Asoke Chandra Mazumdar vs Chota Nagpur Banking Association Ltd.

Mukherji, J.—In this second appeal one of the defendants is the appellant. The original judgment which is of the year 1939 was passed by the Additional Subordinate Judge of Palamau. The suit was decreed and there was an appeal to the Judicial Commissioner of Ranchi. The appeal was dismissed and dismissal of the appeal led to a second appeal to this Court. The second appeal (78 of 1943) was heard by Varma J. and my learned brother. Their Lordships by their order dated 10-2-1944 set aside the judgment and decree of the lower appellate Court and sent back the appeal to be reheard. The learned Judicial Commissioner of Ranchi has again dismissed the appeal.

The facts of the case have been elaborately stated in the judgment of the trial Court as also of the appellate Court. They may be stated within a brief compass as follows: Defendant 2 Kshirode Chandra Mazumdar is the uncle of defendant 1, Asoke Chandra Mazumdar, the present appellant. Probodh Chandra Mazumdar, father of Asoke Chandra Mazumdar, is an elder brother of Kshirode Chandra Mazumdar. Defendant 2 was a contractor working under the Daltongunj Municipality and the District Board of Palamau. The plaintiff-bank (The Chotanagpur Banking Association Ltd.) has its head office at Hazaribagh and a branch office at Daltongunj. Kshirode Babu took loans from the plaintiff off and on. His business apparently did not flourish and he became more and more indebted to the plaintiff-bank. About the year 1932, Kshirode Babu''s financial condition became very bad indeed. His liabilities to the Bank came to Rs. 14,000 or so. The Bank had to bring a suit to recover its dues and the suit was decreed on 24-11-1983. In the execution proceedings a house of the judgment-debtor situate in Nayatoli, a mahalla of Daltongunj town was attached. Defendant 1, Asoke Chandra Mazumdar claimed the house and his claim was allowed. The Bank then had no alternative but to file a suit under Order 21, Rule 63, Civil P.C. This was title Suit No. 6 of 1938. The suit was contested by defendant 1 Asoke Chandra Mazumdar alone. His defence was that defendant 2 transferred the house in question to him in consideration of certain sums of money which defendant 1''s parents had advanced to defendant 2. Defendant 1 also claimed to be in possession of the house and to have effected improvement to it.

The learned Subordinate Judge who tried the suit framed seven issues of which issue 4 was as follows:

Is the purchase of the house in suit by defendant 1 for valid consideration, or is the transaction a mere benami or collusive one? Is defendant 1 in possession and enjoyment of the property?

After considering the evidence and circumstances, the learned Additional Subordinate Judge came to the finding that the sale in favour of defendant 1 was a benami transaction. As indicated in an earlier portion of this judgment, the First Appellate Court conourred with the trial Court in its findings and dismissed the appeal. In second appeal, it was considered necessary to remand the appeal because the learned Judicial Commissioner who heard the appeal wrongly placed the onus upon the present appellant. The appellant being the vendee and there being already a decision of a competent Court in his favour, the onus was certainly not on him to prove that the transaction was not benami in character. It was for the plaintiff Bank to establish that the apparent was not the real state of things.

