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Andhra Pradesh High Court
Perumareddi Lacha Reddi - Appellant
Versus
Perumareddi Venkamma - Respondent
Decided On : 03-18-55
BENAMI TRANSACTION - BURDEN OF PROOF - IN PARI DELICTO - FAMILY NECESSITY - BONA FIDE PURCHASER - LIMITATION - COPARCENERS - FRAUDULENT INTENTION - EVIDENCE - SALE DEED - WILL - MORTGAGE - COURT AUCTION - CIVIL PROCEDURE CODE, 1908 - SECTION 66 - TRANSFER OF PROPERTY ACT, 1882 - SECTION 41 - HINDU LAW - JOINT FAMILY PROPERTY - ALIENATION - VALIDITY - BURDEN OF PROOF - LIMITATION - COPARCENERS - FRAUDULENT INTENTION - EVIDENCE - SALE DEED - WILL - MORTGAGE - COURT AUCTION - CIVIL PROCEDURE CODE, 1908 - SECTION 66 - TRANSFER OF PROPERTY ACT, 1882 - SECTION 41 - HINDU LAW - JOINT FAMILY PROPERTY - ALIENATION - VALIDITY:
Fact of the Case:
Plaintiffs filed a suit for partition and separate possession of their share in the properties set out in schedules A to D of the plaint and to recover mesne profits as mentioned in the Plaint E schedule and for other incidental reliefs. The suit was instituted in firma pauperis in the Subordinate Judge's Court, Nellore. The plaintiffs alleged that the purchase in Court auction in execution of the decree in O. S. No. 1 of 1904 was benami for the members of the plaintiffs' family, that the vendee under Exhibit A-1 (i. e. , the agreement between Subbareddy and Magonta raghavareddy) was a benamidar the beneficiaries being the members of the family that the sale, by Subbareddy in favour of Seshamma in 1916 was also a benami transaction and that lastly the will executed by Seshamma in favour of her daughter-in-law also partook of the same character.
Finding of the Court:
The court found that the plaintiffs failed to prove that the various transactions impugned were benami. The court also found that even if the plaintiffs' case was proved, they could not recover the property as the fraud was perpetrated to defeat the creditors and that in any event the alienations were binding upon the plaintiffs as they were effected for discharging debts incurred by the manager of the family and for other family necessities.
Issues: 1. Whether the purchase in Court auction in execution of the decree in O. S. No. 1 of 1904 was benami for the members of the plaintiffs' family? 2. Whether the vendee under Exhibit A-1 (i. e. , the agreement between Subbareddy and Magonta raghavareddy) was a benamidar the beneficiaries being the members of the family? 3. Whether the sale, by Subbareddy in favour of Seshamma in 1916 was also a benami transaction? 4. Whether the will executed by Seshamma in favour of her daughter-in-law also partook of the same character? 5. Whether the plaintiffs could recover the property even if the transactions were benami? 6. Whether the alienations were binding upon the plaintiffs as they were effected for discharging debts incurred by the manager of the family and for other family necessities?
Ratio Decidendi: 1. The court held that the plaintiffs failed to prove that the various transactions impugned were benami. The court relied on the following factors: (a) There was no indication in the sale deed that the properties were conveyed in favour of Subbareddy for the benefit of the plaintiffs' family. (b) The consideration for the sale was not supplied by the plaintiffs' ancestors. (c) The agreement Exhibit A-1 did not throw any light on the issue of benami. (d) The sale deed by Subbareddy in favour of Seshamma (Exhibit A-2) did not disclose any intention of the vendor to benefit the persons other than the vendee. (e) The oral evidence led by the plaintiffs did not support their case of benami. 2. The court held that even if the plaintiffs' case was proved, they could not recover the property as the fraud was perpetrated to defeat the creditors. The court relied on the principle of in pari delicto, which states that a person who has participated in a fraudulent scheme cannot be permitted to recover the property from the other party to the fraud. 3. The court also held that the alienations were binding upon the plaintiffs as they were effected for discharging debts incurred by the manager of the family and for other family necessities.
Final Decision: The court dismissed the plaintiffs' suit.
( 1 ) THE plaintiffs are the appellants. Originally there were eleven plaintiffs. But, as plaintiffs 1 to 4 were unwilling to prosecute the suit they were transposed as defendants 17 to 20. The suit giving rise to this appeal was instituted in firma pauperis in the Subordinate Judge s Court, Nellore, for partition and separate possession of plaintiffs share in the property set out in schedules a to D of the plaint and to recover mesne profits as mentioned in the Plaint E schedule and for other incidental reliefs. The undisputed facts may be stated briefly in order to appreciate the contentions of the parties.
( 2 ) SOME time in the year 1904 the creditors of the family of the plaintiffs filed o. S. No. 1 of 1904 in the District Court, Nellore, for recovery of money due to them and obtained a decree. In execution of this decree, the properties covering about 120 acres of land were brought to sale and they were purchased by two persons by name Y. Raghavareddy and N. Ramayya Chetty. The auction purchasers sold the properties to one Rebala Subbareddy on nth August, 1908, under Exhibit A-4 for a sum of Rs. 5,000. Subbareddy entered into an agreement for sale of the same properties for Rs. 5,000 with one Magonta Raghavareddy the father-in-law of Venkatareddy, the grandfather of the plaintiffs and defendants 17 to 20. Under the terms of this agreement the vendee should pay the purchase price within ten years, get into possession of the properties and pay sircar cist and also rental at Rs. 375 per annum to the vendor. It was also agreed that on payment of the full purchase price within ten years the vendor should execute a sale deed to the vendee and if the vendee commits default in respect of the above the vendor should take possession of the properties. As there was default in payment of rental, Subbareddy filed a suit O. S. No. 18 of 1914 for recovery of possession of the properties. The suit was decreed on 8th February, 1915 and possession was taken by him in execution of the decree. Subsequently on 4th October, 1916, this Subbareddy executed a sale deed in respect of the very properties which formed the subject-matter of agreement with Magonta Raghavareddy to Seshamma, the daughter of the said Raghavareddy under Exhibit A-2 for a sum of Rs. 8,100. The consideration for sale was found by mortgaging the very same properties to one Bulla Venkatasubbareddy on 9th October. 1916, under Exhibit 6-37. Under this instrument a sum of Rs. 10,000 was borrowed for the purpose of paying off the vendor and for buying some property. On 2nd August, 1921, Seshamma executed a will bequeathing all the properties covered by Exhibit A-2 to her daughter-in-law, Venkamma, the first defendant herein, with absolute rights subject to some liabilities such as the discharge of the mortgage evidenced by Exhibit B-37 performing the marriages of unmarried members of the family and education of her children. The mortgage to Bulla Venkatasubbareddy was discharged by the sale of a portion of the hypotheca. Sometime later Venkamma the legatee under the will of Seshamma sold the properties in dispute under various sale deeds to various persons who are arrayed as defendants 5 to 16. It is these transactions of venkamma that are sought to be impugned in the present suit. The main recitals in the plaint are that the purchase in the Court auction in execution of the decree in O. S. No. 1 of 1904 was benami for the members of the plaintiffs family, that the vendee under Exhibit A-1 (i. e. , the agreement between Subbareddy and Magonta raghavareddy) was a benamidar the beneficiaries being the members of the family that the sale, by Subbareddy in favour of Seshamma in 1916 was also a benami transaction and that lastly the will executed by Seshamma in favour of her daughter- in-law also partook of the same character. It is alleged in the plaint that it became necessary for the parties to resort to these benami transactions because the family of the plain
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