A. G. Krishnamoorthy v. V. Kannammal and others — 1992 DIGILAW 75 (MAD)

Judgment :- Mishra, J. V.Natarajan, the fourth respondent herein, was declared an insolvent. The Official Assignee, however, filed an application under Sec.7 of the Presidency Towns Insolvency Act, 1909, read with Sec.36 thereof, for a declaration that Natarajan, the insolvent, was entitled to one-sixth share in petition mentioned property, and that the same be vested with the Official Assignee consequent on the adjudication that he was insolvent. A learned single Judge of this Court summoned Natarajan his mother Kannammal (first respondent in O.S.A.No.53 of 1985) and other persons known or suspected to have been in possession of the petition mentioned property and inquired as to whether there was any interest or share of the insolvent in the said property. He found, however, that the Official Assignee could not establish that Natarajan had l/6th share in the property, and accordingly dismissed the application. Natarajan, in the meanwhile, also applied for discharge stating inter alia that he possessed no property for any further discharge of the credits, and the learned Judge ordered as follows: "The insolvent has paid his creditors 0.50 P.in a rupee and he had not concealed anything from the Official Assignee or secreted any assets. In the circumstances, this is a fit case where an order of discharge will have to be made in favour of the insolvent." The creditor who had moved an application under Sec.8 of the Act for a review of the order declaring Natarajan, the insolvent, and whose application had been dismissed saying that the question would be taken up only at a stage when it was decided to discharge the insolvent of any liabilities however, felt aggrieved, and thus preferred the instant appeals. 2. The only properly, however, with respect to which the entire dispute related is the property mentioned in the petition of the Official Assignee. It is not in dispute that the title deed of the said property is in the name of (sic) Kamalammal and that the insolvent is one of the five sons of Kannammal. 2. The only properly, however, with respect to which the entire dispute related is the property mentioned in the petition of the Official Assignee. It is not in dispute that the title deed of the said property is in the name of (sic) Kamalammal and that the insolvent is one of the five sons of Kannammal. The case of the Official Assignee before the learned single Judges as well as that of the creditor -appellant before us is that although the title deed stood in the name of (sic Kamalammal, the property belonged to Vedachala Naicker, the husband of the first respondent Kannammal, and it was Vedachala Naicker who had purchased the property in the name of the first respondent as per the three sale deeds Exs.R-1 to R-3. In support of this contention, reliance was placed on Exs.R-1 to R-3, the three mortgage deeds, jointly executed by Kannammal and her sons including the insolvent the recitals whereof indicated that the property had been purchased by Vedachala Naicker in the name of Kannammal, and that on demise of the real owner, Vedachala Naicker, it devolved equally upon Kannammal, the widow and the sons, respondents 2 to 6 including the insolvent. Kannammal, however, maintained chat the property in dispute was a house purchased by her absolutely as per the sale deeds, Exts.R-1 and R-3, and contended that the recitals in Exts.P-1 to P-3 were incorporated at the instance of the creditor, and thus never constituted a conscious admission of the title of her husband. The learned single Judge noticed that the burden of proving that the petition mentioned property was purchased benami by Vedachala Naicker was on the Official Assignee, and that to establish the Benami transaction, he must prove (1) that the sale price for Exts.R-1 to Ru-3 was paid by Vedachala Naicker; (2) that there was sufficient motive for Vedachala Naicker to take a sale deed in the name of his wife; (3) that the possession of the property was always with Vedachala Naicker, and afterwards with his sons; and (4) that the custody of the title deeds was always with Vedachala Naicker and his sons. 3. The Official Assignee examined one of the creditors of the insolvent as P.W.I. He, however, could not show any knowledge about the acquisition of the property by sale deeds, Exts.R-1 to R-3. 3. The Official Assignee examined one of the creditors of the insolvent as P.W.I. He, however, could not show any knowledge about the acquisition of the property by sale deeds, Exts.R-1 to R-3. The first respondent Kannammal deposed as R.W.I and asserted that the property was purchased as per Exts.R-1 to R-3 with her funds, which she earned by vending edibles. She also produced Ex.R-5, licence in her name under Scc.282 of the City Municipal Act for maintaining five heads of cattle, and explained Exts.R-1 to R-3 saying that they were taken for small sums in 1931, 1940and 1941, which sums she could manage with her own earnings. The learned single Judge has stated: "From Ex.P-4 the property tax receipt in respect of the suit property, it is seen that the property stands in the name of Kannammal and that she had been paying the property tax. There is no evidence to show that Vedachala Naicker or his sons paid the property tax for the petition mentioned property at any time. Hence it cannot be said that Vedachala Naicker or his sons had been in possession of the property. No doubt, R.W.I has stated that two of her sons had been permitted to reside in portions of the petition mentioned property. The possession of the suit property by her two sons can only be said to be permissive occupation