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Sulugu Suryanarayana Nayakaram Vs. Gundabolu Butchaiah Naidu and ors. - Court Judgment

LegalCrystal Citation
SubjectCivil
CourtChennai
Decided On
Judge
Reported in32Ind.Cas.810
AppellantSulugu Suryanarayana Nayakaram
RespondentGundabolu Butchaiah Naidu and ors.
Cases ReferredTaylor v. Bowers
Excerpt:
fraud - fraudulent transfer--object of fraud accomplished--transferor, whether can recover--defrauded party recovering his share, effect of. - - in a case like this, i should say that the object of the fraud is accomplished when the transfer is effected and everything is done to give effect to that transfer. there is very much like what has happened here......the 4th defendant of his share. while that suit was pending, the plaintiff instituted the present suit to recover his share on the same state of facts as pleaded by the 4th defendant in the suit in which he was the plaintiff. the fourth defendant got a decree in his suit. the question now is whether the plaintiff ought to be allowed to recover his share of the property from the 2nd defendant. the learned district judge has held that he cannot succeed inasmuch as he was guilty of fraud in effecting the sale and his fraudulent purpose has been accomplished. it is argued, in the first place, on behalf of the appellant that the first part of the first issue has not been tried and until that is tried the question whether the plaintiff is entitled to recover or not, cannot be properly.....
Judgment:

Abdur Rahim, J.

1. The plaintiff and the 4th defendant are brothers, the plaintiff being the older of the two. It appears that while the 4th defendant was absent in Hyderabad, the plaintiff effected a sale of a half share of certain lands, which included his own share and his brother's share, to the 2nd defendant, who is his brother-in-law and the son of the 1st defendant. At that time, the plaintiff, who had just attained majority, was living with his father-in-law and his brother-in-law. This was in 1900. In 1906 there was a partition of the property between the 4th defendant and the plaintiff, and in that partition, the share of the property sold to the 2nd defendant was excluded, that is to say, the 4th defendant was deprived of his share in the property in question. It appears that the 4th defendant afterwards discovered that the sale to the 2nd defendant by the plaintiff was a colourable and benami transaction, the object of which was to deprive the 4th defendant of his share, and he instituted a suit in 1911 to recover the property from the 2nd defendant. The plaintiff was also a party to that suit. He obtained a decree and recovered his share, it being found that the sale was a colourable transaction there being no consideration and having been effected with the object of depriving the 4th defendant of his share. While that suit was pending, the plaintiff instituted the present suit to recover his share on the same state of facts as pleaded by the 4th defendant in the suit in which he was the plaintiff. The fourth defendant got a decree in his suit. The question now is whether the plaintiff ought to be allowed to recover his share of the property from the 2nd defendant. The learned District Judge has held that he cannot succeed inasmuch as he was guilty of fraud in effecting the sale and his fraudulent purpose has been accomplished. It is argued, in the first place, on behalf of the appellant that the first part of the first issue has not been tried and until that is tried the question whether the plaintiff is entitled to recover or not, cannot be properly decided, The first part of the issue in question is whether the sale-deed executed by the plaintiff to the 2nd defendant was brought about by undue influence and misrepresentation of his father-in-law, first defendant in the suit. It is quite true that at the time of the sale; he had just attained majority and he was living with his father-in-law. But beyond these two facts there is nothing else to suggest on the evidence, so far as it has been brought to our notice, that there was really any undue influence.

2. Further, when the partition was effected in pursuance of the fraud, it is not alleged anywhere that he was still under undue influence of his father-in-law. This was in 1906. No evidence was adduced to show that the plaintiff continued to be under the influence of his father-in-law, even supposing that he was under such influence at the time' of the execution of the deed of sale. Having regard to the evidence in the case and the nature of the pleadings, I do not think any useful purpose will be served by calling for a finding on the point.

3. Then remains the question of law which amounts to this: whether upon the facts of the case, it can be said that the fraud contemplated by the plaintiff was accomplished, either wholly or partly. If it was, there can be no doubt but that he is debarred by law from recovering the property. What is the object which the plaintiff had when he executed the deed of sale? It was to exclude this property from partition and thereby deprive the 4th defendant of his share. Therefore, when the partition was effected and the property was excluded from that partition, prima facie that object was fully carried out. I am rather inclined to think that the object was carried out even at' an earlier stage when possession was given in pursuance of the deed of sale. However that may be, there can be little doubt that the object was fully carried out when partition was effected and this property was not included in the partition.

4. What is argued by Mr. V. Ramesam on behalf of the appellant is, now that the 4th defendant has in fact recovered the; property, this is quite enough to entitle the plaintiff to recover his share also, because, by the very fact of 4th defendant recovering the property, the plaintiff's guilt is, as it were, purged. The cases on this subject are almost all, where a debtor seeks to defraud his creditor by nominal or fraudulent conveyances of his; property. In those cases ordinarily the conveyance by the debtor of his property would be merely an attempt to defraud arid if the creditor in fact recovers his dues from the other properties of the debtor, it cannot be said that the object of defeating him, though contemplated by the debtor, was accomplished. Thus in those cases it was necessary to show that the creditor, as a matter of fact, was unable to recover his dues by reason of the fraudulent transfer. But the present, to my mind, is a case which stands on a different footing. There is no ruling that has been brought to our notice in which the object of the fraudulent transfer was to deprive another person of specific property. In a case like this, I should say that the object of the fraud is accomplished when the transfer is effected and everything is done to give effect to that transfer. Here all that was necessary was done to give effect to the transfer by which fraud was accomplished. The leading case on the point, as far as India is concerned, is that reported as Petherpermal Chetty v. Muniandy Servai 35 C.K 551; 5 A.L.J. 290; 7 C.L.J. 528 Their Lordships of the Privy Council accept as laying down the correct law the decision of the Court of Appeal reported as Taylor v. Bowers (1876) 1 Q.B.D. 291, where the general proposition is enunciated, that if the object of the fraud is not accomplished either wholly or partially, then the person in whose hands the property is, is liable to give up the property to the transferor who attempted the fraud. It is true their Lordships state in one place that the plaintiff, who sought to recover the property, was not carrying out any illegal transaction, but was seeking to put every one as far as possible in the same position as they were in before that transaction was determined upon. But that, I take it, is not laid down as an absolute and independent proposition unconnected with the question whether the fraud was carried out or not. The real test which is laid down here is what I have stated, namely, the plaintiff can sue so long as his fraud has not been carried out, but not after it has been carried out wholly or partially. Here I may point out that the 4th defendant was kept out of his property for a number of years. When he recovered the property by a suit, it is likely that he only recovered mesne profits for three years. That would go to show that he was not restored exactly to the same position as he was in before this fraud was perpetrated.

5. I may also refer to an observation of Lord Justice Mellish in the case of Taylor v. Bowers (1876) 1 Q.B.D. 291. There the Lord Justice lays down that if the creditor had in-fact been defrauded, for instance, if he had been induced to assent to a composition by the fraud of the debtor, but if he afterwards discovered the fraud prior to the composition being carried out, it could be re-opened at his instance, but that the debtor could not, under such circumstance, be able to recover the goods which he had fraudulently transferred or attempted to transfer. There is very much like what has happened here. I think the second appeal should be dismissed with costs.

William Ayling, J.

6. I agree. It cannot be said in this case that the fraud was not at least partially successful. Its immediate object was attained when partition was effected without the inclusion of this property. Our attention has not been drawn to anything in the evidence which would support the theory of undue influence even indicative of disparity of guilt between the plaintiff and the 1st defendant. I agree in the order proposed by my learned brother.


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