Kumar Harish Chandra Singh Das &
Ors Vs. Bansidhar Mohanty & Ors [1965] INSC 128 (5 May 1965)
05/05/1965 MUDHOLKAR, J.R.
MUDHOLKAR, J.R.
WANCHOO, K.N.
SHAH, J.C.
CITATION: 1965 AIR 1738 1966 SCR (1) 153
ACT:
Transfer of Property Act (4 of 1882), ss. 3
and 59-Mortgage deed in name of benamidar-Attestation by lender of money-
Vallidity -Suit by lender-If maintainable.
HEADNOTE:
The first respondent lent money to the
appellant and obtained a mortgage deed from him in the name of the second
respondent. The first respondent was himself one of the two attesting
witnesses. On the failure of the appellant to repay the amount, the first
respondent instituted a suit and the suit was decrees by the High Court.
In his appeal to the Supreme Court, the
appellant contended that : (i) the mortgage deed was not validly attested and
(ii) the first respondent was not entitled to sue.
HELD : (i) A person who has lent money, for
securing the payment of which a mortgage deed was executed by the mortgagor,
but who was not a party to the deed, could be an attest or. [156C, G-H] There
is a distinction between a person who is -a party to a deed and a person who,
though not a party to the deed is a party to the transaction and the latter is
not incompetent to attest the deed. The object of attestation is to protect the
executant from being required to execute a document by the other party thereto
by force, fraud or undue influence.
Though, neither the definition of
"attested" in s. 3 nor s. 59 of the Transfer of Property Act debars a
party to a mortgage deed from attesting it, since the testimony of parties to a
document cannot dispense with the necessity of examining at least one attesting
witness to prove the execu- tion of the deed, it must be inferred that a party
is debarred from attesting a document which is required by law to be attested.
Where, however, a person is not a party to the deed, there is no prohibition in
law to the proof, of the execution of the document, by that person. [155H; 156
A- B] (ii) When a transaction is a mortgage, the actual lender of the money is
entitled to sue upon it. [157E] A person who provides consideration for a
transaction is entitled to maintain a suit concerning the transaction. In Gur
Narayan and Ors,. v. Sheo Lal Singh and Ors, . (46 I.A.1) the Privy Council
only recognised the right of a benamidar also to sue, but did not hold that the
benamidar alone could sue and not the beneficial owner. [157 D-F]
CIVIL APPELLATE JURISDICTION: Civil Appeal
No. 304 of 1963.
Appeal from the judgment and decree dated
July 26, 1960 of the Orissa High Court in First Appeal No. 6 of 1954.
Sarjoo Prasad, S. Murty and B. P. Maheshwari,
for the appellants.
154 A. V. Viswanatha Sastri and R.
Gopalakrishan, for the res- pondent no. 1.
The Judgment of the Court was delivered by
Mudholkar, J. Two questions are raised before us in this appeal from the
judgment of the Orissa High Court. One is whether the mortgage deed upon which
the suit of the respondent no. 1 was based was validly attested. The other is whether
the respondent no. 1 was entitled to institute the suit.
The mortgage deed in question was executed by
the appellant in favour of Jagannath Debata, respondent no. 2 on April 30,
1945, for a consideration of Rs. 15,000. The appellant undertook to repay the
amount advanced together with interest within one year from the execution of
the deed.
The appellant, however, failed to do so.
Respondent no. 1 therefore instituted the suit out of which this appeal arises.
According to respondent no. 1 though the
money was advanced by him to the appellant he obtained the deed in the name of
the second respondent Jagannath Debata because he himself and the appellant
were close friends and he felt it embarrassing to ask the appellant to pay
interest on the money advanced by him. As the consideration for the mortgagee
deed proceeded from him he claimed the right to sue upon the deed. He, however,
joined Jagannath Debata as the third defendant to the suit. He also joined Dr.
Jyotsna De as second defendant because she is the transferee of the mortgaged
property-which consists of a house, from the appellant whose wife she is. This
lady however remained ex parts. The appellant denied the claim on various
grounds but we are only concerned with two upon which arguments were addressed
to us. Those are the grounds which we have set out at the beginning of the
judgment. The third defendant Jagannath Debata disputed the right of respondent
no. 1 to institute the suit and claimed that it was he who had advanced the
consideration. His claim was, however, rejected by the trial court and he has
remained content with the decree passed by the trial court in favour of
respondent no. 1. The trial court decreed the suit of respondent no. 1 with
costs. Against that decree the appellant alone preferred an appeal before the
High Court. The contention raised by the appellant before us were also raised
by him before the High Court but were rejected by it.
In our opinion there is no substance in
either of the contentions urged on behalf of the appellant. It is no doubt true
that there 1 5 5 were only two attesting witnesses to the mortgage deed, one of
whom was respondent no. 1, that is, the lender himself.
