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Smart Summary

Concise Analytical Summary of the Opinion

Factual and Procedural Background

On 23 December 1931 the plaintiffs, Kali Charan Mondal and Kasbinath Mondal, executed a patta for 9.31 acres of land in favour of the principal defendants Kalipada, Haripada and Tarapada Mondal (sons of the plaintiffs' maternal uncle Lakshman). Prior to this transaction Lakshman had dealt with the lands: he had earlier lent Rs. 500 on mortgage of the property and later deposited about Rs. 850 to prevent sale in execution of a decree for arrears of rent. Lakshman subsequently obtained a decree for reimbursement of the amount he had deposited.

Plaintiffs alleged that the mortgage dues had been paid and that Lakshman had relinquished his claim under the reimbursement decree before the date of the patta; they asserted the patta was a benami instrument, executed without consideration, created solely to facilitate litigation to obtain possession against a co-sharer named Rakhal. According to the plaintiffs, the scheme succeeded and possession was obtained in Jaistha 1344; Lakshman stayed in possession for four years by amicable arrangement as compensation for litigation expenses, and in 1348 possession returned to the plaintiffs. Thereafter the defendants allegedly refused to execute a deed of relinquishment and conspired to disturb plaintiffs' possession. Plaintiffs sought a declaration that the patta was "fraudulent, collusive and benami".

The defendants contended that the patta was a genuine document executed for consideration (the selami being set off against the reimbursement decree dues) and that they were in actual possession throughout; they relied on the proviso to Section 42 of the Specific Relief Act to plead that, in the absence of a prayer for recovery of possession, the suit was barred. The trial Court accepted the defence contentions and dismissed the suit. On appeal the Subordinate Judge reversed the trial Court: he held the patta to be benami and found the suit was not barred under the proviso to Section 42, and accordingly decreed the suit. The defendants appealed to the present Court.

Legal Issues Presented

  1. Whether the patta executed by the plaintiffs in favour of the defendants was a benami document (and whether it was fraudulent or collusive).
  2. Whether the suit was barred by the proviso to Section 42 of the Specific Relief Act in the absence of a prayer for recovery of possession (i.e., whether plaintiffs needed to pray for recovery of possession from defendants who were in actual possession).
  3. Whether the plaintiffs, being participants in creating a fraudulent document (if it was fraudulent), are disentitled by the doctrine of pari delicto from obtaining relief to set aside the document once its purpose had been fulfilled.
  4. Whether the lower appellate Court wrongly reversed the trial Court by failing to consider material facts and evidence (custody of the patta, effect of reimbursement decree dues on value, and evidence on possession).

Arguments of the Parties

Appellant's (Defendants') Arguments

  • The lower appellate Court failed to give due consideration to important facts and circumstances recorded in evidence and relied upon by the trial Court (including custody of the patta, the outstanding reimbursement decree dues affecting value, and the evidence relating to possession).
  • There is no clear and specific finding that the plaintiffs were in possession; if the defendants were in possession the plaintiffs should have prayed for recovery of possession and therefore the suit is barred under the proviso to Section 42 of the Specific Relief Act.
  • The plaintiffs were pari delicto with the defendants in executing the document for a fraudulent purpose; where parties combine to create a fictitious transfer to effect a fraud, the grantor who seeks to undo that transaction after the fraudulent purpose has been carried out will be refused relief by the Court.

Respondent's (Plaintiffs') Case as Presented in the Opinion

  • The patta was benami and without consideration, created to enable litigation to recover possession from a co-sharer, Rakhal.
  • The mortgage dues had been paid and the reimbursement decree claim had been relinquished by Lakshman before execution of the patta, so the patta lacked consideration.
  • Possession was recovered in Jaistha 1344 and ultimately returned to the plaintiffs in 1348; defendants later refused to relinquish formal title and conspired to disturb possession, hence plaintiffs sought declaration that the patta was fraudulent, collusive and benami.

