- Bookmark
- Share
- CaseIQ
Kolandai v. Arasan Servai & 3 Others
Comprehensive Summary of the Opinion
Factual and Procedural Background
This second appeal was filed by the 3rd defendant (the appellant) against the judgment of the lower appellate court in A.S. No. 49 of 1981, which had reversed the trial court's dismissal of O.S. No. 2587 of 1973. The original suit (O.S. No. 2587 of 1973) sought a declaration of title and consequential injunction by the plaintiff (1st respondent), who claimed title by purchase from the second defendant under Ex.A-1 dated 5.3.1969.
Background transactions and litigation sequence as stated in the opinion:
- The suit property had earlier been brought to court auction by the second respondent/first defendant's wife and children to realize a maintenance decree; they purchased the property at auction and sold it to the second defendant by Ex.A-5 dated 15.5.1964.
- The second defendant then entered into an oral sale agreement with the first defendant, and the first defendant filed O.S. No. 299 of 1967 for specific performance of that agreement. That suit was dismissed on 16.7.1970 (Ex.A-2), though D-1 (the plaintiff in that suit) later preferred A.S. No. 29 of 1972 and obtained an ex parte decree on 23.3.1973 (Ex.A-3).
- While the specific performance suit was pending (before its dismissal), the plaintiff in O.S. No. 2587 purchased the suit property under Ex.A-1 dated 5.3.1969.
- The plaintiff sought impleadment in the specific performance appeal by I.A. No. 26 of 1973; that application was dismissed on 4.12.1973 (Ex.A-4).
- Pursuant to the specific performance decree, a sale deed Ex.B-2 dated 18.2.1975 was executed by the court on behalf of the second defendant in favour of the first defendant.
- The trial court dismissed O.S. No. 2587 of 1973 applying the doctrine of lis pendens under Section 52 of the Transfer of Property Act; the lower appellate court reversed, holding Section 52 inapplicable because it found that the burden of proving absence of collusion had not been discharged by the defendants, and therefore decreed the suit.
- The present second appeal challenges that reversal; the principal contested issue is whether there was collusion between D-1 and D-2 in O.S. No. 299 of 1967 and its appeal.
Legal Issues Presented
- Whether there was collusion between D-1 and D-2 in prosecuting O.S. No. 299 of 1967 and in the appeal therefrom, such that Section 52 (doctrine of lis pendens) would be rendered inapplicable.
- Who bears the burden of proof to establish collusion — is the burden on the plaintiff who alleges collusion, or on the defendants — and how should that burden be applied when the entire evidence is before the court?
- Whether Section 52 of the Transfer of Property Act operates to invalidate the plaintiff's subsequent purchase, particularly given that the plaintiff's purchase occurred after the specific performance suit was filed.
- Whether the plaintiff (a subsequent purchaser) is protected as a bona fide purchaser for value without notice under Section 19 of the Specific Relief Act in circumstances where the purchase occurred after filing of a specific performance suit.
- Whether the appellant (agreement-holder) has locus standi to prefer the second appeal and whether reliefs can be administered to non-appealing parties (notably D-1) under the relevant procedural provisions (Order 41, Rule 33 CPC).
Arguments of the Parties
Appellant (3rd defendant) and R-2's Arguments
- The lower appellate court erred in placing the burden of proof on the defendants to show absence of collusion; the burden, as contended, is on the plaintiff who alleges collusion.
- The lower appellate court erroneously observed that Ex.A-1 (sale in favour of the plaintiff) occurred while A.S. No. 29 of 1972 was pending; in fact Ex.A-1 was dated 5.6.1969, the specific performance suit was dismissed on 16.7.1970 and A.S. No. 29 of 1972 was filed thereafter.
- By implication, once the error on timing is corrected, Section 52 should be seen to operate against the plaintiff's subsequent purchase.
Respondent / Plaintiff's Arguments
- The plaintiff pleaded collusion and fraud: the suit (O.S. No. 299 of 1967) had been obtained collusively and fraudulently by D-1 and D-2.
