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Judgment
S.V. Maruthi, J.—The plaintiff is the appellant. The suit is filed for a declaration that the decree obtained by the second defendant namely T. Yasodaratnam against the first defendant namely T. Sundara Satyanarayana in O.S.No. 108/71 on the file of II Addl. Sub-Court, Vijayawada and the consequent execution proceedings in E.P.N0. 21/72 are collusive, sham, nominal, fradulent, illegal, void and not binding on the plaintiff and for a permanent injunction restraining the third defendant namely V. Rama Tulasamma from proceeding with execution proceedings in E.P.N0. 74/74 in O.S.No. 1319/73 on the file of the District Munsif''s Court, Vijayawada and for costs of the suit.
The averments in the plaint are as follows: The second defendant is the wife of the first defendant The first defendant borrowed a sum of Rs. 2,500/-on 4-4-1966; Rs. 27,500/- on 5-4-1966 and Rs. 1,550/- on 5-8-1968 from the plaintiff and executed pronotes agreeing to pay interest at the rate of Rs. 12%, 15% and 12% respectively. The said amounts were borrowed for the purpose of filing a suit against Smt. Pandiri Sakuntalamma, wife of Kanakaratnam and for purpose of depositing necessary stamp and registration expenses in the suit. Towards the debt due under the above three pronotes, the first defendant paid sum of Rs. 100/- on 4-4-66 and Rs. 500/- on 5-4-66 and made endorsements of payments on the respective pronotes. The amounts paid were from out of consideration of Rs. 1,550/- borrowed by the first defendant under the third pronote. Since, the first defendant did not pay the amount, the plaintiff issued a notice on 17-3-1969 to which the first defendant issued a reply notice through their counsel Pitchaiah on 2-4-1969 admitting the debt and setting up an agreement to sell his vacant site at Rs. 250/- per sq.yd. to discharge the amount due. Since the agreement did not fructify, the plaintiff issued another notice on 28-9-1970. The first defendant having received the notice did not honour the agreement. Therefore, the plaintiff filed a suit O.S.No. 263/70 on the file of the II Addl. Sub-Judge, Vijayawada against the first defendant as manager of his joint family on 15-10-1970 for recovery of the said pronote debts. The first defendant filed his appearance but, however, dragged the matter. An ex parte decree was passed on 28-7-1972. Immediately thereafter, the first defendant filed I.A.No. 3602/72 to set aside the ex parte decree and it was accordingly set aside on 5-7-1973. However, he remained ex parte again. Therefore, on 1-9-1973 an ex parte decree was passed against him second time. Pending disposal of the suit, the plaintiff got interim attachment of the plaint schedule property which was made absolute on 27-7-1971. Meanwhile, the second defendant filed a suit against the first defendant for recovery of Rs. 20,000/- under a pronote dated 1-4-1966 alleged to have been executed by the first defendant. The said pronote was ante-dated and brought into existence subsequently. The suit was numbered as O.S.No. 108/71 and it was filed on 20-3-1971. The first defendant and his minor son as defendant No. 7 filed written statement consenting for a decree. Accordingly, a decree was passed on 2-4-1971. in execution of that decree, the second defendant filed I.A.No. 987/71 on 25-3-1971 and attachment was made absolute on 2-4-71. Thereafter, she filed E.P.No. 21/72 op 5-1-1972 and got the property sold through Court on 14-9-1972. The second defendant purchased the property in the Court sale in the capacity as a decree-holder. The execution of pronote by the first defendant in favour of the second defendant is not supported by consideration as the second defendant did not have any capacity to lend. Secondly, the speed with which the suit filed was decreed establishes that the suit was a collusive suit filed to defraud the plaintiff. The first and second defendants played fraud on the Court. Since that suit followed by decree and consequent execution proceedings in O.S.No. 108/71 are collusive, sham, fradulent, nominal and illegal, they are void. The second defendant who purchased the property on 14-9-1972 and obtained symbolical delivery on 6-12-1972 filed O.P.No. 58/72 on the file of II Addl. Sub-Court, Vijayawada on 17-2-72 representing herself to be a pauper and continued as such till 4-4-1974. The very fact that she filed O.P. No. 58/72 inform pauperis indicates that the second defendant did not have any means to advance a huge amount like Rs. 20,000/- and that too to her husband the first defendant. According to the second defendant, she sold the gold jewellery and out of the sale proceeds she has advanced the amount of Rs. 20,000/ - which is false.
The third defendant filed another suit against the second defendant in O.S.No. 1319/73 on the file of District Munsif''s Court, Vijayawada and obtained a decree fradulently against the second defendant. In furtherance of the said decree, the schedule property was brought to sale once again in E.P.No. 74/74 in O.S.No. 1319/73 on the file of the District Munsif''s Court, Vijayawada. The said debt, decree and the execution proceedings in E.F.No. 74/74 in O.S. No. 1319/73 of the said Court are also sham, collusive, nominal, fradulent illegal and void. The plaintiff got the sale averted by filing a petition in the said E.P.No. 74/74 u/s 47 CPC in E.A.No. 1261/74 and the same is pending. Therefore, the plaintiff filed the present suit for declaration that the debt decree and sale in O.S.No. 108/71 and E.P.No. 21/72 on the file of II Addl.. Sub-Court, Vijayawada are collusive, sham, nominal, fradulent, inoperative and illegal and they are not binding against the plaintiff.
The plaintiff is also seeking for a permanent injunction restraining the third defendant to sell his house in Ramgopal Street of Vijayawada Municipality in pursuance of the decree said to have been obtained by her against the second defendant as the decree and sale obtained by the second defendant against the first defendant is sham, nominal, collusive, fradulent, void etc.
The first defendant filed a written statement contending that he has not borrowed monies on the dates mentioned in the plaint and he denied other allegations. He stated that the pronote dated 1-4-1966 by the first defendant in favour of the second defendant is supported by consideration and that it is not ante-dated. He also denied the allegation that he managed to get the decree passed against him by his wife namely the second defendant. The proceedings namely the suit and the decree and the execution are not collusive and the suit is liable to be dismissed.
