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Muthuvaiyan Vs. Sinna Samavaiyan and ors. - Court Judgment

LegalCrystal Citation
SubjectProperty;Trust and Societies
CourtChennai
Decided On
Reported in(1905)15MLJ419
AppellantMuthuvaiyan
RespondentSinna Samavaiyan and ors.
Cases ReferredNarayana Chettiar v. Chokkappa Mudaliar I.L.R. M.
Excerpt:
- - their lordships preface the discussion thus :it is well known, that benami purchases are common in india, and that effect is given to them by the courts according to the real intention of the parties. for the language is adapted to meet the case of ordinary purchasers, and the same language might well have been used if benamee transactions had been wholly unknown. 15. it is well known that benami transactions are very common. 520 they point out that benami purchases being very common in india they have to be reco-gnised until declared illegal by legislation and, when there is no ex-(sic)oress prohibition of such transactions, a general intention should not be presumed unless it appears very clearly to be the object of the legislature to discountenance them; and when the matter is.....s. subrahmania aiyar, c.j.1. the plaintiff sues to recover from the second defendant possession of certain lands, alleging that the same belong to him, having been purchased by him at a revenue sale in which they were sold on account of arrears of land revenue due to government in respect thereof, that they were subsequently let to and put into the possession of the second defendant by the plaintiff but that the latter refuses to surrender them setting up a title in himself under a collusive purchase from the 1st defendant, a mere benamidar, in whose name certificate at the revenue sale was taken.2. the finding of both the lower courts with reference to these allegations is in favour of the plaintiff. the suit was, however, dismissed by the district judge who reversed the decree of the.....
Judgment:

S. Subrahmania Aiyar, C.J.

1. The plaintiff sues to recover from the second defendant possession of certain lands, alleging that the same belong to him, having been purchased by him at a revenue sale in which they were sold on account of arrears of land revenue due to Government in respect thereof, that they were subsequently let to and put into the possession of the second defendant by the plaintiff but that the latter refuses to surrender them setting up a title in himself under a collusive purchase from the 1st defendant, a mere benamidar, in whose name certificate at the revenue sale was taken.

2. The finding of both the lower courts with reference to these allegations is in favour of the plaintiff. The suit was, however, dismissed by the District Judge who reversed the decree of the District Munsif, on the ground that the plaintiff was disentitled to rely on his being the real purchaser, with reference to the provisions of Sections 38 (clause 5) and 89 of the Madras Revenue Recovery Act, II of 1864.

3. Even if this view were correct, which it is not as will be shown hereafter, a decree should be given in favour of the plaintiff for the simple reason that the second defendant, having been let into possession by the plaintiff, was estopped from denying the latter's title without first surrendering possession. I do not, however, wish to dispose of the case in that way. The question of the construction of Sections 38 (caluse 5) and 39 has been fully argued on both sides; and having regard to the terms of the decision in Narayana Chettiar v. Chokhappa Mudaliar I.L.R., 25 M. 655 cited and relied on by the District Judge, it is necessary to go into that question.

4. The said sections run as follows:

Section 38 (cl. 5). After the confirmation of any such sale, the Collector shall register the laud sold in the name of the person declared to be the purchaser and shall execute and grant a certificate of sale bearing his seal and signature to such purchaser.

Such certificate shall state the property sold and the name of the purchaser, and it shall be conclusive evidence of the fact of the purchase in all Courts and tribunals, where it may be necessary to prove the same; and no proof of the Collector's seal or signature shall be necessary unless the authority before whom it is produced shall have reason to doubt its genuineness.

39. When lands may be purchased at a public sale, the Collector, or other Officer empowered by the Collector in that behalf shall publish in the villages in which the land sold may be situated, in the cutcherry of the taluk, in the head cutcherry of the District, and in the District Gazette, the name of the purchaser and the date of purchase, together with a declaration of the lawful succession of such purchaser to all the rights and property of the former landholder in the said land.

