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S.K. Raghavendra Rao Vs. Venkatasami Naickan and ors. - Court Judgment

LegalCrystal Citation
SubjectProperty
CourtChennai
Decided On
Reported inAIR1930Mad251
AppellantS.K. Raghavendra Rao
RespondentVenkatasami Naickan and ors.
Cases ReferredKumarappa Chettiar v. Narayanan Chettiar
Excerpt:
.....parties who are now contesting are persons who have no means of knowledge and if the rule as to burden of proof is to turn upon this circumstance it is clear that as both the parties are strangers and as the proof of the execution of the document is prima facie proof of the passing of consideration, the further burden of rebutting this presumption arising from such proof must rest on the defendants and the defendants must fail. an elaborate argument has been addressed to us that where ever there is a mortgage and the mortgagee's interest afterwards passes to a stranger and a suit is brought on the document the burden of proof as against the stranger is on the mortgagee and if he fails to show the passing of consideration positively, he must fail even if there is no evidence on the..........precipitate a partition in the family. he relied on some other circumstance for showing that the suit document was a nominal one. defendant 2 contended that the suit document was not binding on him. defendant 7 raised certain contentions which it is unnecessary to state. the subordinate judge granted a decree against defendant 1's share only. the official receiver files this appeal and he repeats his contention in the court below that the suit document was nominal.2. defendant 1 became an insolvent some time in august 1914. he had previously executed two mortgages in favour of his wife's brothers. the were dated 15th february 1913 and 27th february 1913. soon after the mortgagor was declared insolvent, the official receiver took steps to have these mortgages declared void against the.....
Judgment:

Ramesam, J.

1. This appeal arises out of a suit on a mortgage bond dated 17th October 1908, executed by one Venkatasami Naidu. Defendant 2 is the father of the executant. Defendants 3 and 4 are the assignees of a mortgage decree obtained against the suit lands. Defendants 5 and 6 are subsequent mortgagees. Defendants 7 and 10 are purchasers of portions of the mortgage property. Defendants 8 and 9 are purchasers in Court auction of portions of mortgage property in execution of a decree on a prior mortgage. The mortgagor became an insolvent and his property became vested in the Official Receiver who is defendant 1. Defendant 1. pleaded that the mortgagor was not the managing member of the family at the time of the alleged execution of the suit bond. He put the plaintiff to proof of the execution of the mortgage bond and of its consideration. He also alleged that there were misunderstandings between the mortgagor and his father and that they were executing fictitious documents in favour of relations with a view to precipitate a partition in the family. He relied on some other circumstance for showing that the suit document was a nominal one. Defendant 2 contended that the suit document was not binding on him. Defendant 7 raised certain contentions which it is unnecessary to state. The Subordinate Judge granted a decree against defendant 1's share only. The Official Receiver files this appeal and he repeats his contention in the Court below that the suit document was nominal.

2. Defendant 1 became an insolvent some time in August 1914. He had previously executed two mortgages in favour of his wife's brothers. The were dated 15th February 1913 and 27th February 1913. Soon after the mortgagor was declared insolvent, the Official Receiver took steps to have these mortgages declared void against the creditors under Section 36, Insolvency Act, and they were declared void. The present plaintiff 1 is the brother of the father-in-law of the mortgagor. He died before the case came on for trial and his nephews were brought on the record as his legal representatives. These happen to be the two mortgagees whose mortgages were declared void in the insolvency proceedings. It is contended for the appellant that as his mortgages in favour of the brothers-in-law were found to be collusive documents it is likely that the suit document also was a collusive and nominal document. But it seems to me that the suit mortgage was executed in circumstances quite different from those of the other two mortgages. They were executed in 1913 when the mortgagor was getting heavily involved and as a matter of fact he was declared insolvent soon after.

