JUDGMENT

The plaintiff is the appellant in this second appeal. The suit was to set aside an order dismissing a claim petition. The defendants were the decree-holders. They obtained a decree in O.S No. 204 of 1925 on the file of the District Munsif's Court of Coimbatore and attached the properties of the judgment-debtor Pachianna Pannadi. The plaintiff then preferred his claim under a sale deed Ex. A dated the 13th May 1925 from Pachianna Pannadi. This sale was after the decree but about two months before the date of the attachment. The Court of first instance decreed the plaintiff's suit but its decree was reversed in the lower appellate Court which however gave the plaintiff a charge with regard to a certain mortgage Ex. C, which it held that he had discharged. Against this decree the present second appeal is filed.

The trial Court found that the land purchased comprised the whole property of the judgment-debtor. The purchase price was Rs. 3,500. It is not contended that this was an under-estimate and in fact the decree-holders refused to take the land from plaintiff for Rs. 4,000 and transfer the decree to plaintiff. The consideration under Ex. A was stated to be made up as follows: Rs. 2,000 to discharge a mortgage to one Subbiah Pillai, (Ex. C), Rs. 1,168 to discharge a mortgage in favour of one Veera Pannadi, Rs. 100 received in cash, and the discharge of a promissory note for Rs. 200 executed by the vendor in favour of the appellant. The trial Court found that all the consideration as per terms of the sale deed was paid that the plaintiff got delivery of the documents on the date of the sale deed and also got possession of the property, and that the decree-holder was not entitled to proceed against the land. The Subordinate Judge found that as far as the first mortgage Ex. C in favour of Subbiah Pillai was concerned, it had been discharged by the plaintiff and that the consideration was good. As regards the second mortgage Ex.C-1 he found that the debt was not genuine. The mortgagee under Ex. C-1 was the father-in-law of the judgment-debtor. With regard to the payment of Rs. 100 in cash and the promissory note debt of Rs. 200 alleged to be due to the plaintiff, he found that this was a fictitious consideration. He therefore dismissed the plaintiff's suit except that he gave him a charge to the extent of Rs. 2,000 in respect of the mortgage, Ex.C These being the findings of fact, it is clear that the plaintiff was not a creditor of the judgment-debtor, the vendor at the time of the sale.

I shall first deal with the objection which was raised in both the lower Courts and is also raised here and which, if correct, would suffice for dismissing the appeal. The objection is that the plaintiff's suit is not maintainable because the judgment-debtor-vendor was not joined as a party. For this reliance is placed on a remark in Ghasi Ram v. Mangal Chand (1) where it was said “If an unsuccessful claimant brings a suit and he seeks to establish his claim against both the decree-holder and the judgment-debtor, the latter is of course a necessary party.” The trial Court found that this remark does not apply to the present case because the plaintiff did not claim any relief against the judgment-debtor. Assuming for purposes of argument that he can be held to have claimed relief against the judgment-debtor, it is to be observed that the remark in 28 All. 41 is obiter. Besides it was a case decided under the old Code. S. 31 of the old Code which corresponds to O. 1 R. 9 did not contain the words “or non-joinder” which were introduced for the first time in the Code of 1908. Moreover, in a later decision of the same Court, Maryam Bibi v. Ram Das (2) the learned Judge dissents from the view that the judgment-debtor is a necessary party in such a suit. In that case the matter was directly in point and the learned Judge, after observing that the dictum was obiter and was passed under the old Code says, “It is sufficient for the purposes of to-day to hold that O. 1 R. 9 covers the case and distinguishes it from the dictum relied upon by the Courts below”. I have been shown no decided case where it is held that the judgment-debtor is a necessary party and I must therefore dismiss this objection.