The second defendant filed a written statement contending that the suit is not maintainable and that she is not aware of the borrowings nor execution of the pronotes dated 4-4-1966, 5-4-1966 and 5-8-1968 by the first defendant in favour of the plaintiff. The plaintiff is no other than the junior paternal uncle of the first defendant She doubts the genuineness and validity of the said three pronotes and as such the plaintiff is not a bona fide creditor. The suit is not bona fide and she is not a party to the suit in O.S.No. 263/70 filed by the plaintiff. The said suit is collusive between the plaintiff and the first defendant. The purpose of filing the said suit O.S.No. 263/70 is known only to the plaintiff and the first defendant and none else. The plaintiff is well aware of the loose, vagabond and dissolute life of the first defendant, his family affairs and the way in which the first defendant is leading his life eversince the death of his father, late Bala Krishna Rao, who is the eldest brother of the plaintiff. The prohote executed by the first defendant in favour of this defendant is real and genuine and the cash paid thereunder is out of the sale proceeds of jewellery and there is nothing wrong in obtaining the pronote from her husband (D-1) to safeguard her money advanced and in the interest of her minor son and daughters who were all under the custody and management of this defendant. The suit filed by her is neither collusive nor fradulent. In the execution proceedings namely in E.P.No. 21/72 the property was sold and she purchased the same and the same was confirmed on 23-10-1972 and sale certificate was issued in her favour. This defendant used to pay the property tax etc. She denied that any fraud is played on the Court. She also stated that the relationship between the first defendant and the second defendant and the quick disposal of the suit or the execution proceedings cannot be a ground either for collusion or for fraud.
The third defendant also filed a written statement and it is not necessary at this stage to refer to the averments.
The second defendant died subsequently and defendants 4 to 7 have been impleaded as legal representatives of the deceased second defendant, who filed a memo adopting the written statement of the second defendant They have also filed additional written statement as per orders in LA.No. 3651/78. The averments in the additional written statement are that the plaintiff is not a party to O.S.No. 108/71 on the file of the II Addl. Sub-Court, Vijayawada and no decree was either prayed or passed against him. Therefore, the plaintiff is not entitled to ask for declaration that the decree is fraudulent or collusive or otherwise void or for cancellation of the same. The suit is barred by limitation.
The plaintiff also filed a rejoinder to the additional written statement contending that the suit is not barred by limitation and that it is not necessary to initiate any proceedings either under Order 21 Rule 58 or under Order 21 Rule 63 C.P.C.
The plaintiff examined himself as P.W.1 and filed Exs. A-1 to A-23 whereas the defendants examined 5th defendant as D.W.2 (daughter of the second defendant) and marked Exs. B-1 to B-39. The trial Court framed as many as 15 issues. Amongst the others the following are relevant issues:
Whether the plaintiff is not entitled to question the various proceedings and the confirmation of sale held in E.P.No. 21/72 in O.S.No. 108/71 on the file of Sub-Court, Vijayawada.
Whether the decree in O.S.No. 263/70 on the file of the Sub-Court. Vijayawada is vitiated by fraud and collusion between the plaintiff and the first defendant herein.
Whether the suit is barred by limitation.
Whether the plaintiff is entitled to the relief of declaration prayed for.
Additional issue: whether the suit is not maintainable in the present form.
Addl.Issue: Whether the plaintiffis enjoyed to establish the truth of the pronotes which are the subject matter of O.S.No. 263/70 and if not, whether the suit is not maintainable on that ground.
Addl. Issue: Whether the decree in O.S.No. 108/71 and the proceedings in E.P.No. 21/72 are fraudulent, collusive and invalid.
The learned Sub-Judge dismissed the suit on the ground that the suit in O.S .No. 263/70 is collusive between the plaintiff and the first defendant and that the suit filed by the second defendant against the first defendant is not collusive and that the suit is barred by limitation. He also held that the suit as filed is not maintainable, against which the present appeal is filed.
Before considering the issues that arose for consideration, it is necessary to refer to the origin of the litigation: One satyanarayana Rao had three sons namely Balakrishna Rao, Viswanadham and Venkateswara Rao. (plaintiff in the suit). Balakrishna Rao has two sons. The first defendant is one son and other son is Narasimha Rao. The second defendant is the wife of the first defendant and 7th defendant is their son. At the time when the litigation arose, the 7th defendant was a minor. There was partition between the sons of Satyanarayana in the year 1961 under Ex. B-7 dated 2-5-1961, that partition was between the first defendant and his brother and mother. To the deed of partition, the plaintiff was one of the attestors. A-schedule properties consisting of three items namely, 260 sq.yds of site, building in Ramgopal Street and a tiled house, fell to the share of the first defendant. In the partition deed it is mentioned that the gold jewellery belonging to the brothers was already divided on 22-5-1965, there was partition between the first defendant and his son under which the site consisting of 260 sq. yds was allotted to the first defendant and tiled house allotted to his son. By the time partition was executed under Ex.B-8, the first defendant sold the building in Ramgopal street in favour of Pandiri Shakunthalamma on 7th April, 1965 and on the very same day he obtained an agreement of reconveyance. After the partition deed was executed under Ex. B-8 on 22-5-1965, the first defendant on 26th May, 1965 executed a settlement deed namely Ex. B-9 for suit site which fell to his share under the partition in favour of his wife the second defendant. To this document, the plaintiff was one of the Attestors.