3. The suit mortgage bond was executed six years before the insolvency. It does not follow from the fact that the man was getting involved in 1913 and was executing nominal documents, that the document of 1908 should also be regarded as nominal. The suit mortgage is in favour of the uncle-in-law of the mortgagor, a rather remote relation. The other two mortgages were in favour of his brothers-in-law, very close relations. It is next urged that when in the insolvency proceedings the present mortgage bond was summoned for it was produced by defendant 2 before the Official Receiver. Assuming that it was produced by defendant 2, it does not follow that the document was always in the custody of defendant 2 and it had never been with the mortgagee. It is true that, if the mortgagee had never had possession of the suit document, it suggests that it is a nominal transaction. But of this suggestion there is really no evidence. The document was actually produced before the Official Receiver by D.W. 4, son of defendant 7, and he says that defendant 2 gave it to him. I doubt if this oral evidence ought to be believed. D.W. 3 says that there was a partition between the mortgagor and his father in 1909 and that at the time of the partition the suit mortgage bond was with defendant 2 and that it was taken from him. Ex. 4 is the partition deed. There is a clause in it providing that besides the debts referred to in the schedule all other debts should be discharged by the persons who contracted the debts. Now, this is sought to be construed as a statement that all debts other than those mentioned in the schedule are nominal and nominal endorsements of payments should be obtained on the bonds and the bonds handed ever to the other party. I do not see any justification for this construction of Ex. 4. This contention therefore that the suit document was regarded as a nominal document at the time of the partition fails.

4. The next circumstance relied on by the appellant may be thus stated. Defendant 7 obtained a decree in O.S. No. 28 of 1908 and proceeded to execute his decree by sale of the mortgage properties. In the proclamation the suit mortgage was given in the list of prior encumbrances and a remark was added that it was a nominal document. This is a statement made behind the back of the creditor in proceedings to which he was not a party and it was purely a self-serving statement. A statement of that kind is not even evidence against the plaintiff. Thus, so far as the specific circumstances relied on by the appellant are concerned, I think that they do not go to show in the slightest degree that there is any suspicion attached to the document.

5. It is next contended that, even ignoring all the circumstances relied on by the defendant, the plaintiff ought to fail because it is said that the burden of proof is on the plaintiff to prove that there was consideration for the suit mortgage and the supplemental plaintiffs have not discharged that burden resting upon them. The document Ex. A mentions five items of consideration. The first item is a sum of Rs. 1,000 due to the Coimbatore Town Bank. That there was such a debt and that it was paid off by January 1909 is proved by P.W. 1. It is not even suggested that the defendants have paid off this debt. There is some evidence that plaintiff 1 paid off the debt vide the evidence of P.W. 2. Item 2 is a debt of Rs. 1,605 due to one Subramanian Chettiar, and item 3 is a debt of Rs. 567 due to Kumarappa Chettiar. Plaintiff 2 as P.W. 2 swears that these two promissory notes were paid off and that he saw the promissory notes brought back. Unfortunately, the promissory notes are not now produced. But plaintiffs 2 and 3 are not responsible for such non-production. They are only the legal representatives of plaintiff 1 brought on record just two months before trial. The original mortgagee is dead. It may be that if he had been living he would have given a better account of these promissory notes. It cannot be said that the inability of plaintiffs 2 and 3 to explain as to what became of the promissory notes is a suspicious circumstance against them. The payment of the other items is also spoken to by plaintiff 2.

6. It is argued for the appellant that he is a stranger to the document and therefore the burden lies on the plaintiffs to prove the passing of consideration as against him. The appellant is a stranger to the document only in the sense that he was not an original party to the document. In the sense that he derives his interests from the mortgagor and therefore stands in his shoes, he is not a stranger but it is said that as he knows nothing of the original transaction the burden ought to lie on the person who knows more about it. In this particular case, if the burden of proof is to turn upon a consideration of this kind, the plaintiffs also can be said to be in the same position. The original mortgagee, viz., plaintiff 1 died and his nephews are the legal representatives. They know no more of suit transaction than' the appellant and so far as this aspect is concerned both the parties who are now contesting are persons who have no means of knowledge and if the rule as to burden of proof is to turn upon this circumstance it is clear that as both the parties are strangers and as the proof of the execution of the document is prima facie proof of the passing of consideration, the further burden of rebutting this presumption arising from such proof must rest on the defendants and the defendants must fail. But I do not wish to dispose of the case on this narrow ground. An elaborate argument has been addressed to us that where ever there is a mortgage and the mortgagee's interest afterwards passes to a stranger and a suit is brought on the document the burden of proof as against the stranger is on the mortgagee and if he fails to show the passing of consideration positively, he must fail even if there is no evidence on the side of the defendants. I agree with a part of this proposition but not with the full extent of the implication in it and, as there are cases either apparently or really supporting the contention of the appellant, I wish to deal with this matter fully.