5. It will be seen that there is nothing in these provisions that expressly prevents a person from claiming as a purchaser at a revenue sale on the ground that he is real purchaser and that the certified purchaser is only a benamidar. The exhaustive judgment of the Judicial Committee in Mussumat Buhuns Kowur v. Lalla Boohuree Lall 14 M.I.A. 496 in dealing with a similar contention raised with reference to analogous statutory provisions and the canons of construction laid down by their Lordships, to my mind, render it : impossible for us to accept the view adopted by the District Judge. There, a. purchaser of an equity of redemption sold in execution of a decree, who had obtained a certificate as purchaser under Section 259 of the Code of the Civil Procedure of 1859 brought a suit for redemption and possession against the mortgagee under a deed of Zur-i-peshgee (usufructuary mortgage). Their Lordships held, reversing the decree of the High Court, that the Act which was simply a code of procedure did not affect the existing law, and that the fact of the plaintiff's title being certified as purchaser did not under Section 260 of that Act, preclude the defendant who was in possession from pleading that he was the real purchaser and that the purchase was made benami for him by the certified purchaser. The sections referred to run thus:

Section 259. After a sale of immoveable property shall have become absolute in manner aforesaid, the Court shall grant a certificate to the person who may have been declared the purchaser at such sale to the effect that he has purchased the right, title, and interest of the defendant in the property sold and such certificate shall be taken and deemed to be a valid transfer of such right, title, and interest.

Section 260. The certificate shall state the name of the person who at the time of sale is declared to be the actual purchaser, and any suit brought against the certified purchaser on the ground that the purchase was made on behalf of another person not the certified purchaser, though by agreement the name of the certified purchaser was used, shall be dismissed with costs.

6. The analogy in substance between these provisions and those of Sections 38 (cl. 5) and 39 of the Revenue Recovery Act with one exception is obvious. That exception but made the case before the Privy Council decidedly stronger in that the latter part of Section 260 expressly evinced some intention to derogate from the efficacy of benami purchases, while Sections 38 (cl. 5) and 39 of the Revenue Recovery Act are absolutely silent in the matter.

7. Let me now proceed to consider the reasoning of the Judicial Committee. Their Lordships preface the discussion thus :--' It is well known, that benami purchases are common in India, and that effect is given to them by the Courts according to the real intention of the parties. The Legislature has not, by any general measure, declared such transactions to be illegal; and, therefore, they must still be recognised, and effect given to them by the Courts except so far as positive enactment stands in the way, and, directs a contrary course.' The argument that an intention to prohibit benami purchases was inferable from the general tenor of the two sections; Coupled with those relating to delivery of possession was met thus :--' Their Lordships consider it would not be safe to make such an inference, except it arose upon very clear implication and that it would be especially unsafe so to construe the Act as by inference to import into it prohibitory enactments, which would exclude an inquiry into the truth in any suit between the parties.' And referring to the stress sought to be laid on the direction in Section 259 as to the grant of a certificate to the purchaser, and in Sections 261 to 266 as to giving possession to the purchaser, they said:--' Section 259, requiring the Court to grant a certificate to the person declared to be the purchaser of land at the sale, and directing that such certificate shall be taken and deemed to be a valid transfer of the debtor's right and interest, does no more than create statutory evidence of the transfer, in place of the old mode of transfer by Bill of sale. Their Lordships consider, that no inference fairly arises from this clause, that it was intended to interfere with benamee transaction; for the language is adapted to meet the case of ordinary purchasers, and the same language might well have been used if benamee transactions had been wholly unknown. The same observations apply to Sections 261 to 266, which prescribe modes of giving possession of the various kinds of property. These provisions would naturally find a place in the Act in order to govern ordinary purchases and no inference can, therefore, be drawn from them of an intention to prohibit benamee transactions.'

8. I have made these quotations as they appear to me, in effect, applicable to the present case in their entirety and as furnishing by themselves a complete answer to the contention before us. Nor must the rest of the judgment of the Judicial Committee, because it was devoted to the consideration of a provision not to be found in the statute I am dealing with, be understood as possessing no significance here. For in dealing with that provision, i. e., so much of Section 260 as did expressly affect benami purchasers, it is pointed out that the same should not receive anything but a strict interpretation as will be seen from the following concluding portion of the judgment:--'For the reasons given, their Lordships do not feel justified in adopting a construction beyond what the language of the Code imports, when such a construction would, in effect, be to declare that to be unlawful which the Code itself has not declared to be so j and they are consequently of opinion, that there is no bar to preclude the inquiry in this suit into the real title.' If such are the true canons of interpretation to be adopted in the case of an enactment which in terms showed an intention to attach some infirmity to benami transactions, how much less ground is there for implying any prohibition in regard to such transactions from provisions lacking altogether any such indications and which, giving every word its proper meaning, convey nothing more than that the certificate and the proclamation constitute evidence of a statutory transfer under the sale

