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Visvanatha Aiyar Vs. Vengama Naidu and ors. - Court Judgment

LegalCrystal Citation
CourtChennai
Decided On
Reported inAIR1924Mad749
AppellantVisvanatha Aiyar
RespondentVengama Naidu and ors.
Cases ReferredIn Ker v. Ker Ir.
Excerpt:
- .....1909; eleven days later, the suit 49 of 1909 was filed. a week subsequent to the filing of the suit, seshasayi sold the properties to pit-chandi, and a week later again pitchandi sold the properties to venkatachalapathi naidu. in the course of less than a month, the properties were thus transferred thrice. the plaintiff asserts that the sales in favour of pitchandi and in favour of venkatachalapathi were benami for himself. the plaintiff was made a party in 49 of 1909. he did not set up in the written statement filed in that suit, that he was the owner of the properties. although there was an interval of about 5 years between the institution of the suit and the final decree passed in it, during that period the plaintiff never asserted that he owned the properties. it is is now argued.....
Judgment:

Venkatasubba Rao, J.

1. The plaintiff alleges that in pursuance of a mortgage decree his properties were sold, that a certain amount was realised and credited towards the decree, that the 1st defendant was the owner of some of the other properties also included in the mortgage and that the amount paid towards the mortgage by the 1st defendant was less than what he would be liable to pay, having regard to the value of those items. The plaintiff therefore claims in the present suit contribution from the 1st defendant, being the difference between the amount rateably due in respect of the latter properties and the amount actually paid by him.

2. The plaintiff's right to maintain the suit is questioned and to deal with this objection it is necessary to set forth a few facts.

3. One Krishnaswamy Aiyar had two sons, Seshasayi and Lakshmikantham, and they formed members of a joint Hindu family. On the 11th September 1890, they mortgaged the properties described in Schedules A to F of the plaint to certain persons for a sum of Rs. 17,000 (Ex. K.). On 15th December 1894, the amount due on the mortgage was Rs. 21,000, and Krishnaswamy having died, his sons sold F schedule properties to one Sundaracharulu for a sum of Rs. 12,500 (Ex. 1) and mortgaged, the properties in Sohs. A to E to the same person for Rs. 8,500 (Ex. 2). Sundaracharulu was directed to pay the two sums of Rs. 12,500 and 8,500, which made a total of Rs. 21,000 in discharge of the Original mortgage (Ex. K). On the 8th May 1899, there was a partition between Seshasayi and Lakshmikantham. The properties described in Schedule A and F fell to the share of Seshasayi and those in Schedules B, C and D to the share of Lakshmikantham. On 6th November, 1899, Seshasayi sold to the 1st defendant the properties in Schedules A and E (Ex. B). On the 15th September, 1902, Sundaracharulu executed a reconveyance in respect of the properties in Schedule F in favour of Seshasayi (Ex. IV). On the 11th October 1902, Seshasayi sold the properties in Schedule F to the plaintiff (Ex. A). On the 1st July 1905, the properties in Schedule E were conveyed by the 1st defendant in favour of the 12th defendant. On the 2nd September 1909, the plaintiff sold back the properties in Schedule F to Seshasayi (Ex. A-2). On the 13th September 1909, a suit was instituted on the footing of the original mortgage, Ex K. which will be referred to as 49 of 1909. On the 20th September, Seshasayi sold the Schedule F properties to one Pitchandi, who is said to be a servant of the plaintiff, and on the 27th September 1909, Pitchandi in turn sold the said properties to one Venkatachalapathi Naidu. In 1913, the final decree was passed in the mortgage suit 49 of 1909 and on the 9th February 1917, the properties described in Schedules B, C and D were sold by the representatives in interest of Lakshmikantham to the 1st defendant.

4. From the facts stated above, it will be seen that the owners of the various properties with which we are concerned ware as follows:

A to D properties were owned by the 1st defendant. E properties were owned by the 29th defendant.5. F properties were owned by Venkatachalapathi Naidu. But in this connection, it is necessary to notice certain facts having a bearing upon the ownership of the properties in Schedule F. Subsequent to the passing of the final decree in 49 of 1909, the present plaintiff filed a suit for a declaration that, although the properties in F Schedule ostensibly belonged to Venkatachalapathi, he was in truth the owner thereof; and on the 4th November, 1915, a Razinamah was entered into between the widows of Venkathachalapathi and the plaintiff, which contains an admission of the plaintiff's title to the said properties. The material portion of the Razinamah is this:

In respect of the suit which the plaintiff instituted against us for a declaration that the sale deed executed in the name of our husband was executed only nominally on behalf of the plaintiff and that we have no right whatever therein * * * as it is learnt that the sale deed was as alleged by the plaintiff executed nominally on behalf of the plaintiff, it is settled that the plaintiff shall get a declaration that he himself is entitled to the said properties * * * *.6. In virtue of this Razinamah, the plaintiff asserts that he is the owner of the F schedule properties and that he is entitled as such owner to contribution.