Since the first defendant sold the building in Ramgopal street in favour of Pandiri Shakunthalamma with agreement of reconveyance on 7-4-1965 and since the said Shakunthalamma did not perform her part of the contract by re-conveying the property, the first defendant and his minor son (D-7) filed a suit in O.S.No. 78/66 against Shakunthalamma for specific performance of the agreement of sale. The suit was decreed on 4-10-1966 and it is marked as Ex. B-18. The said Shakunthalamma filed an appeal in the High Court in A.S. No. 474/1988. Before that Shakunthalamma executed a sale deed in favour of the first defendant under Ex. B-19 on 30-3-1968 in pursuance of the decree in O.S.No. 78/66. On 14th September, 1970 A-S.No. 474/88 was compromised. Shakunthalamma filed E.P.N0. 153/73 in O.S.No. 78/66 to recover unpaid purchase money due under the compromise decree against the first defendant and his minor son. On 24-4-1975, she brought the property to sale in execution of the decree for recovery of unpaid purchase money and one M. Chalapathi Rao purchased the property in the Court auction. On 30-6-1975, the second defendant filed E.A.No. 839/75 to set aside the sale on the ground that the property was already sold and delivered to her in execution of the decree in O.S.No. 108/71. The said E.A. was dismissed on 30-6-1975. The legal-representatives of the second defendant filed C.M.A.No. 734/78. On 6-8-1982 the C.M.A.No.734/78 was dismissed. The said judgment is reported in 1982(2) A.P.L.J.256. The first defendant and his son filed E.A. No. 1273/82 under order 34 Rule-5 CPC to set aside the sale. The said E.A. was dismissed. The first defendant and his minor son carried the matter in CRP No. 3183 /85 to the High Court. The High Court by its judgment dated 5-8-86 allowed the same. On appeal to the Supreme Court, the Supreme Court confirmed the order of the High Court on 25-2-92 and the sale held on 24-4-75 in favour of M. Chalapathi Rao was set aside.
From the above narration of facts it emerges that the sale in favour of Chalapathi Rao was set aside on an application filed by the first defendant and his minor son perhaps on depositing the sale warrant amount/costs. What is the effect of the order i.e. setting aside the sale in favour of Chalapathi Rao it is not necessary to consider at this stage.
As pointed out in the earlier paragraph in the suit filed by the first defendant against Shakunthalamma in O.S.No. 78/66, the first defendant had to deposit an amount of Rs. 27,500/- towards purchase money. Since he could not raise that amount, he borrowed the same under Exs. B-10, B-11, and B-12 pronotes dated 4-4-1966, 5-4-1966 and 5-8-1968. The amount that is borrowed is Rs. 2,500/- Rs. 27,500/- and Rs. 1,550/- respectively from the plaintiff. Since the first defendant did not pay the amounts in spite of demand, the plaintiff issued a notice on 17-3-1965 under Ex. B-2. The first defendant gave reply on 24-4-1969. In the notice he admitted the borrowings under the three pronotes and the endorsement of payment as correct. In addition to admitting the borrowings, he set up an agreement stating that the understanding was that the plaintiff should help the first defendant in the litigation and collect the amounts with stipulated interest either from the Court if the suit fails or by the purchase of the site near Hindu High School at a rate less Rs. 250/- man the market rate by the end of 1970 whichever was earlier. In the reply he reiterated the said the said understanding. However, since the first defendant did not pay the amount, the plaintiff issued a second notice under Ex. 6-3 dated 28-9-1970. Since there was no response from the defendant (D-1), he filed O.S.No. 263/70 on 15th October, 1970 under Ex. B-13 against the first defendant On 15th October, 1970 itself the plaintiff obtained attachment before judgment under Exs. A-11 and A-13. By virtue of this attachment order before judgment, items 1 and 2 namely site and building in Ramgopal street were attached. On 28th July,1972 ex parte decree was passed in O.S.No. 263/70. It is Ex. A-18. On 5th July, 1973 the ex parte decree was set aside on a petition filed by the first defendant. On 1-9-1973 again the suit in O.S.No. 263/70 was decreed ex parte under Ex. A-19.
Meanwhile the second defendant filed O.S.No. 108/71 against the first defendant on the basis of a pronote executed by the first defendant in her favour for an amount of Rs. 20,000/- on 20-3-1971. On 2-4-1971 a consent letter was filed by the first defendant and his minor agreeing for a decree to be passed against them. The said decree was marked as Ex. A-15. On 5-1-1972 the first defendant filed EP.No. 21/72 under Ex. A-16. On 14-9-1972 the property was sold and the second defendant purchased the same with the permission of the Court. On 23-10-1972, the sale was confirmed and the sale certificate was issued to the second defendant. On 6-12-1972 the second defendant obtained delivery of possession.
It follows from the above that the first defendant and his minor son D-7 filed a suit against Shakunthalamma for specific performance of the agreement in O.S.No. 78/66 and in that suit, he had to deposit an amount of Rs. 27,500/-and the genesis for the litigation is this suit. Since the first defendant did not have the money, he had to borrow. The case of the plaintiff is that he advanced monies on the pronotes under Exs. B-10, B-11 and B-12 dated 4-4-1966, 5-4-1966 and 5-8-1968, whereas the second defendant says that she advanced Rs. 20,000/ - by selling jewellery and contends that she had advanced the money for purpose of depositing in the suit O.S.No. 78/1996. The plaintiff filed O.S. No. 263/70 on 15-10-1970 for realisation of the amounts covered under Exs. B-10, B-11 and B-12 whereas the second defendant filed the suit for realisation of Rs. 20,000/- advanced by her on 20-3-1971 in O.S.No. 108/71. Admittedly, the suit filed by the plaintiff is earlier to the suit filed by the second defendant. Further, the plaintiff also attached the properties namely items 1 and 2 under Exs. A-11 and A-13 dated 15-10-1970 and 16-10-1970. Therefore, the first question that arises for consideration is whether the suit O.S.No. 263 /1970 filed by the plaintiff is vitiated by fraud and collusion between the plaintiff and the first defendant. If the finding is mat the suit is vitiated by fraud and collusion, the appeal filed by the plaintiff stands dismissed. But, if the suit filed by the second defendant O.S.No. 108/71 is vitiated on account of fraud and collusion, then the plaintiff''s suit has to be decreed subject to other issues being found in his favour and the second defendant does not get any right in the property covered by the attachment orders in Ex. A-13 namely item No. 2 i.e. building in Ramgopal street.