which cannot give any right in the property to the sons." He has also said: "There is no evidence let in on behalf of the Official Assignee regarding any motive which might have prompted the ‘benami’ transaction. On the other hand, R.W.I had given evidence that she had purchased the property as per Exts.R-1 to R-3 with her own funds and that neither her husband nor her sons had any manner of right at any time in the said property." He has further said: "It is seen that R.W.I had mortgaged the property with the Oriental Benefit Fund and she deposited the title deeds with them. There is no evidence to show that the original title deeds had been with Vedachala Naicker and his sons." After taking notice of the state of evidence as above, he has dealt with particularly how the recitals in Exs.P-1 to P-3 stand. There is no evidence to show that the original title deeds had been with Vedachala Naicker and his sons." After taking notice of the state of evidence as above, he has dealt with particularly how the recitals in Exs.P-1 to P-3 stand. He had said: "Apart from the recitals in Exts.P-1 to P-3 that the property was purchased in the name of the 1st respondent ‘benami’ by her husband, the Official Assignee is not able to let in any evidence to substantiate the case set out in the petition. R.W.I has stated the circumstances under which the said recital in Exts.P-1 to P-3 came into existence R.W.I had stated that at the instance of the creditors such recitals were incorporated. The said recitals cannot be taken as conclusive for the following reasons: .(a) If the recital is true, there is no reason for making the 1st respondent as a party to Exts. P-1 to P-3; .(b) There is no semblance of evidence to show that late Vedachala Naicker dealt with the property in any manner; and .(c) There is nothing to show that possession of the property had vested with Vedachala Naicker or his sons after his death. Taking the entire circumstances, much value cannot be attached to the recitals in Exts.P-1 to P-3, and the case of the Official Assignee based upon the said recitals will have to be negatived." 4. There can be no dispute that in case of a benami transaction, the most important issue is as to who paid the consideration money/purchase money if at all there was such consideration involved, followed by the other issues to which the learned single Judge has adverted to carefully. It is indeed a mistake if we say so, with respect, to imagine a dispute raised by a third party as to the title in some one other than the person in whose name the property stands. Sec.59 of the Indian Evidence Act provides that the the contents of documents cannot be proved by oral evidence. It is indeed a mistake if we say so, with respect, to imagine a dispute raised by a third party as to the title in some one other than the person in whose name the property stands. Sec.59 of the Indian Evidence Act provides that the the contents of documents cannot be proved by oral evidence. Sec.91 of the Indian Evidence Act says that when the terms of a contract or of a grant, or any other disposition of property, have been reduced to the form of a document and in all cases in which any matter is required by law to be reduced to the form of a document, no evidence shall be given in proof of the terms of such contract, grant or other disposition of property or of such matter except the document itself, or secondary evidence of its contents in cases in which secondary evidence is admissible, subject to the exceptions that are enumerated under it. Sec.92 excludes evidence as to oral agreement which will have the effect of contradicting, varying, adding to, or subtracting from, the terms of the document reduced to writing. Benami is a concept derived from the use and practice in India of any immovable property by the real owner, keeping himself in hiding and projecting ostensibly someone else as the owner. The ostensible owner thus has all the rights and privileges of the owner of a property, except against the real owner who enjoyed the privilege of asserting his title against the ostensible owner. If any one could assert any right or interest in the property that stood in the name of Kannammal in the title deed, that was the real owner viz., the husband, if at all Kannammal was only ostensibly the owner and the property in fact had been purchased by Vedachala Naicker. We cannot see any possibility of a creditor who may have a claim against the debtor to say that his debtor is the real owner of the property, although the property stood in the name of another person. 5. Learned Counsel for the appellant, however, has placed reliance upon a judgment of the Privy Council in Man Mohan v. Mt. Ramdei, A.I.R. 1931 P. C. 175:34 L. W. 7, which was a case relating to a dispute as to a deed of gift. 5. Learned Counsel for the appellant, however, has placed reliance upon a judgment of the Privy Council in Man Mohan v. Mt. Ramdei, A.I.R. 1931 P. C. 175:34 L. W. 7, which was a case relating to a dispute as to a deed of gift. Two brothers, Bebari Lal and Lala Guza Prasad owner in its entirety a house. The entire interest of Lala Gaza Prasad was purchased by the appellants. Behari Lal sold 4 annas of his 8 annas share to the appellants. Thus, the appellants became owners of 12 annas share in the property. Behari Lal executed a deed of gift of his remaining 4 annas share in favour of his wife. Notwithstanding the gift, later he sold’ to the appellants the 4 annas share which was the subject matter of the gift to his wife. The appellants thus claimed that they had purchased the entire share of Lala Gaza Prasad as well as the entire share of Behari Lal in the house property, and