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Putti Sesha Aiyar and ors. Vs. Kuppachar and ors. - Court Judgment

LegalCrystal Citation
CourtChennai
Decided On
Judge
Reported in49Ind.Cas.699
AppellantPutti Sesha Aiyar and ors.
RespondentKuppachar and ors.
Cases Referred and Rao Sahib Pydah Venkatachalapathi Garu v. Muthtt Venkatachalapathi
Excerpt:
.....1882), sections 58, 59--registration act (xvi of 1908), sections 17, 49--construction of document--sale-deed--contemporaneous unregistered agreement to reconvey, admissibility of, to show creation of mortgage by conditional sale--intention of parties--extrinsic evidence. - - exhibit f is on the face of it a sale deed, and it is now well settled that extrinsic evidence of the intention of the parties that it should only be a mortgage is inadmissible in india as again expressly ruled by the judicial committee in maung kyin v. but such a contract, if it ever existed, has not been reduced to writing and there is no reliable evidence about it. these essentials are satisfied by exhibit f and, therefore, prima facie exhibit xiii is not admissible to prove that exhibit f was intended to be a..........the defendants raised the contention in the lower court and again before us that the effect of the sale-deed, exhibit f, by the defendants to the plaintiffs, read with the contemporaneous unregistered agreement to reconvey by the plaintiffs in favour of the defendants, exhibit xiii, was to create a mortgage by conditional sale. there is express authority in this court that an unregistered agreement to reconvey cannot have that effect, achutaramaraju v. subbaraju 11 m.l.s. 370; mutha venkataehelapati v. pyanda venkataehelapati 27 m. 348; rao sahib pydah venkatachalapathi garu v. muthu venkatachalapathi 23 ind. cas. 409: 1 l.w. 157, which was a decision of three judges. as observed in the last case, the party setting up that the transaction amounted to a mortgage by conditional sale has to.....
Judgment:

John Wallis, C.J.

1. I see no reason to differ from the conclusion of the District Judge in this case that the sale deed, Exhibit F, executed by the defendants in favour of the plaintiffs was not a Benami transaction. The evidence shows that it was executed pursuant to an agreement, Exhibit G, by which the suit properties were to be sold to the plaintiff for Its. 6,000. of which Rs. 5,000 was to be paid into Court by the plaintiff, as was actually done, to set aside the Court sale of the properties. It is also the defendants' own case, and has been found to be true, that there was a contemporaneous unregistered agreement for reconveyance, Exhibit XIII, executed by the plaintiffs in favour of the defendants on the same day. These and other facts in the case sufficiently negative the defendants' case that the transaction was Benami.

2. A suit for specific performance of the contract to reconvey was barred at the date of the present suit, and in these circumstances the defendants raised the contention in the lower Court and again before us that the effect of the sale-deed, Exhibit F, by the defendants to the plaintiffs, read with the contemporaneous unregistered agreement to reconvey by the plaintiffs in favour of the defendants, Exhibit XIII, was to create a mortgage by conditional sale. There is express authority in this Court that an unregistered agreement to reconvey cannot have that effect, Achutaramaraju v. Subbaraju 11 M.L.S. 370; Mutha Venkataehelapati v. Pyanda Venkataehelapati 27 M. 348; Rao Sahib Pydah Venkatachalapathi Garu v. Muthu Venkatachalapathi 23 Ind. Cas. 409: 1 L.W. 157, which was a decision of three Judges. As observed in the last case, the party setting up that the transaction amounted to a mortgage by conditional sale has to show that by virtue of the unregistered instrument (Exhibit XIII here) the sale deed (Exhibit F here) did not affect the immoveable property which is comprised both in the sale-deed and the unregistered letter, in the way in which the sale deed purports to affect the property, and would affect the property if the unregistered letter had never been written. That being so, the Court held in that case that the unregistered document was relied on as evidence of a transaction affecting immoveable property and, being unregistered, was inadmissible in evidence. A mortgage by conditional sale consists of an out and out conveyance and a defeasance clause, and as Mr. K. Srinivasa Aiyanar has pointed out, the unregistered agreement, Exhibit XIII, is tendered as evidence of the defeasance clause affecting immoveable property. It is, therefore, a document which requires registration under Section 17 of the Registration Act and is inadmissible for the purpose tendered under Section 49. Farther: Section 59 of the Transfer of Property Act provides that a mortgage can be effected only by a registered instrument signed by a mortgagor. The registered instrument signed by the mortgagor, the sale-deed, Exhibit F, does not effect a mortgage, and it would be contrary to this section also to allow it to be effected by a registered sale-deed and an unregistered agreement to reconvey.