The plaintiff in support of his case that the first defendant borrowed the amounts, covered by three pronotes relied on the reply under Ex. A-23 issued by the first defendant, the account books under Exs. A-1 to A-10. Before considering the evidence on behalf of the plaintiff, i.e. Ex.A-23 and Exs. A-1 to A-10, it is necessary to consider Ex. B-18 judgment in O.S.No. 78/66 filed by the second defendant in O.S.No. 78/66. The first defendant and the plaintiff in the present suit were examined as P.W.1 and P.W.3. The relevant portion of the deposition of P.W.1 and P.W.3 are as follows: P.W.1 stated that.
"He stated that he intimated the first defendant for the first time on 10-3-1966 by means of notice that he was ready with the money and that by 15-3-1966 his paternal uncle Venkateswara Rao advanced him Rs. 27,500/- He claimed to have borrowed the said amount from Venkateswara Rao under a pronote. He denied the suggestion that he did not borrow from Venkateswara Rao and that was the reason why the amount was not deposited in the Bank in his name. He claimed that he and Venkateswara Rao went about a week before the first registered notice dated 10-3-1966 issued by him to the first defendant''s house taking with him Rs. 25,000/-and tendered it to the first defendant and at that time first defendant and her husband were present."
"Headmitted having given Rs. 2,000/- to his advocate even on 1-4-1966 for filing the suit. According to him he borrowed that amount also from his paternal uncle Venkateswara Rao under a pronote."
P.W.3 who is the plaintiff in the present suit corroborate the evidence of P.W.1 namely the first defendant in the present suit. P.W.3 stated that:
"He accommodated P.W.1 by advancing Rs. 27,500/-, that the said amount was deposited In short term deposit with Bank of Baroda, that P.W.1 intimated the first defendant his being ready with the necessary funds to obtain a reconveyance from the first defendant and that he P.W.1, P.W.2 and Gandrapadu Satyanarayana went to the Sub-Registrar''s office at 11a.m. on 6-4-1966--------
"He corroborated P.W.1 that Rs.2,000/- was deposited in the State Bank under Sub-treasury challan for the stamps."
He stated that he obtained promissory note from P.W.1 on 15-3-1966 for Rs. 27,500/- but added that he returned that promissory note to P.W.1 on 16-3-1966 for the reason that P.W.1 brought back that amount and returned the same to him. He claimed that his account books show that he gave Rs. 27,500/- to P.W.1 on 15-3-1966 and obtained a pronote from him. He would have it that he obtained a fresh promissory note from P.W.1 on 5-4-1966 after giving the amount again to him on 5-4-1966 after withdrawing it from the Bank. He categorically stated that P.W.1 was having Rs. 27,500/- when he and P.W.1 and 3 were said to have gone to the Sub-Registrar''s office on 5-4-1966. He stated that with Rs. 2,000/- out of it the stamps were indented for."
From the evidence of P.W.1 and P.W.3 in O.S.No. 78/66 it is clear that the relationship between the plaintiff and the first defendant were cordial and that the families were helping each other. It is also clear from their evidence that the first defendant admitted having borrowed the money of Rs. 27,500/- from the plaintiff in the present suit.
The next piece of evidence to be considered in the reply issued by the first defendant. In the reply Ex. A-23, the first defendant admitted having borrowed amounts covered by the pronotes Ex. B-10, B-11 and B-12 and the payments of endorsements. He also stated that the plaintiff helped him when he was in hardship. According to him, the understanding between the plaintiff and the first defendant is that the plaintiff should help the first defendant in the said litigation and collect the amounts with stipulated interest either from the Court if the suit fails or by the purchase of the site near Hindu High School at a rate less Rs. 250/- than the market rate by the end of 1970 whichever is earlier. It is also stated if the plaintiff insists on the finalisation of the matter, then itself the first defendant has no objection to sell the said site at the stipulated rate. He also requested not to deviate from the understanding and not to proceed before the Court under law.
The next piece of evidence to be considered is Account Books covered by Exs. A-1, A-2, A-3, A-4, A-5, A-6, A-7, A-8, A-9 and A-10. The relevant entries are Exs. A-2, A-4, A-5, A-9 and A-10. These entries establish the debts covered by Ex. B-10 and B-11 pronotes.
From Ex. A-18 which was filed by the second defendant, it is evident that the first defendant categorically admitted having borrowed the money requiring to deposit in O.S.No. 78/1966 from the plaintiff. It conclusively establishes the case of the plaintiff that he advanced the money covered by the pronotes in O.S.No. 263/70. The first defendant admitted having borrowed the money when the relations between the plaintiff and the first defendant were cordial and they were helping each other. The plaintiff as P.W.3 in O.S. No. 78/66 corroborated the version of the first defendant.
