Samittri Devi and
another Vs Sampuran Singh and another
JUDGMENT
Gokhale J.
1.
Leave
Granted.
2.
This
Appeal by Special Leave raises the question as to whether the suit of the first
appellant for the recovery of her house property filed prior to the Benami
Transactions (Prohibition) Act, 1988 coming into force could be considered to
be prohibited by Section 4 of that Act.
3.
This
appeal seeks to challenge the judgment and order passed by a Learned Judge of
the Punjab and Haryana High Court dated 10.9.2009 in Regular Second Appeal
(R.S.A) No. 1367 of 1996 (O & M), whereby the Judge has allowed the Second
Appeal filed by Respondent No. 1 herein, and set aside the judgment and order
dated 22.2.1996 passed by the Additional District Judge, Gurdaspur in Civil
Appeal No. 203 of 1991 filed by appellant No.1 herein. The Learned Additional
District Judge had allowed the Civil Appeal filed by appellant No. 1 herein
whereby he decreed Civil Suit No. 138 of 1987 filed by appellantNo.1, which
suit had been dismissed by the Sub-Judge at Pathankot by his judgment and order
dated 3.10.1991.
4.
Short
facts leading to this appeal are as follows:-
The appellant No.1
herein purchased a house property situated at Pathankot from Sarvashri Romesh
Chand and Chatar Chand sons of Shri Kartar Singh, vide registered sale deed
dated 26.2.1985 for a consideration of Rs. 40,000/-. This sale deed was,
however, executed in the name of her son namely Shri Kamal Chand (the appellant
No.2 herein) and his brother-in-lawShri Jiwan Kumar (respondent No.2 herein).
The appellant no.1 paid the money by two bank drafts for purchasing the house
property which was actually in the possession of a tenant of the previous owner
i.e. Home Guard Department and it continues to be in their possession.
5.
It
is the case of the appellant No.1 that taking advantage of her old age
(presently 93 years), the above referred Kamal Chand and Jiwan Kumar stealthily
removed the sale deed from her possession, and this Jiwan Kumar sold half share
of the suit house to one Sampuran Singh (Respondent No. 1 herein) and that too
without her knowledge and consent. The sale was executed by a registered sale
deed dated 13.4.1987 despite the fact that appellant No.1 had sent, in the
meanwhile, a letter dated 8.4.1987 to Respondent No. 1 herein informing him
that she was the real owner of the Suit House.
6.
The
appellant No. 1 therefore, filed Suit No. 138 of 1987 on30.9.1987 for a
declaration that she was the real owner in possession of the Suit House shown
in red in the site plan attached by letters A B C D part of No. Khasra 574/1,
No. Khawat 262, No. Khatauni 401, as entered in the Jamabandifor the year
1976-77 situated in village Daulatpur HB No. 331, Pathankot. She prayed for a
permanent injunction also restraining the defendants from alienating any part
of the suit house and forcibly interfering with the possession of the plaintiff
of the suit house. By moving an amendment, she claimed an alternative relief
for a decree of Rs. 40,000/- with interest. Her son Kamal Chand was joined as
defendant No. 1, his brother-in-law the above referred Jiwan Kumar as defendant
No. 2, and the purchaser Sampuran Singh as defendant No. 3. They are appellant
No.2, respondent No.2 and respondent No.1 respectively to this appeal.
7.
Defendant
No. 1 admitted the entire claim of the appellant, but the defendant No. 2
disputed it, and contended that half of the consideration of Rs.40,000/- had
been paid by him. He denied that it was a Benami Transaction. Defendant No. 3
filed his written statement and contended in para 5 thereof that even if it is
proved to be a Benami Transaction, due to the recent legislation of Benami
Transactions (Prohibition) Act 1988, the defendants Nos. 1 & 2 were the owners
of the Suit property, and that the alienation of his share in the property by
defendant No. 2 in his favour had been effected legally. He contended that he
had purchased the share of the defendant No. 2 by sale deed dated13.4.1987 for
a consideration of Rs. 30,000/-, and that he was a bonafide purchaser for
value, and that the Suit should be dismissed.