- As an alternative, the plaintiff argued he was a bona fide purchaser for value without notice and therefore protected under Section 19 of the Specific Relief Act; on that basis the applicability of Section 52 need not be considered.
- The plaintiff's counsel relied on Chinna Vanan v. Alamelu to contend that a subsequent purchaser like the plaintiff was protected and that such a subsequent purchaser was a necessary party to a specific performance suit and non-impleading was fatal.
- Finally, the respondent/plaintiff argued that because D-1 had not preferred a second appeal whereas D-3 had, no relief could be given to D-1 in the second appeal; the respondent also submitted that the decree obtained by D-3 was a charge-decree which would not come under Section 100 of the Transfer of Property Act and relied on Thangavelu v. Thirumalaiswami in support.
Other Procedural/Representation Points (as presented)
- It is recorded that counsel for R-2 actually represented both R-2 and the appellant (D-3) with the permission of the appellant's counsel; similarly, D-1's counsel argued both for D-1 and D-3 at the request of D-3's counsel.
Table of Precedents Cited
| Precedent | Rule or Principle Cited For | Application by the Court |
|---|---|---|
| Hafiz Mohammed v. Swamp Chand, A.I.R. 1942 Cal. 1 | Authority cited to support the proposition that the burden of proof as to collusion lies on the plaintiff who alleges it. | The court noted this authority (along with others) to state that the burden is on the plaintiff; but the court also observed that when the entire evidence is before it the formal allocation of burden is less determinative and the matter must be decided on all evidence. |
| Narayanan Nair Govindan Nair v. Narayanan Nair Narayanan Nair, A.I.R. 1956 Travancore & Cochin 266 (D.B.) | Relied upon (with Section 44 Evidence Act) for the contention that the burden to prove collusion is on the plaintiff. | The court accepted the principle that the burden is on the plaintiff, but reiterated that when complete evidence is available the issue must be resolved on the entirety of evidence rather than formal burden alone. |
| Nagubai v. Shama Rao (Supreme Court) | Clarification of the distinction between a collusive suit and a fraudulent suit; used to evaluate the plaintiff's pleading which alleged both fraud and collusion. | The court relied on the Supreme Court's articulation to note that collusion and fraud are distinct, and that the plaintiff had pleaded both; the court emphasised that if a suit is fraudulent it cannot simultaneously be collusive, underscoring the need to examine the evidence on the specific question of collusion. |
| Lakshmi Ammal v. S. Lakshmi Ammal (judgment cited by court) | Authority relied upon to state that Section 52 operates even in specific performance suits because the "right to immovable property is directly and specifically in question." | The court cited this decision to support the proposition that Section 52 applies to specific performance actions; this was applied to hold that Section 52 could invalidate subsequent transfers where a specific performance suit is pending. |
| Kathaperumal Pillai v. Murugesam Pillai (1976) 2 M.L.J. 349 | Held that Section 52 operates even when a transfer by way of lease is pending in a suit for specific performance. | The court relied on this decision to reinforce that Section 52 applies in suits for specific performance and to similar forms of transfer pending litigation. |
| Chinna Vanan v. Alamelu (judgment cited by respondent) | Cited by respondent to contend that a subsequent purchaser was protected and that non-impleading of such a purchaser was fatal to a specific performance suit. | The court considered this authority but held the respondent's reliance on it had no merit in the present facts because the plaintiff's purchase was after filing of the specific performance suit and therefore Section 52 operates; the court rejected the argument that Chinna Vanan supported the plaintiff in these circumstances. |
| Annapoorniammal v. Jayavelu (1974) 2 M.L.J. 285 | Authority for the principle that the necessity for presence of parties is determined with reference to rights as they existed on the date of filing the suit; transfer pending litigation would be hit by Section 52 and such transferee's presence may not be necessary for adjudication. | The court relied on this decision to reject the contention that a person who purchased after the filing of a suit was a necessary party and that Order 1 Rule 10 CPC could be invoked to require their presence. |
| Thangavelu v. Thirumalaiswami (1955) 2 M.L.J. 618; A.I.R. 1956 Mad. 67 | Authority regarding the nature of a decree that amounts to a charge for sale price under a sale agreement and the interplay with Section 100 of the Transfer of Property Act. | The respondent relied on this decision to contend the charge-decree did not fall under Section 100; the court noted the decision observed such a charge did not come under Section 100 but recognised it as a charge of a different category — the court treated that as insufficient to negate the existence of a valid charge and found the respondent's submission had no merit. |
Court's Reasoning and Analysis
The court's reasoning follows a step-by-step assessment of timing, burden of proof, the doctrine of lis pendens (Section 52, Transfer of Property Act), the evidence adduced in the earlier specific performance litigation, and procedural questions about locus standi and reliefs on appeal.
