Skip to content


Vadrevu Suryanarayana Vs. Kocherlakota Venkata Subbarao and anr. - Court Judgment

LegalCrystal Citation
SubjectCivil
CourtChennai High Court
Decided On
Case NumberAppeal No. 607 of 1947
Judge
Reported inAIR1951Mad943; (1951)2MLJ76
ActsCode of Civil Procedure (CPC) , 1908 - Sections 65; Trusts Act, 1882 - Sections 82; Contract Act - Sections 2
AppellantVadrevu Suryanarayana
RespondentKocherlakota Venkata Subbarao and anr.
Appellant AdvocateP. Somasundaram and ;P. Suryanarayana, Advs.
Respondent AdvocateM.S. Ramchandra Rao and ;M. Krishna Rao, Advs.
DispositionAppeal allowed
Cases Referred(vide Gangasahai v. Kesri
Excerpt:
civil - benami transaction - section 66 (1) of code of civil procedure, 1908 - suit for specific performance of contract to covey property - property purchased in court sale by defendant - purchase money provided by plaintiff - prior to purchase defendant agreed to transfer property to plaintiff - suit for specific performance of such contract barred under section 66 (1) - suit dismissed. - - 1. this appeal raises an interesting question of law concerning the scope of the prohibition contained in section 66(1), civil procedure code which runs thus: in such cases the ostensible as well as the real title vests in the auction purchaser and the only right that the plaintiff seeks to enforce is a right founded on an agreement with the purchaser. ' 9. we are clearly of opinion that the.....rajamannar, c.j. 1. this appeal raises an interesting question of law concerning the scope of the prohibition contained in section 66(1), civil procedure code which runs thus:'no suit shall be maintained against any person claiming title under a purchase certified by the court in such manner as may be prescribed on the ground that the purchase was made on behalf of the plaintiff or on behalf of some one through whom the plaintiff claims.' the appeal was first heard by our brother panchapagesa sastri j. who referred it to a division bench.2. the contesting parties are the appellant who was the first defendant in the court below and the first respondent, the plaintiff. the suit was for specific performance of an agreement dated 12th march 1939 executed by the first defendant to convey the.....
Judgment:

Rajamannar, C.J.

1. This appeal raises an interesting question of law concerning the scope of the prohibition contained in Section 66(1), Civil Procedure Code which runs thus:

'No suit shall be maintained against any person claiming title under a purchase certified by the Court in such manner as may be prescribed on the ground that the purchase was made on behalf of the plaintiff or on behalf of some one through whom the plaintiff claims.' The appeal was first heard by our brother Panchapagesa Sastri J. who referred it to a Division Bench.

2. The contesting parties are the appellant who was the first defendant in the Court below and the first respondent, the plaintiff. The suit was for specific performance of an agreement dated 12th March 1939 executed by the first defendant to convey the suit properties to the plaintiff whenever he chose to ask him to convey them without demanding any consideration. The averments in the plaint were extremely vague. After stating that the first defendant became the purchaser at a court auction held on 8th March 1939 in O. S. No. 9 of 1933 on the file of the court of the Subordinate Judge of Rajahmundry of a three fourth undivided share in two survey numbers in the village of Pulugurtha and that the first defendant subsequently filed a suit for partition and obtained the lands described in the plaint schedule towards the three-fourth share purchased, the plaint referred to the execution of the agreement abovementioned, the default on the part of the first defendant to carry out the agreement and averred that the plaintiff was entitled on the strength of the said agreement to demand specific performance of the contract by the execution of a proper instrument of conveyance to him and delivery of possession. The genuineness of this agreement marked as Ex. P 1 was questioned by the first defendant, but the finding of the learned Subordinate Judge who tried the suit that the agreement was genuine has not been challenged before us. The substantial plea in defence with which we are concerned at present is that based upon Section 66(1) of the Code. The learned Judge held that that provision, of law did not apply to the facts of the case and that the plaintiff was not precluded from maintaining this suit. The Subordinate Judge therefore gave a decree for specific performance with costs and mesne profits. Hence this appeal by the first defendant.