Before I proceed further, I may state a few facts regarding the consideration of the sale-deed in favour of the present appellant. The sale-deed which is dated 15-8-1932 is a registered document and the consideration is Es. 5000. According to the recitals in the sale deed (EX. A) defendant 2, the vendor, had borrowed Rupees 3546-1-6 and two further sums of Rs. 166740-2 and Rs. 1000 from the parents of the present appellant. Both the father and the mother of the appellant had accounts in Banks and the evidence on record goes to show that the three sums of money just referred to were received by defendant 2 through Bank. Two out of these three sums, namely, Rs. 3546-1-6 and Rs. 1637-10-2 relate to the years 1927 and 1928. Admittedly they were barred by limitation in the year 1982 when the sale deed Ex. A was executed. The sum of Rs. 1000 however, was not barred. In the order of remand already mentioned, it was pointed out that even barred debts could be good consideration for a sale deed. The learned Judicial Commissioner who heard the appeal after the order of remand was inclined to think that the sum of Rs. 1000 was paid by the father of appellant to defendant 2, his own brother, by way of gift. Defendant 2 had to marry a daughter and as his financial condition was none too-good, the learned Judicial Commissioner inferred that the amount was paid by his elder brother to enable him to meet the necessary expenses in connection with the marriage. So far as the two more substantial items, namely, Rs. 3546-1-6 and Rs. 1667-10-2 are concerned, the learned Judicial; Commissioner has observed that there is no evidence to show that they There advanced as loans. At more than one place in his judgment he has commented on the absence of Probodh Babu and Kshirode Babu from the witness-box. His comment is that they are the persons who could have explained the circumstances in which the alleged loans were advanced. The learned Judicial Commissioner was not inclined to attach much importance to the evidence of the appellant on the ground that in 1927-28 he was nothing more than a callow young man. It is not the finding of the trial Court or of the first appellate Court that none of the three items of money were received by defendant 2. In fact in view of the documents on the record such a finding was not possible. The learned Judicial Commissioner who heard the appeal on remand has more than once in his judgment observed that it is possible that the father of the appellant who was a Deputy Magistrate had a share in the business carried on by defendant 2 and that the sums advanced by him represented his share of the capital in the business. This is surmise pure and Simple. A Court of justice should not draw inference which are unwarranted by evidence on record. In the present case such an inference was all the more undesirable because the person against whom it was drawn was not a party to the suit. He was not even a witness. The inference, as one can plainly see, affected the integrity of Probodh Babu as a Government servant and this was another reason why the learned lower Court should have been more cautious in the matter. It is true, law is no respecter of persons, but at the same time Courts of justice should remember that no person should be injured behind his back.

On behalf of the appellant it has been contended that the learned Judicial Commissioner again wrongly placed the onus on the appellant to prove that the amounts advanced by his parents to Kshirode Babu were in the nature of loans. From what has been stated above, it will be seen that the order of remand was necessary because the former Judicial Commissioner who had heard the previous appeal had wrongly thrown the onus on the appellant to show that the sale deed was for consideration. In my opinion there is some force in the contention of the learned advocate for the appellant that the game mistake has been committed again. At page 62 of the paper-book, the learned first appellate Court has observed that one seeks in vain for evidence that the amounts advanced by the parents of the appellant were loans, it is with regard to the amount of Rs. 1000/- that the learned Judicial Commissioner has recorded a definite finding that it must have been a gift. So far as the other two amounts are concerned, there is no such clear finding. The learned Judicial Commissioner appears to have been under the impression that there is no evidence to prove that the amounts were advanced as loans; it should be taken that they were paid either as gift or as capital for the supposed interest of the parents of the appellant in the business which was being carried on by Kshirode Babu. The order of remand made it sufficiently clear that the onus was upon the plaintiff-respondent to prove that the sale deed was without consideration. I may refer to page 48 of the paper book where my learned brother observed as follows;

in my opinion the judgments of the Courts below have proceeded upon an erroneous assumption and inferences wrongly drawn against the appellant from non-examination of certain witnesses when the burden of proof lay entirely on the plaintiff to prove positively that the transaction was a mere sham.

At page 47 of the paper-book occur the following observation.

Hence in ray opinion, there was the treble onus on the plaintiff in this case, to prove to the satisfaction of the Court that the sale deed in his favour was a mere sham. In such a situation the ones must lie very heavily on the plaintiff to prove that the transaction was a benami one.

The sale deed in question was apparently for good consideration if the amounts advanced in this case can be treated as loans. It was for the plaintiff, respondent to prove that they were not loans. The learned Judicial Commissioner in his judgment has referred to certain circumstances and from them has come to the conclusion that in all probability the advances were not loans. The judgment does not indicate that the learned Judicial Commissioner placed the onus on the plaintiff-respondent and examined the evidence and circumstances in that light.

