- Bookmark
- Share
- CaseIQ
Radha Madhab Paikara v. Kalpataru Roy And Ors.
Structured Summary of the Provided Opinion
Factual and Procedural Background
This appeal is brought by the third defendant in a suit for declaration of title to immovable property and for confirmation of possession. The plaintiff was originally the owner; on 13 March 1888 he mortgaged the property to Hari Bullav Bose. The mortgagee (Hari Bullav Bose) enforced his security, obtained a decree and purchased the property in execution on 4 May 1897. Although ownership passed on that date, the plaintiff apparently continued in possession.
On 22 April 1898 the mortgagee executed a conveyance in favour of the first defendant. The plaintiff's case was that this conveyance was really for his benefit but taken in the first defendant's name to protect the property from the plaintiff's creditors. On 25 March 1899 the first defendant executed a mortgage of the property in favour of the second defendant. The mortgagee (second defendant) sued to enforce his security, obtained a decree, and at the execution sale the third defendant purchased the property on 15 December 1906 for Rs. 7,150.
The plaintiff commenced this action on 15 March 1907 claiming (a) the third defendant acquired no title by the purchase, (b) the plaintiff was the owner under the conveyance of 22 April 1898, (c) the mortgage by the first to the second defendant (25 March 1899) was fraudulent and without consideration, and (d) the decree obtained in the mortgagee's suit was collusive. The lower Courts decreed the suit in favour of the plaintiff, finding the conveyance was for the plaintiff's benefit, the plaintiff remained in possession and custody of the conveyance, the second defendant had not advanced money (the mortgage was fictitious), and the subsequent suit and decree were collusive. The lower Courts also found, in general terms, the third defendant's purchase was fraudulent, but a specific conspiracy among the first three defendants was not established.
The third defendant appealed, asserting he acquired valid title by the execution sale and, alternatively, the plaintiff should not succeed until the appellant was repaid the sum deposited by him in Court after his purchase. The appellate Court (as expressed in the provided extract) concluded that the facts found by the District Judge were insufficient to dispose of the suit and did not support the decree in favour of the plaintiff.
Legal Issues Presented
- Whether the third defendant, purchaser at the execution sale, was an innocent purchaser for value without notice of the fraud vitiating the mortgage decree and thus acquired a valid title.
- Whether the decree and execution sale founded on a collusive/fictitious mortgage can prejudice the plaintiff, and if so, whether the plaintiff can enforce rights against an execution purchaser who paid value in good faith.
- Whether the third defendant's conduct (including alleged failure to make inquiries) justifies imputing notice of the fraud to him.
- What party bears the burden of proof on the question whether the execution purchaser was a bona fide purchaser for value without notice.
Arguments of the Parties
Plaintiff-Respondent's Arguments
- The conveyance of 22 April 1898 by the mortgagee to the first defendant was really for the benefit of the plaintiff and the plaintiff continued in possession; the conveyance itself remained in the plaintiff's custody.
- The mortgage executed by the first defendant in favour of the second defendant (25 March 1899) was fraudulent and without consideration; the lawsuit and decree obtained by the second defendant were collusive.
- The lower Courts' finding that the third defendant's purchase was fraudulent supports the decree against the third defendant.
- It was suggested that the money deposited in Court after the execution sale was not truly the third defendant's money — the three defendants conspired and money was paid into Court by one and subsequently withdrawn by the others — so the third defendant was not actually prejudiced by a fictitious deposit.
- The plaintiff's counsel argued that because the title-deed was in the plaintiff's custody and the plaintiff remained in possession, any purchaser who made inquiry would have been apprised of the fraud, so the third defendant should be fixed with notice.
Third Defendant (Appellant)'s Arguments
- The third defendant contended that he acquired a valid title by his purchase at the execution sale (15 December 1906).
- He asserted that, at least, the plaintiff should not recover until the appellant is repaid the sum deposited by him in Court after his purchase.
- The third defendant explained he purchased hastily and made no inquiries; he maintained that his purchase was bona fide and without notice of the fraud.