1. Timing of events: the court first corrected a factual error made by the lower appellate court — Ex.A-1 (sale to the plaintiff) was dated 5.6.1969, while O.S. No. 299 of 1967 was dismissed only on 16.7.1970 and A.S. No. 29 of 1972 was filed thereafter. Consequently the lower appellate court's assumption that the sale occurred while A.S. No. 29 of 1972 was pending was incorrect.
2. Burden of proof on collusion: the court acknowledged precedents (Hafiz Mohammed, Narayanan Nair, and Section 44 Evidence Act) supporting the proposition that the burden of proving collusion lies on the plaintiff who alleges it. Nevertheless, the court emphasised that when the entire evidence is before it the formal allocation of burden is less determinative; the issue must be resolved on the entirety of evidence and the features of the case.
3. Applicability of Section 52 (lis pendens): the court reproduced the relevant portion of Section 52 and reiterated its prior holdings (citing Lakshmi Ammal and Kathaperumal Pillai) that Section 52 applies even in specific performance suits because such suits directly raise rights to immovable property.
4. Examination of collusion evidence: the court examined the record of O.S. No. 299 of 1967 and found:
- D-2 filed a written statement and, though he did not give evidence, the judgment (Ex.A-2) records passages indicating that D-2 cross-examined P.W.1 (the plaintiff in that earlier suit, i.e., D-1 in the present suit), showing active contest between parties.
- After the dismissal of the specific performance suit, D-1 preferred an appeal (A.S. No. 29 of 1972) and though D-2 remained ex parte in that appeal, the appeal was allowed on merits.
- The plaintiff in the present suit (who alleges collusion) did not take any action against D-2 subsequent to the decree in the other suit — the court regarded that omission as relevant because, if collusion had in fact occurred, the plaintiff would normally have taken action against D-2.
From these features — documentary and oral evidence and conduct of parties — the court concluded that the evidence did not establish collusion between D-1 and D-2 sufficient to render Section 52 inapplicable. The lower appellate court had erred in not properly considering these materials and other features of the case.
5. On the plaintiff's alternate contention under Section 19 Specific Relief Act: the court held that Section 19 protection for a bona fide purchaser for value without notice has no relevance where the purchase is made after the filing of a specific performance suit. Because the plaintiff purchased after the suit was filed, Section 52 operates regardless of bona fides or value.
6. On procedural and locus-standi questions: the court observed that Order 41, Rule 33 CPC empowers the appellate court to mould reliefs and that once D-3 (the agreement-holder) had locus standi to prefer the second appeal, there was no bar to the court, while disposing of D-3's second appeal, to give appropriate reliefs also in favour of D-1 (the first defendant) where justified.
7. On the nature of the decree (charge-decree) and Section 100 argument: the court considered the respondent's reliance on Thangavelu v. Thirumalaiswami and noted that although that authority observed that such a charge may not fall under Section 100, it was recognised as a charge of a different category — the court treated that as not negating the validity of a charge in the circumstances and found the respondent's submission had no merit.
Overall, after assessing evidence, precedent and procedure, the court concluded that there was no proven collusion sufficient to exclude Section 52 and that the trial court's application of Section 52 was correct.
Holding and Implications
Holding:
The second appeal is allowed; the judgment and decree of the lower appellate court are set aside and the judgment and decree of the trial court are restored.
