1. The unsuccessful third defendant in O.S. No. 97 of 1975 on the file of the Subordinate Judge, Nagercoil, is the appellant in A.S. No. 756 of 1979. Defendants 5, 6 and 7 who are the legal representatives of the deceased 2nd defendant in the said suit, are the appelants in A.S. No. 1177 of 1979 and the first defendant in the said suit is the appellant in A.S. No. 82 of 1982.
2. The first respondent in all these appeals is the plaintiff in the said suit and he filed the same in a representative capacity for himself and on behalf of all the creditors of the first defendant for a consideration that the sale deeds executed by the first defendant are void and not binding on the general body of the creditors of the first defendant and also for a decree against him for realisation of Rs. 49,909,25 with interest and for costs of suit. The plaintiff has also prayed for an injunction against the purchasers of the suit properties from the first defendant from effecting any alterations in the suit properties. The material allegations in the plaint filed by the plaintiff are as follows: On 14.4.1974 the first defendant executed a promissory note in favour of the plaintiff for a valuable consideration of Rs. 42,296 agreeing to pay the same on demand or order with interest 12 per cent per annum. The first defendant has not paid back any amount inspite of repeated demands. The first defendant was the owner of the suit properties and he had no other properties. On 25.3.1975 the first defendant executed a sale deed in favour of the fourth defendant relating to item No. 1. On the same day, the first defendant executed another sale deed in respect of item No. 2 in favour of the second defendant. Subsequently, on 25.6.1975 the fourth defendant sold item No. l to the third defendant. All the aforesaid sale deeds have been brought into existence by the defendants with intent to defeat and delay the execution of the decree that may be passed against, the first defendants These sale deeds have been registered in Kerala, at Parasala Sub Registrar's Office, with a view to prevent the creditors from gaining knowledge about the same. In all the sale deeds on imaginary item, in which the first defendant had no right, has been included as item 2 so as to facilitate registration in Kerala. The defendants 2 and 4 are related to the first defendant and the third defendant is a close friend of the other defendants. Defendants 2 to 4 are not transferees in good faith. The transfers have been effected in pursuance of a scheme perpetrated by the first defendant in collusion with the other defendants with a view to place the properties out of the reach of the plaintiff and other creditors. The sale deeds are not supported by consideration and necessity. The sales are collusive and fraudulent transactions. The first defendant was working as Manager under the plaintiff in the Petrol Bunk at Vadesery. From 16.4.1975 the first defendant suddenly ceased to attend the office and he sent intimation to the plaintiff that he was laid up in his house due to blood pressure. Subsequently, on enquiry, the plaintiff learnt that the first defendant was deliberately evading to surrender the keys of the almirah and the table. The plaintiff has filed this suit in a representative capacity. The plaintiff is entitled to a decree for realisation of Rs. 909.25 due to him with interest thereon. The plaintiff is entitled to a decree for a declaration that the sale deeds executed in favour of defendants 2 to 4 are void and not binding upon him and other creditors of the first defendant.
3. The first defendant resisted the suit and filed a written statement raising the following contentions: The promissory note was executed under the following circumstances. The defendant joined the plaintiff's service on a monthly salary in 1956 and was in discharge of the petrol Bunk of Vadasery. Subsequently, this defendant was also in charge of the other concerns of the plaintiff viz., Petrol Bunk at Colachel, Kerosene dealership, Lorry Service etc. The plaintiff was getting enormous income from the aforesaid businesses as well as from the two studios, Raja Studio and Krishna Studio of which he was the owner. The plaintiff did not want to disclose the entire income to the Income-tax Authorities. The plaintiff maintained different forms of accounts and adopted various methods to hide his un-accounted money. The plaintiff wanted to make it apear that he had advanced amounts to the first defendant, and for that purpose he obtained a promissory note in his favour. It was for adjusting the accounts for Income-Tax purposes,. In pursuance, of such a request, this defendant executed a promissory note in favour of the plaintiff on 14.4.1971 for Rs. 31,1001. No amount was received by the first defendant for the promissory note. In fact this promissory note was antedated and was not actualy written on 14.4.1971. The Plaintiff asked him to put the date as 14.4.1971 and he had obeyed. There was also no necessity for the first defendant to borrow the amount from the plaintiff. Since the first defendant was in the service of the plaintiff, he was not in a position to disoblige the plaintiff. Subsequently, the plaintiff wanted the defendant to execute a promissory note in renewal of the earlier promissory note. In that way, the suit promissory note dated 14.4.1974 for Rs. 42,296 was brought into existence. The figures 42,296 was arrived at by totalling the amount covered by the earlier promissory note and interest thereon for three years at 12 per cent per annum. In fact, it was executed a few months after 14.4.1974 and as requested by the plaintiff the date 14.4.1974 was put in the promissory note. Since the first defendant had full confidence in the plaintiff, he did not get back the earlier promissory note. The plaintiff was not satisfied with the realisation of the outstandings from the customers and he asked the first defendant to pay those outstandings from his own pocket. The first defendant naturally declined. Then differences arose between this defendant and the plaintiff and therefore this defendant left the services of the plaintiff. On account of this, the plaintiff developed ill will and malice towards the first defendant. Only because of the same, the plaintiff has filed the suit by misusing the suit promissory note. It is true that the first defendant has executed two sale deeds in favour of defendants 2 and 4. These sales are fully supported by consideration and necessity. The plaintiff has no competency to question the sales. The first defendant has no knowledge about the sale deed executed by the 4th defendant in favour of the third defendant. The sale deeds were registered in the Sub Registrar's office at Kulathoor since the expenses for registration was less in Kerala than in Tamil Nadu.
4. The 2nd defendant filed a separate written statement contending that the sale in his favour is fully supported by consideration and it is a Bona Fide transaction. In other respects, he supported the case of the first defendant.
5. The third defendant also filed a separate written statement contending as follows: This defendant has no knowledge about the alleged borrowing by the first defendant from the plaintiff. This defendant was in search of a house in Nagercoil to settle his family and for conveniently educating his children. This defendant came to know that the plaint item 1 was coming up for sale. After verifying the documents of title, this defendant has purchased it. The price was fixed at Rs. 30,000. Out of the sum of Rs. 30,000, a sum of Rs. 17,510.33 due to the building cooperative society was directed to be paid and the balance was paid in cash to the vendor. This defendant is a transferee in good faith and for valuable consideration. At the time of purchase the plaint item No. 1 was not in good condition. There was no proper compound wall. There was no cattle shed. For the staircase, no protection rails had been provided and there were also cracks in the 3 walls of the main hall After the purchase, this defendant after consulting a qualified Engineer had repaired the walls. An additional room was constructed in the first floor by this defendant. For effecting the various improvements this defendant has spent about Rs. 30,000.
6. The 4th defendant filed a written statement on the following grounds: The fourth defendant is a bona fide purchaser for valuable consideration. The plaintiff has no right to question the sale. The sale in favour of the 4th defendant and the further sale deed executed by the 4th defendant in favour of the third defendant on 25.6.1975 are fully supported by consideration. After purchasing item No. 1, the 4th defendant and his family moved to that house and lived in it for a short while. The 4th defendant as well as various members of his family were laid up with fever one after another. Then the 4th defendant was astrologically advised to shift his residence. Therefore, the 4th defendant sold this property in the third defendant.
7. Defendants 5, 6 and 7 also filed a written statement practically adopting the written statement filed by the first defendant.
8. The trial Court framed as many as 7 issues and after elaborately considering the evidence adduced by the parties, decreed the suit holding that the plaintiff is entitled to get a decree for Rs. 49,909.25 with interest and costs and that the sales effected by the first defendant are hit by Section 53 of the Transfer of Property Act. Aggrieved against the said decision, the third defendant filed A.S. No. 756 of 1979, defendants 5, 6 and 7 filed A.S. No. 1177 of 1979 and the other appeal A.S. No. 82 of 1982 has been preferred by the first defendant.