9. Our attention was drawn to the second paragraph of Section 82 of the Indian Trusts Act, which, however, does not appear to me to touch the present case. No doubt, that provision excludes to some extent the application of the doctrine of trust to benami purchases under judicial sales governed by Section 317 of the Code of Civil Procedure or under revenue sales governed by Act XI of 1859, Section 36, which proceeds on the same lines and lays down :--' Any suit brought to oust the certified purchaser as aforesaid on the ground that the purchase was made on behalf of another person not the certified purchaser or on behalf partly of himself and partly of another person, though by agreement the name of the certified purchaser was used, shall be dismissed with costs.' If it were necessary to decide how far in these descriptions of cases the doctrine of trusts in excluded, the drift of the remarks of the Judicial Committee in the decision above cited, with reference to the various classes of cases that could rise under provisions such as the concluding part of Section 260 of the Civil Procedure Code of 1859, would have to be steadily kept in view. But Sections 88, Clause 5, and 39 of the Revenue Recovery Act find no place in the said second paragraph of Section 82 of the Trusts Act. Why the reference there is confined to the two sections mentioned and provisions such as are contained in Section 184 of the N.W.P. Land Revenue Act (XXX of 1873) referred to in The Delhi and London Bank, Ld. v. Chaudhri Pariah Bhaskar I.L.R. 21 A. 40 were left out, it is useless to speculate upon. Suffice it to say that, be the cause for the said paragraph standing as it does what it may, it is not competent to us to extend the restriction therein laid down to Sections 38, Clause 5, and 39 of oar Eevenue Recovery Act, which, as more than once stated, make no reference to benami transactions, since, to borrow the language of the Judicial Committee at page 528 of the report of the case I have been quoting from, ' where the legislature has stopped the Courts must stop.'

10. Turning now to the cases decided in. this Court and cited in the argument, it is clear that two out of these three decisions viz. Tirumalayappa Pillai v. Swami Naihur I.L.R. 18 M. 469 and Subbarayar v. Asirvatha Upadesayyar I.L.R., M. 494 are directly in favour of the view I am adopting. As to the third and latest case, Narayana Chettiar v. Chokkappa Mudaliar I.L.R. M. 655, it seems to me that the actual decision there is not consistent with the ratio decadent of either of the earlier cases, though these are there stated to be distinguishable. Nor is the part of the judgment of the learned Judges disallowing the question of trust under Section 82 of the Trusts Act being raised, if I am not altogether mistaken in grasping the meaning of the passage, reconcileable with their conclusion that it was not open to the 2nd and 3rd defendants to contend that the person through whom the plaintiff claimed was not the real purchaser, it being stated in the commencement of the judgment that the purchase was in fact benami. I do not know what more was required to found a case of an obligation in the nature of a trust, within the meaning of Section 82 of the Trusts Act. If what the learned Judges had in mind was that the plaintiff in the case, who claimed through the benami purchaser, could have shown that he was a bona fide purchaser without notice and therefore as against him, the 2nd and 3rd defendants could not at that stage be allowed to rely on their being the original real purchasers, that would be different. But such a view would be inconsistent with the conclusion expressed in the sentence that 'it was not competent to the 2nd and 3rd defendants to prove the truth as to who was the real owner under the Eevenue Sale.' However this may be, the Privy Council decision already cited was not brought to the notice of the learned Judges and as the reasoning therein and the rules of interpretation laid down by their Lordships make it imperative on us to come to the conclusion that statutory provisions such as Section 38, Clause 5 and Section 39 of the Kevenue Recovery Act ought not to be construed as precluding the real purchasers from showing the truth, I feel compelled to say, with all deference to the learned Judges who decided Narayana Chettiar v. Chokkappa Mudaliar I.L.R. M. 655 that I am unable to follow them, if they really intended to lay down that benami purchases are in any way struck at by the said Section 38, Clause 5 and 39, though I am by no means sure that they did so intend.