8.
The
trial court framed the necessary issues including whether the sale deed dated
26.2.1985 was Benami, and whether the sale deed dated13.4.1987 was illegal, and
also whether defendant No. 3 was a bonafide purchaser without notice.
9.
The
appellant No. 1 laid the evidence amongst others of a clerk from a branch of
State Bank of Patiala at Chaki, Pathankot, who deposed to the fact that the
appellant had made the payment for the sale consideration from her account.
Defendant No. 2 had contended that he had arranged Rs. 20,000/-from friendly
loans to purchase half the share of the Suit House, but he did not lead any
evidence for proving the availability of such funds with him. The Trial Court
therefore, held that it was obvious that the payment was not made by defendant
nos. 1 & 2, but by the plaintiff i.e. the appellant No.1 herein.
10.
The
appellant No.1 had produced before the trial court a copy of the notice dated
8.4.1987 which she had sent to defendant no. 3, to point out to him that she
was the real owner of the suit house. She produced the same 5alongwith the
certificate of posting. The sale deed between defendant Nos. 2 &3 was
executed on 13.4.1987. The trial court held that the delivery of the notice was
not proved, and therefore, defendant No. 3 was a bonafide purchaser for valuable
consideration without notice. That apart, at the time when the Suit was decided
on 3.10.1991, the law laid down by this Court in Mithilesh Kumari and Anr. Vs.
Prem Behari Khare [AIR 1987 SC 1247] : [1989 (2) SCC 95]was governing the field
viz. that the provisions of Benami Transactions(Prohibition) Act 1988 were
retroactive. It had been held that the prohibition under Section 4 of the Act
to recover the Benami property was applicable to suits, claims or action
pending on the date of commencement of the Act. The appellant No.1 had filed
her suit on 30.9.1987. The Benami Transactions(Prohibition) Act 1988 came into
force on 5.9.1988. Thus, this Suit was pending on the date on which the Act
came into force. The Trial Court, therefore, followed the judgment in Mithilesh
Kumari (supra), and held that the appellant no longer retained the right to
recover the property from the Benami holder. The suit was, therefore, dismissed
for being barred by virtue of the provisions of the said Act, though without
any order as to costs.
11.
The
appellant No.1 carried the matter in first appeal to the Additional District
Judge, Gurdaspur. As we have noted, the trial court had already held that
appellant No. 1 had purchased the suit house by making the payment from her
account. It had, however, declined to decree her suit on two grounds, firstly
due to the prohibition under Section 4 of the Benami Transactions (Prohibition)
Act 1988 as interpreted in Mithilesh Kumari judgment(supra), and secondly on
the ground that the appellant did not prove the service of her notice dated
8.4.1987 on respondent No. 1 herein. By the time the first appeal was being
heard, the judgment of the two Judges bench in Mithilesh Kumari (supra) had
been over-ruled by a bench of three Judges of this Court in R.Rajagopal Reddy
Vs. Padmini Chandrasekharan decided on 31.1.1995and reported in [AIR 1996 SC
238] : [1995 (2) SCC 630]. This Court had held that Section 4 or for that
matter the Act as a whole was not a piece ofdeclaratory or curative
legislation. It creates substantive rights in favour of benamidars and destroys
substantive rights in favour of the real owners. It creates a new offence of
entering into such benami transactions. It had therefore, been held that when a
statutory provision creates a new liability and anew offence, it would
naturally have a prospective operation, and Section 4 will not apply to pending
suits which were already filed and entertained prior to the Act coming into
force. The first appellate Court therefore, held that the suit filed by
appellant No.1 was not prohibited by the said Act. As far as the notice dated8.4.1987
is concerned, the Court held that there was a presumption under the law that
the letter which was proved to have been posted well in advance must have
reached the addressee. The first appellate court therefore, held that the notice
will have to be presumed to have been served, and yet respondent No. 1herein
got the sale deed executed on 13.4.1987. It was therefore, held that respondent
No. 1 could not be held to be a bonafide purchaser without any notice of the
rights of appellant No.1 in the suit property. The first appellate court
therefore, decreed the suit filed by appellant No.1 to the effect that she was
the real owner in possession of the house and the sale deed dated13.4.1987 was
null and void. It also granted an injunction against the defendants that they
shall not alienate any part of the suit house and will not interfere in her possession
of the suit house. The Court awarded cost of Rupees 1,000/-.