9. The following points would arise for consideration in the above appeals:
(1) Whether the promissory note Ex. A-1 dated 14.4.1974 was supported by consideration?
(2) Were the sale deeds Ex. A-7 dated 25.3.1975 Ex. A-9 dated 25.6.1975 and Ex. A-8 dated 25.3.1975 executed with intent to defeat and delay the creditors of the first defendant?
(3) If so, whether the purchasers under Exs. A-7, A-9 and A-8 are transferees in good faith and for consideration?
(4) Whether the impugned sale deeds are void for want of proper registration?
10. Point No. 1 : The plaintiff has filed the present suit in a representative capacity for himself and on behalf of the creditors of the first defendant praying for a decree for the amount payable under the promissory note Ex. A-1 dated 14.4.1974 executed by the first defendant and for a decree declaring the sale deed Ex. A-7 dated 25.3.1975 in favour of the 4th defendant, the sale deed Ex. A-9 dated 25.6.1975 in favour of the third defendant relating to the first item of the suit property and also the sale deed Ex. A-8 dated 25.3.1975 in favour of the 2nd defendant relating to the plaint second item, as void against the plaintiff and all other creditors. It is the case of the plaintiff that the first defendant borrowed a sum of Rs. 2,296 from him on 14.4.1974 and credited the promissory note Ex. A-1 in his favour and that he has not paid any amount for the said promissory note inspite of repeated demands. It is his further case that the first defendant, who was the owner of the plaint items of properties, executed a sale deed Ex. A-7 dated 25.3.1975 to the 4th defendant and on the same date another sale deed Ex. A-8 in favour of the 2nd defendant. Further, the 4th defendant executed the sale deed Ex. A-9 dated 25.6.1975 in favour of the third defendant. According to the plaintiff, all the aforesaid sale deeds were executed by the first defendant with intent to defeat and delay the execution of the decree that may be passed against the third defendant. The first defendant resisted the suit on the ground that the suit promissory note was not supported by any consideration and that the sale deeds came to be executed under the circumstances set out in his written statement. According to him, he joined the plaintiff's service on a monthly salary in 1956 and was in charge of the Petrol Bunk at Vadaseri and other institutions like Petrol Bunk at Golachel, kerosene dealership lorry service etc, belonging to the plaintiff. It is his case that the plaintiff had been getting enormous income from the aforesaid businesses running to several lakhs per annum. As he did not want to disclose the entire income to the Income-tax authorities, he had been maintaining different forms of account to hide his unaccounted money. It is his further case that in order to make it appear that there are monies outstanding, he requested the first defendant to execute a promissory note in his favour and for adjusting his accounts for income-tax purposes and also for showing it to the Income-tax authorities as and when necessary. It was only under those circumstances and at the request of the plaintiff, he had executed a promissory note in favour of the plaintiff on 14.4.1971 for Rs. 31,100. According to him, he did not receive any amount for the said promissory note and the promissory note was actually antedated at the direction of the plaintiff. He has further submitted that later on the plaintiff wanted him to execute a removal promissory note and, therefore, he executed the suit promissory note dated 14.4.1974 for Rs. 42,296 and the figure was arrived at totalling the amount covered by the earlier promissory note and interest thereon for three years at 12 per cent per annum. He has relied upon the draft promissory note marked as Ex. B-1 in support of the contentions.
11. Before going into the question of the validity and binding nature of the said sale deeds, we have to find out whether Ex. A-1 promissory note was supported by consideration. The first defendant has admitted the execution of the suit promissory note Ex. A-1 in favour of the plaintiff. The trial Court accepted the case of the plaintiff and held that the promissory note was supported by consideration, Mr. A. Ramanathan learned Counsel appearing for the appellant in A.S. No. 756 of 1979 submitted that while arriving at the said conclusion, the trial Court has erred in relying on the presumption contemplated under Section 118 of the Negotiable Instruments Act. He further submitted that the presumptions which are raised under Section 118 of the said Act, set out special rules of evidence relating to negotiable instruments, but the nature of the presumptions from their very nature operate in favour of or against the parties to the negotiable instrument or their parties and cannot generally apply to persons who do not claim under the parties to the instrument. In support of the said contention, he has relied on the decision of the Supreme Court in Official Receiver v. Abdul Shakoor . It is unnecessary to go into this question now since we consider that the question of onus of proof is merely academic at this stage because the entire evidence is before us and we are going to base our conclusion on the evidence adduced by the parties and not merely on the basis of the presumptions available under Section 118 of the Negotiable Instruments Act. Learned Counsel further contended that the trial Court has not raised proper issues for consideration and that it has failed to note that the transfer effected by the 4th defendant in favour of the third defendant stands in a different footing. According to him, these infirmities have vitiated the decision of the trial Court. We do not find any force in the said submission of the learned Counsel. Whatever might be the form in which the issues were framed, the trial Court has considered the entire evidence in a proper perspective taking note of all the legal principles applicable to the facts of the case. In any event, it has not vitiated the judgment of the trial Court in any manner. Whatever it might be, it is open to this Court to consider the entire evidence on record and arrive at our own conclusions on such evidence in regard to the controversy in this matter. While doing so, we have framed the necessary points for consideration and, therefore, the objections relating to the framing of issues in purely academical. It transpires from the evidence that admittedly the first defendant was working as Manager in the Petrol Bunk of the Plaintiff from the year 1956 till 16.4.1975. According to the first defendant, the plaintiff has come forward with the present suit making a false claim on account of some misunderstandings that arose between them in respect of the collection of the outstandings from the customers. He says that the plaintiff wanted him to collect the outstandings and that if it was not possible he wanted him to pay the same out of his pocket. On the other hand, the plaintiff has stated that on 16.4.1975 the first defendant suddenly stopped coming to the Bunk without even surrendering the keys of the table and the almirah. On the face of it, the motive suggested by the first defendant appears to be unnatural. We fail to understand how the plaintiff could have compelled the first defendant to pay out of his pocket the entire outstandings payable by the customers to the plaintiff, it is to be noted in this connection that the first defendant was an employee under the plaintiff for a very long time from 1956 to 1975 and that the plaintiff is a very rich man Having considerable transactions and having a daily income of Rs. 25,000.
