The main legal point established in the judgment is that a party is entitled to show that a transaction recorded in a document was never intended to be acted upon and that the document is a sham one, even if the document purports to be a sale deed.

Sathish Ninan, J.

1. R.F.A. No.329 of 2005 arises from O.S. No.563 of 1999 of the Sub Court, Ernakulam. The suit was one for declaration that Ext A1 sale deed is sham and void. The suit was decreed in favour of the plaintiffs (hereinafter referred to as “the vendors”). Defendant No.1 who is the vendee under Ext.A1 (hereinafter referred to as "the purchaser") and Defendant No.2 who is a subsequent assignee under Defendant No.1 (hereinafter referred to as "the assignee") are in appeal.

2. R.F.A. No.138 of 2006 originally filed as A.S. No.365 of 2005 before the District Court, Ernakulam arises from O.S. No.85 of 2003 of the Sub Court, Ernakulam. The suit was one for fixation of boundary and injunction filed by the purchaser and the assignee as plaintiffs. The dismissal of the suit is under challenge in the appeal.

3. The property in question having an extent of 53 cents is a portion of larger extent of 65.50 cents which belonged to late Jacob, the predecessor-in-interest of the vendors as per Ext B2 sale deed of the year 1964. It is the case of the vendors that they availed a loan of Rs. 50,000/- from the purchaser and as insisted by him, Ext A1, a document styled as a sale deed, was executed by the vendors in favour of the purchaser. Exhibit A1 was executed as required by the purchaser. The purchaser had agreed that a re-conveyance deed would be executed on repayment of the loan amount. It is the case of the vendors that Ext A1 was never intended to take effect and was a document executed merely for the sake of it. The vendors seek for a declaration that Ext A1 is sham and void. The purchaser and assignee denied the contention that Ext A1 is a sham document. It was contended that out of the larger extent of 65.50 cents that belonged to the vendors, the purchaser purchased 53 cents excluding the residential house as per Ext A1 sale deed for sufficient consideration. The contention of the vendors that Ext.A1 was not intended to take effect and that the transaction between the parties was in fact a loan arrangement, was denied. A portion of the 53 cents covered under Ext A1 was conveyed by the purchaser to the assignee as per Ext B6 sale deed. They prayed for dismissal of the suit.

4. The purchaser and assignee together filed O.S. No.85 of 2003 for fixation of boundary of the property covered under Ext A1=B1 and B6 sale deeds with the remaining property of the vendors. Similar allegations and contentions as urged in the suit for declaration have been raised in this suit also by either sides.

5. After appreciating the evidence, the court below found that Ext A1 is a sham document and was not intended as a sale deed and granted declaration as sought. The suit for fixation of boundary was consequently dismissed. The decree and judgment in the suits are under challenge by the purchaser and the assignee.

6. Heard learned Senior Counsel Shri S.Sreekumar for the appellants (purchaser and assignee) and Shri C.P. Saji on behalf of the respondents (vendors).

7. We were taken exhaustively through the pleadings and evidence in the case. In our considered opinion the circumstances enumerated hereunder eloquently speak as to the true nature of the transaction between the parties.

(i) Though the consideration for Ext.A1=B1 sale is Rs. 50,000/-, as on the date of sale there existed in the property trees worth at least Rs. 95,000/-.

As evidenced by Ext.A3 commissioner's report which is within a period of 6 months from the date of sale, trees worth Rs. 95,000/- were in the property. Going by Ext.A1, trees, the timber value itself worth Rs. 95,000/- along with 53 cents of property is sold for Rs. 50,000/-. The folly in accepting Ext A1 as an outright sale, needs no further elaboration.

(ii) Exhibit A1=B1 sale deed was executed on 11.06.1996. As evidenced by Ext B4, mutation was effected only on 09.12.1996 which is just before execution of Ext B6 sale deed in favour of the assignee.

If Ext A1 was an outright sale, there is no reason why steps were not