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2012 DIGILAW 996 (KAR)

S. Lokanatha v. S. Varalakshmi

2012-12-13

JAWAD RAHIM

body2012
JUDGMENT Jawad Rahim, J. The 1st defendant is in appeal against the judgment and decree in O.S. 6692/99 granting to the respondents half share in the schedule premises along with the 2nd defendant-Venkateshaiah. 2. Heard. The appeal is admitted and taken up for final disposal by consent of the learned Counsel on both sides. 3. From what the learned Counsel on both sides have urged and on perusal of the records, the following contextual facts manifest: a) The 1st respondent-Smt. Varalakshmi along with her children (respondents 2 to 7) filed suit seeking division of properties described in the schedule to the plaint to assign unto them and the appellant herein half share therein. b) In support of the relief so sought, she averred she was married to the 2nd defendant-Venkateshaiah who is arrayed as respondent No.8 in this appeal and during the matrimony with him, begot respondents 2 to 7. Venkateshaiah was engaged in the business of selling juices and eatables in Bangalore; he shifted to Bombay for better prospects. While living there, he incurred heavy debts and secreted himself; since then he has not been heard of. c) It is averred appellant's father-Subbaiah and father of her husband-Venkateshaiah had acquired the schedule premises; Subbaiah mortgaged the premises to raise loan in favour of one Rukkamma as evidenced from a deed dated 24.3.1971. She further contended, Subbaiah is not alive and upon his death, the properties are divisible amongst the appellant and her husband-Venkateshaiah, but partition has not yet been affected. It is her case that from the time of her marriage, she and respondents 2 to 7 (her children lived with Venkateshaiah in the schedule property and are in physical possession and enjoyment uninterruptedly. However, 1st defendant with ulterior motive took advantage of the absence of her husband and started acting adverse to her interest; in one such attempt, he initiated eviction proceedings against Venkateshaiah in HRC 10400/93 knowing well that Venkateshaiah was not heard of for a long period and she and her children were in physical possession of the property. It is alleged, having come to know of such sinister design of the appellant to evict them, she had no choice but to file the suit seeking division of the properties to allot unto her, her husband and children half share in the properties along with the appellant herein. It is alleged, having come to know of such sinister design of the appellant to evict them, she had no choice but to file the suit seeking division of the properties to allot unto her, her husband and children half share in the properties along with the appellant herein. She also alleged, when partition was demanded, appellant herein put forward an untenable contention that he has purchased the property from Rukamma and thus he is the owner. In the circumstances, she filed the suit for partition. d) Appellant who was 1st defendant in the suit, entered contest. While admitting genetic relationship between him, Subbaiah and 2 defendant-Venkateshaiah, he contended during the lifetime of Venkateshaiah, appellants are not entitled to any share and therefore the suit was not maintainable. The second ground urged to negate the suit claim is, though Subbaiah was the owner of the property in question, he had sold it in favour of Rukamma by sale deed dated 24.3.1971 and had entered into an agreement with the plaintiff for re-conveyance stipulating four years as the period to seek re-conveyance of the property on payment of the price. It is his case that Subbaiah did not take benefit of the right under the agreement of re-conveyance and therefore the transaction of sale between him and Rukamma is binding on him, and his right to re-purchase the property has diminished. Consequent to such event, Rukamma became the absolute owner and by virtue of the sale deed vide Ex.D3 dated 18.10.1999, she sold the property to him. In short, he claimed to have acquired lawful title from Rukamma to the exclusion of his brother-Venkateshaiah and respondents herein. Relying on 6 documents, he sought dismissal of the suit. e) Based on the material propositions in the pleadings, learned trial judge framed the following issues: 1. Whether plaintiffs prove that suit property is the joint family property of plaintiffs and defendants? 2. Whether plaintiffs have half share in the suit property? 3. Whether plaintiffs are entitled for mesne profits? 4. Whether defendant No. 1 proves that suit property is self acquired property of defendant No. 1? 5. What decree or order? and in the enquiry that ensued, plaintiff-Varalakshmi tendered evidence as PW2 and examined Chandrashekar, her son, as PW1 and placed reliance on 8 documents. Appellant herein-Lokanath tendered evidence as DW1 and relied on 8 documents. 4. Whether defendant No. 1 proves that suit property is self acquired property of defendant No. 1? 