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1967 DIGILAW 282 (MAD)

Kanthammal v. D. Venkatakrishna Reddiar

1967-07-19

T.VENKATADRI

body1967
Judgment.- This appeal is filed by the eighth defendant in a suit for declaration and injunction regarding the suit properties or in the alternative for possession of the same. The suit properties originally belonged to defendants 1 and 2. The second defendant is the son of the first defendant. Defendants 3 to 7 are the children of the second defendant. The eighth defendant is the wife of the second defendant, and she is the appellant in the second appeal. Defendants 1 and 2, i.e., father and son, mortgaged the suit properties to the plaintiff in the year 1945 for Rs. 2, 220. To discharge the mortgage, they sold the suit properties to the plaintiff under two sale deeds, Exhibits A-2 and A-3 both dated 7th February, 1949. One creditor of the second defendant filed a suit O.S. No. 31 of 1949 on the file of the District Munsif’s Court, Vellore, against the second defendant and obtained a decree against him. In pursuance of the decree obtained in that suit, the creditor attached the suit properties covered by the two tale deeds in favour of the plaintiff. The plaintiff and his alienors filed claim petitions in the execution proceedings which were allowed in their favour. Therefore, the creditor had to file two suits O.S. Nos. 154 and 186 of 1951 on the file of the District Munsif’s Court, Sholinghar, to set aside the claim order. These two suits were decreed against the plaintiff. In the decree, the Court gave a finding that the sale deeds Exhibits A-2 and A-3 were not true, and that they were conveyed to defraud the creditors. It was also found that though the properties were conveyed under Exhibits A-2 and A-3, possession continued to be with the second defendant on the date of the attachment and the second defendant had right, title and interest in them. Therefore, the plaintiff and his alienors filed appeal suits, A.S. Nos. 41 and 42 of 1954 on the file of the Sub-Court, Vellore, where the findings of the trial Court were reversed. There were second appeals to this Court in S.A. Nos. 375 and 376 of 1955. The second appeals were allowed, the decision of the lower appellate Court was set aside and that of the trial Court was restored. 41 and 42 of 1954 on the file of the Sub-Court, Vellore, where the findings of the trial Court were reversed. There were second appeals to this Court in S.A. Nos. 375 and 376 of 1955. The second appeals were allowed, the decision of the lower appellate Court was set aside and that of the trial Court was restored. This Court held that the sale deeds were not genuine and that there was collusion between the plaintiff and the second defendant. Another creditor filed O.S. No. 472 of 1953 on the file of the District Munsif’s Court, Sholinghar, against the first and second defendants. The suit was decreed in favour of the creditor and the plaintiff in that suit allowed the properties to be attached. But defendants 1 and 2 paid the decree amount in the said suit. Once again defendants 1 and 2 sold the properties to one Chinnappa Naidu on 27th August, 1958. He filed the suit O.S. No. 263 of 1958 on the file of the District Munsif’s Court, Sholinghar, against defendants 1 and 2 and the plaintiff for possession. That suit was dismissed. But the finding in that suit was that the sale deeds Exhibits A-2 and A-3 were genuine. During the pendency of that suit, defendants 1 and 2 filed O.S. No. 250 of 1959 on the file of the District Munsif’s Court, Sholinghar, for accounts in regard to the income from the suit properties. That suit was also dismissed. Then the plaintiff filed the present suit out of which the Second Appeal has arisen, in order to clear the cloud in his title as against defendants 1 and 2. Meanwhile, the first defendant had executed a settlement deed of his half share in the suit properties in favour of the eighth defendant, the wife of the second defendant, under Exhibit B-1, dated 29th October, 1953. The first defendant remained ex parte. The eighth defendant (appellant) contended that the sale deeds (A-2 and A-3) were nominal transactions. Her main defence to the suit was that it was barred by res judicata by virtue of the findings recorded finally in S.A. Nos. 375 and 376 of 1955. The first defendant remained ex parte. The eighth defendant (appellant) contended that the sale deeds (A-2 and A-3) were nominal transactions. Her main defence to the suit was that it was barred by res judicata by virtue of the findings recorded finally in S.A. Nos. 375 and 376 of 1955. The trial Court found that defendants 1 and 2 were not entitled to claim the suit properties, that the plaintiff had title to the suit properties under Exhibits, A-2 and A-3, that the plaintiff was not barred by res judicata by reason of the second appellate