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2015 (3) TMI 1361
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....ring Survey No. 70/1 of Yeshwanthpura village, Bangalore North Taluk, measuring 1 acre. The plaintiff claimed that he was entitled to 1/7th share in the suit schedule property. Defendant Nos. 1 to 5 were the brothers of the plaintiff and the defendant No. 6 was the mother of the plaintiff M/s. Fire Bricks and Potteries Private Limited was arrayed as defendant No. 7. It was the plaintiffs case that his father Late V.L. Dhanram Modaliar and his father's brother V.L. Venugopal Modaliar had purchased 12 acres and 2 guntas of land in land bearing survey No. 73 of Yeshwanthpur Village, under a registered sale deed dated 3.2.1938. It was claimed that V.L. Dhanram Modaliar and V.L. Venugopal Modaliar, along with their family members had promoted two companies, namely, M/s. Fire Bricks and Potteries Private Limited and M/s. Standard Tile and Clay Works Limited. The shares in the said two companies were held jointly by VL Dhanram Modaliar and V.L. Venugopal Modaliar. Subsequently, by an arrangement between the two brothers, M/s. Fire Bricks and Potteries Private Limited (defendant No. 7) came to be owned by V.L. Dhanram Modaliar and his family members and M/s. Standard Tile and ....
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....rtition dated 29.9.1962. However, in the said deed, the parties thereto had expressly agreed that the said partition was only a partial partition. Subsequently, in the year 1969, the plaintiff is said to have filed a civil suit in O.S. No. 56/1969 seeking partition of the joint family property. A compromise was said to have been arrived at by the parties thereto. In the said Compromise Petition, at paragraph 11, the parties to the said petition are said to have declared as below: "Parties hereby confirm that there are no other property - movable or immovable whatsoever to be divided amongst them and belonging to joint family". The plaintiff is said to have served defendant No. 7 in various capacities, including as the Managing Director of the said company till 16.1.1980. During his tenure as a director, the defendant No. 7 had mortgaged the suit schedule property in favour of Karnataka State financial Corporation to secure a loan. The mortgage deeds dated 2.6.1961 and 2.1.1970 had also been executed by the plaintiff as a director of the defendant No. 7 - company. In the said mortgage deeds, the plaintiff had represented to the secured creditor that the defendant No. ....
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....orated under the provisions of the Companies Act. There is also evidence to show that the seventh defendant company was incorporated before 03.02.1938. The seventh defendant company has been incorporated in the year 1935 as seen from Exhibit D-8 at page 107 of the typed set of documents and also as seen from page No. 258. which are balance sheets of the seventh defendant company. Thus, there is documentary evidence to show in the form of balance sheets filed by the defendants themselves that the seventh defendant was Incorporated in the year 1935 and it is seen from para 8 of the written statement that M/s. Standard Tile and Clay Works (P) Ltd. was already incorporated under the Indian Companies Act, 1913, and the two brothers were directors." The learned Senior Advocate would draw attention to para 6.01, at page 15 of the judgment, wherein the learned trial Judge had posed a question as follows: "So, now we have to consider that whether both V.L. Dhanram Mudaliar and V.L. Venugopal Mudaliar have purchased the entire Sy. No. 73 of Yeshwantpura Village wherein Item 1 of suit schedule property is situated in their individual capacity or as directors of M/s. Standard Tile ....
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....1 to 5 had stood as guarantors, it would not create title in favour of the seventh defendant, if Exhibit D-2 had not, in fact, created title. Exhibits D-5 and D-6 are seen to be mortgage deeds in a printed format. Apart from that, the plaintiff and Defendants 1 to 6 were shareholders and plaintiff and defendants 1 to 5 were in the management of the company. They were all family members. No third-party was involved. There were no separate deeds of guarantee. It is not stated as to why the plaintiff and defendants 1 to 5 or some of them had been asked to stand as guarantors. Therefore, if Exhibit D-2 did not convey title to the seventh defendant, the mere mortgage of the property by the seventh defendant claiming as owner and the plaintiff and defendants 1 to 5 joining in the said mortgage deed, would not confer title to the seventh defendant, if the seventh defendant otherwise had no title under Exhibit D-2. The third reasoning given by the Judge is that there was a suit in O.S. No. 56/1969, covered by Exhibits D-38 and D-39 and in that suit, the suit properties were not included and hence the suit properties are not the joint family properties, but is the property of the seventh....
