Friday, 29 November 2013

Challenging completed transaction on ground of fraud

Contract - partition - Section 31 of Specific Relief Act, 1963 - partition deed executed by maternal grandfather disputed on ground of fraud in this petition - Court observed that parties to partition are free to raise their claim subject to restriction - party who disputed deed is required to file a suit for declaration under Section 31 - Court found no suit for declaration was filed by appellant - held, plea of fraud barring declaration suit not maintainable.
Apparently, in such cases, the question as to the validity and the affect of such transaction would not possibly be gone into and may not warrant to find its correctness, unless an independent suit is filed by the parties to the transaction challenging such transaction on any permissible grounds. Of course, a coparcener, who is not a party to any alienations need not, simply because he is not bound. Therefore, it cannot be held that a party without taking recourse to the remedy of a separate suit for challenging a completed transaction will be entitled to get over the transaction by merely taking the plea of fraud. Especially in the circumstances of this case, several aspects are sought to be alleged to show that fraud was committed, which requires an enquiry and establishment of the said facts before one could come to any conclusion on fraud. Such a finding can be expected in a suit challenging the deed. Otherwise, it would open pandorah 's box allowing every party-defendant to canvass all such pleas and seek reliefs by avoiding the specific remedies as contemplated under the law. It is also well accepted that no relief can be granted to a defendant party inspite of the plaintiff failing to prove or establish his claim. Therefore, under these circumstances, the bar is staring against a party defendant in making an attempt to avoid a document to which he is a party by taking the mere plea of fraud without the same being declared void in a suit filed under Section 31 of the Specific Relief Act, more so, when the apprehension is writ large on the allegations in the plaint where the document is relied on and used against the defendant.1


Andhra High Court
Kasireddy Ramayamma vs Kasireddy Rama Rao on 5 July, 1999
Equivalent citations: 1999 (4) ALD 491, 1999 (4) ALT 118
Bench: B P Rao



1. This appeal is filed by the defendant against the judgment and decree in OS No.27 of 1980 dated 6-11-1982 on the file of the Subordinate Judge at Chodavaram by which the suit filed by the respondent-plaintiff seeking partition of Lot I of the plaint schedule properties into two equal shares and allotment and delivery of one such share to him was decreed.
2. For the sake of convenience, the parties will be referred to as they are arrayed in the suit.
3. The plaintiff laid the claim on the allegation that the suit properties were owned by late Isamsetty Pothu Naidu, his maternal grand-father. The plaintiff is the son of the defendant. The defendant being the sole issue, Poihu Naidu executed a settlement deed on 24-9-1976 in Ex.A1 conferring the suit properties with absolute rights on the plaintiff and after his (Pothu Naidu's) death, the defendant to have life interest. Therefore, the plaintiff and the defendant viz., the mother and son should enjoy the properties jointly. Pothu Naidu died in November, 1976 and thus the suit properties vested in him with absolute rights and he was enjoying the same along with the defendant. While so, the defendant, coming under the influence of one Boddu Kanakaiah, was contemplating to alienate the suit properties. The plaintiff demanded for partition to which the defendant was not agreeable. It was alleged that the properties described in Lot II of the plaint schedule were to be enjoyed by the donor along with the co-sharers, hence the relief of partition is restricted only to the properties mentioned in Lot I. Thus the suit for partition.
4. The suit was contested by the defendant, inter alia, on the ground that the settlement deed in Ex.A1 is not true and valid. She was deserted by her husband, who had taken a concubine, and, therefore, she had to live along with her son with her father, Pothu Naidu, during his life time. Before his death, Pothu Naidu developed defective vision, hardness of hearing and also was suffering from throat cancer. Therefore, he was being treated at Chodavaram and he sent for his son-in-law and advised him to change his habits and treat the defendant and the plaintiff with affection. Her husband, brother in law Jangu Naidu and one Lalam Pathrinaidu used to frequent her father and they persuaded him to execute a registered Will bequeathing the properties to herself and her son equally. On such representation, they took Pothu Naidu to Madugula and under the guise of execution of a registered Will deed, got executed the settlement deed by playing fraud on the old man. On coming to know of the said mischief played by them, Pothu Naidu issued a registered notice dated 2-10-1976 in Ex.B6 through his Counsel disowning the settlement deed and calling upon the plaintiff and the defendant to consent for the cancellation of the settlement deed. Therefore, both of them gave their consent by their reply dated 18-10-1976 in Ex.B7. Thereupon, her father cancelled the settlement deed by another registered document dated 6-11-1976 in Ex.B2. Her father died not in November 1976 but in January, 1977. Therefore, on his death, all the properties devolved on her as the exclusive and sole heir. It was alleged that the plaintiff was never in possession and enjoyment of the suit properties and the suit was filed at the instance of the father of the plaintiff and his brother in law Jangu Naidu, at whose instance, the plaintiff left her protection. She further pleaded that the plaintiff being a minor and she herself being the guardian, the suit as has been filed and framed is not maintainable and thus prayed for the dismissal of the suit.