Other Parties / Procedural Points Noted in the Opinion
- The Courts below characterized the mortgage transaction between the first and second defendants as fictitious (no advance of money) and the suit brought by the second defendant as collusive.
- The first-instance court observed relationships among the defendants and that the third defendant owned adjoining land, which the Court below thought should have put him on inquiry; the appellate Court examined whether those facts legally supported an inference of notice or collusion.
Table of Precedents Cited
| Precedent | Rule or Principle Cited For | Application by the Court |
|---|---|---|
| Earl of Bandan v. Henry Becker (per Lord Brougham) | Describes requisites of a real litigation and the nature of a fraudulent/collusive suit (no real interest, argument, prosecution, defence, or decision). | Used to explain that a fraudulent and collusive suit lacks real contest and therefore, prima facie, a collusive decree should not affect an innocent third party such as the plaintiff in relation to his original rights. |
| Gore v. Stacpoole | General observations on collusive litigation (cited alongside Earl of Bandan passage). | Cited in support of the characterization of collusive suits as lacking real litigation and thus not prima facie binding on the defrauded party. |
| Robert Cole Bowen v. John Evans | Principle that, when fraud is clearly proved, lapse of time does not protect parties or those claiming through them; fraud will be set aside irrespective of the mechanism used to effect it. | Applied to state that once fraud is clearly proved, a court of equity may set aside transactions or decrees even after time has passed. |
| Colyer v. Finch | Supportive authority on setting aside transactions tainted by fraud. | Cited as additional support for the general proposition that clear proof of fraud defeats protections of time or form. |
| Lalla Bunseedhur v. Koonwar Bindeseree Dutt Singh | Authority on rights of execution purchasers and effect of collusive decrees (Judicial Committee decision cited). | Used to show that an execution purchaser may, prima facie, acquire no title where the decree itself is fictitious or collusive; but further inquiry about notice/innocence is required. |
| Mohesh Chunder Bagchee v. Bwarkanath Moitro | Supportive authority from this Court on similar issues of execution purchasers and collusive decrees. | Cited to confirm that innocent purchasers may be protected, and that an execution purchaser's title depends on the nature of the decree and his notice of fraud. |
| Hungsha Majillya v. Tincowri Das | Illustrates that when execution proceedings themselves are vitiated by fraud, it may be unnecessary to show fraud by the auction purchaser. | Distinctly relied upon to show the contrast: fraud in execution proceedings can displace protection of purchaser, but where proceedings appear regular and only the underlying decree is fraudulent, purchaser protection depends on notice. |
| Ambika Prasad Singh v. Whitwell | Similar principle as Hungsha Majillya re fraud in execution proceedings. | Cited as another example where purchaser need not be shown to have been party to fraud if execution itself is corrupt. |
| Bishun Chand v. Bijoy Singh | Authority addressing protection of execution purchasers and requirement to show notice or participation in fraud. | Quoted in support of the proposition that where execution appears regular, an innocent purchaser is protected unless he was party to or had notice of the fraud. |
| Murray v. Mann (Baron Parke) | Distinction between factual findings (jury) and legal inferences (court) on whether facts justify an inference of fraud. | Applied to state that even if lower courts find certain facts, whether those facts justify an inference of fraud is a question of law for the appellate Court to determine. |
| Oliver v. Hinton | Authority for the proposition that omission to call for title-deeds can fix a purchaser with constructive notice (in private sale context). | Cited to acknowledge that a private purchaser who fails to call for title-deeds may be charged with constructive notice of the true title. |
| Berwick and Company v. Price | Similar authority on duty of purchaser to inquire and consequences of failing to call for title-deeds. | Relied upon as supporting the general rule about inquiry and constructive notice in private purchases. |
| Agra Bank v. Barry | Authority confirming the rule that a private purchaser's failure to inquire may operate as constructive notice. | Cited to support the court's statement about consequences of omission to call for title-deeds in private sales. |
| Allen v. Seckham | Illustration that a reasonable purchaser might be expected to make inquiries about the condition of property and possession. | Used to show that private purchasers are often expected to inquire into possession and title. |
| Barnhart v. Greensl Mds | Authority that possession by a person may be sufficient to put a purchaser on inquiry as to that person's interest. | Cited as an instance where possession gives rise to a duty of inquiry in a private-sale context. |