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....endant No. 7 - company has proved beyond reasonable doubt that the suit schedule properties are its absolute properties. The following documents have been produced before the trial court by the defendant No. 7 - company for establishing its title to the suit schedule properties: "a) Sale deed dated 14.4.1945 (Exhibit D-2) b) Mortgage deeds dated 2.6.1961 and 2.1.1970 [Exhibits D-5 and D-6 respectively]: Both the deeds were signed by the plaintiff and other directors on behalf of the defendant No. 7 company and this fact had been admitted by the plaintiff himself in his cross examination; c) Compromise Petition filed by the plaintiff and other defendants in the suit for partition bearing O.S. No. 56/1969. In the said petition, the plaintiff and other defendants too have expressly confirmed, in paragraph 11 of the petition, that there are no other property-movable or immovable whatsoever, to be divided amongst them and belonging to joint family. d) Grant certificate [Exhibit D-46] in respect of the item No. 2 property, confirming that the grant was in favour of the defendant No. 7 - company." Therefore, it is contended that the trial court....
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....represented as the Director of the defendant No. 7 company; b) Being parties to the sale deed dated 14.4.1945, both VL Venugopal Modaliar and V.L. Dhanram Modaliar had expressly consented to the sale of the property by M/s. Standard Tile and Clay Work Limited to the defendant No. 7 without any opposition; c) Based on the representations made by M/s. Standard Tile and Clay Work Limited, the defendant No. 7 - Company has altered its position by paying the consideration to it; and d) Therefore, neither the plaintiff nor any other legal heirs of V.L. Venugopal Modaliar and V.L. Dhanram Modaliar should be allowed in any suit or proceeding between themselves and such person or their representative to deny the transfer of title form M/s. Standard Tile and Clay Work Limited to the defendant No. 7 company." It is further pointed out that the High Court of Madras in V. Baskaran and another v. Manjula and others, 2013(2) MWN (Civil) 631, has held as under: "if there are certain recitals in a registered document then contra evidence cannot be adduced by either of the parties". It was further held that "the recitals in a registered deed cann....
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....and Clay Work Limited in favour of the defendant No. 7 - Company is squarely covered by Section 41 of the TP Act, and therefore, M/s. Standard Tile and Clay Work Limited can be held to be the ostensible owner. For application of Section 41 of the TP Act, the following conditions need to be satisfied: "(a) The Transferor must be an ostensible owner; (b) He must be held out to be so by the consent, express or implied, of the real owner; (c) The transfer must be for consideration; and (d) The Transferee must have acted in good faith, taking reasonable care to ascertain that the Transferor had power to transfer." The following authorities are relied upon:-- "In Ramcoomar v. Mac-queen, (1872)11 Beng LR 46, the Judicial Committee of the Privy Council held as follows: "It is a principle of natural equity which must be universally applicable that, where one man allows another to hold himself out as the owner of an estate and a third person purchases it, for value, from the apparent owner in the belief that he is the real owner, the man who so allows the other to hold himself out shall not be permitted to recover upon h....
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....the representation is not made directly to the representee but when it consists in making it possible for the ostensible owners to mislead those with whom they are dealing on account of the special position of vantage in which they were placed by the conduct, express or implied, of the real owners." In view of the principles laid down as above in the aforesaid judgments, it is contended that the facts of the present cases are completely covered under Section 41 of the TP Act, as all the conditions contemplated under the said section is satisfied. It is sought to be analysed thus: "a) the Transferor must be an ostensible owner: In this case, M/s. Standard Tile and Clay Work Limited is the ostensible owner as it has represented itself to have acquired the property under the registered sale deed dated 03.02.1938 as per the recital; b) He must be held out to be so by the consent, express or implied, of the real owner: M/s. Standard Tile and Clay Work Limited represented that it is the real owner by express consent of both V.L. Venugopal Modaliar and V.L. Dhanram Modaliar as they were also parties to the sale deed dated 14.4.1945; c) The tran....
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....d on the title to the property " It is clear that when there is a cloud on the plaintiffs title, it is necessary for the plaintiff to seek for declaration. In the present case, the plaintiff has admitted in this cross examination at page No. 39, of the paper book that he was aware of the execution of the sale deed dated 14.4.1945, in favour of the defendant No. 7 -company and therefore it implies that the plaintiff was aware that there is cloud on his title wherein sale deed dated 14.4.1945 has confirmed prima facie title in favour of the defendant No. 7 company. That being so, it was imperative for the plaintiff to have filed a suit for declaration challenging the sale deed dated 14.4.1945 under Section 31 of the Specific Relief Act, 1963 (Hereinafter referred to as the 'SR Act', for brevity). Since, the plaintiff has failed to challenge the said sale deed within the limitation period, the plaintiff cannot now contend that he can ignore the said sale deed and seek partition. It is contended that apart from the above, the reliefs as prayed for are merely consequential. (v) It is pointed out that the trial court had also dismissed the suit for part....
