Decided on July 04,1980

BHURA DHANNA Respondents

Referred Judgements :-



- (1.)TO accept the contention of the petitioner would amount to making a hole in the Debt Relief Act, through which could be driven not a small coach or car, but in the words of Denning L. J. , an articulated vehicle. Whenever, it is found that if what a person does is really A, but covers the reality by giving to it the colour of B, the Court should naturally go behind the form and look to the substance. The provisions of a statute cannot be evaded by covering the reality by an ungenuine transaction.
(2.)IN the present case, the original respondent-debtor Bhura (since dead) moved the Debt Relief Court in accordance with the provisions of the madhya Pradesh Anusuchit Jati Evam Jan Jati Rini Sahayata Adhiniyam for a discharge of the alleged debt of Rs. 500, which was advanced to him by the petitioner. It was alleged by the debtor that he had in all paid a sum of more than Rs. 800 but despite the same, the petitioner was trying to enforce the alleged nominal transaction in the shape of a deed of sale executed under a collateral agreement for securing the repayment of loan. It is not disputed even by the petitioner that he had recovered a sum of Rs. 550 from the debtor Bhura. Bhura undisputedly belonged to the Scheduled caste. It was not disputed that the provisions of the Act referred above were applicable to him provided the transaction was held in reality to be a debt. However, the case of the petitioner was that he had purchased House no. 169 situate in Shilanath Camp Ward of Indore Town from Bhura on 31-3-1968 by a registered deed of sale for a consideration of Rs. 500 and that bhura was allowed to remain in actual occupation of the said house as a tenant by executing a rent note reserving monthly rent at Rs. 15. The contention put forth by the petitioner before the Debt Relief Court and also before this Court was that the transaction in reality was a sale and not that of a loan advanced on payment of interest at the rate of Rs. 15 per month. It would be significant to mention that before the institution of the case before the Debt Relief Court, the petitioner had already brought a suit on the basis of the alleged rent note claiming arrears of rent and eviction. He obtained an ex parte decree against the defendant not only for arrears of rent, but also for eviction. By that time, the decree was put in execution, the provisions of the aforesaid Act came into force on 15th August, 1973. The case of the respondent-debtor was that according to the prevalent practice, the creditors by taking advantage of the helplessness of the persons belonging to the weaker sections, insisted on obtaining a formal deed of sale by way of collateral security to ensure the repayment of loan and since the transaction was not intended to be operative as a deed of sale, in reality, and possession of the property sold was not being given, a formal rent note was also got executed by reserving the amount of interest agreed in the shape of rent. According to the respondent, the interest to be charged by the petitioner was @ 3% Per month, i. e. 36% per annum and accordingly a sum of rs. 15 was shown as rent. According to him, however, there was no relationship of landlord and tenant and since the transaction in substance was that of a loan, he was entitled to the relief provided by the Act by moving the competent Authority.
(3.)THE Debt Relief Court, after noticing the petitioner, entered into an enquiry to ascertain the true nature of the transaction and to find out whether the said deed of sale was real or sham and whether it was a case of debt existing on the date of commencement of the Act. The Debt Relief court recorded evidence and relied on various circumstances to arrive at the conclusion that the transaction in the colour of a deed of sale was a nominal one, not intended by the parties to be operative as a deed of sale. According to the Debt Relief Court, it was a transaction simply in the nature of collateral security for the purpose of ensuring the repayment of loan and interest. The petitioner himself had to ultimately admit during the course of his deposition before the Debt Relief Court that he never got possession of the house even after the execution of the deed of sale. He further admitted that it was agreed that on payment of the original amount of Rs. 500 and rent due at the rate of Rs. 15 per month, he would execute a deed of conveyance in favour of the respondent Bhura. In order to give a colour of a real sale to the transaction, the petitioner at the beginning stated that he himself had incurred the expenses of the stamps and registration etc. but later on had to admit that he had deducted the entire amount spent towards the execution of the deed out of the original amount of Rs. 550 and paid the remaining amount alone to Bhura. There is nothing on record to show that after the execution of the deed of sale in respect of the house in question, the petitioner at any time took steps to get his name mutated in the municipal record. This would have been the natural course of conduct if the transaction was a real sale. He would have at least taken such steps after the expiry of the agreed period. The petitioner has further admitted that the amount of Rs. 15 shown as rent was calculated at the rate of Rs. 3% per month. He had further admitted that he had received Rs. 550 from the respondent but the same was towards the amount of arrears of rent. He had further admitted that he had obtained sale-deeds in similar manner from other four or five persons of the said locality. At one stage, he deposed that he had advanced Rs. 500 to Bhura against the house, which being a 'kachcha' one, was described as a 'tapara', but immediately on realising that the said statement would indicate that a loan was advanced on the security of the house, he made an attempt to change the same and found it convenient to say that he had not advanced the said amount against the house but had actually purchased the same.

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