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Sing Pillai Vs. Ayyaneri Govinda Reddi and anr. - Court Judgment

LegalCrystal Citation
CourtChennai
Decided On
Judge
Reported in43Ind.Cas.905
AppellantSing Pillai
RespondentAyyaneri Govinda Reddi and anr.
Cases ReferredFalaniandi Chetti v. Appavu Chettiat
Excerpt:
mortgage - benami mortgagee, suit by, maintainability of--assignment by benamidar, validity of. - .....what grounds he could also be successful against the ostensible owner of the legal estate when the real owner holds hack. in case of dispute the remedy would be to join the person alleged to be the real owner as a party, so that he might be bound by the decision. if the benamidar can sue upon the bond, there is no reason why he should not assign his right of suit to another for proper consideration. in this caste, however there is a further difficulty. both the lower courts have found that the transfer to the plaintiff by rangasami mudali, the benamidar, was not a bona fide transaction.2. the subordinate judge gives as one of his reasons for this finding that the transfer was made on the very date upon which 2nd defendant sued to recover the consideration of the pro-note from the real.....
Judgment:

Spencer, J.

1. In the Calcutta and Allahabad High Courts in appears to have been settled by the judicial decisions that a benami mortgagee may maintain a suit upon a mortgage [Vide, Kirtibash Das v. Gopal Jeo 20 Ind. Cas 499 Sachitananda Mohapatra v. Baloram Gorain 12 Ind. Dec. 1099 and Parmeshwar Bat v. Anardan Dat 26 Ind. Cas 507. In this Court there is no reported case on the point so far as I am aware; but in Chidambara Mandaroyan v. Singaram 17 M.L.J. 174 the same view was taken as in Calcutta and Allahabad, and three more unreported cases were therein referred to as authorities that precluded arguments being raised to the contrary. In Kuthaperumal Rajali v. Secretary of State for India 17 M.L.J. 174. the decision in Chidamlara Mandaroyan v. Singaram 17 M.L.J. 174 was quoted with approval and its principle was explained as being that a benamidar's suit is equivalent to a suit by an agent of an undisclosed principal. If a mortgagor can successfully resist a suit brought by the beneficial owner of the bond on the ground that he is not the person named in the bond as mortgagee, it is difficult to see on what grounds he could also be successful against the ostensible owner of the legal estate when the real owner holds hack. In case of dispute the remedy would be to join the person alleged to be the real owner as a party, so that he might be bound by the decision. If the benamidar can sue upon the bond, there is no reason why he should not assign his right of suit to another for proper consideration. In this caste, however there is a further difficulty. Both the lower Courts have found that the transfer to the plaintiff by Rangasami Mudali, the benamidar, was not a bona fide transaction.

2. The Subordinate Judge gives as one of his reasons for this finding that the transfer was made on the very date upon which 2nd defendant sued to recover the consideration of the pro-note from the real mortgagee, If he meant that the transaction was one in fraud of creditors, it must be set aside in a suit framed for that purpose. So far as the parties to this suit are concerned, it is sufficient that Rangasami Mudali says he transferred his title to the plaintiff and received consideration for the transfer. His act must be taken as operating to pass whatsoever title he had to sue the mortgagor and I have held above on the point of law that he had a title to sue as mortgagee though he was a benamidar.

3. I agree, therefore, that the lower Court's decree must be reversed and a decree passed for the plaintiff.

Seshagiriaiyar, J.

4. Both the Courts below have found that the plaintiff's assignor was only a benamidar in respect of the mortgage sued on. We see no reason to differ from this conclusion. The further question whether a benamidar can sue in his own name on the mortgage is not free from difficulty.

5. There is only a thin line of demarcation between a benamidar and an agent or trustee. The element of confidence in the ostensible owner exists in all the three oases. In the case of an agent the law gives a qualified right of suit to him. See Section 230 of the Contract Act. In the Case of a trustee the law recognises him alone as entitled to deal with the outside world, because the legal estate vests in him; and until discharge he represents that estate: The ease of a benamidar is slightly different. He is not the legal owner because, although from the outset he is expected to screen the real owner from the public, he is to be only the alias of the latter until he chooses to reveal himself as the person entitled. Such an attitude is insufficient to create a relationship of principal and agent either.