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....erence to the said partition in the plaint except to the extent of making bare averments that there were certain partitions in the joint family. Therefore, the plaintiff has not come to the court with clean hands. A perusal of the Compromise Petition and the certified copy of the final decree proceedings makes it clear that in O.S. No. 56/1969 filed by the plaintiff, the members of the joint family have expressly confirmed that there are no other joint family properties except the properties that are subject matter of the partition suit bearing No. O.S. No. 56/1969. It is pointed out that exhibit D-39 at page No. 304 of the paper book confirms that the parties to the partition suit bearing O.S. No. 56/1969 filed by the plaintiff have reaffirmed that "there are no other movable and immovable properties whatsoever to be divided amongst them and belong to the joint family". And that although the trial court did not consider the note contained at page No. 304 of Exhibit D-39, which was made by the parties to the said suit before the appropriate authority, the trial court has rightly come to the conclusion that there was no reason for the plaintiff and the defendants i....
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....ained at page No. 304 of the Exhibit D-39, wherein it was stated that there are no other movable and immovable properties whatsoever to be divided amongst them and belong to the joint family. That being the case, it is now not open for the plaintiff to state that the earlier partition was merely a partial partition. (vi) It is contended that the trial court had also dismissed the suit for partition bearing O.S. No. 874/1990 as barred by law of limitation. The trial judge held that there were two earlier partitions amongst the family members of late V.L. Dhanram Modaliar and that this property was never consciously excluded from the partition of the joint family properties. On the contrary, the parties to the aforesaid compromise petition have expressly stated that there are no other properties for partition except the suit properties of that case. Therefore, the trial judge had held that in the year 1962 itself or in the year 1969, the possession of the plaintiff was excluded from the suit schedule properties and therefore 12 years have been and therefore, the suit is barred in terms of Article 110 of the Limitation Act, 1963 (Hereinafter referred to as the 'Limitation....
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....ights in Form No. 5 in favour of the first defendant, the eldest son of Dhanram Modaliar and kartha upon the demise of Dhanram Modaliar. Exhibit P4 refers to Mutation IT 2/53-54. It was probably for noting inheritance. Exhibit P5, the index of land records in Form No. 6 in which, Sy. No. 73 is standing in the name of Dhanram Modaliar and Venugopal Modaliar in column No. 18 and there is reference to D. Balakrishna Modaliar and in Column No. 20, there is reference to M.R. 2/53- 54. So Exhibit P-4 and P-5, namely record of rights and index of land records stood in the name of Dhanram Modaliar and thereafter Balaknshna Modaliar, the eldest son. Exhibit P4 and P5 are the certified copies obtained in 1988. As against this, regarding Item No. 1 of suit schedule property, the defendant has produced Exhibits D2, D47 and D48. D-47 is said to be of the year 1950. It mentions a mutation No. 6/50-51. As already stated, D-47 is said to be a photocopy, no negative has been produced. It is not stated as to who took the photo. If it is alleged to be a photocopy, whether photocopiers were available in 1950 is doubtful. D.W.-1 is not competent to speak about Exh. D-47 because he became the Company....
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....t D-48 cannot be relied upon to show that M/s. Standard Tile and Clay Works (P) Ltd. had title in the year 1939. Apart from that, the defendants have produced Exhibits D-8 to D-35 balance sheets. That will not prove title. In one of the balance sheets, in the auditor's report, there is a query in Exhibit D-8 that the company has not maintained records showing full particulars including quantitative details and situations of fixed assets. This refers to an auditor's report and in the reply to the auditor's remarks, it is stated that records are being compiled. This Director's report is for the year ending 30.06.1979. So, this clearly shows that the family members were running the company and no one has applied their mind as to whether the seventh defendant had title. They have produced assessment of tax by Corporation dated 10.7.1969. It says that it is a special notice for assessment to building tax. It refers to Door No. 4, Tumkur Road, I Division. The same will not create any title. Further, they have produced Exhibits D-49 to D-63. Most of them are after the date of institution of the suit and they have no bearing on the title and most of them are photocopi....