12.
Feeling
aggrieved by this decision, the first respondent herein filed a Regular Second
Appeal bearing RSA No. 1367 of 1996. The Learned single Judge of the High
Court, who heard the matter, framed the following substantial question of law -
"Whether the Learned Additional District Judge has misread the evidence on
record while coming to the conclusion that the suit property was benami
property of the plaintiff." The Learned Judge did not dispute the fact that
appellant No. 1 had purchased the suit house out of her money, but he noted
that the office of the Home Guard continued in that property. The Learned Judge
did not give any importance to the notice dated 8.4.1987 being sent under
postal certificate, but held that there was nothing on record to prove that
defendant No.3 had been served with that notice. The Learned Single Judge
therefore, found fault with the finding of the Additional District Judge to the
effect that defendant No. 3 (Respondent No. 1 herein) was not a bonafide purchaser,
and further held that, it amounted to misreading of evidence. The Regular
Second Appeal was therefore, allowed and the judgment and decree of the Addl.
District Judge was set aside.
13.
Being
aggrieved by the judgment and order passed by the High Court this Appeal has
been filed by the appellant. This time, the son of appellantNo.1, the original
defendant No.1 has joined her as appellant No. 2.Mr. Saikrishna Rajagopal,
learned counsel appearing for the appellants pointed out that the order passed
by the High Court does not deal with the law laid down in the judgment of this
Court in R. Rajagopal Reddy case (Supra). The Judgment was binding on the
Learned Judge, and in view thereof the suit filed by the appellant No.1 was not
hit by the prohibition under Section 4 of the Act. He also pointed out that the
appellants as well as the respondent No. 1 were staying in the same area i.e.
College Road, Pathankot, and therefore, the Learned Additional District Judge
was right in his inference that the notice dated8.4.1987 must be presumed to
have been duly served on respondent No. 1 prior to 13.4.1987 when respondent
No. 3 purchased half share of the suit house. He submitted that the appellants
were ready to return the amount of Rs.30,000/-with interest to respondent No. 1
which amount he claims to have paid to respondent No. 2 to purchase his half
share in the property.
14.
As
against this submission of the appellant, Mr. V.K. Monga, learned counsel
appearing for respondent No. 1 repeated the same submissions made in the courts
below, namely, that he was a bonafide purchaser without notice, and that the
original defendant No. 2 had purchased half the share of the suit house from
his money, and from him the respondent No.1 had purchased that share, and
therefore, the present appeal should be dismissed.
15.
We
have noted the submission of the rival parties. As far as the purchase of the
suit house by the appellant No. 1 from her own money is concerned that finding
of the trial court has remained undisturbed all throughout and cannot be
re-opened in this appeal. The appellant No.1 led cogent evidence before the
trial court, and it had been held in her favour that it is out of her funds
that she had purchased the suit house. The submission of the original defendant
no. 2 that he had arranged the amount of Rs. 20,000/- through friendly loans
was negated by the trial court since there was no supporting evidence at all.
There is no reason for us to disturb that finding. Once the High Court held
that the appellant had purchased the suit house out of her funds, it ought to
have held that it follows that the defendant No. 2 had no right to deal with it
or to sell his half share merely because his name was shown as a purchaser
along with the appellant No. 2. Consequently the purchase of the share of the
defendant No. 2 by the respondent No. 1 herein without the consent of the
appellant No. 1 gave him no rights whatsoever. Therefore, the High Court ought
to have held that the suit of appellant No. 1 for declaration of her ownership
to be valid and maintainable.
16.