6. In this view of his status, the question is whether he should be allowed to sue in his own name. The Judicial Committee of the Privy Council apparently held that he can sue to recover debts: Gopeehrist Gosain v. Gangapersaud Gosain 6 M.I.A. 53 In regard to negotiable instruments, it was held in Subba Narayana Vathiyar v. Rama-swami Aiyar 1 M.L.T. 377 that he alone was competpnt to maintain a suit. An extension of this principle was made in Sivasankaram Pillai v. Panchami Kesiyar 8 M.L.J. 302, where he was held entitled to sue for a debt due on a simple bond. A still further inroad upon the rights of the real owner was made in Vehkata.Suryanaraina v. Guluguri Bapiraju 7 Ind. Cas. 60. In that case it was held that a benamidar can sue to set aside a sale. It may here be mentioned that an attempt to bar his right to all cases of suits relating to immoveable property in general did not meet with approval in Madras. See the observations in Kuthaperumal Rajah v. Secretary of State for India 17 M.L.J. 174. Nonetheless , it was held that he is not entitled to sue for rent: Kuppu Konan v. Thirugnana Sarnmindam Pillai 31 M.K 461. Suits in ejectment have been regarded as outside his rights: Kuthaperumal Rajali v. Secretary of State for India 17 M.L.J. 174.

7. As regards the other High Courts, in Allahabad the benamidar is allowed to sue on the mortgage: Parmeshwar Bat v. Anardan Dat 26 Ind. Cas 507. A suit in ejectment is also allowed by that High Court: Nand Kishore Lal v. Ahmad Ata (1895) A.W.N. 160 . In Calcutta notwithstanding Munshi Basiruddin Ahmed v. Mahomed Jalish Pataari 12 C.W.N. 409, the later decisions concede his right to sue on the mortgage: Hara Gobind Naha v. Puma Chandra Saha 1 Ind. Cas. 522 and Kirtibash Das v. Gopal Jeo 27 Ind. Cas. 136 : 18 C.W.N 814, following Saohitananda Mohapatra v. Baloram Gorain 12 Ind. Dec. 1099. But he is not allowed to sue in ejectment: Mohendra Nath Mookerjee v. Kali Prasad Johuri 7 C.W.N. 229. In Bombay also, the same view seems to prevail: See Ravji Appaji v. Mahadev Bapuji 11 Ind. Dec.1030.

8. Probably it would be more logical to permit the benamidar to sue in all cases, leaving it to the real owner to his remedies against him in a separate suit. The decisions which apply this rule of res judicata against the real owner and even permit him to execute a decree obtained by the benamidar are not inconsistent with this view.

9. It may be that suits in ejectment stand on a different footing from other suits. In such suits the legal right of the plaintiff and his right to eject are directly in question. It may be said that the defendant can plead jus tertii. These considerations may not be altogether absent to other suits. However that may be, it is not necessary at present to canvass the correctness of his position in regard to suits for ejectment.

10. I think that prima facie a suit on a mortgage is one to recover a debt, although such debt is charged on immoveable property. Consequently the dictum of the Privy Council in Gopeekrist Gosain v. Oangapersaud Gosain 6 M.I.A. 53 is applicable to such a suit. It was pointed out in Chidambara Mandaroyan v. Singaram S.A. No. 186 of 1903 that the practice in this Presidency is to permit the benamidar to sue on a mortgage: and that practice is in consonance with what obtains in the other High Courts.

11. A further argument was addressed to us on the finding of the Subordinate Judge that the transfer to the plaintiff by the first benamidar Rangasami was in fraud of the creditor, the 2nd defendant. Even accepting this finding it is not open to the 2nd defendant to resist the suit without first suing to set aside the transfer. Vide, Falaniandi Chetti v. Appavu Chettiat 34 Ind. Cas. 778. Under these circumstances we must hold that the plaintiff must be allowed to sue in his own name. The decree of the Courts below must be reversed and the usual mortgage decree must be passed for the amount sued for. Time for payment will be six months from this date. Each party will bear his own costs throughout.


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