| Manchrajee Sorabji Chulla v. Kongseoo | Supportive example for possession putting a purchaser on inquiry. | Cited among other authorities on possession and inquiry. |
| Hakeern Meah v. Beejoy Patnee (Sir Richard Couch) | Statement that possession may put one dealing with a property on inquiry as to the nature and extent of the possessor's interest. | Referred to in discussing when possession can amount to constructive notice; court limited its application in the execution-sale context. |
| Jugul Kissore v. Karhic | Authority cited for the proposition that possession can impose an inquiry duty. | Included among cases discussing constructive notice by reason of possession. |
| Bhikhi Bai v. Udit Narain Singh | Another authority on possession and inquiry. | Cited in the string of authorities concerning possession as a ground for inquiry. |
| Kondiba v. Nana | Support for the principle that possession may require inquiry by purchasers. | Used as part of the authorities showing the rule's application in private sale contexts. |
| Munshi Karimuddin v. Kunwar Oobind Krishni Narain | Judicial Committee authority that prima facie an execution purchaser acquires no title where the decree is fictitious or collusive. | Applied to hold that an execution purchaser prima facie acquires no title from a fictitious decree, but protection may arise by estoppel if purchaser paid value without notice. |
| D. McLaren Morrison v. Versohoyle | Doctrine that where one of two innocent parties must suffer from a third party's fraud, loss should fall on the party who enabled the fraud. | Applied to support the view that the plaintiff, who devised the scheme to shield property from creditors, may be the proper party to bear the loss of his own device. |
| Juggernath Augurwalla v. Swith | Similar authority on the allocation of loss when one of two innocent parties must suffer due to a third party's fraud. | Cited to buttress the equitable principle that the loss should fall on the party who enabled the fraud. |
| Sidlingappa v. Hirasa | Authority that the Court will not assist a party in carrying out his own fraudulent design. | Used to indicate that a plaintiff who designed a fraudulent scheme to protect his property from creditors should not receive equitable assistance if the fraud was carried out. |
| Jadu Nuth Foddar v. Buplal Poddar | Authority recognizing that if a fraudulent design has not succeeded the party who designed it may still retain protection in equity (subject to circumstances). | Cited to nuance the position that a plaintiff's own attempted fraud does not automatically disentitle him to protection if he was overreached by an ostensible owner. |
| Petherpermal Chetty v. Servai Muniandy | Similar authority on the rights of a party who attempted to effect a protective fraudulent transfer but may have been overreached. | Cited alongside Jadu Nuth Foddar to show the complexity when a fraudulent design may not have been actually carried out. |
Court's Reasoning and Analysis
The Court proceeded in stages:
- It accepted the lower Courts' finding that the mortgage from the first to the second defendant (25 March 1899) was fictitious because no consideration was advanced; therefore the mortgage transaction and the suit founded upon it were collusive.
- The Court observed established authorities that a collusive or fictitious suit lacks the attributes of a genuine judicial contest. For the defrauded original owner (the plaintiff), prima facie the collusive decree should not bind him and he would be entitled, on discovery of the fraud, to have it declared that his rights were unaffected by that decree.
- However, the Court emphasized that this general rule does not inevitably prevail against an innocent purchaser who pays value at an execution sale conducted with apparent regularity. Where the execution appears regular and the only defect is that the decree underlying it was fraudulent, an execution purchaser will be protected unless he was a party to the fraud or had notice of it before paying his money.
- The central legal question was whether the third defendant (execution purchaser) was an innocent purchaser for value without notice. The Court reviewed the factual findings of the lower Courts (relations among defendants; adjacency of the third defendant's land; the third defendant's admitted failure to make inquiries and hurried purchase) and held that such facts, even if assumed, did not necessarily justify inferring that the third defendant knew of the underlying fraud that vitiated the mortgage decree.
- The Court analyzed the doctrine of constructive notice and the duty to inquire. It reiterated established principles that whatever puts a person on inquiry may amount to notice if inquiry would be productive of knowledge by ordinary intelligence, and that one who willfully abstains from inquiry to avoid notice may be charged with constructive notice.