decrees, and that Exhibits A-2 and A-3 were binding on the defendants by virtue of the decree in O.S. No. 263 of 1958. As far as the eighth defendant was. concerned, he held that the settlement deed was not binding on the plaintiff and that the same had also been cancelled by the Insolvency Court as on the date of the settlement deed the first defendant was found to have no title to the suit properties. Finally the suit was decreed in favour of the plaintiff. Defendants 2 and 8 preferred an appeal to the Sub-Court, Vellore. The learned Subordinate Judge held that the present suit was maintainable as it was not barred by res judicata by reason of the decision in the second appellate decrees, that the first defendant had no title to give part of the suit properties on the date of the settlement deed, that the decision rendered in O.S. No. 263 of 1958 did not operate as res judicata against the present plaintiff, that the settlement deed executed by the first defendant in favour of the eighth defendant was invalid and that the plaintiff had been in possession of the suit properties from 1958. In the result, the appeal was dismissed. Now, it is against this judgment and decree the eighth defendant has preferred this second appeal. The crucial point for consideration is whether Exhibits A-2 and A-2 executed by defendants 1 and 2 in favour of the plaintiff are nominal and sham and intended to defraud the creditors and whether the findings in the previous proceedings would be binding on the plaintiff. The validity of the above two sale deeds was the subject-matter of discussion and decision from time to time between the parties. The validity of the above two sale deeds was the subject-matter of discussion and decision from time to time between the parties. The finding about the sale deeds varied, modified or changed from Court to Court, and the validity and finality of them were not capable of ascertainment. Taking advantage of the varied findings of the various Courts, the plaintiff is interested in asserting that the findings in the previous proceedings wherever they are against him are not binding on him and equally the appellant is asserting that the present suit is barred by res judicata wherever the findings are against the plaintiff. Therefore I have to decide whether the earliest finding recorded in S.A. Nos. 375 and 376 of 1955 which arose out of claim suits is binding on the plaintiff. The findings are that Exhibits A-2 and A-3 are to defraud the creditors, they are nominal and there was collusion. The lower appellate Court is of opinion that the present suit is not barred by reason of the said decision. Learned Counsel for the appellant has contended before me that the above two suits, O.S. Nos. 154 and 186 of 1951, which arose out of execution proceedings, ultimately ended in second appeals, that the findings therein are against the plaintiff and they are therefore binding on the plaintiff. If they are binding, then the present suit will not be maintainable on the ground that it will be barred by res judicata. In Narasimhachariar v. Raghava Padayachi1, a Full Bench of this Court had to consider the question whether a finding given in a suit which arose under Order 21, rule 63, was binding on the parties in a subsequent suit. In Narasimhachariar v. Raghava Padayachi1, a Full Bench of this Court had to consider the question whether a finding given in a suit which arose under Order 21, rule 63, was binding on the parties in a subsequent suit. The learned Judges observed:- “It is conclusive between the parties to the suit or their representatives so far as the execution of the particular decree is concerned ; but where the property is sold in execution proceedings arising out of an entirely different decree the claimant will not be precluded from setting up his title as against a stranger purchaser If the attachment has not led to the sale of the property all those concerned even if there has been a suit under rule 63, will be left in the same position as they were before attachment, except that the decree-holder will be at liberty to institute fresh proceedings in execution of the same decree without any right remaining in the claimant to reagitate his claim. Subject to the operation of the doctrine of ret judicata in any particular case, we hold that an order on a claim petition filed under Order 21, rule 58, or a decree in a suit filed under rule 63 does not extend beyond the execution of the decree which has given rise to those proceeding?.” This principle, no doubt, has been followed by the lower appellate Court for the purpose of holding that the present suit is not barred by res judicata, because the present suit is an entirely different suit not connected with the claim petitions. But learned Counsel for the appellant cited the decision in Ramireddi v. Bichalu2, where a Division Bench of this Court had explained the true doctrine in such circumstances. The facts of that case are similar to the facts of the present case. The suit property originally belonged to one Khasim. Subsequent to his death his widow Yelli sold the same for a stated consideration of Rs. 100 to the plaintiff in that suit under Exhibit P-1. A creditor of Yelli filed a suit and obtained a decree. Prior to judgment, the suit property was attached when the plaintiff intervened with a claim based on Exhibit P-1. This claim was allowed which led to the filing •of a suit by the creditor for vacating the claim order. 