The next matter with which I should like to deal is the question of onus. It has been argued that the lower appellate Court has wrongly thrown the onus upon the plaintiff. This being a suit under O.21 R. 63 by an unsuccessful claimant it is unnecessary to discuss what the position would be if the suit were simply by the plaintiff under S. 53 of the Transfer of Property Act. The recent Privy Council decision in Mohammad Ali Mohammad Khan v. Mt. Bismillah Begam (3) is clear on the point that the onus is on the defeated claimant to establish by cogent evidence that the deeds in question were bona fide and it was held in Perayya v. Venkayamma (4) that it was not sufficient for him to rely merely upon the deed which shows his ostensible title. The Privy Council decision in V. E. A. R. M. Firm v. Mating Ba Kyin is quoted in the opposite sense; but as observed in Appathurai Chettiar v. Vellayan Chettiar there is nothing in the judgment about onus and the head-note is misleading in this matter. This Rangoon case was also considered in Maha Deo Missir v. Ram Prashad and the same conclusion was reached that no proposition of law casting the onus upon the defendants was laid down in that case. The learned Judges make some observations on the matter of onus in 62 M.L.J 236, which may be quoted. They say:

“In cases under O. 21 R. 63 Civil Procedure Code, the burden of proving the validity of the alienation is on the plaintiff. The defendant, however, cannot escape the burden at some stage or other. If the plaintiff produces his deed, and swears that it is genuine and for full consideration, and the defend, ant has nothing to say to the contrary, the plaintiff will succeed, and where the burden of the plaintiff is so light it is scarcely worth arguing whether it is more correct to say that the burden is originally on the defendant, or on the plaintiff. But where the defendant has something substantial to say to the contrary, the real burden must inevitably fall on the plaintiff to establish the right which he claims.”

It has also been ruled in Ramaswami Chettiar v. Mallappa Reddiar overruling a previous Full Bench decision, that the contention that an alienation is not valid may be put forward by way of defence in a suit and need not be made the subject of a separate suit by the decree-holder. In Elaya Perumal v. Vellaikannu (5) Sundaram Chetty, J., held that when a claim under O. 21 R. 63 was rejected as time-barred and was not investigated, the onus in the suit subsequently instituted by the claimant would fall on the defendant. That decision is alluded to in 62 M.L.J 236. As the claim petition in this case was dismissed after investigation, it is unnecessary to discuss its correctness. I hold therefore that the onus was on the plaintiff in the present case.

It was argued that the lower appellate Court was confused with regard to the payments under Ex.C and Ex.C (1) but whatever may be said about the correctness of the conclusions of the Subordinate Judge, there was no confusion. The plaintiff withdrew on 12th May 1925 a sum of Rs. 2,000 from a deposit account some months before it was due to mature. Ex. A was executed the next day and on the date of Ex. A Rs. 1,168 is endorsed as paid towards the mortgage, Ex. C-1, which the lower appellate Court has found to be a sham transaction. Ten days later Rs. 1035-10-0 was paid towards the mortgage Ex.C which the lower appellate Court has found to be genuine; and a year afterwards on the 13th May 1926 another sum of Rs. 1,160 was paid towards Ex. C and the mortgage was discharged. The learned Subordinate Judge feels some doubt about the truth of this second payment on Ex. C but in the end he gives the plaintiff the benefit of it; It is not permissible to argue here that the payment towards Ex. C-1 of Rs. 1,168 on the date of the sale deed was out of the sum of Rs. 2,000 withdrawn by the plaintiff. However much the dates may support such a view, the learned Subordinate Judge has in fact held that only Rs. 1035-10-0 under Ex.C was discharged at that time from the Rs. 2,000 drawn out. Therefore there is no confusion in this matter in the finding of the lower appellate Court and I am bound by that finding of fact.

