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High Court of Judicature at Madras
M. DURAISWAMY, J.
Saroja & Others
Versus
R.P. Matheswaran
S.A. Nos. 398 to 400 of 2009 & M.P. Nos. 1 to 1 of 2009
Decided on: 03-07-2014
Fraud - Property Dispute - Transfer of Property Act - [Section 122, Section 126] - The court considered the execution of Settlement Deeds, Cancellation Deeds, and Gift Settlement Deeds in a property dispute. The court found that the Settlement Deeds were obtained by misrepresentation and fraud, and were subsequently cancelled by the settlor. The court also found that the subsequent Gift Settlement Deed in favor of the settlor's daughters was legally valid. The lower Appellate Court's decision was reversed, and the trial Court's judgment and decrees were restored.
Fact of the Case:
The case involved a property dispute arising from the execution of Settlement Deeds, Cancellation Deeds, and Gift Settlement Deeds. The respondent obtained the Settlement Deeds through misrepresentation and fraud, which were subsequently cancelled by the settlor. The settlor then executed a Gift Settlement Deed in favor of his daughters.
Finding of the Court:
The court found that the Settlement Deeds were obtained by misrepresentation and fraud, and were subsequently cancelled by the settlor. The subsequent Gift Settlement Deed in favor of the settlor's daughters was legally valid.
Issues: The issues involved misrepresentation and fraud in the execution of Settlement Deeds, the validity of the subsequent Cancellation Deeds, and the legality of the Gift Settlement Deed in favor of the settlor's daughters.
Ratio Decidendi: The court held that the Settlement Deeds were obtained by misrepresentation and fraud, and were subsequently cancelled by the settlor. The subsequent Gift Settlement Deed in favor of the settlor's daughters was legally valid.
Final Decision: The lower Appellate Court's decision was reversed, and the trial Court's judgment and decrees were restored. All the three Second Appeals were allowed.
The key legal point established in this judgment is that Settlement Deeds obtained through misrepresentation and fraud, which are subsequently cancelled by the settlor, are not valid. This means that such deeds can be declared null and void, especially when the circumstances surrounding their execution are tainted by fraudulent conduct. Additionally, the judgment clarifies that a subsequent Gift Settlement Deed, executed after the cancellation of the fraudulent Settlement Deeds, can be legally valid and enforceable, provided it is free from fraud and undue influence.
The court emphasized that the validity of a Settlement Deed depends on its lawful execution, which includes free consent and proper understanding of the terms, particularly when the settlor is illiterate or vulnerable. If a Settlement Deed is procured by misrepresentation or fraud, it can be declared void or voidable, and the cancellation of such deeds by the settlor is a valid act to rescind the transaction. Furthermore, the court highlighted that the mere execution of a Gift Settlement Deed after the cancellation of earlier invalid deeds does not automatically invalidate the latter, provided it is executed without fraud or undue influence.
In the context of property law and transfer of property, the judgment underscores that the legal effect of cancellation deeds and subsequent gifts hinges on the absence of fraud and the genuine intention of the parties. It also reinforces that the burden of proof lies on the party asserting the validity of the deed, especially when allegations of fraud or undue influence are raised. Overall, the decision reaffirms that transactions tainted by fraud are not binding and that subsequent valid transactions can stand independently if executed properly.
1. The above Second Appeals arise against the common judgment and decrees passed in O.S.No.919 of 2003, I.A.No.264 of 2007 in O.S.No.899 of 2003 and O.S.No.899 of 2003 on the file of the II Additional District Munsif Court, Salem, reversed by the common judgment and decrees of the Additional Sub Court, Salem passed in A.S.Nos.224, 226 of 2007 and 10 of 2008 respectively.
2. S.A.No.398 of 2009 arises against the judgment and decree passed in A.S.No.224 of 2007 on the file of the Additional Sub Court, Salem, reversing the judgment and decree passed in O.S.No.919 of 2003 on the file of the II Additional District Munsif Court, Salem. The plaintiffs and second defendant are the appellants and the respondent was the first defendant in the suit. The fourth appellant had died during the pendency of the appeal and his legal representatives were brought on record in the appeal. The plaintiffs filed the suit in O.S.No.919 of 2003 for declaration, injunction and to declare the Settlement Deed dated 07.04.2003 as not binding on them.
3. S.A.No.399 of 2009 arises against the judgment and decree passed in A.S.No.226 of 2007 on the file of the Additional Sub Court, Salem, reversing the judgment and decree passed in I.A.No.264 of 2007 in O.S.No.899 of 2003 on the file of the II Additional District Munsif Court, Salem. The appellants 2 to 5, who were the defendants 2 to 5, are the legal representatives of the deceased first appellant, who died pending appeal and who was the first defendant in the suit and the respondent was the plaintiff. The first appellant filed counter claim in I.A.No.264 of 2007 to declare that the three Gift Deeds as null and void, except for 12 cents in Survey No.927 and for injunction.
4. S.A.No.400 of 2009 arises against the judgment and decree passed in A.S.No.10 of 2008 on the file of the Additional Sub Court, Salem reversing the judgment and decree passed in O.S.No.899 of 2003 on the file of the II Additional District Munsif Court, Salem. The defendants are the appellants and the respondent was the plaintiff in the suit. The plaintiff filed the suit in O.S.No.899 of 2003 for declaration and injunction.
5. The Courts below disposed of all the three matters by a common judgment. Since the issues involved in all the three Second Appeals are common, they are disposed of by this common judgment.
6. The brief case of the plaintiff in O.S.No.899 of 2003 is as follows:
(i) According to the plaintiff, he is the son of the first defendant, the second defendant is his brother and the defendants 3 to 5 are his sisters. On 07.04.2003, the first defendant executed a registered Settlement Deed in respect of the suit properties. In fact, the first defendant executed three separate Settlement Deeds in respect of the suit properties. The plaintiff was given full and absolute right in respect of the ‘A’ and ‘B’ Schedule properties by the first defendant. In respect of the ‘C’ Schedule property, the plaintiff and the second defendant were given equal rights, after the life time of the first defendant. The plaintiff is residing in a part of the ‘C’ Schedule property. There are other house portions in the ‘C’ Schedule property, which were let out by the first defendant to various tenants and the first defendant is enjoying the benefits therefrom.
(ii) The first defendant is having another 94 cents of land in the same Survey Number, adjacent to the suit property, which is yet to be divided by the first defendant. At the instigation of the defendants 2 to 5, the first defendant had written cancellation of the Settlement Deeds in respect of the properties on 19.05.2003. The first defendant has no right to cancel the Settlement Deeds after having been acted upon the Settlement Deeds. On 25.09.2003, the first defendant issued a notice to the plaintiff. On 06.10.2003, the plaintiff sent a reply notice. The plaintiff did not accept the demands of the defendants 2 to 5 to partition the properties. The plaintiff alone is in exclusive posse
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