CALCUTTA HIGH COURT
Stevens, J., Macpherson, J.
Banka Behary Dass - Appellant
Versus
Raj Kumar Dass - Respondent
Decided On : 30-05-1899
Fraudulent Conveyance - Property - [Transfer of Property Act, 1882, Section 53] - The court held that a plaintiff cannot seek relief from the consequences of a fraudulent conveyance that has been successfully used to achieve its intended fraudulent purpose. The court refused to allow the plaintiff to challenge the validity of the conveyance, which had been used to defraud creditors, as it would be aiding the plaintiff in undoing a fraud he had successfully perpetrated.
Fact of the Case:
The appellant's father executed a kobala (deed of sale) in favor of the respondent, allegedly to secure the property against creditors. The respondent used this deed to claim the property when it was attached by a creditor of the appellant's father. The appellant sued for a declaration that the kobala was a benami (fictitious) deed and that he was the rightful owner of the property.
Finding of the Court:
The court found that the kobala was indeed executed for a fraudulent purpose, and that the respondent had successfully used it to achieve that purpose. The court held that the appellant could not be allowed to challenge the validity of the conveyance after it had been used to defraud creditors.
Issues: Whether the appellant could challenge the validity of a fraudulent conveyance that had been successfully used to achieve its intended fraudulent purpose.
Ratio Decidendi: The court held that a plaintiff cannot seek relief from the consequences of a fraudulent conveyance that has been successfully used to achieve its intended fraudulent purpose. The court reasoned that allowing the plaintiff to challenge the validity of the conveyance would be tantamount to aiding him in undoing a fraud he had successfully perpetrated.
Final Decision: The appeal was dismissed with costs.
JUDGMENT
Macpherson and Stevens, JJ. - The object of this suit is to obtain a declaration that the kobala of the 5th Assar 1296, executed by the appellant's father in favour of the respondent, is a benami and fictitious deed not affecting the appellant's right to the property which it purported to convey, and to get such further relief as the Court may think fit to give in confirmation of the appellant's title and possession. The plaint discloses that the deed in question was executed at the respondent's suggestion to secure the property against persons who had obtained decrees against the appellant's father, that it was a purely colourable transaction without consideration or any transfer of possession, and that the respondent was now fraudulently setting up a title to the property. The respondent put in a written statement, in which he claimed title to the property under the kobalas impugned by the appellant, alleging that there was a good and valid sale for consideration. Admittedly the deed in question was used to give effect to the fraudulent purpose for which, according to the appellant's case, it was executed, The holder of a decree against the appellant's father attached the property; the respondent was allowed to put forward a claim to it on the strength of this deed; and the claim was allowed by the Court. On the allegations in the plaint, coupled with the undisputed facts mentioned, the Subordinate Judge, without taking any evidence, dismissed the suit on the ground that the plaintiff could not maintain it.
2. In our opinion the decision is right and the appellant cannot ask the Court to relieve him from the consequence of an accomplished fraud. He cannot be allowed to show the true nature of the conveyance which gave a good legal title to the respondent, when the conveyance has been successfully used to give effect to the fraudulent purpose for which it was executed. In none of the cases decided in England and in this country, which have been cited in the argument, except perhaps the case of Param Singh v. Lalji Mal (1877) 1 AIL, 403, does it appear that relief has been given in a case such as this; and in the recent cases of Goberdhan Singh v. Ritu Roy I.L.R (1896) 23 Cal., 962, and of Kali Charan Pal v. Rasik Lal Pal I.L.R (1894) 23 Cal., 962, note, where there was a colourable conveyance in fraud of creditors, and the fraud had been carried into effect, this Court refused to give the plaintiff relief. The same course was adopted by the Madras Court in Rangammal v. Venkatachari I.L.R (1895) 18 Mad., 378, and in Chenvirappa v. Puttappa I.L.R (1887) 11 Bom. 708, West and Birdwood, JJ., dissented from the Allahabad case mentioned above.
3. It is argued that there is no real distinction between cases in which there is a fraudulent conveyance to cheat creditors, but nothing more is done in furtherance of the fraud, and cases in which the fraudulent purpose is effected wholly or partially by means of the fraudulent conveyance; and we have been referred to a number of cases in which it is said that the stricter and broader rule adopted in the earlier cases in this Court, e.g., in Alooksoondery Goopto v. Horo Lal Roy (1866) 6 W.R., 287, and in Kalee Nath Kur v. Doyal Kristo Deb (1870) 13 W.R., 87, has been relaxed and relief given without any such distinction being drawn. The cases referred to are Luteefoonissa v. Goor Surun Doss (1872) 18 W.R., 485 Sree Nath Roy v. Bindoo Bashinee Debia (1873) 20 W.R., 112 Debia Chowdhrain v. Bimola Soonduree Debia (1874) 21 W.R., 422 Gopee Nath Naik v. Jodoo Ghose (1874) 23 W.R., 42; By hunt Nath Sen v. Goboollah Sikdar (1875) 24 W.R., 391, and Thacoor Prosad v. Baluck Ram (1882) 12 C.L.R., 64.
4. All these cases purport to follow the decisions of the Judicial Committee in Ram Surun Singh v. Pran Pearee (1870) 13 Moore I.A., 551, and Oodey Koowwur v. Ladoo (1870) 13 MooreI.A., 585: 6 B.L.R., 283. In the former case the plaintiff sued for possession on a conditional deed of sale executed by
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