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Ariyaputra Naicken Vs. Muthu Chetty and ors. - Court Judgment

LegalCrystal Citation
SubjectProperty
CourtChennai
Decided On
Reported inAIR1936Mad165; 160Ind.Cas.753
AppellantAriyaputra Naicken
RespondentMuthu Chetty and ors.
Cases ReferredVertannes v. Robinson
Excerpt:
.....effected the suit sale to the plaintiff on 23rd december 1921, but the evidence clearly shows that natesa chetti was himself never in possession during the three years that intervened between ex. the circumstances disclosed by the evidence in the case clearly establish that the transfer in favour of natesa chetti was for the benefit of defendant 1. defendant 1 has also been contending that the sale by natesa chetti to the plaintiff was a nominal transaction and that no consideration was paid by the plaintiff to natesa chetti. we must however express serious doubts as to whether the plaintiff is likely to have paid anything like the full consideration expressed on the face of ex. the present is a case which -clearly falls under section 82 because the evidence shows that narasier and..........from one natesa chetti on 23rd december 1921 (ex. a). this natesa chetti had in turn purchased the suit property from a father and his son, narasier and narayana rao under ex. a-2 on 21st december 1918 and the principal question for determination is the nature of the title acquired by natesa chetti. at the time of natesa's purchase, the property was subject to a usufructuary mortgage in favour of the present defendant 1, the equity of redemption being vested in narasier and narayana rao. natesa chetti was the son-in-law of defendant 1. defendant 1 had agreed to assign his usufructuary mortgage right in the suit properties and certain other properties of his to one hanumanthayya and the latter had instituted a suit for specific performance of that agreement in o.s. no. 352 of 1917 on the.....
Judgment:

Varadachariar, J.

1. This is an appeal by the plaintiff whose suit for possession and mesne profits has been dismissed by the lower Court. The plaintiff claims title under a purchase from one Natesa Chetti on 23rd December 1921 (Ex. A). This Natesa Chetti had in turn purchased the suit property from a father and his son, Narasier and Narayana Rao under Ex. A-2 on 21st December 1918 and the principal question for determination is the nature of the title acquired by Natesa Chetti. At the time of Natesa's purchase, the property was subject to a usufructuary mortgage in favour of the present defendant 1, the equity of redemption being vested in Narasier and Narayana Rao. Natesa Chetti was the son-in-law of defendant 1. Defendant 1 had agreed to assign his usufructuary mortgage right in the suit properties and certain other properties of his to one Hanumanthayya and the latter had instituted a suit for specific performance of that agreement in O.S. No. 352 of 1917 on the file of the District Munsif's Court of Salem. Acting on some advice to the effect that, if during the pendency of that suit defendant 1 should purchase the equity of redemption himself, his interests may be jeopardised, he went through a process of releasing the equity of redemption in favour of Narasier and Narayana Rao as if on payment of the mortgage money by them, and also took a sale of the property (as if after a discharge of the encumbrance) in favour of her son-in-law Natesa Chetti. When these transactions were brought to the notice of the Court where the suit for specific performance was pending, the only course open to the Court was to give Hanumanthayya a decree for damages.

2. For some reason, which does not clearly appear on the record, Natesa Chetti effected the suit sale to the plaintiff on 23rd December 1921, but the evidence clearly shows that Natesa Chetti was himself never in possession during the three years that intervened between Ex. A-2 and Ex. A, nor was the plaintiff able to get possession. The title deeds have all along been in the custody of defendant 1 and on his own evidence the plain tiff never even inspected the title deeds nor did he take any steps to get possession of the title deeds. Defendant 1 has all along contended that the sale deed in favour of Natesa Chetti was for his own benefit and that Natesa Chetti sold the property to the plaintiff in fraud of defendant 1's rights. The plaintiff was a partner of defendant 1 from some time before the date of Ex. A-2 and for some years thereafter. He has attested Ex. A-2, and on his own admission was aware of the transaction, though he says it was not a benami transaction and that at any rate he was not aware that it was a benami transaction. The circumstances disclosed by the evidence in the case clearly establish that the transfer in favour of Natesa Chetti was for the benefit of defendant 1. Defendant 1 has also been contending that the sale by Natesa Chetti to the plaintiff was a nominal transaction and that no consideration was paid by the plaintiff to Natesa Chetti. In the view that we take on the evidence in the case, that the purchase by Natesa Chetti under Ex. A-2 was for the benefit of defendant 1, and that the plaintiff was aware of the true character of the purchase under Ex. A-2, it is not necessary for us to express any definite opinion as to whether the plaintiff paid any part of the consideration for the sale under Ex. A. We need not go so far as the learned Judge has done in throwing doubt upon the account books produced by the plaintiff; because it is sufficient to say that if for some reason the plaintiff thought fit to enter into this transaction with Natesa Chetti he would have made the entries in his account books fit in with the apparent nature of the transaction. We must however express serious doubts as to whether the plaintiff is likely to have paid anything like the full consideration expressed on the face of Ex. A. As we are of opinion that the plaintiff knew that Natesa Chetti held the property only for the benefit of defendant 1, that is sufficient to disentitle the plaintiff to insist on claiming the property as against defendant 1.

