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1927 DIGILAW 627 (MAD)

Velayudhan Pandaram v. Nallathambi Nadan

1927-11-28

DEVADOSS

body1927
JUDGMENT Devadoss, J. 1. Several contentions are raised by Mr. Sesha Ayyangar for the appellant, but before considering them it is necessary to know whether the sale in favour of he plaintiff by defendant 3 evidenced by Exhibit B, was a nominal transaction or a real one. The Subordinate Judge, in para. 6 of his judgment, says: there is no question about the sale to the plain-tiff being nominal, the only position taken up being that it was executed in fraud of creditors. 2. It is difficult to see how the Subordinate Judge came to make the remark that there was no question about the sale to the plaintiff being nominal. The plaintiff averre in his plaint that the sale was found to be nominal in O.S. 177 of 1912. The defendant, in his written statement, also stated that the sale was only a nominal one. In the written statement, in O.S. 177 of 1912 the defendant specifically pleaded that the sale was colourable and not supported by consideration and was never intended to be operative, and never became operative, and was executed with a view to defraud creditors. 3. The District Munsif, on an examination of the evidence, found that the sale was a colourable or a nominal sale: vide Ex. D. On appeal the District Judge of Tinnevelly held, affirming; the decision of the District Munsif that Exhibit B was a colourable transaction (Exhibit 1). The second appeal by the plaintiff was dismissed: vide Ex. D-l. In the light of the contentions and findings in O.S. 177 of 1912 it is difficult to see how the learned Subordinate Judge came to make the remark: that "there is no question about the sale to plaintiff 1 being nominal." The Subordinate Judge has not considered the pleadings and the evidence in the case, and it is necessary, for a proper disposal of the case that there should be a definite finding as to whether the sale evidenced by Ex. B is a nominal transaction and whether the transaction was a fraudulent one intended to defeat the creditors of the vendor. If the transaction is nominal certain considerations would arise. If it is a real but a fraudulent one, and if the plaintiff aided and abetted defendant 3 in the fraud, certain other considerations would arise. If it is only a voidable transaction under Section 53 some-other considerations would arise. If the transaction is nominal certain considerations would arise. If it is a real but a fraudulent one, and if the plaintiff aided and abetted defendant 3 in the fraud, certain other considerations would arise. If it is only a voidable transaction under Section 53 some-other considerations would arise. I, therefore, direct the Subordinate Judge to record a finding on the following issues. (1) Whether the sale under Exhibit B was intended to be a nominal transaction. (2) Whether the sale under Ex. B was a real one intended to defraud or defeat or delay creditors. (3) Whether the plaintiff aided and abetted defendant 3, the vendor, in trying to defeat, defraud or delay the latters creaitors. 4. The finding, will be returned within one month from the date of the receipt of this order. Objections in seven days thereafter. 5. [In compliance with the order contained in the above judgment the Subordinate Judge of Tinnevelly submitted the following] Findings. 6. Issues 1 and 2-As there is an entire absence of evidence of such enjoyment and possession by plaintiff 1 in this case, I must come to the conclusion that the transaction in question was only a colourable and nominal one. Issue, 1 is, therefore, found in the affirmative and Issue 2 in the negative. 7. Issue 3.-Under the circumstances, it must be presumed that plaintiff 1 raided and abetted defendant 3 in his attempt to defraud his creditors by bringing into existence such a nominal sale deed, even though there is no direct evidence in the case to show that any-particular creditor was defeated or delayed or defrauded as the result of the combined action of plaintiff 1 and defendant 3. My finding on issue 3 is in the affirmative. 