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1928 Supreme(SC) 1

Privy Council
Sir John Wallis, Sinha, Atkinson , Justice Viscount Sumner, JJ.
Balaram and others -Appellant
Versus
Naktu and others -Resopndent
Privy Council Appeal No. 1 of 1927
Decided On : 19-01-1928

Important Points

Consent to another's name in a sale certificate precludes benami claims. Specific performance requires a genuine, considered agreement. Title acquired via foreclosure of a specific mortgage share is limited to that share and does not extend to the entire property.

Subject

Civil Law - Property Law

Act Referred

C. P. Land Revenue Act
Civil P. C: S.66

Headnote

(A) Civil Procedure Code - Section 66 - Benami purchase - Where a party consents to another's name being entered in a sale certificate, they are precluded from claiming the property on the ground that the named person was not the real purchaser.

(B) Specific Relief - Specific Performance - A claim for specific performance based on a letter promising to convey property fails if the document's genuineness is doubtful, it lacks consideration, and the claimant's conduct is inconsistent with ownership, such as allowing another to appropriate the property's income for an extended period.

(C) Property Law - Foreclosure Decree - Title obtained through a foreclosure decree regarding a specific share or specific lands does not grant title to the entire property nor does it establish a basis for a claim of redemption over the whole.

Facts of the case:
A property was purchased at an auction sale and the sale certificate was issued in the name of the respondent. After nearly twelve years, the appellant filed a suit alleging that the respondent was merely an agent and that the purchase was benami, as the appellant had provided the funds. The appellant relied on a letter allegedly written by the respondent promising to convey the property. Additionally, the appellant claimed title to a portion of the village based on a previous foreclosure decree obtained against some shareholders.

Findings of Court:
The court found that the appellant was precluded by law from claiming the property as a benami purchaser. The letter produced to seek specific performance was deemed non-genuine due to its appearance, the suspicious date, and the lack of any demand for conveyance for twelve years. Furthermore, the respondent had collected rents and profits for twelve years without objection. The foreclosure decree only granted the appellant ex-proprietary title to specific sir lands and not the entire village.

Issues: Whether the purchase was benami and enforceable by the appellant; whether the alleged letter was a valid basis for specific performance; and whether the foreclosure decree granted title to the whole property.

Ratio Decidendi: The court ruled that consent to the entry of another's name in a sale certificate bars a benami claim under the Civil Procedure Code. A promise to convey property is unenforceable if it lacks consideration and the authenticity of the supporting document is not proven. Title acquired via foreclosure of a specific mortgage share is limited to that share and does not extend to the entire property.

Result: Appeal dismissed.

Legal Category Hierarchy

  • civil law
    • property law
      • benami transactions
      • specific performance
      • mortgages and foreclosure
  • practice and procedure
    • civil procedure code
      • section 66
    • evidence
      • authenticity of documents

Advocates Appeared:
T. L. Wilson and Co., Francis and Harker, J. M. Parikh, G. R. Lowndes, A. Majid, L. DeGruyther

Lord Sinha:-

This is an appeal from a judgment and decree of the Court of the Judicial Commissioner of the Central Provinces reversing a judgment and decree of the Court of the Additional District Judge of Bhandara in Suit No. 63 of 1921. The facts out of which the suit arose are as follows : Mauza Chulod in perganna Kampta, district Bhandara, C. P., was put up for auction sale by the Collector under a decree obtained by R. B. Indraraj Bhao, Zemindar of Kampta, against the sub-proprietors of Chulod who had failed to pay him the revenue, cesses and malikana payable by them under the C. P. Land Revenue Act . On 28th October 1907, it was knocked down to Naktu for Rs. 3,810, of which Rs. 1,000 was paid at once and Rs. 2,810 on 12th November 1907. The sale was confirmed in due course on 5th December 1907, and sale certificate issued to Naktu, who was put in possession by the Court officer on 5th June 1908.

On 27th October 1919, i. e., just one day short of 12 years after the auction sale, one Bhikha filed this suit, being suit No. 63 of 1921, in the District Court of Bhandara against Naktu and his sons, alleging that he was the real purchaser, that both the sums which made up the purchase money were found by him and that Naktu, his brother-in-law (sister's husband) was his agent in the matter of the purchase, and though instructed to purchase the property in his, i. e. Bhikha's name, had purchased it in his own ; also that before the balance of the purchase money, viz., Rs. 2,810, was paid by him, Naktu wrote him a letter dated 4th November 1907, promising to convey the property to him whenever asked to do so.

Certain other events happened between the auction sale of Chulod and the institution of this suit, which it is necessary to state as they were relied upon by Bhikha as giving him a separate and independent cause of action. Some of the sub-proprietors of Chulod had mortgaged in 1902 their share of 9 annas 6 pies in the village Chulod, together with their right to cultivate sir land comprising 87-94 acres and khudkast 13-28 acres to Jagannath Marwari. The latter obtained a conditional decree for foreclosure on that mortgage on 13th December 1906, for Rs. 4,319-5-2. This decree was purchased by Bhikha on 22nd October 1907, and the decree was made absolute on 30th March 1909. There were further proceedings in connexion with the foreclosure between Bhikha and the mortgagors. In the end it was held that Bhikha having himself become benami purchaser of 9½ annas share in the village under Indraraj Bhao's decree, the mortgage debt should be apportioned and the mortgagors held liable only for Rs. 1,787-2-2 payable in respect of the sir lands of 87-94 acres which did not pass under the benami purchase. As the mortgagors defaulted in paying this latter sum, the foreclosure decree was made absolute.

By his written statement in the present suit, Naktu denied that he purchased the village on behalf of or with the moneys advanced by Bhikha. He asserted that after obtaining possession by virtue of his sale certificate he remained in possession of the village collecting the rents and paying all the outgoings in respect thereof. He denied the genuineness of the letter dated 4th November 1907, and he further denied that Bhikha obtained any such title to a 9½ annas share of the village by the foreclosure decree above mentioned as would entitle him to redeem. As regards the sir lands of 87-94 acres, he disclaimed any interest therein, and asserted that he was in no way responsible for the entry in the settlement records with regard thereto.

In spite of the allegation in the plaint that Naktu had purchased the village in his own came and contrary to the directions given to him by Bhikha, no evidence was adduced with regard thereto, and in the trial Court (as well as in the appellate Court) the basis of Bhikha's case was that Naktu's name was entered in the sale certificate with his consent. This is tantamount to the purchase being benami, and both Cour





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