The
High Court has clearly erred in ignoring the binding judgment of a Bench of
three Judges of this Court in R. Rajagopal Reddy (supra). By this decision,
this Court had reversed its earlier judgment in Mithilesh Kumari (supra)and had
held in terms that suits filed prior to the application of the act would not be
hit by the prohibition under Section 4 of that act. Section 4(1) of the Benami Transactions
(Prohibition) Act 1988 reads as follows:
"Prohibition of
the right to recover property held benami.- (1) No suit, claim or action to
enforce any right in respect of any property held benami against the person in
whose name the property is held or against any other person shall lie by or on behalf
of a person claiming to be the real owner of such property." While
reversing the earlier decision of this Court in Mithilesh Kumari(supra), a bench
of three Judges observed in para 11 of R. Rajagopal Reddy (supra) as follows:- "Before
we deal with these six considerations which weighed with the Division Bench for
taking the view that Section 4 will apply retrospectively in the sense that it
will get telescoped into all pending proceedings, howsoever earlier they might
have been filed, if they were pending at different stages in the hierarchy of the
proceedings even up to this Court, when Section 4 came into operation, it would
be apposite to recapitulate the salient feature of the Act. As seen earlier,
the preamble of the Act itself states that it is an Act to prohibit benami
transactions and the right to recover property held benami, for matters
connected therewith or incidental thereto. Thus it was enacted to efface the
then existing right of the real owners of properties held by others benami.
Such an Act was not given any retrospective effect by the legislature. Even
when we come to Section 4, it is easy to visualise that sub- section (1) of
Section 4 states that no suit, claim or action to enforce any right in respect
of any property held benami against the person in whose name the property is
held or against any other shall lie by or on behalf of a person claiming to be
the real owner of such property. As per Section 4(1) no such suit shall
thenceforth lie to recover the possession of the property held benami by the defendant.
Plaintiff's right to that effect is sought to be taken away and any suit to
enforce such a right after coming into operation of Section 4(1) that is
19-5-1988, shall not lie. The legislature in its wisdom has nowhere provided in
Section 4(1) that no such suit, claim or action pending on the date when
Section 4 came into force shall not be proceeded with and shall stand abated.
On the contrary, clear legislative intention is seen from the words "no
such 11 claim, suit or action shall lie", meaning thereby no such suit,
claim or action shall be permitted to be filed or entertained or admitted to
the portals of any court for seeking such a relief after coming into force of
Section 4(1)." (Emphasis supplied)
17.
In
the impugned judgment, the High Court nowhere refers to the judgment in R.
Rajagopal Reddy's case (supra) although the same was very much referred to and
relied upon by the appellant to counter the contrary submission of the
respondent No. 1. The High Court has therefore, committed a serious error of
law in holding that the Additional District Judge has misread the evidence on
record while coming to the conclusion that the suit property was the Benami
Property of the plaintiff-appellant No.1 herein and that her suit to enforce
the right concerning the same shall not lie. In fact there was no such misreading
of evidence on the part of the first appellate court, and hence there was no
occasion for the High Court to frame such a question of law in view of the
prevailing judgment in R. Rajagopal Reddy which had been rightly followed by
the first appellate court.
18.
The
High Court has held that there is nothing on record to suggest that respondent
No.1 herein had, in fact, been served with the notice dated 8.4.1987and thereby
reversed the finding rendered by the first appellate court. It is material to
note in this behalf that it was canvassed by respondent No.1 before the first
appellate court that a certificate of posting is very easy to procure and it does
not inspire confidence. The Additional District Judge observed that there was
no dispute with this proposition of law, but there was no such averment or even
allegation against appellant No.1 herein, that she had procured the certificate
of posting nor was there any such pleading to that effect. It is on this background
that the first appellate court has drawn the inference that the notice must be
deemed to have been served within the period of five days thereafter i.e.
before 13.4.1987, the date on which the respondent No.1 herein entered into an
agreement to purchase the suit property. It is also material to note that the appellant's
premises are situated on College Road, Pathankot and so also the residence of
the first respondent where the notice was sent. Therefore, there was nothing
wrong in drawing the inference which was permissible under Section114 of the
Evidence Act that such notice must have been duly served in the normal course
of business before 13.4.1987.
19.