11. As regards the other decisions relied on on either side, it is not necessary to notice them as they are decisions with reference to cases governed by Section 317 of the Civil Procedure Code or provisions similar whereby (unlike as in Sections 38, Clause 5, and 39 of the Revenue Recovery Act) it is in terms provided that no suit shall be maintained against a certified purchaser on the ground that the purchase was made on behalf of any other person or on behalf of some one through whom such other person claims.

12. I would, therefore, reverse the decree of the District Judge and restore that of the District Munsif with costs in this and in the lower appellate Court.

Sankaran Nair, J.

13. The plaintiff sues in ejectment. He was the owner and pattadar of the lands in dispute. They were sold in 1883 for arrears of revenue and, according to the plaintiff, purchased by him, on account of disputes with his uncle, in the name of the 1st defendant. The plaintiff alleges that having obtained them, and continued in possession till 1893, he let the lands to the 2nd defendant, who now sets up the title of the 1st defendant as the real purchaser of the lands at the revenue sale.

14. Both the lower courts have found that the plaintiff was the real purchaser, having paid the sale amount as purchaser himself, and that though the revenue sale certificate was taken in the name of the 1st defendant, the latter was only a benamidar who had no interest in the property. The first court has further found--whether that finding has been accepted by the appellate court is one of the points in dispute before us--that the plaintiff, having obtained possession of the property, let the 2nd defendant into possession as his tenant. Although he was of opinion that the purchase was made by the plaintiff with his own money and for his own benefit, and that the 1st defendant was only a benamidar, the District Judge has, nevertheless, dismissed the plaintiff's suit on the ground that the sale certificate issued in the name of the 1st defendant as purchaser, and the publication of his name as such, by the Collector, under the provisions of the Eevenue Recovery Act, confer upon the 1st defendant an absolute title and pass to him the entire estate which admittedly vested in the plaintiff before the sale, and that it is not open to the real purchaser, the plaintiff, to put forward his claims and contend that the 1st defendant is only a benamidar, even when the purchase money was paid by the plaintiff and the purchase was made for his benefit. The main question for consideration which has been fully argued before us is whether this is the correct view of the law.

15. It is well known that benami transactions are very common. They have been recognised by all the High Courts in India and the Privy Council. When a transaction is proved to be benami, the courts proceed to give effect to the real as against the nominal title except in a few instances not necessary now to be noticed. If, the benamidar sues the beneficial owner, the latter is allowed to prove his title as against the plaintiff and, conversely, the beneficial owner is allowed to enforce his title as against the benamidar. On the question whether a benamidar could enforce his rights against strangers in the absence of the beneficial owner, the High Courts in India are not in agreement. But they are all agreed that, ordinarily, the title of the beneficial owner must prevail against that of the benamidar. A stranger in whose name property is purchased by a person with his own money for his own benefit has been always treated as a benamidar having no interest in the property that could be enforced against the beneficial owner. In English law it would be treated as a resulting trust in favour of the actual purchaser who advances the money and effect given to it accordingly. In India the definition of 'trust' in the Trusts Act excludes resulting and other constructive trusts; and these latter are dealt with in a separate chapter--chapter IX, Section 80 to 96. Section 82 substantially reproduces the rule of English law and enacts that the transferee must hold the property for the benefit of the person who is proved to have paid the purchase money.

16.Thus, according to the authorities, the plaintiff, as the real purchaser, is entitled to recover the property now in suit from the 1st defendant, who is only his benamidar. Under the English law and the Indian Trusts Act, he would be treated as a beneficial owner, and his claim enforced against the 1st defendant, the trustee who has the legal estate or the ownership. It now remains to consider whether the Judge is right in holding that the provisions of Act 11 of 1864, are a bar to the recognition of the just claim of the plaintiff on the ground that it is not open to him to contend that the 1st defendant is not the absolute owner of the property.

