Kumar Gupta Vs. Rochiram Nagdeo  INSC 157 (20 April 1999)
Thomas, & D.P. Mohapatra.,
enviable position to which the tenant of a shop building has ensconced himself
as corollary to the judgment of the High Court (under appeal now) is that he
need not thenceforth be accountable to any landlord. On the one side when the
claim of appellant to be the landlord has been dis-countenanced by the High
Court, at the other side the person whom the tenant proclaimed as his landlord
has disclaimed the credential. If the judgment of the High Court remains in
force the tenant stands elevated virtually to the status of owner of the suit
building. But appellant is not prepared to concede defeat and hence he has come
up with this appeal by special leave.
which led to the aforesaid position can be summarised thus: Respondent was the
tenant of the suit building (consisting of a shop room and godown premises)
which belonged to one Narain Prasad. As per a sale deed executed on 23.1.1989
(Ext.P.11) Narain Prasad transferred his rights in the suit building to the
appellant. On its footing appellant filed Civil Suit No.75-A of 1990 for
eviction of the respondent under Section 12(1)(a) of the M.P. Accommodation
Act, 1961 (for short "the Act") on the ground that respondent has not
paid rent to the appellant.
suit was contested by the respondent raising the contention that the building
was actually purchased by Pyarelal (father of the appellant) as per
Ext.P11-sale deed and appellant is only a name-lender therein, and hence
appellant is not entitled to get the eviction order or the rent of the
building. In that suit the court found that appellant is the real owner of the
building pursuant to Ext.P.11-sale-deed and that he was entitled to receive
rent of the building. However, the suit was dismissed as the respondent
deposited the arrears of rent in court during pendency of the suit but
appellant was permitted to withdraw the arrears of rent so deposited by the
respondent as per the judgment rendered in that suit.
filed the present suit (No. 304-A of 1994) under Section 12(1) (f) of the Act
for eviction of the respondent on the ground that appellant requires the
building bona fide for the purpose of starting a business of his own.
Respondent contested the suit and in the written statement be contended, inter alia,
that appellant is only benami to his father Pyarelal in Ext.P.11-sale deed and
the real transferee was Pyarelal. Respondent further contended that the sale in
favour of the appellant is void as it is forbidden under Section 3 of the Benami
Transaction (Prohibition) Act, 1988, (for short the "the Benami
the issues raised by the trial court in the present suit is whether respondent
is precluded from raising the issue regarding benami nature of Ext.P.11-sale
deed, due to the bar of res judicata. The trial court held that the finding in
the previous suit (No.75-A of 1990) against the respondent would not operate as
res judicata as the said suit was ultimately dismissed. The trial court then
proceeded to consider whether appellant is only a benamidar under the aforesaid
sale deed. The court concluded that appellant is the real transferee under the
sale deed and is entitled to institute the suit. It was further found that
appellant bona fide requires the building for his own business purpose. On the
strength of such findings a decree was granted by the trial court for eviction
of the respondent.
District Court in the first appeal filed by the respondent upheld all the
findings arrived at by the trial court and dismissed the appeal. A second
appeal was preferred by the respondent before the High Court of Madhya Pradesh.
During arguments learned single judge permitted the appellant to raise the plea
of res judicata while supporting the decree for eviction.
learned single judge of the High Court held that there is no bar of res judicata
for the respondent in raising the contention regarding the title of the
appellant over the building. Learned single judge reversed the findings of the
two courts regarding benami transaction and held that Ext. P.11 was executed in
favour of Pyarelal and that transaction is hit by Section 3 of the Benami Act
and consequently the transaction is void. Learned single judge dismissed the
suit filed by the appellant.
G.L. Sanghi, learned senior counsel contended that the plea of the respondent
based on Section 3 of the Benami Act is barred by res judicata. Alternatively
he contended that respondent has failed to show that Ext. P.11 is a benami
transaction Learned senior counsel further contended that the High Court went
wrong in fastening the appellant with the burden of proof to prove that Ext.