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....roperty by relying upon Exhibit P1. Admittedly, under Exhibit P1, the purchasers are two individuals. Hence, it is for the seventh defendant to prove as to how M/s. Standard Tiles and Clay Works (Private) Limited can claim to be the owner of item No. 1, when they have not purchased it under Exhibit P1. That is why the burden is put on the seventh defendant. So in this suit, the rival title is being adjudicated. Hence, the suit falls under Section 34 of the SR Act. Section 31 is in Chapter V with the heading "Cancellation of Instruments". Section 34 do not say, it is subject to Section 31. It is for the plaintiff to choose the remedy and the plaintiff can elect. It is settled law that even 100 years of possession will not create title unless and until there is a plea of adverse possession. Unless and until there is a plea of adverse possession, the question of title does not arise. In the case at hand, there is no plea of adverse possession. The seventh defendant do not admit the title of the plaintiff, the plaintiff do not admit the title of the seventh defendant. So the issue is who is having title. There is no question of limitation because there is no plea of adverse posse....
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....ence is a conduct which may be a relevant fact to apply the procedural law like estoppel, waiver or acquiescence, but thereby no title can pass. If in law, a person does not acquire title, the same cannot be vested only by reason of acquiescence or estoppel on the part of other. It is contended that in this regard, the principles of law laid down in the case of Kamakshi Builders v. Ambedkar Education Society and Others (2007) 12 SCC 27 and in the case of Karnataka Board of Wakf v. Government of India and others (2004) 10 SCC 779 are relevant. On the question of estoppel, the decision of the Apex Court in Chhaganlal Keshavlal Mehta v. Patel Narandas Haribai, (1982) 1 SCC 223 is relied upon. It is contended that there is no scope to raise the question of estoppel on the facts of the present case at all, for the following reasons: "a) If at all there was any representation, it was by Venugopal Mudaliar that M/s. Standard Tile and Clay Works (P) Ltd., represented by him as Managing Director, owned Item No. 1 of the suit schedule property. This representation is on the face of it, incorrect on a mere perusal of Exhibit P-1. So, this representation or admission is erroneou....
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....ay claim that he is the real owner. That is why, if a dispute arises, the presumption will be the ostensible owner is the owner. The real owner has to prove that the ostensible ownership is wrong. If it is admitted that X is the ostensible owner and Y is the real owner and based upon ostensible ownership, X transfers the property with the implied or express consent of Y, then Y will be precluded from questioning the title of the purchaser from X. But on the facts of this case, the purchasers under Exhibit P1 are two individuals, Dhanram and Venugopal. The seventh defendant's contention that they are only ostensible owners and the real owner is M/s. Standard Tiles and Clay Works (Private) Limited. This the defense set up by the seventh defendant in contending that the above said two persons purchased the properties as directors of two companies for the benefit of the two companies. It is for the seventh defendant to prove the same. No evidence has been let in, no proof is forth coming. Now, the argument proceeds on the wrong assumption that M/s. Standard Tiles and Clay Works (Private) Limited is the ostensible owner. This is only a surmise. Exhibit P-1, purchase deed does not sa....
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....referred to Exhibit P3. The learned judge has relied upon Ex-D46. Ex-D46 is again a photo copy marked subject to objections. Ex-D46 is a printed format with blanks. There is reference to "as per 565/51, 52" this document speaks of some auction and this document has not been proved to be true. It is not signed by anyone. The date is not clear. It is full of blanks. Mere, Exhibit D-46 which is said to be a photocopy which has not been proved in a manner known to law cannot create title to the seventh defendant. On the other hand, the plaintiff has produced Ex-P2 and P3. There is a presumption regarding correctness of the entries in Exhibit P2 and Exhibit P3 as per Section 133 of Karnataka Land Revenue Act. It is in the name of Balakrishna Modaliar. It is a certified copy applied in 1988-89. There is a reference to the year 1963-64. Item 2 is standing in the name of Balaknshna Modaliar. Ex-P3 is index of lands. Here also there is reference to 365/51-52. Exs. P2 and P3 are certified copies applied by Managing Director of seventh defendant Mr. Narasimha Murthy. This clearly shows it was in the name of Balaknshna Modaliar, eldest son of Dhanram Modaliar and after the demise of Dhan....
