{"id":328003,"date":"2024-08-04T11:00:55","date_gmt":"2024-08-04T05:30:55","guid":{"rendered":"https:\/\/www.scconline.com\/blog\/?p=328003"},"modified":"2024-08-04T11:41:08","modified_gmt":"2024-08-04T06:11:08","slug":"sale-deed-was-sham-fictitious-no-consideration-money-passed-to-vendor-sc","status":"publish","type":"post","link":"https:\/\/www.scconline.com\/blog\/post\/2024\/08\/04\/sale-deed-was-sham-fictitious-no-consideration-money-passed-to-vendor-sc\/","title":{"rendered":"Never Reported Judgment | When Supreme Court declared a sale deed sham\/fictitious as no consideration money passed to vendor [(1953) 2 SCC 21]"},"content":{"rendered":"
\n

Supreme Court:<\/span> An appeal was filed against a judgment and decree passed by the Madras High Court (‘High Court’) on 30-8-1950, which reversed the decree of the Subordinate Judge of Anantapur (‘Subordinate Judge’), dated 17-3-1947, and decreed the suit, declaring Respondent 1, Ratchepalli Atchamma to be the owner of the properties, movable and immovable, and restraining Appellant 1, Yerraguntala Ramireddi from interfering with Respondent 1’s possession of the said properties. The Division Bench of M.C. Mahajan and S.R. Das*<\/span>, JJ., agreed with the High Court’s conclusion that the sale deed was without any consideration and was not acted upon. The Supreme Court also agreed with the High Court that there was evidence on record that Respondent 1’s husband, Ratchepalli Nagireddi, continued to cultivate the lands with hired bulls and the presence of agricultural implements and grains in the house which was in possession of Respondent 1’s husband also supported the High Court’s conclusion. Thus, the High Court’s judgment was upheld, and the present appeal was dismissed with costs.<\/p>\n

Background<\/p>\n

Respondent 1’s husband filed the original suit, out of which the present appeal arises, praying for a declaration of his right to the property and for an injunction restraining Appellant 1 from interfering with his possession of the said property.<\/p>\n

Respondent 1’s husband stated that Respondent 1, his first wife left him about sixteen years prior to the present suit, thus, he had a second marriage. Thereafter, his second wife died around the year 1937 and he had no issues by either of his wives and in the year 1943, Respondent 1 and her brother claimed maintenance and threatened to file a suit against him. Therefore, he consulted Appellant 1, in whom he had implicit trust and confidence, as to what should be done to avoid the claim and safeguard the properties and thus, on Appellant 1’s advice, Respondent 1’s husband, on 9-6-1943 executed a deed, purporting to be a deed of sale, in favour of Appellant 1 for the consideration of Rs 8000.<\/p>\n

It was submitted that no consideration passed to Respondent 1’s husband and the endorsement of payment of Rs 8000 made by the Sub-Registrar was fictitious and Appellant 1 had no means to pay Rs 8000 and that the sale deed was a nominal, sham, colourable, and fictitious transaction, not intended to be operative between the parties. It was further submitted that Appellant 1 never took possession of the property, and Respondent 1’s husband continued to be in possession and cultivate the same.<\/p>\n

The Subordinate Judge found that Rs 8000 was paid by Appellant 1 to Respondent 1’s husband in the presence of the Sub-Registrar at the time of the registration of the sale deed and although there was no evidence to corroborate the oral statement of Respondent 1’s husband that he possessed Rs 8000, he must have had that amount as that had been paid in the presence of the Sub-Registrar. The Subordinate Judge summarized his findings that the sale deed was not intended to be a nominal and fictitious transaction, and that Appellant 1 had taken possession but Respondent 1’s husband had continued to be in possession of the suit house till a particular date. The Subordinate Judge accordingly dismissed the suit, except in respect of one item of movable property which he found to belong to Respondent 1’s husband.<\/p>\n

