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1994 DIGILAW 110 (KER)

Leelavathy Nambiar v. Sankara Kurup

1994-03-02

P.K.IYER BALASUBRAMANYAN

body1994
JUDGMENT P.K. Balasubramanyan, J. 1. This is an appeal by the plaintiff. The suit O. S. No. 189 of 1981 was filed by her for a declaration that the plaint schedule property belongs to her and for recovery of possession of the same from the defendant with profits and damages. The plaint schedule property having an extent of 38 cents is situated in the middle of the other properties admittedly belonging to the plaintiff. The thavazhi of the plaintiff had Jenm right over the suit property. The property was outstanding on tenancy with one Virundan. Virundan defaulted in payment of rent. A suit O. S. No. 280 of 1960 on the file of the Munsiff's Court, Payyannur was thereupon filed for recovery of the arrears of rent. The suit was decreed and in execution of that decree the plaint schedule property, according to the plaintiff, was purchased by the plaintiff. Ext. A26 dated 15-6-1964 is the sale certificate issued in that regard. The defendant was the agent of the plaintiff as well as her Power of Attorney Holder. Instead of purchasing the property in court auction in the name of the plaintiff what the defendant did was to take it in his own name. This fact was not known to the plaintiffs since the defendant debited the purchase price to the account of the plaintiff and he continued to account to the plaintiff for the profits derived from the suit property, as well. Therefore the plaintiff had no reason to suspect that the name entered in the sale certificate was not that of herself. The agency of the defendant was terminated and he was sent out of service in the year 1976. In the year 1979 the defendant trespassed into the suit property with a view to spite the plaintiff for having terminated his agency. The plaintiff therefore filed the present suit praying for the reliefs referred to above. The main, if not the only defence was that the sale certificate Ext. A26 stood in the name of the defendant and hence it enured to his benefit. It was contended that in the light of the sale certificate Ext. The plaintiff therefore filed the present suit praying for the reliefs referred to above. The main, if not the only defence was that the sale certificate Ext. A26 stood in the name of the defendant and hence it enured to his benefit. It was contended that in the light of the sale certificate Ext. A26, the defendant was the owner of the property The Trial Court clearly found that the defendant purchased the property with the money of Hie plaintiff while he was acting as her agent and Power of Attorney, But the Trial Court dismissed the suit holding that since the sale certificate stood in the name of the defendant, the suit was barred by virtue of S.66 of the Code of Civil Procedure. The claim of the plaintiff that in any view even after the sale certificate dated 15-6-1964 the plaintiff has been in possession of the property and taking income from there and hence the plaintiff has prescribed a title as against the defendant even if the bar under S.66 of the Coda of Civil Procedure is to be put forward, was negatived by the Trial Court on the finding that the possession of the defendant could not be treated as that of the plaintiff for this purpose. On appeal by the plaintiff, the appellate court held that the suit was hit by S.66 of the Code of Civil Procedure and hence the plaintiff is not entitled to recover possession of the property or to get her title declared. The appellate court also found that the case of the plaintiff that/she had actual possession of the property and that she must be taken to have prescribed for a title against the defendant, who was in custody of the property and not in possession thereof was also found unacceptable. Thus the lower appellate court also dismissed the suit. The plaintiff has come up with Second Appeal challenging the dismissal of her suit by the courts below. 2. This suit was instituted on 16-11-1981 The suit was dismissed on 24-8-1985. The appeal before the lower appellate court was filed in the year 1985. While the appeal was pending the Benami Transactions (Prohibition) Act, 1988 came into force with effect from 19-5-1988. S.7 of the said Act repealed S.66 of the Code of Civil Procedure. It also repealed S.81, 82 and 94 of the Indian Trust Act. The appeal before the lower appellate court was filed in the year 1985. While the appeal was pending the Benami Transactions (Prohibition) Act, 1988 came into force with effect from 19-5-1988. S.7 of the said Act repealed S.66 of the Code of Civil Procedure. It also repealed S.81, 82 and 94 of the Indian Trust Act. The lower appellate court had therefore to consider the effect of the said Act on the contentions raised by the parties. The lower appellate court took the view that the repeal of S.66 of the Code of Civil Procedure would not make any difference except to widen the scope of the bar created by that Section so as to preclude the plaintiff from pleading that the purchase was benami for her. The lower appellate court therefore proceeded to take the view that the suit itself is hit by S.66 of the Code of Civil Procedure, what would be the effect of the Benami Transactions (Prohibition) Act was not elaborately considered by the lower appellate court. 3. S.66 of the Code of Civil Procedure as it stood provided that no suit shall be maintained against any person claiming title under a purchase certified by the court by a person claiming that the purchase was made on behalf of that person. Sub-s.(2) provided an exception to this Rule. The said Sub-section provided that no suit shall be barred to obtain a declaration that the name of any purchase certified in the sale certificate was inserted fraudulently or without the consent of the real purchaser thus saving certain categories of suits from within the bar created by S.66(1) of the Code. The whole of this section now stands repealed. Whether the repeal of the Section would in any way affect suits that were saved by Sub-s.