3. On behalf of the appellant Mr. Sitarama Rao however pressed two points of law, one, a plea of res judicata, and the other a contention founded on the doctrine of pari delicto. In 1922 defendant 1 instituted a suit (transferred as O.S. No. 3 of 1923, on the file of the Sub-Court of Salem) asking for a declaration that the sale to Natesa Chetti was for this defendant's benefit and also that the sale by Natesa Chetti to the present plaintiff was in fraud of his rights. The first Court decreed the suit, but on appeal this Court, in A.S. No. 315 of 1925, (Ex. H-2), reversed that decision and dismissed the suit on the ground that the then plaintiff was not entitled to raise the plea on which he founded that suit. In this view the learned Judges expressly refrained from deciding the question of benami on the merits. Mr. Sitarama Rao has very strongly urged upon us that this decision must be taken to preclude defendant 1 from raising in any suit between the parties the plea that the purchase by Natesa Chetti was for his benefit, and in this connection he relied upon the judgment of the Privy Council in Vertannes v. Robinson 1930 59 MLJ 296. We do not think the decision of the Judicial Committee supports the contention in the extreme form put forward by Mr. Sitarama Rao. The earlier judgment of the Board, which was relied on as res judicata in that case no doubt rested on a ground of estoppel arising from the law of landlord and tenant; but Lord Russell of Killowen who delivered the judgment of the Board in the later case expressly refers to the fact that the language used by their Lordships in the earlier judgment also purported to decide finally the question of title. It is on this ground that the Judicial Committee held that it was no longer open to the appellant in that case to re-agitate the question of title. It is not for us to say whether the earlier judgment could not be read as restricted to the plea of estoppel available only during the continuance of the tenancy. All that the later judgment purported to decide was that if the earlier judgment could on a fair reading be held to amount to a conclusive determination of the question of title on the merits it was not open to the appellant to re-agitate that question.

4. Dealing with the judgment relied on as res judicata in the present case (that is, Ex. H-2) it must be remembered that the present defendant 1 then figured as a plaintiff asking for discretionary relief by way of declaration and injunction. He had so framed his plaint as to lead the learned Judges to think that he rested his claim on what would in their opinion amount to a case founded on his own fraud; and as they were of opinion that the fraud had been effectuated, they held that they could not give him relief on the case set out by him. It seems to us too much to read into that judgment a decision that for all time and in all proceedings between the parties it must be taken that the title had vested conclusively in Natesa Chetti and not in defendant 1; whether a particular plea could be allowed to be raised or not is a question in the nature of a preliminary plea and any decision on that question is not a decision on the merits which could be regarded as res judicata. It may be that, if the same case is sought to be put forward again in circumstances in which the party could succeed only on a disclosure of his own fraud, we would be concluded by the opinion expressed by the learned Judges as to whether the fraud has in fact been effectuated or not. But in a case where it is not necessary for defendant 1 to rely upon any story of fraud, and he can succeed on other grounds, we are unable to accept the contention of Mr. Sitarama Rao that the former judgment of this Court precludes defendant from relying upon his beneficial title.

5. As Mr. Sitarama Rao pressed upon the contention based upon the doctrine of pari delicto even independently of the plea of res judicata founded on Ex. H-2, we wish to point out that as the case stands before us it is unnecessary to consider any plea to which Section 84, Trusts Act, will apply. The present is a case which -clearly falls under Section 82 because the evidence shows that Narasier and Narayana Rao conveyed the property to Natesa Chetti for consideration paid by defendant 1. Once these facts are established Natesa Chetti will under Section 82, Trusts Act, 'hold the property for the benefit of defendant 1. It is nobody's case that the transaction was intended as an arrangement for the benefit of Natesa Chetti himself. The only question was whether the consideration was paid by Natesa Chetti or by defendant 1. This way of looking at the case shows that it is unnecessary for defendant 1, once he has proved those facts, to rely upon any of the ingredients referred to in Section 84; that is, this is not a case where a party can succeed only on proving his own fraud. There is another reason why Section 84 could not be applicable here at all. That section speaks of a case where a transfer has been effected for an unlawful purpose and the transferor claims that he nevertheless remains the beneficial owner of the property. Nothing has been suggested in the case to show that the transferors to Natesa Chetti, that is, Narasier and Narayana Rao, had any illegal purpose in view or were even parties to any fraud that defendant 1 had in view. Nor are we now concerned with any claim of Narasier and Narayana Rao to be beneficial owners. It is therefore unnecessary in this case to consider whether, if Section 84 would have applied, the contemplated fraud had in fact been carried out or not. If it were necessary to decide that question, we should have great difficulty in holding that any fraud has in fact been perpetrated. All that happened is that pending a suit to enforce an agreement to assign the usufructuary mortgage right, the usufructuary mortgagee allowed himself to be redeemed 'by the mortgagors, on putting it at the worst against defendant 1 the usufructuary mortgagee acquired the equity of redemption from the mortgagors. This is a necessary incident of the mortgage right and we do not see that the mere fact that defendant 1 had some motive in entering into the transaction in a benami form would make it a fraud in law however ill-advised he might have been in choosing that form. But, as we have mentioned already, the case not being governed by Section 84, it is not necessary for us to pursue this line of argument.

6. Mr. Sitarama Rao drew our attention to the fact that in some of the decisions where the rule of pari delicto has been applied, the facts were similar to those of the present case in that a sale had been taken in the name of one person for consideration paid by another; but in none of those cases has the distinction between the language of Section 82 and the language of Section 84 been adverted to. All the cases recognise that the principle of pari delicto will operate as a bar only when it is necessary for the party to plead his own fraud before he can make out his case. For reasons' already stated, that is unnecessary for defendant 1's case in the present instance. The appeal therefore fails and is dismissed with costs.


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