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PETITIONER: KUMAR HARISH CHANDRA SINGH DAS & ORS.

       Vs.

RESPONDENT: BANSIDHAR MOHANTY AND ORS.

DATE OF JUDGMENT: 05/05/1965

BENCH: MUDHOLKAR, J.R. BENCH: MUDHOLKAR, J.R. WANCHOO, K.N. SHAH, J.C.

CITATION:  1965 AIR 1738            1966 SCR  (1) 153

ACT: Transfer of Property Act (4 of 1882), ss. 3 and  59-Mortgage deed  in name of benamidar-Attestation by lender  of  money- Vallidity -Suit by lender-If maintainable.

HEADNOTE: The  first  respondent  lent  money  to  the  appellant  and obtained a mortgage deed from him in the name of the  second respondent.  The first respondent was himself one of the two attesting  witnesses.   On the failure of the  appellant  to repay the amount, the first respondent instituted a suit and the suit was decrees by the High Court. In his appeal to the Supreme Court, the appellant  contended that  : (i) the mortgage deed was not validly  attested  and (ii) the first respondent was not entitled to sue. HELD  :  (i) A person who has lent money, for  securing  the payment  of  which  a  mortgage deed  was  executed  by  the mortgagor, but who was not a party to the deed, could be  an attestor. [156C, G-H] There is a distinction between a person who is -a party to a deed  and a person who, though not a party to the deed is  a party  to the transaction and the latter is not  incompetent to attest the deed.  The object of attestation is to protect the  executant from being required to execute a document  by the other party thereto by force, fraud or undue  influence. Though, neither the definition of "attested" in s. 3 nor  s. 59  of  the  Transfer of Property Act debars a  party  to  a mortgage  deed  from attesting it, since  the  testimony  of parties to a document cannot dispense with the necessity  of examining at least one attesting witness to prove the execu- tion  of  the  deed, it must be inferred  that  a  party  is debarred from attesting a document which is required by  law to be attested.  Where, however, a person is not a party  to the  deed, there is no prohibition in law to the  proof,  of the execution of the document, by that person. [155H; 156 A- B] (ii) When a transaction is a mortgage, the actual lender  of the money is entitled to sue upon it. [157E] A  person  who provides consideration for a  transaction  is entitled to maintain a suit concerning the transaction.   In Gur  Narayan  and  Ors,. v. Sheo Lal Singh and  Ors,  .  (46

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I.A.1)  the  Privy Council only recognised the  right  of  a benamidar  also to sue, but did not hold that the  benamidar alone could sue and not the beneficial owner. [157 D-F]

JUDGMENT: CIVIL APPELLATE JURISDICTION : Civil Appeal No. 304 of 1963. Appeal  from the judgment and decree dated July 26, 1960  of the Orissa High Court in First Appeal No. 6 of 1954. Sarjoo  Prasad,  S.  Murty and B.  P.  Maheshwari,  for  the appellants. 154 A.   V. Viswanatha Sastri and R. Gopalakrishan, for the res- pondent no. 1. The Judgment of the Court was delivered by Mudholkar,  J.  Two questions are raised before us  in  this appeal  from the judgment of the Orissa High Court.  One  is whether  the  mortgage  deed  upon which  the  suit  of  the respondent no. 1 was based was validly attested.  The  other is  whether the respondent no.  1 was entitled to  institute the suit. The mortgage deed in question was executed by the  appellant in favour of Jagannath Debata, respondent no. 2 on April 30, 1945,  for  a consideration of Rs.  15,000.   The  appellant undertook  to  repay  the  amount  advanced  together   with interest  within  one year from the execution of  the  deed. The  appellant, however, failed to do so.  Respondent no.  1 therefore  instituted  the  suit out of  which  this  appeal arises. According to respondent no.  1 though the money was advanced by him to the appellant he obtained the deed in the name  of the  second respondent Jagannath Debata because  he  himself and  the  appellant  were  close  friends  and  he  felt  it embarrassing  to  ask the appellant to pay interest  on  the money  advanced  by  him.   As  the  consideration  for  the mortgagee  deed proceeded from him he claimed the  right  to sue upon the deed.  He, however, joined Jagannath Debata  as the third defendant to the suit.  He also joined Dr. Jyotsna De as second defendant because she is the transferee of  the mortgaged  property-which  consists  of a  house,  from  the appellant whose wife she is.  This lady however remained  ex parts.   The appellant denied the claim on  various  grounds but we are only concerned with two upon which arguments were addressed  to us.  Those are the grounds which we  have  set out  at the beginning of the judgment.  The third  defendant Jagannath  Debata disputed the right of respondent no. 1  to institute  the  suit  and claimed that it  was  he  who  had advanced   the  consideration.   His  claim  was,   however, rejected by the trial court and he has remained content with the decree passed by the trial court in favour of respondent no. 1. The trial court decreed the suit of respondent no.  1 with  costs.   Against  that  decree  the  appellant   alone preferred  an appeal before the High Court.  The  contention raised  by the appellant before us were also raised  by  him before the High Court but were rejected by it. In  our  opinion  there is no substance  in  either  of  the contentions  urged  on behalf of the appellant.   It  is  no doubt true that there 1 5 5 were only two attesting witnesses to the mortgage deed,  one of  whom was respondent no. 1, that is, the lender  himself. Section  59 of the Transfer of Property Act, which,  amongst other  things,  provides  that  a  mortgage  deed  shall  be attested  by at least two witnesses does not in terms  debar