P.11 is not a benami transaction. Even otherwise, appellant has proved that
Ext.P.11 was executed in his favour and he is the real transferee, according to
the learned Senior Counsel.
S.S. Khanduja, learned counsel for the respondent supported every finding of
the High Court and further contended that even if the burden is on the respondent
to prove the benami nature of the transaction respondent has succeeded in
discharging the burden.
the plea of res judicata learned counsel submitted that it is not available to
the appellant. Alternatively he pleaded that even if ownership of the building
is found with the appellant he has not made out a ground for eviction under
Section 12(1)(f) of the Act.
reasoning adopted by the learned single judge for rejecting the plea of res judicata
is the following:
the suit itself was dismissed, the appellant was not aggrieved and he had no
right of appeal.
such circumstances there could be no question of application of principles of res
judicata. A successful defendant is not bound by any adverse finding against
him in a suit, for the reason, it cannot file an appeal against that finding.
This principle is firmly in the saddle." To reach the said conclusion
learned single judge relied on the decisions in Waris Khan & ors. vs. Admadullakhan
& ors. (AIR 1952 Nagpur 238) and Firm Manhaiyalal Mohanlal Somani vs. Paramsukh
(AIR 1956 Nagpur 273).
earlier suit (75-A/90) was contested on the main issue that appellant was only
a benamidar and hence he has no right in the suit property. The main plea of
the respondent in that suit has been extracted in the judgment as follows:
defendant has specifically denied that the plaintiff has purchased the suit
premises. His contention is that disputed premises has been purchased by Pyarelal,
father of the plaintiff in his name and it is a benami transaction and on that
basis the plaintiff has not acquired any right." Issues No. 1 and 2 in
that suit were formulated in the following words:
Whether the plaintiff is owner of the suit premises?
Whether the defendant is tenant of plaintiff of disputed premises @ Rs.210/-
The decision of the court in that suit, on the above issues, was
this: "I find that the plaintiff is the owner on the basis of sale-deed
dated 23.1.1989 under section 2(b) of MP Accommodation Control Act; and when
plaintiff is owner of the suit premises the defendant is definitely his
tenant." The court in that suit then proceeded to consider the question of
arrears of rent and held that "the plaintiff is entitled to obtain
Rs.1400/- from the defendant towards arrears of rent; this rent has been
deposited by the defendant in CCD which the plaintiff can withdraw." of
course in the last para of the judgment the Court said that suit is
"dismissed" and both parties were directed to bear their own costs.
the word "dismissed" has been employed in the last paragraph of the
judgment a reading of it, as a whole, would show that the plaintiff had won the
suit. The court found against the plea of the defendant that plaintiff was not
the rightful owner of the building. Dismissal of the suit was not on account of
any defect in the plaintiff's claim nor in the frame of the suit nor even on
any technical reason, but solely because the amount claimed by the plaintiff
from the defendant has been deposited by the defendant in the court during pendency
of the suit. As the plaintiff was permitted to withdraw that amount his
grievance in the suit would necessarily have been redressed fully.
rule of res judicata incorporated in section 11 of the Code of Civil Procedure
(CPC) prohibits the court from trying an issue which "has been directly
and substantially in issue in issue in a former suit between the same
parties", and has been heard and finally decided by that court. It is the
decision on an issue, and not a mere finding on any incidental question to
reach such decision, which operates as res judicata. It is not correct to say
that the party has no right of appeal against such a decision on an issue
though the suit was ultimately recorded as dismissed. The decree was not in
fact against the plaintiff in that first suit, but was in his favour as shown
above. There was no hurdel in law for the defendant to file an appeal against
the judgment and decree in that first suit as he still disputed those decisions
on such contested issues.
two decisions of the Nagpur High Court relied on by the learned single judge
(in the impugned judgment) have followed the rule set by the Privy Council in
an early decision in Midhanpur Zamindari Company vs. Naresh Narayan Roy (AIR
1922 PC 241). It seems that the legal principle formulated by the Privy Council
in the aforesaid decision regarding this facet of res judicata has since been
approved and followed by the courts in India as the correct position.
said rule was founded on the following facts: When a zaminder sued for
possession against the tenant the latter contested the suit on two alternative
grounds, one by claiming occupancy right and the other by contending that the
suit was premature. The court had recalled the plea of the tenant regarding
occupancy right, but dismissed the suit as premature. In the subsequent suit
filed by the zamindar against the same tenant their Lordships of the Privy
Council did not agree that the finding regarding occupancy right in the first
suit would operate as res judicata "for the tenant having succeeded on the
other plea, had no occasion to go further as to the findings against him."