Table of Precedents Cited

Precedent Rule or Principle Cited For Application by the Court
Ram Indar v. Rup Narain (1814) 2 Mac. S.R. 149 Cited as an example of the earlier strict rule refusing relief to the grantor of a fraudulent deed, whether or not the fraudulent purpose had been carried into effect. The Court cited this authority as demonstrating the historical stringency of the rule but explained that later authorities have narrowed the rule; it did not apply the strict early approach to the facts of the case.
Ram Narain v. Jugnnath (1851) Bengal S.D.A. p. 774 Again cited for the early strict approach refusing relief to grantors of fraudulent deeds regardless of fulfillment of purpose. Used to illustrate the historical position; the Court noted the development of the law since these cases and did not rely upon their strict rule to deny relief in the present circumstances.
Jadu Nath Poddar v. Rup Lal Poddar, 10 C.W.N. 650 (33 Cal. 967) Cited for the later, more lenient view that the Courts should refuse relief only where the fraudulent purpose of the deed has actually been fulfilled. The Court relied on this later approach in assessing whether the doctrine against participants in a fraudulent deed should bar relief; it applied the principle that mere participation does not automatically deny relief unless the fraudulent purpose has been carried into effect and is intended to bar relief.
Petherpermal Chetty v. Muniandy Chetty, 35 Cal. 651 (35 I.A. 98 P.C.) Cited as authority for the modern restriction of the earlier strict rule — refusal of relief being limited to cases where the fraudulent purpose was actually achieved. The Court cited this case to support the statement of law that refusal of relief is now limited to situations where the fraudulent objective has been fulfilled; it then examined the facts to determine whether that test was met here.

Court's Reasoning and Analysis

The Court proceeded in a stepwise analysis focused on legal principles and their application to the findings below:

  1. On the complaint that the lower appellate Court omitted consideration of certain facts (custody of the patta, effect of reimbursement decree dues, evidentiary details regarding possession), the Court explained why those matters were either immaterial in the circumstances or had in fact been considered. For custody of the patta, the Court observed that if the instrument was benami it would naturally remain with the benamidar for purposes of litigation, so the alleged omission produced no injustice. Concerning the reimbursement decree receipts, the Court found the appellate Court disagreed with the trial Court and concluded the receipts were genuine, showing the reimbursement dues had been satisfied, and therefore those dues could not form consideration for the patta. As to possession, although the appellate judgment did not recount every detail of evidence, the Court pointed to explicit passages in that judgment indicating the judge had considered the evidence on both sides and found the plaintiffs' evidence of possession more convincing.
  2. The Court reaffirmed the proper standard of review in a second appeal: it is not the function of the Court to re-evaluate whether the appellate judge's reasoning was persuasive on matters of fact, but to determine whether proper legal principles have been applied. The Court found no error by the lower appellate Court in this respect; the appellate judge had applied his mind to evidence and reached a factual conclusion of plaintiffs' possession.
  3. On the proviso to Section 42 of the Specific Relief Act, the Court noted a legal error by the Subordinate Judge in stating that even if plaintiffs were not in possession they need not pray for recovery of possession. The Court clarified the law: if plaintiffs are out of possession and the benamidars are in possession, the recovery of possession is a "further relief" that should have been prayed for; in the absence of such a prayer a mere declaration must be refused. However, this error did not affect the outcome because the Subordinate Judge had positively found, on the evidence, that the plaintiffs had been in possession since 1348. Given that factual finding, there was no 'further relief' necessary and the proviso did not bar the suit.
  4. The Court examined the doctrine barring relief to participants in a fraudulent deed. It recited both the historical strict rule (earlier cases like Ram Indar and Ram Narain) and the later, more lenient approach (cases such as Jadu Nath Poddar and Petherpermal Chetty) limiting refusal of relief to situations where the fraudulent purpose had actually been fulfilled. The Court emphasized that not every benami document is executed to defraud others; some benami arrangements can be intended to prevent fraud (for example, within joint-family contexts).
  5. Applying legal principle to facts, the Court concluded that the primary intention in creating the patta was to assist in recovering rightful possession from Rakhal — i.e., to prevent Rakhal from defrauding the plaintiffs — rather than to defraud third parties. The Court regarded any alleged intention to create a false impression in other litigation as, at most, secondary and insufficient to extend the doctrine which bars participants in a fraudulent deed from obtaining relief. The Court therefore held that the doctrine against participants in a fraudulent deed did not apply to the present case.
  6. On balance the Court found that the lower appellate Court had lawfully applied legal principles to the facts, had accepted the plaintiffs' case on possession, and had correctly concluded that the patta was benami. The Court nonetheless corrected a defect in the decree by directing a specific declaration that the patta is a benami, inoperative document.