- The Court distinguished between a private purchaser and a purchaser at an execution sale: a private purchaser's omission to call for title-deeds or to inquire into possession is more readily treated as constructive notice. In contrast, an execution purchaser acquires the right, title and interest of the judgment-debtor and cannot compel mortgagor or mortgagee to produce title-deeds; registration records will show the conveyance in the first defendant's name and the earlier dealings, but those records would not necessarily disclose the collusive nature of the underlying decree.
- Because of those differences, the Court concluded that the rule treating failure to call for title-deeds as constructive notice in private sales does not straightforwardly apply to execution purchasers. Consequently, the third defendant could not be blamed merely for not making certain inquiries which, even if made, might not have revealed the fraud before payment.
- The Court invoked the equitable maxim that where one of two innocent parties must suffer because of a third party's fraud, loss should fall on the party who enabled the fraud — here, the plaintiff whose design to keep the property from creditors created the root problem. Nevertheless, if the plaintiff's design did not succeed and he was overreached by an ostensible owner, the plaintiff could still be protected.
- Finally, the Court found that the question whether the third defendant in fact paid his money in good faith and without notice had not been properly investigated. The plaintiff's allegation that the sum deposited in Court was not truly the appellant's money (implying collusion among defendants regarding the deposit) raises a specific factual issue. Given this evidentiary posture, the appellate Court held that the factual findings below were insufficient to support the decree for the plaintiff.
Holding and Implications
Core Ruling: The appellate Court held that the facts found by the District Judge were not sufficient for the disposal of the suit and did not support the decree made in favour of the plaintiff. The Court emphasized that the decisive issue — whether the third defendant was a bona fide purchaser for value without notice — remained unresolved on the evidence presented.
Specific Legal Determination: The Court ruled that the burden rests upon the third defendant (the appellant) to prove that he is a bona fide purchaser for value without notice of the fraud which vitiated the mortgage decree.
Implications
- If the third defendant can establish that he in good faith and without notice paid his money for the property at the execution sale (15 December 1906), the plaintiff will have no enforceable title as against him under the circumstances described.
- The opinion clarifies that where execution proceedings appear regular and only the underlying decree is fraudulent, an execution purchaser will be protected unless he participated in or had notice of the fraud prior to payment.
- The Court applied equitable principles to allocate loss: a plaintiff who enabled or attempted to effect a fraudulent scheme to keep property from creditors may not receive relief if the scheme has succeeded; conversely, if the scheme did not succeed and the plaintiff was overreached, he may still obtain protection. The present record did not permit resolution of these issues.
- Practically, the decision requires further proof on the crucial factual point (the bona fide nature of the execution purchase and the provenance of the deposit into Court) before a final adjudication can be made on the title question between the plaintiff and the third defendant.
- No novel precedent is stated; the Court applied existing principles on collusive suits, constructive notice, the distinction between private purchasers and execution purchasers, and equitable allocation of loss where fraud is involved.
Note: This summary is confined to the matters and findings expressly stated in the provided extract of the opinion. It does not infer any subsequent procedural disposition beyond the statements quoted in the opinion fragment.