(2) of S.66 of the Code is one aspect that has to be considered in this Second Appeal. The other aspect of course is the scope of the Benami Transactions (Prohibition) Act and the ambit of the operation of S.4 of that Act. 4. It appears to me that one or two aspects require to be remembered in this case. There is a clear finding in this case that the defendant was the agent and the Power of Attorney Holder of the plaintiff. He was helping the plaintiff in looking after her thavazhi properties. 4. It appears to me that one or two aspects require to be remembered in this case. There is a clear finding in this case that the defendant was the agent and the Power of Attorney Holder of the plaintiff. He was helping the plaintiff in looking after her thavazhi properties. The present suit property lies in the middle of the thavazhi properties. It was outstanding on a lease. In execution of the decree for arrears of rent the property was purchased. The accounts maintained by the father of the plaintiff would show that the expenses of the litigation and the obtaining of the sale certificate were all entered in the account of the plaintiff. It is also found that the expenses for the purchase was incurred by the plaintiff. The clear finding of the Trial Court is that the property was purchased with the funds of the plaintiff and it was improved and converted into a coconut garden with the funds of the plaintiff. Thus the consideration for purchase as well as the act of improvement over the property were done with the funds of the plaintiff for whom the defendant was acting as an agent and Power of Attorney. The defendant obviously bad a fiduciary 'capacity vis a vis the plaintiff and it is obvious from the facts of this case and on the finding that he was acting on behalf of the plaintiff when he took the sale certificate in his own name. Obviously, he had got his name inserted in the certificate of sale without the consent of the plaintiff and by playing a fraud on the plaintiff. If so looked at, there cannot be any difficulty in holding that the suit was clearly maintainable and the title and possession of the properly vested with the plaintiff and she will be entitled to the reliefs claimed in the suit. I am inclined with respect to agree with the decision of the Madras High Court reported in Krishna Bhatta v. Ganapathy Bhatta ( AIR 1955 Mad. 548 ) that "suits for recovery of possession do not stand barred under S.66 if the purchase is made by persons with express or implied authority or agency or by persons who stand in a fiduciary position". 548 ) that "suits for recovery of possession do not stand barred under S.66 if the purchase is made by persons with express or implied authority or agency or by persons who stand in a fiduciary position". But the learned counsel for the respondent defendant submitted that S.66(2) of the Code of Civil Procedure would apply to this case only if the necessary foundation has been laid in the plaint by the plaintiff. According to the learned counsel S.66(1) of the Code of Civil Procedure would be attracted the moment the plaintiff admits that the name of the defendant is shown in the sale certificate as purchaser and claims that the property in fact belonged to her. He submits that the courts below were right in dismissing the suit as being hit by S.66 of the Code. 5. The first aspect to be considered is whether there is sufficient foundation laid in the plaint so as to attract S.66(1) of the Code so as to save the claim of the plaintiff from the vice of S.66(1) of the Code. The plaint has clearly pleaded that the defendant was the Kariyastha and Mukthiar holder of the plaintiff and he was managing the property and conducting the litigation for and on behalf of the plaintiff. The plaint has also pleaded that the expenses incurred for the litigation against the tenant Virundan had been incurred by the plaintiff and the amounts have been debited in her account by the defendant who was acting as her agent while accounting to her for the profits of the property. The plaint also pleads that subsequent improvements were effected in the property with the expenses incurred by the plaintiff. The plaint also says that the plaintiff was particular of purchasing this property since it was lying in the middle of her other properties and the defendant had been authorised to purchase the property. It goes on to say that instead of taking the property in the name of the plaintiff the defendant had taken it in his own name but had debited her for the expanses for the purchase and other expanses In my view these facts pleaded by the plaintiff which have been found by the courts below in sufficient to attract S.66(2) of the Code of Civil Procedure to the facts of this case. The defendant was the agent and Power of Attorney of the plaintiff and was managing the properties and conducting the litigation against Virundan on behalf of the plaintiff. With the money of the plaintiff the defendant had purchased the property in court auction. The plaintiff was anxious to purchase this property since it was in the middle of her other properties. The defendant had accounted for the expenses and the income from this property to the plaintiff until his dismissal from service. The property had been improved by the plaintiff with the funds belonging to her. These facts clearly establish that the defendant had got his name inserted in the sale certificate without the consent of the plaintiff who was the real purchaser. At best, the learned counsel for the defendant could be right to the extent of saying that it has not been averred in the plaint that the defendant fraudulently got inserted his name. But this is a case where on the evidence and the finding it is clear that the plaintiff was the real purchaser and it was without her consent that the defendant got his name inserted