7. In paragraph. 7 of the 1st defendant's written statement in the present suit, the following plea was raised:

The plaintiff further, in the dealings relating to the F schedule properties was a mere name-lander and alias of Seshasayi whose friend he was throughout.8. The learned Subordinate Judge on this plea raised the issue 'was the plaintiff the real owner?' and recorded a finding adverse to the plaintiff. With this finding of fact I entirely agree. On behalf of the plaintiff (appellant), no motive was suggested for the numerous dealings with the properties described in the F schedule. As already observed they were sold on the 15th December 1894, to Sundaracharulu and Sundaracharulu reconveyed them to Seshasayi on the 15th September 1902, and on the 11th October 1902. Seshasayi sold them to the plaintiff. This sale in favour of the plaintiff is admitted to be merely nominal. In fact in a deposition given by the plaintiff, he said that the properties were not his and that he was supervising them on behalf of Seshasayi. It is also not disputed that Seshasayi and the plaintiff were on very intimate terms. We have not been referred to the circumstances in which the sale was made in favour of the plaintiff in 1902, or to the motive for the transaction. Whatever be the reason, the sale was fictitious and the plaintiff himself had to admit that it was so. Presumably to get over the effect of this admission another sale deed was executed by Seshasayi in favour of the plaintiff (Ex. A 1) on 17th April 1906. If the plaintiff was already the owner, there was no need to have a second sale deed in his favour. It seems to me therefore that the second sale deed was got up merely with a view to keep up the pretence that the plaintiff was the real owner of the property, although in facthe was not. This view receives support from Ex. XIX dated 7th August 1909, a letter addressed by the plaintiff to Seshasayi. He says:

As you ask ma to execute a sale deed for the resale of the properties for which you have executed a Bale deed to me, I have no objection to so execute a sale deed for the resale.9. It is in pursuance of this letter that the plaintiff reconveyed the properties to Seshasayi on 2nd September 1909 (Ex. A-2). The appellant's learned vakil has not been able to tell us why the properties were reconveyed to Seshasayi. But it is clear from Ex. XIX that the plaintiff was never the owner of them and that the properties were ultimately conveyed to the man to whom they belonged, namely, to Seshasayi. The fact that the plaintiff remained in possession of them is of little importance, because as the plaintiff admitted in a previous deposition, he was supervising the properties on behalf of the true owner, Seshasayi. If so far therefore Seshasayi continued to remain the true owner of the properties notwithstanding the fact, that they stood sometimes in the name of the plaintiff, did anything that happened subsequently have the effect of transferring the ownership to the plaintiff? The reconveyance in favour of Seshasayi was on the 2nd September 1909; eleven days later, the Suit 49 of 1909 was filed. A week subsequent to the filing of the suit, Seshasayi sold the properties to Pit-chandi, and a week later again Pitchandi sold the properties to Venkatachalapathi Naidu. In the course of less than a month, the properties were thus transferred thrice. The plaintiff asserts that the sales in favour of Pitchandi and in favour of Venkatachalapathi were benami for himself. The plaintiff was made a party in 49 of 1909. He did not set up in the written statement filed in that suit, that he was the owner of the properties. Although there was an interval of about 5 years between the institution of the suit and the final decree passed in it, during that period the plaintiff never asserted that he owned the properties. It is is now argued on his behalf that in 1915 Venkatachalapathy's widows having admitted his ownership, his title to the properties cannot be questioned. This argument is clearly untenable. The parties who made the admission may be estopped from denying the plaintiff's title but the 1st defendant is not bound by the proceedings which culminated in the Razinamah.

