Balammal v. Haribabu

IN THE HIGH COURT OF JUDICATURE AT MADRAS

DATED : 21.02.2022

CORAM:

THE HONOURABLE MR.JUSTICE S.S.SUNDAR SA.No.82/2022 & CMP.No.1894/2022 Balammal rep.by her Power of Attorney Agent Mr.Vasudevan ... Appellant/Plaintiff Vs.

1.Haribabu 2.Balu @ Balasubramanian 3.The Joint Registrar-II Arakkonam Ranipet District.

[Previously Vellore District] ... Respondents/Defendants Prayer:- Second Appeal preferred under 100 of CPC against the decree and judgment of the learned Subordinate Judge, Arakkonam in AS.No.15/2018 dated 07.04.2021 confirming the decree and judgment of the learned District Munsif, Sholinghur in OS.No.223/2007 dated 24.01.2018.

For Appellant:Mr.J.Shanmuga Sundara Babu

JUDGMENT

(1) The plaintiff in the suit in OS.No.223/2007 on the file of the learned District Munsiff, Sholingur, is the appellant before this Court in this Second Appeal.

(2) The appellant filed the suit in OS.No.223/2007 for declaring the Sale Deed executed on 13.07.2007 by the plaintiff in favour of the 1st defendant as null and void and for permanent injunction restraining the 1st defendant from alienating the suit property to any third party. The suit property is a vacant site measuring an extent of 1800 sq.ft., out of an extent of 19 cents in new S.No.518/19E in 87, Vadamambakkam Village, Kaveripakkam Union, Arakkonam Taluk.

(3) The case of the plaintiff/appellant is that the suit property belonged to the plaintiff and that the 2nd defendant who was working as police constable in A1 Police Station, Tiruvallur, conspired with the 1st defendant to get the Sale Deed from the plaintiff taking advantage of his police power influencing the Police Department. It is further stated that by using the police force, the plaintiff and his family members were under threat and coercion to get a wrongful gain. The suit was filed by the plaintiff represented by her Power of Attorney agent by name Vasudevan. Even in the typed set filed by the appellant, it is seen that the plaint was originally filed by the Power of Attorney agent in his name. However, by subsequent amendment, the cause title was altered showing the plaintiff represented by her Power of Attorney agent.

(4) The suit was contested by the 1st defendant refuting all the allegations made in the plaint. It is the case of the 1st defendant that he was in search of some residential plot outside the city limits of Arakkonam for his own purpose and that the 2nd defendant introduced the plaintiff as if the plaintiff was the childhood friend of the 2nd defendant. It is the specific case of the 1st defendant that the plaintiff himself had contacted him and offered the plaint schedule property for sale for a sum of Rs.70,000/-, which could not be immediately accepted by the 1st defendant. Thereafter, the plaintiff once again approached the 1st defendant stating that he is in urgent need of money to pay some debt and therefore, he is prepared to sell the property even for a sum of Rs.56,000/-.

Since the entire property was purchased by the 1st defendant for a consideration of Rs.56,000/- and the document was duly registered following all formalities satisfying the statutory requirements, the 1st defendant contended that the Sale Deed is a valid document voluntarily executed by the plaintiff after receiving full consideration. It is further stated that possession was also delivered on the date of executing the Sale Deed. It is also stated by the 1st defendant that the plaintiff has discharged the loan of Rs.50,000/- out of the sale consideration paid by the 1st defendant.

(5) The Trial Court, after framing necessary issues, found that the plaintiff has proved the execution of the document and passing of consideration. The Trial Court also found that the plaintiff has not proved his case of

coercion. Since the pleadings does not disclose the basic facts and details or ingredients to establish the case of coercion and the plaintiff has not even stated as to how and in what manner the plaintiff was forced to execute and register the Sale Deed, the Trial Court disbelieved the entire case of the plaintiff on appreciation of evidence. Though the plaintiff examined PW1 to PW4 and marked Exs.A1 to A9, the Trial Court found that the plaintiff has not even prosecuted the criminal complaint in the manner known to law. Except the private complaint, no other reliable evidence was let in by the plaintiff to prove his case that the document of sale is obtained by coercion or sham and nominal.

