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IN THE HIGH COURT AT CALCUTTA
Harish Tandon, Prasenjit Biswas, JJ.
Sri Shyamal Kumar Ghosh – Petitioner
Versus
Sri Nemai Chandra Bag & Ors. – Respondents
SAT 190 of 2022 IA No. CAN 1 of 2022
Decided On : 14-09-2023
sale-deed - Ostensible Sale - Code of Civil Procedure, Order 41 Rule 27 - AIR 1997 SC 3243
Fact of the Case:
The plaintiff-respondent executed a purported sale-deed in favor of the defendant-appellant, which was claimed to be a security for a loan. The suit was decreed ex-parte, and the appeal against it was also dismissed. The defendant-appellant later executed a deed of sale in favor of another party, leading to a legal dispute.
Finding of the Court:
The Court found that the sale-deed was an ostensible sale for securing the loan and not an absolute sale, and dismissed the appeal under Order 41 Rule 11 of the Code of Civil Procedure.
Issues: The core issue was whether the Court of First Appeal was justified in rejecting the application under Order 41 Rule 27 of the Code.
Ratio Decidendi: The Court emphasized that the defendant-appellant cannot contradict the findings made in a previous suit in a subsequent proceeding, and the entry in the Record of Right has a rebuttable presumption of possession. The Court also highlighted the conditions for allowing additional evidence under Order 41 Rule 27.
Final Decision: The appeal was dismissed under Order 41 Rule 11 of the Code, with no order as to costs.
JUDGMENT :
Harish Tandon, J.
1. Both the Courts below held that the purported sale-deed dated 17.02.1976 executed by the plaintiff-respondent in favour of the defendant-appellant is an out and out sale but a security given to the loan advanced by the appellant. It is relevant to record that the suit was decreed ex-parte and the appeal assailing the said ex-parte decree is also dismissed by the First Appellate Court.
2. The salient facts of the case as appears from the plaint annexed with the application (CAN 1 of 2022) are narrated as under:
3. The father of the plaintiff no. 1 respondents and the grandfather of the rest of the plaintiffs owned and possessed the suit property described in the schedule appended to the plaint as absolute owner thereof. The said original owner borrowed a sum of Rs. 1000/- from one Kishori Mohan Ghosh of the same village for a period of 3 years at the rate of interest of Rs. 11.2/3 Per cent per annum by executing an ostensible deed of sale dated 13.07.1959 for Rs. 1350/- representing the principal amount of Rs. 1000/- and the interest at Rs. 350/-. Upon payment of the principal as well, the interest the interest the said Kishori Mohan Ghosh re-conveyed the property by executing and registering a deed on 13.07.1959 in favour of the original owner. Subsequently, the plaintiff no. 1 felt dire need of money and took a loan from Satish Chandra Porel, the maternal uncle of the plaintiff no. 1 a sum of Rs. 1500/- on the rate of interest at Rs. 16.2/3 per cent per annum by registering an ostensible deed of sale of Rs. 2000/- representing the principal sum of Rs. 1500/- and Rs. 500/- towards interest. The said Satish Chandra Porel subsequently re-conveyed the suit property by a registered deed of re-conveyance on 12.09.1970 after receiving the loan amount with interest. It is further averred that the plaintiffs faced the economic disaster and in order to meet the expenses of the necessity of life borrowed a sum of Rs. 1500/- on 17.2.1976 from the defendant being the son of the sister-in-law of the said Kishori Mohan Ghosh for a period of 3 years at the rate of interest at 11.1/9 per cent per annum upon executing an ostensible deed of sale dated 17.2.1976 depicting the total amount of Rs. 2000/- out of which the principal amount was shown as 1500/- and Rs. 500/- towards interest. It is stated in the plaint that the plaintiffs intended to repay the said amount and demanded the execution of the deed of re-conveyance which was refused on one pretext or another. It is further averred that despite the execution and registration of the purported ostensible deed of sale on 17.02.1976, the possession remained with the plaintiffs all along which would indicate that it was an ostensible sale for securing the loan taken by the defendant. It is also indicated in the plaint that taking advantage of the said ostensible sale the defendant-appellant fraudulently executed a deed of sale on 03.12.1979 in favour of one Somnath Mukhopadhyay who, in turn, filed title suit no. 329 of 1982 against the plaintiff no. 1 and the defendant-appellant herein for declaration of right, title and interests as well as the permanent injunction restraining the parties herein from creating any obstruction in the peaceful possession of the said property. The said suit was contested by the plaintiff no. 1/respondent and the Trial Court dismissed the said suit on contest holding that the said Somnath Mukhopadhyay did not acquire any right, title and interests in respect of the subject property nor is found in possession thereof. The judgment and decree passed in Title Suit no. 329 of 1982 was assailed before the First Appellate Court in Title Appeal no. 184 of 1996 which was dismissed for default on 08.08.1991 and till date no steps have been taken to restore the said appeal. The plaintiffs, therefore, claimed the relief in the form of declaration that the said ostensible deed of sale dated 17.2.1976 is not an out and out sale but a mortgage and also
The legal point established is that the findings in a previous suit are binding on the parties, and the conditions for allowing additional evidence under Order 41 Rule 27 were emphasized.
The main legal point established in the judgment is the application of res judicata in the second round of litigation, the nature of the transaction, and the possession of the property.
Registered sale deed's validity prevails over subsequent will recitals absent fraud proof; oral evidence cannot contradict under Evidence Act Sections 91-92.
The court established that a transaction could be classified as a mortgage rather than a sale, emphasizing the burden of proof and admissibility of oral evidence.
The court established that a transaction must clearly indicate its nature, and the absence of a reconveyance clause in a deed typically signifies an outright sale rather than a mortgage.
The registered sale deed carries a presumption of genuineness, and the burden of proof lies on the defendants to establish it as a sham, which they failed to do.
A mere declaration that a sale deed is null and void is ineffectual; a plaintiff must seek to set aside the deed, which must be substantiated by evidence to oppose its presumptive validity.
Failure to challenge admitted sale and gift deeds renders declaration of title suit non-maintainable; no right to additional evidence under Order 41 Rule 27 CPC.
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