The reason is that such adverse finding in the aforesaid suit would only be
the Madras High Court in Veeraswamy Mudali vs. Palaniyappan and ors. (AIR 1924
Madras 626) and the Calcutta High Court in Fulbash Sheikh vs. Emperor (AIR 1929
Cal 449) distinguished the said principle in cases where the first suit was
dismissed due to want of valid notice to quit, and findings on disputed issues
on title were held sufficient to operate as res judicata in subsequent suit
between the same parties.
the sound legal position is this: If dismissal of the prior suit was on a
ground affecting the maintainability of the suit any finding in the judgment
adverse to the defendant would not operate as res judicata in a subsequent
suit. But if dismissal of the suit was on account of extinguishment of the
cause of action or any other similar cause a decision made in the suit on a vital
issue involved therein would operate as res judicata in a subsequent suit
between the same parties. It is for the defendant in such a suit to choose
whether the judgment should be appealed against or not. If he does not choose
to file the appeal he cannot thereby avert the bar of res judicata in the
this case the position is still stronger for the appellant. Dismissal of the
first suit was only on account of what the respondent did during the pendency
of the suit i.e. depositing the arrears of rent claimed by the appellant. The
court permitted the plaintiff to withdraw that amount under deposit for
satisfying his claim. Such a degree cannot be equated with a case where the
suit was dismissed as not maintainable because any adverse finding in such a
suit would only be obiter dicta. The finding made in OS 75-A/90 that appellant
was the real owner of the building as per Ext. P.11-sale deed became final. If
the respondent disputed that finding he should have filed an appeal in challenge
therefore agree with the plea of the appellant that there is bar of res judicata
in re-agitating on the issue regarding appellant's title to the building.
assuming that the finding in the first suit would not operate as res judicata,
the contention of the respondent that Ext. P.11 is a void transaction being hit
by Section 3(1) of the benami Act can now be considered. The trial court and
first appellate court concurrently found that it is not a benami transaction
but the High Court interfered with the said concurrent finding and held that
the transaction is void. Learned single judge of the High Court observed that
finding of the first appellate court is contrary to the pleadings of the
plaintiff and that burden of proof had been wrongly placed on the defendant,
and that the conclusion was based on considerations which are not germane to
to the learned single judge "it is clear from section 106 of the Evidence
Act that is was the respondent to prove that the money was advanced by him
because he had the special knowledge of the transaction between him and his
vendor". The High Court held that appellant sailed to prove that the suit
building was purchased by him on payment of sale price.
the above three premise adverted to by the High Court are unsupportable. The
clear pleading of the plaintiff is that he purchased the suit property as per
Ext.P.11-sale deed. Burden of proof cannot be cast on the plaintiff to prove
that the transaction was consistent with the apparent tenor of the document.
Ext.P.11-sale deed contains the recital that sale consideration was paid by the
plaintiff to Narain Prasad the transferor. Why should there be a further burden
of proof to substantiate that recitals in the document are true?. The party who
wants to prove that the recitals are untrue must bear the burden to prove it.
this context reference to Section 91 and 92 of the Evidence Act will be useful.
