cannot plead 'in defence any right as legatee under the Will, had not a Bench of this Court apparently held in a case reported in Carlapatti Chinnah Cunniah v. Cota Nammalwarial I.L.R.(1907) M. 91 in which however, the facts are not very clear, that Section 187 of the Indian Succession Act did not preclude her from doing so. At any rate it is quite clear that the second defendant cannot ignore the Will, since if she does so she has otherwise no right to the property. Therefore ground No. 2 fails.

11. As to ground No. 4, I agree with the learned Chief justice that Section 187 is no bar to a transferee from an executrix who has not taken out probate, but who was in possession, and who has given a possessory title deed, suing on that title deed to eject a trespasser. It cannot be said that the transferee in such a case has not a better title to possession than the trespasser, and the lack of probate is insufficient, under the authorities quoted, to bar the ejectment of such a trespasser.

12. The next point is ground No. i. It relates to the question whether Ex. D is a genuine sale. That Ex. D was a benami document under which no transfer of the property was at all intended, as the trying Court has held, I find very difficult to believe. There is really no evidence to prove it and the onus lies on those who assert it. The hearsay statement of the widow, reported by Vinayaka Mudaly, is not evidence that the statement was true, and is partly countered by the fact that the sale deed was handed over to the transferee. The only attestor examined, D.W. 2, who speaks to its benami nature is on the second defendant's own admission, the real contesting defendant in this case. The reason alleged for a benami document, namely, to frighten the second defendant's husband is unintelligible, if it is true, as contended, that it was kept from his knowledge altogether. Further it seems incredible that the widow or Rajagopal, or D.W. 2, or 2nd defendant's husband, if he knew of it, would not at some time have told second defendant, about the real nature of the transaction, which on the face of it, robbed her of her rights, and made sure that the title deeds were handed to her. In my view, the second defendant has no reasonable explanation why the documents Exs. M and D were not with her. I cannot believe that she did not know that they were in possession of Rajagopal. No reason is suggested why Rajagopal should have been left in possession of these title deeds ever since 1906, or why it was necessary to keep up the benami farce after the death of 2nd defendant's husband in 1910. It is further difficult to believe that second defendant would not have heard that Rajagopal himself was mortgaging the property in 1908, her husband's brother having attested that mortgage. It is quite clear to me that she knew of Rajagopal's title, and, for reasons known to herself, refrained from challenging it. Against these considerations are set the alleged low price and the fact that Ex. D was executed ostensibly to discharge Ex, E. I am not so clear as the trying Court that Ex. E was benami, but accepting it to be so there is nothing to show that the widow knew it was so, and at this distance of time, I am not prepared to assume, in the absence of evidence, that she did know, ff Rajagopal was, as contended by second defendant, villain enough to cheat her by Ex. D, he would not scruple by using Ex. E to cheat her mother also. The theory that the ostensible mortgagee Subbusami and Rajagopal colluded to cheat the widow might easily account for the low figure in Ex. D. It is also not as clear as the trying Court found that Rajagopal could not have raised Rs. 1,000 on loan then, as he was able to do in 1905 under Ex. Q, when if he was an insolvent, as suggested, it is unlikely that the widow would choose him as benamidar. Her refusal of Vinayaka Mudali's offer of Rs. 2,000 was not unreasonable, as by selling to Rajagopal she was at least keeping the property within the family, and probably securing herself in continued occupation thereof. As to the tenants paying rent to the widow, such occupation with Rajagopal's permission may be the very simple explanation for that, and there is no evidence free from grave suspicion, that for any length of time they paid rent to second defendant or to any one on her behalf, and not on behalf of Rajagopal. I find it difficult to believe that if Ayyathambi was collecting-rent for second defendant he never informed her of the sale deed (which he attested) by her mother to Rajagopal. The fact that she pleaded she did not know of the sale is enough to dispose of the idea that the attestor to Ex. D was collecting rent for her. The execution of rental agreements, by Rajagopal and first defendant may be due merely to the fact that they had a suspicion that the tenants were then preparing to side with second defendant. There is thus no convincing evidence that Ex. D must have been benamiand I therefore agree with the learned Chief Justice that Ex. D must be held to have been a genuine sale transferring all the vendor's rights in the property to Rajagopal. Therefore the second defendant cannot resist the plaintiff's suit on the plea that Ex. D was benami.

13. Ground No. 3 remains. The question is whether or not 2nd defendant's mother had a right to sell under Ex. D so as to bind 2nd defendant by the sale. It seems unlikely that the mother would wish to defraud the daughter. No reason why she should do so is suggested. It therefore seems probable that she must have at least believed that the debt under Ex. E was a genuine debt. On this point again I would call in aid the Will. I have said that the second defendant cannot reprobate it, and if she now approbates it is to claim rights to herself. She cannot be heard to reprobate it so as to destroy the mother's, rights and authority under it. That is, she cannot be heard to deny that the mother had the authority of the testator to sell the property to discharge his debts and that she herself is entitled only to the residue of the property after such sales. As to whether there was necessity for the sale, i.e. whether there was a genuine debt under Ex. E, it is clear to me that Jambulinga when he died left Ex. E among other documents to his widow, and thus, in my view, represented to his widow, as to others, that the debt under Ex. E was genuine and one which fell to be discharged under the Will; and the widow, as I find, believed that it was a genuine debt. Second defendant, who claims under the Will of the testator who was guilty of this representation which resulted in a genuine sale under Ex. D, cannot in my view be heard to say that this was not a bona fide sale by the widow i. e. bona fide so far as the widow was concerned, and that it was not validated by the authority given under the Will. For this conclusion reference may be made to the Privy Council case in Luchman Chunder Geer Gossain v. Kallichurn Singh 19 W.R. 292 . It appears to me then that, even if I accept the finding of the trying Court that Ex. E was benami, there was a misrepresentation by the testator that it was a genuine debt which misrepresentation binds the residuary legatee who claims under the Will, and the plea that there was no real debt cannot be advanced by the second defendant against one who was no party to the sale Ex. D. For the purposes of this case it must be held that Ex. D was a genuine sale for the discharge of a genuine debt and therefore valid and binding on the testator's legatees under the authority given by the Will which the second defendant cannot reprobate.

14. I would hold therefore that second defendant can have no locus standi to challenge the title of Rajagopal under Ex. D or his ability to hand on a good title to first defendant and through him to plaintiff. It is no part of second defendant's business to challenge the consideration paid by the first defendant to Rajagopal or plaintiff's title as against Rajagopal, since, even if Ex. L. was benami, plaintiff can, if it were necessary for him to do so, plead in this case that he was a bona fide purchaser without notice of the benami nature of Ex. L and hold up his mortgage against Rajagopal.

15. In the view then that second defendant has no real legal claim, which can be heard, to this property, the question of constructive notice to plaintiff of her claim, which has been argued at length before us, will not arise, nor would it matter whether or not he knew the extent of her claim before his mortgage. It is only if her claim is a good one in law that it is worth while contending that plaintiff, a mortgagee for value, was guilty of wilful absention from enquiry or gross negligence, and consequently must be deemed to have had notice of her claim and his mortgagor's inability to convey to him a good title. That even so, there was any such wilful abstension or negligence I find it difficult to deduce. I do not go further into this question as I agree with the learned Chief Justice for the reasons given by him that no wilful abstention or gross negligence on the part of the plaintiff has been established.


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