# 1VIDYADHAR "' v. MANIKRAO AND ANR

- **Citation:** [1999] 1 S.C.R. 1168
- **Court:** Supreme Court of India
- **Decided:** 1999-03-17
- **Case number:** Civil Appeal No. 1534 of 1999
- **Bench:** S. Saghir Ahmad, D.P. Wadhwa
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/1vidyadhar-v-manikrao-and-anr-16620
- **Pages:** 29

## Headnote

cl
Civil Procedure Code, 1908 :
Order 8--Def endant can raise any legi.timate plea available to him
c under the law to defeat the suit of the plaintiff.
Order 16 Rules 1(3) & I-A-Rule 1-A not in derogation of Rule
1 (3 )-Witnesses-A party may bring witnesses even without applying for court
summons-But leave of the court has to be procured before proceeding to
examine such witnesses.
D
r
Section 100--:-Second appeal-Scope of power of the High Court under.
..
-,.-
Transfer of Property Act, 1882:
Section 54:
E
•
Sale of immovable property-Non payment or part-payment of sale
,.._
'
consideration-Plea that sale deed was fictitious, collusive, void, not intended
to be acted upon-Held, can be raised also by a defendant who was a
stranger to the sale deed-It would depend upon the pleadings of the parties
F
to the suit, nature of the deed, evidence led by the parties and other circumstances.
~
Consideration--"Price paid or promised or part paid and partpromised"-Held, actual payment of full price at the time of execution of sale
deed is not a sine qua non for completion of sale-Real test is the intention
G of parties.
Section 55(4)(b)-Doctrine of Equitable lien-If ownership of the
property is transf e"ed to the buyer before the payment of the entire sale
-J
price-Held, vendor is entitled to a charge on that property for the amount of
sale price as also interest thereon-Such charge provides the vendor the right
H to enforce the charge by way of filing a suit but does not entitle the seller to
1168
,.
..
VIDYADHAR v. MANIKRAO
1169
retain the property as against the buyer.
Section 58(c), proviso-Mmtgage by conditional sale-Detemiination
of whether the transaction is an out and out sale or morlgage-Docwnent
styled as 'Kararkharedi' executed by Defendant No. 2 inf avour of defendant
No. 1 for a sum of Rs. 1500 with the stipulation that if the entire amount is
retumed to Defendant No. 1 before a specified date, the property to be
reconveyed to Defendant 2-Held, deed must be treated as a 11101tgage by
conditional sale.
A
B
Evidence Act, 1872-Section 114 Explanation (g)-Presumption of
adverse inf erence-lf a pwty to the suit abstains from ente1ing the witness box,
C
an adverse inference would wise agai11St him.
Deeds and docwnent~Inte1pretatio11 of-The real test is the intention
of the parlies under the deed or document~The intention is to be gathered
from the recital in the sale deed, conduct of the parlies and the evidence 011 D
record.
Words and phrase~Words ''p1ice paid or promised or pan paid and
pwt-promised''--Mem1ing of-In the context of Section 54 of the Act.
Defendant No. 2, owner of a plot of land, executed a document styled
as "Kararkharidi" in favour of defendant No. 1 for a sum of Rs. 1500 and
handed over possession to him. There was a stipulation in the document
that ifthe entire amount of Rs. 1500 was returned to defendant No.1 before
15.3.1973, the property would be given back to defendant No. 2. This land
E
was subsequently transferred by defendant No. 2 in favour of the. plaintiff F
for a sum of Rs. 5000 by a registered sale dated 19.6.1973. After having
obtained the sale deed, the plaintiff filed a suit in which it was given out that
defendant No. 2 had offered the entire amount to defendant No. 1 but he
latter did not accept the amount and, therefore, defendant No. 2 had to send
it by money order on 7.6.1973 which was refused by defendant No. 1. A notice
dated 5.6.1973 had also been sent by defendant No. 2 to defendant No. 1 G
pleading that since the document executed by defendant No. 2 in favour of
defendant No.1, was a mortgage by conditional sale, the property was liable
to be redeemed. In the alternative, it was also pleaded that if it was held by
the Court that the document did not create a mortgage but was an out and
?ut sale, the plaintiff as transferee of defendant No. 2, \\'.as entitled to a H
I
1170
SUPREME COURT REPORTS
(1999] 1 S.C.R.
A decree for reconveyance of the property as defendant No. 2 had already
"
o

## Text

_Characters 0–39,975 of 65,900. This is a partial read: ask again with offset=39975 for what follows._

-
A
1VIDYADHAR
"'
v.
MANIKRAO AND ANR.
l
MARCH 17, 1999
B
[S. SAGHIR AHMAD AND D.P. WADHWA, JJ.]
cl
Civil Procedure Code, 1908 :
Order 8--Def endant can raise any legi.timate plea available to him
c under the law to defeat the suit of the plaintiff.
Order 16 Rules 1(3) & I-A-Rule 1-A not in derogation of Rule
1 (3 )-Witnesses-A party may bring witnesses even without applying for court
summons-But leave of the court has to be procured before proceeding to
examine such witnesses.
D
r
Section 100--:-Second appeal-Scope of power of the High Court under.
..