Section 59 of the Transfer of Property Act,
which, amongst other things, provides that a mortgage deed shall be attested by
at least two witnesses does not in terms debar the lender of money from
attesting the deed. The word "attested" has been defined thus in s. 3
of the Transfer of Property Act :
" 'attested' in relation to an
instrument means and shall be deemed always to have meant attested by two or
more witnesses each of whom has seen the executant sign or affix his mark to
the instrument, or has seen some other person sign the instrument in the
presence and by the direction of the executant, or has received from the
executant a personal acknowledgment of his signature or mark or of the
signature of such other person, and each of whom has signed the instrument in
the presence of the executant; but it shall not be necessary that more than one
of such witnesses shall have been present at the same time, and no particular
form of attestation shall be necessary." This definition is similar to
that contained in the Indian Succession Act. It will seen that it also does not
preclude in terms the lender of money from attesting a mortgage deed under
which the money was lent. No other provision of law has been brought to our
notice which debars the lender of money from attesting the deed which evidences
the transaction whereunder the money was lent. Learned counsel, however,
referred us to some decisions of the High Courts in India. These are Peary
Mohan Maiti & Ors. v. Sreenath Chandra(1); Sarur Jigar Begun v. Barada
Kanta ( 2 ) and Gamati Ammal v. V. S. M. Krishna Iyer (3). In all these cases it
has been held that a party to a document which is required by law to be
attested is not competent to attest the document. In taking this view reliance
has been placed upon the observations of Lord Selborne, L.C., in Seal v. Clarige(1).
"It (i.e., the attestation) implies the
presence of some person, who stands by but is not a party to the
transaction." The object of attestation is to protect the executant from
being required to execute a document by the other party thereto by force, fraud
or undue influence. No doubt, neither the definition of (1) 14 C.W.N. 1046.
(2) I.L.R. 37 Cal. 526.
(3) A.I.R. 1954 Mad. 126.
(4) LR. 7 Q.B.D. 516.
Sup/165- 11 156 'attested' nor s. 59 of the
Transfer of Property Act debars a party to a mortgage deed from attesting it.
It must, however, be borne in mind that the law requires that the testimony of
parties to a document cannot dispense with the necessity of examining at least
,One attesting witness to prove the execution of the deed. Inferentially,
therefore, it debars a party from attesting a document which is required by law
to be attested. Where, however, a person is not a party to the deed there is no
prohibition in law to the proof of the execution of the document by that
person.
It would follow, therefore, that the ground
on which the rule laid down in English cases and followed in India would not be
available against a person who has lent money for securing the payment of which
a mortgage deed was executed by the mortgagor but who is not a party to that
deed.
Indeed it has been so held by the Bombay High
Court in Balu Ravji Charat v. Gopal Gangadh Dhabu(1) and by the late Chief
Court of Oudh in Durga Din & Ors. v. Suraj Bakhsh(2). In the first of these
cases an argument similar to the one advanced before us was addressed before
the Bombay High Court. Repelling it the court observed:
"In Seal v. Claridge(1) much relied upon
by the appellant's pleader the old case of Svire v. Bell (1793) 5 T.R. 371, in
which the obsolete rule was pushed to its farthest extent, was cited to the
Court but Lord Selbome in delivering judgment said : 'What is the meaning of
attestation, apart from the Bills of Sale Act, 1878 ? The word implies the
presence of some person who stands by but is not a party to the transaction.'
He then referred to Freshly v. Reed ( 1842) 9 M & W 404 and said : 'It
follows from that case that the party to an instrument cannot attest it.' Again
in Wichita v. Marquis of Bath (1865) L.R.I Eq. 17 at p. 25, the remarks of the
Master of the rolls imply that if the plain- tiffs Dave and Wickham had not
executed the deed as parties but had only signed with the intention of
attesting, the provision of the statute requiring two attesting witnesses would
have been satisfied."' A distinction was thus drawn in this case between a
person who is a party to a deed and a person who, though not a party to the
deed, is a party to the transaction and it was said that the latter was not
incompetent to attest the deed.
This decision was followed by the Chief Court
of Oudh. We agree with the view taken by the Bombay High Court.
(1) 12 I.C. 531.
(2) I.L.R. 7 Lucknow 41 (F.D.) (3) L.R. 7
Q.B.D. 516.
1 57 As regards the second question a number
of High Courts in India had taken the view that a benamidar could not maintain
a suit for the recovery of property standing in his name, beneficial interest
in which was in someone else. Benami transactions are not frowned upon in India
but on the other hand they are recognised. Indeed s. 84 of the Indian Trusts Act,
1882 gives recognition to such transactions. Dealing with such transactions Sir
George Farewell has observed in Bilas Munwar v. Desrai Ranjit Singh(1):
"It is quite unobjectionable and has a
curious resemblance to the doctrine of our English law, that the trust of the
legal estate results to the man who pays the purchase money, and this again
follows the analogy of our common law, that where a feoffment is made without
consideration the use results to the reoffer." It must follow from this
that the beneficial owner of property standing in the name of another must
necessarily be entitled to institute a suit with respect to it or with respect
to the enforcement of a right concerning the property of a co-sharer. It will
follow that a person who takes benefit under the transaction or who provides
consideration for a transaction is entitled to maintain a suit concernina the
transaction. Thus where a transaction is a mortgage, the actual lender of money
is entitled to sue upon it. Indeed, till the decision of the Privy Council in
Gur Narayan & Ors. v. Sheo Lai Singh & Ors. (2) the right of a
benamidar to sue upon a transaction which is only ostensibly in his favour was
not recognised by several courts in India. Relying upon this decision it was
con- tended before us on behalf of the appellant that in view of this decision
it must be held that it is the benamidar alone who could maintain a suit but
not the beneficial owner.
That, however, is not what the Privy Council
decided.
Indeed, that was never a question which arose
for consideration before the Privy Council. Apart from that on principle the
real beneficiary under a transaction cannot be disentitled to enforce a right
arising there under.
In this view we uphold the decree of the High
Court and dismiss the appeal with costs.
Appeal dismisssed.
(1) 42 I.A. 202, 2)5.
(2) 46 I.A. 1.
Back