alleged that the deed of gift was fictitious and invalid, the Privy Council said upon that: “In order to determine the question of the validity or invalidity of the deed of gift in question it is of assistance to consider:” the surrounding circumstances, the position of the parties and their relation to one another the motives which could govern their actions and their subsequent conduct. “Dalip Singh v. Nawal Kunwar, (1908)30 All. 258:35 LA. 104 P.C., at p.107 (of 35 I.A.) always remembering that the onus of proof rests upon the party impeaching the deed. The terms of the deed itself are not suggestive of a merely colourable document. After reciting the fact of his recent marriage the minority of his wife, the advice of his relation and his own desire to make arrangements for his wife’s maintenance, Behari Lal gives the property in question to his wife under his sister-in-law’s guardianship, for her life-interest, subject to an elaborate series of conditions, which include inter alia a prohibition against alienation, a provision for the reversion of the property to himself should his wife die without male issue, and a forfeiture clause in the event of his wife ceasing to live with him...... The situation of the parties at the time of the execution of the deed renders it probable that it was intended to be a genuine transaction. The situation of the parties at the time of the execution of the deed renders it probable that it was intended to be a genuine transaction. The learned Subordinate Judge came to the conclusion that the deed was a” farzi “ transaction entered into to save the property from his creditors,” but although Behari Lal had a sufficiently chequered financial career in which a conveniently shifting date of majority placed a large part, he does not appear to have been at the time of the execution of the deed under any pressure of debt. The deed of gift was duly registered and the name of the donee entered in the Municipal records. “ Besides the above, it is noticeable in the judgment of the Privy Council that Behari Lal had instituted the suit to have the deed of gift set aside and stated that he did so under the advice of his evil companions and due to fear of creditors and described and deed of gift as fictitious. He also alleged somewhat inconsistently that the property had reverted to him under the terms of the deed owing to his wife having ceased to live with him. The Privy Council pronounced: ”Their Lordships on a consideration of the whole circumstances, of which they have set out the salient incidents, are satisfied that the appellants have failed to discharge the burden incumbent upon them of proving that the deed of gift was fictitious. Apart from general auspicion of Behari Lal, on whose actings as little reliance can be placed as on his word, and who was naturally willing when it suited his purpose, to falsify the facts, there is really no evidence of such a character as would entitle a court to take the serious step of setting aside the deed of gift and depriving the innocent minor respondent of the provisions reasonably made for her.“ 6. The other case relied upon by learned Counsel for the appellant is again a case of benami transfer of property and a dispute between the real owner and the ostensible owner. In Jayadayal Poddar v. Bibi Hazra, A.I.R. 1974 S.C. 171: (19711 S.C.C. 3, it is said: ”It is well settled that the burden of proving that a particular sale is benami and the apparent purchaser is not the real owner, always rests on the person asserting it to be so. In Jayadayal Poddar v. Bibi Hazra, A.I.R. 1974 S.C. 171: (19711 S.C.C. 3, it is said: ”It is well settled that the burden of proving that a particular sale is benami and the apparent purchaser is not the real owner, always rests on the person asserting it to be so. This burden has to be strictly discharged by adducing legal evidence of a definite character which would either directly prove the fact of benami or establish circumstances unerringly and reasonably raising an inference of that fact. The essence of a benami is the intention of the party or parties concerned; and not unoften such intention is shrouded in a thick veil which cannot be easily pierced through. But such difficulties do not relieve the person asserting the transaction to be benami of any part of the serious onus that rests on him; nor justify the acceptance of mere conjectures or surmises, as a substitute for proof. The reason is that a deed is a solemn document prepared and executed after considerable deliberation, and the person expressly shown as the purchaser or transferee in the deed, starts with the initial presumption in his favour that the apparent state of affairs is the real state of affairs. Though the question, whether a particular sale is benami or not, is largely one of fact, and for determining this question, no absolute formulae or acid test, uniformally applicable in all situations, can be laid down; yet in weighing the probabilities and for gathering the relevant indicia, the courts are usually guided by these circumstances; (1) the source from which the purchase money came (2) the nature and possession of the property, after the purchase; (3) motive, if any, for giving the transaction a benami colour (4) the position of the parties and the relationship, if any, between the claimant and the alleged benamidar; (5) the custody of the title-deeds after the sale and (6) the conduct of the parties concerned in dealing with the property after the sale. 7. Learned counsel for the appellant also referred to a judgment of the Supreme Court in Gapadibai v. State of M.P., A.I.R. 1980 S.C. 1040. This was a case before the Supreme Court, wherein for recovery of sums due to the Government from the husband, a property which has stood in the name of his wife was attached. 