100 to the plaintiff in that suit under Exhibit P-1. A creditor of Yelli filed a suit and obtained a decree. Prior to judgment, the suit property was attached when the plaintiff intervened with a claim based on Exhibit P-1. This claim was allowed which led to the filing •of a suit by the creditor for vacating the claim order. In that suit, he impleaded not only the plaintiff (claimant ) but the judgment-debtor as well. In that suit, it was decided that the property continued to be that of Yelli despite Exhibit P-1 for the reason that Exhibit P-1 was a sham and nominal transaction and was liable to be attached. After this decision, Yelli sold the property to the defendant in that suit, a portion of which was for discharging the decree debt in the previous suit. The plaintiff who purchased the property filed a suit for declaration of his title and for an injunction restraining the defendant from interfering with his possession. The defence was that the finding that the property continued to be that of Yelli was res judicata that Exhibit P-1, was a sham and nominal transaction and would not therefore bind him. The learned Judge referred to the Full Bench decisions and observed: “We do not think that the observations in Narasimhachariar v. Raghva Padayachi1 lend themselves to the interpretation that in no case will the decision given in a suit under Order 21, rule 63 with reference to title to property would operate as res judicata in a subsequent suit.......... It is clear from this statement of law that the learned Judges did not intend to lay down that in no case would the doctrine of res judicata apply to a decision given under Order 21, rule 63. The earlier observations must be understood in the light of later statement of law contained in the same judgment and we may take it that the former related to a case where the rule of res judicata would have no application, as for instance in a suit instituted by the claimant or by the decree-holder, the judgment-debtor was not made a party and the fight was only between the claimant and the decree-holder. Viewed in that light we think there is no conflict between the two statements of law contained in the same judgment.” This judgment has not been referred to by the lower Courts, and learned Counsel for the appellant contends that, even though the Full Bench has made observations that any finding rendered in a previous suit is final and conclusive in the subsequent suit but yet it does not extend beyond the execution of the decree which has given rise to those proceedings, in an order on a claim petition or a decree in a suit filed under rule 63, the Full Bench did not intend that in no case would the doctrine of res judicata apply to a case under rule 63. The statement of law laid down by the Full Bench may not be applicable to the facts of the present case, if we take into consideration the principle laid down in the later decision above referred to. Learned Counsel for the respondents contended that as far as the first defendant was concerned he was not a party to the claim suits, O.S. Nos. 154 and 186 of 1951 which ended ultimately in second appeals in this Court and that his half share was not the subject-matter in previous proceedings, and that further the finding in the •said proceedings was about the fraudulent character of the transaction and not that they were sham and nominal. He therefore contended that the principle laid down in Ramireddi v. Bichalu2, did not apply to the present case. There may be some force in this contention. But still learned Counsel for the appellant asserted that mere impleading of a new party or adding some more items of property in a later suit -will not take away the finality and binding character of the former decision. This proposition of law has been laid down in Anthony Nadar Mariayanagam Nadar v. Vedamanickam Sathianesan3. Learned Counsel for the appellant has next contended that in any event the plaintiff himself was a party to the sale deeds, Exhibits A-2 and A-3 which have been characterised as fraudulent in the previous proceedings and he cannot ask the Court to give him relief on the foot of those transactions. It is true that this plea was not taken in the lower Courts but this was allowed to be taken here as a question of