3. Before we deal with the decided cases cited to us by counsel on either side bearing on the construction of Section 66(1) of the Code, it is very necessary to ascertain the facts of the ease in so far as they can be gathered from the evidence adduced. One Bavaraju Venkataramanamurthi, a minor represented by his guardian obtained a decree inter alia against the plaintiff and his brother Yenkata Rao. In execution of this decree the three-fourth share to which the plaintiff and his brother were entitled in certain immovable property was brought to sale. At the court auction, the property was knocked down in favour of the first defendant for a sum of Rs. 425 on 8th March 1939. It is now common ground that the entire amount of the sale price and the money for expenses of the sale were wholly furnished by the plaintiff himself. According to the plaintiff he paid Rs. 150 in the first instance, evidently before the sale was held and Rs. 300 on the date of the agreement which was four days after the sale i.e., 12th March 1939. The agreement of that date is contained in a letter addressed by the first defendant in favour of the plaintiff in the following terms.

'Letter written and given this 12th day of March 1939 to Kotcherlukota Venkatalakshmipathi Garu's son Venkatasubba Rao, resident of Nidadavole, Kovvur taluk, West Godavari district, by Vadrevu Kamaraju Garu's son Sooryanarayana resident of Dwarapoodi Ramachandrapuram taluk East Godavari district

In the sale by auction held in E. P. No. 291 oi 1936 in O. S. No. 9 of 1933 on the file of the Subordinate Judge's Court, Rajahmundry, you on account of your troubles, in business, got bid by me at your cost; your undefinedthree shares which both of you brothers, have in Pulugutta village i.e., the land of the extent of Ac. 4.36 cents bearing R. S. NOS. 101 and 102/11.

The lands relating to the said bid. i.e., the lands bearing the said numbers which were bid in auction on 8-6-1939, as soon as your troubles in business end, and whenever required by you, shall be reconveyed to you by me without demanding any consideration therefor. Assuring you that till that time the said lands shall not be alienated by me in any manner whatever to anybody else. I have executed and given this letter to you. This letter has been got written and given with my consent.'

It is this agreement specific performance of which is sought. From this letter the following facts emerge. Even prior to the court sale, there was an arrangement between the plaintiff and the first defendant that the first defendant should bid at the auction on behalf of the plaintiff. The first defendant himself was not really interested and it was the plaintiff who was, but owing to circumstances which made it inconvenient for the plaintiff himself to bid, the first defendant was chosen to bid on his behalf. It was also understood that the price would be furnished by the plaintiff himself. It must not be overlooked that the property which was being sold was properly belonging to the plaintiff and his brother. Apparently, there was an idea of screening the property from other creditors. In pursuance of this agreement, the first defendant bid at the auction and also became the successful bidder Presumably from and out of the sum of Rs. 150 paid by the plaintiff at first the deposit of 25 per cent of the bid amount was made into Court The balance had to be paid within 15 days. It was during this interval that Ex. P-1 was executed and Rs. 300 paid on 12th March 1939. The intention of the parties was that the property should continue to stand in the name of the first defendant till the plaintiff's troubles were over and then they should be conveyed to him, of course, without demanding any consideration in view of the fact that the entire consideration for the sale had been provided by the plaintiff himself. The balance of the sale amount and the value of stamps for the sale certificate were deposited by the first defendant on the 15th March and on the 14th July 1939 a Bale certificate was duly issued in the name of the first defendant. The first defendant filed a suit for partition and separate possession of the three-fourth share which he had purchased and obtained a decree Ex. D 4. There was a mortgage over the property and a suit based on that mortgage, and a decree thereon. It is the plaintiff's case that he provided all the money for the partition suit and it was with his money that the mortgage was discharged.

4. The following extracts from the evidence of the plaintiff, P. W. 1 are very material.

'I was present at the time of court sale.....I spent Rs. 450 for the auction sale. I paid Rs. 150 at first and Rs. 800 on the date of Ex. P 1 .... As that time my difficulties were (1) the insolvency of my father, (2) creditors filed suit against us. On account of thosedifficulties the property was purchased in the name of defendant 1 for my benefit.'

When A purchases property with his own money but in B's name without any intention of conferring on him any beneficial interest, the purchase is generally described as benami. In such a case the benamidar holds the property in trust for A and A may compel him to transfer the property to him. Section 82 of the Indian Trusts Act embodies this principle. It says:

'Where property is transferred to one person for a consideration paid or provided by another person and it appears that such other person did not intend to pay or provide such consideration for the benefit of the transferee, the transferee must hold the property for the benefit of the person paying or providing the consideration.'