5. What decree or order? and in the enquiry that ensued, plaintiff-Varalakshmi tendered evidence as PW2 and examined Chandrashekar, her son, as PW1 and placed reliance on 8 documents. Appellant herein-Lokanath tendered evidence as DW1 and relied on 8 documents. f) Learned trial judge analyzing the evidence, opined the transaction between Subbaiah and Rukamma was not a transaction of outright sale but it was a mortgage transaction and therefore, the right, title and interest of his legal heirs was only subject to charge created by the mortgage deed dated 24.3.1971. He rejected the appellant's contention that Rukamma had acquired absolute right, title and interest and by virtue of such marketable title, she had sold the property to him. Learned judge thus held upon death of Subbaiah, the schedule property devolves upon the appellant and his brother-Venkateshaiah and as he was not heard of for more than the statutory period, respondents 2 to 7 would acquire a share. The suit is therefore decreed as prayed for directing division in two equal shares, one to the appellant and the other to be assigned to respondents 2 to 7. g) Assailing it, defendant is in second (sic) appeal. 4. Sri Deviprasad Shetty, learned Counsel for the appellant was at his best to contend that the transaction between Subbaiah and Rukamma documented on 24.3.1971 is an absolute sale wherein no conditions are stipulated, nor there is any restriction on the right of Rukamma. He submits, Ex.D1 would show Rukamma having purchased the property, had agreed to re-convey it to Subbaiah subject to terms stipulated in the conveyance agreement-Ex.D2. Since Subbaiah had not complied with the conditions stipulated in the re-conveyance agreement-Ex.D2, his right was lost. Besides Subbaiah had not sought enforcement of specific performance of the re-conveyance agreement during his lifetime. Consequent to such default, the right acquired by Rukamma vide sale deed dated 22.4.1971 (Ex.D1) was unfettered and she enjoyed right, title and interest. While being the absolute owner, she transacted with the appellant and on receipt of sale consideration, sold the property unto him vide sale deed dated 18.10.1999. Consequent to such default, the right acquired by Rukamma vide sale deed dated 22.4.1971 (Ex.D1) was unfettered and she enjoyed right, title and interest. While being the absolute owner, she transacted with the appellant and on receipt of sale consideration, sold the property unto him vide sale deed dated 18.10.1999. Therefore, appellant has acquired the schedule property to the exclusion of all others and particularly legal heirs of Venkateshaiah, for valuable consideration and unless that transaction is annulled or declared to be void, it binds the heirs who are respondents 2 to 7 in this appeal. 5. Besides, he relies on EX.D4-rental agreement dated 12.11.1989 alleged to have been executed by Venkateshaiah in favour of the appellant agreeing to continue in occupation of the schedule premises as tenant and not as a person having any semblance of right. He would also rely on other revenue records, viz. Ex.D5-Khatha, Ex.D6-tax paid receipt to show appellant has exercised his right of ownership from the year 1999 and therefore his right is unaffected. Thus he submits learned trial judge instead of giving due credence to the sale transaction between Rukamma and the appellant, has misled himself in belief that the transaction dated 22.4.1971 was a mortgage which conclusion is against facts and the material evidence on record. Therefore the seeks dismissal of the suit. 6. In negation of these grounds, learned Counsel for the respondents, Sri Rajanna would submit Ex.D1-document described as sale deed dated 22.4.1971 was in fact intended to secure mortgage in favour of Rukamma and such intention of the parties is affirmed vide Ex.D2-re-conveyance agreement of the same date. He would submit, the documents read together would show Subbaiah and Rukamma were mortgagor and mortgagee and therefore Subbaiah had the right to redeem the mortgage within 30 years and upon his demise, his legal heirs would get the same right. Since the appellant has obtained documentation from Rukamma, the mortgage should be treated as having stood discharged and the property free from that encumbrance. Consequent to such transaction between Rukamma and the Subbaiah, the property would become the estate of Subbaiah and upon his death divisible among his legal heirs who are appellant and 2nd defendant-Venkateshaiah. Respondents 2 to 7 being wife and children of Venkateshaiah are entitled to it as he has not been heard of for over 8 years. Consequent to such transaction between Rukamma and the Subbaiah, the property would become the estate of Subbaiah and upon his death divisible among his legal heirs who are appellant and 2nd defendant-Venkateshaiah. Respondents 2 to 7 being wife and children of Venkateshaiah are entitled to it as he has not been heard of for over 8 years. Consequently respondents would be entitled to a share though not in their individual capacity, but through Venkateshaiah-2 defendant. He relies on the provision of Section 58 of the Transfer of Property Act which deals with a transaction of this nature and supports the impugned judgment of the trial Court decreeing the suit as prayed for. 7. Keeping in mind the assertive contentions of both sides, I have not only examined the records, but reappraised the evidence in the light of settled principle of law enunciated by the Apex Court in its several decisions. 