As per the former, in all cases in which any matter is required by law to be
reduced to the form of a document no evidence shall be given in proof of the
terms of such matter except the document itself. Section 92 forbids admission
of any evidence for the purpose of contradicting, varying, adding to, or
subtracting from the terms of such document. One of the exceptions to the said
rule is that any fact which would invalidate the instrument can be proved by
adducing other evidence.
this case, Ext.P.11 is the document by which transfer of ownership from Narain
Prasad was effected. When any party proposes to show something which is at
variance with the terms of Ext.P.11 the burden of proof is on him.
respondent asserted that the real transaction is not what is apparently
mentioned in Ext.P.11 the burden is on the respondent to establish the
transaction which he asserts to be the real one.
understand that respondent made a bid to discharge his burden by examining Pyarelal
(father of the appellant) and Narain Prasad (the executant of Ext. P.11) as
witnesses for the defendant. But it was a risky course of action which he
undertook and the risk proved to be costly for him as both witnesses stood by
the apparent terms of Ext.P.11 regarding consideration. In other words, both
witnesses of the respondent stuck to the version that consideration for the
sale was paid by the appellant.
true that respondent adduced evidence to show that Ext.P.11 was preceded by an
agreement entered into between Pyarelal and Narain Prasad for the sale of the
suit building. The High Court adverted to the said agreement.
even with that agreement the respondent has only succeeded in showing that Pyarelal
had enough money and appellant was not having so much of funds to pay the
purchase money for Ext.P.11. Perhaps the said circumstance may lead to an inference
that Pyarelal, the father of the appellant, gave money to his son to pay the
consideration for buying the property.
3(1) of the Benami Act contains the interdict that no person shall enter into
any benami transaction. The aforesaid prohibition has been judicially
pronounced as prospective only, (vide R.Rajagopal Reddy v. Padmini
Chandrasekharan (1995 2 SCC 630). As the Benami Act was passed on 5.9.1988 it
would apply to Ext. P.11 which was executed subsequently. A contention was bolsteced
up in the High Court on behalf of the tenant that since the sale consideration
was provided by Pyarelal the sale deed would be a benami transaction.
2(a) of the Benami Act defines benami transaction as "any transaction in
which property is transferred to one person for a consideration paid or
provided by another person." The word "provided" in the said
clause cannot be construed in relation to the source or sources from which the
real transferee made up funds for buying the sale consideration. The words
"paid or provided" are disjunctively employed in the clause and each
has to be tagged with the word "consideration". The correct
interpretation would be to read it as "consideration paid or consideration
provided". If consideration was paid to the transferor then the word
provided has no application as for the said sale. Only if the consideration was
not paid in regard to a sale transaction the question of providing the
consideration would arise. In some cases of sale transaction ready payment of
consideration might not have been effected and the provision would be made for
such consideration. The word "provided" in Section 2(a) of Benami Act
cannot be understood in a different sense. Any other interpretation is likely
to harm the interest of persons involved in genuine transactions, e.g., a
purchaser of land might have availed himself of loan facilities from banks to
make up purchase money. Could it be said that since the money was provided by
the bank it was benami transaction?.
are, therefore, not inclined to accept the narrow construction of the word
"provided" in Section 2(a) of the Benami Act. So even if appellant
had availed himself of the help rendered by his father Pyarelal for making up
the sale consideration that would not make the sale deed a benami transaction
so as to push it into the forbidden area envisaged in Section 3(1) of the Benami
looking from either angle the contention of the respondent that appellant had
no title to the suit property could not stand legal scrutiny. The High Court
erred grossly in adopting such a view which is in conflict with law and is in
reversal of the concurrent findings of the two fact finding courts. Shri S.S. Khanduja,
learned counsel for the respondent lastly pleaded that if ultimately the respondent
is found to be the transferee under the Ext. P.11-sale deed the case may be
remitted to the High Court for considering the question whether appellant's
claim for eviction on the ground that he needs the building for his own use in
bona fide. Shri G.L. Sanghi, learned senior counsel pointed out that there is
concurrent finding by two courts on that aspect. We have noticed that the High
Court which admitted the second appeal had formulated certain questions of law,
and none of such questions pertained to the finding regarding the bona fides of
appellant's claim for eviction.
no purpose would be served by remanding the case to High Court. In the result,
we allow this appeal and set aside the impugned judgment. The decree passed by
the trial court as confirmed by the first appellate court will stand restored.
We pass no order as to costs.