Holding and Implications

Holding: The appeal is DISMISSED.

The Court modified the decree of the lower appellate Court by ordering the following specific declaration: it is declared that the patta executed by the plaintiffs in favour of the principal defendants is a benami, inoperative document. With that modification the appeal is dismissed with costs. Leave to appeal under Clause 15 of the Letters Patent was sought and refused.

Implications:

  • Direct effect on the parties: the plaintiffs obtain a judicial declaration that the patta is benami and inoperative; the defendants' appeal fails and they are ordered to pay costs.
  • No broader legal innovation was announced: the Court applied established principles (including the evolved limitation on refusing relief to participants in a fraudulent deed) to the facts and declined to extend the doctrine. The opinion does not purport to establish a new precedent beyond applying settled principles to these facts.

Result reported in the opinion: "Appeal dismissed."

Show full summary ...

    Kalipada Mondal v. Kali Charan Mondal

    1. On 23rd December 1931, Kali charan Mondal and Kasbinath Mondal, plaintiffs in the suit out of which this appeal has arisen executed patta for 9.31 acres of land in favour of the principal defendants in the suit, Kalipada, Haripada and Tarapada Mondal, sons of plaintiffs' maternal uncle Lakshman. Admittedly, Lakshman had dealings with these lands before this date, having first lent Rs. 500 on mortgage of this property, and thereafter deposited about; Rs. 850 to save this from sale in execution of a decree for arrears of rent. Thereafter, Lakshman obtained a decree for reimbursement of the amount deposited by him. According to plaintiffs, the mortgage dues were paid up and the claim on the reimbursement decree, was relinquished by Lakshman before the date of the patta. Plaintiffs assert that this patta was a benami document without consideration and was brought into existence solely to facilitate the prosecution of legal proceedings for the possession of these lands in the face of the attempts of plaintiffs' cosharer in the jama Rakhal. The scheme, it is said, succeeded, and after possession was obtained in Jaistha 1344, Lakshman remained in possession for four years by amicable arrangement to compensate him for the expenses of litigation. In 1348, plaintiffs continue, the lands returned to their possession, but though thereafter the defendants were asked to execute a deed of relinquishment to nullify the formal effect of the patta, they would not do so and conspired to disturb plaintiffs' possession. Plaintiffs therefore seek a declaration that the patta is “fraudulent, collusive and benami”. The defence is that the patta is areal and effective document executed, for consideration, the selami having been set off against the dues on account of the reimbursement decree, and also that the defendants are in actual possession all along, so that in the absence of a prayer for recovery of possession, the suit is barred under the proviso to Section 42 of the Specific Relief Act. The trial Court accepted both these defence contentions and dismissed the suit. On appeal, the learned Subordinate Judge came to the conclusion that the patta is a benami document and that the suit was not barred under the proviso to Section 42 of the Specific Relief Act, and accordingly decreed the suit. Against this decision, the defendants have appealed.

    2. Three grounds have been pressed in appeal. The first is that in coming to the conclusion that the document is benami, the lower appellate Court did not take into consideration many important facts and circumstances appearing in evidence and considered by the trial Court, and, so, the case should be sent back for proper hearing by the appellate Court below. Secondly, it is urged that there is no clear and specific finding that the plaintiffs are in possession, and in the absence of such a finding, the Court below erred in law in rejecting the defendants' plea that the suit was barred under Section 42 of the Specific Relief Act. The third ground is that in any case, the plaintiffs' suit must fail, as they having been in pari delicto with the defendants in executing the document for a fraudulent purpose will not be helped by the Court, after that purpose has been fulfilled, to “resume the individuality they cast off” to defraud others.