The next objection is that the learned Subordinate Judge has failed to keep in mind the distinction between a sham transaction and a benami transaction. There is of course a distinction between the two things. A sham transaction is one in which no title passes or is intended to pass and the title still vests in the transferor. In a benami transaction title passes for certain reasons to the name of a third party who could bring a suit, give a discharge etc., on his title. Vide Rangappa v. Rangaswami a case of our High Court and Gur Narayan v. Sheolal Singh a Privy Council case. This distinction is not disputed on behalf of the respondents but it is argued that the learned Sub-Judge clearly meant that the transaction was benami as he observes in paragraph 4

“Taking advantage of the circumstance that Ex. C is a real transaction the judgment-debtor Pachianna Pannadi seems to have got up Ex. A nominally in favour of the plaintiff to screen his properties from the creditors in view of his impending insolvency.”

It is very easy to use incorrect terms in a matter of this sort and I may point out that in Appa Dhond v. Babaji Krishnaji a case quoted for the appellant to show that document cannot be partly genuine and partly benami, the learned Judge has applied the term “unreal” in describing an alleged benami transaction; while one of the objections to the lower appellate Court's judgment in this case is that he says “Even assuming that the plaintiff is in possession it does not establish the reality of the transaction in his favour.” I do not think there is any doubt that the Court really regarded Ex. A as a benami document for which there was genuine consideration to the extent of the discharge of the mortgage, Ex.C It is objected further that when the Subordinate Judge says:

“Pachianna Pannadi (the vendor) has now absconded and his whereabouts are not known. Therefore it cannot be said that plaintiff has really become entitled to the suit properties by reason of purchase under Ex. A,”

and that while, admitting that Ex. E-series, the kist receipts, show that the plaintiff did get into possession of the properties, he says that these are of very little value as they are subsequent to the claim but has failed to notice that the plaintiff got patta for the property on the 29th May 1925, Ex. E-8, and that in the remarks column of the patta it is stated that “that old pattadar Pachai's name has been removed according to the petition for transfer filed by him.” It appears from the evidence that Pachianna Pannadi stabbed his wife and absconded and that he was also adjudicated insolvent. It must be admitted that as regards this objection the learned Subordinate Judge has certainly failed to mention with regard to possession the important evidence of the patta and of its having been obtained on the application of the vendor. But a more serious objection is that there is no definite finding as to whether the plaintiff did make the payment of discharge under Ex. C-1. If he made this payment thinking the debt to be really due then he would still be a transferee in good faith even though the debt was a fictitious one and the mortgage got up by the vendor with his father-in-law. The debt for which the mortgage, Ex. C-1. was executed was due under the promissory note, Ex. C-7. The learned Subordinate Judge observes that Ex. C-7, was not produced at the time of the claim enquiry, and that P.W 7, the mortgagee was not, as found also by the trial Court, in a position to lend such an amount; and he says:

“Therefore there can be no doubt that Ex. C-1, is a sham document for which no consideration passed and which was apparently got up to screen the properties of Pachianna Pannadi from his creditors.”

He goes on then to deal with the endorsement on Ex. C-1 and he says on that matter that

“P. W. 4 admits that he does not know whether the mortgage in favour of Veera Pannadi is a true or a nominal transaction though he himself has written the endorsement of discharge thereon.”

But he does not say expressly whether the endorsement is true or not. For a proper decision of the case the matter will have to go back for a finding as to whether the Plaintiff paid the amount entered on the mortgage, Ex. 0-1, as having been paid by him.

The lower appellate Court will therefore submit a finding on the following issue:—

“Was the discharge on Ex. C-1 genuinely made by the plaintiff.” (Onus on plaintiff).

Time for finding one mouth. Objection 10 days.

On the receipt of the finding, the following is the

JUDGMENT

The lower Court has now returned a finding that the discharge on Ex. C-1 is not satisfactorily proved to be genuine. This finding is well supported by evidence and it is not open to me to canvass a finding for which there is evidence. I may however say that I should come to the same conclusion myself. Even the fact that the mortgage deed, Ex. C-1, is with the plaintiff, which would be a strong circumstance otherwise to prove that the discharge was real, loses all its force when we find the mortgagee, the uncle of the mortgagor deposing that it was the mortgagor who got the document registered and kept it himself.