Such benami transactions are not illegal and ordinarily there is nothing to prevent a case of benami being put forward in a Court successfully. The rule of law enacted in s. 82 is expressly stated not to affect the provision contained in Section 66 of the Code. Now Section 66 of the Code lays down an embargo on the plea of banami when it forms the basis of a suit by the person claiming to be the real owner against a court auction purahaser alleged to be a benamidar. As the section places a procedural bar to the enforceability of a claim based on benami which is otherwise quite legal and valid and effective, the section has to be strictly construed, see Muniappa v. Thangavelu : AIR1937Mad362 and Sheoshankar Prasad v. Mahabir Prasad, 26 Pat. 505. But when substantially the facts attract the operation of the rule enacted by the section, Courts will be failing in their duty if effect is not given to it. In the present case, it appears to us that the facts directly fall within the scope of the enactment. Obviously, the plaintiff is claiming title to the suit property on the ground that the auction purchase was made by the first defendant on behalf of the plaintiff. The sale price was furnished wholly by him (the plaintiff). There was no intention of conferring any title on the first defendant. It was as if really the plaintiff was the purchaser, though on account of certain difficulties, the first defendant Was made to bid at the auction and to take a sale certificate in his own name.

5. It is to get over this difficulty that the suit has been framed as one for specific performance of an agreement namely, the agreement alleged to be embodied in the letter, Ex. P. 1. The argument on behalf of the plaintiff (first respondent) was that a suit based on an agreement subsequent to a court auction purchase to convey the property purchased to the plaintiff will not fall within the mischief of Section 66(1) of the Code even though there might have been an agreement before the court sale that the property purchased should be conveyed to the plaintiff. Reliance was placed by the learned counsel for the plaintiff on certain rulings of this Court and of the Judicial Committee of the Privy Council to which we(shall presently refer. Before doing so, we shall examine the position briefly. There may be a case in which A at the instance of B bids and purchases property at a court auction agreeing to convey the property so purchased to B on payment of the amount which A had to pay for the purchase at the court sale; or after the purchase the auction purchaser may agree with the plaintiff to convey the property to him for the same consideration for which he purchased at the court sale. In such cases the ostensible as well as the real title vests in the auction purchaser and the only right that the plaintiff seeks to enforce is a right founded on an agreement with the purchaser. But for the agreement the plaintiff would have no case. The plaintiff could not in such a case invoke, apart from the agreement, the title which law confers on a person under Section 82 of the Trusts Act. On principle we see no difference between an agreement before the purchase and an agreement after the purchase so long as it is clear that the purchaser at the court auction is treated to be the real owner for the time being only subject to the performance of an agreement to convey the property to the plaintiff. On the other hand, it the real purchaser is the plaintiff, in that he furnished the entire consideration and it was intended that the purchase should be for his benefit and the defendant was only a name lender, then a subsequent agreement under which the defendant acknowledging the title of the plaintiff agrees to execute a formal deed of conveyance to the plaintiff would make no difference. It is, so to say, not an agreement in the strict sense of the term as there is no consideration. The property already belongs to the plaintiff except in name and a promise to convey the property to its real owner for no consideration cannot come within the definition of a contract in Section 2(h) of the Indian Contract Act. An agreement is defined as a promise or a set of promises forming the consideration for each other. For the promise on the part of the defendant to convey in such a case there is no consideration whatever, and so it will not be enforceable (vide Section 25).

6. Reference may be first made to the rulings of the Full Bench of this Court in Venkatappa v. Jalayya, 42 Mad. 615. The actual opinion of the Court, which was very short, proceeded on the finding that there was no benami transaction. The facts found were : the plaintiff and the defendant agreed that at the court auction the suit property should be purchased in the name of the defendant and one half of it should be conveyed to the plaintiff. Some money was paid before the court auction and subsequently a promissory note for the balance of the purchase money due from the plaintiff for his half share was executed. Nearly five years thereafter, the promissory aote was discharged. It was then that an agreement was executed in favour of the plaintiff in which it was provided that the defendant should execute a conveyance for the half share whenever plaintiff demanded. The suit was to enforce this agreement. There was an allegation in the plaint that the half share was purchased in the name of the defendant benami, but that allegation was considered to be irrelevant. It was contended that the case was not really a case of a real owner as such to recover property from a benamidar, that there was really no benami transaction, but there was an agreement with a real purchaser, namely, the defendant, that a half share should be conveyed to the plaintiff on payment of a part of the consideration. It was this contention which was accepted. Wallis C. J. who delivered the opinion of the Full Bench observed, ''Such an agreement is not inconsistent with auction purchaser's own title, but rather the reverse.' The ratio decidendi of this decision is that when the suit is for specific performance of an agreement entered into on the basis that the court auction-purchaser is the real owner of the property Section 66 is not a bar.

