1. C.R.P. No. 2185 of 1941 : - The allegation in the plaint with which we are now concerned is that the deceased petitioner 1 executed a sham and nominal gift deed for the purpose of screening his property from creditors. He was subsequently dispossessed of this property; and he therefore sought for a declaration that he was still the owner of the property, despite the execution of the gift deed and for possession. The question is whether the prayers in his plaint are to be looked upon as being merely for a declaration and consequential relief or whether the suit is to be regarded in substance as one for the cancellation of the gift deed. If the latter be the case, as the lower Court has found, then the petitioners will have to pay a very much higher court-fee than that already paid. It is not denied that if, as the plaintiff alleged, the transaction was a sham and nominal one, there was no conveyance of property from petitioner 1 to his first wife, the donee under the deed. There are many decisions of this Court to the effect that if there has been no conveyance and the transaction in which the deed was executed was a sham and nominal one, there is no need to set aside the transaction or the deed. In Swaminatha v. Rukmini Ammal A.I.R. 1920 Mad. 88, for example, the question arose whether it was necessary to have a transaction set aside under Section 53, T. P. Act, where the allegations were that it was a sham and nominal transaction intended to defraud creditors. It was held that it was not Petherperumal Chetti v. Muniandi Servai (1908) 35 Cal. 551 is a decision of the Privy Council in which the question whether a certain sale was sham and nominal or not had to be considered. The parties to the proceeding traced their title to the original parties to the sale deed. Their Lordships said 'that the conveyance of 11th June 1895 being an inoperative instrument, as, in effect, it has been found to be, does not bar the plaintiff's right to recover possession of his land, and that it is unnecessary for him to have it set aside as a preliminary to his obtaining the relief he claims.' In Subraya Chetti v. Nagappa Chetti : AIR1927Mad805 , Venkatasubba Rao J. held that a deed which is sham and nominal has not to be set aside. I do not think it necessary to consider Abdulla v. Subramania Pattar A.I.R. 1936 Mad. 470, as it is perhaps doubtful whether that decision is any longer good law after the Full Bench decision in Ramaswami v. Rangachari A.I.R. 1940 Mad. 113. If the gift deed in question, being a sham, nominal and inoperative instrument, has no legal effect, it is difficult to see how Section 7 (iv-A), which deals with a suit for cancellation of a document securing money or other property, can have any application. The learned Government Pleader relies on a general summary of the law relating to Section 7 (iv-A), Court-fees Act, found in a judgment of Wadsworth J. in Vellayya v. Ramaswami A.I.R. 1939 Mad. 894. The learned Judge draws a distinction between those classes of cases in which the plaintiff was eo nomine a party to a decree or document and those in which he is not. He says with regard to the former that 'when the plaintiff seeks to establish a title in himself and cannot establish that title without removing an insuperable obstruction such as a decree to which he has been a party or a deed to which he has been a party, then quite clearly he must get that decree or deed cancelled or declared void in toto.' So far, the correctness of this statement is not disputed; but the learned Judge goes on to say 'and his suit is in substance a suit for the cancellation of the decree or deed even though it be framed as a suit for a declaration.'
2. That would perhaps be so in all cases of decrees and it certainly would be so with regard to voidable deeds; but there seems to be an exception to the general rule, for the reasons given in the preceding paragraph, with regard to deeds which are intended to be inoperative. The learned Judge however held that the case which he was considering came in the other class of cases in which the deed is between third parties. He held that in such circumstances, it was not necessary to have the document set aside and it could not, in fact, be set aside. The learned Government Pleader then referred to a decision in Singarappa v. Talari Sanjivappa (1901) 28 Mad. 349. There, the deed with which the learned Judges were concerned, was alleged to be a sham sale deed in favour of the defendants; and the question was one of limitation. The learned Judges held that the suit had to be brought within three years from the date when the plaintiff apprehended that the defendants had set up title under the instrument; but that was a case in which the plaintiff specifically asked to have the deed cancelled; and the learned Judges did not consider whether it was necessary for the plaintiff to pray for the cancellation of the document. Moreover, the matter did not arise, because the suit was held to be within time. If a plaintiff sues for a declaration, he would have to pay court-fees under Section 7(iv-A), Court-fees Act, whether it was necessary to have the deed cancelled or not. In Unni v. Kunchi Amma (1991) 14 Mad. 26, another case relied on by the learned Government Pleader, remarks are found which really favour the petitioners. The learned Judges say:
There can be no doubt that when a person seeks to recover property against an instrument executed by himself or one under whom he claims he must first obtain the cancellation of the instrument.... Although similar relief might be given in cases where the deed was on the face of it void, on the principle of removing a cloud from the plaintiff's title and preventing further litigation, we do not think that relief by way of cancellation of the deed was absolutely necessary, except in eases where the deed was sought to be avoided on account of fraud or other such ground.
3. The learned Judges were in fact dealing with a case between third parties. The argument of the learned Government Pleader is that the plaintiff is seeking to establish his title and is met by this document which negatives his title, that in order to establish his title he has to get rid of the effect of this document and that it is therefore necessary to pray for the cancellation of the document. Where however, he asserts that the document was intended to be inoperative and was not intended to be anything more than a scrap of paper, it has no legal effect and therefore does not stand in the way of his getting a declaration of his title. The lower Court referred to Petherperumal Chetti v. Muniandi Servai (1908) 35 Cal. 551; but distinguished it on the ground that it was a case in which the plaintiff was not a party. Although that is true, he was claiming under a party and would therefore be in the same position as the party himself. The petition is therefore allowed with costs against the Government.