We
may fruitfully refer to a few judgments laying down the propositions relating
to service of notice. To begin with, we may note two judgments in the context
of the notice to quit, sent to the tenants under Section106 of the Transfer of
Property Act 1882, though both the judgments are concerning the notices sent by
registered post. Firstly, the judgment in the case of Harihar Banerji Vs.
Ramshashi Roy [AIR 1918 PC 102], wherein the Privy Council quoted with approval
the following observations in Gresham House Estate Co. Vs. Rossa Grande Gold
Mining Co. [1870 Weekly Notes 119] to the following effect:
"..........if a
letter properly directed, containing a notice to quit, is proved to have been
put into the post office, it is presumed that the letter reached its
destination at the proper time according to the regular course of business of
the post office, and was received by the person to whom it was addressed. That
presumption would 13 appear to their Lordships to apply with still greater
force to letters which the sender has taken the precaution to register, and is
not rebutted but strengthened by the fact that a receipt for the letter is produced
signed on behalf of the addressee by some person other than the addressee
himself."
20.
Secondly,
we may refer to the judgment of a Full Bench of the Allahabad High Court in the
case of Ganga Ram Vs. Smt. Phulwati [AIR 1970Allahabad 446], wherein the Court
observed in paragraphs 12 and 13 as follows: "12. When a registered
article or a registered letter is handed over to an accepting or receiving post
office, it is the official duty of the postal authorities to make delivery of
it to the addressee. Human experience shows that except in a few exceptional
cases letters or articles received by the post office are duly, regularly and properly
taken to the addressee. Consequently as a proposition it cannot be disputed
that when a letter is delivered to an accepting or receiving post office it is
reasonably expected that in the normal course it would be delivered to the
addressee. That is the official and the normal function of the post office.
Help can also be
taken from Section 16 of the Indian Evidence Act which reads as follows:- "When
there is a question whether a particular act was done, the existence of any
course of business, according to which it naturally would have been done, is a
relevant fact. Illustrations: (a) The question is, whether a particular letter
was dispatched. The facts that it was the ordinary course of business for all
letters put in a certain place to be carried to the post, and that that particular
letter was put in that place, are relevant. (b) The question is, whether a
particular letter reached A. The facts that it was posted in due course, and
was not returned through the Dead Letter Office, are relevant."
21.
As
far as a notice sent under postal certificate is concerned, in Mst. L.M.S. Ummu
Saleema Vs. B.B. Gujaral & Anr. [1981 (3) SCC 317], a bench of three judges
of this Court on the facts of that case, refused to accept that the notice sent
under a postal certificate by a detenue under the Conservation of Foreign
Exchange and Smuggling Activities Act, 1974, to the Assistant Collector of
Customs, retracting his original statement had been duly served on the
concerned office. This was because the respondent rebutted the submission by
producing their file to show that such a letter had not been received in their
office in the normal course of business. However, the proposition laid down in
that case is relevant for our purpose. This Court observed in paragraph 6 of
that judgment as follows:
"The certificate
of posting might lead to a presumption that a letter addressed to the Assistant
Collector of Customs was posted on August 14, 1980 and in due course reached
the addressee. But, that is only a permissible and not an inevitable presumption.
Neither Section 16 nor Section 114 of the Evidence Act compels the court to
draw a presumption. The presumption may or may not be drawn. On the facts and
circumstances of a case, the court may refuse to draw the presumption. On the
other hand the presumption may be drawn initially but on a consideration of the
evidence the court may hold the presumption rebutted and may arrive at the
conclusion that no letter was received by the addressee or that no letter was
ever dispatched as claimed. After all, there have been cases in the past,
though rare, where postal certificates and even postal seals have been manufactured.
In the circumstances of the present case, circumstances to which we have
already referred, we are satisfied that no such letter of retraction was posted
as claimed by the detenu."
22.