8. It is not in dispute Subbaiah was the owner of the schedule premises and upon his death, is survived by two sons, viz., Lokanath (appellant herein) and Venkateshaiah (8th respondent). It is also not in dispute that Varalakshmi 1st respondent is his wife and respondents 2 to 7 are his children. It is also not disputed that Subbaiah had executed two documents vide Ex.D1 dated 22.4.1971 describing it as an absolute sale deed and agreement and re-conveyance of the property-Ex.D2. 9. The moot question is, whether the transaction covered by Ex.D1 is an outright sale or whether it is a mortgage. For decision on this issue, necessarily we have to scrutinize the recitals of the re-conveyance agreement of the agreement executed by the mortgagee in favour of Subbaiah vide Ex.D2. 10. Certain circumstances relevant for consideration are: (i) Whether the monetary consideration shown as in the document described as sale deed is the same consideration as in the agreement for re-conveyance to be paid at a later point of time? (ii) Whether a person claiming to be the absolute owner having acquired the property by outright sale would, after a lapse of several years, agree to re-convey the property for the same amount as indicated in the document styled as sale deed? (iii) Whether the transferor had parted with possession, or whether he has retained physical (sic possession) despite the alleged sale? The period stipulated for re-conveyance of the property gains importance. (iii) Whether the transferor had parted with possession, or whether he has retained physical (sic possession) despite the alleged sale? The period stipulated for re-conveyance of the property gains importance. These factors are to be taken into consideration for the reason, a prudent man would not agree to re-convey the property against escalation of price in the value of the property. In the normal circumstances, appreciation of the value of a property by passage of time would not be ignored by the lawful owner to convey the property for a lesser price to his disadvantage. 11. The Apex Court in its decision in the case of Smt. Indira Kaur Vs. Sheo Lal Kapoor, (1988 SC 1074) after taking into consideration these factors, has affirmatively held, if a document described as sale deed specifies a particular amount as sale consideration and in the agreement of re-conveyance the same amount is mentioned to be paid, the conclusion would be that the first deed described as sale deed was not intended to be an outright sale deed, but to secure the amount as loan. For Clarity, the discussion on this issue and the proposition of law laid by the Apex Court in paragraph 5 of the judgment needs to be incorporated herein which is as follows: "5. There is no manner of doubt that the transaction in question was one of mortgage in essence and substance though it was clothed in the garb of a transaction of ostensible sale. The factors adumbrated herein under leave no room for doubt on this score:- (1) The sale deed was for a sum of Rs.7,000/- so also the agreement which could be enforced at any time within 10 years was also for an identical sum of Rs.7,000/-. If the defendant wanted to purchase an immovable property for the sake of investment would he have agreed to convey the very same property, for the same amount even after ten years? In the first place he would have lost the advantage of appreciation in value of the property resulting in 10 years let alone erosion of his investment on account of inflation. In the first place he would have lost the advantage of appreciation in value of the property resulting in 10 years let alone erosion of his investment on account of inflation. In the second place he would not have been able to sell, mortgage, gift or will away the property for 10 years as the obligation to convey it to the plaintiff within ten years for the very same amount was annexed to the property and he could have dealt with his property in any of the aforesaid modes only subject to this obligation. Why should he have locked up his funds in such a manner? (2) The stipulated period for conveying the property was a very long period of ten years. The very length of the period is suggestive of a transaction of mortgage and not a transaction of absolute sale with a stipulation to re-convey the property in such peculiar circumstances, bearing on the relationship between the parties or some other relevant consideration. (3) If he wanted to purchase the property for his personal occupation, why should he have allowed the plaintiff to continue as a tenant on payment of Rs.80/- p.m. which worked out to 13½% interest on the sum of Rs.7,000/-. (4) Admittedly the property was never mutated to the name of the plaintiff (defendant). If he had become an absolute owner, why should he not have got the property mutated to his own name? It is not even his case that he had ever applied for mutation. The fact that he allowed