-,.-
Transfer of Property Act, 1882:
Section 54:
E
•
Sale of immovable property-Non payment or part-payment of sale
,.._
'
consideration-Plea that sale deed was fictitious, collusive, void, not intended
to be acted upon-Held, can be raised also by a defendant who was a
stranger to the sale deed-It would depend upon the pleadings of the parties
F
to the suit, nature of the deed, evidence led by the parties and other circumstances.
~
Consideration--"Price paid or promised or part paid and partpromised"-Held, actual payment of full price at the time of execution of sale
deed is not a sine qua non for completion of sale-Real test is the intention
G of parties.
Section 55(4)(b)-Doctrine of Equitable lien-If ownership of the
property is transf e"ed to the buyer before the payment of the entire sale
-J
price-Held, vendor is entitled to a charge on that property for the amount of
sale price as also interest thereon-Such charge provides the vendor the right
H to enforce the charge by way of filing a suit but does not entitle the seller to
1168
,.
..
VIDYADHAR v. MANIKRAO
1169
retain the property as against the buyer.
Section 58(c), proviso-Mmtgage by conditional sale-Detemiination
of whether the transaction is an out and out sale or morlgage-Docwnent
styled as 'Kararkharedi' executed by Defendant No. 2 inf avour of defendant
No. 1 for a sum of Rs. 1500 with the stipulation that if the entire amount is
retumed to Defendant No. 1 before a specified date, the property to be
reconveyed to Defendant 2-Held, deed must be treated as a 11101tgage by
conditional sale.
A
B
Evidence Act, 1872-Section 114 Explanation (g)-Presumption of
adverse inf erence-lf a pwty to the suit abstains from ente1ing the witness box,
C
an adverse inference would wise agai11St him.
Deeds and docwnent~Inte1pretatio11 of-The real test is the intention
of the parlies under the deed or document~The intention is to be gathered
from the recital in the sale deed, conduct of the parlies and the evidence 011 D
record.
Words and phrase~Words ''p1ice paid or promised or pan paid and
pwt-promised''--Mem1ing of-In the context of Section 54 of the Act.
Defendant No. 2, owner of a plot of land, executed a document styled
as "Kararkharidi" in favour of defendant No. 1 for a sum of Rs. 1500 and
handed over possession to him. There was a stipulation in the document
that ifthe entire amount of Rs. 1500 was returned to defendant No.1 before
15.3.1973, the property would be given back to defendant No. 2. This land
E
was subsequently transferred by defendant No. 2 in favour of the. plaintiff F
for a sum of Rs. 5000 by a registered sale dated 19.6.1973. After having
obtained the sale deed, the plaintiff filed a suit in which it was given out that
defendant No. 2 had offered the entire amount to defendant No. 1 but he
latter did not accept the amount and, therefore, defendant No. 2 had to send
it by money order on 7.6.1973 which was refused by defendant No. 1. A notice
dated 5.6.1973 had also been sent by defendant No. 2 to defendant No. 1 G
pleading that since the document executed by defendant No. 2 in favour of
defendant No.1, was a mortgage by conditional sale, the property was liable
to be redeemed. In the alternative, it was also pleaded that if it was held by
the Court that the document did not create a mortgage but was an out and
?ut sale, the plaintiff as transferee of defendant No. 2, \\'.as entitled to a H
I
1170
SUPREME COURT REPORTS
(1999] 1 S.C.R.
A decree for reconveyance of the property as defendant No. 2 had already
"
offered the entire amount of sale consideration to defendant No. 1 which
was refused by defendant No. 1 and which amount the plaintiff was still
prepared to offer to defendant No. 1 and also otherwise ready and willing to
perform his part of the contract. defendant No. 2 admitted the whole claim
B
of the Plaintiff, whereas defendant No. 1 contested the suit on the ground
that the document in his favour was not a mortgage by conditional sale but
was an out and out sale and since the amount of consideration had not been
...
paid within the time stipulated therein, the plaintiff could not claim recon·
veyance of the property in question. Before the Trial Court, when plaintiff
entered the witness box, defendant No. 2 did nor cross-examine him. llowc ever, defendant No.1 did not enter the witness-box and deputed his brother
to appear as a witness in the court, who could not prove that the sale
consideration was not paid to defendant No. 2. The Trial Court recorded a
positive finding that defendant No. 2 had mortgaged the land in question to
defendant No. 1 and that defendant No. 2 had transferred the property in
D favour of the plaintiff for a sum of Rs. 5000 by a registered sale deed and,
therefore, the plaintiff was entitled to redeem the mortgage executed by
...
defendant No. 2 in favour of defendant No. 1. This finding was affirmed by
the lower appellant court. However, on second appeal, the High Court
;.
recorded the finding that the plaintiff had not paid the entire sale con·
sideration to defendant No. 2. The High Court disposed of the suit by
E directing that the land in question to be restored to defendant No. 2. Hence
this appeal.
It was contended by the appellant-plaintiff that the sale deed as executed
by defendant No. 2 in favour of the plaintiff, was not challenged by defendant
F No. 2, who, on the contrary, had admitted the entire claim set out by the plaintiff
...
in his plaint and, therefore, the High Court was in error in setting aside the sale
deed. It was also contended that defendant No. 1 who had challenged the sale
.•
deed as fictitious had not appeared as a witness in the case and had avoided the
witness box in order to avoid cross-examination and, therefore, an adverse
G
inference should have been drawn against him. It was also contended that the
findings of fact could not legally set aside in second appeal. On the other hand
it was contended by defendant No. 1 that findings recorded by the courts were
not borne out by the evidence on record and were perverse which was rightly set
1
aside by the High Court in second appeal. It was further contended that the
document of title in favour of defendant No.1 was misread as a mortgage deed
H although it constituted out and out sale.