1. This is an appeal on behalf of the third defendant in a suit for declaration of title to immoveable property and for confirmation of possession thereof. The plaintiff-respondent, admittedly the original owner of the property, on the 13th March 1888, mortgaged jt to one Hari Bnllav Bose. The mortgagee enforced his security, obtained a decree and in execution thereof purchased the property on the 4th May 1897. On that date, therefore, the plaintiff ceased to be the owner of the property, but he apparently continued in possession. On the 22nd April 1898, the mortgagee auction-purchaser executed a conveyance in respect of the property in favour of the first defendant. The case for the plaintiff is that this transfer was made for his benefit but that the conveyance was taken in the name of the first defendant because he himself was in debt and was anxious to keep his property from the reach of his creditors. On the 25th March 1899, Jhe first defendant executed a mortgage of plaintiff property in favour of the second defendant. The mortgagee sued to enforce his security and obtained a decree. At the execution sale which followed, the third defendant became the purchaser on the 15th December 1906 for a sum of Rs. 7,150. On the 15th March 1907, the plaintiff commenced this action for declaration that the third defendant had acquired no title by his purchase, that he himself, was the owner under the conveyance executed in favour of the first defendant on the 22nd April 1898, that the mortgage by that defendant to the second defendant was fraudulent and without consideration and that the decree, in execution whereof the property was subsequently sold, was collusive. The Courts below have decreed the suit. They have found concurrently that the transfer by Hari Bullav Bose in favour of the first defendant on the 22nd April 1898 was for the benefit of the plaintiff, that the plaintiff thereafter continued in possession as before, and that the conveyance also was in his custody. They have further held that no money was advanced by the second defendant to the first defendant on the footing of the mortgage of the 25th March 1899, that the transaction in substance, was fictitious and that the suit subsequently brought by the mortgagee to enforce his security was also collusive. Under these circumstances, the Courts below have held that the third defendant has acquired no title to the property by his purchase at the execution sale, they have also found, though in vague and general terms, that the purchase by the third defendant was fraudulent, but the allegation of the plaintiff that the first three defendants bad conspired to defraud him, has not been specifically established. The third defendant has now appealed to this Court and has contended that he has acquired a valid title to the property by his purchase at the execution sale, and that, at any rate, the plaintiff is not entitled to succeed till the appellant has been re-paid the sum deposited by him in Court after his purchase at the execution sale. In our opinion, the facts found by the District Judge are not sufficient for the disposal of the suit and do not support the decree which has been made in favour of the plaintiff.
2. It is clear at the outset, that as no consideration was paid by the second defendant to the first defendant on the basis of the mortgage of the 25th March 1899, the mortgage transaction must be regarded as collusive. On the basis of this mortgage, a fictitious suit was brought by the mortgagee against the mortgagor; there was no contest and a decree was made in favour of the mortgagee. Under these circumstances, the result of the suit may be described in the language used by Lord Brougham in Earl of Bandan v. Henry Becker 3 Cl. & F. 479 : 9 Bligh (N.S) 532 In order to make, a sentence there must be a Veal interest, real argument, real prosecution, real, defence and a real decision; of all these requisites, not one takes place in the case of a fraudulent and collusive suit; there is no Judge but a person invested with the insignia of a judicial office who is mis-employed in listening to a fictitious cause proposed to him; there is no party litigating, there is no parly defendant and no real interest brought into question." See also the observations in Gore v. Stacpoole 1 Dow. App. Cas. 18 at p. 30 : 14 R.R. 1. We must take it then that, in so far as the plaintiff was concerned, prima facie, he would not be affected by the collusive decree in the fictitious suit of the second defendant against the first defendant, and he would be entitled, when the fraud was discovered, to have it declared that his rights had not been affected by the fraudulent decree. No doubt, as was stated in Robert Cole Bowen v. John Evans 2 H.L. Cas. 257 although fraud is not to be assumed in doubtful evidence, yet if it is clearly proved, no lapse of time would protect the parties to it or those who claim through them, against the jurisdiction of a Court of Equity, and in that case, it is immaterial by what machinery or contrivance the fraudulent transaction may have been effected, whether by a decree in equity, or a judgment at law, or otherwise See also Colyer v. Finch 5 H.L.C. 905 : 26 L.J. Ch. 65 : 3 Jur (N.S.) 25. It does not follow, however, that if, in execution of such a decree, the property has passed into the hands of an innocent purchaser, who pays value for the property, the plaintiff is necessarily in a position to enforce his rights as against him.