7. The Privy Council ruling in Vadivelu Mudaliar v. Periamanicka Mudali 43 Mad. 643 was strongly relied on by the plaintiff's learned counsel and it is necessary to go into it in some detail to ascertain what was actually decided in that case and what was not. One S, the owner of certain lands in order to get a sale of the lands held in execution of a mortgage decree set aside, conveyed to four persons the said lands for Rs. 65,000. Subsequently there was another suit on foot of a prior mortgage which ended in a decree for sale. The sale was fixed for 3rd May 1905. It was obvious that the four persons to whom the properties had been conveyed ran the risk of losing the benefit of their purchase if the properties were sold to third parties. They therefore resolved to bid for the property and for that purpose got together a sum of Rs. 10,000. It was then discovered that three other persons were also proposing to bid. There was then an oral agreement entered into between the four vendees and the three intending bidders to the effect that the vendees should not bid for the property but should permit the three persons to buy and if they bought, the vendees should advance to them the above sum of about Rs. 10,000 to assist them in providing the deposit and completing the purchase and that whichever of them became the purchaser of any property which had been allotted to any of the original vendees in the division between them should convey such property to such vendee on payment by him of such proportion of the auction price as might be found to be due from him on adjustment of accounts. The auction took place and one V, one of the three persons, who bid in pursuance of the agreement became the purchaser of one lot of the lands. Other lots were purchased by the two others. The vendees paid their contribution of Rs. 10,000 and the balance was raised from other sources and sate certificates were issued to the purchasers. In 1906 there was an adjustment of accounts between V and the vendees in accordance with the arrangement. The decision of the questions which arose on the adjustments was entrusted to a Panchayat and v sighed a written undertaking to abide by the award of the Panchayatdars. The award fixed the amount payable by each of the vendees on taking his conveyance and embodied the allotment of the lands among the parties. There were certain variations in the allotment from that previously made, but every one accepted the variation. V was a party both to the agreement to abide by the award and to the agreement to vary the allotments. He, however, would not carry out the arrangement and so a suit was brought against him by certain persons who were the representatives of the vendees. The suit ended in a compromise by which V agreed to convey to the plaintiffs in that suit about 50 acres of the lands purchased by him. At the time of this compromise, the other persons representing the original vendees insisted upon V conveying to them their respective shares in the property and V undertook to do so, though the undertaking could not be included in the compromise in the suit. There was also a variation with reference to representatives of one of the vendees as regards lands to be conveyed and the moneys to be paid Notwithstanding these transactions V afterwards refused to convey to the representatives of the vendees the properties to which they were entitled under the arrangement and ultimately suits were brought to enforce the agreements. One of the main pleas in defence was that the suits were barred by Section 66, Civil Procedure Code. Though this plea was upheld by the Subordinate Judge, the High Court negatived it and the decision of the High Court was upheld by their Lordships of the Judicial Committee. The reasoning of the High Court was as follows:

'. . . .it is clear that Section 66 is not a bar to the plaintiffs' claim as for specific performance of the contract. Their case is not that the first defendant or Vythilingam or Dharmakartha Kandasami were merely benamidars, but that they were to be real purchasers; but they agreed to convey to the plaintiffs in each of these suits or to their predecessors in title such portions of the property for which (as we find) they had already paid or had to pay under that agreement the balance of the purchase money. That we think is a sufficient answer to the plea under Section 66, Civil Procedure Code.'