7. Learned counsel for the appellant also referred to a judgment of the Supreme Court in Gapadibai v. State of M.P., A.I.R. 1980 S.C. 1040. This was a case before the Supreme Court, wherein for recovery of sums due to the Government from the husband, a property which has stood in the name of his wife was attached. The wife filed a suit claiming relief on the ground that the house was her personal property and could not be attached to the sums owing by her husband. The defence by the State was that the property belonged to the husband, and that, therefore, the attachment was valid. The wife relied on a registered document which was proved to have been duly executed. She also let evidence to show that she had sufficient means to purchase the house. The Supreme Court, on the basis of the above said: “In the first place, the State never pleaded that the house in question was purchased by the husband through a benami transaction in the name of his wife. It was also not pleaded clearly that the property belonged to the husband and that it has been sold to the wife with the intention to defeat the creditors of the husband. A vague allegation of this type seems to have been made in the written statement but no evidence whatsoever has been led to show as to whether there was any such intention on the part of defendant No.5. Even the data when the sums sought to be recovered become due has not been proved or indicated to the satisfaction of the court. The trial court, after a very careful consideration of the evidence of the plaintiffs and the documents produced by her found that she had established that the property in question belong to her and not to defendant No.5. In the instant case as the plaintiff relied on a registered document which was proved to have been duly executed, a finding which has not been reversed by the High Court, the onus lay on the State to prove that what was apparent was not the real. No evidence on behalf of the State was adduced to displace the presumption arising from the registered sale deed in favour of the plaintiff. On the other hand, the plaintiff led evidence oral and documentary, to show that she had sufficient means to purchase the house. No evidence on behalf of the State was adduced to displace the presumption arising from the registered sale deed in favour of the plaintiff. On the other hand, the plaintiff led evidence oral and documentary, to show that she had sufficient means to purchase the house. The High Court instead of displacing the reasons given by the trial court, has rejected the oral evidence on a general ground that there were some contractions here and there and has also misconstrued the documents produced by the plaintiff which were in the nature of applications to the municipality for purchasing a backyard of the house in dispute and which were allowed on the footing that the house belonged to her..... Once the plaintiff proved by virtue of the registered sale deed that she was the owner of the house and also explained the source of the price paid by her for it, that was sufficient to hold that the property belonged to her and could not be attached for the recovery of dues owing by her husband.” The Supreme Court in that case rejected the plea of benami saying, “In order to prove the benami nature of the transaction the State could have led evidence to show (1) that defendant No.5 paid the consideration, (2) that he had the custody of the sale deed, (3) that he was in possession of the property and (4) the motive for the transaction. None of those factors has been proved by the State.” 8. The discussion that we have made thus of the principles of law clearly shows that the most vital of the questions that was required to be answered is the source from which the purchaser money came and then only the nature of possession of the property after the purchase and the other issues as aforementioned have to be examined. As observed by the Supreme Court, the title deed is a solemn document. It cannot easily be ignored, and no inference drawn against its contents unless, as again observed by the Supreme Court, the person asserting the transaction to be benami is able to show that the ownership although ostensibly shown in the name of a certain person, was in reality with another. We are satisfied that the learned trial Judge has committed no mistake in coming to the conclusion as above with respect to the property in question. 9. We are satisfied that the learned trial Judge has committed no mistake in coming to the conclusion as above with respect to the property in question. 9. Had there been any assertion before us that the fourth respondent insolvent had any other property or that the Official Assignee and or the learned single Judge were not informed about all the properties of the insolvent, we would have thought to give to the creditor another opportunity to agitate and seek a review of the order discharging the insolvent. Since the only property referred to is one which has been found to belong to the first respondent Kannammal, and in which property it has not been established that the insolvent ever had any interest, we think no interest will be served by making any observation as to the claim of the creditor still surviving and the insolvent still liable and not discharged. It is a case, in our opinion, in which the only possible view is one that has been taken by the learned single Judge. There is no merit in the appeals. The appeals are accordingly dismissed. There shall, however, be no order as to costs.