3. Nor can it be used as evidence that the intention of the parties to Exhibit F was to create a mortgage. Exhibit F is on the face of it a sale deed, and it is now well settled that extrinsic evidence of the intention of the parties that it should only be a mortgage is inadmissible in India as again expressly ruled by the Judicial Committee in Maung Kyin v. Ma Shwe La 15 A.L.J. 825: 22 C.W.N. 257 : 27 C.L.J. 175 : 20 Bom. L.R. 278 : (1918) M.W.N. 300 : 9 L.B.R. 114 . The appeal fails and is dismissed with costs.

Seshagiri Aiyar, J.

4. The properties in suit belonged originally to the defendants. In execution of a decree against them they were sold in Court auction and purchased by a Nattukottai Chetty. An application to set aside the sale was dismissed by the Court of first instance. Thereupon an appeal was preferred to the High Court. While the civil miscellaneous appeal was pending the parties agreed that, if the judgment-debtors paid into Court a certain sum of money, the auction purchasers should consent to set the sale aside. The High Court was, therefore, moved to permit the judgment-debtors to sell the property privately. The agreement (Exhibit C), dated the 26th of March 1908, was executed by the judgment debtors, the present defendants, to the 1st plaintiff. It stipulated that, as soon as the Court-sale was set aside, the properties should be conveyed to the latter for Rs, 5,000, which was practically the amount which he advanced for payment into Court in the civil miscellaneous Appeal. The sale was set aside. On the 2nd of April 1S08, Exhibit F, the sale-deed was executed in Madras by the defendants to the 1st plaintiff. On the same date Exhibit XIII was executed by the 1st plaintiff to the defendants agreeing to reconvey the property.

5. This suit is to recover possession of the properties conveyed. There are two defences. One is that the sale was Benami, and (2) Exhibits F and XIII read together amount to a mortgage by conditional sale and that defendants are entitled to redeem the properties. The Subordinate Judge has found both the points against the defendants. On the first question I am clear that in law the admitted facts are not sufficient to establish the plea of Benami At the same time, I feel very little doubt that, when Exhibit F was executed, the 1st plaintiff did not intend t6 lay claim to all the items of property as vendee. The facts are these: (a) Plaintiff and defendants are near relations. (6) The, defendants had been for sometime in involved circumstances. Some years earlier a deed of trust was executed by the defendants (Exhibit V) in which it was stipulated that the properties should be handed over to the 1st plaintiff, that he should sell portions of them and discharge the liabilities and return the remaining properties to them. For some reason or other this arrangement fell through. A number of attachments upon the properties followed, one of which led to the Court sale and to the litigation which I have already referred to. (c) It is clear from the evidence in this case that even on the. date of Exhibit F the properties were worth nearly thrice the amount for which they were sold, (d) The major portion of the properties continued to be in the possession of the defendants, (e) They spent moneys in advancing claims when third parties attached them. (f) They paid the Sirkar Kist. It is also 'noteworthy that the plaintiffs even denied having executed Exhibit XIII although, in appeal, the finding of the Subordinate Judge about its genuineness has not been questioned. On these facts the learned Advocate-General pressed strongly before us that the transaction must be treated as Benami. Unfortunately three prominent circumstances render it impossible to give such a complexion to the transaction; namely, (1) the payment of consideration; (2) the agreement to re-sell, and (3) partial possession, These show that there was an intention to convey property. It may be that the intention was, as in the trust deed (Exhibit V), that the 1st plaintiff should retain only so much of the property as would cover the money advanced by him. But such a contract, if it ever existed, has not been reduced to writing and there is no reliable evidence about it. I do feel strongly that the plaintiffs have not behaved honestly towards the defendants. But the ordinary characteristics of a Benami transaction are wanting in this case, and I do not think it desirable to bring into existence a new species of such transactions as was done in Rajah of Karvetnagar v. Echampadi Saravana Pillai 35 Ind. Cas. 893. It is a great pity chat Courts should ever have given their sanction to such pseudo transfers. They have demoralised litigants. For what do we find One man circumvents the rule which prohibits public servants from acquiring property in certain cases. Another resorts to the subterfuge of placing his property beyond the reach of creditors; a third wants to prevent his coparceners from laying claim to acquisitions. Other instances may be multiplied. What follows? The biter is bit in almost every one of the oases. These transactions offer a premium to breach of faith and speculation. For the Benamidar often sells the properties to third parties for very 'inadequate prices to enable the latter to set up the plea of bona fide purchase for value without notice. Whatever may have been the motive which induced the Courts to recognise these transactions in the early period of the British administration, I think the time has come for dealing stringently with these transfers It may be that Courts were anxious to protect the too trusting transferors from dishonest transferees. But modern instances of Benami transactions point to initial dishonesty on the part of the transferor himself. I, therefore, think that there is no need to lending a helping hand to such persons. I have made these remarks because transactions of this kind show a tendency to increase, I agree with my Lord that the plea of Benami has not been made out.