10. The compromise between the widows of Venkatachalapathi and the plaintiff is clear evidence of the fact that the former were not the owners of the properties. On the evidence in the case, I am clearly of the opinion that on the date of the compromise Seshasayi or his representative was the beneficial owner. What then is the position of affairs? Seshasayi on our finding was the beneficial owner. Venkatachalapathy's widows were benamidars and the plaintiff got them to admit that he was the real owner. Does any interest in these circumstances pass to the plaintiff? I am clearly of the opinion that the plaintiff has acquired no interest in the properties. It has been strenuously argued by Mr. Alladi Krishnaswamy Aiyar for the appellant that on our finding Venkatachalapathy's widows, being benamidars for Seshasayi, were in the position of trustees and that the legal ownership was by the Razinamah transferred from the widows of Venkatachalapathy to the plaintiff. In the first place, there was no conveyance at all. There was merely an admission by benamidars, that a person, who was not the true owner, was the true owner. I fail to see how such an admission can give a stranger to the properties any right over them. The widows did not profess to deal with the legal (as distinguished from the beneficial) ownership, which they possessed and there was no attempt to convey this legal ownership. The mere fact that the widows admitted that the plaintiff to be the beneficial owner, which he was not, cannot have the effect of conveying to the plaintiff the interest of Venkatachalapathy's widows in the properties.

11. In the second place, granting that the transaction amounted to a conveyance, what is the legal effect of the transaction? Venkatachalapatby's widows being benamidars were merely possessed of the legal ownership in the properties. They were the trustees in respect of the properties accountable to Seshasayi. There could not be an effectual transfer of the Trust. The office of trustee is incapable of transfer. See Raja Vurmah Valia v. Ravi Vurma Kunhi Kutty [1876] 1 Mad. 235 and Gnanasambanda Pandara Sannadhi v. Velu Pandaram [1900] 23 Mad. 271. It was impossible to dissociate the office of trustee from the possession of the properties. The widows of Venkatachalapathy were bound to preserve the properties and to render an account in respect of them to Seshasayi. The parting with the properties virtually amounted to parting with the office and such an alienation cannot be recognised. Moreover the plaintiff knew that Seshasayi was the owner. The essence of the transaction was the recognition of the plaintiff as the owner, while as a matter of fact he was not the owner. The clear object of the transaction was to make out that a party who was not entitled to the properties was the real owner thereof. It is fraudulent and the Courts will refuse to give recognition to the transaction. If Seshasayi or his representative was not a party to the transaction, it was clearly a fraudulent attempt by Venkatachalapatby's widows and the plaintiff to create a title in the plaintiff to the detriment of Seshasayi. If on the other hand Seshasayi or his representative was also a party to the transaction, it should undoubtedly have been brought about with the fraudulent object of making it appear, that the plaintiff was the owner while he was lot, in order to enable him to file this suit. In my view, therefore, the plaintiff is not a benamidar for Seshasayi. I have found that Seshasayi is the owner of the properties in the F schedule, and I am also clear that the plaintiff has no interest whatsoever in the properties. He is neither the beneficial nor the legal owner.

12. It has been argued on behalf of the appellant on the strength of Gur Narayan v. Sheolal Singh [1919] 46 Cal. 566 that a benamidar can successfully maintain a suit. But this argument is of little avail in view of the finding that the plaintiff is not even the benamidar for Seshasayi in respect of the suit, properties. Granting for a moment that the plaintiff is the benamidar for Seshasayi, the further question arises, is the suit for contribution at the instance of Seshasayi maintainable? If Seshasayi cannot bring the suit, his benamidar cannot equally maintain it. The appellant's learned vakil relies upon Section 82 of the Transfer of Property Act. The material portion of the Section is as follows:

Where several properties whether of one or several owners are mortgaged to secure one debt, such properties are, in the absence of a contract to the contrary, liable to contribute rateably to the debt secured by the mortgage, after deducting from the value of each property the amount of any other incumbrance to which it is subject, at the data of the mortgage.13. So far as contribution is claimed against the A schedule properties, it must be remembered that the first defendant became the owner of them, in virtue of a sale in his favour by Seshasayi himself. In regard to those properties the position is this. The mortgagor, Seahasayi who was the owner of the properties in A and F schedules sold the properties in A schedule to the first defendant. Can he then as owner of the properties in F schedule claim that A schedule properties are liable to contribute to the mortgage debt? The answer is furnished by Re Darby's Estate, Rendall v. Darby [1907] 2 Ch. 465. It was held in it that an assignee as a party of the mortgage security was not liable to contribute, as against the mortgagor to the payment of the mortgage debt. An assignor having executed a deed of charge to his bankers in respect of various items of property, assigned by a voluntary deed one of those items to his wife. The latter deed contained no reference to the charge. The assignor died and his executors paid off the debt to the bank. The question arose whether the widow as assignee of the items was liable to contribute to the payment of the debt. It was held that the widow was under no liability to contribute, Warrington, J., says:

