1959 Supreme(AP) 261

Andhra Pradesh High Court
Judges : P.CHANDRA REDDY, SANJEEVA ROW NAIDU
Devathi Subbarayudu - Appellant
Versus
Puvvadi Chinna Venkatasubbiah - Respondent
Decided On : 12-15-59

A suit brought against a benamidar would affect and bind the person holding a beneficial interest in the property.

Headnote:

ESTOPPEL - REPRESENTATION - MORTGAGE - BENAMI - RES JUDICATA - ORDER XXXIV, RULE 1, C. P. C. - Where a person fraudulently or erroneously represents that he is authorised to transfer certain immovable property and professes to transfer such property for consideration, such transfer shall, at the option of the transferee, operate on any interest which the transferor may acquire in such property at any time during which the contract of transfer subsists. A suit brought against a benamidar would affect and bind the person holding a beneficial interest in the property. A decree against a benamidar binds the real owner, if the benamidar acts in concert with the beneficial owner, or rather that the beneficial owner acts through the benamidar, and on the further ground that it is by the act and conduct of the beneficial owner that the benamidar is held out to the world as the rightful owner. Where the benamidar protests against his having been made a party to the suit and indicates in his written statement who the real owner was and in whom the beneficial interest vested and disclaimed any interest in the suit property, the decree passed in that suit would not bind the real owner.

Fact of the Case:

The plaintiffs brought a suit for setting aside the order dated 4-5-1949 made in E. A. No. 366 of 1948 in O. S. No. 235 of 1943 on the file of the District Munsiffs Court, Nandalur, and for re-delivery of possession of the suit properties to the plaintiffs. The suit property consists of the northern portion of a terraced house in the town of Badvel in Cuddapah District. The 2nd plaintiff is the mother of the 1st plaintiff. The latter as minor represented by his guardian, the 2nd plaintiff filed O. S. No. 396 of 1931 in the District Munsifs Court, Mandalur, on a promissory note, against one Chinni Venkata Subbayya and his sons and also obtained an attachment before Judgment of the suit house, which then belonged to the defendants in that suit. This suit was decreed on 10-12-1931. Some fifteen days before this, on 25-11-1931, the defendant in O. S. No. 396 of 1931 i. e. , Chinni Venkata Subbayya and his sons, executed a mortgage, Ex. B. 1, in favour of Puwadi Venkata Subbaiah the father of the respondent in this appeal. Subsequently, the said Chinni Venkata Subbayya and his sons were adjudicated insolvent in their own petition on 25-7-1934 in I. P. 126 of 1933, on the file of the District Judges Court Cuddapah. After this adjudication, and during the pendency of the insolvency, the present 2nd plaintiff us the mother and guardian of the 1st plaintiff, filed I. A. 168 of 1935 in the court of the Official Receiver, requesting the latter to move the District Court for an annulment of the aforesaid mortgage as fraudulent and not binding on the general body of creditors of the said Chinni Venkata Subbayya and his sons. At this stage, mediators intervened, and there was a settlement between the plaintiffs and the mortgagee, that is, the father of the present respondent by which it was settled that the respondents father should purchase the house in the auction to be held by the Official Receiver, subject to the mortgage in his favour, and thereafter, according to the plaintiffs herein, give a half portion of that house to the plaintiffs free of the mortgage liability, towards the decree debt in favour of the plaintiffs; and as part of this arrangement I. A. 168 of 1935 was withdrawn by the plaintiffs and was dismissed on 27-2-1936.

Finding of the Court:

The Court held that the settlement pleaded by the plaintiffs with the respondents father and the subsequent division of the house in 1940 between the plaintiffs and the respondent, whereby the suit property fell to the share of the plaintiffs is true, that the disparity in the values was adjusted by the payment of penalty of Rs. 75 by the plaintiffs to the respondent, that under this settlement the respondents father had agreed to give to the 1st plaintiff a half share of the house free of mortgage, that Vadlaputi Chinna Subbayya, the maternal uncle of the 1st plaintiff was a mere benamidar for the plaintiffs and that the plaintiffs were in enjoyment of the suit property from that day onwards till they were dispossessed by the respondent under the orders of the Court in execution of the decree in O. S. 235 of 1943. The Court further held that once a plaintiff in a suit had the knowledge as to who the real owner was, any decree obtained by him against the benamidar could not bind the real owner and that, therefore, the decree in O. S. 235 of 1943 as well as the Court sale held to execution of that decree could not bind the plaintiffs who had not been impleaded as parties thereto, notwithstanding that Vadlaputi Chinna Subbayya, the benamidar was impleaded as a party.

Issues: 1. Whether the respondent is estopped by reason of the representations and the conduct of his father, and subsequently of himself, in the prior proceedings, and otherwise, from disputing the right and title of the plaintiffs to the northern half of the suit house derived by them under the settlement between the plaintiffs on the one hand and the respondents father on the other? 2. Whether the mortgage decree in O. S. 235 of 1943 would have any binding effect on the plaintiffs, who were not made parties thereto, particularly when the benamidar Vadlaputi Chinna Subbayya had disclosed who the real owner was and disclaimed all interest in the mortgage property.

Ratio Decidendi: 1. The principle of estoppel as laid down by their Lordships of the Supreme Court as well as by the Judicial Committee in 45 Ind App 118 : (AIR 1918 PC 70), is fully applicable on the facts of the instant case. The respondents father as well as the respondent are, therefore clearly estopped from questioning or contesting the validity of the settlement reached between the plaintiffs on the one hand and the respondents father and subsequently the respondent on the other. 2. As the plaintiffs were directly interested in the half portion of the suit house, which was the subject matter of the mortgage suit in O. S. No. 235 of 1943, and as the 2nd defendant i. e. , the maternal uncle of the first plaintiff Vedlaputi Chinna Subbayya disclosed in his written statement that he had no interest in the property at all, and that the beneficial interest vested in the present plaintiffs who were in possession of the mortgage house, it was the plain duty of the plaintiff in O. S. No. 235 of 1943, to have impleaded the plaintiffs as party-defendants, as they were the persons interested in the equity of redemption as well as in the mortgage property, and not having done this, any decree passed against the second defendant, a mere benamidar, who has disclaimed any Interest in the property and disclosed the real owners, would be ineffective and cannot bind the plaintiffs.

Final Decision: Appeal allowed.