(1) This appeal is filed by the 8th defendant in a suit for declaration and injunction regarding the suit properties or in the alternative for possession of the same.
(2) The suit properties originally belonged to defendants 1 and 2. The 2nd defendant is the son of the first defendant. Defendants 3 to 7 are the children of the 2nd defendants. The 8th defendant is the wife of the 2nd defendant. The 8th defendant is the wife of the 2nd defendant, and she is the appellant in the second appeal. Defendants 1 and 2 i.e., father and son, mortgaged the suit properties to the plaintiff in the year 1945 for Rs. 2220. To discharge the mortgage, they sold the suit properties to the plaintiff under two sale deeds, Exs. A-2 and A-3 both dated 7-2-1949. One creditor of the 2nd defendant filed a suit O. S. 31 of 1949 on the file of the District Munsif Court, Vellore against the 2nd defendant and obtained a decree against him. In pursuance of the decree obtained in that suit, the creditor attached the suit properties covered by the two sale deeds in favour of the plaintiff. The plaintiff and his alienees filed claim petitions in the execution proceedings which were allowed in their favour. Therefore, the creditor had to file two suits O. S. 154 and 186 of 1951 on the file of the District Munsif Court, Sholinghur, to set aside the claim order. These two suits were decreed against the plaintiff. In the decree, the Court gave a finding that the sale deeds Exs. A-2 and A-3 were not true, and that they were conveyed to defraud the creditors. It was also found that though the properties were conveyed under Exs. A-2 and A-3, possession continued to be with the 2nd defendant on the date of the attachment and the 2nd defendant had right, title and interest in them. Therefore the plaintiff and his alienees filed appeal suits A. S. Nos. 41 and 42 of 1954 on the file of the Sub Court, Vellore, where the findings of the trial Court were reversed. There were second appeals to this Court in S. A. Nos. 375 and 376 of 1965. The second appeals were allowed, the decision of the lower appellate Court was set aside and that the sale deeds were not genuine and that there was collusion between the plaintiff and the 2nd defendant.
(3) Another creditor filed O. S. 472 of 1953 of the file of the District Munsif Court, Sholinghur, against the first and 2nd defendants. The suit was decreed in favour of the creditor and the plaintiff in that suit allowed the properties to be attached. But defendants 1 and 2 paid the decree amount in the said suit.
(4) Once again defendants 1 and 2 sold the properties to one Chinnappa Naidu on 27-8-1958. He filed the suit O. S. 263 of 1958 on the file of the District Munsif Court, Sholinghur, against defendants 1 and 2 and the plaintiff for possession. That suit was dismissed. But the finding in that suit was that the sale deeds Exs. A-2 and A-3 were genuine. During the pendency of that suit, defendants 1 and 2 filed O. S. 250 of 1959 on the file of the District Munsif Court, Sholinghur, for accounts in regard to the income from the suit properties. That suit was also dismissed.
(5) Then the plaintiff filed the present suit out of which the second appeal has arisen, in order to clear the cloud in his title as against defendants 1 and 2. Meanwhile, the first defendant has executed a settlement deed of his half share in the suit properties in favour of the 8th defendant, the wife of the 2nd defendant, under Ex. B 1, dated 29-10-1953. The first defendant remained ex parte. The 8th defendant (appellant) contended that the sale deeds (Exs. A-2 and A-3) were nominal transactions. Her main defence to the suit was that it was barred by res judicata, by virtue of the findings recorded finally in S. As. 375 and 376 of 1955.
(6) The trial Court found that defendants 1 and 2 were not entitled to claim the suit properties, that the plaintiff had title to the suit properties under Exs. A-2 and A-3, that the plaintiff was not barred by res judicata by reason of the second appellate decree, and that Exs. A-2 and A-3 were binding on the defendants by virtue of the decree in O. S. 263 of 1958. As far as the 8th defendant was concerned, he held that the settlement deed was not binding on the plaintiff and that the same had also been cancelled by the insolvency Court as on the date of the settlement deed the first defendant was found to have no title to the suit properties. Finally the suit was decreed in favour of the plaintiff.
(7) Defendants 2 and 8 preferred an appeal to the Sub Court, Vellore. The learned Subordinate Judge held that the present suit was maintainable as it was not barred by res judicata by reason of the decision in the second appellate Court, that the first defendant had no title to give part of the suit properties on the date of the settlement deed, that the decision rendered in O. S. 263 of 1958 did not operate as res judicata against the present plaintiff, that the settlement deed executed by the first defendant in favour of the 8th defendant was invalid and that the plaintiff had been in possession of the suit properties from 1958. In the result, the appeal was dismissed.
(8) Now, it is against this judgment and decree the 8th defendant has preferred this second appeal. The crucial point for consideration is whether Exs. A-2 and A-3 executed by defendants 1 and 2 in favour of the plaintiff are nominal and sham and intended to defraud the creditors and whether the findings in the previous proceedings would be binding on the plaintiff.