17. In construing the provisions of that Act it is useful to boar in mind the observations of their Lordships of the Privy Council. In Musamat Buhuns Kowur v. Lalla Buhuoree Lal 14. M.I.A. 520 they point out that benami purchases being very common in India they have to be reco-gnised until declared illegal by legislation and, when there is no ex-(sic)oress prohibition of such transactions, a general intention should not be presumed unless it appears very clearly to be the object of the Legislature to discountenance them; and when the matter is doubtful, it is safer that the legislature should declare its view clearly and unequivocally to prohibit transactions which are generally known to take place than for the courts to do so from ambiguous or uncertain expressions in any Act, and thereby preclude an inquiry to discover the truth and connive at the perpetration of fraud. Having regard to these observations of their Lordships, it appears clear to me that the plaintiff is not estopped by any provision of law from pleading the benami nature of the 1st defendant's title-

18. Sections 38 and 89 of Act II of 1864 are relied upon in favour of the respondent's contention. The material portion of Section 38 runs thus :--' The certificate shall state the property sold and the name of the purchaser, and it shall be conclusive evidence of the fact of the purchase'. There is nothing in this to bar the plea that the purchase was benami. Section 39 prescribes a proclamation giving among other things, 'the name of the purchaser and the date of purchase, together with a declaration of the lawful succession of such purchaser to all the rights and property of the former landholder in the said lands.' This declares in fact the effect of Section 38 which confers title. Neither in this section nor in the last section is it declared that a purchase benami is illegal or void. For the purpose of this discussion these provisions seem similar to Section 259 of Act VIII of 1859, which declares in equally clear terms that the sale certificate shall be taken and deemed to be a valid transfer to the person who is declared to be the purchaser. And the Privy Council decided, in the case above referred to, that this does nothing more than create statutory evidence of transfer in place of the ordinary deed of sale and that '' no inference fairly arises from the clause, that it was intended to interfere with benami transactions; for the language is adopted to meet the case of ordinary purchasers and the same language might have been used if benami transactions had been wholly unknown.'

19. These observations appear to be directly in point; and I am inclined to hold accordingly that Sections 38 and 38 do not preclude us from holding that the first, defendant in this case was only a benami tar and, as such, no title vested in him and that it was in the plaintiff for whom the property was purchased. Nor do those sections in any way interfere with the operation of Section 82 of the Trusts Act when the trust is imposed by law on a person who, by the hypothesis (see the definition of 'Trust') is the owner or the property by virtue of the sale certificate (Section 38) and the proclamation (Section 39). These provisions deal with the transfer of ownership or legal estate. They have nothing to do with the equitable obligations imposed on the certified purchaser by law and subject to which he takes.

20. Nor in the absence of an express prohibition can any intention to discourage such transfers be gathered with sufficient clearness from the provisions of the Acts which have been referred to in the argument before us. Mr. Seshagiri Iyer contended that such provisions indicate that the policy of the Legislature is to confer absolute title on the purchaser and not to allow benami purchases in public sales. So far as sales under the Civil Procedure Code are concerned, it has been determined by the highest authority that there is no ground for such presumption, but that Section 317 of that Code only interdicts the class of suits mentioned therein.

21. The Trusts Act lends no support to the contention. Section 82 by specially exempting the cases under Section 317 of the Civil Procedure Code and the sales under Section 36 of Act XI of 1859 makes it clear that benami purchasers in other sales take subject to the obligations imposed by that section

22. Illustration (c) to Section 90 shows that where a qualified owner makes default in payment of Government revenue with a view to the land being put up for sale and himself becoming the purchaser of it and he himself becomes the purchaser, he has to hold the land for the benefit of the other persons who were interested in the property before the date of his purchase. This illustration declares the intentiou of the Legislature not to exempt purchasers at revenue sales from the operation of the rules of law imposing equitable obligations. Similarly, illustration (b) to the same sections shows a similar intention not to treat the entry in the Government records of the name of a person as inamdar as conclusive of his beneficial ownersihp to the property. He has to hold it subject to the claims of the other persons interested. Nor is there anything in the legislation of this Presidency to show that the person whose name is entered in the patta must be the owner, legal and equitable, of that property; and the certified purchaser stands in no higher position. Though Regulation XXVI of 1802 directs the Collectors to keep public registers for transfers of land, yet such transfers are valid botween the parties though unregistered. A patta granted by Government, even accompanied with possession, to one person for land belonging to another will not confer any right to possession against the true owner and a sale for arrears of revenue due by him will not pass any title to the certified purchaser. Bee Secretary of State v. Ashtamurthi I.L.R. M. 89 That the Government may issue the patta in the name of persons put forward by the real proprietor is clear to show that it is recognised even by Government that a certified purchaser or the pattadar need not necessarily be the real owner though, as a rule, the pattadar is the proprietor. See Zamorin of Calicut v. Sitarama I.L.R., M. 406.