the property to remain standing in the name of the vendor-plaintiff tells its own tale. (5) The obvious reason for entering into such a transaction of ostensible sale coupled with a contemporaneous agreement to sell within ten years was that if it was not garbed with this paraphernalia and was given the nomenclature of a mortgage the period of redemption would have been 30 years. This period could not have been curtailed without attracting the doctrine of clog on equity of redemption. This was obvious reason for resorting to this device. These factors clearly spell out the real intention of the parties that it was a transaction of mortgage to secure the sum of Rs.7,000/- at approximately 13½% interest. This period could not have been curtailed without attracting the doctrine of clog on equity of redemption. This was obvious reason for resorting to this device. These factors clearly spell out the real intention of the parties that it was a transaction of mortgage to secure the sum of Rs.7,000/- at approximately 13½% interest. But then it is not necessary to examine this dimension of the matter inasmuch as the plaintiff has not prayed for redemption though in the plaint an averment has been made that the real intention of the parties was to create a mortgage. As the plaint stands, and as the plaintiff himself has preferred to enforce the agreement for specific performance, it is not necessary to examine the question as to whether or not the real nature of the transaction was mortgage though it was given an appearance of a transaction of a sale. For the same reason we need not examine the question as to whether or not S.58(c) of the Transfer of Property Act would have disabled the plaintiff from claiming the relief of redemption on the basis that the real intention of the parties was to create a mortgage and not an absolute sale coupled with an agreement for re-conveyance. This question will have to be dealt with at an appropriate time having regard to the fact that there is an increasing tendency in recent years to enter into such transactions in order to deprive the debtor of his right of redemption within the prescribed period of limitation. In fact very often the mortgagee in place of getting a mortgage deed executed in lieu of a loan obtains an agreement to sell in his favour from the mortgagor so as to bring pressure on the mortgagor by seeking to enforce specific performance to enable the mortgagee to obtain possession of the property for an amount smaller than the real value of the property. We need not however probe the matter any further for the purpose of disposing of the present appeal for the reasons stated earlier." Was time of the essence of the contract? 12. From the extracted observation of the Apex Court, it could be noticed that the facts which arose for consideration before the Apex Court are similar to the facts in this case. 12. From the extracted observation of the Apex Court, it could be noticed that the facts which arose for consideration before the Apex Court are similar to the facts in this case. Undoubtedly the questioned transaction comes within the mischief of Section 58 of the T.P. Act which has been elaborately discussed and. dealt with by the learned trial judge in the impugned judgment. In paragraph 21 of the judgment, learned judge has very rightly referred to the various clauses in the proviso to Section 58, T.P. Act and has discussed Exs.-D1 and D2 in the light of it. 13. Besides the conduct of the party has also been into consideration by the learned judge to reach a logical conclusion that the transaction between Subbaiah and Rukamma though styled as sale deed vide Ex.D1, was in fact a transaction to secure the loan paid by her. Therefore, the nomenclature of the document in Ex.D1 did not establish that it was an outright sale in favour of Rukamma. Safely it has been construed as a document to secure the loan borrowed by Subbaiah which is fortified from the agreement of re-conveyance at Ex.D2. 14. The question therefore, was, whether by efflux of time due to default in enforcing the re-conveyance agreement within 4 years stipulated under Ex.D2, whether it diminished the Subbaiah's right. Once it is concluded that the transaction is a mortgage, then the period stipulated for redemption will be 30 years. In the instant case, appellant's assertion is he has purchased the schedule property by virtue of the sale deed-Ex.D3 paying Rs.4,000/- as consideration in the year 1999, more than 28 years after Subbaiah executed Ex.D1 on 22.4.1971. It is material to note vide Ex.D1 Subbaiah is said to have sold the property to Rukamma for the same sum, i.e. Rs.4,000/- and the same amount is mentioned to have been paid by him for re-conveyance vide Ex.D2 of the same date executed by Rukamma. After 28 years, appellant claims Rukamkma sold the schedule property to him for the same amount of Rs.4,000/- against multiple increase in the value of the property. This is exactly what was noticed by the apex Court in the case of Indira Kaur (supra) to hold that the transaction between the parties in that case though described as sale, was only a mortgage transaction. 