Respondent 1 appealed to the High Court and the High Court reversed the findings of the Subordinate Judge and decreed the suit in its entirety in favour of Respondent 1. Thus, Appellant 1 filed an appeal before this Court.<\/p>\n

Analysis, Law, and Decision<\/p>\n

The issue for consideration before the Supreme Court was “whether any consideration passed from Appellant 1 to Respondent 1’s husband?”<\/span>.<\/p>\n

The Supreme Court noted that there was an endorsement made by the Sub-Registrar at the foot of the sale deed stating that “A sum of Rs 8000 (in words, Rupees eight thousand) only, has been paid in my presence, by the claimant, to the executant”<\/span>. The Supreme Court stated that this endorsement was made as required by Section 58(1)(c)<\/a> of the Registration Act, 1908<\/a>.<\/p>\n

The Supreme Court relied on Nawab Mirza Ali Kadar Bahadur<\/span> v. Indar Parshad<\/span>,1896 SCC OnLine PC 9<\/a> and Gangamoyi Debi<\/span> v. Troiluckhya Nath Chowdhry<\/span>, 1906 SCC OnLine PC 3<\/a> and opined that it was clear that the endorsement gives rise to a presumption that consideration passed, as it was stated in the endorsement. The Supreme Court stated that this presumption, however, was not conclusive and might be rebutted.<\/p>\n

The Supreme Court took note of the facts that Respondent 1’s husband was an illiterate person of 70 years of age, while Appellant 1 was a literate person of the age of 50 years; the sale deed covered the entire properties possessed by Respondent 1’s husband including his dwelling house; there was no evidence that Respondent 1’s husband was in any need of money and indeed there was in the deed itself no recital of any necessity.<\/p>\n

The Supreme Court further noted that the deed covered valuable properties and was said to be the largest sale in the village and yet it was not written or witnessed by a respectable inhabitant of the village itself. The Supreme Court stated that the scribe was an obscure person, carrying on his vocation under a margosa tree, standing near the Sub-Registrar’s office and the scribe himself said that at the time he wrote out the document he had been told by Appellant 1 that he had no debts, and that it was intended to be a fictitious document.<\/p>\n

The Supreme Court noted that Appellant 1 himself stated that the value of the subject-matter of the suit, in the court of first instance, was over Rs 20,000, and the subject-matter of appeal to this Court was considerably over Rs 20,000. The Supreme Court stated that apart from Appellant 1’s submission that the value of the property was about Rs 8000, there was on record abundant evidence, oral, and documentary, that the value of the property was not less than Rs 20,000. The Supreme Court noted that Respondent 1’s husband’s witnesses had testified to the value of the property as assessed by him and they had produced actual sale deeds to show that in June 1943 the suit properties could not have been worth anything less than Rs 20,000.<\/p>\n

The Supreme Court opined that the Subordinate Judge declined to place any reliance on these witnesses and the sale deeds on no other tangible ground than that the witnesses were residents of, and the sale deeds covered land situated in, not the Village of Avulampalli where the suit lands were situated but the adjoining Villages of Ramarajupalli or Kasepalli or Cooty Anantapuram. Further, the Subordinate Judge overlooked that one of the witnesses gave his evidence in 1947 by deposing that he was prepared to buy the suit lands at and for Rs 30,000 if he was given a month’s time to collect the money. The Supreme Court opined that this fact certainly indicated that his evidence as to the value of the suit lands could be safely relied on as substantially correct.<\/p>\n

The Supreme Court stated that the High Court accepted the evidence adduced by Respondent 1’s husband as to valuation of the suit lands and there was nothing on record for this Court to differ from the High Court.<\/p>\n

The Supreme Court observed that Appellant 1 was not in a position to pay Rs 8000 on 9-6-1943 as he separated from his brothers in 1937, and he used to save Rs 500 per annum and his savings amounted to Rs 5000. He borrowed Rs 800 and Rs 700 from his two brothers and he got the balance of Rs 1500 from his business. The Supreme Court stated that he had not examined either of his brothers or produced any account books of his business in support of his oral testimony. Further, even if it was accepted that he used to save Rs 500 per year, his savings from 1937 to 1943 would at best amount to Rs 3000 and not Rs 5000 and the fact that a businessman would keep Rs 5000 in his safe and not invest it on interest was difficult to believe.<\/p>\n