7. If the suit is between the mortgagee and the mortgagor only and the mortgagor admits the document, the onus of proving want of consideration is on him but if he does not admit the execution of the document and denies it and therefore denies the whole transaction the burden of proving execution and the passing of consideration are both on the plaintiff mortgagee. Generally he discharges his burden by proving execution only and exhibiting the document containing the admission by the defendant of having received consideration. The moment such a document is proved and exhibited, it is for the defendant to rebut the presumption arising out of the recitals in it. Those last statements of mine are elementary propositions and there can be no conflict of opinion about them. I state them merely to lead to the next step. But suppose that the original mortgagor died leaving, let us say an infant heir who knows nothing about the original transaction and a suit is brought against the infant heir. Naturally he denies knowledge of the transaction and puts the plaintiff to the proof of the execution and the passing of consideration. The burden is of course on the plaintiff to prove both. But suppose the plaintiff proves execution and exhibits the document containing the recitals as to receipts of the consideration by the mortgagor whose heir the defendant is, has he not made out a prima facie case as to the passing of consideration also? I think he has done so and unless in the course of proving execution very suspicious circumstances are elicited in the cross-examination of the plaintiff's witnesses the moment the execution is proved, it is for the defendant to meet the plaintiff's case made out by the putting in of the document in evidence containing the recitals. I do not think there is any case, at any rate none has been cited before us, showing that an infant heir is in a better position than the original mortgagor and that there is a greater burden on the plaintiff because the infant heir knows nothing about the original transaction. No Court has yet said that:

8. Now I take up the next question. Instead of the property passing to the infant heir, suppose the original mortgagor has sold it by private sale or the mortgaged property has passed from him by an auction-purchase to the purchaser. Does this purchaser stand in a better position than the original mortgagor or the infant heir? On principle I do not see why he should. As to one proposition laid down by all the cases I entirely agree, namely, that, where a purchaser who cannot be expected to admit the execution of the document denies such execution and puts the plaintiff to proof of the whole transaction the burden is on the plaintiff to prove execution and the passing of consideration. All the cases lay down this and I agree with this proposition. But this is nothing more than what happens in the case of the mortgagor himself denying execution; and to say this is not to put the purchaser in a better position than the original mortgagor. Now, suppose in such a case the plaintiff mortgagee has proved the execution of the document and has put in evidence the recital therein as to the passing of consideration, i.e., an admission by the mortgagor whose representative the defendant is. In such a case it seems to me that, unless in the course of proving the document circumstances have been elicited by cross-examination of witnesses which throw a great cloud or suspicion on any part of the case, the recitals would be prima facie proof of the passing of the consideration and it is for the defendant who claims under the person who made the admission to meet the presumption arising from the recitals. I do not think it can lie in his mouth to say that he was a stranger to the original transaction; and, if he cannot undertake to meet the plaintiff's prima facie case arising from the; recitals, he cannot, it seems to me, insist on the plaintiff proving something more than the recitals so as to make out the passing of the consideration specifically and not by mere admissions. It may be in a particular case, if the plaintiff is in a position to produce better evidence than mere recitals and deliberately abstains from doing so, such as in the case of a merchant not filing his accounts or where it appears that there must have been other vouchers and they are not produced, or some other suspicious circumstances appear, that it is open to the Court to say that it is not satisfied with the presumption arising from the recitals and to require more from the plaintiff before it calls upon the defendant to meet the plaintiff's case. But to say this is not to lay down any rule as to burden of proof. It is merely a question of weighing the evidence. It seems to me that in general, by which I mean where no other suspicious circumstances appear, the plaintiff by merely proving the execution of the document containing recitals must be taken to have made out a prima facie case and it is for the defendant to meet that case by adducing his evidence. The fact that the defendant is a stranger to the original transaction cannot make his position better or the plaintiff's position worse than where he sues the original mortgagor. So far, I have discussed the matter on general principles and without reference to any cases. I will now discuss the cases that have been cited before us.