Direct consequences for the parties:
- The trial court's dismissal of O.S. No. 2587 of 1973 (which applied Section 52 lis pendens) is restored — the plaintiff's claim for declaration of title and consequential injunction is therefore not sustained by this appellate court.
- The court found that the plaintiff failed to prove the alleged collusion between D-1 and D-2; Section 52 operates to affect the plaintiff's subsequent purchase made after filing of the specific performance suit.
- The appellant (D-3), as agreement-holder, had locus standi to prefer the second appeal, and the court had jurisdiction under Order 41, Rule 33 CPC to grant appropriate reliefs, including where such reliefs affect other parties connected to the appeal.
Broader implications: The opinion confines itself to the facts and legal principles applied in this case. It reaffirms established principles that Section 52 applies to specific performance suits and that a subsequent purchaser after filing of such a suit is affected by lis pendens; it also reiterates that the burden to prove collusion lies on the plaintiff but that, when full evidence is before the court, the question must be resolved on the totality of evidence. The opinion does not announce any new legal principle beyond application of these settled doctrines in the facts of the case.
1. This second appeal by the 3rd defendant is against the reversing judgment in A.S. No. 49 of 1981 on the file of the Subordinate Judge, Salem, decreeing the suit O.S. No. 2587 of 1973 on the file of District Munsif, Namakkal for declaration of plaintiff/1st respondent's title to suit property and consequential injunction thereon. The plaintiff claimed title by purchase from the second defendant/3rd respondent under Ex.A-1 dated 5.3.1969.
2. Earlier, the second respondent/first defendant's wife and children brought the suit property to court auction to realise their decree for maintenance against the first defendant and themselves purchased the suit property. Then; they sold it to the second defendant under Ex.A-5 dated 15.5.64. The second defendant in turn, entered into an oral sale agreement with the first defendant for selling the property to the first defendant and subsequently D-l also filed O.S. No. 299 of 1967 against the 2nd defendant for specific performance of the said agreement. While the said suit was pending, the plaintiff purchased the suit property as stated above. The suit was dismissed on 16.7.1970 as borne out by Ex.A-2 judgment. Ex.B-1 is the copy of the suit register extract in relation to O.S. No. 299 of 1967. But, in the appeal filed by the first defendant herein AS. No. 29 of 1972, the suit was decreed ex parte on 23.3.1973 (Ex.A-3 is the judgment). The plaintiff herein sought in I. A. No. 26 of 1973 to get himself impleaded in the suit, after the said appeal was disposed of on 23.3.1973. The said I.A. was dismissed on 4.12.1973 (Ex.A-4 is the order). Pursuant to the specific performance decree as stated above, the sale deed Ex.B-2 dated 18.2.1975 was executed by the court on behalf of the second defendant and in favour of the first defendant.
3. The trial court in dismissing the present suit O.S. No. 2587 of 1973, applied the doctrine of lis pendens enunciated under Section 52 of the Transfer of Property Act. No doubt, the plaintiffs contention was that there was collusion between the first and 2nd defendants in relation to O.S. No. 299 of 1967 proceedings and that therefore Section 52, Transfer of Property Act was not attracted, but the trial court found that the said collusion was not proved. However, the lower appellate court in A.S. No. 49 of 1981 held that the burden of proof of "no collusion" was on the defendants and that the said burden had not been discharged and that hence, the above said Section 52 was not attracted. So it decreed the suit. Hence the second appeal by the 3rd defendant who is the agreement holder from the first defendant in relation to the suit property, having earlier agreed to purchase the suit property from the 1st defendant. D-l is the second respondent in this second appeal. In this second appeal D-l & D-3 (R-2 and the appellant) said together and in fact the counsel for R-2 actually represented both R-2 and the appellant and argued the appeal with the permission of the counsel for the appellant.
4. The only main question in this second appeal is this: Whether there was collusion between D-l and D-2 in prosecuting O.S. No. 299 of 1967 and the appeal therefrom. The main submission on behalf of the appellant as well as R-2 well as R-2 is that the lower appellate court erred in placing the burden of proof on the defendants. It is also pointed out that the lower appellate court erred in assuming that Ex.A-1 sale in favour of the plaintiff was only while A.S. No. 29 of 1972 was pending.