12. It is the specific case of the first defendant that the plaintiff had obtained the suit promissory note for his income-tax purposes and that no consideration, was paid for the same. We find that the reasons given by the first defendant for executing the suit promissory note are not consistent, as is seen from the reply notice Ex. A-6, his written statement and the evidence. He is not able to give any cogent reason for executing the promissory note nominally without receiving any consideration. His main contention seems to be that the earlier promissory note was obtained from him on 14.4.1971 for a sum of Rs. 31,000 for the purpose of his (Plaintiff) income-tax accounts. According to him, the plaintiff did not want to disclose the entire income to the Income-tax authorities and that he wanted to make it appear that there are monies outstanding for adjusting his accounts for income-tax purposes. It is his further case that there was no necessity for him to borrow any amount from the plaintiff and that later on the plaintiff wanted him to execute a renewal promissory note to make it appear that monies were still outstanding from him. In support of his contentions, he has filed a draft promissory note which has been marked as Ex. B-4 from which the suit promissory note Ex. A-1 was written. In Ex. B-1, it is seen that the amount is mentioned as Rs. 31,000 both in figures and in words. At the bottom of Ex. P-1, Rs. 31,000 is mentioned and below that 11,196 is written as interest for three years and the total as 42,296. From this, it was argued that there was an earlier promissory note for Rs. 31,100 and the suit promissory note Ex. A-1 was written as renewal for the earlier promissory note by adding interest for three years. According to him, the plaintiff is having the earlier promissory note and Ex. A-1 promissory note for the purpose of showing to the Income-tax authorities. It is also contended by him that the promissory notes were antedated. But the said plea has to be rejected on the ground that such a plea has not been advanced in the reply notice Ex. A-6 sent by the first defendant. Apart from that, there was absolutely no necessity for the plaintiff to antedate the documents since, according to the first defendant, they were created only for account purposes. The entire defence of the first defendant on this aspect to unnatural was highly improbable. If a promissory note for Rs. 31,100 was taken in the year 1971 and another promissory note for Rs. 42,296 was obtained in renewal of the earlier promissory note by the plaintiff for the purpose of manipulating his accounts to satisfy the Income-tax authorities, then one would expect that there should be relevant entries from the date of the 1971 promissory note itself. There must also be relevant entries showing the payment under Ex. A-l promissory note. It is only then the case of the first defendant is acceptable in this regard. But on the other hand, we find that there are absolutely no entries in the accounts of the first defendant relating to these transactions. The plaintiff has filed the relevant day books and ledgers from 1970-71 and 1971-72 and they have been marked as Exs. A-13 to A-20. Admittedly, there are no entries in these accounts relating to the said transactions. In view of this factual position, we are unable to accept the case of the first, defendant on this aspect. It was further contended on behalf of the first defendant that though originally in 1971 the first defendant was residing at Vellamadam, he was residing at Nagercoil on the date of Ex. A-1 namely in the year 1974. According to him, since Ex. A-1 was copies from Ex. B-1, the place of residence of the first defendant has been shown as Vellamadam. As against these contentions, Mr. Peppin Fernando, learned Counsel appearing for the plaintiff/first respondent submitted that the plaintiff has given satisfactory explanation as to why the said calculation was made in Ex. B-1 including interest for three years. It is the case of the plaintiff that in the year 1971, the first defendant requested the plaintiff for a loan of Rs. 31,100 as he had incurred debts for purpose of putting up a building and the creditors were pressing for payment. But he did not advance any money in 1971 and no promissory note was executed by the first defendant in his favour. According to him, on 14.4.1974 when he was in his Petrol Bunk, the first defendant again requested him for a loan of Rs. 31,100 with a view to discharge his debts and that, therefore, the plaintiff asked him to go over to his Photo Studio. Thereafter, he came to the Studio and prepared the draft promissory note Ex. B-1 for obtaining a promissory note from the first defendant, for Rs. 31,100. A little later, the first defendant came to the studio and after seeing the draft promissory note Ex. B-1, he stated that he had to pay interest for 3 years on the loan to his creditors and thereupon the sum of Rs. 31,100 mentioned in Ex. B-1 draft was altered as Rs. 42,296 both in figures and words. Therefore, according to the plaintiff, the first defendant wanted the loan for his specific purpose of discharging the debts incurred by him from some other creditors. Since the plaintiff had mentioned only the principal sum of Rs. 31,100 in Ex. B-1 draft, the first defendant wanted him to lend a durther sum of Rs. 11,196 for paying interest to his creditors. It was only under those circumstances Ex. B-1 draft was corrected and Ex. A-1 promissory note was executed for a sum of Rs. 42,296. In the peculiar circumstances of the present case, we find that the said explanation of the plaintiff is acceptable. Otherwise, we do not see any reason why there should be such corrections in Ex. B-1. If the suit promissory note Ex. A-1 was executed in renewal of the earlier promissory note as contended by the first defendant, then there was no reason why the plaintiff had chosen to mention the principal sum of Rs. 31,100 only without including the interest payable for the period of three years. If the case of the first defendant is true, then certainly the plaintiff would have mentioned the total figure of Rs. 42,296 and not Rs. 31,100 only. Moreover, if the plaintiff had taken Ex. A-1 promissory note as renewal for the earlier promissory note for purpose of his income-tax accounts, then definitely he would have stated so in Ex. A-1 promissory note itself as otherwise, the Income-tax authorities may not approve his accounts. In these circumstances, we are of the view that the plaintiff did not obtain any promissory note from the first defendant in the year 1971 and Ex. A-1 promissory note was not executed in renewal of any earlier promissory note.
13. Miss. O.K. Sridevi, learned Counsel appearing for the appellant in A.S. No. 82 of 1982 submitted that the first defendant had absolutely no necessity to borrow any amount under Ex. A-1 from the plaintiff in the year 1984 According to her, the first defendant was employed under the plaintiff and getting Rs. 250 per month and apart from that, he was also working as an agent for the Life Insurance Corporation of India. He also owned a taxi and other properties. The first defendant as D.W. 1 deposed that his wife owned about 15 acres of rubber estate and they were paying agricultural income-tax as evidenced by Exs. B-5 to B-8. It is also in evidence that she has sold her properties under Exs. B-9 and B-10. According to the learned Counsel, the first defendant had purchased the site for Rs. 2,500 under Ex. B-16 in the year 1968 and constructions were put up thereon after obtaining the loan under Ex. B-4 from the Co-operative House Loan Society, Nagercoil. Therefore, the first defendant was not in need of any money in the year 1974.
14. As against the said submissions, Mr. Peppin Fernando, learned Counsel for the first respondent/plaintiff drew our attention to the various circumstances to show that the first defendant was in need of money for putting up constructions in the suits purchased under Ex. B-16. According to the first defendant, he started the work in the year 1971 and completed the same in 1972 spending Rs. 30,000. He says that a sum of Rs. 20,000 was borrowed from the Society, realised a sum of Rs. 8,000 by sale of his lorry and he had Rs. 2,000 in cash, thus making a total of Rs. 30,000. On the other hand, it is the case of the plaintiff that the first defendant spent Rs. 80,000 for the constructions and, therefore, in order to meet the said necessity, he borrowed the amount from others and in order to discharge the same, he had borrowed from the plaintiff under Ex. A-1. The first defendant has not produced any accounts to show the actual amount spent by him for the constructions. Even though he had admitted in his evidence that he is having ), he has not produced the same to prove his case. Learned Counsel for the plaintiff, relying on the decision of the Supreme Court in Braithwaite and Company v. E.S.I. Corporation , submitted that since the first defendant has failed to adduce the best evidence available with him, an adverse inference should be drawn against him. According to him, the burden is on him to show that he has spent only Rs. 30,000 and not Rs. 80,000 as claimed by the plaintiff. The first defendant was not able to produce any document evidencing the sale of lorry and, therefore, there is no evidence to show as to the amount for which it was sold. Apart from that, there is also no evidence to show that he had received any money from his wife and as a matter of fact he has admitted in his evidence that he did not receive any money from his wife, for the purpose of the construction. He has also admitted in his evidence that he was not able to save any money by the sale of the lorry. It was further admitted by him that no income-tax assessment was made against him, since he was not getting assessable income till 1974. An Advocate-Commissioner was appointed to value the house in item No. 1 and he has valued the same at Rs. 84,555 including the cost of the site. Therefore, it is obvious that he must have spent much more than Rs. 30,000 and he has come forward with the said plea only for the purpose of showing that there was no necessity to borrow under Ex. A-1. He made an attempt to explain that the third defendant has spent some amount for the building after his purchase in order to explain the present value of the building. We are going to consider this aspect in detail later on. Suffice it to say at this stage that there is no document evidencing the spending of any money by the third defendant for the building. The plea Ex. B-20 relied on by the defendants was sent only after the date of the suit and approved only on 17.9.1986. D.W. 2 says that the third defendant has got records and accounts evidencing the expenses incurred by the third defendant for the construction. However, they have not been filed into Court. Therefore, there is no acceptable evidence to show that the third defendant has spent any money for the building in item No. 1.