Mr. B.C. De arguing for the plaintiff-respondent has contended that the whole question before the first appellate Court was whether the sale deed embodies a genuine or a sham transaction and that the finding being one of fact cannot be challenged in second appeal I am inclined to think that for the reason stated in the foregoing paragraph of this judgment the contention of Mr. De has no force. The onus of proof was wrongly placed on the appellant and therefore this Court is quite competent to interfere in second appeal.

On behalf of the appellant it has been argued that all advances of money are to be treated as loans whether or not there is any written or implied contract between the parties. There is no direct authority on this point. There is, however, a case reported in Sinclair v. Brougham 1914 A.C. 398 in which certain principles have been laid down and I am inclined to think that these principles govern a case like the present one. The House of Lords case has also been referred to in Bhagwati Saran Singh Vs. Bai Kishunji, . In Sinclair v. Brorgham 1914 A.C. 398, a certain Society was formed in England under the Building Societies Act. The Society was empowered by its rules to borrow to an unlimited extent and it started and developed a banking business. The Society which was formed in 1851 was ordered to be wound up in 1911. When the question of distribution of assets came up for consideration, it was found that the society had no legal authority to carry on banking business. It was held that the depositors were entitled to recover monies paid by them although the carrying on of the banking business was declared to be ultra vires. The Patna case was one under the Revenue Sales Act. u/s 81 of the Act certain surplus sale proceeds were paid by the Collector to persons entered in the Collector''s register. The estate had already been sold and purchased by another person. When the rightful owner brought a suit to recover the surplus sale proceeds, a Division Bench of this Court held that such a suit was maintainable. In the course of the judgment their Lordships referred to the case in Sinclair v. Brougham 1914 A.C. 398 already mentioned and. quoted the following few lines from the speech of Lord Haldane delivered in that case;

In its origin an action of tort, it was soon transformed into an action of contract, becoming afterwards a remedy where there was neither tort nor contract. Based at first only upon an express promise, it was afterwards supported upon an implied promise, and even upon a fictitious promise. Introduced as a special manifestation of the action on the case, it soon acquired the dignity of a distinct form of action, which superseded debt, became concurrent with account, with case upon a bailment, a warrantee and bills of exchange and competed with equity in the case of the essentially equitable quasi-contracts growing out of the principle of unjust enrichment.

Although the facts of the reported cases are different from those of the present case, the guiding principle in both the cases must be the same, namely, that where money has been paid, it must either be repaid or properly accounted for. An advance by one brother to another should stand on the same footing as an advance made by one person to another who is wholly unconnected with him. There is no presumption in law that an advance by a brother to another brother is a gift. Where a brother is the creditor, he may not sue the debtor brother, particularly where, as in the present case, the latter is in straitened circumstances.

As already stated above, the learned Judicial Commissioner has referred to a number of circumstances and has drawn his conclusion there from. Apparently the relationship between the parties considerably weighed with him. Another fact also seriously considered by him is that Kshirode Babu observed close secrecy regarding the execution of the sale deed and did not disclose anything about the transaction to the plaintiff Bank. The fact that Kshirode Babu did not vacate the house in question also weighed with the learned first appellate Court. The learned Judicial Commissioner also seriously thought that out of the three, two debts had already become barred.

All these circumstances are capable of being satisfactorily explained away. As pointed out in the order of remand a debtor may prefer one creditor to another. As regards possession, the evidence is that not only Kshirode Babu but some of the other members of the family of the appellant also lived in the house. Where the minority transaction is between two brothers, rarely if ever the creditor brother will behave like a Shylock who must have his pound of flesh. If after the sale of the house Kshirode Babu who was already a broken man was allowed to live in the house, it is something one can very well understand The father of the appellant had to take another house because he was re-called to service and he wanted a house where he could also locate his office. These are all facts which one can gather from the record. I am referring to the evidence in this cam because already there has been a remand and any further remand will be expensive for the parties. While dealing with the attendant circumstances of the case, the learned lower Court has observed that both Probodh Babu and his wife (the parents of the appellant) had natural affection for Kshirode Babu. This is apt quite correct. Probodh Babu may have natural affection for his brother but his wife would have no natural affection for her brother-in-law because there can be no natural ties between the two.