The
proposition laid down in this judgment has been followed in two subsequent
cases coming before this Court in the context of Section 53(2) of the Companies
Act 1956 providing for presumption of service of notice of the board meeting,
sent by post. In M.S. Madhusoodhanan vs. Kerala Kaumudi (P)Ltd. and others
[2004 (9) SCC 204], a bench of two Judges of this Court referred to the
proposition in Mst. L.M.S. Ummu Saleema (supra) in para 117 of its judgment,
and held in the facts of that case, that the notice by postal certificate could
not be presumed to have been effected, since the relations between the parties
were embittered, and the certificate of posting was suspect. As against that,
in a subsequent matter under the same section, in the case of VS Krishnan Vs.
West fort Hi-Tech Hospital Ltd. [2008 (3) SCC 363],another bench of two Judges
referred to the judgment in M.S. Madhusoodhanan(supra), and drew the
presumption in the facts of that case that the notice sent under postal
certificate had been duly served for the purposes of Section 53(2)of the
Companies Act, 1956, since the postal receipt with post office seal had been
produced to prove the service. Thus, it will all depend on the facts of each case
whether the presumption of service of a notice sent under postal certificate should
be drawn. It is true that as observed by the Privy Council in its above referred
judgment, the presumption would apply with greater force to letters which are
sent by registered post, yet, when facts so justify, such a presumption is
expected to be drawn even in the case of a letter sent under postal
certificate.
23.
Having
seen the factual and the legal position, we may note that in the present case
it has already been established that the appellant had purchased the property
out of her own funds. Therefore, it could certainly be expected that when she
came to know about the clandestine sale of her property to respondent No.1, she
would send him a notice, which she sent on 8.4.1987. As noted earlier, the
notice is sent from one house on the College Road to another house on the same
road in the city of Pathankot. The agreement of purchase is signed by the
defendant No.3 five days thereafter i.e. 13.4.1987. The appellant had produced
a copy of the notice along with postal certificate in evidence. There was no
allegation that the postal certificate was procured. In the circumstances, it
could certainly be presumed that the notice was duly served on respondent No.1
before 13.4.1987. The High Court, therefore, erred in interfering in the
finding rendered by the Additional District Judge that respondent No.1 did
receive the notice and, therefore, was not a bona fide purchaser for value
without a notice.
24.
The
judgment of the High Court, therefore, deserves to be set aside. The appellants
through their counsel have, however, in all fairness offered to compensate the
first respondent herein by paying him the amount of Rs. 30,000/- with
appropriate interest. The first respondent did not evince any interest in this
suggestion. Yet, the end of justice will be met, if this amount of Rs. 30,000/-
is returned by the appellants to him as offered by them with simple interest at
the rate of 10%.
25.
In
the circumstances this appeal is allowed. The Judgment and order dated
10.2.2009 passed by the High court in R.S.A No. 1367 of 1996 and that of the
Sub-Judge, Pathankot in Civil Suit No. 138 of 1987 dated 3.10.1991are set
aside. The judgment and order dated 22.2.1996 passed by Addl. District.Judge,
Gurdaspur in Civil Appeal No. 203 of 1991 is confirmed. The suit filed bythe
appellant No.1 bearing Civil Suit No. 138 of 1987 is decreed and it is declared
that the appellant No. 1 is the owner of the suit house. There shall be a permanent
injunction restraining the defendants from alienating any part of the suit
house and forcibly interfering into the possession of the plaintiff of the
house in dispute. In view of the offer given by the appellants to compensate
the first respondent, the appellants shall pay him the amount of Rs. 30,000/-(Rupees
thirty thousand only), with simple interest at the rate of 10% for the period
from13.4.1987 till the decision of the first appellate court i.e. 22.2.1996,
within twelve weeks from today, though it is up to the respondent No. 1 to
receive the amount. The interest is restricted upto 22.2.1996 for the reason
that respondentNo.1 ought to have accepted the decision of the First Appellate
Court, particularly in view of the judgment of this Court in R. Rajagopal Reddy
(supra),and should not have dragged the appellants to the High Court in Second
appeal.
26.
The
first respondent will pay a cost of Rs. 10,000/- to the 1 st appellant for this
appeal.
........................................J.
( Dalveer Bhandari )
.........................................J.(
H.L. Gokhale )
New
Delhi
Dated:
January 21, 2011
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