The arguments of the learned counsel for the defendants is that it is highly improbable that the plaintiff would have advanced such heavy amounts to the first defendant who was addicted to a number of vices. The learned counsel submitted that the plaintiff was an attestor to Ex. B-7 which is a partition deed between the first defendant and his brother and mother. The plaintiff was also an attestor to the settlement deed executed by the first defendant in favour of his wife namely the second defendant under Ex. B-9. Under Ex. B-8 partition on 22-5-1965 between the first defendant and the 7th defendant, 260 square yards of site was allotted to the first defendant and the tiled house fell to the share of the 7th defendant. The first defendant settled the site in favour of his wife i.e the second defendant under settlement deed Ex. B-9 dated 26-5-1965. The first defendant had already sold the building in Ramgopal street to Shakunthalamma on 7-4-1965. It is evident from Exs. B-8, B-9 and sale deed dated 7-4-1965 that the first defendant did not have a single piece of property in his name. The property was distributed between the son, wife and Shakunthalamma. Therefore, the first defendant was virtually a pauper and so it is highly improbable that the plaintiff would have advanced the monies to the first defendant. It is true that by the time the pronotes were executed and money was advanced the first defendant divested himself of all the properties and he was not in possession of the properties . However, the sale in favour of Shakunthalamma was subject to an agreement of reconveyance pursuant to which the first defendant and his minor son filed a suit against Shakunthalamma and in that suit to fulfil his part of the contract, he borrowed the monies from the plaintiff. The understanding between the plaintiff and the first defendant was in case the suit was dismissed, the amounts borrowed from the plaintiff deposited in the Court will be returned to the plaintiff. In the alternative i.e. if the suit is decreed, the property is secure, in the hands of the first defendant and the amounts can be realised from out of the said property. Further, the first defendant himself agreed while borrowing the money, as is evident from his reply under Ex.A-23, to sell the site near Hindu High School at the rate less Rs. 250/- than the market rate and to repay the amount covered by the pronotes. Therefore, the amounts advanced under the three pronotes is secure and there is no substance in the contention of the learned counsel for the defendants that the plaintiff would not have advanced the monies to the first defendant who was more or less a pauper as on the date when the monies were advanced.
The next contention of the counsel for the defendants is that the second defendant who is the wife of the first defendant got jewellery under Ex. B-7 partition deed and it is but natural for the wife to sell the gold jewellery and advance money to the husband. Except the recital in Ex. B-7 that gold jewellery was already partitioned between the members of the family, there is no other evidence as to what was the gold that the second defendant was having. There is neither documentary evidence nor oral evidence as to the quantity of gold that she was having and the sale proceeds of the gold. In the absence of any evidence, the recital in Ex. B-7 cannot be taken as conclusive proof that the second defendant sold the gold and advanced the monies to the first defendant. The counsel also submitted that the entries in the Account Books were not proved as no attestors were examined, and therefore, these entries cannot be relied upon. I have already referred to the evidence of the first defendant and the plaintiff in O.S.No. 78/1996 filed by the first defendant against Shakunthalamma. In view of the categorical admission made by the first defendant the fact that the attestors of the Account Books were not examined, does not in any way affect the genuineness, relevancy and admissibility of the entries in the Account Books. In the light of the above discussion, I am of the view that the plaintiff established that he advanced the monies covered by the three pronotes i.e. Exs. B-10, B-11 and B-12 and the said pronotes were supported by consideration and the suit filed by the plaintiff in O.S.No. 263/70 is not collusive and fradulent and consequently the ex parte decree is binding on the defendants.
The next issue to be considered is whether the suit in O.S.No. 108/71 filed by the second defendant against the first defendant is collusive and whether the first and second defendants played fraud on the Court. The contention of the second defendant is that she advanced Rs. 20,000/- to the first defendant in order to enable him to deposit the amount in O.S.No. 78/66. Except the recital in Ex. B-7 there is absolutely no evidence as to the quantity of the gold and the amount realised by selling the gold. Further, the second defendant herself filed a suit O.S.No. 58/72 in forma pauperis which indicates that she did not have the capacity to advance the monies. Further suit is O.S.No 108/71 was filed by the second defendant on 20-3-1971 and the first defendant filed a written statement on 1-4-1971 stating that the first defendant and his minor son D-7 have no objection for passing a decree in this suit on confessional scale. The decree was passed on 2-4-1971. The amount of speed with which the decree was passed indicates the secrecy with which the first and second defendants acted upon. By the time the suit O.S.108/71 was filed, the plaintiff already filed a suit on 15-10-1970 and obtained attachment order under Exs. A-11 and A-13 of items 1 and 2, a site and the building in Ramgopal street. By 20-3-1971 Shakunthalamma already executed a reconveyance deed on 30-3-1968 Ex. B-19. The fact that the suit was filed when there was attachment order obtained by the plaintiff under Exs. A-11 and A-13; the fact that the first defendant and the minor son filed a written statement agreeing to suffer the decree; the fact that there is no evidence that the second defendant had the capacity to advance the monies; the fact that the amount that was required to be deposited in O.S. No. 78/1996 was Rs. 27,500/- and whereas the amount that was alleged to have been advanced to the first defendant was Rs. 20,000/- makes it abundantly clear that it is nothing but a collusive decree and the first defendant and second defendant played fraud on the Court. Had the attachment order obtained by the plaintiff under Exs. A-11 and A-13 dated 15-10-70 been known to the Court it would not have passed the decree in O.S.No. 108/71. In this context the observation made by Sir Alfred Henry Lionen Leach, Chief Justice and Mr. Justice Byers in Rm. N.L. Kr. Ramanathan Chettiar Vs. Unnamalai Achi and Another, are relevant. The facts in brief are that the first respondent (Unnamalia Achi) instituted a suit (O.S.No 56 of 1934) in the Court of the Subordinate Judge of Devakottai to recover moneys said to have been deposited by her with a money lending firm carried on by the second respondent''s father at Burma. On 23-1-1935 the Court granted a decree for Rs. 5,318/- in favour of the first respondent. On 24-7-1935 the first respondent commenced the proceedings in execution and these proceedings were still pending on 31-7-1936. On 1-4-1936, the appellant filed a suit in the Court of the District Munsif of Devakottai to recover from the second respondent a sum of Rs. 1,000/- and interest which he claimed to be due on a pronote executed by the second respondent in his favour. On 28-4-1936 a decree was obtained and in execution thereof she attached a house belonging to the second respondent. This house was already under attachment in the execution proceedings instituted by the first respondent to enforce payment of the decree which she had obtained against the second respondent on 27 7-1936, the house was sold in the execution proceedings instituted by the appellant and bought by him for a sum of Rs. 1,811/-Thereupon, the first respondent filed a suit for declaration that the suit instituted by the appellant was fradulent and collusive, its object being to defeat the attachment which she had effected in execution of the decree obtained by her in O.S.No. 56/1934, and a decree setting aside the sale to the appellant. The Courts below held that both the appellant and the second respondent were parties to the fraud and therefore, the District Munsif granted the declaration which was confirmed by the Sub-Judge. The contention that was advanced in the High Court was that "Section 53 of the Transfer of Property Act has no application to a transfer made under an order of court and therefore, the sale of property in execution of the decree pursuant to the suit filed on 1-4-1936 cannot be set aside." It was held that
"What the appellant in effect says is that where a person has obtained a transfer of property under an order of the Court as the result of a gross fraud, the Court is powerless to remedy the injustice caused unless Section 53 of the Transfer of Property Act can be invoked. To follow this argument to its logical conclusion means that all a debtor has to do in order to defeat his creditors is to induce some equally fradulently minded person to bring a false suit against him, say on a promissory note, obtain a decree and attach and buy in the defendant''s property at the Court auction. The Court certainly has full power to remedy such an injustice and the Courts below have applied the proper remedy. It is indeed regrettable that the appellant, having been found guilty of fraud against the first respondent should have persisted in this appeal."