15. It is not in dispute that the plaintiff is a rich man getting substantial income from his properties and business. He was also the owner of Raja Studio and Krishna Studio apart from a Petrol Bunk in the name of his wife at Colachel. He was the Managing Partner of Palkulam Estate in which his children were also partners. It is tn evidence that the accounts of the various concerns of the plaintiff were usually written in his Raja Studio. In this background, we have to consider whether there is sufficient evidence to show the actual payment of consideration for Ex. A-1. In order to prove the payment of consideration, the plaintiff has produced his accounts relating to his various concerns. According to him, a sum of Rs. 42,296 was transferred from the Petrol Bunk of his wife at Colachel to the account of Palkulam Estate. Ex. A-29 is the day book maintained in the said Petrol Bunk and the relevant entry is found at Page 160 which is marked as Ex. A-30, where it is shown that the said sum was given to Palkulam Plantation, Nagercoil. The relevant ledger is marked as Ex. A-31 and the corresponding entry at page 112 is marked as Ex. A-32. Inorder to show that the said amount was credited in the accounts of Palkulam Estate, its day book has been marked as Ex. A-25 and the corresponding entry in page 117 is marked as Ex. A-26 wherein there is an entry showing the receipt of Rs. 42,296 from N. Krishnammal on 14.4.1974, There is also an entry showing the transfer of the said amount in the name of the plaintiff on the same date. Ex. A-27 is the ledger of Palkulam Plantation and Ex. A-28 is the corresponding entry for the same. Here also we find the debit entry in the name of the plaintiff On the same date, the said amount has been transferred to the account of the plaintiff as is seen from the entries found in the day book marked as Ex. A-21 of the plaintiff's Petrol Bunk. The relevant entry is marked as Ex. A-22 which shows that a sum of Rs. 42,296 was received from the Palkulam Plantation and that the same was paid to the first defendant on 144.1974. Ex. A-23 is the ledger of the Petrol Bunk and the corresponding entry is marked as Ex. A-41 found at page 131. In the ledger Ex. A-23 at page 144, a ledger page has been opened in the name of the first defendant and there is a debit entry of Rs. 42,296 as the amount advanced to him on a promissory note. This entry is marked as Ex. A-24. It is seen from the evidence on record that subsequently on 16.4.1974 the said sum of Rs. 42,296 was paid back in the Petrol Bunk of Krishnammal at Colachel as is seen from the entries found in Ex. A-32. According to the plaintiff, examined as P.W. 1. he borrowed a sum of Rs. 42,500 from one Jayachandran who is the father-in-law of his daughter for Palkulam Estate and thereafter he returned the said amount to the Colachel Petrol Bunk. This is evidenced by the entry found in the ledger Ex. A-27 of Palkulam Plantation and the relevant entry at page 29 is marked as Ex. A-40. This shows that a sum of Rs. 42,500 was received from the said Jayachandran on 16.4.1974 by Palkulam Estate. There is also evidence to show that this amount was paid back to Jayachandran. Ex. A-43 is the ledger of Palkulam Plantation. Exs. A-44 and A-45 are the relevant entries in the said ledger. The corresponding day book has been marked as Ex. A-46 and the relevant entries showing the payment of various amounts to the said Jayachandran have been marked as Exs. A-47 to A-51. Thus, we find that the plaintiff has satisfactorily explained the manner in which the consideration was paid to Ex. A-1, by the production of his accounts.
16. It was seriously contended by the learned Counsel for the appellants that the way in which the plaintiff has adopted a complicated procedure by showing the amounts to various accounts shows that it was only an attempt to give a colour of reality to the transaction. Learned Counsels also commented upon the various entries found in the said accounts to create some sort of suspicion in the accounts of the plaintiff. A serious criticism made relating to the entries found at page 131 in the ledger marked as Ex. A-23 of the Petrol Bunk of the plaintiff. It was pointed out that the entry relating to the receipt of 42,296 was entered only on 30.4.1974 and not on 14.4.1974. It is no doubt true that such an entry was made only on 30.4.1974. But it is stated therein that the said entry was omitted to be entered on 14.4.1974 We are not able to come to a conclusion that the said account is a fabricated one solely on this ground also. Even though it created some amount of doubt initially, we have checked up the other accounts and came to a conclusion that the said entry is not a fabricated one. This aspect is patently clear from the entries found in the corresponding day book marked as Ex. A-21 wherein there is an entry relating to the said amount on 14.4.1974 itself. Apart from that, there are corresponding entries relating to the said amount in other accounts entered on 14.4.1974 itself. Learned Counsels further submitted that there are several entries found as the last entries in the relevant account and, therefore, there is considerable suspicion about the genuineness of the said account books. We have perused the various entries in the account books and we are satisfied that the account books have been maintained in the regular course of business and the entries have not been fabricated for the purpose of the present suit. It was further contended that mere entries in the account books are not conclusive evidence to prove the payment and there must be independent evidence this aspect. In support of their contentions, they relied on the decision of the Supreme Court in Chandradhar Gauhati Bank (1967) 1 Comp. L.J. 98 : (1967)1 S.C.R. 898 : A.I.R. 1967 S.C. 1058. The said decision is of no help to the appellants in this case, since apart from the account books, there is the evidence of the plaintiff who has spoken about these transactions.
17. Miss. O.K. Sridevi, learned Counsel for one of the appellants made a strong reliance on Ex. B-3 which is a statement of outstandings prepared by the plaintiff. Accourding to her, it was prepared in the year 1975 and that there is no entry relating to the outstandings from the first defendant payable under the promissory note Ex. A-1. Even though the plaintiff had admitted Ex. B-3, he says that it was not prepared in 1975. According to him, Ex. B-3 was given to the first defendant for collection of outstandings found in Ex. B-3. Therefore, there is no scope for including the amount payable by the first defendant himself to the plaintiff under the suit promissory note, therefore, no importance can be attached to the omission of the promissory note amount in Ex. B-3. On a consideration of the oral evidence of P.W. 1 and the documentary evidence produced by him in this case, we find, that there is sufficient evidence to show that a sum of Rs. 42,296 was paid to the first defendant on 14.4.1974 and thus Ex. A-1 is fully supported by consideration. This point is answered accordingly.
18. Point Nos. 2 and 3 : The first defendant sold suit item No. 1 to the fourth defendant on 25.3.1975 and Ex. A-7 is the registration copy of the said sale deed. Ex. B-17 is, the original of Ex. A-7. On the same date, the first defendant sold item 2 to thee 2nd defendant. Ex. A-8 is the registration copy of the said sale deed, and Ex. B-31 is its original. Three months after the purchase of item 1, the fourth defendant sold the same to the third defendant on 25.6.1975. Ex. A-9 is the registration copy of the said sale deed and Ex. B-18 is its original. According to the plaintiff, all the said sale deeds are fraudulent and executed with a view to defeat the claims of the creditors of the first defendant. They have been executed with a view to put the properties beyond the reach of the creditors. The purchasers claimed that they are the transferee in good faith and for consideration. Therefore, we have to find out whether the sale deeds were executed with a view to defeat and delay the claims of the creditors of the first defendant.
19. Before going into the facts of the case on this appeal, it is necessary to take note of the legal principles existing under Section 53 of the Transfer of Property Act. That section, so far as it is relevant for the purpose of this case, is as follows:
Section 53(1): Every transfer of immovable property made with intent to defeat or delay the creditors of the transferor shall be voidable at the option of any creditor so defeated or delayed;
Nothing in this sub-section shall impair the rights of a transferee in good faith and for consideration.
Nothing in this sub-section shall affect any law for the time being in force relating to insolvency.
A suit instituted by a creditor (which term includes a decree-holder whether he has or has not applied for execution of his decree) to avoid a transfer on the ground that it has been made with intent to defeat or delay the creditors of the transferor, shall be instituted on behalf of, or for the benefit of all the creditors.