(9) The validity of the above two sale deals was the subject-matter of discussion and discussion from time to time between the parties. The finding about the sale deeds varied, modified or changed from Court to Court, and the validity and finality of them were not capable of ascertainment. Taking advantage of the varied findings of the various Courts, the plaintiff is interested in asserting that the findings in the previous proceedings wherever they are against him are not binding on him, and equally the appellant is asserting that the present suit is barred by res judicata wherever the findings are against the plaintiff. Therefore I have to decide whether the earliest finding recorded in S. A. 375 of 376 of 1955 which arose out of claim suits is binding on the plaintiff. The findings are that Exs. A-2 and A-3 are to defraud the creditors, they are nominal and there was collusion. The lower appellate Court is of opinion that the present suit is not barred by reason of the said decision. Learned counsel for the appellant has contended before me that the above two suits. O. S. 154 and 186 of 1961, which arose out of execution proceedings, ultimately ended in second appeals, that the findings therein are against the plaintiff and they are therefore binding on the plaintiff. If they are binding, then the present suit will not be maintainable on the ground that it will be barred by res judicata.
(10) In Narasimhachariar v. Raghava Padayachi : AIR1945Mad333 a Full Bench of this Court had to consider the question whether a finding given in a suit which arose under O. 21, R. 63 was binding on the parties in a subsequent suit. The learned Judges observed:--
'It is conclusive between the parties to the suit or their representatives so far as the execution of the particular decree is concerned, but where the property is sold in execution proceedings arising out of an entirely different decree the claimant will not be precluded from setting up his title as against a stranger purchaser. If the attachment has not led to the sale of the property all those concerned even if there has been a suit under Rule 63, will be left in the same position as they were before attachment, except that the decreeholder will be at liberty to institute fresh proceedings in execution of the same decree without any right remaining in the claimant to reagitate his claim. Subject to the operation of the doctrine of res judicata in any particular case, were hold that an order on a claim petition filed under Order 21, Rule 58, or a decree in a suit filed under Rule 63 does not extend beyond the execution of the decree which has given rise to those proceedings'.
This principle, no doubt, has been followed by the lower appellate Court, for the purpose of holding that the present suit is not barred by res judicata, because the present suit is an entirely different suit not connected with the claim petitions. But learned counsel for the appellant cited the decision in Ramireddi v. Tagaram Bichalu, : AIR1952Mad837 , where a Division Bench of this Court had explained the true doctrine in such circumstances. The facts of that case are similar to the facts of the present case. The suit property originally belonged to one Khasim. Subsequent to his death, his widow Yelli sold the same for a stated consideration of Rs. 100 to the plaintiff in that suit under Ex. P-1. A creditor of Yelli filed a suit and obtained a decree. Prior to judgment, the suit property was attached when the plaintiff intervened with a claim based on Ex. P-1. The claim was allowed which led to the filing of a suit by the creditor for vacating the claim order. In that suit, he impleaded not only the plaintiff (claimant) but the judgment debtor as well. In that suit, it was decided that the property continued to be that of Yelli despite Ex. P-1 for the reason that Ex. P-1 was a sham and nominal transaction and was liable to be attached. After this decision, Yelli sold the property to the defendant in that suit, a portion of which was for discharging the decree debt in the previous suit. The plaintiff who purchased the property filed a suit for declaration of his title and for an injunction restraining the defendant from interfering with his possession. The defence was that the finding that the property continued to be that of Yelli was res judicata that Ex. P-1 was a sham and nominal transaction and would not therefore bind him. The learned judges referred to the Full Bench decision and observed:--
'We do not think that the observations in : AIR1945Mad333 end themselves to the interpretation that in no case will the decision given in a suit under Order 21, Rule 63 with reference to title to property would operate as res judicata in a subsequent suit. It is clear from this statement of law that the learned judges did not intend to lay down that in no case would the doctrine of res judicata apply to a decision given under Order 21, Rule 63. The earlier observation must be understood in the light of later statement of law contained in the judgment and we may take it that the former related to a case where the rule of res judicata would have no application, as for instance, in a suit instituted by the claimant or by the decreehohlder, the judgment debtor was not made a party and the fight was only between the claimant and the decreehohlder. Viewed in that line, we think there is no conflict between the two statements of law contained in the same judgment'.
This judgment has not been referred to by the lower Courts, and learned counsel for the appellant contends that even though the Full Bench ahs made observations that any finding rendered in a previous suit is final and conclusive in the subsequent suit but yet it does not extent beyond the execution of the decree which given rise to those proceedings, in an order on a claim petition or a decree in a suit filed under Rule 63, the Full Bench did not intend that in no case would the doctrine of judicata apply to a case under Rule 63. The statement of law laid down by the Full Bench may not be applicable to the facts of the present case, if we take into consideration the principles laid down in the later decision above referred to.
