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VALLIAMMAI ATCHI v. ABDUL MAJEED O.L.M.
NLR45V169
1944 Present: Howard C.J. and Keuneman J.
VALLIYAMMAI ACHI, Appellant , and O. L. M. ABDUL MAJEED,
Respondent
.
30-D. C. Colombo, 1,961.
Trust-Arrangement between debtor and
creditor-Transfer of property by debtor-Agreement to hold property in trust
pending liquidation of debts- Parol evidence of agreement-Prevention of Frauds
Ordinance (Cap. C7) s. 2, Evidence Ordinance (Cap. 11) s. 92.
Defendant's testator, N. C, who was a creditor of plaintiff, undertook the
management of plaintiff's affairs and in pursuance of the said undertaking
plaintiff transferred to N. C. for an ostensible consideration certain
properties, all of which, except one. were under mortgage to him.
It was agreed between them that N. C. should collect the rents and profits of
the properties and give credit for them to the plaintiff. The proceeds of sale
of any properties, were to be appropriated by N. C. and applied in settlement of
the debts. N. C. undertook to retransfer the properties remaining unsold to
plaintiff after the debts had been paid.
In terms of the said agreement, N. C. by his agent entered into possession of
the properties, collected the rents and profits and sold some, the proceeds of
which were appropriated in payment of the debts,.
When (he debts had been liquidated, N. C. agreed to reconvey the properties
remaining unsold to plaintiff. But on N. C's death before such re-conveyance the
defendant, the executrix of N. C's last will, fraudulently repudiated the
agreement and claimed the properties.
Held, that the defendant, as the executrix of N. C, held the
properties remaining unsold in trust for the plaintiff, and that parol evidence
was admissible to establish the trust.
APPEAL from a judgment of the
District Judge of Colombo: the facts are stated in the head-note. The District
Judge gave judgment for the plaintiff.
H. V. Perera, K.C. (with him N. Nadarajah, K.C., and S. J. V. Chelvanayagam),
for the defendant, appellant.-The plaintiff sold, by deed P '21 of March 3,
1930, certain properties to one Natchiappa Chettiar, of whose estate the
defendant is the executrix. The transfer deed does not disclose any conditions,
and was given for full consideration. The plaintiff now, after an interval of
ten years, when properties have risen in value, seeks to get back the properties
on the basis that the transfer was subject to a trust according to which the
transferee was to pay off certain debts of the plaintiff out of the income or
sale of the properties and, thereafter to reconvey to plaintiff such of the
properties as remained unsold. The alleged trust is sought to be proved entirely
by oral evidence.
P 21 was admittedly executed in order to prevent unsecured creditors from
seizing the properties which were transferred. The purpose was illegal.
Plaintiff, therefore, cannot maintain the present action. See Sauramma et al. v.
Mohamadu Lebbe [1 (1943) 44 N. L. R. 397.] and sections 404 and 406 of Penal
Code. Under section 2 of the Prevention of
Frauds Ordinance (Cap. 57) a contract for the retransfer of immovable property
has to be notarially executed-Wijewardene v. Peiris et al.[1 (1935) 37 N. L. R.
179.]. Deed P 21 does not contain any condition for reconveyance. Section 92 of
the Evidence Ordinance is also applicable, and no evidence of a contemporaneous
oral agreement is admissible to prove any such condition. No oral evidence is
admissible for the purpose of ascertaining the intention of the parties to a
deed or to contradict the express terms of the document-Balkishen Das et al. v.
Legge [2 (1899) I. L. R. 22 All. 149.]; Perera v. Fernando [3 (1914) 77 N. h. R.
486.]. The additional agreement which is pleaded by the plaintiff discloses, if
true, not a trust but the creation of security for money lent. Such a contract
in respect of immovable property has to conform to the provisions of section 2
of the Prevention of Frauds Ordinance. See