In construing the scope of Section 53 of the Transfer of Property Act, a Bench of this Court in M/S. Maxhemeijer Jr (India) Pvt. Ltd. v. Zainub Bi ((974)1 M.L.J. 455 noticed the following features:
1. The suit contemplated by the section must be one instituted by a creditor of the transferor of the property.
2. The transfer of the immovable property should have been made with intent to defeat or delay the creditors of the transferor.
3. The plaintiff in the suit must be one of the creditors so defeated or delayed.
4. The suit instituted by a creditor under this section to avoid a transfer on the ground mentioned in the section shall be instituted on behalf of or for the benefit of all the creditors.
5. The provisions of this sub-section shall not impair the rights of a transferee in good faith and for consideration.
It has been well established that a suit filed under Section 53 of the Transfer of Property Act should be filed only as a representative suit on behalf of all the creditors of a debtor whose alienations are sought to be avoided. The basic principles underlying this provision in the intention on the part of the transferor to defeat and delay the creditors at the time when the transfer was effected. The section itself refers to the "creditors" and not the "creditor". Therefore, in a suit filed under Section 53 of the Act, the plaintiff must plead and prove that the alienations which are attacked by the plaintiff, were effected with the intention to defeat or delay the creditors of the transferor generally and not to a debtor and delay one particular creditor. Therefore, an intention to defeat and delay the creditors as a whole is regarded as fraudulent intention under this section. There are two basic principles which will have to be borne in mind before dealing with a case of this nature. Any person is entitled to deal with his property in any manner to further his interest and the restriction Imposed by law on the said power or alienations is only by way of equity in favour of other persons. The right of the creditors is that the entire assets of the debtor should be applied in payment of the debts without any portion of it being retained by the debtor to the detriment of the interests of the creditors. For the purpose of this case, we are not referring to the provisions of the section regarding the Law of Insolvency which stands in a different footing. Mr. A. Ramanathan, learned Counsel appearing for one of the, appellants contended that the law does not prohibit a debtor from alienating his properties with a view to discharge his debts of some of the creditors and that merely because one of the creditors has not been paid, is not a ground for challenging such alienations. In support of this, contention, he relied on the decision of a Bench of this Court reported in Rajeswari and Co. v. Union of India , which has been subsequently confirmed by the Supreme Court in Union of India v. Rajeswari and Co. , wherein the following principle was laid down:
Ordinarily in the race between creditors, he who lages 'behind could not complain of him who proceeded fact and succeeded in getting at the property of the debtor. The fact that the transferee was not a creditor would not make any difference where the sale has been effected, among other things for the purpose of discharging all other debts payable by the transferor. A transfer by a debtor of all the property to a particular creditor is not necessarily voidable under Section 53 of the Transfer of Property Act, even-though under the insolvency law it may operate as a fraudulent transfer or a fraudulent preference. The case of fraudulent preference falling under the Insolvency Act must be distinguished from those falling under Section 53 of the Transfer of Property Act.
There cannot be any controversy in so far as the said legal principal is concerned.
20. Learned Counsel strenuously contained that the provision under Section 58 of the Transfer of Property Act contemplate the filing of a suit on behalf of the general body of creditors or a debtor. Therefore, according to him, the existence of more than one creditor is necessary to invoke the provisions of Section 53 of the Act. A single creditor has no Locus Standi to file a suit under Section 53 of the Act to avoid an alienation by a debtor. Since in this case, the plaintiff is the only creditor of the first defendant, the suit filed by him is not maintainable. We are totally unable to appreciate these extreme contentions of the learned Counsel as there is absolutely no warrant for construing the said section in the manner in which it has been done by him. It is by now well established that the said section will be atracted even if there are no creditors on the date of transfer, but the transferor intends to defeat his future creditors by transferring the property in question. The very same question was considered in the said decision in M/s. Marhemeijer Jr. (India) Pvt. Ltd. v. Zainub Bi. , wherein it was held as follows:
Therefore, even assuming that the first respondent herein was the sole creditor of defendants 2 to 13 on the dates when the originals of Exs. B-2 and B-3 came into existence, it does not absolve the first respondent from pleading and proving that on the date of Exs. B-2 and B-3, defendants 2 to 13 intended to defeat or delay their creditors generally and not merely to defeat the rights of the first respondent.
Again, the Bench made the following important observations:
As far as the representative character of the suit is concerned, Mr. Ahmed Meeran, contended that the first respondent happened to be the only creditor at the time when she instituted the suit and therefore there was no obligation on her part to institute the suit in a representative capacity. We are unable to accept this argument. In the first place, there is no averment in the plaint that on the date of the suit, the first respondent, was the sole creditor of defendants 2 to 13. As a matter of fact, no plaintiff, who comes to Court with a suit under Section 53 of the Act, can assert that apart from him or her, there are no other creditors of the transferor. All that the plaintiff can say in such circumstances is that to the best of his or her information and knowledge there are no other creditors. That does not absolve a plaintiff from the obligation of instituting the suit in a representative capacity so that other creditors of the transferor, if any, will be benefited by the suit and seeking the permission of the Court under Order 1, Rule 8, Code of Civil Procedure. If this requirement is not satisfied, the suit is liable to be dismissed summarily.
The above observations would be a direct answer to the contention raised by the learned Counsel on this aspect. Therefore, we are of the view that even where there is only one creditor and if he is filing the suit in a representative capacity on behalf of the general body of creditors of the debtor, such a suit will squarely come under the provisions of Section 53 of the Transfer of Property Act and it is therefore not necessary that a plaintiff in such a suit should prove that there are more than one creditor.
21. We shall now proceed to consider the facts and circumstances of the case to find out whether the impugned sale deeds were executed with a view to defeat or delay the creditors. Before going into the details of the said transactions. It is relevant to consider certain important circumstances surrounding the execution of the said sale deeds. We have already found that the promissory note Ex. A-1 was supported by consideration and the first defendant was liable to pay the amount due under the said promissory note. Admittedly, the first defendant has not paid any amount towards the said promissory note. Even though he claimed to have sold his lorry for Rs. 50,000 in November, 1974, he did not make any arrangement to discharge the debt due to the plaintiff. Admittedly, the first defendant owned only two items of properties which are the subject matter of the present suit. He has admitted in evidence that excepting those two items, he did not own any other property. It has been also established in evidence that he has sold his entire properties to the persons who were not his creditors and without making any provision for the payment of debts to his creditors including the plaintiff.
22. The next circumstance to be noticed in this connection is that defendants 2 and 4 are class relations of the first defendant. Apart from that, the first defendant had no other debts excepting the loan obtained by him from the Co-operative Society which was payable by instalments in 15 years and the interest charged was only at 9 per cent per annum. There was absolutely no pressure from the Bank or anybody else necessitating the alienations by the first defendant. This indicates that the main intention of the first defendant was to convert the properties into cash so that he can place the properties beyond the reach of his creditors especially the plaintiff to whom he owed monies under Ex. A-1. There is yet another important circumstances showing the fraudulent intention of the first defendant. The sale deeds were registered at Parasalai in Kerala State after including an item of property in Kerala to which the first defendant had absolutely no right, even though the suit properties are situated in Tamil Nadu. This was done with a view in maintain the secrecy of the sale deeds so that he can secret the amounts and defeat the rights of his creditors. These are all important circumstances which will have a bearing on the question relating to the intention of the debtor as observed by the Supreme Court in C. Abdul Shukoor Saheb v. Arji Papa Rao (1964)1 M.L.J. (S.C.) 46 : (1964)1 An.W.R. (S.C.) 46 : (1964)1 S.C.J. 186 : (1964)2 S.C.R. Supp. 55 : A.L.R. 1963 S.C. 1150.