9. The first decision cited before us is Brajeswaree v. Bhudamuddi [1881] 6 Cal. 268. The matter came up on second appeal before Jackson and Macdonell, JJ. The lower appellate Court held that the passing of the consideration was not proved though the execution of the document had been proved. The point raised in second appeal was that, unless there was some evidence for the defendant to rebut the case made out for the plaintiff, the plaintiff ought to get a decree. Jackson, J. agreed with this contention but Macdonell, J. said that it was a second appeal and he could not interfere. The matter came up before a third Judge Garth, C.J., who made certain observations to the effect that the weight of the recitals as against a stranger to the document must be taken to be less than the weight of the same recitals against the original executant. I regret I have to dissent from this proposition. No doubt, the result of that case can be justified if the lower appellate Court had said that, apart from the recitals in the document, there were other circumstances appearing in the plaintiff's case itself or other surrounding circumstances which threw so much suspicion that without further evidence on the part of the plaintiff it was not prepared to accept his case, or in other words, it would not have called upon the defendant to meet the plaintiff's case. If anything in that case rests upon some such consideration, I would agree with Macdonell, J., that it is a matter for non-interference in second appeal; but Jackson, J's judgment shows that there were no such circumstances and I would agree with Jackson, J., that in that case the second appeal ought to have been allowed. In any event, I am unable to agree with the Chief Justice's observation that because the defendant is a stranger to the document the weight to be attached to the plaintiff's evidence varies. The weight of certain evidence cannot vary because of the nature of the defendant but can only vary with reference to the surrounding circumstances.

10. The recitals in a document may lose their weight on account of other suspicious circumstances surrounding the execution of the document coming out in the evidence; but where there are no such suspicious circumstances I am unable to see how the weight can diminish because the defendant is a person other than the original executant, though claiming under him. The next decision relied on is Bisheswar Dayal v. Harban Sahay [1907] 6 C.L.J. 659. So far as the head-note in this case is concerned, I do not see any reason to dispute it. The defendant was a stranger and he denied all knowledge of the bond. The burden therefore was primarily on the plaintiff. It was for him to make out a prima facie case. Whether more was intended by the case does not appear from the judgment. If it was meant to lay down in that case that positive proof of the passing of consideration must be given and that the proof of execution is not enough to discharge the plaintiff's burden and to call upon the defendant to meet the case, I cannot agree with it. It is not clear that the case was intended to lay down any such rule. The words 'the transaction was perfectly genuine and free from taint of fraud' suggest not that the plaintiff should prove a huge negative, that he has to imagine some fraud and show that there was no fraud, but that there was some circumstance in the case suggesting fraud or suspicion of fraud and the plaintiff has to clear it up. But it is unnecessary for me to say more about that case. There again the matter came up on second appeal and the appeal was dismissed. Perhaps, there was something in the lower appellate Court's judgment about fraud surrounding the execution of the document. The next case referred to is Saluk Singh v. Ajudhya Pershad [1912] 10 A.L.J. 108. Here again, I have no quarrel with the head-note. The burden certainly lay on the plaintiff, but it seems to have been held that even if the plaintiff proved the execution of the document he had not proved the passing of consideration. The last sentence in the judgment seems to suggest that there was so much more which the plaintiff could have proved but he did not and that his not adducing such further evidence as was in his power must be taken to destroy any presumption arising from the recitals of the document. It may be that the decision is right on the facts. All that the Judges say is that the Court of first instance was quite right in primarily placing the onus of proof on the plaintiff and in holding that the onus was not shifted. The latter proposition I do not take as a general rule of law that in every case of a stranger-defendant the burden does not shift merely by proof of execution. If it is (merely a statement on the facts of the case, the case lays down nothing in favour of the appellant.

11. The next case is Krishna, Kisore v. Nagendrabala Chowdhurani : AIR1921Cal435 . This case certainly does not help the appellant. Both sides adduced such complete evidence as was in their power and the Court was in a position to adjudicate upon the truth and not upon a technical rule of onus. In such cases it is said that the onus of proof becomes immaterial and no importance should be attached to the question of onus. I entirely agree with these remarks. In a case where all the facts are proved by ample evidence and the Court is in a position exactly to say what happened, no importance need be attached to the rule as regards burden of proof. Other cases occur where evidence is very meagre and the Court is not in a position to know definitely what happened. In such a case the case has to be decided with reference only to the technical rule as to burden of proof. Let us imagine a very elementary case. Suppose that beyond exhibiting the document both sides have adduced no further evidence. In such a case, if the burden is on the defendant, he ought to fail; but if it is on the plaintiff if ho has not discharged the burden by exhibiting the document he ought to fail. In such a case the rule as to burden of proof becomes of great importance and it is with reference to such a case that my remarks apply. It is in such a case that I say in general that after exhibiting the document containing the recitals as to the passing of, consideration, the burden shifts to the defendant. It is only in certain special cases of suspicious circumstances that it may not so shift.

