1927 Supreme(SC) 27
Privy Council
Sir Lancelot Sanderson, Darling, Justice Viscount Dunedin, JJ.
Krishna Reddi -Appellant
Versus
Gandavaram Raghava Reddi and another -Resopndent
Privy Council Appeal No. 7 of 1924
Decided On : 10-03-1927
T.L. Wilson and Co., Dold, Douglas Grant, E.B. Raikes, L. DeGruyther, K.V.L. Narasimham
In a joint Hindu family, if sale deeds are determined to be sham transactions without consideration intended to defraud a member, the transactions are void, and the member may recover the property without being required to repay debts allegedly discharged by the purported purchasers.
Headnote:(A) Hindu Law - Joint Family Property - Alienation of joint family property - Where sale deeds are found to be sham transactions intended to screen properties from a family member and are devoid of consideration, such alienations are null and void.
(B) Appellate Jurisdiction - Findings of fact - Findings of fact made by a lower court are binding on the appellate court unless there is no evidence to support them.
(C) Equity and Restitution - Where a transaction is held to be a sham and no real transfer occurred, the claimant cannot be required to repay alleged debts discharged by the purported purchaser as a condition for recovery of possession.
Facts of the case:
A member of a joint undivided Hindu family challenged the sale of joint family properties and a gift of property, alleging fraud and lack of legal necessity. The lower courts found that the sale deeds were sham transactions intended to screen the properties from the plaintiff and that no real transfer of property had occurred. A dispute arose as to whether the recovery of the properties should be conditional upon the repayment of debts that a purchaser had allegedly discharged on behalf of the family.
Findings of Court:
The court found that the sales were purely sham transactions and no real transfer of property occurred. Consequently, the previous finding that debts had been discharged by the purchaser was eradicated, as the transactions were devoid of consideration.
Issues: Whether the recovery of joint family properties, found to be subject to sham sale transactions without consideration, should be conditional upon the repayment of debts allegedly discharged by the purchasers.
Ratio Decidendi: When a court finds that a sale deed was a sham transaction devoid of consideration and intended only to screen property, any previous finding that the purchaser discharged family debts is negated. Therefore, the claimant is entitled to recover the property without the condition of repaying such alleged debts.
Result: Appeal allowed.
Legal Category Hierarchy
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family law
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hindu law
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joint family property
- alienation of property
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joint family property
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hindu law
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property law
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transfer of property
- sham transactions
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transfer of property
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practice and procedure
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appeals
- letters patent appeal
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appeals
Sir Lancelot Sanderson. -
This is an appeal by the plaintiff, Krishna Reddi, and a cross-appeal by Gandavaram Raghava Reddi and Kodur Venkataperumal Reddi, defendants 3 and 4, from a judgment and decree dated 19th April 1920, of the High Court of Madras, in Letters Patent Appeal No. 23 of 1918.
The suit was brought as long ago as 1910, and it has had a chequered career. Defendant 1, Varada, was the father of defendant 2, Venkatarama, and the plain tiff is the son of defendant 2, and they are members of a joint undivided Hindu family. Venkatarama, defendant 2, had two wives; by his first wife he had a daughter, and by the second he had an only son, viz., the plaintiff.
It was alleged on behalf of the plain tiff that he and his mother were obliged to leave the home of defendant 2, and to live with the plaintiff' mother' people for some three-and-a-half years before the suit was brought.
Defendants 3, 4 and 5 were alleged to be close friends of defendant 2. By a document dated 22nd January 1910, defendant 1, Varada, purported to sell to defendant 3 properties comprised therein and specified in Sch. A to the plaint. The consideration was alleged to be Rs. 15,000 and the property was alleged to be the self-acquired property of defendant 1.
On the same day, defendants 1 and 2 (defendant 2 purporting to act for himself and his minor son, the plaintiff), by another document purported to convey to defendant 4 the property comprised therein, and described in Sch. B to the plaint. The consideration was alleged to be Rs. 20,000, through a bond executed in favour of defendant 2 for discharging certain debts specified therein, and also other family debts.
On 9th February 1910, defendant 2 purported, by means of an alleged deed of gift of that date, to give certain properties specified in Sch. C to the plaint in favour of a temple, of which defendant 5 was trustee.
The plaintiff alleged that the proper ties specified in Sch. A, B and C were joint family properties of the family, of which the plaintiff and defendants 1 and 2 were members, that the above-men tioned alleged deeds of sale and the deed of gift were fraudulent and devoid of consideration, that there was no legal necessity, and that the alleged deeds were nullities.
On 31st January 1910, the alleged deeds of sale were registered, in spite of the plaintiff' mother' objection before the Registrar.
The suit was brought on 15th April 1910 and the plaintiff claimed therein a declaration that the sale-deeds and the deed of gift were null and void and that he should be put in possession of the above-mentioned properties on behalf of the joint family. There was an alter native prayer for partition in case it was held that the deeds were in any way binding on the interests of defendants 1 and 2.
The case of the contesting defendants, viz., defendants 3 and 4, was that the sales were bona fide and that consider ation passed for them, and that title was intended to and did actually pass to them.
Defendant 1 was an old man, and it was alleged that defendant 2 was acting as manager of the family.
The learned Subordinate Judge found that the sale-deeds were made to defraud ; the plaintiff, that they were not bona fide to discharge antecedent debts, and that they were not valid as against the plaintiff to the extent of his share, viz., one-quarter. He held that the properties in Sch. A were joint family properties. This finding is not now disputed. He held, further, that the gift of the properties in Sch. C was invalid. This finding also is not now disputed
While holding that there was consider ation and that title was intended to pass under the two deeds of sale, he found there was no necessity for the sales and made a decree, dated 15th April 1913, that defendants 3 and 4 should put the plaintiff in possession of his share of the properties on his paying into Court Rs. 2,945-11-6 (i. e. one-quarter of Rs. 11,782-14-0), to be paid to defen dants 3 and 4 in the way they might arrange between themselves. It w