23. Bearing the abovesaid principles in mind, we shall now proceed to consider the nature of alienations effected by the first defendant. First let us take the sale of the first item of the suit properties. The first defendant executed a registered sale deed dated 25.3.1975 in favour of the fourth defendant for Rs. 30,000 under the original sale deed Ex. B-17 the registration copy of which is Ex. A-7. It is admitted in evidence that the fourth defendant is a close relation of the first defendant. Neither in the reply notice Ex. A-11 nor in the written statement filed by the first defendant, he has given the particulars about the manner in which the consideration was received by him under the said sale deed. Excepting a vague averment that he had borrowed money from the fourth defendant long before the execution of the sale deed, there is no specific averment on that aspect. No particulars have been given about the amount or the date on which such a loan was obtained by him. During the course of his evidence as D.W. 3, he has stated that the fourth defendant had advanced a sum of Rs. 11,000 in the first week of December, 1975. If the said statement is correct, then on the face of the sale deed Ex. A-7, I must be false since the said sale deed came to be executed long before December, 1975. Perhaps, it is a mistake for December, 1974. However, this aspect has not been cleared in the re-examination. Apart from that, there is no other evidence, either oral or documentary, to prove the receipt of the said loan by the first defendant from the 4th defendant. Cruiously we find that entirely a different recital is found in the sale deed Ex. A-7. The sale deed describes the manner in which the consideration was paid. A sum of Rs. 17,683.29, was directed to be paid by the vendee, the fourth defendant to Nagercoil Co-operative House Mortgage Society Limited towards the mortgage debt of Rs. 20,000 received by the first defendant. Then we have the recital regarding the receipt of Rs. 11,000. The recital is as follows.
It is significant to note that there is absolutely no reference to the earlier borrowing as alleged by the first defendant now. On the other hand, the sale deed specifically says that the said sum of Rs. 1,000 was received an advance of sale price. Even though Miss. O.K. Sridevi, learned Counsel for the first defendant/appellant attempted to interpret the said recital in a different manner to suit the evidence of the first defendant, we are unable to agree with her on this aspect. The recitals are very clear on this aspect and there is no room for any doubt regarding the alleged payment of Rs. 11,000 as advance of sale price. Therefore, we find on this aspect that the pleadings and the evidence of the first defendant are contrary to the recitals found in the sale deed. As far as the passing of consideration for the said sale is concerned, there is considerable doubt. The reason given by the first defendant for receiving the said sum of Rs. 11,000 from the fourth defendant was that he had borrowed the same for meeting the marriage expenses of his brother's daughter Jayalakshmi. Excepting his belated explanation, there is nothing to show that he had utilised the said money for the marriage of his brother's daughter. On the admitted facts, such a plea of the, first defendant appears to be improbable. It is admitted that his brother is alive and is employed as a Health Inspector. It is also in evidence that his brother's daughter has got 2 3/4 acres of land from the tarwad. As the first defendant has got a big family consisting of his wife and 5 children, it is impossible to believe that he had sold the property for the purpose of celebrating the marriage of his brother. Significantly, his brother Velappan has not been examined as a witness in this case. The balance of Rs. 12,489.07 is stated to have been paid in cash to the first defendant at the time of the sale. There is no endorsement by the Registrar showing the payment of cash consideration before him. There is no evidence to show when it was paid and how it was utilised by the first defendant. As already noticed, there was absolutely no necessity for the first defendant to pay the mortgage amount due to the Society as the said amount was payable in 15 yearly instalments from the year 1971. Even after the sale, the fourth defendant has not paid the entire amount. But on the other hand, he has paid only one instalment of Rs. 172.36 towards the said mortgage. Considering the conduct of the fourth defendant in purchasing the said property, we find that the reasons given by him for purchasing the property appear to be unnatural. According to him, he has two children aged 2 years and 3 years and that in order to admit them in Kinder garden School at Nagercoil, he had purchased the said property. As a matter of fact, we find that he had resided therein for only 40 days and he has disposed of the same to the third defendant within three months after his purchase. Here again, he has come forward with a curious explanation for having sold the said property within a short time. According to him, after the purchase of the said property, his children fell ill and he was getting bed dreams and therefore, he was advised by his astrologers to dispose of the same. There is yet another circumstance which we have already noticed, namely, the said sale deed was registered in Kerala for away from the registeration office in Tamil Nadu having jurisdiction over the suit property. This was evidently done with a view to keep the transaction secret so that the creditors of the first defendant may not be aware of the same.
24. Learned Counsel for the first respondent/plaintiff submitted that in the sale deed in favour of the fourth defendant and in the subsequent sale deed in favour of the third defendant, the property had been grossly undervalued in a fraudulent manner. It was pointed out that the value of the building-item No. 1 at the relevant time was estimated to be Rs. 80,000. Excluding the value of the site, the value of the building alone comes to Rs. 72,075. But in both the sale deeds, only a sum of Rs. 30,000 is shown as consideration. It is claimed by the third defendant that he has made certain improvements after he had purchased the said property and therefore, the present value is more than the value shown in the sale deed. In support of his contentions he has filed the plan Ex. B-19 which was subsequently revised by the Nagercoil Municipality. It appears that thereafter on 17.9.1976 the plan Ex. B-20 was approved after approaching the Assistant Director in Tirunelveli. But according to the third defendant, even before the approval of the said plan, he started putting up additional constructions immediately after the purchase of the said property. But we find that the suit was filed on 18.10.1975 and the third defendant entered appearance on 17.1.1976. He filed his written statement on 26.2.1976. It is only long thereafter the plan Ex. B-19 was sent to the Municipality on 30.7.1976. Therefore, it has been established that the plan was submitted long after the filing of the suit itself. As we have already noticed, no documents have been produced by the third defendant to prove the expenses incurred by him for the alleged improvements made by him. Even though D.W. 2 examined on behalf of the third defendant has stated that the third defendant had accounts in respect of the suit improvements, no such account has been filed by him. The third defendant claims to have put up a compound wall and cattle shed subsequent to his purchase. But it is seen from the sale deed Ex. B-18 executed by the fourth defendant in favour of the third defendant that even at that time there was a compound wall in the property. Therefore, it is obvious that the third defendant could not have made any improvements subsequent to his purchase. It was also stated in the written statement that a qualified Engineer was engaged by him for putting up additional construction. But he has not been examined as a witness in this case. Therefore it has been established that the property has been undervalued with a view to defeat the rights of the creditors of the first defendant. This is also one of the important factors to decide about the nature of the transaction.
25. Coming to the second item of the suit properties, we find that the first defendant sold it to the second defendant under a registered sale deed dated 25.3.1975. Ex. A-8 is the registration copy of the sale deed and Ex. B-31 is its original. The second defendant died subsequently. However, for the notice Ex. A-6 sent by the plaintiff, he had sent a reply under Ex. A-10. In the said reply notice, he did not give any particulars asto the actual price paid by him and how it was paid. Even in his written statement, no such particulars have been furnished. Admittedly, he is also a relation of the first defendant. It is elicited that the son-in-law of the 2nd defendant one Nagappan is the brother-in-law of the first defendant. A sum of Rs. 8,000 is shown as the consideration for the said sale deed. There is no recital in the sale deed to show that the said property was sold for discharging any debts of the first defendant. On the contrary, the recitals in the sale deed show that the entire consideration of Rs. 8,000 was paid in cash to the first defendant on the date of sale. Admittedly, it was not paid before the Registrar. The sixth defendant has been examined as D.W. 4 in this case. According to him, the sale was completed through a broker. He has admitted that he has no knowledge about the payment of consideration for the sale. There is another clinching circumstances which will go to show that the said transaction cannot be a genuine one. It is seen from the evidence that the first defendant had purchased the said property on 21.9.1974 for Rs. 11,200 and it was sold to the second defendant within a year after his purchase for a price much lower than the price for which he had purchased the same a year ago. The only explanation offered in this connection is that there was a fall in the price of paddy, and, therefore, the land was sold for Rs. 8,000 to the second defendant. On the face of it, such an explanation is totally unacceptable. There is no evidence available in this case to show that there was any urgency for the first defendant to sell the property for a lower price within a short time after his purchase. It is also important to note that the learned Commissioner in his report and plan Exs. C-1 and C-2 has valued this property at Rs. 13,200. Apart from that, we find that the second respondent has executed a Will in favour of the seventh defendant who is none other than the wife of the brother of the first defendant. Therefore, it was rightly pointed out by the learned Counsel for the first respondent/plaintiff that the said sale deed is only a device to place the property beyond the reach of the creditors and ultimately the idea is to get back the property under the said Will. Here again, we find that with a view to maintain secrecy of the transaction, the sale deed was not registered at Nagercoil, but it was registered at Parasalai at Kerala State after including an item of property in Kerala to which the first defendant had no title.