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....10 of the Limitation Act. Reference was made to page 304 of the typed set of papers and attention was shown to a note at the bottom stating that the parties to that suit have made a note that there are no other properties to be partition. This endorsement is of the year 1981. It was argued that this note would amount to exclusion of the plaintiff This is without any basis. This note cannot be called as exclusion for the purpose of Article 110 of the Limitation Act. Exclusion is a positive overt act. The so-called statement in the form of a note will not, at any stretch of imagination, be called as exclusion for the purpose of Article 110 of the Limitation Act. The whole argument is academic because the note is of the year 1981 and the suit has been filed on 07.02.1990, within 9 years. So, 12 years have not elapsed. This is pointed out only to show that this argument is baseless. If the note at page 304 is sought to be used as an admission, it can always be proved to be erroneous or untrue and in this case, it is so. It is settled law that the so called erroneous admission will not raise title. Exhibit P1 clearly shows that the property was owned by Dhanram Modaliar and Venugo....
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....orporated and the two brothers acquired the property not for their own personal benefit, but acquired as directors of the companies incorporated under the provisions of the Companies Act. There is also evidence to show that the seventh defendant -company was incorporated before 03.02.1938. The seventh defendant company has been incorporated in the year 1935, as seen from Exhibit D-9 at page 107 of the typed set of documents and also as seen from page No. 258 etc., which are balance sheets of the seventh defendant company. Thus, there is documentary evidence in the form of balance sheets filed by the defendants themselves to show that the seventh defendant was incorporated in the year 1935. It is seen from para 8 of the written statement that M/s. Standard Tile and Clay Works (Private) Limited was already incorporated under the Companies act and the two brothers were its directors. The trial court has also accepted the case of defendant No. 7 that the suit property having been mortgaged under Exhibit D-5 and D-6, would indicate that the said defendant had exercised a right of ownership, to the knowledge of the plaintiff and the other defendants as they had also been signatories t....
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....It is stated that there is a portion which is not the subject matter of the partition. Hence, the mere fact that suit property has not been included in O.S. No. 56/1969, it cannot be concluded that the suit properties are not properties available for partition and they are the properties of the seventh defendant. In Exhibit D-39 at page No. 304, there is a note stating that there are no other properties movable or immovable whatsoever to be divided amongst them and belonging to the joint family. The learned Trial Judge does not rely upon this endorsement stating that it is not incorporated in the body of the decree. A plea of partial partition was not raised in O.S. No. 56/1969. There was no adjudication in O.S. No. 56/1969 on merits and it ended in a compromise. The following factors are relevant in addressing whether Exhibit D-2 confers title on Defendant No. 7: "a) The vendor is mentioned as M/s. Standard Tiles and Clay Works (Private) Limited, represented by its Managing Director Venugopal Modaliar and the purchaser is M/s. Fire Bricks and Potteries (Private) Limited incorporated under Mysore Companies Act represented by its Managing Director Dhanram Modaliar.....
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....o the suit properties is concerned, it is seen that the representation made by Venugopal Mudaliar that M/s. Standard Tile and Clay Works Limited, represented by him as Managing Director, owned Item No. 1 of the suit properties was not apparent from Exhibit P-1, this was an incorrect statement. Dhanram Mudaliar the other co-owner, had not made any statement, he was purportedly acting for the purchaser. Hence no title would pass to Defendant No. 7. M/s. Standard Tile and Clay Works Limited never had title to the property. Even if Exhibit D-2 is treated as a sale deed executed by Venugopal Mudaliar, it would at best cover his half share, namely, 6 acres and 2 guntas. However, the plaintiff cannot be said to be estopped from making a claim to one-seventh share of his father's share of the property. He had not conveyed the same. There is no plea of adverse possession set up by defendant No. 7, either. Hence its continuous possession of the property even if unquestioned would not confer title. In so far as the reasoning of the trial court that having regard to the fact that in the suit for partition filed in OS 56/69, the suit properties had not been included and therefore it woul....
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....would be a person in whose favour the title deed stands. The real owner may be another. An example would be a benami transaction. If a dispute arises in such cases, the presumption would be that the ostensible owner is the owner. The real owner would have to prove otherwise. If the property is transferred by the ostensible owner with the implied consent or to the knowledge of the real owner, then the real owner would be precluded from questioning the transfer. But on the facts of this case, the purchasers of the dispute property were Dhanram Modaliar and Venugopal Modaliar. It was the claim of Defendant No. 7 that they were ostensible owners. And the real owner was M/s. Standard Tile and Clay Works Limited. In that, it was claimed that they had purchased the property in their individual names no doubt, but were in fact, acting as Directors of the company, which was yet to be incorporated as on the date of the transaction. However, the sale deed does not mention the same. Hence, the application of Section 41 of the TP Act does not arise. In so far as the contention that the plaintiff ought to have sought for the relief of declaration that Exhibit D-2 was a void document, is co....