Now Ex. C-1 being shown to be a sham transaction and when we find plaintiff making a false entry of discharge on it when in fact he did not pay anything, nothing more is needed to prove want of consideration and good faith on his part as regards this branch of the transaction specially when as noted above the onus lies heavily on him to prove good faith and consideration.

The plaintiff was not a creditor of the judgment-debtor at the time of Ex. A. Consequently all cases dealing with a transfer taken by a creditor are irrelevant. A useful summary of the position of transferees will be found in Mohideen v. Md. Mustappah , by Ananthakrishna Ayyar, J. Dividing these transferees into two classes, (1) creditors, (2) non-creditors, an alienation in favour of the first class, i. e., creditors, to defeat the other creditors will not be invalid, even though the alienee knows this is the object of the transaction, provided of Course that he does not satisfy anything more than his own debt. As regards non-creditors it will be invalid if they had knowledge of the fraudulent object but if they had not that knowledge, the alienation will be good. As I said above, we are not here concerned with a creditor-alienee. With regard to strangers a distinction has repeatedly been drawn between cases where the property is converted into cash which is more easily secreted from creditors and cases where this is not done. Anantakrishna Ayyar, J, states:

“If the transfer is for valuable consideration and is made with the full intention that the title to the property should pass to the transferee, and if no benefit be intended to be retained to the grantor, then the transfer will be valid as against an attaching creditor even though the object of the transfer might have been to defeat an impending execution. The general creditors of the transferor are not defeated in such a case since instead of the property of the debtor which has been transferred, there remains the money representing the price paid for the property in the hands of the debtor, and the creditors could proceed against the same.”

It is really a question of fact in the case of money consideration whether the transferee knew or did not know the fraudulent object of the transfer. But as observed above the onus on the defeated claimant is very heavy to establish by cogent evidence that the deeds are bona fide. In the present case the facts as found are these. The plaintiff is not a creditor. He has bought property of the value of Rs. 3,500 and it has not been shown that that is an under-valuation. But the properties consist of the whole of the judgment-debtor's immovable properties and no provision is made for payment of the decree debt. For this purchase the plaintiff has paid Rs. 2,195-10-0 as genuine consideration to discharge the mortgage bond Ex. C. Rs. 300 made up of an alleged promissory note debt to himself of Rs. 200 and cash consideration at the time are not found to be genuine. But it is argued that the plaintiff is entitled to possession even though he had not paid the whole of the purchase price. Only one of the cases quoted appears to be relevant as the others do not involve any question under S. 53 of the Transfer of Property Act. That case is Deoki Nandan Singh v. Saiyed Jawad Hussain . But in that case the only point raised against the plaintiff purchaser was that he had not paid the full amount of the consideration. There is something much more here. He has entered as part of the consideration a fictitious payment of a mortgage which has itself been found to be a fictitious transaction. This, as I said above is quite enough to show want of good faith and consideration. It has been laid down in Chidambaram Chettiar v. Sam Aiyar [confirmed by the Privy Council in Chidambaram Chettiar v. Srinivasa Sastrial ] that an alienation made to defeat or delay creditors is wholly invalid even though consideration may have been given for some part and must be set aside in its entirety.

The lower appellate Court has given the plaintiff a charge on the property to the extent of the encumbrance Ex. C which he has discharged. This is in accordance with Palamalai Mudaliar v. The South Indian Export Company and Ponnuswami Pillai v. Quadir Mohideen Rowther . By mistake this has not been incorporated into the decree but it is not disputed by the respondent.

In the result the appeal must be dismissed with costs but the necessary alteration will be made in the decree to bring it into conformity with the judgment of the lower appellate Court, namely, giving plaintiff a charge over the property to the extent of the mortgage which he has discharged (Ex. C.)

N. R. R. Appeal dismissed.