It is therefore clear that S.66(2) of the Code of Civil Procedure saved the present suit from the bar created by S.66(1) of the Code. 6. The plaintiff has a further case that in 1976 the agency of the defendant was terminated and he went out of employment and at that time, the plaintiff had actually obtained possession of the property. In 1979 the defendant had second thoughts and had trespassed into the property, according to the plaintiff. In the circumstances I find no reason to reject this case of the plaintiff. It is clear that while the defendant continued to be in management of the properties of the plaintiff, even the expenditure for effecting improvements in the property was debited to the account of the plaintiff. The defendant had rendered accounts of the plaintiff in respect of all the income including the income from the suit property. That circumstance in my view goes a long way in making the case of the plaintiff that this was a case where the defendant came back and trespassed into the property in the year 1979 probable. The defendant had rendered accounts of the plaintiff in respect of all the income including the income from the suit property. That circumstance in my view goes a long way in making the case of the plaintiff that this was a case where the defendant came back and trespassed into the property in the year 1979 probable. Thus on a consideration of the facts in this case, it is clear that this suit was saved by S.66(2) of the Code of Civil Procedure and the courts were clearly in error in holding that the suit was hit by S.66(1) of the Code. 7. What is the effect of the repeal of S.66 of the Code of Civil Procedure as a whole by S.7 of the Benami Transactions (Prohibition) Act, 1988? It would mean that the bar created by S.66(1) of the Code is no more there. It would also of course mean that the saving under S.66(2) of the Code also does not survive. Bat in a case where title to a property is claimed on the basis that the ownership vests in a person, but the purchase was made by an agent authorised in that behalf who fraudulently purchased the property in his own name, in my view, a suit will always lie to void the tide of the agent or to affirm the title of the principal. The fact that it is a court auction purchase would not make any difference to such a suit. The bar created by S.66(1) of the Code having disappeared, I do not find any bar created by any law to the maintainability of such a suit. In fact S.88 of the Indian Trusts Act postulates that an agent or other person bound in a fiduciary character to protect the interests of the principal would hold the property for the benefit of the principal or a person like the present plaintiff. In such a suit really no plea of benami at all is involved. It; is interesting to note that S.88 of the Trusts Act has not been repealed by the Benami Act. 8. Then the question is, what is the effect of S.4 of the Benami Transactions (Prohibition) Act. As I stated, in such cases, no question of benami at all may arise. In that case S.4 of Benami Act may have no application at all. 8. Then the question is, what is the effect of S.4 of the Benami Transactions (Prohibition) Act. As I stated, in such cases, no question of benami at all may arise. In that case S.4 of Benami Act may have no application at all. But assuming that S.4 of the Benami Act is attracted to the case like the present the question is what is its effect on the present suit. S.4 makes unavailable a plea of benami either to a plaintiff or to a defendant. But sub-s.3 of S.4 provides that nothing in the laid section would apply where the person is whose name the property is held is a trustee or other person standing in a fiduciary capacity and the property is held for the benefit of another person for whom he is a trustee or towards whom he stands in such capacity. It is clear on the facts of this case that the defendant was an agent and power of attorney of the plaintiff and hence stood in a fiduciary capacity to her. He had an obligation to account for the income from the property and the expenses incurred for improving the property. He had also accounted for the purchase price in respect of his purchase of the property in court auction and the expenses incurred in connection with the litigation against the tenant. Thus as an agent and Power of Attorney Holder the defendant held a position of confidence vis a vis the plaintiff. The defendant had been authorised to purchase the property in court auction at the expense of the plaintiff. In such a situation the defendant would be considered a trustee for the plaintiff. It is stated by Fridman in the Law of Agency, Fifth Edition at page 237: "It should also be noted that where the agent is employed to purchase property on behalf of his principal and does so in his own name, then, upon conveyance or transfer of the property to the agent, he is considered to be trustee of it for the principal". It is further observed at page 21: "Certain equitable remedies in respect of property in the hands of an agent may be pursued by the principal against an agent, in the same way that they are available to the beneficiary against the trustee". It is further observed at page 21: "Certain equitable remedies in respect of property in the hands of an agent may be pursued by the principal against an agent, in the same way that they are available to the beneficiary against the trustee". Philip H. Pettit in Eqaity and the Law of Trusts, 6th Edition, has observed at page 24: "It is sometimes said that an agent is a trustee for his principal of property belonging to the principal committed to his charge, either generally, or, according to Keeton and Sherid an, only where there is some special confidential relationship. There is no doubt that a principal can commonly exercise the same remedies against his agent as a cestui que trust can against his trustee, but Professor Powell has pointed out that this does not necessarily mean that an agent is a trustee or that a trustee is an agent. It means simply that agents and trustees have something in common and that "something in common" is that, they both hold a fiduciary position which imposes on them certain obligations. Thus both agents and trustees are under a duty not to delegate responsibilities not to let their interests conflict with their duties, not to make any unauthorised profits and to keep proper accounts." On the nature of the relationship set out in this case and the facts established, I have no difficulty in holding that the defendant was standing in a fiduciary capacity to the plaintiff while he got his name inserted in the sale certificate Ext. A26 and hence I am of the view that the defence under S.4 of the Benami Act in any event, is not available to the defendant. 