The assignor owed a sum of money charged on certain property, what equity would he have hail in his life time to call upon, an assignee from him to pay any part of that debt? I can seen none, unless he assigned the property subject to the debt. If, then, the assignor would have had no such equity, I fail to see what greater right his executors can have to call upon the assignee to contribute.14. To entitle one to contribution from another, the equities must be equal. If, for instance, there was any obligation on the person who paid the encumbrance to discharge it as a debt of his own, he cannot claim anything from that other; and similarly if a mortgagor sells a part of an. encumbered estate with a covenant against encumbrance, he cannot claim contribution from the purchaser, because he is himself liable for the whole debt. See Halsbury Vol. 21, p.306, and Ghose on Mortgages, 4th Edn. Vol. 1. p. 374.

15. In the sale deed by Seshasayi, conveying the A schedule properties to the 1st defendant, the former makes a distinct allegation that the debt under Ex, K. was discharged and that the sale was not subject to the encumbrance evidenced by the said document. In the face of this, it is impossible to hold that Seshasayi is entitled to contribution from the 1st defendant so far as the A schedule properties are concerned. The principle underlying the decision in Re Darby's Estate Rendall v. Darby [1907] 2 Ch. 465 is recognised in Section 56 of the Transfer of Property Act. It rims thus:

Where two properties are subject to a common charge and one of the properties is sold, the buyer is as against the seller, in the absence of a contract to the contrary entitled to have the charge satisfied out of the other property, so far as such property will extend.16. It has been contended by the appellant's learned vakil that, as on the date of the conveyance in favour of the 1st defendant of A schedule properties, Seshasayi was not the owner of the properties described in F schedule, the Section has no application. Whether the terms of Section 56 are literally applicable or not, there can be no doubt that the general Rule enacted in Section 82 is subject to the exception that a mortgagor is not entitled to contribution when he has assigned the property with an express covenant as against encumbrances. In Ker v. Ker Ir. 4 R. Eq. 15 Christian, L.J., says:

The conclusions which I gather from Harberr's case [1584] 3 Rep. 11 are the following. First that the origin principle of the common law was equality, that is to say, contribution in the ratio of value, wholly irrespective of priority of dates of purchase; second, that the case of the debtor himself and his heir-at-law, in respect of retained lands was an exception to that principle by reason solely of his personal liability and that to such exception it mattered not whether the purchasers were such, with consideration or without it.17. The Transfer of Property Act enacts the Rule in Section 82 and the exception in Section 56. I am of the opinion that Seshasayi could not have successfully maintained a suit for contribution against the 1st defendant. It follows that even if the plaintiff was benamidar of Seshasayi his suit would fail.

18. There is only one further matter to consider. If the 1st defendant as owner of the properties in schedule A is not liable to contribute, the question still remains, is he bound to contribute by reason of his being the owner of the properties in B, C, and D schedules? It is agreed on both sides that if the valuation adopted by the Subordinate Judge is accepted, no liability to contribution can arise: in other words, that the properties in B, C, and D schedules have paid their share of the mortgage debt. But it is said that the valuation is not correct, that the Subordinate Judge did not decide the issue relating to valuation in the judgment under appeal and he postponed the consideration of it to be disposed of in C.S. No. 17 of 1919, It is then argued that the learned Subordinate Judge did not try the issue in the second suit, but that the valuation was fixed by the consent of certain parties and that the plaintiff is not bound by it. There is no force in this contention as the plaintiff did not offer to give evidence in the second suit on the point and as he was not prevented from placing such materials as he could before the Court. There is no reliable affirmative evidence upon which we can act and disturb the finding of the learned Subordinate Judge. It is not seriously contended that there is material on the record which would justify a different finding.

19. In the result, the appeal fails and is dismissed with costs.

20. One set to be divided among the respondents that have appeared in the proportion of their interests in the properties in A to D Schedules.

Phillips, J.

21. I agree and am of opinion that the decision may also be based on the short ground that all the dealings with the F schedule properties by Seshasayi from 1902 onwards were purely nominal and that the conveyances to plaintiff, Pitchandi and Venkatachalapathi Naidu, (Ex. A series) were never intended to take effect, the property remaining all along in the ownership of Seshasayi. As plaintiff has no interest in the mortgage property he cannot claim contribution from defendant, since the payment on account of schedule F, if really made by plaintiff, must have been made by him as a volunteer for he had no interest in schedule F.


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