The facts of the case are exactly on all fours with the facts of the present case. By the date the second defendant filed the suit for recovery of the money alleged to have been advanced on a pronote to the first defendant, the plaintiff already filed a suit for recovery of the amount advanced on three pronotes and also obtained order of attachment under Exs. A-11 and A-13. The suit that was filed by the second defendant is on the basis of a pronote alleged to have been executed by the first defendant in her favour. The said pronote was not supported by consideration and the suit was filed on20-3-1971. Within a period of 12 days decree was passed and in execution of that decree, the second defendant attached the property under Ex. A-15 and within a period of one and half years, she filed E.P.No. 21 / 72 and the property was sold and she purchased the same on 14-9-1972 and the sale was confirmed and delivery was obtained on 6-12-72. The learned counsel for the appellant-plaintiff relied on the following passage: In Wharton''s Law Lexicon:
"In such a proceeding, the claim put forward is fictitious, the contest over it is unreal, and the decree passed therein is a mere mask having the similitude of a judicial determination and worn by the parties with the object of confounding third parties. But, when a proceeding is alleged to be fraudulent, what is meant is that the claim made therein is untrue/ but that the claimant has managed to obtain the verdict of the Court in his favour and against his opponent by practicing fraud on the Court. Such a proceeding is started with a view to injure the opponent, and there can be no question of its having been initiated as the result of an understanding between the parties. While in collusive proceedings the combat is a mere sham, in a fradulent suit it is real and earnest." (Refer Nagubai Ammal and Others Vs. B. Shama Rao and Others, )
He also relied on the judgment of the Supreme Court in Nagubai Ammal and Others Vs. B. Shama Rao and Others, wherein it is observed as follows:
"There is a fundamental distinction between a proceeding which is collusive and one which is fraudulent. Collusion in judicial proceeding is a secret arrangement between two persons that the one should institute a suit against the other in order to obtain the decision of a judicial tribunal for some sinister purpose. In such a proceeding the claim put forward is fictitious, the content over it is unreal, and the decree passed therein is a mere mask having the similitude of a judicial determination and worn by the parties with the object of confounding third parties."
"But when a proceeding is alleged to be fraudulent, what is meant is that the claim made therein is untrue, but that the claimant has managed to obtain the verdict of the Court in his favour and against the opponent by practicing fraud on the Court. Such a proceeding is started with a view to injure the opponent, and there can be no question of its having been initiated as the result of an understanding between the parties. While in collusive proceedings the combat is a mere sham, in a fraudulent suit is real and earnest."
I have already pointed out that the relationship between the first defendant and the second defendant is that of wife and husband and that the second defendant did not have the capacity to advance the money and that the suit was filed on 20-3-1971 and within a period of 12 days decree was passed on the consent made by the first defendant. The plaintiff was not even aware of the proceedings initiated by the second defendant. It is as a result of secret arrangement between the first and second defendants in order to segregate the property from the hands of the plaintiff. Therefore, the purpose for which the suit was filed and the decree was obtained is to defraud the plaintiff and to retain the property for themselves. The claim of the first and second defendants is fictitious, the contest over it is unreal and the decree passed therein is a mere mask having judicial determination. Hence, the decree is collusive and the first and second defendants incidentally also played fraud on the Court. Since the decree in O.S.No. 108/71 is collusive and vitiated by fraud, the subsequent sale and confirmation of sale do not convey any right in the property to the second defendant.
The next issue to be considered is whether the suit is maintainable. The II Addl. Sub-Judge held that the suit is not maintainable. According to him that the suit for declaratory decree will not lie when the plaintiff is neither entitled to any legal character nor to any right in the suit property. According to him the attachment before judgment is of no utility and therefore, the mere fact that the plaintiff obtained attachment order under Exs. A-11 and A-13, does not confer any rights in him and therefore, he cannot seek a declaration that the decree in O.S.No. 108/71 and the consequent proceedings and sale cannot be challenged seeking a declaratory relief against the second defendant and her legal representatives. In support of his finding, he relied on Krishnaveni Ammal and Another Vs. M.D. Soundararajan and Others, which was followed in Bandaru Subbaraidu Vs. Alluri Satyanarayana Raju and Others, . It is necessary to refer to these judgments. In Krishnaveni Ammal and Another Vs. M.D. Soundararajan and Others, it was held that:
"A suit by a creditor for a declaration that certain transfers made by the debtor to his wife and daughter were benami and fictitious and were made for the purpose of defrauding the creditors does not come within the purview of Section 42 nor is it maintainable apart from the provisions of Section 42 because the plaintiff is clothed with neither any legal character nor title to the suit property. Nor can such a suit come within the purview of Section 53 of the Transfer of Property Act."