;
\
VIDYADHAR v. MANIKRAO ~
1171
Allowing the appeal, this Court
HELD : 1.1. A,s regards right of defendant 1-to raise pleas, it is not
possible to subscribe to the view expressed in broad terms in Lal Achal
Ram* case by Privy Council that a stranger to a sale deed cannot dispute
payment of consideration or its adequacy. A distinction has to be drawn
between a deed, which was intended to be real or operative between the
parties and a deed which is fictitious in character and was never designed
as a genuine document to effect transfer of title. In such a situation, it
would be open even to a stranger to impeach the deed as void and invalid
on all possible grounds. A person in his capacity as a defendant can raise
any legitimate plea available to him under law to defeat the suit of the
plaintiff. This would also include the plea that the sale deed by which the
title to the property was intended to be conveyed to the plaintiff was void
A
B
c
or fictitious or, for that matter, collusive and not intended to be acted
upon. Thus, the whole question would depend upon the pleadings of the
parties, the nature of the suit, the nature of the deed, the evidence led by
the parties in the suit and other attending circumstances.; [1183-E-G]
D
1.2. In the instant case, the property which was mortgaged in favour
of defendant 1 was transferred by defendant 2, who was the owner of the
property, to the plaintiff. This transfer does not, in any way, affect the
rights of defendant 1 who was the mortgagee and the mortgage in his E
favour, in spite of the transfer, subsisted. [1184-B]
Kamini Kumar Deb v. Durga Charan Nag, AIR (1923) Cal. 521;
Saradindu Mukheljee v. Kunja Kamini Roy & Ors., AIR. (1942) Cal. 514;
fugal Kishore Tewmi & Anr. v. Umesh Chandra Tewari & Ors., AIR (1973)
Pat. 352; Sa11ata11 Mahapatra & Ors. v. Hakim Mohammad Kazim MahamF
~
mad & Ors., AIR (1977) Ori. 194, approved.
*Lal Achal Ram v. Raja Kazim Husain Khan, (1905) 32 IA 113,
dissented from.
2. Defendant 1 himself was not a party to the transaction of sale G
between defendant 2 and the plaintiff. He himself had no personal
knowledge of the terms settled between the defendant No. 2 and the
plaintiff. The transaction was not settled in his presence nor any payment
made in his presence. Nor, for that matter, was he a scribe or marginal
witness of that sale deed. Defendant 1 could not have raised a plea as to H
r,
1172
SUPREME COURT REPORTS
[1999] 1 S,CR.
A the validity of the sale deed on the ground of inadequacy of the considera1'
tion or part-payment thereof defendant 2 alone, who was the executant of
the sale deed, could have raised an objection as to the validity of the sale
deed on the ground that it was without consideration or that the consideration paid to him was highly inadequate. But he admitted the claim of the
B plaintiff whose claim in the suit was based on the sale deed, executed by
defendant 2 in his favour. The property having been transferred to him,
the plaintiff became entitled to all the relief which could have been claimed
by defendant 2 against defendant 1 including redemption of the mortgaged
property. [1182-D-F]
C
3. The findings of fact concurrently recorded by the Trial Court as
also by the lower appellate court could not have been legally upset by the
High Court in a second appeal under Section 100 CPC unless it was shown
that the findings were perverse, being based on no evidence on record or
that on the evidence on record, no reasonable person could have come to
D that conclusion. In the face of the findings recorded by the Trial Court as
also by the lower appellate court on the question of execution of sale deed
by defendant 2 in favour of the plaintiff with the further finding that it was
a valid sale deed which properly conveyed the title of the property in
question to the plaintiff, the High Court could not set aside those findings
merely on the ground that the circumstances which had already been
E considered by the lower courts appeared to suggest some other conclusion
from proved facts. [1184-H; 1195-A; 1187-A-B]
4.1. The High Court erred in commenting upon the production of
defendant 2 as a' witness. EYen though the name of defendant 2 was not
F mentioned in the list of witnesses furnished by the plaintiff, he was
properly examined as a witness and his testimony was not open to any
criticism on the ground that he was produced as a witness without being
summoned throngh the Court and without his name being mentioned in
the list of witnesses. [1184-E]
G
4.2. Rules 1 and lA of Order 16 CPC when read together clearly
indicate that it is open to a party to summon the witness to the court or
may, without applying for summons, bring the witnesses to give evidence
or to produce documents. Since Rule lA is subject to the provisions of
sub-rule (3) of Rule 1, all that can be contended is that before proceeding
H to examine any witness who might have been brought by a party for that
VIDYADHAR v. MANIKRAO
1173
purpose, the leave of th~ court may be necessary but this by itself will not A
mean that Rule 1A was in derogation of sub-rule (3) of Rule 1. [1188-F-G]
Mange Ram v. Blij Mohan, [1983) 3 SCR 525 : AIR (1983) SC 925 :
[1983) 4 sec 36, relied on.
