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Thanubuddi Venkatappa Reddi and anr. Vs. Gopavarapu Brahmayya and ors. - Court Judgment

LegalCrystal Citation
SubjectCriminal
CourtChennai High Court
Decided On
Case NumberSecond Appeal No. 2113 of 1948
Judge
Reported inAIR1953Mad1000; (1952)2MLJ448
ActsTransfer of Property Act, 1882 - Sections 78; Evidence Act, 1872 - Sections 33, 101 to 103 and 145
AppellantThanubuddi Venkatappa Reddi and anr.
RespondentGopavarapu Brahmayya and ors.
Appellant AdvocateM.S. Ramachandra Rao, Adv.
Respondent AdvocateN. Ramamohan Rao, Adv.
DispositionAppeal allowed
Excerpt:
- .....court and gave a decree in favour of the plaintiff. the learned judge held that it was for the prior mortgagee to prove that there was consideration for his mortgage, and not for the plaintiff to establish that the first mortgage was devoid of consideration and that the former had not established the payment of consideration for the mortgage, that the question of the sham and nominal nature of the transaction could be gone into in this suit and no court- fee need be paid as it is a mere piece of paper. 5. against this judgment defendants 4 and 5 have preferred this second appeal.6. the same contentions that were raised in the courts below were raised before me in this second appeal. the contention that in a suit by the subsequent mortgagee the question whether the prior mortgage was.....
Judgment:

Chandra Reddi, J.

1. Defendants 4 and 5 are the appellants. The suit which has given rise to this second appeal was instituted by the first respondent in the court of the District Munsif of Guntur for recovering a sum of Rs. 800 with interest that has accrued thereon, on a mortgage executed in his favour by the first defendant and his two minor sons, the Second and third defendants, on 10-5-1943, after declaring that the mortgage in favour of the fourth defendant is a sham and nominal transaction and that the plaintiff is entitled to be treated as the first mortgagee.

2. Defendants 1 to 3 executed a mortgage on 1-5-1943 in favour of the fourth defendant which mortgage was assigned to the 5th defendant by the fourth defendant for consideration. As soon as the plaintiff came to know of the existence of the mortgage in favour of the fourth defendant, he instituted criminal proceedings against the first defendant under Section 420, J. P. C. alleging that the first defendant cheated him by not disclosing to him the existence of the first mortgage and thereby inducing him to part with a sum of Rs. 800. The criminal proceedings were thrown out on the ground that the complainant, i.e., the plaintiff, had not established that the first defendant was guilty of the offence under Section 420, I. P. C. This led the plaintiff to file the present suit with the averments that there was really no consideration for the mortgage in favour of the 4th defendant and that it was a sham and nominal transaction intended to defraud the plaintiff and that for all intents and purposes he is the first mortgagee.

3. The defences to the suit were that the question of the sham and nominal nature of the first mortgage could not be gone into in a suit by the subsequent mortgagee, that even if it could be agitated in such a suit, court-fee must be paid thereon and lastly that the case of the plaintiff that the first mortgage is a sham and nominal transaction is not true.

4. The trial court dismissed the suit as. against the fourth and fifth defendants agreeing with their defence. On appeal the Subordinate Judge reversed the judgment of the trial court and gave a decree in favour of the plaintiff. The learned Judge held that it was for the prior mortgagee to prove that there was consideration for his mortgage, and not for the plaintiff to establish that the first mortgage was devoid of consideration and that the former had not established the payment of consideration for the mortgage, that the question of the Sham and nominal nature of the transaction could be gone into in this suit and no court- fee need be paid as it is a mere piece of paper.

5. Against this judgment defendants 4 and 5 have preferred this second appeal.

6. The same contentions that were raised in the courts below were raised before me in this second appeal. The contention that in a suit by the subsequent mortgagee the question whether the prior mortgage was supported by consideration cannot be gone into, has no substance and is therefore rejected. The point whether separate court-fee has to be paid or not on the declaration prayed for about the nominal and sham nature of the document need not be gone into in view of my finding on the question about the nature of the document in favour of the fourth defendant executed on 1-5-1943.

7. The main question that arises for consideration in this second appeal is whether the mortgage in favour of the 4th defendant should take precedence over that of the plaintiff or whether it should be treated as a bogus one. As already pointed out, the lower appellate court decreed the suit, as in its opinion the onus of proving consideration for the earlier mortgage is on the first mortgagee and he had--not discharged it. Now, is that view of the lower appellate court sound? No decided case has been placed before me on this question of onus by either side and both of them stated that it is bereft of direct authority. However, there is not much difficulty as regards the principles governing such cases. It appears to me that when the existence of the prior mortgage is not disputed but its genuineness is attacked by the subsequent mortgagee who alleges that the prior mortgage is a sham and bogus one created With intent to defraud him, it is for the latter to prove it and not for the former to establish that the mortgage in his favour is supported by consideration and not a colourable one.

8. That being so, has that burden been discharged in this case? When asked by the trial court whether he has got any witnesses to prove his case, the plaintiff stated that he has not summoned any witnesses for that purpose. So, he has not placed any material on record which supports his case. If there is nothing to show that the prior mortgage was a sham one, then the plaintiff will not be entitled to the declaration sought by him.

9. That apart, there are some circumstances which throw light on the nature of transaction . in favour of the 4th defendant. When the plaintiff filed a complaint against the first defendant under Section 420, I. P. C. he stated therein categorically that the first defendant not only did not bring to his notice the existence of the mortgage in favour of the fourth defendant but even represented to him that there was no other mortgage and thereby induced him to part with the money and that had he known about the prior mortgage, he would not have advanced money to the first defendant on the security of the same property. There was not even a suggestion then that the first mortgage was a collusive one with intent to defeat the subsequent mortgagees. His deposition in the criminal court was marked as Ex. P-3. The trial court thought that this was sufficient to prove that there was no basis for the present case of the plaintiff that the earlier mortgage was not supported by consideration. The lower appellate court thought that the trial court acted illegally in relying on Ex. P-3 as it was not evidence under Section 33, Evidence Act. But the appellate Judge overlooked the fact that Ex. P. 3 was admissible under Section 145, Evidence Act. The attention of the witness was drawn to the statements made by him as required by that section and therefore the statement is admissible under Section 145, though it does not come under Section 33, Evidence Act. In these circumstances, the lower appellate court erred in rejecting Ex. P. 3 as inadmissible in evidence. In my judgment, this document shows that the prior mortgage was believed to be a genuine and a bona fide transaction and that the present version of the plaintiff is an after-thought and rests on a very slender foundation. I must therefore hold that the mortgage in favour of the fourth defendant is not a sham or collusive one and the declaration sought by the plaintiff against defendants 4 and 5 cannot be granted. It follows that the conclusion of the lower appellate court is not correct.

10. In the result, the decree of the lower appellate court is set aside and that of the trial court is restored. The plaintiff will have a decree against defendants 1 to 3. So far as defendants 4 and 5 are concerned, each party will bear his costs throughout. Time for redemption one month. (Leave to appeal is refused).


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