The evidence of PW1 to PW4 was considered and the Trial Court found that the evidence of PW2 to PW4 does not support the case of the plaintiff that the document of sale was obtained by force. Except that there was a complaint against the 2nd defendant, absolutely there is no evidence to suggest that the 2nd defendant was the real owner and the document was obtained by the 2nd defendant for his benefit in the name of the 1st defendant as pleaded by the plaintiff. Since the plaintiff has failed to prove his specific case and there was no proper pleading to support the evidence of some of the witnesses, the Trial Court dismissed the suit after holding all issues against the plaintiff. Aggrieved by the dismissal of the suit by the Trial Court, the plaintiff preferred an appeal in AS.No.

15/2018 on the file of the learned Subordinate Judge, Arakkonam. The Lower Appellate Court also concurred with the judgment and decree of the Trial Court by considering all the issues independently and after considering every documents and oral evidence, with reference to the pleadings. As against the concurrent judgments and decrees of the Courts below, the above Second Appeal is preferred by the plaintiff.

(6) The learned counsel for the appellant strenuously argued the appeal by referring to a few judgments. Learned counsel submitted that the document of sale is a sham and nominal transaction and that, when a plea is raised by the plaintiff specifically, the burden lies on the defendants to prove the actual transaction as a valid one. The submission of the learned counsel is contrary to his own plea. The plea of the plaintiff in the plaint is not that the document was a sham and nominal document and not intended to be acted upon.

(7) The learned counsel for the appellant relied upon the judgment of the Hon'ble Supreme Court in the case of Subhra Mukherjee and Another V. Bharat Coking Coal Ltd., and Others reported in 2000 [3] SCC 312,wherein the Hon'ble Supreme Court considered Section 201 of the Indian Evidence Act. Having regard to the facts that was dealt, the Hon'ble Supreme Court has held as follows:- ''11. Mr Srivastava submitted that undue emphasis was given to the fact that the Directors of the Company were brothers and the appellants are their wives. He argued that the Company is a separate legal entity which is independent of its Directors and shareholders and repeatedly referred to the oft-quoted decision in Salomon v. Salomon [1897 AC 22 (HL)] .

The principle laid down in Salomon case [1897 AC 22 (HL)] more than a century ago in 1897 by the House of Lords that the company is at law a different person altogether from the subscribers who have limited liability, is the foundation of joint stock company and a basic incidence of incorporation both under English law and Indian law. Lifting the veil of incorporation under statutes and decisions of the courts is an equally settled position of law. This is more readily done under American law. To look at the realities of the situation and to know the real state of affairs behind the facade of the principle of the corporate personality, the courts have pierced the veil of incorporation.

Where a transaction of sale of its immovable property by a company in favour of the wives of the Directors is alleged to be sham and collusive, as in the instant case, the court will be justified in piercing the veil of incorporation to ascertain the true nature of the transaction as to who were the real parties to the sale and whether it was genuine and bona fide or whether it was between the husbands and the wives behind the facade of separate entity of the company. That is what was done by the High Court in this case.

12. There can be no dispute that a person who attacks a transaction as sham, bogus and fictitious must prove the same. But a plain reading of Question 1 discloses that it is in

two parts; the first part says, "whether the transaction in question is a bona fide and genuine one" which has to be proved by the appellants. It is only when this has been done that the respondent has to dislodge it by proving that it is a sham and fictitious transaction. When the circumstances of the case and the intrinsic evidence on record clearly point out that the transaction is not bona fide and genuine, it is unnecessary for the court to find out whether the respondent has led any evidence to show that the transaction is sham, bogus or fictitious.''

