1. The suit out of which this appeal arises was instituted by the plaintiff on the following allegations: Plaintiff was one of the partners in a business named Friend and Co., which ran into debts, and the creditors of the firm were about to take proceedings for realizing their dues from out of the plaintiff's properties; The plaintiff thereupon in 1892 executed a benami kobala in favour of the father of the defendant Abani in respect of some of his properties. Some years later, the Comilla Loan Office, one of the creditors of the partnership business, in execution of a decree obtained by them brought to sale in 1895 some of the properties covered by the kobala. The plaintiff thereupon satisfied their dues and got the properties sold reconveyed to himself in 1900 in the name of one Tara Kanta. The plaintiff instituted this suit against Abani and the heirs of Tara Kanta for declaration of his title to the properties, maliki title and title by adverse possession.
2. The defence of the defendants shortly stated was that the kobala of 1892 was not a benami document but represented' a genuine and bona fide transaction and that Tara Kanta in his purchase of 1900 was benamdar for Abani's father and not for the plaintiff.
3. These pleadings raised several clear issues notably the issues framed as Nos. 7, 11 and 13. These issues raised the following questions: Whether Abani's father was benamdar for the plaintiff; whether Tara Kanta was benamdar for the plaintiff or for Abani's father; and if Abani's father was benamdar for the plaintiff, is the plaintiff entitled to recover. It should be observed that Tara Kanta's heirs did not set up any title in themselves but supported the defence of Abani. A case of title by adverse possession was also set up in the plaint but in view of the allegation that the plaintiff used to receive the profits of the properties through Abani's father, such a case cannot be said to be well-founded; though if that allegation is found to have been established it would lend support to the plaintiff's case as to the benami nature of the transaction.
4. The Courts below have dismissed the plaintiff's suit. The Subordinate Judge in an elaborate judgment dealt with the facts, circumstances and probabilities of the case and arrived at the following conclusions. He was unable to believe the plaintiff and his witnesses that the kobala of 1892 was a benami transaction and he found that the plaintiff had failed to make out that he was in possession of the properties covered by the kobala. As regards the kobala of 1900 he was unable to come to a finding in plaintiff's favour and held that the plaintiff acquired no title under it. These findings were sufficient to dispose of the plaintiff's suit; but the learned-Subordinate Judge also recorded his findings on Issue No. 13, which related to the question of the maintainability of the suit. His findings on this issue were in these words:
There is no sufficient evidence to prove that plaintiff amicably paid up all his creditors. Evidently the object of the kobala of 1892 was to defraud the creditors, and the plaintiff cannot recover if the fraud was carried into effect. As there is no sufficient evidence to show that his debts were paid up by the plaintiff, I cannot find that the object to defraud the creditors failed. This issue is, therefore, found against the plaintiff. I may observe that there is also no reliable evidence that the plaintiff defrauded any of his creditors.
5. The plaintiff appealed against the aforesaid decision. The learned District Judge, on appeal, formulated two questions which he thought called for his decision: viz., (1) was the kobala of 1892 a benami document; and (2) if so, is the plaintiff prevented from recovering the property on the ground that the transaction was fraudulent and the fraud was carried out?
6. As regards the first of the questions set out above, the learned Judge to quote his own words in his judgment was of opinion that there were more points in favour of the plaintiff's case than were noted in the judgment under appeal and that the evidence was fairly evenly balanced between the parties. He, however, thought that in view of his decision on the second question it was not necessary for him to come to a decision on the first.
7. As regards the second question the learned District Judge was of opinion that the fraudulent intention pleaded by the plaintiff was the delaying of his creditors, that it is a fraudulent act to transfer one's property to delay the payment of one's debts, that the evidence to prove that the plaintiff's debts had been paid off was inadequate and that assuming that they had been paid off, upon the plaintiff's case itself they were not paid off till 1313 or 1314, i.e., about 1907, and that in the absence of any explanation from the plaintiff this delay must be attributed to the fraudulent act of the plaintiff. He was thus of opinion that fraud had been carried out and that, therefore, the plaintiff was not entitled to succeed. In this view of the matter he dismissed the plaintiff's appeal.
8. This mode of dealing with a first appeal on facts, apart from the erroneous view of the law which the decision purports to embody, is highly unsatisfactory. It precludes this Court, when it disagrees with the Court below on the view of the law, from dealing with the matter finally and necessitates a remand, which means considerable harassment to the litigants.
9. Now as to the view of the law taken by the learned District Judge several questions arise and it is necessary to deal with them categorically in order that there may be no misapprehension as to how the case should be treated on remand, as that is the order which we feel we must make in the present case.
10. The first question which arises is the question of onus of proof. The learned District Judge was of opinion that when the fraudulent intention is set out in the plaint and when as in this case the alleged benami transaction took place more than 25 years before the suit and there has been no deed of release the onus lies heavily on the plaintiff to prove that fraud was not carried into effect. In this proposition which the learned Judge laid down for' the appraisement of the evidence I am not sure that he was right. The onus of proving that the ostensible owner is not the real owner is undoubtedly on the plaintiff; and the fact that the transaction took place so long ago and that there has been no deed of release, together with the fact that the transferee was in possession casts the onus heavily on him for proof of the benami nature of the transaction. That, however, is a different matter altogether. If a simple benami is alleged in the plaint without any suggestion indicating that a fraud or an illegal act was contemplated the defend-ant would have to aver and prove the fraud or the unlawful act that was intended and carried out. If the plaintiff's own allegation is that a fraud was meant to be perpetrated and in the present case that statements in the plaint are capable of that interpretation he has got to establish that the fraud was not carried into effect. But when in his plaint he alleged that fraud was not carried into effect and the creditors were all paid off, and in the defendant's written statement it is asserted that the transaction was not benami but real though it is also disputed that the creditors have all been paid off, that onus is considerably lightened. In such a case it is not necessary that the plaintiff should be expected to call the creditors themselves or produce other direct evidence to prove that they were paid off.