12. Certainly the decision in Krishna Kiser De v. Sreemati Nagendrabala Chowdhurani : AIR1921Cal435 , does not help the appellant. There is only one case from our Court cited for the appellant and this is Kumarappa Chettiar v. Narayanan Chettiar [1910] 35 I.C. 455, I regret to say that I am unable to agree with the observations of Spencer, J., at p. 456. He seems to dissent from the decision in Babbu v. Sita Ram [1914] 36 All. 478, on the ground that the peculiar position of the stranger has not been carefully examined. Now a stranger who purchased a mortgagor's title, whether by private purchase or in Court auction, ought to know exactly the nature of the title he has purchased, and to say that such purchase was without notice seems to be incorrect. Want of notice in such a case can only be the result of sheer carelessness on the part of the purchaser which must amount at least to constructive notice. It is very difficult to imagine a case of a transferee who does not stand in the shoes of the transferrer and against whom an admission of the transferrer cannot be regarded as evidence. Par from dissenting from Babbu v. Sita Ram [1914] 36 All. 478, I am inclined fully to agree with the observations in that case. The observations of Kumaraswami Sastriar, J., at p. 458 are more carefully worded and it is not necessary for me to dissent from them as from Spencer, J's., observations. There he says that, where a person claiming title to the property succeeds in showing that there is no debt, then the property cannot be sold. This of course is perfectly right. In fact, the whole judgment of Kumaraswami Sastriar, J., proceeds on the footing that the fictitious nature of the consideration was actually shown in that particular case and in such a case, unless it is intended to benefit the mortgagee, which is a special case, the mortgagee cannot have a decree for sale. I agree with all this. At p. 457 he agrees with Bisheshwar Dayal v. Harbans Sahay [1907] 6 C.L.J. 659. But on reading the rest of the paragraph it seems to me he is not laying down any rule as to burden of proof. He only says that want of consideration may be proved as part of other circumstances going to show that the instrument is a colourable transaction and not intended to convey any interest to the ostensible purchaser or to confer any title on him. In fact, there seems to be in that case very strong evidence to show that the document was colourable. Whether it came out as part of the plaintiff's case or whether the defendant adduced such evidence I am not able to say. The matter came up in second appeal and the crux of the appellant's contention seems to have been that, even if there is no consideration proved he is entitled to a decree for sale. In my opinion this case does not help the appellant. Certainly I am inclined to dissent from Spencer, J.'s disapproval of Babbu v. Sita Ram [1914] 36 All. 478.

13. In my opinion the observations in Babbu v. Sita Ram [1914] 36 All. 478, are unexceptionable, and I agree with them. In Benoy Bhusan Roy v. Dhirendra Nath De : AIR1924Cal415 , we have got the following observation:

The document was executed by his father, and contains a recital that the consideration had been received by the executant. The burden lies upon the executant or his representative to prove that the recital was untrue and to satisfy the Court how he became a party to a document which contained an untrue recital of this description.... This burden has not been discharged. On the other hand, there is affirmative evidence on the part of the plaintiff to show that consideration was in fact paid.

14. I entirely agree with these observations and seeing that Mukerjee, J., is a party to this case it seems to me that what is sought to be implied in Bisheswar Dayal v. Harbans Sahay [1907] 6 C.L.J. 659, was not really meant by it. It is true that this last case is a case of an heir; but I do not see how the case of an heir differs from that of a transferee. If any relaxation of the rule of law is to be made for the case of a purchaser on the ground that he is a stranger and he knew nothing of the initial facts, surely the same thing ought to be done for an infant heir or even a major heir who knew nothing about the transaction. The truth is that Section 106, Evidence Act, cannot be utilized to help persons who are representatives of other parties and who step into their shoes, as Spencer, J., seems to suggest in Kumarappa Chettiar v. Narayanan Chettiar [1910] 35 I.C. 455. In my opinion, in the present case after Ex. A has been proved there are no suspicious circumstances compelling the Court not to shift the onus to the defendants. The defendants have proved nothing to rebut the presumption arising from the recitals in the bond.

15. The appeal fails and ought to be dismissed with costs.


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