6. On the second question also I agree with the judgment just pronounced. Under Section 94 of the Evidence Act, evidence is not admissible where a document is plain and applies accurately to existing facts. These essentials are satisfied by Exhibit F and, therefore, prima facie Exhibit XIII is not admissible to prove that Exhibit F was intended to be a mortgage. The judgment of Lord Maonaghten in Hanifunnisa v. Faizunnisa 11 Ind. Cas. 398 : (1911) 2 M.W.N. 370 : 38 I.A. 85 is not inconsistent with this view. In that case the question was whether what was apparently a sale-deed can be construed as a deed of gift. Evidence was admitted to show that the recital about consideration in the document was not true it has always been held by the Judicial Committee, vide Balkishen Das v. Legge 4 C.W.N. 153 : 2 Bom.L.R. 523 : 9 Ind. Dec. 1130, that the recital as to consideration in a document can be shown to have been either false or inaccurate; because such a recital is not a term of the document. Therefore, what the Judicial Committee laid down in Hanifunnisa v. Faizunnisa 11 Ind. Cas. 398 : 15 C.W.N. 521: 13 C.L.J. 510 : (1911) 2 M.W.N. 370 was that so long as the terms of a document are not varied or contradicted, etc, evidence can be given to show that what in name was a sale deed was in reality a deed of gift. This was the construction placed upon 33 I. L. R. Allahabad in Challa Venkata Reddy v. Devabaktunni 14 Ind. Cas. 65 : (1912) M.W.N. 161, and I agree with it. In the present case by attacking the recital as to consideration alone it is not possible to bring about the result contended for by the defendants. As was pointed out by Mr. K. Srinivasa Ayyangar, in order that Exhibit F may be regarded as a mortgage by a conditional sale, it must be shown in the present instance that it was agreed that on re-payment the buyer should transfer the property to the seller. Such a condition must be sought within the terras of the document or in a document 'of the same high character.' That is to say, the document which is relied upon to derogate from the absolute conveyance must be of the same character as the conveyance itself. The Legislature, after having in Section 58, Clause (c), of the Transfer of Property Act defined a mortgage by conditional sale, has provided in Section 59 that such a document should be registered, meaning thereby that the essential terms of the document should be embodied in one or two registered documents. This was the view taken in this Court in Achutaramaraju v. Subbaraju 11 M.L.S. 370; Mutha Venkatachelapati v. Pyaudu Venkatachelapati 27 M. 348 and Rao Sahib Pydah Venkatachalapathi Garu v. Muthtt Venkatachalapathi (1914) M.W.N. 178 : 1 L.W. 157 and I see no ground for not following them. Looking at the case from another point of view the same result seems to follow. Exhibit F, which has been registered, conveys an absolute estate. Exhibit XIII seeks to out down that estate. It, therefore, comes under Section 17, Clause (1) (6), of the Registration Act, and if evidence of it is to be admitted, its effect will be to affect the immoveable property referred to in it. Consequently, unless it is registered, it is not receivable in evidence under Section 49 of the Registration Act, because the effect of the contention is not only to curtail the rights granted to the plaintiff but also to give the defendants the right of redemption, which is a right which affects immoveable property. For this reason also the document is inadmissible to show that Exhibit F is in reality a mortgage. For all these reasons I am of opinion that the second contention also fails. I agree with the learned Chief Justice that the appeal should be dismissed with costs.


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