9. If the view be taken that in view of the repeal of S.66 of the Code of Civil Procedure by the Benami Act, the whole of S.66 has disappeared and the rights thereafter are governed only by S.4 of the Benami Act, then in my view the plea of bar is not available to the defendant since he was standing in a fiduciary capacity to the plaintiff at all relevant times. Thus, I overrule the contention raised on behalf of the defendant based on S.4 of the Benami Act. 10. On the facts, there cannot be much dispute. Thus, I overrule the contention raised on behalf of the defendant based on S.4 of the Benami Act. 10. On the facts, there cannot be much dispute. On the finding of the Trial Court as affirmed by the lower appellate court with which I entirely agree, it is clear that the money of the plaintiff was utilised by the defendant while he was acting as her agent and the property was purchased. The property was purchased for the plaintiff in view of the fact that the property was situated in the middle of the plaintiff's other properties and the plaintiff was anxious to see to it that no stranger came in the middle of her properties by purchasing it in court auction. It is easy to imply that the plaintiff had directed the defendant to purchase the tenancy right for her. There is acceptable evidence to show that it was the plaintiff who incurred expenses for improving the property subsequent to the purchase under Ext. A26. Thus the title to the property in this case clearly vested in the plaintiff and the plaintiff is therefore entitled to the declaration and recovery of possession sought for by her. 11. In the view I have taken, I do not think it necessary to consider the further case of the plaintiff that is any event the plaintiff had prescribed for a title against the defendant subsequent to the purchase Ext. A26 in view of the fact that the plaintiff was in possession of the property along with her other properties though through the defendant as her agent. 12. The learned counsel for the respondent raised a contention that the title of the plaintiff if any is barred by adverse possession. There was no plea of adverse possession originally raised. Though a plea was sought to be added by way of amendment and the amendment was allowed, the same was not carried out. More over, in this case the defendant continued to be an agent until 1976. The case of the plaintiff is that the defendant trespassed in to the property only in the year 1979. The suit was laid on 16-7-1981, well within the 12 years of 1976. Since even subsequent to the purchase under Ext. More over, in this case the defendant continued to be an agent until 1976. The case of the plaintiff is that the defendant trespassed in to the property only in the year 1979. The suit was laid on 16-7-1981, well within the 12 years of 1976. Since even subsequent to the purchase under Ext. A26 dated 15-6-1964 improvements continued to be effected in the property at the expense of the plaintiff, it cannot be said that the defendant was holding the property adversely to the plaintiff at least until the termination of his agency in the year 1976. I therefore find that there is no merit in the plea of the defendant that the title of the plaintiff is barred by adverse possession. The possession of the defendant prior to 1976 was only for and on behalf of the plaintiff. In the circumstances of this cases, I am inclined to accept the case of the plaintiff that the defendant trespassed into the property only in the year 1979, therefore overrule the case of adverse possession set up by the defendant. There is no evidence as regards the claim for damages of Rs. 900/-. In the nature of the evidence in the case, I am of the view that plaintiff is not entitled to any decree for damages. 13. The plaintiff has claimed mesne profits at the rate of Rs. 600/- per year. This is not specifically denied by the defendant in the written statement. In the circumstances, I feel that a sum of Rs. 500/- per annum from the date of suit can be awarded to the plaintiff towards the profits of the property. It is seen that a Receiver had been in possession of the property for some time. The plaintiff will be entitled to the income of the property in those years on the basis of the deposits by the Receiver and in respect of the other periods during which the defendant continued to be in possession the defendant will be liable for profits, at the rate of Rs. 500/- per year. In the result, I allow this Second Appeal with costs. 500/- per year. In the result, I allow this Second Appeal with costs. I decree the suit O. S. No. 189/81 and declare that the plaint schedule property belongs to the plaintiff, I direct the defendant to surrender the plaint schedule property to the plaintiff, falling which the plaintiff will be entitled to execute this decree and recover possession of the same from the defendant, with mesne profits at the rate of Rs. 500/- per year subject to O.20 R.12 of the Code of Civil Procedure. It is made clear that the amounts collected by the Receiver and available in court will be given credit to while calculating the liability for mesne profits of the defendant.