K. TIRUPATHI MUDALI Vs. T. LAKSHMANA MUDALI AND ANR.
HIGH COURT OF MADRAS
K. Tirupathi Mudali
T. Lakshmana Mudali And Anr.
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Chandra Reddi, J. -
(1.) THIS second appeal is filed by the 1st defendant against the judgment and decree of the Subordinate Judge of Chingreput who reversed the decision of the trial Court dismissing the suit brought by the respondents for a declaration of their title to the suit property and for the recovery of possession thereof. The facts material for the purpose of this enquiry are as follows: One Damodara Mudali executed a sale deed, Ex. P. 1, in favour of the appellant conveying his divided half share in the suit house for a stated consideration of Rs. 600 on 9 -6 -1935 and had it registered on 3 -10 -1935. The vendor took the same property on lease from the vendee evidenced by the original of Ex. D. 1 dated 3 -10 -1935. A creditor of Damodara attached the suit house in execution of a decree which he obtained against him. The first defendant in the present suit intervened with a claim petition but his claim was disallowed on the ground that the sale was effected with a view to defraud the creditors. The defeated claimant did not bring a suit to set aside the claim order as the decree debt was satisfied out of the sale proceeds of other properties belonging to Damodara. Subsequently, the present plaintiffs instituted a suit, O. S. No. 176 of 1937 against the present 1st defendant that is the vendee under Ex. P. 1 and the widow and mother of Damodara (Damodara having died by that time) for an injunction restraining them from interfering with the plaintiff's possession on the allegations that Damodara and the plaintiffs were members of an undivided Hindu joint family and that on the death of Damodara the plaintiffs got the suit property by survivorship. This suit was ultimately dismissed as it was found that Damodara on the date of Ex. P. l was divided from the plaintiffs and that the plaintiffs were not In possession of the property at the time of the suit. It Is not necessary (or me to refer to some other litigation in respect of the same property as that has no bearing on the controversy in the present appeal. Having failed there, the plaintiffs laid this action for the reliefs mentioned above with the averments, that Ex. P. I was a sham and nominal document not intended to convey title and that they were entitled to the properties as the reversioners to the estate of Damodara.
(2.) THE suit was resisted mainly on the plea that the sale deed Ex. P. I was a genuine one and that the plaintiffs could not put forward any claim thereto. The trial Court dismissed the suit holding that Ex. p. l evidenced a real transaction and that it was not a nominal document executed in fraud of creditors. On appeal the lower appellate Court in disagreement with the trial Court found that Ex. P. 1 was executed with a view to defraud the creditors. In the result, it decreed the suit. It may be stated that the learned Subordinate Judge had not kept in view the distinction between a sham and fictitious document under which no title was intended to pass and a real document executed with intent to defraud creditors. Having regard to this fact, I had to call for a finding when the appeal came on for hearing for the first time in September 1951 as to whether Ex. P. 1 was a mere sham document under which no title was intended to pass to the vendee and therefore a mere nullity or whether it was a document by which legal title was intended to vest in the vendee with the object of defrauding the creditors. The finding submitted by the learned Subordinate Judge is that the intention of Damodara was not to defraud his creditors but that his object was only to retain the suit property for himself and make the creditors proceed against the other properties, that consequently Ex. P. 1 was not intended to convey legal title to the first defendant and that it was merely a sham document. I will presently show that this finding is not borne out by the evidence on record and is also self -contradictory and is therefore not entitled to any weight. I propose to consider the evidence afresh and give a decision on this question on the materials before me.
(3.) IN support of this appeal, Mr. Natesan on behalf of the appellant contended that in view of the finding of the learned Subordinate Judge that there were no creditors at all in fraud of whom this document is said to have been executed, the only conclusion that could have been reached by the learned Subordinate Judge was that Ex. P. 1 evidenced a genuine transaction and could not be impeached on the ground that it was entered into with a view to defraud the creditors. I do not think that I can accede to this argument having regard to the fact that there is evidence to show that there were some creditors at the time of the execution of Ex. P. 1 to defeat whom the document is said to have been executed and that the finding given in all the prior litigations was that this document was executed with intent to defraud the creditors.
It was next argued that the object in entering into the transaction being a fraudulent one and the reason for the non -fulfilment of the fraud being not the 'locus paenitentiae' of the fraudulent grantor but the intervention of the Court, the transferor cannot invoke the aid of the Court to recover the property transferred by him. According to him, it is only when an illegal transaction is not carried out due to repentance on the part of the transferor and not due to the intervention of third parties that the transferor would be entitled to claim the recovery of the property through Court. In support of this proposition reliance was placed by him on - - 'Muthooraman Chetti v. Krishna Pillai',, 29 Mad 72 and also on the opinion expressed by Pritchard J. in - - 'Bigos v. Boustead',, (1951) 1 A11 E. R. 92. I do not think that - - 'Muthuraman Chetti v. Krishna Pillai',, 29 Mad 72 carried the appellant very far. All that was laid down there was that the rule that a person 'in pari delicto cannot recover is applicable not only to cases where contemplated fraud is completely carried out but to cases where there has been substantial part performance of the same as well. Undue weight cannot be attached to the remarks at page 74 of the report which run thus: "Turning to the facts here, we do not find a case when a party to a fraudulent transaction relented before anything was done in pursuance of the intended fraud and the unlawful compact was in no way carried out."
These remarks should be understood only with reference to the context in which they are used.;
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