8. It was argued before their Lordships that in substance the agreement was that the purchase should be made on behalf of the original vendees and would therefore fall within Section 66, Civil Procedure Code. Their Lordships did not in terms accept this argument but observed that if the agreement entered into before the auction stood alone, there would be considerable force in the contention. They said:

'The object of Section 66 was to put an end to purchases by one person in the name of another; and the distinction between a purchase on behalf of another, and a purchase coupled with an undertaking to convey to another at the price of purchase, is somewhat narrow.'

But in their Lordships' view, whatever doubt might be caused by the character of the original agreement was removed by the events which happened after the sale. Their actual decision is found in this concluding passage:

'It was decided in Venkatappa v. Jelayya, 42 Mad. 615 that an agreement subsequent to a purchase is not affected by the section, and there can be no question as to the correctness of that decision. In the present case agreements were entered into after the sale, namely, first at the time of the panchayat in 1906 and secondly, on the occasion of the compromise of the suit of 1907, by which the appellant bound himself to carry out the original contract with the respondents, with certain variations which were then agreed to and accepted by all parties. These subsequent agreements are unaffected by the section and are accordingly enforceable against the appellant.'

9. We are clearly of opinion that the facts of the case before us are entirely and materially different from the facts before their Lordships. In that case the original purchase was in 1905 and the subsequent arrangements were long after that date and were the result of fresh transactions, which included a Panchayat. In the case before us, strictly speaking, there are no two agreements at all. There is really one agreement, namely, that the first defendant should bid at the auction on behalf of the plaintiff, the plaintiff was to find the entire purchase money but ostensibly the first defendant would be the purchaser, and at a later date when the plaintiff's troubles were over, the property should be put in the name of the plaintiff to whom it belonged always. It is not as if there was one agreement before the purchase and after the purchase as a result of fresh negotiations there was a subsequent agreement. It must not be overlooked that in the case before the Privy Council there was first an agreement and then there were certain disputes which were referred to arbitration and then there was a suit resulting in a compromise by which one of the court auction purchasers bound himself to carry out the original contract with certain variations which were agreed to and accepted by all parties. There is nothing similar to this in the present case.

10. We must also say that their Lordships should not be deemed to have decided that if the agreement entered into before the auction had Stood alone, Section 66 would have been a bar. Their Lordships no doubt say that the distinction between a purchase on behalf of another which is strictly benami and a purchase coupled with an undertaking to convey to another at the price of purchase is somewhat narrow, but their Lordships do not say that there is no distinction at all. Not infrequently there are transactions which are on the border line as regards which it is difficult to decide whether they fall within the mischief of a particular enactment or not. Cases dealing with memoranda of deposit of title deedsto secure money advanced may be given as an instance where Courts have found it difficult to decide whether a particular memorandum requires registration or not.

11. It appears to us that the real test is this. If the plaintiff's title depends ultimately on the benami nature of the transaction, then, Section 66 would certainly be a bar, but if the plaintiff's title is dependent upon other facts and circumstances like, for example the application of the general law or the carrying out of a separate con tract, then Section 66 would not be a bar. The test may be applied in several ways. Supposing there was no subsequent agreement, could the plaintiff still have maintained that the property really belonged to him? If he could, then, it is a case of benami and Section 66 would apply. But, if without the subsequent agreement the plaintiff would not be entitled to claim any relief, then the fact of the subsequent agreement would take the case away from Section 66 If the property, according to well-established principles of law, like Section 82 of the Trusts Act, is really held in trust by the auction purchaser for the plaintiff who had furnished the consideration, then, the auction purchaser is bound ordinarily to convey the property to the real owner the plaintiff, when called upon to do so. There is no question of an agreement being necessary for such a conveyance. If on account of Section 66 of the Code, the real owner cannot call upon the auction purchaser to do what is incumbent on him, he cannot get over the difficulty by pleading an agreement under which the auction purchaser undertook to do what he had to do otherwise under the law.

12. Another way of looking at it is this. Do the facts in a particular case show that the auction purchaser was intended to be treated as the real purchaser, and is the agreement between the auction purchaser and the plaintiff entered into on the footing that the auction purchaser is the real owner? If it is then Section 66 has no application and that is exactly what Venkatappa v. Jalayya, 42 Mad. 615 decided. The learned Judges in that case found that the agreement specific performance of which was sought was not inconsistent with the auction purchaser's own title, but rather the reverse.