The learned Judicial Commissioner did not refer to the proceedings of the parties on the question as to whether the amounts were advanced as loans. There is nothing within the four corners of the plaint to show that the advances were not loans. It would appear that the plaintiff respondent knew about the sale deed before the institution of the suit in the sale deed there is a clear recital about the three items of advances. Yet one finds that it is nowhere stated, in the plaint that these advances were really not made or that they were made by way of gift. In the evidence also, the two witnesses for the plaintiff examined in this case did not say a word to show or suggest that there were no loans.

The learned Judicial Commissioner himself also appears to have felt that the evidence and circumstances are not sufficient to justify a conclusion that the amounts in question were paid as gifts. This is undoubtedly the reason why he has evolved a third theory that perhaps Probodh Babu had a share in Kshirode Babu''s business and the amounts advanced represented Probodh Babu''s capital investment.

Upon a consideration of the evidence on record and the attendant circumstances, I am of opinion that at least two of the advances, namely, those of Bs. 3546 odd and Rs. 1667 odd were loans taken by Kshirode Babu from the parents of the appellant. These two make up a total of over Bs. 5000 and the sale deed in question is for RS. 5000. We may leave out the item of Rs. 1000 because as already pointed out there is a definite finding of the learned lower Court that this amount must have been paid as a gift.

The appeal, therefore, succeeds and it is allowed with costs throughout.

Sinha, J.

While delivering the judgment of this Court on the previous occasion set-ting aside the judgment of the lower appellate Court and remanding the case for a fresh decision, I pointed out that the plaintiff company had a very heavy burden on it of proving that the transaction impugned was a mere sham. It should be remembered that the case made out in the plaint by the plaintiff company was that the transaction was a mere nominal one without any consideration. The defendant was the successful claimant in a proceeding under Order 21, Rule 58, Civil P.C. He had succeeded in his claim based on the sale deed in question. That sale deed disclosed three items of consideration. It was not alleged in the plaint either that these were sums advanced to Kshirode Babu by his brother or his brother''s wife on account of the capital in the joint venture of the two brothers or that those items, or any one of them, represented a mere gift by one brother to another brother, or, as the case may be, by the brother''s wife to the brother, in-law, and that is a reason why the learned Judicial Commissioner on the first occasion came to the conclusion that all those items of consideration were fictitious in the sense that there were absolutely no monetary dealings between the two brothers. After remand, the lower appellate Count has conjectured, as I can see from its judgment, that either these sums represented gifts to Khirode Babu or contributions of capital in a joint venture of the two brothers. No tangible evidence was pointed out to us for such findings. Hence it is clear that these findings are not bindings upon us in second appeal. If there were tangible evidence, and not what has been characterized as circum. stances, in support of the conclusion that those items mentioned in the sale deed were either acts of gift or contribution to the joint funds of a partnership business, the finding would have been unassailable in second appeal. But it appears that no foundation was laid in the pleadings or even in the evidence for such conclusions which must be characterized as mere guess work. Though benami transactions are common in this country, it has been repeatedly pointed out by their Lordships of the Judicial committee that findings of benami must be based on tangible evidence, and not on mere suspicion, however strong. The judgment of the lower appellate Court suffers from another infirmity in so far as it has in effect again thrown the onus of proof on the defendant to prove that the transaction, on the basis of which his claim had been allowed by the executing Court, was a real transaction.

In view of these considerations, it must be held that the judgment of the lower appellate Court is vitiated in so far as it has come to a finding that the sale deed was not real transaction. I would, therefore, agree with my learned brother that the appeal should be allowed and the suit dismissed with costs throughout including costs of the two hearings of the appeal in the Court below and in this Court.