4-a. I may straight-away say that the lower appellate court actually erred in observing that Ex.A-1 sale was while A.S. No. 29 of 1972 was pending. As already stated while Ex.A-1 was dated 5.6.1969, O.S. No. 299 of 1967 was dismissed only subsequently on 16.7.1970 and thereafter only AS. No. 29 of 1972 was filed.
5. Regarding the burden of proof, since the entire evidence is before the court, the burden of proof may not loom large and it has to be only seen on the entire evidence let in, what conclusion could be reached.
6. The relevant portion of Section 52 runs as follows:
During the pendency in any court...of any suit...which is not collusive and in which any right to immoveable property is directly and specifically in question, the property cannot be transferred... dealt with by any party to the suit...so as to affect the rights of any other party thereto under any decree... which may be made therein.
No doubt, the learned Counsellor the appellant relied on Hafiz Mohammed v. Swamp Chand A.I.R. 1942 Cal. 1 and Narayanan Nair Govindan Nair v. Narayanan Nair Narayanan Nair A.I.R. 1956 Travancore & Cochin 266 (D.B.) and Section 44 Evidence Act to contend that the burden of proof in regard to the above aspect of collusion, is only on the plaintiff who alleges collusion. In the light of these authorities, I may also state that the burden is only on the plaintiff. However, as I have already indicated the question of burden of proof will not loom large when the entire evidence is before the court and it is only to be seen whether on the entire evidence and other features of the case it can be said that O.S. No. 299 of 1967 and the appeal therefrom are collusive as spoken to in the above said Section 52. No doubt, on the other question whether with reference to a specific performance suit, the doctrine of lis pendens under Section 52 operates or not, there can be no dispute. I have held in Lakshmi Ammal v. S. Lakshmi Ammal, relying on earlier decisions that Section 52 would operate even in the case of a specific performance suit. In such a suit also "right to immovable property is directly and specifically in question." as spoken to under Section 52. The learned Counsel for the appellant also relied on Kathaperumal Pillai v. Murugesam Pillai (1976)2 M.L.J. 349, where it has been held that Section 52 operates even when transfer byway of lease is there pending suit for specific performance.
7. Then, let me come to the actual question of collusion. The actual plea of the plaintiff in the plaint is that D-l and D-2 collusively and fraudulently obtained the decree. In this connection, I may state that the Supreme Court has also stated that collusive suit differs from a fraudulent suit. In Nagubai v. Shama Rao , where the relevant observation, while referring to Wharton's Law Lexicon, on the word 'collusion', is as follows:
In such a proceeding, the claim put forward is fictitious, the contest over it is unreal, and the decree passed therein is a mere mask having the similitude of a judicial determination and worn by the parties with the object of confounding third parties. But when a proceeding is alleged to be fraudulent, what is meant is that the claim made therein is untrue, but that the claimant has managed to obtain the verdict of the court in his favour and against his opponent by practising found on the court. Such a proceeding is started with a view to injure the opponent, and there can be no question of its having been initiated as the result of an understanding between the parties. While in collusive proceedings the combat is a mere sham, in V a fraudulent suit it is real and earnest Despite this divergence in meaning between above said two expressions 'frudulent' and 'collusive', the plaintiff has chosen to plead 'fraudulent and collusive'. If the said suit is fraudulent, it cannot be collusive also.
8. Anyway let us see whether there is evidence of collusion in this case. D-2 the defendant in O.S. No. 299 of 1967 filed written statement in the said suit, though he did not enter the witness box or examine any witness on his side; But, I found in Ex.A-2 the judgment in O.S. No. 299 of 1967 the following passage:
The plaintiff as P.W.1 (D-1 in the present suit.. This witness (P.W.1) admits that in cross-examination that he has to pay the amount within six months.