    3. The learned advocate argued at considerable length to convince me that the judgment of the learned Court below is not a proper judgment of reversal and mentioned to me a number of facts which in his opinion, the Court below should have considered but did not. He complained that the Court omitted to consider the facts that the patta remained in the custody of the defendants, that the value of the property was materially affected by the dues of the reimbursement decree remaining outstanding so that there was nothing improbable that the land should be leased out at a nominal profit, and that the evidence as regards possession was not duly considered. The obvious reason for the omission to consider the question of custody of the document is that in the circumstances of the present case, if the patta was a benami document, it must still necessarily remain with the benamidar for the purpose of the litigation with Lakshman. As regards the reimbursement decree dues, I find that the learned Court below, found in disagreement with the trial Court that the portions of two receipts which mention satisfaction of the reimbursement decrees that these portions were not interpolations but were genuine and so, the dues of reimbursement decree having been already satisfied, these could not form the consideration of the patta. As regards the evidence of possession, it is true that the judgment does not mention in detail the evidence given by the P.Ws and the D.Ws; but in two different parts of the judgment, the Court-below has clearly indicated that he has on consideration of the evidence of possession, on both aides, has found the evidence of the plaintiffs' side more acceptable. The learned Judge has considered the question of relationship between the parties, the question of motive for a benami document, and the question of probabilities of such a lease being really created. It is neither necessary nor proper for this Court in second appeal to consider whether the reasoning for a finding, of facts is acceptable. It is necessary only to see whether, the proper legal principles have been applied. I find that the learned Court below committed no error in this respect. The first ground therefore fails. In considering whether the suit was barred under the proviso to Section 42 of the Specific Relief Act, the learned Court below fell into error in thinking that even if the plaintiffs are not in possession and the defendants are in possession, the plaintiff is not required to pray for recovery of possession. There can be no doubt that if the plaintiffs are out of possession and the benamidars are in possession, the recovery of possession from the benamidar is ‘further relief’ which the plaintiffs ought to have prayed for, when praying for the declaration that the patta is a benami document; and, in the absence of such a prayer for the ‘further relief,’ the Court must refuse to give a mere declaration. This error of law of the learned Subordinate Judge has not, however, affected the decision of the case, as he has actually come to the conclusion that the plaintiffs' story of possession since 1348 should be believed. The learned advocate for the appellant has complained that there is no proper discussion of the evidence of possession by the learned Court below, and his finding on this important question of possession is not specific and definite. I should have certainly preferred to see a critical discussion of the evidence of possession in the judgment of the Court below. I agree also that the conclusion could have been expressed in a more categorical way. The judgment clearly shows however that the learned Judge did apply his mind to the consideration of the evidence of possession, and then came to the conclusion that the evidence on the plaintiffs' side was more reliable and that the plaintiffs' story that they possessed the land since Jaistha 1348 was true. At p. 8 of the paper book, we find the settlement (statement?) after a statement of both sides case re: possession, “I am inclined to believe in the story of the plaintiff; after going over the evidence on both sides.” At p. 12 of the paper book there appears the statement. “The evidence of possession on the side of the plaintiff is more convincing than that of the defendant.” The reasonable interpretation of Bush language is that the Court found as a fact that the plaintiffs' story of possession since 1348 is true. On this finding of fact, the plea of bar under the proviso to Section 42 of the Specific Relief Act must fail, as there was no ‘further’ relief that the plaintiffs could ask for.

    4. The third ground is based on the doctrine that:

    “Where a party admits that he has made a fictitious transfer of his property to another with a view to effect a fraud, but asks to have his act undone, the Court would refuse relief and would leave the parties to the consequences of their misconduct.”