13. So, it becomes necessary to ascertain in this case if the facts point out to a benami transaction. On the facts, who must be deemed to be the real purchaser according to law, omitting from consideration for this purpose Section 66? The purchase by the defendant 1, was obviously we can say admittedly--a benami purchase. The plaintiff's evidence make it almost conclusive. Even the language of Ex. P. 1 confirms this view. We are of opinion that the letter Ex. P. 1 only amounts to an acknowledgment by the first defendant of the benami nature of the transaction and no more. It does not proceed on the footing that the title vests in the auction purchaser and the plaintiff has to obtain a conveyance as from a real owner. On the other hand, the title is deemed to vest in the plaintiff even from the moment of the purchase.

14. We may now briefly deal with the other decisions cited to us at the bar. The decision of the Privy Council in Balaram v. Nakthu, 54 M. L. J. 462 in our opinion, really applies the test which we have indicated above. The facts were as follows. On 28th October 1907 certain property was knocked down to one Naktu for Rs. 3800 of which Rs. 1000 was paid at first and Rs. 2810 on 12th November 1907. The sale was confirmed on 5th December 1907 and the sale certificate issued to Naktu. In 1909 one Bhika filed a suit against Naktu and his sons alleging that he was the real purchaser, that both the sums which made up the purchase money were found by him and that Naktu was his agent in the matter of the purchase, and that before the balance of the purchase money, namely, Rs. 2810 was paid by him, Naktu wrote to him a letter on 4th November 1907 promising to convey the property to him whenever asked to do so. In the trial Court the basis of Bhika's case was that Naktu's name was entered in the sale certificate with his consent and their Lordships held that this must tantamount to the purchase being benami and Section 66 would therefore apply. Their Lordships then dealt with the case of specific performance of the agreement which Bhika alleged was evidenced by the letter dated 4th November 1907. Their Lordships found grave reason for doubting the genuineness of this letter and held that 'in any event such promise as there is in it is not supported by any consideration' and that the claim for specific performance must fail. The facts in the present case are almost identical with the facts in that case. The case of the plaintiff here is the case set up by Bhika in that case, namely, that the entire consideration was provided by him, that he was the real purchaser and that the auction purchaser's name was entered in the sale certificate with this consent. Here as in that case, the plaintiff relied upon a letter in the interval between the date of the sale and the date of the deposit of the balance of sale price, and claimed specific performance of an agreement alleged to be evidenced by the letter in and by which the auction purchaser agreed to convey the property to the plaintiff.

15. In Bishan Dayal v. Kesho Prasad I. L. R. (1937) ALL 113 there was no separate agreement. The plaintiff's allegation was that the bid at the auction was made by the defendant on behalf of both the plaintiff and the defendant and the plaintiff was accordingly the owner of half the property. The learned Judges held that the claim of the plaintiff fell within the mischief of Section 66. It was contended that the plaintiff was claiming only a share in the property and not the entire property, but they held it that it did not matter. This decision was affirmed by the Privy Councilin Bishun Dayal v. Kesho Prasad, 52 M. L. W. 755. It was not disputed before them that Section 66 excluded the claim of the plaintiff based upon an averment that the auction purchase had been made by the defendant both on his own account and on account of the plaintiff. No case independent of the purchase was put forward and therefore the claim of the plaintiff was negatived. In Shiv Shankar v. Manbharan Rai, 18 Pat 181 the same view was taken, namely, that Section 66 operates as a bar to a claim by a person, who alleges that the actual purchase was on behalf of himself, whether the purchase is alleged to be in execution of an express agreement or otherwise, for the learned Judges point out,

'It is clear that no benami purchase can ever be otherwise than as the result of an agreement of some sort between the principal and the benamidar.'

16. In Upendralal Pal v. Ajaharuddin Ahmed, 61 Cal. 371 it was pointed out that the operation of Section 66 would not be ousted by the existence of any private agreement or understanding between the certified purchaser and others and relianee was placed on the observations of their Lordships of the Privy Council in Bodh Singh v. Gunesh Chunder, 12 Beng. L. R. 317.

