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1981 Supreme(Ori) 118
High Court Of Orissa
R. N. Misra, C. J. And B. K. Behera, J.
NANDIPALLI APPALARAJU - Appellant
Versus
G.PANNALAL SOWCAR - Respondent
A. H. O. 49 Of 1975
Decided On : 11/02/1981
B.L.N.SWAMY, B.R.RAO, N.V.RAMDAS, Y.S.N.MURTY
The burden of proof lies on the person asserting that a transaction is Benami to establish that fact by adducing legal evidence of a definite character.
Headnote:
BENAMI TRANSACTION - DISTINCTION FROM SHAM TRANSACTION - BURDEN OF PROOF - SOURCE OF PURCHASE MONEY - SUBSEQUENT CONDUCT - MAINTAINABILITY OF SUIT UNDER ORDER 21, RULE 63, C. P. C. - NECESSITY FOR RELIEF OF SETTING ASIDE AUCTION SALE - SUIT UNDER SECTION 53 OF THE TRANSFER OF PROPERTY ACT - BENEFIT OF ALL CREDITORS.
Fact of the Case:
In two separate suits, the plaintiffs sought a declaration that certain properties were liable to be proceeded against for satisfaction of their respective decrees. The properties had been attached in execution of money decrees obtained by the plaintiffs against the judgment-debtors. The defendant in both suits, Appalaraju, claimed ownership of the properties, contending that he had purchased them in a sale held under the Madras Revenue Recovery Act for realization of arrears of sales tax dues outstanding against the judgment-debtors.
Finding of the Court:
The trial court found that the sale in favor of Appalaraju was sham and that the consideration money paid therein came from the judgment-debtors' family. The court further found that the sale certificate in favor of Appalaraju did not confer any title on him and that the delivery of possession in favor of Appalaraju was a mere paper transaction. The trial court also found that the suits were maintainable and were not barred by limitation.
Issues: 1. Whether the sale in favor of Appalaraju was a sham transaction or a Benami transaction? 2. Whether the burden of proof lay on the plaintiffs to establish the Benami character of the transaction? 3. Whether the plaintiffs had discharged the burden of proof? 4. Whether the suit under Order 21, Rule 63, C. P. C. was maintainable without obtaining relief of setting aside the auction sale? 5. Whether the suit not having been framed under Section 53 of the Transfer of Property Act for the benefit of all the creditors was maintainable?
Ratio Decidendi: 1. The court held that the sale in favor of Appalaraju was not a sham transaction but a Benami transaction. The court distinguished between a sham transaction and a Benami transaction, stating that in a sham transaction there is no operative transfer resulting in the vesting of title in the transferee, whereas in a Benami transaction there is an operative transfer but the real owner is someone other than the person named in the deed. 2. The court held that the burden of proof lay on the plaintiffs to establish the Benami character of the transaction. 3. The court held that the plaintiffs had failed to discharge the burden of proof. The court noted that there was no evidence to support the plea that the judgment-debtors advanced the consideration money. The court also noted that Appalaraju had obtained the sale certificate and possession was taken in the proceeding through the Revenue Court. 4. The court held that the suit under Order 21, Rule 63, C. P. C. was not maintainable without obtaining relief of setting aside the auction sale. 5. The court held that the suit not having been framed under Section 53 of the Transfer of Property Act for the benefit of all the creditors was not maintainable.
Final Decision: The court allowed both appeals and set aside the judgment and decree of the trial court and the affirming judgment of the learned single Judge. The court dismissed the suits and restored the order of the executing court under Order 21, Rule 58, C. P. C. holding that the properties were not liable to attachment for satisfaction of the decree against the judgment-debtors.
R. N. MISRA, J.
( 1 ) THE appellant in both these appeals seeks to challenge the affirming common judgment of a learned single Judge of this Court in First Appeals Nos. 65 and 66 of 1977. The said First Appeals were directed against a common judgment in Title Suits Nos. 71 and 72 of 1964. First Appeal No. 65 of 1967 arose out of Title Suit No. 72 of 1964 while First Appeal No. 66 of 1967 was out of Title Suit No. 71 of 1964-
( 2 ) THE short facts are the following : One Pannalal Sowcar carried on business in the name and style of "baughmal Pannalal Sowcar". He obtained a money decree against defendants 2 to 13 of Title Suit No. 71 of 1964 and levied execution of the said decree in E. P. No. 4 of 1958 in the court of the Subordinate Judge, Jeypore. In execution, he brought the disputed properties of Title Suit No-71 of 1964 under attachment by contending that these properties belonged to the judgment-debtors. One Lakshmanrao, plaintiff in Title Suit No. 72 of 1964, also obtained a money decree against defendants 1 to 8 of that suit and raised execution in E. P. No. 1 of 1968 against the judgment-debtors. The decree-holder brought the disputed properties of Title Suit No. 72 of 1964 under attachment. While these execution cases were pending and attachment of properties had been effected, Appalaraju, defendant No. 1 in Title Suit No. 71 of 1964 and defendant No. 9 in Title Suit No. 72 of 1964, preferred two claim petitions in the corresponding execution cases on the footing that the properties had been purchased by him in a sale held under the Madras Revenue Recovery Act for realisation of arrears of sales tax dues outstanding against the judgment-debtors who were defendants 2 to 13 in Title Suit No. 71 of 1964, some of whom were also defendants 1 to 8 in Title Suit No. 72 of 1964. The auction-purchaser maintained that the sale in his favour had been duly confirmed; the sale certificate had been issued and possession had been made over through court and he was hi possession and enjoyment of the properties as absolute owner thereof; and, therefore, attachment of such properties which did not belong to the defendant-judgment-debtors for satisfying the decrees was not valid. The executing court allowed both the claims. Therefore, the two separate plaintiffs instituted these two Title Suits by impleading the claimant along with the other defendants for a declaration that the properties were liable to be proceeded against for satisfaction of the respective decrees.
( 3 ) THE short facts relevant for appreciating the contentions advanced are these:-- The plaintiffs claimed that Appalaraju was the brother-in-law of Satyanarayana, the 3rd defendant in Title Suit No. 71 of 1964, who was also the 2nd defendant in the connected suit. The auction-purchaser was not a resident of Koraput district. The property belonged to the family of the judgment-debtors and when for satisfying the demand of arrears of sales tax the certificate sale was held, Appalaraju was set up by the certificate-debtors to bid in the auction sale. The auction money was paid not by Appalaraju but was advanced by the certificate-debtors. This device was adopted to defeat the creditors of the certificate-debtors. The true owners of the property thus were the certificate-debtors who later became the judgment-debtors in the two suits. The right, title and interest in the properties thus continued to be with the family of the judgment-debtors and were liable to be attached. The claims should not have been allowed and the properties should have been found liable for attachment and to be proceeded against for satisfaction of the decrees, Appalaraju, the auction-purchaser, took the stand that the family of the certificate-debtors was heavily indebted and all their properties which formed the subject-matter of the two suits were under attachment in the earlier cases including the certificate case under the Madras Revenue Recovery Act. There were several bidders when in the certi