26. Coming to the sale Deed executed by the fourth defendant to the third defendant under the registered sale deed Ex. A-9, dated 25.9.1975, learned Counsels for the appellants submitted that even if this Court comes to the conclusion that the sale in favour of the fourth defendant is a fraudulent transfer, still the third defendant as a Bona Fide transferee is protected and the sale cannot be set aside. According to him, Bona Fide purchaser for valuable consideration from a fraudulent transferee is protected. He relied on the decision reported in Kunhu Pothanassier v. Raru Nair, 44 M.L.J. 515 : I.L.R. 46 Mad. 478 : A.I.R. 1923 Mad. 558 : 17 L.W. 547, wherein this Court held that the Proviso to Section 53 of the Transfer of Property Act protects not only a Bona Fide transferee from an original fraudulent transferor but also a Bona Fide transferee from a fraudulent transferee. Further reliance was placed on the decision reported in Firm Man Singh v. B.N. Sinha A.I.R. 1940 Lah. 198, wherein also a similar view was taken. In so far as the said legal position is concerned, there cannot be any controversy. Therefore we have to find out whether the third defendant is a Boan Fide transferee for value from the fourth defendant. The original sale deed in favour of the third defendant has been marked as Ex. B-18 in this case. We have already held that the vendor of Ex. A-9, namely, the fourth defendant is not a transferee in good faith and for consideration, and therefore we have to consider the evidence in this background. The third defendant has not gone to the box to give evidence. But on his behalf, his power of attorney agent D.W. 2 has been examined. He has deposed that when the negotiations with the 4th defendant took place for the sale, one Vithu Thampi, who is an Advocate and the brother-in-law of the fourth defendant, was present and he took part in the said negotiations on behalf of the fourth defendant. It is in evidence that he is the brother-in-law of the first defendant also and he had attested the sale deed Ex. A-7 executed in favour of the fourth defendant. Therefore, he is a person who was in know of things about the entire transactions. Therefore, the third defendant and D.W. 2 must have known the entire background in which the sale deed in favour of the fourth defendant was executed by the first defendant. The evidence adduced in this case clearly shows that the third defendant and D.W. 2 did not take any steps to verify the encumbrance in respect of the property purchased by them and they did not care to find out whether the Kerala property shown in the document is really existing and the fourth defendant has title over the same. No enquiry worth the name was made by them. It is significant to note that within three months after the purchase, the fourth defendant offered to sell the property and this should have made the third defendant to scrutinise the transactions more closely and thoroughly. As already pointed out, the major portion of the consideration was only the mortgage debt which is to be paid in instalment in 15 years and, therefore there was no pressing necessity for the fourth defendant to sell the property shortly after his purchase. We have already found that the third defendant could not have spent any considerable amount for the so-called improvements in the property. We have also noticed that the said improvements should have been made even prior to the sale in his favour. Therefore, it is obvious that the value mentioned in the sale deed as Rs. 30,000 is patently fraudulent. The fact that long after the filing of the suit the third defendant obtained an approved plan from the authorities shows that he was enxious to create evidence in his favour. Learned Counsel for the third defendant relied on three Drafts received by the third defendant from Singapore marked as Exs. B-22 to B-24. At the most, he could show that the third defendant was possessed of sufficient funds at the time of the impugned transaction. But that by itself is not sufficient to show that he is a Bona Fide purchaser for value. On a consideration of the entire circumstances in this case, we are unable to accept the case of the third defendant that he is a Bona Fide purchaser from the fourth defendant and therefore, we hold that he is not entitled to any protection on that ground.
27. Therefore, considering the entire circumstances of the impugned transactions and the evidence adduced by the parties, we hold that all the said three sale deeds Exs. A-7, A-9 and A-8 have been executed with intent to defeat and delay the creditors of the first defendant and that they are not transferee in good faith and for consideration. Accordingly, these points are held against the appellants.
28. Point No. 4 : One other important objection raised by the learned Counsel for the first respondent/plaintiff is that the impugned sale deeds having not been registered before the Registrar having jurisdiction and on the other hand having been registered in Kerala including a fictitious property are void. It is the admitted case that a property to which the vendors are not entitled has been included in the sale deeds just for the purpose of registering it in Kerala. The reason given by them is that the registration fees in Kerala are cheaper and, therefore, they have chosen to register the case there. It is also in evidence that the vendors under these sale deeds had no sembalance of title to the said property in Kerala and there is also no evidence to show that such properties exist in Kerala. It is a case where the parties had deliberately chosen to register the sale deeds in Kerala, with a view to defeat the provisions of law of this State. There is no difficulty if actually the vendors had any property in Kerala and it is included in the sale deeds, since in such a case the sale deeds can be registered in Kerala and they will be perfectly valid. In this connection, we have to note the relevant provisions in the Registration Act. The sale deeds are compulsorily registrable under Section 17 of the Indian Registration Act of 1877. Section 28 of the Act requires that every registrable document shall be presented for registration in the office of a Sub Registrar within whose sub-district the whole or some portion of the property to which such document relates is situate. Section 49 enacts that no registrable instrument shall affect any immovable property comprised therein unless it has been registered in accordance with the provisions of the Act. Section 65 provides for the transmission of copies to the offices of other districts in which any of the property is situate. Therefore, the registration law is positive that a document should be registered only before the Sub Registrar within whose jurisdiction the property is situate with certain exceptions. It is also seen from the above provisions that a document not registered in accordance with the said provisions of Act has no effect on immovable property comprised therein. In order to show that the sale deeds have been validly registered, there must be evidence to show that the properties of Kerala included in the sale deeds really exist and that the vendors had any semblance of title or right over the same. It is the case of the plaintiff that the inclusion of a fictitious property in Kerala in the sale deeds just for the purpose of getting the documents registered in Kerala, is a fraudulent act, therefore, the documents should be held to be void. Reliance was placed on the decision of the privy Council in Harendra Lal Ray v. Haridasi Debi, 27 M.L.J. 80 : 23 I.C 637 : A.I.R. 1914 P.C. 67. In that case, the properties comprised in a deed of mortgage were all situated outside the limit of Calcutta except for a portion which did not belong to the mortgagor and which neither the mortgagor nor the mortgagee intended to be included in the mortgage. In those circumstances, the Privy Council held as follows:
Their Lordships hold that this parcel is in fact a fictitious entry, and represents no property that the mortgagor possessed or intended to mortgage, or that the mortgagee intended to form part of his security. Such an entry intentionally made use of by the parties for the purpose of obtaining registration in a district where no part of the property actually charged and intended to be charged in fact exists, is a fraud on the Registration Law, and no registration obtained by means thereof is valid.