This shows that D-2, the defendant in that suit has also cross examined the plaintiff therein, i.e., D-1 in the present suit. Further after the dismissal of the said suit, D-1 has also preferred an appeal AS. No. 29 of 1972 and though D-2 remained ex pane in the said appeal, the appeal has been allowed only on merits. While so, don't think that there is any scope for holding that there was collusion between D-1 and D-2 in the above said suit O.S. No. 299 of 1967 proceedings. No doubt, the ipso dixit of P.W. 1, the plaintiff herein the chief examination is that, In the cross-examination P.W. 1 has admitted as follows:
Further, the plaintiff has also not taken any steps against D-2 subsequent to the decree in the other suit. If there was really any collusion, the plaintiff would have normally taken action against D-2. The lower appellate court erred in not considering the above said documentary and oral evidences and the other features in the case. From the above findings it cannot at all be concluded that there was collusion so as to render Section 52 inapplicable. 9. In the light of the abovesaid features, the learned Counsel for the respondent/plaintiff did not concentrate on the question of collusion-aspect at all but began to argue that there was no necessity to go into the question of applicability of Section 52 since the plaintiff was a bona fide purchaser for value without notice of the sale agreement in favour of the first defendant and he was protected by Section 19 of the Specific Relief Act. But, this argument has no merit at all. No doubt if the plaintiff had purchased the suit property before the filing of the specific performance suit, his said contention may be considered in the light of the said Section 19. But, once his purchase is after the specific performance suit, certainly Section 52 will immediately come into operation. The said counsel relied on the decision in Chinna Vanan v. Alamelu , to contend that subsequent purchaser like him was protected and that such a Subsequent purchaser was a necessary party for such a specific performance suit and that his non-impleading was fatal to the said suit. But his contention has no merit at all since, in the present case, the plaintiff is a subsequent purchaser after the filing of the specific performance suit and in which case Section 52 will certainly operate. While considering Section 52, the fact that the plaintiff is a bona fide purchaser for value, even though established, has no relevance at all. The said counsel also could not place before me any authority to the effect that a person who purchases, after the filing of a Specific performance suit is a "necessary party" to the said suit. On the other hand, I find that this Court has held in Annapoorniammal v. Jayavelu (1974)2 M.L.J. 285, that the necessity for the presence of parties has got to be determined with the rights of the parties as they existed on the date of filing of the suit. In the said case also, after observing that a transfer pending litigation would be hit by Section 52, Transfer of Property Act, it was held that such a transferee's presence was not necessary for an effective adjudication of all the question involved in the litigation and that Order 1, Rule 10, C.P.C., could not be invoked.
10. The said learned Counsel for the respondent/ plaintiff finally argued that since D-l has not preferred a second appeal and only D-3 had filed this second appeal, no relief could be given to D-l. He pointed out that pursuant to the sale agreement by D-l in favour Of D-3 there was a specific performance suit by D-3. But decree for specific performance was not given, and only a charge-decree was given for the sale price agreed under the sale agreement and that such a Charge would not come under Section 100 of Transfer of Property Act, it being not charge by operation of law. In this connection, he relied on Thangavelu v. Thirumalaiswami (1955) 2 M.L.J. 618 : A.I.R. 1956 Mad. 67 1955, M.W.N. 750 : (1955)68 L.W. 755 : I.L.R. 1956 Mad. 697. But, this submission of the said counsel also has no merit. Even the above mentioned decision observed that even though such a charge would not come under Section 100, it was a charge of a different category. Therefore, it cannot be said that there was no valid charge at all.
11. That apart in view of what is contained in Order 41, Rule 33 of Civil Procedure Code also, the above said contention of the said counsel has no merit. As already indicated, though D-l is only one of the respondents in this second appeal, D-l's counsel alone argued both for D-l and D-3 (appellant) at the request of D-3's counsel himself. Once D-3 has locus standi to prefer the second appeal, as agreement-holder, there is no bar for the court, while disposing of the said second appeal by D-3, to give proper reliefs in accordance with Order 41, Rule 33 of C.P.C. even to the first defendant.
12. The net result is, the judgment and the decree of the lower appellate court are set aside and the judgment and the decree of the trial court are restored and the second appeal is allowed.
Alert