5. On the basis of the said pleadings, the following issues were framed :
"(1) Whether the settlement deed dated 24-9-1976 is vitiated by fraud and misrepresentation ?
(2) Whether the cancellation of the said settlement deed by another deed dated 6-11-1976 is valid, true and binding on the plaintiff?
(3) Whether the plaintiff is in possession and enjoyment of the suit properties as alleged in the plaint ?
(4) Whether the plaintiff is entitled for partition ?
(5) Whether the plaintiff is a minor and if so whether this suit is not maintainable?
(6) Whether the plaint schedule is correct?
(7) Whether the mortgages stated in the written statement are true, valid and binding on the plaintiff ?
(8) To what relief ?"
6. In support of the plaintiff, PWs.1 to 4 were examined and Exs.A1 and A2 were marked and in support of the defendant, DWs.1 to 10 were examined and Exs.B1 to B11 were marked. The trial Court, on a consideration of the evidence let in, has held that in view of Ex.A2, the record sheet issued by the Head Master of Panchayat Samithi Elementary School, Manchala, which shows the plaintiff's date of birth as 8-9-1959, the suit filed on 9-6-1980 is not vitiated as the plaintiff is more than 20 years of age; Ex. A1 settlement deed is not vitiated by any fraud or misrepresentation; the subsequent cancellation deed executed by Pothu Naidu in Ex.B2 is not valid and the conferment of rights under Ex.A1 is absolute; the plaintiff is not in possession of the suit properties and thus decreed the suit holding that the plaintiff is entitled for half share and granted a preliminary decree with a direction that under Section 34 of the Andhra Pradesh Court Fees and Suits Valuation Act, 1956, the plaintiff should pay the Court fee on 3/4th of the market value included in his share.
7. Sri G. Prabhakar, learned Counsel appearing for the appellant elaborately attacked the correctness of the finding of the lower Court on Ex.A1 by pointing out several circumstances especially as to the immediate reaction of late Pothu Naidu in cancelling the settlement deed through Ex.B2 and contending that fraud and misrepresentation were played on him and, therefore, the very document in Ex.A1 is void document and does not confer any right, title or interest of whatsoever nature. He lastly contended that the gift under Ex.A1 is not complete as there is no acceptance by the donee as mandatorily required under Section 122 of the Transfer of Property Act.
8. The learned Counsel appearing on behalf of the respondent, in his reply, contended that the transaction under Ex.A1 is complete and absolute rights had already flowed and vested and nothing remained in late Pothu Naidu to make any cancellation as such through Ex.B2 and there is no fraud or misrepresentation in the execution of Ex.A1. Further, it was pleaded that the transfer being complete under Ex.A1, a registered document, no relief as such can be granted as to its validity nor can it be cancelled on any such plea of fraud or misrepresentation unless and until the said document is challenged in appropriate proceedings by taking recourse to the remedy of separate suits as contemplated under Section 31 of the Specific Relief Act and, therefore, it is not open either for the defendant to plead any such fraud or misrepresentation and get over the document or for the Court below to go into any such question and hold that such transaction is void or vitiated otherwise. Further it was argued that the defendant has in fact hopelessly failed to make out any warranting circumstance to hold that the transaction is vitiated by any fraud or misrepresentation and the lower Court has considered the entire evidence and circumstances in detail and gave valid reasons, which do not call for any variation nor the appellant-defendant has made out any basis to disturb the reasons given by the trial Court.
9. In view of the rival contentions urged on behalf of the parties, the question which falls for consideration is :
"Whether the plea of the defendant in a suit for partition that the settlement in Ex.A1 is void, is sustainable and if so, whether Ex.A1 is vitiated ?
10. The plaintiff is the son of the defendant herein and the settlement in Ex.A1 was executed by Pothu Naidu, the father of the defendant, i.e., the maternal grand father of the plaintiff. Late Pothu Naidu first married the mother of the defendant and after her death, he married another sister of PW4 and on her death, married some other woman. But all the wives pre-deceased him leaving the defendant as his only issue. The defendant is the sister's daughter of her husband, PW4. PWs.2 and 3 are the attestors of Ex.A1, the scribe being one Pathavelli Sathyanarayana Murthy, a professional document writer. PW2 is a village Munsif and PW3 is a Sarpanch. PW2, one of the attestors, is the husband of another sister of PW4 i.e., the husband of the defendant's now maternal aunt. PW3's mother and the mother of Pothu Naidu are sisters.
