RADHA MADHAB PAIKARA Vs. KALPATARU ROY

JUDGEMENT

(1.) This is an appeal on behalf of the third defendant in a suit for declaration of title to immoveable property and for confirmation of possession thereof. The plaintiff-respondent, admittedly the original owner of the property, on the 13th March 1888, mortgaged jt to one Hari Bnllav Bose. The mortgagee enforced his security, obtained a decree and in execution thereof purchased the property on the 4th May 1897. On that date, therefore, the plaintiff ceased to be the owner of the property, but he apparently continued in possession. On the 22nd April 1898, the mortgagee auction-purchaser executed a conveyance in respect of the property in favour of the first defendant. The case for the plaintiff is that this transfer was made for his benefit but that the conveyance was taken in the name of the first defendant because he himself was in debt and was anxious to keep his property from the reach of his creditors. On the 25th March 1899, Jhe first defendant executed a mortgage of plaintiff property in favour of the second defendant. The mortgagee sued to enforce his security and obtained a decree. At the execution sale which followed, the third defendant became the purchaser on the 15th December 1906 for a sum of Rs. 7,150. On the 15th March 1907, the plaintiff commenced this action for declaration that the third defendant had acquired no title by his purchase, that he himself, was the owner under the conveyance executed in favour of the first defendant on the 22nd April 1898, that the mortgage by that defendant to the second defendant was fraudulent and without consideration and that the decree, in execution whereof the property was subsequently sold, was collusive. The Courts below have decreed the suit. They have found concurrently that the transfer by Hari Bullav Bose in favour of the first defendant on the 22nd April 1898 was for the benefit of the plaintiff, that the plaintiff thereafter continued in possession as before, and that the conveyance also was in his custody. They have further held that no money was advanced by the second defendant to the first defendant on the footing of the mortgage of the 25th March 1899, that the transaction in substance, was fictitious and that the suit subsequently brought by the mortgagee to enforce his security was also collusive. Under these circumstances, the Courts below have held that the third defendant has acquired no title to the property by his purchase at the execution sale, they have also found, though in vague and general terms, that the purchase by the third defendant was fraudulent, but the allegation of the plaintiff that the first three defendants bad conspired to defraud him, has not been specifically established. The third defendant has now appealed to this Court and has contended that he has acquired a valid title to the property by his purchase at the execution sale, and that, at any rate, the plaintiff is not entitled to succeed till the appellant has been re-paid the sum deposited by him in Court after his purchase at the execution sale. In our opinion, the facts found by the District Judge are not sufficient for the disposal of the suit and do not support the decree which has been made in favour of the plaintiff.

(2.) It is clear at the outset, that as no consideration was paid by the second defendant to the first defendant on the basis of the mortgage of the 25th March 1899, the mortgage transaction must be regarded as collusive. On the basis of this mortgage, a fictitious suit was brought by the mortgagee against the mortgagor; there was no contest and a decree was made in favour of the mortgagee. Under these circumstances, the result of the suit may be described in the language used by Lord Brougham in Earl of Bandan v. Henry Becker 3 Cl. & F. 479 : 9 Bligh (N.S) 532 In order to make, a sentence there must be a Veal interest, real argument, real prosecution, real, defence and a real decision; of all these requisites, not one takes place in the case of a fraudulent and collusive suit; there is no Judge but a person invested with the insignia of a judicial office who is mis-employed in listening to a fictitious cause proposed to him; there is no party litigating, there is no parly defendant and no real interest brought into question." See also the observations in Gore v. Stacpoole 1 Dow. App. Cas. 18 at p. 30 : 14 R.R. 1. We must take it then that, in so far as the plaintiff was concerned, prima facie, he would not be affected by the collusive decree in the fictitious suit of the second defendant against the first defendant, and he would be entitled, when the fraud was discovered, to have it declared that his rights had not been affected by the fraudulent decree. No doubt, as was stated in Robert Cole Bowen v. John Evans 2 H.L. Cas. 257 although fraud is not to be assumed in doubtful evidence, yet if it is clearly proved, no lapse of time would protect the parties to it or those who claim through them, against the jurisdiction of a Court of Equity, and in that case, it is immaterial by what machinery or contrivance the fraudulent transaction may have been effected, whether by a decree in equity, or a judgment at law, or otherwise See also Colyer v. Finch 5 H.L.C. 905 : 26 L.J. Ch. 65 : 3 Jur (N.S.) 25. It does not follow, however, that if, in execution of such a decree, the property has passed into the hands of an innocent purchaser, who pays value for the property, the plaintiff is necessarily in a position to enforce his rights as against him.

(3.) This is clear from the decision of their Lordships of the Judicial Committee in Lalla Bunseedhur v. Koonwar Bindeseree Dutt Singh 10 M.I.A. 454 and of this Court in Mohesh Chunder Bagchee v. Bwarkanath Moitro 24 W.R. 260. We are not unmindful that it has been laid down, in cases where an execution sale has been vitiated by fraud committed in the course of the execution proceedings themselves as in Hungsha Majillya v. Tincowri Das 8 C.W.N. 230 and Ambika Prasad Singh v. Whitwell 6 C.L.J. 111 that it is not necessary to establish fraud on the part of the auction-purchaser. But where execution proceedings have been conducted, apparently with regularity and in conformity with law, and the only defect alleged is that the decree on which the execution proceedings are founded was fraudulent, an innocent purchaser would be protected and it would be necessary to establish that he was a party to the fraud or was apprised thereof before he paid his money. Bishun Chand v. Bijoy Singh 13 C.L.J. 588 : 11 Ind. Cas. 399 : 15 C.W.N. 648 : 8 A.L.J. 587 : 13 Bom. L.R. 440 : (1911) 2 M.W.N. 418 : 21 M.L.J. 652 : 10 M.L.T. 335.