    5. It is argued by the learned Advocate for the appellant that in this case, the plaintiffs on their own case combined with the defendants to create a document for the fraudulent purpose of evicting Haran from these lands, and then after that purpose was fulfilled, he wants to get rid of that document, the Court will not help him to do so. The rule of law relied upon may now be said to be well settled. As it is one of the principal functions of a Court of law to detect and punish fraud, it is only right that it should do nothing that would even indirectly encourage or promote fraud. If people knew that after creating a nominal document to defraud some persons, they could later get the help of the Court in getting rid of this very document when it started embarrassing them, a main restraining influence against the creation of fraudulent documents would disappear. So, from the earliest cases the Courts, refused to relieve the grantor of a fraudulent deed of its consequences. In the earlier cases, the rule was applied with such stringency that the grantor of a fraudulent deed was refused relief from the effects thereof, whether or not the fraudulent purpose had been carried into effect. Ram Indar v. Rup Narain, (1814) 2 Mac. S.R 149, Ram Narain v. Jugnnath, (1851) Bengal S.D.A page 774. In later years, a more lenient view has prevailed and the Courts have restricted such refusal only to cases where the fraudulent purpose of the deed has actually been fulfilled. Jadu Nath Poddar v. Rup Lal Poddar, 10 C.W.N 650 : (33 Cal. 967), Petherpermal Chetty v. Muniandy Chetty, 35 Cal. 651 : (35 I.A 98 P.C).

    6. In considering the application of this rule of law to the circumstances of the present case, it is necessary to decide first whether the patta apart from being a benami document was created with a fraudulent purpose and if so, whether that fraudulent purpose was fulfilled. We must of course look to the substance of the matter in preference to the form. It is important to bear in mind in this Connection that every benami document is not executed for the purpose of defrauding other people. It is not uncommon for an individual member of a Hindu joint family, when acquiring property with his own funds to take the conveyance in the benami of his wife, with a view to prevent false claims by other members of the joint family. Far from being created for a fraudulent purpose, such a document may well be said to be for the purpose of preventing fraud. It is important therefore before a benami document is also considered to be fraudulent, to examine the real intention of the parties. Was it to effect a fraud? If so, it was not merely benami, but fraudulent; if there was no intention to effect a fraud, it was not fraudulent, though benami, and the doctrine against parties to a fraudulent deed will not stand in the way of the real owner getting relief against the benamidar of such a document.

    7. In the present case, the motive for the execution of the patta as alleged by the plaintiffs and held to be established by the learned Court below was that possession should be recovered from Rakhal. It is not only nobody's case that Rakhal was in rightful possession of the land. Plaintiff's case on the contrary is that Rakhal, a co-sharer, was obstructing plaintiffs' rightful possession of the land, in spite of a partition. In law, the plaintiffs themselves could have sought the aid of the Court against Rakhal; but it was considered more convenient to secure the aid of their maternal uncle Lakshman for this, purpose and to facilitate the scheme, the patta in favour of Lakshman's sons was created. It seems to me clear that the intention in creating the document was thus to prevent Haran from defrauding the plaintiffs, and not to defraud Haran and anybody else. It seems to me improper to attach too much weight to the fact that the plaint mentions the documents “fraudulent and collusive”. But, argues the learned lawyer for the appellant, certainly the parties wanted to create a false impression on the Court where the litigation was proposed that the defendants were the real lessees of the land. This, according to the learned Advocate, amounted to the practice of fraud on Court. The primary intention in creating the document was as already stated to recover rightfully possession from Haran, and only, in a secondary manner, if at all, could it be said that there was intention to deceive the Court. In my opinion, it will be an undue strain on language to say that the parties intended to practise fraud upon the Court. Neither in principle, nor in authority, am I able to find any justification for extending the doctrine against the participants in a fraudulent deed to cases where without there being any intention to defraud any person, there is an intention to practise fraud upon Court.

    8. My conclusion therefore is that the doctrine against participants in a fraudulent deed is not applicable to this case.

    9. All the grounds taken in appeal therefore fail. Adverse criticism was made by the learned Advocate for the appellant on the fact that the judgment and decree of the Court below do not specify the reliefs granted to the plaintiff. It seems to me proper that the defect in the decree should be removed. It is ordered accordingly that it be declared that the patta executed by the plaintiffs in favour of the principal defendants, is a benami, inoperative document. The decree passed by the learned Court below is modified to this extent with this modification in the decree, the appeal is dismissed with costs. Leave to appeal under cl. 15 of the Letters Patent was prayed for and refused.

    R.G.D

    10. Appeal dismissed.

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    Comments

    Kalipada Mondal v. Kali Charan Mondal
    (Jun 22, 1948)