5.1. The •ecital in the registered sale deed that out of the amount of
Rs. 5,000 which was the sale price, a sum of Rs. 4,500 had been paid earlier
while Rs. 500 was paid before the Sub-Registrar, read in the light of admission made by defendant 2 in his written statement and, therefore, in his
statement on oath as a witness clearly establishes the fact that defendant 2
had executed a sale deed in favour of the plaintiff or a price which was paid
by defendant 2. Even if the findings recorded by the High Court that the
plaintiff had paid only Rs. 500 to defendant 2 as sale consideration and the
remaining amount of Rs. 4,500 which was shown to have been paid before
B
c
the execution of the deed was, in fact, not paid, the sale deed would not, for
that reason, become invalid on the ground of the provisions contained in D
Section 54 of the Transfer of Property Act. The definition of sale contained
in Section 54 indicates that in order to constitute a sale, there must be
transfer of ownership from one person to another, i.e., transfer of all dghts
and interests in the properties, which are possessed by that person are
transferred by him to another person. The transferor cannot retain any
part of his interest or right in that property or else it would not be a sale. E
Price constitutes an essential ingredients of the transaction of sale. But the
words "price paid or promised or part-paid or part- promised" indicate that
actual payment of the whole of the price at the time of the execution of the
sale deed is not a sine qua 11011 to the completion of the sale. Even if the
whole if the price is not paid but the document is executed and thereafter F
registered, if the property is of the value of more than Rs. 100, the sale
would be complete, the transaction of sale will take effect and the title would
pass under that transaction. The real test is the intention of the parties. In
order to constitute a "sale", the parties must intend to transfer the ownership of the property and they must also intend that the price would be paid
either in presenti or in future. The intention is to be gathered from the G
recital in the sale deed, the conduct of the parties and the evidence on
record. [1190-C•H; 1191-A-C]
Gayatri Prasad v. Buard of Revenue, (1973) All W 412; Sukaluo & Ors.
v. Pwiau, AIR (1961) MP 176: ILR (1960) MP 614, approved.
H
1174
SUPREME COURT REPORTS
[1999] 1 S.C.K
A
5.2. In the present case, the facts already establish that a complete and
formidable sale deed was executed by defendant 2 in favour of the plaintiff
and the title in the property passed to the plaintiff. The findings recorded by
the High Court on this question cannot, therefore, be upheld. [1192-B]
5.3. The High Court totally ignored the provisions contained in
B Section 55 ( 4)(b), TPA. This Section applies to a situation where the
ownership in the property has passed to the buyer before the whole of the
purchase money was pai.d to the seller or the vendor. What is contained in
this clause is based on the English doctrine of equitable lien as
propounded in Goode v. Bwto11**. This clause confers statut.ory recogniC tion on the English doctrine of equitable lien. The statutory charge under
this p;;ragraph is inflexible. The charge does not entitle the seller to retain
possession of the property as against the buyer but it positively gives him
a right to enforce the charge by suit. [1192-C-F]
Ve11katapentmal Naidu v. M. Rath11asabhapathi Chettiar, AIR (1953)
D Mad. 821; Shobhalal Shyamlal Kunni v. Sidhelal lfalkelal Ba11ia, AIR (1939)
Nag. 210; Balalingaya Reva11shiddappa v. Chin11ava Karibasappa, AIR
(1932) Born. 247, approved.
**Goode v. Buno11, [1847) 74 RR 633 : 1 Ex 189; ·webb & Anr. v.
E Macpherso11, 30 IA 238, referred to.
5.4. The High Court was wholly in error in coming to the conclusion
that there was no sale as only a sum of Rs. 500 was paid to defendant 2
and the balance amount of Rs. 4,500 was not paid. Since the title in the
property had already passed, even if the balance amount of sale price was
F not paid, the sale would not become invalid. The property sold would stand
transferred to the buyer subject to the statutory charge for the unpaid part
of the sale price. [1193-G-H]
6. It is not possible to accept the contention of defendant 1 that the
G deed dated 24.3.1971 was not mortgage deed but an out and out sale with
the result that the property having been transferred to defendant 1 was not
available for being sold to the plaintiff. The contents of the document
indicate that defendant 2 had executed a mortgage by conditional sale in
..... favour .of defendant.1, He had promised to pay back Rs. 1,500 by a particular date failing which the document was to be treated as sale deed. The
H intention of the parties are reflected in the contents of the documents which
~
r •
VIDYADHAR v. MANIKRAO
1175
y
is described as a mortgage by r.onditional sale. In the body of the document, A
the mortgage money has also been specified. Having regard to the circumstances of this case as also the fact that the _condition of purchase is
contained in the same document by which the mortgage was created in
favour of defendant 1, the deed in question cannot but be treated as a
mortgage by conditional sale. Mortgage by conditional sale is defined under B
Section 58(c). The proviso was introduced in this clause only to set at rest
>-
the controversy about the nature of the document, whether the transaction
would be a sale or a mortgage. If has been specifically provided by the
amendment that the document would not be treated as a mortgage unless
the condition of repurchase was contained in the same document. The basic
principle is that the form of transaction is not the final test and the true c
test is the intention of the parties in entering into the transaction. If the
intention of the parties was that the transfer was byway of security, it would
be a mortgage. As between the parties to the document, the intention to
treat the transaction as an out and out sale or as a mortgage has to be
found out on a consideration of the contents of the document in the light
D
of surrounding circumstances. [1195-G-H; C; D; E]
Bhaskar Waman Joshi v. Sluinarayan Rambilas Agarwal, AIR (1960)
SC 301 : [1960) 2 SCR 117; P.L. Bapuswami v. V.N. Pattay Gounder, AIR
(1966) SC = (1966) 2 SCR 918, relied on.