3. This is clear from the decision of their Lordships of the Judicial Committee in Lalla Bunseedhur v. Koonwar Bindeseree Dutt Singh 10 M.I.A. 454 and of this Court in Mohesh Chunder Bagchee v. Bwarkanath Moitro 24 W.R. 260. We are not unmindful that it has been laid down, in cases where an execution sale has been vitiated by fraud committed in the course of the execution proceedings themselves as in Hungsha Majillya v. Tincowri Das 8 C.W.N. 230 and Ambika Prasad Singh v. Whitwell 6 C.L.J. 111 that it is not necessary to establish fraud on the part of the auction-purchaser. But where execution proceedings have been conducted, apparently with regularity and in conformity with law, and the only defect alleged is that the decree on which the execution proceedings are founded was fraudulent, an innocent purchaser would be protected and it would be necessary to establish that he was a party to the fraud or was apprised thereof before he paid his money. Bishun Chand v. Bijoy Singh 13 C.L.J. 588 : 11 Ind. Cas. 399 : 15 C.W.N. 648 : 8 A.L.J. 587 : 13 Bom. L.R. 440 : (1911) 2 M.W.N. 418 : 21 M.L.J. 652 : 10 M.L.T. 335.
4. We have, therefore, to determine in the present case, whether the third defendant who purchased at the execution sale, was an innocent purchaser for value without notice of the fraud which vitiated the suit of the mortgagee and the decree obtained therein. The Courts below have stated in general terms that his conduct was fraudulent and it has been urged before us that that finding is binding upon this Court in second appeal. But, as was observed by Baron Parke in Murray v. Mann 2 Ex. 538 : 76 R.R. 686 : 17 L.J. Ex. 256 : 12 Jur. 634 although it is the" duty of the Jury to determine the facts upon which the allegation of fraud is based, whether the facts so found justified the inference of fraud, is a question of law for the Court to determine. We have thus to consider whether the facts found by the Courts below justify the inference which has been drawn from them. The Court of first instance, which dealt with this matter more fully than the Court of Appeal below, observed that the third defendant and the second and the fourth defendants were relations; the third defendant owns a village contiguous to the tenure in suit, he must have been aware of or could have easily known the particulars of the tenure he was purchasing but he says he made no inquiries and purchased in a hurry; in other words, he acted in a way in which a man of ordinary prudence would not have acted; he must, therefore, have purchased in collusion with the other defendants. These facts, even if they are assumed to be established, do not, in our opinion, justify the inference that the third defendant was aware of the fraud which vitiated the decree in the mortgage suit, It has been argued, however, on behalf of the respondents' that as the title-deed was in the custody of the plaintiff and as he retained possession of the property, if the third defendant had made any inquiry, he would at once have been apprised of the fraud. Reliance has been placed upon the theory principle that it is the duty of a purchaser to call for the title-deeds and it is also his duty to inquiry into the possession of the property. Now, it may be conceded that whatever puts a party on inquiry amounts in law to notice, provided the inquiry becomes a duty and would lead to a knowledge of the facts by the exercise of ordinary intelligence and understanding. Wherever the facts put a party on inquiry, constructive notice will be imputed to him, if he designedly abstains from inquiring for the purpose of avoiding notice. But where a party could not have learnt the facts by inquiry, he is not prejudiced because he did not inquire. If the third defendant had been a private purchaser from the first defendant or the second defendant, the omission to call for the title-deeds would have unquestionably fixed him with constructive notice of the title of the plaintiff. This position has not been disputed on behalf of the appellant and is supported by the cases of Oliver v. Hinton (1899) 2 Ch. 264 : 68 L.J. Ch. 583 : 48 D.R. 3 : 81 L.T. 212 : 15 T.L.R. 450; Berwick and Company v. Price (1905) 1 Ch. 632 : 74 L.J. Ch. 249 : 92 L.T. 110 and Agra Bank v. Barry 7 H.L. 135 at p. 157. It need not also be disputed that if the third defendant had been a private purchaser, he might be expected, a* a reasonable man, to make inquiries about the condition of the property. Allen v. Seckham 11 Ch. D. 790 : 48 L.J. Ch. 611 : 41 L.T. 260. 