However, it is necessary to refer to the observation made by the learned Judge while holding as above It was observed that:
"such facts are of almost daily occurrence in the various Courts of this Presidency and the usual and proper remedy in such circumstances would have been for the plaintiff to apply to the Court for an order for attachment before judgment. Had he obtained such an order, he could have attached the properties transferred to the wife and daughter as being the properties of defendant No. 1. That would have been a perfectly logical course in that he alleges in para -5 that the transfers were made in the name of the wife and daughter."
In other words according to the learned Judges, in the absence of an order obtaining attachment before judgment, the creditors cannot annihilate the transfer made by the debtor in favour of his wife and daughter. Admittedly, the above decision is not applicable to the facts of this case, as on the facts of this case, the plaintiff obtained an order of attachment in his suit O.S.No. 263/70 on 15-10-1970 under Exs. A-11 and A-13. Therefore, the judgment relied on by the learned Sub-Judge is not relevant to the facts of this case.
In Bandaru Subbaraidu Vs. Alluri Satyanarayana Raju and Others, the learned Single Judge relied on the judgment of the Madras High Court in Krishnaveni Ammal and Another Vs. M.D. Soundararajan and Others, . It is also a case where there is no attachment before judgment and therefore, it is not relevant to the facts of the case. It was observed that:
"the specific question which of the creditors can institute a suit u/s 42 of the Special Relief Act has been answered with reference to the creditor who has attached the properties and differentiating that case from that of a creditor who has only a right to attach in execution of his decree but has not attached the property."
Therefore,in cases where the creditor obtains attachment before judgment or an order of attachment in his suit stands on a different footing from a creditor who does not have an order of attachment in his favour. A creditor who has an order of attachment in his favour can question the validity of transfer through Court u/s 42 of the Special Relief Act and such suit is maintainable. Supreme General Films Exchange Ltd. Vs. His Highness Maharaja Sir Brijnath Singhji Deo of Maihar and Others, is relevant in this context. The facts in brief are that: Owners of the theatre the Bhatias had borrowed a sum of Rs. 2,50,000/- from the Maharaja against the security of bales of cotton. They also executed registered mortgage deed in respect of the Plaza Theatre in favour of Maharaja. The Maharaja could not recover the amount due. Therefore, he filed a suit 15 A of 1954 in which a compromise decree was passed in terms of an agreement to realise the amount due by the sale of Plaza Theatre.
The Central Bank of India, another creditor of Bhatias had brought Civil Suit No. 3-B of 1952 and obtained a decree for Rs. 1,24,000/- on 29-4-1952. The rights under this decree were assigned to the Maharaja. The properties were attached on 4-5-1955 in execution of the decree which was assigned to the Maharaja.
The S.G. Films Exchange was the original lessee in occupation of Plaza Theatre under an unregistered lease deed dated 27-2-1940. The lease of 1940 had expired on 10-4-1946. The Company continued as a tenant holding-over. On 30th March, 1956 the Bhatias executed a lease deed for eight years i.e. from 10th February, 1956 to 10th February, 1964 with an option for a renewal until 10-2-1970. This lease was executed after the Company had filed a suit for specific performance of agreement to lease contained in a letter dated 19-7-1948. A compromise decree was passed on 24-3-1956. The lease deed Dt. 30-3-1956 purported to carry out the terms of that compromise decree, passed in the suit to which the plaintiff was not impieaded at all. The case of the plaintiff was that the lease of 30-3-1956 was void. Ultimately the matter went up to Supreme Court and the Supreme Court held that:
"Section 42 merely gives statutory recognition to a well-recognised type of declaratory relief and subjects it to a limitation, but it cannot be deemed to exhaust every kind of declaratory relief or to circumscribe the jurisdiction of Courts to give declarations of right in appropriate cases falling outside Section 42 - The circumstances in which a declaratory decree u/s 42 should be awarded is a matter of discretion depending upon the facts of each case. No doubt a complete stranger whose interest is not affected by another''s legal character or who has no interest in another''s legal character or who has no interest in another''s property could not get a declaration u/s 42 with reference to the legal character of the property involved."
It was further held that on the facts of that case:
"in the circumstances of the case, the declaration sought for could not be reasonably denied. The plaintiff had not only the rights of a mortagagee decree-holder with regard to the property involved but he was also the assignee of the rights of the Bank which had got the property in question attached in execution of its decree. Although, the mere possibility of future rights of an intending purchaser could not, by itself, be enough to entitle him to get a declaration relating to a purported lease affecting the right to possess and enjoy the property. Yet, the plaintiff possessed sufficient legal interest in the theatre, as a mortgage as well as an assignee of a decree holder who had got the property attached before he filed his suit, so as to enable him to sue for the declaration he sought. He was not seeking a merely whimsical or eccentric or an unreasonable declaration of a right in property with no enforcible legal claims over it which could remain unaffected by the defendant''s claims as a lessee."
It follows from the above decision that an attaching creditor has interest in the property attached and he is clothed with a legal character and falls within the category of persons specified in Section 42 of the Specific Relief Act. The plaintiff by seeking declaration in the present suit i.e. declaring that the suit O.S. No. 108/71 and consequent execution and sale of property in favour of the second defendant is not seeking a merely whimsical or eccentric or an unreasonable declaration of right in property with no enforceable legal claims over it. The plaintiff had not only the rights of an attaching creditor but also a decree holder having obtained attachment of property and decree. Therefore, the view expressed by the learned Sub-Judge that the suit filed by the plaintiff is not maintainable is contrary to well established principle u/s 42 of the Specific Relief Act.
The next issue to be considered is whether the suit is barred by limitation. The II Addl. Sub-Judge held that the suit is barred by limitation on the ground that the decree in O.S.No. 108/71 was passed on 2-4-1971 whereas, the present suit was instituted on 5-9-1974 and there was attachment which was made absolute in O.S.No. 108 /71 on 2-4-1971. Therefore, the present suit having been filed beyond the period of three years is barred by limitation under Article 58 of the Limitation Act. Under Article58 of the Limitation Act, the period prescribed is three years from the date when right to sue accrues. Therefore, the question for consideration is when the right to sue accrued to the plaintiff.