23. I. fail to find, therefore, any indication of any general policy to prohibit a benami purchase. On the other hand, if we are to adopt the strict construction suggested for the respondents, we have to hold that a purchase by the managing member of a Hindu family out of family funds at a revenue sale or by a qualified owner in the circumstances referred to in Section 90 of the Trusts Act will confer on him an absolute title. Even fraud and mistake will apparently be no ground for avoiding the bar created by Sections 38 and 39. In the absence, therefore, of any clear intention to declare benami purchases null and void or to confer absolute ownership on the certified purchaser, there is no reason for extending the scope of Sections 38 and 39 beyond what they, in terms, warrant.

24. I now proceed to refer to the three cases which deal with the question before us. In Tirumalayappa Pillai v. Swami Naihar I.L.R. M. 470 land was sold for arrears of revenue due by the pattadars-trustees of a certain endowment, who purchased the property themselves in the name of a dependent of theirs who was the plaintiff in the case. It was there decided that no title vested in the plaintiff a benamidar whose suit must therefore be dismissed. Adverting to Section 38, the Judges held that no greater effect can be given to it than to the provisions in the Civil Procedure Code, which do not prevent third parties from relying upon the benami nature of the plaintiff's purchase. Substantially the same view was taken in the case of Subbarayar v. Asirvatha Upadesayyar I.L.R. M. 494 as to the scope of Section 38, where is was held that a plaintiff who purchased the land for the benefit of himself and the other villagers cannot recover the land for himself. Both these cases are authorities for the proposition that a sale certificate issued by the Collector at a revenue sale is not conclusive as to the right to recover of the person named therein and that it is open to the contesting defendants to show that the purchase was really made for the benefit of other persons. The next case and the one relied upon by the respondent's pleader as decisive in his favour is Narayana Chettiar v. Chokkappa Mudaliar I.L.R. M. 656 where the plea of the defendants Nos. 1 and 4 that one Palaniappa Chetti, the certified purchaser at a revenue sale, under whom the plaintiffs claimed, was merely a 'name lender' for the real purchaser Dandayuda Ghettiar was found true and the trans- action was held to be benami. But on the ground that Sections 38 and 39 of Act II of 1864 vested the property in the purchaser therein named and that it was not open subsequently to any one to contend that such purchaser was only a benamidar for some one else, the Court passed a decree in favour of the plaintiff whose vendor was found to be only a benamidar. The two cases already referred to were noticed and declared not to be in conflict with this conclusion. I do not see how this case can be reconciled with the decision in Tirumalayappa Pillai v. Swami Naiker I.L.R. M. 470 or with the principle involved in the decision in Subburayar v. Asirvatha Upadesayyar I.L.R. M. 494

25. Those cases proceed on the view that when a transaction is proved to be benami, the benamidar's name must be treated as an alias for that of the person beneficially interested and that there is nothing in the Revenue Sale Law, Act II of 1864, to affect the operation of that rule. It appears to me to be clear that the decision in Narayana Chettiar v. Chokkappa Mudaliar I.L.R. M. 656 declares that no effect can be given to benami purchases in the cases of revenue sales under Act II of 1864. As to Section 82, Trusts Act, the learned Judges refused to consider whether the case before them came within the scope of that section as the question was not raised in the courts below and fresh issues would have to be tried. As that decision thus expressly excluded such cases from consideration, it does not apply to the facts before us. In this case the plea has been raised and the facts necessary for the determination of the question have been found. Both the lower courts hold that the property was purchased in the name of the first defendant by the plaintiff with his own money. The law will, therefore, clearly imply a trust in favour of the plaintiff; and the plaintiff is therefore entitled to recover possession of the property from the defendants.

26. In this view it is unnecessary to consider the various other questions argued before us.

27. I would, therefore, reverse the decree of the District Judge and restore that of the District Munsif with costs.


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