Balkishen Das & Ors. v. Legge, 27 IA 58, referred to.
E
7. So far the contention of defendant 1 that the mortgage money was
not paid within the time stipulated in the document and, therefore, the
transaction, even if _it was a mortgage, became an absQlute sale is concerned, the finding of the courts below is that this money was tendered to
F
Defendant 1 who refused to accept it. defendant 2 had thus performed his
...
part of the agreement and had offered the amount to defendant 1 so that
the property may be reconveyed to him but defendant 1 refused to to accept_
the money. He, therefore cannot complain of any default in not paying the
amount in question within the time stipulated in the deed. Since there was G
no default on the part of defendant 2, the document would not convert itself
into a sale deed and would remain a mortgage deed. The suit for redemption was, therefore, properly tiled by the plaintiff who was the assignee of
)
defendant 2. [1196-B-C]
8. Where a party to the suit does not appear in the witness-box and H
1176
SUPREME COURT REPORTS
[1999] 1 S.C.R.
A states his own case on oath and does not offer himself to be cross-examined
by the other side, a presumption would arise that the case set up by him
is not correct. [1181-G]
Sardar Gurbakhsh Singh v. Gurdial Singh, AIR (1927) PC 230; Kirpa
Singh v. Ajaipal Singh, AIR (1930) Lah. 1; Ma1tand Pandh1inath Chaudha1i
B v. Radhabai !Vislmarao Deshmukh, AIR (1931) Born. 97; Gulla-Kharagjit
Ca1pe11ter v. Narsingh Nandkishore Rawat, AIR (1970) MP 225; Arjun Singh
v. Virendra Nath, AIR (1971) All. 29; Bhagwan Dass v. Bhishan Chand &
Ors., AIR (1974) P & H 7, approved.
C
. CIVIL APPELLATE JURISDICTION : Civil Appeal No. 1534 of
1999.
From the Judgment and Order dated 3.5.91 of the Bombay High
Court in S.A. No. 352 of 1976.
D
S.K. Gambhir for the Appellant.
E
Markand D. Adkar, S.D. Singh and Vishwajit Singh for the Respondents.
The Judgment of the Court was delivered by
S. SAGHIR AHMAD, J. Leave granted.
Vidhyadhar, the appellant before us, who shall hereinafter be
referred to as plaintiff, had instituted a suit against the respondents, who
shall hereinafter be referred to as defendant Nos. 1 and 2 respectively, for
F redemption of the mortgage by conditional sale or in the alternative for a
decree for specific performance of the contract for repurchase which was
decreed by the Trial Court on 29.4.1975. The decree was upheld by the
Lower Appellate Court by its judgment dated 28.9.1976 but the High
Court, by the impugned judgment dated 3.5.1991, set aside both the judgments and passed a unique order to which a reference shall be made
G presently in this judgment. The plaintiff is in appeal before us.
The property in dispute is 4.04 acres of land of survey plot No. 15 of
Kasba Amdapur, District Buldana. The whole area of survey plot No.15 is
16.09 acres and except the land in dispute, namely, an area of 4.04 acres,
the entire land is in possession of the plaintiff. Defendant No.2 was the
H owner of the whole Plot No.15. On 24th of March, 1971, he executed a
0
I ,
, I
VIDYADHAR v. MANIKRAO (S.SAGHIRAHMAD,J,]
1177
y
document styled as "Kararkharedi" in favour of defendant No.1 for a sum A
of Rs. 1500 and delivered possession thereof to the latter. There was a
~
stipulation in the document that if the entire amount of Rs.1500 was
returned to defendant No.1 before 15th of March, 1973, the property would
be given back to defendant No.2.
This land was subsequently transferred by defendant No.2 in favour
B
of the plaintiff for a sum of Rs.5,000 by a registered sale deed dated
19.6.1973. After having obtained the sale deed, the plaintiff filed the
aforesaid suit in which it was given out that defendant No.2 had offered
the entire amount to defendant No.1 but the latter did not accept the
amount and, therefore, defendant No.2 had to send it by money order on c
7.6.1973 which was refused by defendant No.l. A notice, dated 5.6.1973,
had also been sent by defendant No.2 to defendant No.l. It was pleaded
that since the document, executed by defendant N o.2 in favour of de fendant N o.1, was a mortgage by conditional sale, the property was liable to
be'redeemed. It was also pleaded in the alternative that if it was held by , D
the Court that the document did not create a mortgage but was an out and
out sale, the plaintiff as transferee of defendant No.2, was entitled to a
i<
decree for reconveyance of the property as defendant No.2 had already
offered the entire amount of sale consideration to defendant No.1 which,
the latter, had refused and which amount the plaintiff was still pr;:pared to E
offer to defendant No.1 and was also otherwise ready and willing to
perform his part of the contract.