The said decision was followed in Biswanath Prasad v. Chandra Narayan Chowdhury I.L.R. 48 Cal. 509. Again, the said question was considered by the Privy Council in Collector, Gorakhpur v. Ram Sundar, 67 M.L.J. 274 : 159 I.C. 545 : A.I.R. 1934 P.C. 157. In that case, an insignificant item of property included in the sale deed was of no Value, both in respect of the interest taken in it and in respect of its complete inaccessibility. It was incapable either of being utilised or enjoyed by the purchaser, the vendor refused to include in the sale any property to which these disadvantages did not attach in the place where registration was effected. On those facts, the Privy Council held as follows:
One of two inferences alone was possible, either that it was never intended by either party that the item should, for any purpose other than that of registration, be subject of sale at all, or that the vendor only included it, because he knew that it never could become an effective subject of enjoyment or occupation by the, purchaser. The so-called sale was a mere device to evade Registration Act.
Again, the Privy Council had an occasion to go into the question in Venkatarama Rao v. Appa Rao, 59 M.L.J. 53 : A.I.R. 1930 P.C. 91, wherein it was held as follows:
Where the property sought to be transferred by a deed is situated in one district but a small strip of land situated in another district is included in the deed, without any intention on the part of the parties that it should pass under the deed but solely with a view to obtain registration in the latter district, it amounts to fraud on the law of registration, being a device to evade the Registration Act, and the registration obtained in such a way is not valid. There being no effective registration, a suit for possession of basis of the deed does not lie.
The Privy Council further held as follows:
The criterion by which the question as to validity or otherwise of the registration is to be decided is whether upon the facts established by evidence, the small stript of land was really intended to pass under the deed. The motive may be immaterial if the requirements of law have been complied but of this the intention is critical.
These Privy Council decisions followed the principles laid down by tham in Harendra Lal v. Hari Dasi Debi 27 M.L.J. 80 : A.I.R. 1914 P.C. 67, referred to above. The preponderance of legal opinion in respect of such a document where fictitious properties were included in a sale deed or where an insignificant property over which the vendor has no title or where over such property the vendor has no intention of conveying any title, is that it is a fraudulent document and as such it is void. It is needless to say that when there is a specific provision in the Registration Act that a document should be registered in a particular manner and in a particular place, it-should be dealt with according to law. The authority to register arises from the existence of some property within the jurisdiction of the registering officer and if the property is property as the term is understood in law and is capable of ownership and enjoyment and if title is intended to pass, then whatever may be the object with which it is included in the document, the registration would be valid. But where no property exists or on the property the vendor has no semblance of right and the parties never intend that the title should pass under the property, then it must be held that such an inclusion is a document amounts to fraud on the Registration Law and no registration obtained by means thereof is valid. No such fictitious item, inserted to give a colourable appearance to the deed relating to the property in Kerala, when in reality such was not the case, could bring the deed within the jurisdiction of the registering authorities of Kerala. It has been clearly established in this case that none of the parties to these documents know about the existence of the Kerala property mentioned in the documents. It has been specifically admitted by the first defendant in his evidence as D.W. 1 in the following terms:
Therefore, it is made amply clear that he was not aware of the existence of such property in Kerala. According to him, he was not responsible for including the said property and that it was done any at the instance of the fourth defendant with a view to avoid stamp duty and registration charges. On the other hand, the fourth defendant has not stated in his evidence that he owns any such property in Kerala.
29. Mr. A. Ramanathan, learned Counsel appearing for the appellant, in A.S. No. 756 of 1979 relied on the decision reported in Anthrayes Kathanar v. Itty, 32 T.L.R. 258 wherein the Full Bench of the Kerala High Court held as follows:
The mere fact that the registration of a document has been obtained by means of an entry of a fictitious parcel made by the parties to a document for the purpose of obtaining registration in a district where no part of the property charged and intended to be charged exists, does not on that account alone render the registration invalid.
The said decision was followed by the Kerala High Court in Thrasia v. Varkey Mathai A.I.R. 1951 Tra. Cochin 42. Relying on these decisions, learned Counsel submits that such a practice has been recognised in Kerala and, therefore, on that score the documents cannot be held to be invalid. It is seen that the properties involved in those cases were all situated inside the Kerala State and the Kerala High Court did not consider the situation where such a fictitious property is situated outside the State. In a case where the property is situated within the same State, the Registration Law and the Stamp Act will be the same every where, and, therefore, the parties do not stand to gain financially and in that sense perhaps the Kerala High Court construed the position and held that there is no fraud in the Registration Law. It is also to be noted that there is a provision in the Registration Act to register the document either at the concerned Sub-Registrar's office or at the District Registrars office or at the office of the Head of the Registration Department ill the State. On such registration being effected either in the office of the District Registrar or in the Head of the Registration Department of the State, the document is sent to the concerned Sub Registrar for purpose of entry in the Registration records. In all those cases, no question of fraud on the Registration Law is involved. Perhaps, these considerations weighed with the Kerala High Court in coming to the said conclusion. But here in this case, She document which had to be registered in the State of Tamil Nadu on payment of prescribed stamp duty and registration fees, was registered in Kerala on the basis of an inclusion of a fictitious property and paying lessor fees, thereby defrauding the State of Tamil Nadu in the matter of collection of stamp duty and registration fees. Again, reliance was placed on the decision of this Court in A.S. No. 212 of 1979 Mytheen Beevi and Ors v. Podi Pillai and Anr. Judgment dated 18.6.1986 wherein a Bench of this Court had considered the question in a different context. In that case, the Bench found that the property shown in the document really existed in Kerala and, therefore, they held that it is not a case of a non-existing property having been shown to exist with a view to persuade the registering authorities to effect the registration of a document presented for registration. They further held that it was not a bogus property and that the vendor has got title to the same. They also held that both the parties intended that a security should be created over such a property in order to validate the document. The Bench also found that there was no collusion between the parties to the document. It was in those circumstances the Bench held that the impugned document in that case is valid. As a matter of fact, the said decision supports the case of the first respondent and not that of the appellants. Considering all these facts and the legal principles noticed above, we have no hesitation in holding that the impugned sale deeds are void and no title can pass under the documents. This point is answered accordingly.
30. Mr. A. Ramanathan, learned Counsel for the appellant submitted that even if the registration is improper, it does not annul the documents and it is open to the parties to get them registered before the proper Sub Registrar. It is unnecessary for us to consider such hypothetical questions at this stage. A further contention was raised by the learned Counsel for the appellant that in case the impugned sale deeds are held to be void, the provisions of Section 53 of the Transfer of Property Act are not attracted and that, therefore, the plaintiff is not entitled to any relief in the present suit. It is no doubt true that since the sale deeds are held to be void, they need not be set aside. In this case, the plaintiff has not prayed for setting aside the sale deeds. But they want only a declaration that the sale deeds are void. Even though no such declaration is necessary in respect of void documents, nothing prevents the plaintiff from making such a prayer in order to remove all the clouds created by such sale deeds over the suit properties. Even otherwise, the plaintiff cannot be non-suited on such technical objection as he has also prayed for a decree for money due on the promissory note executed by the first defendant in favour of the plaintiff. In so far as the prayed for injunction is concerned, we find that such a relief cannot be granted in this suit and moreover it is unnecessary to do so. We are unable to understand how putting up additional construction is going to prejudice the rights of the creditors. We make it clear that whatever additional construction or alterations made therein will form part of the suit properties as they would be done after the filing of the suit it is not open to the defendants to resist the claims of the creditors on that ground as such additional construction or alterations are sought to be made in the suit properties subsequent to the filing of the suit.
31. In the result, these appeals are dismissed with costs (one set) and the relief of injunction granted by the trial Court would stand deleted from the decree.
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