(8) In the above case, it was a transaction where the Directors of the Company who are brothers, had executed Sale Deeds in respect of the properties of the Company in favour of their respective wives. Therefore, the plea of sham and nominal when raised, the Hon'ble Supreme Court has held that the High Court is justified in piercing the corporate veil to ascertain the true nature of transaction as to who are the real parties to the sale and whether it was a genuine and bona fide or whether it was between the husbands and wives behind the facade of separate entity of the Company. Since the High Court had exercised its jurisdiction and found that the transactions are sham and nominal, the Hon'ble Supreme Court had occasion to deal with the burden of proof.

(9) It is to be noted that when the transaction is questioned and is challenged and the Court has framed an issue with regard to bona fides and genuineness of the transaction, it is held that the burden lies on the defendant to prove the genuineness. In the instant case, the transaction has been completed and there is no dispute that the Sale Deed was executed by the plaintiff in favour of the 1st defendant. The transaction as such, is challenged only on the ground that it was by coercion. This is not a situation handled by the Hon'ble Supreme Court. (10) When a contract is questioned on the ground of fraud or coercion or undue influence or collusion, the burden lies on the person who challenges the transaction to prove that the contract is vitiated. In the present case, though it is alleged that the plaintiff was forced to execute the Sale Deed by the 2nd defendant, taking advantage of his position as a police constable and with the help of Police

Department, there is no specific allegation as to how this coercion was accomplished by the defendants. The Court cannot presume facts which are required to be proved by some evidence.

(11) The learned counsel has also relied upon the judgment of the Hon'ble Supreme Court in the case of Krishna Mohan Kul @ Nani Charan Kul and Another V. Pratima Maity and Others reported in 2004 [2] LW 344 wherein it is held that when fraud, misrepresentation or undue influence is alleged by a party in a suit, the burden lies on him to prove it. It is further held that when a person has pleaded undue influence and shows that, the person concerned is in a fiduciary relationship with another and latter was in a position of active confidence to win over him, then the burden lies on the dominating person to prove that there was a fair play in the transaction.

(12) The judgment [cited supra] relied on by the learned counsel for the appellant has no application to the facts of the instant case. This is not a case of undue influence. Similarly, the learned counsel also submitted that the burden lies on the defendants to prove the transaction otherwise when a plea of non est factum is raised. It is true that when a person challenges a transaction on the ground that the character and nature of transaction as such is not the one as it transpired from the document, but it is entirely different, the Courts have held that the plea is permissible despite Sections 91 and 92 of the Indian Evidence Act. However, the burden lies on the person who sets up a plea to prove the transaction. Exception to this general rule will be cases where the document was executed by an illiterate or Pardanashin lady. In such cases, when a plea is raised by an illiterate or pardanashin lady, it is settled that the burden lies on the defendant to prove that the transaction was actually the one that was stated in the document and not vitiated by misrepresentation.

(13) The arguments of the learned counsel for the appellant on the legal aspects was also considered by the Trial Court and this Court is unable to find anything inconsistent with the settled legal position.

(14) Since the Courts below have rendered the findings concurrently on the basis of proper appreciation of the entire evidence and pleadings, this Court is not inclined

to interfere with the findings on facts, especially when it is not brought to the notice that the findings of the Courts below are perverse or contrary to any portion of evidence or without considering an important piece of evidence either oral or documentary. This Court is satisfied that the findings of the Courts below are well founded and supported by reasons.

(15) Having regard to the fact that the Courts below have considered the pleadings and appreciated the evidence on all issues and held against the plaintiff/appellant, this Court is unable to find any question of law much less a substantial question of law warranting interference of this Court.

(16) In the result, the Second Appeal is dismissed. Consequently, connected miscellaneous petition is closed. SD/- ASSISTANT REGISTRAR // TRUE COPY // AP SUB ASSISTANT REGISTRAR To 1.The Subordinate Judge, Arakkonam.

2.The District Munsif, Sholingur.

+1cc to Mr.J.Shanmugasundara Babu, Advocate Sr.10899 SA.No.82 of 2022 sv[co] srg 07/04/2022