15. This is exactly what was noticed by the apex Court in the case of Indira Kaur (supra) to hold that the transaction between the parties in that case though described as sale, was only a mortgage transaction. 15. A perusal of the reasons assigned by the learned trial judge on all issues fully support the ultimate conclusion reached by it that the appellant could not be treated as having acquired the property as an outright sale from Rukamma, dissipating the right, title and interest of other heirs, viz. Venkateshaiah, his brother to succeed to the estate of Subbaiah-their father. 16. Learned trial judge has also taken the assistance of the decision of the Apex Court in the case of Shyam Singh Vs. Daryao Singh ( AIR 2004 SC 348 ) to examine the rival contentions. The Apex Court's observation in that decision is used by the learned judge to determine the rights of the parties under Exs.D1 to D3. It is material to note, by conduct appellant has failed to establish bona fides in the transaction between him and Rukamma. The lis between the parties germinated somewhere in the year 1999 when respondents 1 to 7 demanded partition of the properties and he refused. Ex.D3 has come into existence soon thereafter which indicates sinister design of the appellant to create a right in himself to defeat the contemplated legal action for partition by the respondents-plaintiffs. 17. Besides it must also be noticed that in a suit for partition, if the defendant had created any documentation to set up title in himself, plaintiff need not seek any declaratory decree to declare it is not binding on him or that it was sham or voidable. This view finds support from the decision of this Court in the case of Vadde Sanna Hulugappa & Others Vs. Vadde Sanna Hulugappa & Others (ILR 1998 Kar 2127) wherein this Court in similar facts and circumstances, opined that in a suit for partition, plaintiffs were not required to seek cancellation of sale deeds executed by the defendants in favour of other individuals. A similar view is taken by the Division Bench of this Court in the case of Ganapati Santaram Bhosale Vs. Ramachandra Subbarao Kulkarni (ILR 1985 Kar 1115). 18. A similar view is taken by the Division Bench of this Court in the case of Ganapati Santaram Bhosale Vs. Ramachandra Subbarao Kulkarni (ILR 1985 Kar 1115). 18. In yet another decision of the Apex Court reported in (2006) 5 SCC 353 , with reference to Articles 58, 59 and 65 of the Limitation Act, it is held Article 59 is applicable only to voidable transactions and not to avoid the transactions. It therefore applies where a document is prima facie valid and would not apply to an instrument which has presumptive value, and Article 59 would be attracted in case of coercion, undue influence, misrepresentation or fraud if the party seeking to avoid the document is a party to it and not otherwise. Documents which are void ab initio, plaintiff need not seek for its cancellation or declaration. In the instant case, Ex.D1 undoubtedly would show it was fraudulent and therefore plaintiffs were not required to seek its cancellation. 19. Apart from all legal issues discussed above, it is material to note, Subbaiah had executed Ex.D1 styled as sale deed, but had not delivered physical possession to the alleged transferee-Rukamma, and Rukamma had also noto (sic) sought delivery of possession. It is also evident from the subsequent events that respondents-plaintiffs continued to be in physical possession and enjoyment of the property and were also in such possession when the suit was filed. Long period of continuous uninterrupted physical possession of the plaintiffs would indicate that Rukamma had not exercised the right of ownership in respect of the schedule property from the year 1971, though Ex.D1 was styled as a sale deed. The reasonable conclusion would be, Rukamma was conscious of the fact that it was only a mortgage transaction and thus did not obtain physical possession. It is only the appellant who is trying to set up tenancy between Venkateshaiah-his brother and himself vide Ex.D4. That document has remained unproved. He has failed to establish vinculum juris of landlord and tenant between him and Venkateshaiah or the respondents. 20. It is only the appellant who is trying to set up tenancy between Venkateshaiah-his brother and himself vide Ex.D4. That document has remained unproved. He has failed to establish vinculum juris of landlord and tenant between him and Venkateshaiah or the respondents. 20. For the reasons discussed above, I am satisfied the learned trial judge has examined the facts and circumstances and applied the position of law correctly to reach a reasonable conclusion that the respondents-plaintiffs were entitled to half share allottable to Venkateshaiah and the remaining half was to be allotted to the appellant by virtue of the right of succession conferred on the parties under the provisions of the Hindu Succession Act. 21. I, therefore, find no merit in the appeal and the same is dismissed, confirming the judgment and decree passed in O.S.6692/99 by the trial Court. In the circumstances, there is no order as to costs. Appeal dismissed.