Defendant No.2 admitted the whole claim of the plaintiff by filing a
one-line written statement in the trial court. But defendant No.1 contested
the suit and pleaded that the document in his favour was not a mortgage
F
_,,
by conditional sale but was an out and out sale and since the amount of
consideration had not been tendered within the time stipulated therein, the
plaintiff could not claim reconveyance of the property in question. The
Trial Court framed the following issues:-
G
"l. Does the plaintiff prove that the defendant No.2 mortgaged the
suit field with the defendant No.1 for Rs.1500 on 24.3.71?
•
2. Does the plaintiff prove that the suit field was purchased by him
from the defendant No.2 for Rs.5,000 on 19.6.73?
H
' '
1178
SUPREME COURT REPORTS
[1999) 1 S.C.R.
A
3. Is the plaintiff entitled to redeem the mortgage executed by the
y
defendant No.2 in favour of defendant No.1?
4. Was the defendant No. 2 ready and willing to repurchase the
suit field prior to 15.3.71?
B
5. Is the plaintiff entitledlto claim retransfer of the suit field from
the defendant No.l?
6. Relief and costs?"
c
The finding on issue No.l was that defendant No.2 had mortgaged
the land in question to defendant No.l for Rs.1500 on 24.3.1971. On issue
no.2, it was found that defendant No.2 had transferred the property in
favour of the plaintiff for a sum of Rs.5,000 on 19.6.1973 by a registered
sale deed and, therefore, the plaintiff was entitled to redeem the mortgage
executed by defendant No.2 in favour of defendant no.1. Issue Nos. 4 and
D 5 were decided in the negative as the Trial Court had held the document
in question to be a mortgage deed. In view of these findings, the suit was
decreed and the Trial Court passed the following order:-
~
);
"It is hereby declared that the amount due to the defendant-1
E
on the mortgage mentioned in the plaint dated 24-3-71 is Rs.1500/-.
It is further ordered and decreed that the plaintiff to pay into court
on or before 29-10-75 or any later date into which time for payment
may be extended by the Court the said sum of Rs.1500.
That on such payment and on payment thereafter before such
F
date as the Court may fix of such amount as the Court may adjudge
due interest as may be payable under rule 10, together with such
subsequent interest as may be payable under rule 11 of the order
;.
34 of the first schedule to the Code of Civil Procedure 1908, the
defendant-1 shall bring into Court all documents in his possession
...
G
or power relating to the mortgage property in the plaint mentioned
and all such documents shall be delivered over to the plaintiff or
to such person as he appoints, and the defendant-1 shall, if so
required, reconvey or retransfer the said property from the said
mortgage and clear of and from all encumbrances created by the
'
defendant-1 or any person claiming under him or any person under
H
who he claims, and free from all liability whatsoever arising from
VIDYADHAR v. MANIKRAO (S.SAGHIRAHMAD,J.)
1179
the mortgage or this suit and shall, deliver up the plaintiff quiet A
and peaceful possession of the said property. And it is further
ordered and decreed - that, in default of payment as aforesaid, the
defendant-1 may apply to the Court for a final decree that the
plaintiff be debarred from all right to redeem the property."
This decree was confirmed in appeal but, as pointed out above, was
B
reversed by the High Court in the second appeal.
The High Court was of the opinion that the plaintiff had not paid
the entire amount of sale consideration to defendant No.2. Out of a sum
of Rs.5,000, for which sale deed was executed, a sum of Rs.500 alone had
been paid to defendant No.2 before the Sub- Registrar and the rest of the
amount was not paid. The High Court further held that the document
"Kararkharedi" which purports to have been executed for a sum of Rs.1500
by defendant No.2 in favour of ddendant No.1 was, in fact, executed for a
c
sum of Rs.800 which was paid before the Sub-Registrar. The High Court,
then, disposed of the suit by directing that the land in question shall be D
restored to defendant No.2 who shall pay back a sum of Rs.800 (in
instalments) to defendant No.1 and a sum of Rs.500 (in instalments) to the
plaintiff.
Learned counsel for the appellant has contended that the sale deed,
executed by defendant No.2 in favour of the plaintiff, was not challenged
by defendant No.2 who, on the contrary, had admitted the entire claim set
out by the plaintiff in his plaint and, therefore, the High Court was in error
in setting aside the sale deed. It is also contended that defendant No.1 who
had challenged the sale deed as fictitious had not appeared as a witness in
the case and had avoided the witness box in order to avoid cross-examination and, therefore, an adverse inference should have been drawn against
him and this plea ought to have been rejected by the High Court which, it
is also contended, could not have legally set aside the findings of fact in
second appeal. It is also contended that defendant No.1 being a stranger
E
F
to the sale deed should not have been allowed to raise the plea relating to G
inadequacy or non-payment of consideration money.
Learned counsel for defendant No.l, on the contrary, has tried to
justify the interference by the High Court at the stage of second appeal by
contending that the findings recorded by the Courts were not borne out by
the evidence on record and were perverse which could be set aside under H
1180
SUPREME COURT REPORTS
[1999] 1 S.C.R.