(11) Learned counsel for the respondents contended that as far as the first defendant was concerned he was not a party to the claim suit, O. S. 154 and 186 of 1951 which ended ultimately in second appeals in this Court and that his half share was not the subject-matter in previous proceedings and that further the finding in the said proceedings was about the fraudulent character of the transaction and not that they were sham and nominal. He therefore contended that the principle laid down in : AIR1952Mad837 , did not apply to the present case. There may be some force in this contention. But still learned counsel for the appellant asserted that mere impleading of a new party or adding some more items of property in a later suit will not take away the finality and binding character of the former decision. This proposition of law has been laid down in A.N. Mariyanaga Nadar v. Vedamanickam Satthiahesan (1959) 1 MLJ 346.
(12) Learned counsel for the appellant has next contended that in any event the plaintiff himself was a party to the sale deeds Exs. A-2 and A-3 which have been characterised as fraudulent in the previous proceedings and he cannot ask the Court to give him relief on the foot of these transactions. It is true that this plea was not taken in the lower Courts but this was allowed to be taken here as a question of law. Their Lordships of the Supreme Court but this was allowed to be taken here as a question of law. Their Lordships of the Supreme Court have held in Immani Appa Rao v. Gollapalli Ramalingamurthi, : 3SCR739 , that where both the transferor and the transferee are in equal fraud in carrying out the transfer and the fraud contemplated has been carried out but possession remains with the transferor, in a suit by the transferee for possession, it is open to the transferor to plead fraud and the absence of consideration. They further held that public interest requires that the plea of fraud should be allowed to be raised and tried, and if it is upheld the estate should be allowed to remain where it rests. In the previous proceedings, especially in the second appeals it has been found that the sale deeds are not true and genuine. But it was pointed out by learned counsel for the plaintiff that no issue was framed and no finding had been given by the trial Court. But it must be said that the lower appellate Court had framed it as a point for consideration and given a finding thereon. It is true that if a transaction is sham and nominal, it need not be set aside. Even assuming that there was no issue as to whether the sale deeds are sham and nominal, still it can be construed that those suits have raised two pleas namely whether the sale was sham and nominal and whether the sale was in fraud of creditors. In such circumstances, their Lordships of the Supreme Court have held in Abdul Shukoor v. Arjii Papa Rao : AIR1963SC1150 .
'...........it cannot be said that the defendants did not raise two distinct pleas--(i) that the sale was a sham, a pretended sale without any consideration and not intended to pass any title to the nominal purchaser and in the alternative (ii) that even if it were a real transaction supported by consideration and intended to pass title to the plaintiff, still the same was, having regard to the circumstances stated, a fraud upon the creditors and therefore voidable at his instance. Though the pleading in the written statement was in this form, the issues struck did not raise the two defences as distinct pleas but rolled both of them into a single plea raising the question 'whether the plaintiff had title to the suit property and whether the claim order was liable to be set aside'.
Though on the previous proceeding the Court might have considered only whether the transaction was fraudulent in character, still applying the principle noted above, I am of opinion that the findings rendered in O. S. 154 and 186 of 1951 which rendered in S. A. 375 and 376 of 1955 on the file of this Court is binding on the plaintiff, and if it is binding then the present suit would be barred by res judicata. But learned counsel for the first respondent-plaintiff would contend whether the findings rendered in O. S. 263 of 1958 O. S. 250 of 1959 where they are in favour of the plaintiff would not bind the appellant herein. But learned counsel for the appellant would submit that those decrees would not be binding on the appellant since those proceeding commenced against the settlor after the settlement deed was executed in her favour.
(13) Learned counsel for the appellant contended that, in any event, since the petitioner had come to Court for declaration and possession he must prove possession within 12 years in suit. But I do not find any discussion about it in the judgment of the Courts below and no issue has been framed and no finding given. In regard to the other contentions by learned counsel for the first respondent-plaintiff that the settlement deed itself was void, since a coparcener cannot gift away property, learned counsel for the appellant cited a passage from Mullah's Hindu law, 13th Edn. page 291, to show that with the consent of other coparceners, a coparcener can make a gift of his interest in the coparcenary property.
(14) The main question that was considered in the Courts below and have also related to whether the findings arrived at in the previous proceedings which ended in second appeals in this Court were binding on the plaintiff in the present suit. Since I have come to the conclusion that those findings are binding on the plaintiff, on the principle laid down in : AIR1952Mad837 , the present suit of the plaintiff is barred by res judicata. The second appeal is accordingly allowed. There will be no order as to costs.
(15) In view of the complicated facts and continuous proceedings between the parties and the conflicting findings arrived at in them, leave is granted.
(16) Appeal allowed.