11. As regards fraud the learned Judge's findings are that the fraudulent intention was to delay the creditors that the creditors, even if it be held that they have realized their dues, were delayed, that in the absence of any evidence to show another reason for the delay the Court must assign the delay to the fraudulent act of the appellant and hold that the fraud has been carried out. I am of opinion that in the above findings there is an error resulting from a confusion between the principle embodied in Section 53 of the Transfer of Property Act and the principle on which a Court refuses to assist a plaintiff to recover property from his benamdar. The two principles are essentially distinct. As regards the latter. principle it should be held that it is not fraudulent to shield some particular property from being proceeded against by creditors so long as there are other properties from which the just dues of the creditors may be realized; and mere delay caused to creditors for the realization of their dues is not of any consequence so long as there has been no deprivation of the creditors in respect of their just dues. An intention to delay creditors is not necessarily fraudulent or unlawful. Fraud in respect of creditors involves an element of loss or injury of a substantial character, and not merely inconvenience caused by delay in the realization of what is due. In all such cases it is the fraudulent or unlawful purpose of which the accomplishment either wholly or in a substantial part that has to be proved. The learned Judge's findings, in my opinion, are wholly inadequate for the purpose of refusing relief to the plaintiff on this ground. It is note worthy that in the judgment of the Trial Court there are findings indicating that the plaintiff had properties, not covered by the kobala of 1892, against which the creditors could have, if they had liked, proceeded, and this finding does not appear to have been assailed before the learned District Judge.
12. In the earlier decisions in this country a considerable divergence of judicial opinion is noticeable on the question as to the circumstances under which the Court would refuse relief to the plaintiff. These decisions have been very carefully reviewed in an elaborate judgment of Mookerjee, J., in the case of Jadu Nath Poddar v. Rup Lal Poddar 33 C. 967 : 10 C.W.N. 650 : 4 C.L.J. 22. The learned Judge summarised the correct view of the law in these words: 'Although where the intended fraud has been carried into effect, the Court will not allow the true owner to resume the individuality which he has once cast off, in order to defraud others, yet, if he has not defrauded any one, the Court will not punish his intention by giving his estate away to another, whose retention of it is an act of gross fraud.' This distinction between the effect of fraud merely intended and a fraudulent purpose carried into effect appears to have been recognized by the Legislature in Section 84 of the Indian Trusts Act 'II of 1882 which runs in these words: 'Where the owner of property transfers it to another for an illegal purpose and such purpose is not carried into execution, or the transferor is not as guilty as the transferee or the effect of permitting the transferee, toretain the property might be to defeat the provisions of any law the transferee must hold the property for the benefit of the transferor.' This view of the law has been affirmed by the Judicial Committee in the case of Petherpermal Chetty v. Muniandy Servai 35 C. 551 : 12. C.W.N. 562 : 5 A.L.J. 290 : 7 C.L.J. 528 : 14 Bur. L.R. 108 : 10 Bom. L.R. 590 : 18 M.L.J. 277 : 4 M.L.T. 12 : 4 L.B.R. 266 : 35 I.A. 98 (P.C.). Their Lordships in that case quoted with approval the opinion expressed by Mr. Mayne in his Hindu Law (7th Edition, page 595 para. 446) as to the result of the authorities on this subject of benami transactions. From this decision of the Judicial Committee the propositions deducible are the following:- 1. Where nothing has been done to carry the fraud or illegal purpose into effect and the fraud or illegal purpose remains only in the intention the disposer is entitled to have the property reconveyed. 2. To enable a fraudulent confederate to retain property transferred to him in order to effect a fraud the contemplated fraud must be effected. 3. Overt acts done or steps taken for the purpose of effecting the fraud or the accomplishment of the illegal purpose if comparatively insignificant and harmless, do not disentitle the disposer to relief but a partial yet substantial execution of an illegal purpose or effectuation of fraud disentitles the disposer to the assistance of the Court; and 4. If the disposer has been frustrated in his attempt and the fraudulent or illegal purpose has been absolutely defeated he is entitled to relief.
13. So far as the kobala of 1892 is concerned the necessary findings of fact being arrived at, the law as enunciated above will have to be applied.
14. As regards the kobala of 1900 the learned District Judge has not considered the effect of it at all. Apparently he was of opinion that the plaintiff was not entitled to succeed on the basis of this kobala also on the principles which governed the kobala of 1892. If this was his view he was in error. The law has been summarised in Mr. Mayne's Hindu Law, 8th Edition, page 613, para. 447 in these words: 'Even before the decisions referred to in Section 445 it was held in Bengal that there was nothing to prevent a man enforcing his rights against a benamdar where he had made a new purchase taking the conveyance in the name of a stranger, even though he had done so for the purpose of preventing the property from being seized by creditors.' It is clear, therefore, that the effect of the kobala of 1900 must be separately considered.
15. The decree of the learned District Judge, therefore, cannot be supported. It must be and accordingly is set aside and the case remitted to his Court so that the appeal may be re-heard and disposed of in the light of the above observations.
16. Costs of this appeal will abide the result.
17. I agree.