A Section 100 C.P. C. He also contended that the document of title in favour
of defendant No.I was misread as a mortgage deed although it constituted
an out and out sale. Moreover, on the commission of default, as contemplated by the document in question, the whole transaction, even if it
was a mortgage, converted itself into an absolute sale as agreed upon
B between the parties. The sale having thus become absolute in favour of
defendant No.1, no title was left in defendant Nc..2 to convey it to the
plaintiff through the sale deed in question.
Let us examine the respective contentions. Beginning with the pleadings, defendant No.2 in his written statement filed before the Trial Court,
C admitted the claim of the plaintiff.
Annexure P-III to the Special Leave Petition is the true translation
of the copy of written statement filed by defendant No.2 in the suit. It reads
as under:-
D
"IN THE COURT OF HON'BLE CIVIL JUDGE SENIOR
E
F
G
H
DWISION BULDANA:-
R.C. S.No.195173
F.F. ___ _
Plaintiff: Vidhyadhar Vishnupant Ratnaparkhi
- Versus -
Defendant :
(1) Manikrao Babarao Deshmukh
(2) Pandu Ganu Bhalerao
WRITTEN STATEMENT OF DEFENDANT N0.2 PANDU
GANU BHALERAO
(1) The suit filed by Plaintiff is admitted. Hence this written
statement.
Buldana
Dt. 20.12.73
Sd/-
(Pandu Ganu Bhalerao)
r·
)
VIDYADHAR v. MANIKRAO [S.SAGHIRAHMAD,J.]
1181
I, defendant No. 2 state on oath that the contents of para 1 of A
the written statement ar:: true as per my personal knowledge.
Hence this affidavit is signed and executed at Buldana on this
20.12.73.
Sd/-
(Pandu Ganu Bhalerao)"
The Lower Appellate Court has noticed this and observed in its
judgment as under:-
"Defendant No.2 filed his written statement at Ex.15 which is
extremely brief comprising only a sentence, stating that the suit
filed by the plaintiff is admitted by him."
Even while plaintiff was in the witness box, defendant No.2 declined
B
c
to cross examine the plaintiff which shows that defendant No.2 after D
admitting the case of the plaintiff, had no interest in the litigation particularly as he had already transferred the property in favour of the
plaintiff.
It was defendant No.1 who contended that the sale deed, executed
by defendant No.2 in favour of the plaintiff, was fictitious and the whole
E
transaction was a bogus transaction as only Rs.500 were paid as sale
consideration to defendant No.2. He further claimed that payment of
Rs.4,500 to defendant No.2 at his home before the registration of the deed
was wholly incorrect. This plea was not supported by defendant No.I as he
did not enter into the witness box. He did not state the facts pleaded in
F
the written statement on oath in the Trial Court and avoided the witness
box so that he may not be cross examined. This, by itself, is enough to reject
the claim that the transaction of sale between defendant N o.2 and the
plaintiff was a bogus transaction.
Where a party to the suit does not appear into the witness box and G
states his own case on oath and does not offer himself to be cross examined
by the other side, a presumption would arise that the case set up by him
is not correct as has been held in a series of decisions passed by various
High Courts and the Privy Council beginning from the decision in Sardar
Gurbakhsh Singh v. Gurdial Singh and Another, AIR (1927) Privy Council H
r
1182
SUPREME COURT REPORTS
(1999] 1 S.C.R.
A 230. This was followed by the Lahore High Court in Kirpa Singh v. Ajaipal
-..·
Singh and Others, AIR (1930) Lahore 1 and the Bombay High Court in
Ma1tand Pandharinath Chaudhari v. Radhabai Krishnarao Deshmukh, AIR
(1931) Bombay 97. The Madhya Pradesh High Court in Gulla Klzaragjit
Carpenter v. Narsingh Nandkishore Rawat, AIR (1970) Madhya Pradesh 225
B
also followed the Privy Council decision in Sardar Gurbakhsh Singh's case
(supra). The Allahabad High Court in A1jw1 Singh v. Virender Nath and
Another, AIR (1971) Allahabad 29 held that if a party abstains from
..
entering the witness box, it would give rise to an inference adverse against·
him. Similarly, a Division Bench of the Punjab & Haryana High Court in
Bhagwan Dass v. Bhishan Chand and Others, AIR (1974) Punjab &
c Haryana 7, drew a presumption under Section 114 of the Evidence Act
against a party who did not enter into the witness box.
Defendant No.1 himself was not a party to the transaction of sale
between defendant No.2 .and the plaintiff. He himself had no personal
D knowledge of the terms settled between defendant No.2 and the plaintiff.
-<
The transaction was not settled in his presence nor was any payment made
J
in his presence. Nor, for that matter, was he a scribe or marginal witness
~
of that sale deed. Could, in this situation, defendant No.1 have raised a
plea as to the validity of the sale deed on the ground of inadequacy of
consideration or part-payment thereof? Defendant No.2 alone, who was
E the executant of the sale deed, could have raised an objection as to the .
validity of the sale deed on the ground that it was without consideration or
that the consideration paid to him was highly inadequate. But he, as
pointed out earlier, admitted the claim of the plaintiff whose claim in the
suit was based on the sale deed, executed by defendant No.2 in his favour.
F The property having been transferred to him, the plaintiff became entitled
to all the reliefs which could have 'been claimed by defendant No.2 against
defendant No.l including redemption of the mortgaged property.