11. Both the attestors are closely related to Pothu Naidu, the plaintiff and the defendant. In view of the attitude adopted by PW4, the husband of the defendant, for safeguarding the defendant's family late Pothu Naidu allegedly executed Ex.A1. Ex.B6 was got issued immediately by late Pothu Naidu through his Counsel, which was addressed to the plaintiff and the defendant. To the cancellation deed in Ex.B2, the attestors are one barber and another stranger. The fact that Pothu Naidu wanted to execute some document for the benefit of the family of the defendant is not denied. Admittedly, the entire transaction under Ex.A1 was processed amidst the near relatives and well wishers of Pothu Naidu, the plaintiff and the defendant. There is no denial of the presence of Pothu Naidu before the sub-Registrar and execution. The notices and Ex.B2 alone would not in any way affect the legal consequences which flow under Ex.A1. Having issued the notice in Ex.B6, no step has been taken to avail any legal remedy during his life time to cancel the document except simply executing Ex.B2. Once the title passes under a duly executed and registered document as per the provisions of the Transfer of Property Act and the Indian Registration Act, there remains no subsisting right, title or interest of whatsoever nature to fall back or to recall or to cancel any such document except by taking recourse to a civil remedy seeking cancellation as contemplated under Section 31 of the Specific Relief Act, which reads as follows :
"31. (1) Any person against whom a written instrument is void or voidable, and who has reasonable apprehension that such instrument, if left outstanding may cause him serious injury, may sue to have it adjudged void or voidable; and the Court may, in its discretion , so adjudge it and order it to be delivered up and cancelled.
(2) If the instrument has been registered under the Indian Registration Act, 1908, the Court shall also send a copy of its decree to the officer in whose office the instrument has been so registered; and such officer shall note on the copy of the instrument contained in his books the fact of its cancellation."
12. The said provision, in clear terms, applies to the situation on hand which contemplates for the remedy of a suit for cancellation of a document when the same is being put against or where a person has an apprehension that such document would be used against him. An attempt was made on the part of the learned Counsel appearing for the appellant that in view of the fraud and misrepresentation alleged against the document, the same is void and needs no cancellation either by suit or otherwise and the said document can be simply ignored and it will be a non est. However, there is distinction between executory and concluded contracts.
13. In support of the plea that a party can raise the plea of undue influence by way of defence, the decisions in MT. Manbhari v. PT. Sri Ram, AIR 1936 All. 672, Rangnath Sakhram v. Narsinv Sakharam, ILR 1938 Bom. 639 have been cited. In both these cases, the provisions of Section 31 of the Specific Relief Act, 1963, which corresponded to Section 39 of the repealed Specific Relief Act, 1877, have not been considered and no such plea seemed to have been advanced. Therefore, these decisions cannot be of any assistance on the question. In support of the plea that the gift under Ex.A1 is not complete as there being no acceptance and thus no rights would flow and the gift is not complete as required under Section 122 of the Transfer of Property Act, the learned Counsel cited the decision in Rajaram v. Ganesh, ILR 23 Bom, 131, Shimla Development Authority v. Sanihosh Sharma, , Mastanamma v. Adinarayana, 1962 (2) ALT 405 and V.V. Janiki v. P.P. Paru, AIR 1986 Ker. 100. However, the question as to the completeness or validity of a concluded transaction could crop in only if the party avails the appropriate remedy and seeks cancellation thereafter. Therefore, these decisions may not have any direct bearing on the proposition. The learned Counsel also cited the decision in A. Thakurdas v. A. Venilal, , in support of the well
established principle that in a partition suit, every party-whether arrayed as a plaintiff or defendant-is substantially a plaintiff in a suit and is entitled to a decree and he can move the Court for partition of his share. Being governed by this principle, the defendants inter se could claim for partition of their respective shares. The said principle is well established and in a partition cause, every party to the proceedings will be at liberty to canvass their claims. However, even such suits will have the normal trappings and restrictions under the law. It is again a well accepted principle that in a suit for partition, equities have to be worked out in respect of the alienations already made by any coparcener of the family by allotting the subject matter of such alienation towards the share of the alienor-coparcener. Apparently, in such cases, the question as to the validity and the affect of such transaction would not possibly be gone into and may not warrant to find its correctness, unless an independent suit is filed by the parties to the transaction challenging such transaction on any permissible grounds. Of course, a coparcener, who is not a party to any alienations need not, simply because he is not bound. Therefore, it cannot be held that a party without taking recourse to the remedy of a separate suit for challenging a completed transaction will be entitled to get over the transaction by merely taking the plea of fraud. Especially in the circumstances of this case, several aspects are sought to be alleged to show that fraud was committed, which requires an enquiry and establishment of the said facts before one could come to any conclusion on fraud. Such a finding can be expected in a suit challenging the deed. Otherwise, it would open pandorah 's box allowing every party-defendant to canvass all such pleas and seek reliefs by avoiding the specific remedies as contemplated under the law. It is also well accepted that no relief can be granted to a defendant party inspite of the plaintiff failing to prove or establish his claim. Therefore, under these circumstances, the bar is staring against a party defendant in making an attempt to avoid a document to which he is a party by taking the mere plea of fraud without the same being declared void in a suit filed under Section 31 of the Specific Relief Act, more so, when the apprehension is writ large on the allegations in the plaint where the document is relied on and used against the defendant.
14. In view of the conclusion arrived at, the very plea of fraud, misrepresentation etc., is not sustainable in the absence of a suit filed challenging the document. Thus, there are no merits in the appeal and no other points are urged.
15. In the result, the appeal fails and accordingly it is dismissed. However, in the circumstances, there shall be no order as to costs.
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