The contention of the learned counsel for the plaintiff is that the right to sue accrued only on 1-9-1973 i.e. when the ex parte decree for the second time was passed in O.S.No. 263/70. Till such time his rights in the suit were not yet crystalised. The rights under O.S.No. 263/70 were crystalised only after passing the ex parte decree. Apart from the fact that the plaintiff was not aware of the suit filed in O.S.No. 108/71 and the limitation starts running from the date of the knowledge of the decree in O.S.No. 108/71, in the absence of crystalisation of his rights in O.S.No. 263/70 even if he had filed a suit for declaration, the suit is liable to be dismissed on the ground that his rights are yet to be crystalised. Therefore, limitation starts running from 1-9-1973. If the limitation starts running from the date on which the plaintiff obtained the decree i.e. on 1-9-1973, the suit having been filed in 1974 is admittedly within the time. This issue is decided in favour of the plaintiff.
The next issue to be considered is whether it is obligatory on the part of the plaintiff to file a petition u/s 73 CPC r/w Order 21 Rules 58 and Order 21 Rule 63 CPC. The argument for the learned counsel for the defendants is that Section 73 CPC enables equitable distribution of assets between various decree-holdeRs. Since the first defendant obtained a decree-holders against Shakunthalamma, she had a right over the property. Similarly, the second defendant who obtained decree in O.S.No. 108/71 has a rightover the property as she had already attached the property and therefore, the plaintiff should have filed a petition under Order 21 Rule 58 CPC or under Order 21 Rule 63 asking for rateable distribution of the assets namely the property which was attached and sold in execution of decree in O.S.No. 108/71. There is fallacy in this argument. First of all Section 73 says where assets are held by Court. In this case, no asset was held by the Court. Therefore, the question of rateable distribution of the asset does not arise. Secondly, the plaintiff was not aware of the proceedings in O.S.No. 108/71. Therefore, the question of filing a petition under Order-21 Rule 58 or Order 21 Rule 63 does not arise. Further, the decree in O.S.No. 108/ 71 is not binding on the plaintiff. Moreover, I have already held that the decree in O.S.No. 108/71 is collusive and obtained by playing fraud incidentally on the Court. "A judgment or decree obtained by fraud upon a Court binds no such Court or any other and its nullity upon this ground, though it has not been set aside or reversed may be alleged in a collateral proceeding. "Fraud said De Grey, CJ is an intrinsic, collateral act, which vitiates the most solemn proceedings of Court of Justice. Lord Coke says it avoids all judicial acts ecclesiastical and temporal. " (Refer to 1942 (2) MLJ)
Therefore, the decree obtained by the second defendant in O.S. No. 108/71 is a nullity and it is not binding not only on the plain tiff but also on the Court Therefore, the fact that the plaintiff has not approached the Court u/s 73 CPC by filing a petition under Order 21 Rule 58 or Order 21 Rule 63 CPC does not disentitle the plaintiff from filing the present suit for a declaration sought for. The arguments of the learned counsel is rejected.
The counsel for the defendants contended that in the suit filed by the first defendant against Shakunthalamma in O.S.No. 78/66, Shakunthalamma filed E.P.No. 153/73 for recovery of purchase money due under the compromise decree against the first defendant and his minor son. In execution of that E.P. Property was sold in Court auction and one Chalapathi Rao became auction purchaser on 2-4-1973. On 30-6-1975 the second defendant filed E.A. No. 839 /75 to set aside the sale on the ground that the property was already sold and delivered to her in execution of the decree in O.S.No. 108/71. The said application was dismissed. The legal representatives of the second defendant filed CMA 734/78 and the same was dismissed on 6th August, 1982. The first defendant and his son filed E.A.No. 1273/82 under Order 37 Rule 5 CPC to set aside the sale in favour of M. Chalapathi Rao which was dismissed. The first defendant and his son deposited the amount under Order 34 Rule 5 CPC. Against the order dismissing the petition to set aside the sale in favour of Chalapathi Rao CRP No. 3183/85 was filed by the defendants which was allowed by the High Court on 5-8-1986 and the said order was confirmed by the Supreme Court on 25-2-92 and the sale held on 24-4-1975 in favour of Chalapathi Rao was set aside. The effect of the proceedings was to make the second defendant absolute owner of the property namely, the building in Ramgopal street and this Court should take into consideration the subsequent events and when the subsequent events are taken into consideration, it is clear that the second defendant is the absolute owner of the building in Ramgopal street and therefore, the plaintiff is not entitled to seek the relief of declaration.
The arguments of the learned counsel for the defendants is without any substance. First of all sale in favour of Chalapathi Rao was set aside on the amount being deposited under Order 34 Rule 5 CPC by the first defendant and his minor son. Therefore, the sale deed executed by Shakunthalamma in favour of the first defendant gets confirmed. It is not at the instance of the second defendant, the sale in favour of Chalapathi Rao was set aside. Further, I find that her petition to set aside the sale was dismissed and the CMA.No. 734/78 filed by her Legal representatives was also dismissed, with the result she did not get any rights in the building at Ramgopal street. Therefore, the contention that five second defendant became the absolute owner of the buildingand consequently the plaintiff cannot seek a relief of declaration, does not stand to the scrutiny by the Court. Further, any rights obtained by the second defendant is only pursuant to the decree obtained in O.S.No. 108/71. If the decree is valid one any right flowing out of that decree would confer title and interest on the second defendant. If the decree itself is not valid, no rights would flow from out of that decree. Therefore, the subsequent purchase of the property by the second defendant in execution of that collusive decree in O.S.No. 108/71, does not confer any right or interest in the building in her favour in Ramgopal street. Therefore, the contention is rejected as it is without any substance.
The findings of the learned Subordinate Judge in disregard to the material evidence on record and, in view of my discussion above, cannot be sustained both on facts and law.
The appeal is, therefore, allowed with costs.