The Supreme Court agreed the High Court’s conclusion that the story of the Sub-Registrar counting the money before making his endorsement was untrue and that he made the endorsement only on the strength of the admission of the receipt of the money by Respondent 1’s husband.<\/p>\n

The Supreme Court noted that both the Subordinate Judge and the High Court had concurrently found that even after the execution of the sale deed, Respondent 1’s husband continued in possession of the dwelling house and that the story put forward by Appellant 1 that Respondent 1’s husband had left the village with the money and went over to his sister’s place was entirely false. The Supreme Court stated that the fact of Respondent 1’s husband continuing in possession of the dwelling house certainly militates against the sale deed being a genuine transaction. The Supreme Court agreed with the High Court that there was evidence on record that Respondent 1’s husband continued to cultivate the lands with hired bulls and the presence of agricultural implements and grains in the house which was in possession of Respondent 1’s husband also supported that conclusion.<\/p>\n

The Supreme Court stated that the claim for maintenance by Respondent 1 as the reason given by Respondent 1’s husband for executing the sham deed of sale, in the facts and circumstances, could not be rejected out of hand. The Supreme Court thus agreed with the High Court’s conclusion that the sale deed was without any consideration and was not acted upon and the fact of mutation and payment of the cist in the name of Appellant 1 was quite consistent with the benami nature of the deed. The Supreme Court thus upheld the judgment of the High Court and dismissed the present appeal with costs.<\/p>\n

[Yerraguntala Ramireddi v. Ratchepalli Atchamma, (1953) 2 SCC 21<\/a>, decided on 15-05-1953<\/span>]<\/p>\n

*Judgment authored by: Justice S.R. Das<\/span><\/strong><\/p>\n\n

Advocates who appeared in this case :<\/p>\n

For the Appellant:<\/span> R. Ganapathy Iyer and C.V.L. Narayan, Advocates<\/p>\n

For the Respondents:<\/span> M.C. Setalvad, Attorney General for India (K.R. Chaudhury and C. Kondiah, Advocates, with him)<\/p>\n

Note: Sham\/Fictitious Sale Deed<\/p>\n

In V.M. Salim<\/span> v. Fathima Muhammed<\/span>, (2011) 15 SCC 756<\/a>, the Supreme Court held that a document will be “sham” if it ostensibly creates right\/obligations, which are not intended to be acted upon by the parties to the deed, and is executed in pursuance of a secret arrangement, with the ulterior motive of securing an undisclosed advantage to the owner. It includes collusion between the parties to the document to achieve an illegal objective. Therefore, if anyone wants to establish that sale transaction was sham, he ought to plead and prove a secret arrangement between the vendor and the purchaser, that the sale was nominal and that no right, title, or interest passed or intended to pass to the purchaser under the sale, and the deed was executed with the sole intention of securing the eviction of the tenants or securing some other benefit to the vendor.<\/p>\n<\/div>\n","protected":false},"excerpt":{"rendered":"

This report covers the Supreme Court’s Never Reported Judgment dating back to the year 1953 on determining whether sale deed is a sham.<\/p>\n","protected":false},"author":1,"featured_media":328011,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[5,58675],"tags":[40056,71700,11801,62152,71698,58925,30459,71699,59573,5363],"class_list":["post-328003","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-casesreported","category-scc-never-reported-judgments-supreme-court","tag-consideration","tag-fictitious-sale-deed","tag-high-court","tag-justice-m-c-mahajan","tag-justice-s-r-das","tag-never-reported-judgment","tag-sale-deed","tag-sham-sale-deed","tag-subordinate-judge","tag-supreme-court"],"yoast_head":"\nSupreme Court's Never Reported Judgment on sham\/fictitious sale deed | SCC Times<\/title>\n<meta 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