8. Some objections are raised in the finding, but I do not see any reason to upset the finding arrived at by the learned Subordinate Judge. It is contended for the plaintiff-respondent that he is entitled to be subrogated to the rights of defendant 2 inasmuch as he had paid off a mortgage debt. The finding is that the transaction in favour of the plaintiff was a nominal transaction and it was intended to defeat or delay the creditors. A person who claims under a sham transaction, which is no transaction at all, has no interest in the property conveyed to him. The finding is that the transaction in favour of the plaintiff was a nominal transaction and it was intended to defeat or delay the creditors. A person who claims under a sham transaction, which is no transaction at all, has no interest in the property conveyed to him. Seeing it is a nominal transaction he cannot possibly acquire any interest in the property under it. What is urged is that, even though the plaintiff was a vendee under a sham transaction, his position cannot be worse than that of a volunteer, and, if a volunteer pays off a mortgage, he is entitled to be subrogated to the rights of the mortgagee whose debt he pays off. This is a startling proposition of law. No volunteer is entitled to pay the debt of another person and claim to charge the amount against him. Reliance is placed upon a decision of the Calcutta High Court in Gobinda Chandra v. Parsa Nath A.I.R. 1926 Cal 231, in which the following observations occur: It seems to me that the doctrine has been further extended so that a stranger who pays off the mortgage debt, even if not asked to do so by the mortgagor, is entitled to the same rights, that is to say, in both the cases, which I have mentioned, the Court assumes that even though there has been no assignment of the debt, it was the intention of the parties that the debt should be kept alive for the benefit of the person who has provided the money out of which the debt or a portion thereof was paid off. 9. The learned Judge, after observing that there is no direct authority for the position, seems to draw support for his position from two English decisions With very great respect I am unable to agree with the learned Judge in holding that a mere volunteer is entitled to the benefit of any payment that he might make on behalf of a debtor whether it be to redeem a mortgage or whether it be to pay off a simple money debt; and the cases upon which the learned Judge relies do not warrant such a wide proposition as he has laid down. In the case of Chetwynd v. Allen [1899] 1 Ch. In the case of Chetwynd v. Allen [1899] 1 Ch. 353, Romer, J., found that the amount was paid on account of the fraud played by Chetwynd, and he could not complain that the charge was kept alive also on the school, seeing that it was by his fraud that the true facts as to Terrels charge were kept hidden from Mynors. In Buttler v. Rice [1910] 2 Ch. 277. Warrington, J., observes at p. 282: I cannot but say that I think the defendants, Mr. and Mrs. Rice, have by their pleadings endeavoured to take advantage of their own deceitfulness to defraud the plaintiff and get the property discharged from this debt. 10. In both the cases it was found, as a matter of fact that by the deceit of the person who wanted afterwards to repudiate the transaction the payment was made. After having deceived a person into paying a certain sum of money on his own account he is not entitled to turn round and say that the money was paid by a volunteer and therefore, he is not liable to pay it. The case in Tangya Falu v. Trimbak Daga [1916] 40 Bom. 646 does not help the respondent. There the mortgagor himself got money from the plaintiff and paid off the mortgagee. There it was held that the intention of the mortgagor was that the plaintiff should have the benefit and should be subrogated to the rights of the mortgagee whom he was paying off. These cases do not warrant the proposition contended for that a volunteer is entitled to be subrogated to the rights of the mortgagee whom he pays off and when he does so, not on account of the fraud or at the request of the mortgagor, but of his own free will. In Nadhamuni Ayyan v. Appu Odayan [1918] 48 I.C. 799 it was held that if a person buys property from a member of a joint Hindu family and pays off the family debt, he could only proceed against his alienors share and he is not entitled to be subrogated to the rights of the mortgagees of the shares of the other members of the family. The mere fact that the alienee from one cosharer pays off the whole of the mortgage debt would not entitle him to be subrogated to the rights of the mortgagee from the other sharers. The mere fact that the alienee from one cosharer pays off the whole of the mortgage debt would not entitle him to be subrogated to the rights of the mortgagee from the other sharers. In Piramu Ammal v. Serunatha Ammal A.I.R. 1925 Mad. p. 1175 I observed that a volunteer was not entitled to be subrogated to the rights of a mortgagee. In the result the second appeal is allowed and the suit dismissed with costs throughout.