28 W.R. 26. For instance, if a person is in possession, it may be sufficient to put one, dealinsr with the property, on inquiry as to the nature ande xtent of his interest. Barnhart v. Greensl Mds 9 Moore P.C. 18; Manchrajee Sorabji Chulla v. Kongseoo 6 B.H.C.R.O.C. 59; Hakeern Meah v. Beejoy Patnee 22 W.R.S.; Jugul Kissore v. Karhic 21 C. 116; Bhikhi Bai v. Udit Narain Singh 25 A. 366 at p. 370 : A.W.N. (1903) 81; Kondiba v. Nana 27 B. 48 : 5 Bom. L.R. 269. This principle however does not apply to the case of the third defendant, who is a purchaser at a sale in execution. Such a purchaser acquires the right, title and interest of the judgment-debtor, and, he can acquire, it is true, only such title by his purchase at the sale in execation of the mortgage decree as might have been conveyed to him by the mortgagor and the mortgagee. That title, as we have already held, is fictitious, and, therefore, as pointed out by the Judicial Committee in Munshi Karimuddin v. Kunwar Oobind Krishni Narain 36 I.A. 138 : 13 C.W.N. 1117 : 11 Bom. L.R. 911 : 6 A.L.J. 807 : 6 M.L.T. 275 : 10 C.L.J. 243 : 31 A. 497 : 3 Ind. Cas. 795 : 19 M.L.J. 687 prima facie he has acquired no title by his purchase ; but the question still remains, whether he has not acquired a good title by estoppel against the plaintiff. What inquiries could he have made before his purchase? If he had inquired in the Registration Office, he would have found that the conveyance from. Hariballabh Bose 'stood in the name of the first defendant, the mortgagor. He would have farther found that many years before the execution sale, the first defendant had dealt with the property as his own and had executed a mortgage in favour of the second defendant, on the footing whereof a decree had been made by a Court of Justice. He could not have called upon either the mortgagor or the mortgagee to produce the title-deeds for inspection and examination; if he had made such a request, neither of them would have been under any obligation to produce the title-deeds. Nor could he be blamed for his omission to inquire, whether the mortgagee or the mortgagor was in actual occupation of the property, because it is conceivable that even a person who is out of possession may execute a mortgage of his property and may transfer a valid title to the mortgages and ultimately to the execution purchaser. The principle, Jaid down by Sir Richard Couch in Hakeem Meah v. Bejoy Patnee 22 W.R.S. that if a person is in possession, it may be sufficient to put one, dealing with that property, on inquiry as.to the nature and extent of his interest, cannot consequently be applied to the case before us. On the other hand, the third defendant can claim the benefit of the doctrine that where one of two innocent parties must suffer from the fraud of a third, the loss should fall on him who enabled such third party to commit the fraud. D. McLaren Morrison v. Versohoyle 6 C.W.N. 429 at p. 445; Juggernath Augur walla v. Swith 33 C. 547 at p. 557. The root of the trouble in which the plaintiff now finds himself is his fraudulent design to keep his property from the reach of his creditors; whether he has accomplished the fraud, we do not know; but if the fraud has been carried out, no Court will assist him Sidlingappa v. Hirasa 31 B. 405 : 9 Bom. L.R. 542; on the other hand, if it has not been carried out, though, as laid down in Jadu Nuth Foddar v. Buplal Poddar 33 C. 967 : 4 C.L.J. 22 10 C.W.N. 650 and Petherpermal Chetty v. Servai Muniandy 35 I.A. 98 : 35 C. 551 : 8 C.L.J. 528 : 12 C.W.N. 562 : 5 A.L.J. 290 : 7 C.L.J. 528 : 14 Bur. L.R. 18 : 10 Bom. L.R. 590 : 18 M.L.J. 277 : 4 M.L.T. 12 : 4 L.B.R. 266 his conduct does not disentitle him to protection from the Court, he may find that he has been successfully overreached by the ostensible owner whom he deliberately set up. The position, therefore, is that if the third defendant can establish that, without notice of the fraud, he in good faith paid his money for the purchase of the disputed property at the execution sale on the 15th December 1906, the plaintiff has no enforceable title as against him. This part of the case, however, has not been properly investigated. It has been suggested on behalf of the plaintiff-respondent that the money put into Court was not the money of the third defendant, that the three defendants conspired to cheat him, and that to carry out this scheme, money was paid into Court by one of the three defendants and subsequently taken out by the others, so that ultimately the third defendant has not been prejudiced by the fictitious deposit. The burden thus rests upon the third defendant to prove that he is a lona fide purchaser for value without notice.
Alert