SupremeToday Landscape Ad
Back
Next
Judicial Analysis Court Copy Headnote Facts Arguments Court observation
Listen Audio Icon Pause Audio Icon
judgment-img

1957 Supreme(Pat) 156

PATNA HIGH COURT
Kanhaiya Singh, J.
Mahendra Mahto
Versus
Suraj Prasad Ojha
Appeal From Appellate Decree No. 392 of 1952 ; 635 of 1952 ;
Decided On : JULY 29, 1957

Section 53 of the Transfer of Property Act does not apply to farzi or benami transactions, which are fictitious and colourable with no real transfer of property intended.

Headnote:

TRANSFER OF PROPERTY ACT - SECTION 53 - AUCTION PURCHASER - RIGHT TO CHALLENGE REDEMPTION - FARZI TRANSACTION - DISTINCTION - APPLICABILITY OF SECTION 53.

Fact of the Case:

Plaintiff, as the purchaser of equity of redemption in part of the mortgaged property, sued to redeem the mortgages in their entirety. The defendants, heirs of the original mortgagee, and the auction-purchaser, resisted the suit, alleging that the sale deed in favor of the plaintiff was farzi, fraudulent, and fictitious, and that the plaintiff was not entitled to redeem. The trial court held that the sale was genuine and for consideration, that the mortgages had not been validly redeemed, and that the plaintiff was entitled to redeem. On appeal, the lower appellate court reversed the trial court's decision, holding that the sale was fraudulent, collusive, and farzi, and that the mortgages had been redeemed by the auction-purchaser.

Finding of the Court:

The High Court held that the auction-purchaser was not entitled to challenge the plaintiff's right to redeem the mortgages under Section 53 of the Transfer of Property Act, as the sale in favor of the plaintiff was not a fraudulent transfer within the meaning of the section. The court distinguished between a fraudulent transfer under Section 53 and a farzi or benami transaction, holding that Section 53 applies only to genuine and real transfers made with the intent to defeat creditors, while a farzi transaction is fictitious and colourable, with no real transfer of property intended.

Issues: 1. Whether the auction-purchaser was entitled to challenge the plaintiff's right to redeem the mortgages under Section 53 of the Transfer of Property Act. 2. Whether the sale in favor of the plaintiff was a fraudulent transfer within the meaning of Section 53.

Ratio Decidendi: 1. Section 53 of the Transfer of Property Act does not apply to transfers by operation of law or by or in execution of a decree or order of a court of competent jurisdiction. 2. A farzi or benami transaction is fictitious and colourable, with no real transfer of property intended, and is distinct from a fraudulent transfer under Section 53, which contemplates a genuine and real transfer made with the intent to defeat creditors.

Final Decision: The High Court dismissed the appeals, upholding the lower appellate court's decision that the sale in favor of the plaintiff was farzi and that the mortgages had been redeemed by the auction-purchaser.

Judgment

Kanhaiya Singh, J.

1. These two appeals by the plaintiff arise out of the same suit for redemption. The facts so far as they are necessary for the disposal of these appeals, may be stated as follows. On 17th March, 1927, Ramasray, through his mother and guardian, executed a usufructuary mortgage bond in respect of 3 bighas 3 kathas 2 dhurs of kasht land together with some homestead land for a consideration of Rs. 2400 in favour of Satnarain, husband of defendant 1 and father of defendants 2 to 5. On 16th June, 1942, Ramasray, on becoming major, executed in favour of Satnarain aforesaid another usufructuary mortgage bond in respect of the same property for a consideration of Rs. 2500. Nearly five years later on 6th June 1947 Ramasray sold equity of redemption in respect of half of the mortgaged properly to the plaintiff for Rs. 2500 by a registered sale deed. Out of the consideration, Rs. 1950 were left in deposit for payment to the mortgagee Satnarain and Rs. 500 were paid to the mortgagor Ramasray in cash. It appears that in the meantime one Kamalnarain in a suit for money against Ramasray in a court of Small Causes at Calcutta obtained a decree and after transfer of the decree to Chapra put that decree into execution by attachment and sale of the aforesaid mortgaged property along with other properties. The properties were eventually sold at auction on 4th October, 1947 and were purchased by Suraj Prasad Ojha defendant 6 (respondent 1). The latter obtained delivery of possession through court on 2nd February, 1949.

2. The plaintiff offered Rs. 1250 to defendants 1 to 5, the heirs of the original mortgagee Satnarain, and on refusal of the offer by the mortgagee instituted the present suit on 3rd September, 1949 on the ground that as the purchaser of the equity of redemption, though in part, was entitled in law to redeem the mortgages in their entirety.

3. The defendants resisted the suit by two separate written statements one on behalf of the mortgagees (defendants 1 to 5) and the other on behalf of the auction-purchaser (defendant 6) raising similar defences. They denounced the sale deed in favour of the plaintiff as a farzi, fraudulent and fictitious document brought into existence by Ramasrey without consideration for defeating his creditors and contended that, therefore, the plaintiff was not in law entitled to redeem the mortgages. They also pleaded that the mortgages were no longer subsisting but that they had been already redeemed by the auction-purchaser (defendant 6).

3. The learned Munsif held that the safe in favour of the plaintiff was genuine and for consideration, that the mortgages aforesaid had not been validly redeemed and that the plaintiff was, therefore, entitled to redeem them. Against this decree, two appeals were taken to the District Judge - one by defendant 6, being Title appeal 50/2 of 1951/52 and the other by defendants 1 to 5, being title Appeal 64/6 of 1951-52. While the former questioned the correctness of the decision as a whole the latter contested the decree only so far as it related to costs against them.

The learned Subordinate Judge who disposed of the appeals, took a different view altogether. He held that the sale in favour of the plaintiff was fraudulent collusive and farzi and without consideration, and that, therefore, the plaintiff was not entitled to redeem. He further held that the mortgages were not subsisting but that they had been redeemed already by the auction-purchaser, defendant 6, and, therefore, defendants 1 to 5 should not have been saddled with costs.

The learned Subordinate Judge accordingly allowed both the appeals and set aside the judgment and decree of the learned Munsif and dismissed the suit with costs throughout. Now, the plaintiff, has preferred these two second appeals from the decrees in the aforesaid two appeals.

4. The only question canvassed, in these appeals is whether defendant 6, auction-purchaser, was entitled in law to challenge the right of the






























Click Here to Read the rest of this document
1
2
3
4
5
6
7
8
9
10
11
Judicial Analysis

AI

SupremeToday Portrait Ad
supreme today icon
logo-black

An indispensable Tool for Legal Professionals, Endorsed by Various High Court and Judicial Officers

Please visit our Training & Support
Center or Contact Us for assistance

qr

Scan Me!

India’s Legal research and Law Firm App, Download now!

For Daily Legal Updates, Join us on :

whatsapp-icon Back to top