Learned counsel for defendant No.1 confended that since the plainG
tiff had filed the suit on the basis of sale deed, executed by defendant No.2
in his favour and had sought possession over that property from defendant
No.1, it was open to the latter to show that plaintiff had no title to the
property in suit and, therefore, the suit was liable to be dismissed. It was
~
contended that in his capacity as a defendant in the suit, it was open to
defendant No.1 to raise all the pleas on the basis of which the suit could
H be defeated.
)
VIDYADHAR v. MANIKRAO [S.SAGHIRAHMAD,J.]
1183
In Lal Achal Ram v. Raja Kazim Hussain Khan, (1905) 32 Indian A
Appeals 113, the Privy Council laid down the principle that a stranger to
a sale deed cannot dispute payment of consideration or its adequacy. This
decision has since been considered by various High Courts and a distinction has been drawn between a deed which was intencfed to be real or
operative between the parties and a deed which is fictitious in character
and was never designed as a genuine document to effect transfer of title.
In such a situation, it would be open even to a stranger to impeach the
deed as void and invalid on all possible grounds. This was also laid down
in Kamini Kumar Deb v. Durga Charan Nag & Ors., AIR (1923) Calcutta
521 and again in Saradindu Mukhe1jee v. S.M. Kwija Kamini Roy & Ors.,
AIR (1942) Calcutta 514. The Patna High Court in fugal Kishore Tiwari &
Anr. v. Umesh Chandra Tiwari & Ors., AIR (1973) Patna 352 and the Orissa
High Court in Sanatan Mahapatra and Others v. Hakim Mohammad Kazim
Mohammad and Others, AIR (1977) Orissa 194 have also taken the same
VIew.
The above decisions appear to be based on the principle that a
person in his capacity as a defendant can raise any legitimate plea available
to him under law to defeat the suit of the plaintiff. This would also include
the plea that the sale deed by which title to the property was intended to ' ·
be conveyed to plaintiff was void or fictitious or, for that matter, collusive
and not intended to be acted upon. Thus, the whole question would depend
upon the pleadings of the parties, the nature of the suit, the nature of the
deed, the evidence led by the parties in the suit and other attending
circumstances. For example, in a landlord-tenant matter where the
landlord is possessed of many properties alid cannot possibly seek eviction
of his tenant for bona fide need from one of the properties, the landlord
may ostensibly transfer that property to a person who is not possessed of
B
c
D
E
F
any other property so that that person, namely, the transferee, may institute
eviction proceedings on the ground of his genuine need and thus evict the
tenant who could not have been otherwise evicted. In this situation, the ·
deed by which the property was intended to be transferred, would be a G
collusive deed representing a sham transaction which was never intended
to be acted upon. It would be open to the tenant in his capacity as
defendant to assert, plead and prove that the deed was fictitious and
collusive in nature. We, therefore, cannot subscribe to the view expressed
by the Privy Council in the case of Lal Achal Ram (supra) in the broad H
1184
SUPREME COURT REPORTS
[1999] 1 S.C.R.
A terms in which it is expressed but do approve the law laid down by the
Calcutta, Patna and Orissa High Courts as pointed out above.
In the instant case, the property which was mortgaged in favour of
defendant Ncl.l was transferred by defendant No.2, who was the owner of
B the property, to plaintiff. This transfer does not, in any way, affect the rights
of defendant No.1 who was the mortgagee and the mortgage in his favour,
in spite of the transfer, subsisted. When the present suit for redemption
was filed by the plaintiff, defendant No.2, as pointed out above, admitted
the claim of the plaintiff by filing a one-sentence written statement that the
claim of the plaintiff was admitted. When the plaintiff entered into the
C witness box, defendant No.2 did not cross examine him. He did not put it
to the plaintiff that the entire amount of consideration had not been paid
by him. defendant No.1 alone raised the question of validity of the sale
deed in favour of the plaintiff by pleading that it was a fictitious transaction
as the sale consideration had not been paid to defendant No.2 in its
D entirety. Having pleaded these facts and having raised the question relating·
to the validity of the sale deed on the ground that the amount of consideration had not been paid, defendant No.2 did not, in support of his case,
enter into the witness box. Instead, he deputed his brother to appear as a
witness in the case. He did enter into the witness box but could not prove
E that the sale consideration had not been paid to defendant No.2. On a
consideration of the entire evidence on record, the Trial Court recorded a
positive finding of fact that the sale deed, executed by defendant No.2 in
favour of the plaintiff, was a genuine document and the entire amount of
sale consideration had been paid. This finding was affirmed by the Lower
F Appellate Court but the High Court intervened and recorded a finding that
although the property which was mentioned to have been sold for a sum
of Rs.5,000/-, the plaintiff had; in fact, paid only Rs. 500 to defendant No.2.
The amount of Rs.4,500 which was indicated in the sale deed to have been
paid to defendant No.2, prior to registration, was not correct. It was for
this reason that the High Court while redeeming the property directed that
G the amount of sale consideration which was paid by the plaintiff to defendant No.2 shall be returned by defendant No.2 and the property would
revert back to him.
The findings of fact concurrently recorded by the Trial Court as also
H by the Lower Appellate Court could not have been legally upset by the
)·
VIDYADHAR v. MANIKRAO [S.