17. Some cases were cited in which it was held that Section 66 would not apply. In Allibhai v. Dada A. I. R. 1931 Bom. 578 there was a separate transaction long after the original Court auction purchase. It was held by the learned Judge that Section 66 would apply only to a suit in which the cause of action is given by the benami purchase and not to a suit like the one before him which was baaed on a contract separate from the transfer. The court sale had taken place sometime before the agreement. In Ramachandra v. Lakshman A. I. R.1930 Bom. 81 the learned Judges understood the case of the plaintiff to be based upon an agreement entered into with the auction purchaser treated as the real owner. In Niranjan v. Sarojini, 62 C. L. J. 88 there was an agreement after the sale and one of the terms of the agreement was that the conveyance was to be made only after the defendants got their dues on a final adjustment of accounts. It was held that the bar of Section 66 did not operate in the case. In Prem Sukh v. Habibullah, I. L. R. (1945) Cal. 375 the learned Judges held that Section 66(1) applied. In that case A contracted to sell to B certain property which A intended to purchase at a court sale. It was C however who became the actual purchaser. B brought a suit against 0 for specific performance of the contract of sale with A on the ground that C was the benamidar of A at the court sale. There can be no exception to the decision in the case, but with great respect we must demur to the proposition of law stated by the District Judge in that case and approved by the learned Judges, namely, that :

'Where there is a contract by the benimidar, who hadpurchased at a court sale, to convey the property to thebeneficial owner, the suit by the beneficial owner is notaffected by Section 66(1) of the Code, where the contract is made after the court sale.'

Two decisions of single Judges of this Court were cited to us, but in both the cases the benamidar had actually executed conveyances in favour of the real owner and the suits related to events whiah happened thereafter. In Muniappa v. Thangavelu : AIR1937Mad362 after the execution of the sale deed by the benamidar a suit was brought by the real owner for rectification of the sale deed. No exception can be taken to the decision that Section 66 was no bar to the suit, nor with the followihg reasoning :

'In this case the case of the plaintiffs is not rested on the fact of the benami purchase or a mere prior agreement by the defendant to convey. It is based on a conveyance subsequent to the Court sale.'

18. In Nagappa Chettiar v. Meenakshi Achi 1944 2 M. L. J. 266 the judgment does not set out the actual facts. The only relevant circumstance to which the learned Judge (Somayya J.) refers is that there was not merely an agreement to convey the property executed after the court sale, but there was an actual sale deed executed by the person who purchased the property in court auction conveying the property to the plaintiff. But with due deference to the learned Judge, we must dissent from the observations made by him as to the effect of the judgment of the Judicial Committee in Vadivelu Mudaliar v. Peria Manicka Mudaliar, 43 Mad. 643. We have already pointed out in discussing that ruling that the Judicial Committee did not proceed on the footing that the purchases at the court sale were benami and that the original vendees under the deed of 1902 were the real owners. From the facts narrated in the judgment, it is clear that the only sum furnished by the original vendees towards the sale price was Rs. 10,000 and it was necessary to find the balance of the price from other sources. It could not be said that each of these vendees was the real owner of any particular portion of the properties purchased at the court sale. Further it is not correct to say that the subsequent agreement which were held to be enforcible were mere reiterations of the original agreement.

19. It appears to us to be an incomplete statement of the law to say that if the cause of action is based on an agreement subsequent to the auction purchase, then Section 66 will not apply, unless it is also understood by necessary implication that such an agreement is made on the basis that the auction purchase is the person who has the real title vested in him and it is intended that by the conveyance to be executed by him, title should pass from him to the other. This is the ratio decidendi of Venkatappa v. Jalayya, 42 Mad. 615, which is expressly approved by the Judicial Committee in Vadivelu Mudaliar v. Periamanicka Mudaliar, 43 Mad. 643.

20. It is not necessary to ascertain the policy underlying Section 66(1) of the Code. But we have thehigh authority of the Privy Council that the provisions of the section

'were designed to create some check on the practice making what are called benami purchases at execution sales for the benefit of judgment-debtors (vide Gangasahai v. Kesri, 37 All 545 .'

If we allow the plaintiff's claim in this suit, we would be directly frustrating the object of the section, because it may be recalled that the plaintiff was himself a judgment-debtor in the execution proceedings in which the court sale took place.

21. In the result we are clearly of opinion that Section 66(1), Civil P. C. operates as a bar to the suit. The appeal is allowed and the suit is dismissed with costs of defendant 1 here and in the lower Court.


Save Judgments// Add Notes // Store Search Result sets // Organizer Client Files //