Decided on July 07,1952

Thanubuddi Venkatappa Reddi And Anr. Appellant
Gopavarapu Brahmayya And Ors. Respondents


Chandra Reddi, J. - (1.) DEFENDANTS 4 and 5 are the appellants. The suit which has given rise to this second appeal was instituted by the first respondent in the court of the District Munsif of Guntur for recovering a sum of Rs. 800 with interest that has accrued thereon, on a mortgage executed in his favour by the first defendant and his two minor sons, the Second and third defendants, on 10 -5 -1943, after declaring that the mortgage in favour of the fourth defendant is a sham and nominal transaction and that the plaintiff is entitled to be treated as the first mortgagee.
(2.) DEFENDANTS 1 to 3 executed a mortgage on 1 -5 -1943 in favour of the fourth defendant which mortgage was assigned to the 5th defendant by the fourth defendant for consideration. As soon as the plaintiff came to know of the existence of the mortgage in favour of the fourth defendant, he instituted criminal proceedings against the first defendant under Section 420, J. P. C. alleging that the first defendant cheated him by not disclosing to him the existence of the first mortgage and thereby inducing him to part with a sum of Rs. 800. The criminal proceedings were thrown out on the ground that the complainant, i.e., the plaintiff, had not established that the first defendant was guilty of the offence under Section 420, I. P. C. This led the plaintiff to file the present suit with the averments that there was really no consideration for the mortgage in favour of the 4th defendant and that it was a sham and nominal transaction intended to defraud the plaintiff and that for all intents and purposes he is the first mortgagee. The defences to the suit were that the question of the sham and nominal nature of the first mortgage could not be gone into in a suit by the subsequent mortgagee, that even if it could be agitated in such a suit, court -fee must be paid thereon and lastly that the case of the plaintiff that the first mortgage is a sham and nominal transaction is not true.
(3.) THE trial court dismissed the suit as. against the fourth and fifth defendants agreeing with their defence. On appeal the Subordinate Judge reversed the judgment of the trial court and gave a decree in favour of the plaintiff. The learned Judge held that it was for the prior mortgagee to prove that there was consideration for his mortgage, and not for the plaintiff to establish that the first mortgage was devoid of consideration and that the former had not established the payment of consideration for the mortgage, that the question of the Sham and nominal nature of the transaction could be gone into in this suit and no court - fee need be paid as it is a mere piece of paper.;

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