YELAMANCHILI PITCHAYYA Vs. YELAMANCHILI RATTAMMA

JUDGEMENT

(1.) The plaintiff has preferred this appeal against the decree of the Subordinate Judge of Masulipatam dismissing his suit on a mortgage-deed executed by the 1 defendant. The plaintiff's case is that he lent Rs. 1,750 on the mortgage of property belonging to the 1st defendant, a Hindu widow, and that she did not pay anything towards the mortgage amount and that he is entitled to a decree against her. The 1 defendant's case is that the money lent on the mortgage belonged to Kottayya, her sister's husband, and that the plaintiff is only a benamidar and is not entitled to a decree against her. Kottayya applied to the Court to be made a party to the suit and the Subordinate Judge directed him to be added as the 2nd defendant to the action. Kottayya's case is that the plaintiff is a benamidar for him and that he paid Rs. 1,750 for the plaint mortgage and the plaintiff, therefore, is not entitled to a decree. The Subordinate Judge upheld the contention of the 2nd defendant and dismissed the suit. Hence this appeal.

(2.) The first contention of Mr. Krishnaswami Aiyar for the appellant is that the Lower Court had no power to make the 2nd defendant a party to a suit on a mortgage and to try the question whether the mortgagee is a benamidar for some one else. His argument is that, granting that the plaintiff is a benamidar, he is a trustee and the cestui que trust or the beneficial owner cannot intervene in a suit in which the trustee is seeking to enforce a legal remedy against a third person in respect of the trust property and that Order 1, Rule 10 of the Civil Procedure Code has no application to a case like the present. When a person acquires an interest in property with his funds in the name of another for his own benefit the latter is called a benamidar. A benamidar is not a trustee in the strict sense of the term. He has the ostensible title to the property standing in his name but the property does not vest in him but is vested in the real owner. He is only a name-lender or an alias for the real owner. The cardinal distinction between a trustee as known to English Law and a benamidar lies in the fact that a trustee is the legal owner of the property standing in his name and the cestui que trust is only a beneficial owner, whereas, in the case of a benami transaction, the real owner has got the legal title though the property is in the name of the benamidar. It is well settled that the real owner could enforce his remedy in respect of property standing in the name of a benamidar without reference to the latter. If a mortgage stands in the name of a benamidar, the person for whom the mortgage was obtained could sue on the mortgage, and the same rule applies to other transactions except those forbidden by law. The benamidar has some of the liabilities of a trustee but not all his rights. When the benamidar is in possession of the property standing in the name, he is in a sense the trustee for the real owner. It is well settled now that a benamidar can sue in his own name. He can give a discharge to an obligor, who, not knowing the real nature of the transaction, bo na fide pays him the amount due from him. The benamidar incurs no obligation if he does not protect the property standing in his name. A trustee is liable for neglect in safeguarding the interests of the trust by not taking reasonable care with it such as a prudent man would bestow in his own affairs, but I am not aware of any case in which a mere benamidar was held liable for failure to sue for recovery of money due on a bond standing in his name. A benamidar has no interest at all in the property or transaction standing in his name. If a contract is entered into in his name, he is not the contracting party. Bipeen Beharee Chowdhry V/s. Ramchunder Roy and Ors. (1870) 14 W.R. 12, 15. In Petheperumal Chetti V/s. Muniandy Servai (1908) I.L.R. 35 Cal. 551 : L.R. 35 I.A. 98 : 18 M.L.J. 277 (P.C.) Lord Atkinson quotes with approval the following passage from Mayne's Hindu Law, 7 Edition, para. 446: Where a transaction is once made out to be a mere benami, it is evident that the benamidar absolutely disappears from the title. His name is simply an alias for that of the person beneficially interested.

(3.) A benami transaction does not create the relation of trustee and cestui que trust. See Uma Sundari Dasi V/s. Dwarakanath Roy (1868) 2 Beng. L.R. (App. Civil) 284, A person dealing with a benamidar bona fide without the knowledge of the real nature of the transaction would be protected on the principle of the law of estoppel. As the real owner held out to the world that the benamidar was the real owner, he could not complain if other people bona fide dealt with the owner of the ostensible title as the real owner. The principle is embodied in Section 41 of the Transfer of Property Act.