law. It is true that this plea was not taken in the lower Courts but this was allowed to be taken here as a question of law. Their Lordships of the Supreme Court have held in Immani Appa Rao v. G. Ramalingamurthi1, that where both the transferor and the transferee are in equal fraud in carrying out the transfer to defraud the creditors of the transferor and the fraud contemplated has been carried out but possession remains with the transferor, in a suit by transferee for possession, it is open to the transferor to plead fraud and absence of consideration. They further hold that public interest requires that the plea of fraud should be allowed to be raised and tried, and if it is upheld the estate should be allowed to remain where it rests. In the previous proceedings, especially in the second appeal it has been found that the sale deeds are not true and genuine. But it was pointed out by learned Counsel for the plaintiff that no issue was framed and no finding had been given by the trial Court. But it must be said that the lower appellate Court had framed it as a point for consideration and given a finding thereon. It is true that if a transaction is sham and nominal, it need not be set aside. Even assuming that there was no issue as to whether the sale deeds are sham and nominal, still it can be construed that those suits have raised two pleas, namely, whether the sale was sham and nominal and whether the sale was in fraud of creditors. In such circumstances, their Lordships of the Supreme Court have held in Abdul Shukoor v. Arji Papa Rao2 . “.......... It cannot be said that the defendants did not raise two distinct pleas: (1) that the sale as a sham, a pretended sale without any consideration and not intended to pass any title to the nominal purchaser and in the alternative, (2} that even if it were a real transaction supported by consideration and intended to pass title to the plaintiff, still the same was, having regard to the circumstances-stated, a fraud upon the creditors and therefore voidable at his instance. Though the pleading in the written statement was in this form, the issues struck did not raise the two defences as distinct pleas but rolled both of them into a single plea raising the question whether the plaintiff had title to the suit property and whether the claim order was liable to be set aside.” Though in the previous proceedings the Court might have considered only whether the transaction was fraudulent in character, still, applying the principle noted above, I am of opinion that the findings rendered in O.S. Nos. 154 and 186 of 1951 which ended in S.A. Nos. 375 and 376 of 1955 on the file of this Court is binding on the plaintiff, and if it is binding then the present suit would be barred by res judicata. But learned Counsel for the first respondent-plaintiff would contend whether the findings rendered in O.S. No. 263 of 1958 and O.S. No. 250 of 1959 where they are in favour of the plaintiff would not bind the appellant herein. But learned Counsel for the appellant would submit that those decrees would not be binding on the appellant since those proceedings commenced against the settlor after the settlement deed was executed in her favour. Learned Counsel for the appellant contended that, in any event, since the plaintiff had come to Court for declaration and possession, he must prove possession within 12 years of suit. But I do not find any discussion about it in the judgment of the Courts below and no issue has been framed and no finding given. In regard to the other contention by learned Counsel for the first respondent-plaintiff that the settlement deed itself was void, since a coparcener cannot gift away property, learned Counsel for the appellant cited a passage from Mulla’s Hindu Law, 13th Edition, page 291, to show that with the consent of other coparceners, a coparcener can make: a gift of his interest in the coparcenery property. The main question that was considered in the Courts below and here also related to whether the findings arrived at in the previous proceedings which ended in second appeals in this Court were binding on the plaintiff in the present suit. The main question that was considered in the Courts below and here also related to whether the findings arrived at in the previous proceedings which ended in second appeals in this Court were binding on the plaintiff in the present suit. Since I have come to the conclusion that those findings are binding on the plaintiff, on the prin-ciple laid down in Ramireddi v. Bichalu1, the present suit of the plaintiff is barred by res judicata. The second appeal is accordingly allowed. There will be no order as to costs. In view of the complicated facts and continuous proceedings between the parties and the conflicting findings arrived at in them, leave is granted. S.V.J. ---------- Second appeal allowed; Leave granted.