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the  lender  of  money from attesting the  deed.   The  word "attested" has been defined thus in s. 3 of the Transfer  of Property Act :               "  ’attested’  in relation  to  an  instrument               means and shall be deemed always to have meant               attested by two or more witnesses each of whom               has seen the executant sign or affix his  mark               to  the  instrument, or has  seen  some  other               person sign the instrument in the presence and               by  the  direction of the  executant,  or  has               received   from  the  executant   a   personal               acknowledgment of his signature or mark or  of               the  signature of such other person, and  each               of  whom  has  signed the  instrument  in  the               presence of the executant; but it shall not be               necessary that more than one of such witnesses               shall have been present at the same time,  and               no  particular  form of attestation  shall  be               necessary." This  definition is similar to that contained in the  Indian Succession Act.  It will seen that it also does not preclude in terms the lender of money from attesting a mortgage  deed under  which the money was lent.  No other provision of  law has  been brought to our notice which debars the  lender  of money   from   attesting  the  deed  which   evidences   the transaction whereunder the money was lent.  Learned counsel, however, referred us to some decisions of the High Courts in India.   These  are  Peary Mohan Maiti &  Ors.  v.  Sreenath Chandra(1);  Sarur  Jigar Begun v. Barada Kanta (  2  )  and Gamati  Ammal  v. V. S. M. Krishna Iyer (3).  In  all  these cases  it has been held that a party to a document which  is required  by law to be attested is not competent  to  attest the document.  In taking this view reliance has been  placed upon  the  observations of Lord Selborne, L.C., in  Seal  v. Clarige(1). "It  (i.e.,  the attestation) implies the presence  of  some person,   who  stands  by  but  is  not  a  party   to   the transaction." The  object of attestation is to protect the executant  from being  required  to execute a document by  the  other  party thereto  by  force,  fraud or undue  influence.   No  doubt, neither the definition of (1)  14 C.W.N. 1046. (2)  I.L.R. 37 Cal. 526. (3)  A.I.R. 1954 Mad. 126. (4)  LR. 7 Q.B.D. 516. Sup/165- 11 156 ’attested’ nor s. 59 of the Transfer of Property Act  debars a  party  to a mortgage deed from attesting  it.   It  must, however,  be  borne in mind that the law requires  that  the testimony of parties to a document cannot dispense with  the necessity  of examining at least ,One attesting  witness  to prove the execution of the deed.  Inferentially,  therefore, it  debars  a  party  from attesting  a  document  which  is required by law to be attested.  Where, however, a person is not  a party to the deed there is no prohibition in  law  to the  proof of the execution of the document by that  person. It  would  follow, therefore, that the ground on  which  the rule laid down in English cases and followed in India  would not  be  available against a person who has lent  money  for securing  the payment of which a mortgage deed was  executed by  the  mortgagor  but who is not a  party  to  that  deed. Indeed it has been so held by the Bombay High Court in  Balu Ravji Charat v. Gopal Gangadh Dhabu(1) and by the late Chief

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Court  of Oudh in Durga Din & Ors. v. Suraj  Bakhsh(2).   In the  first  of these cases an argument similar  to  the  one advanced  before  us was addressed before  the  Bombay  High Court.  Repelling it the court observed:               "In  Seal v. Claridge(1) much relied  upon  by               the appellant’s pleader the old case of  Svire               v.  Bell  (1793)  5 T.R.  371,  in  which  the               obsolete  rule  was  pushed  to  its  farthest               extent,  was  cited  to  the  Court  but  Lord               Selbome in delivering judgment said : ’What is               the  meaning  of attestation, apart  from  the               Bills of Sale Act, 1878 ? The word implies the               presence  of some person who stands by but  is               not  a  party  to the  transaction.’  He  then               referred  to Freshly v. Reed ( 1842) 9 M  &  W               404 and said : ’It follows from that case that               the party to an instrument cannot attest  it.’               Again  in  Wichita v. Marquis of  Bath  (1865)               L.R.I  Eq.  17 at p. 25, the  remarks  of  the               Master  of the rolls imply that if the  plain-               tiffs  Dave and Wickham had not  executed  the               deed  as parties but had only signed with  the               intention  of attesting, the provision of  the               statute  requiring  two  attesting   witnesses                             would have been satisfied."’ A  distinction was thus drawn in this case between a  person who  is  a party to a deed and a person who,  though  not  a party to the deed, is a party to the transaction and it  was said that the latter was not incompetent to attest the deed. This  decision was followed by the Chief Court of Oudh.   We agree with the view taken by the Bombay High Court. (1) 12 I.C. 531. (2) I.L.R. 7 Lucknow 41 (F.D.) (3)  L.R. 7 Q.B.D. 516. 1 57 As  regards the second question a number of High  Courts  in India had taken the view that a benamidar could not maintain a  suit for the recovery of property standing in  his  name, beneficial  interest in which was in someone  else.   Benami transactions are not frowned upon in India but on the  other hand they are recognised.  Indeed s. 84 of the Indian Trusts Act,  1882 gives recognition to such transactions.   Dealing with  such transactions Sir George Farewell has observed  in Bilas Munwar v. Desrai Ranjit Singh(1):               "It is quite unobjectionable and has a curious               resemblance  to  the doctrine of  our  English               law,  that  the  trust  of  the  legal  estate               results  to  the  man who  pays  the  purchase               money,  and this again follows the analogy  of               our common law, that where a feoffment is made               without  consideration the use results to  the               feoffor." It  must  follow  from this that  the  beneficial  owner  of property standing in the name of another must necessarily be entitled  to  institute a suit with respect to  it  or  with respect  to  the  enforcement  of  a  right  concerning  the property  of a co-sharer.  It will follow that a person  who takes   benefit  under  the  transaction  or  who   provides consideration  for a transaction is entitled to  maintain  a suit  concernina the transaction.  Thus where a  transaction is a mortgage, the actual lender of money is entitled to sue upon it.  Indeed, till the decision of the Privy Council  in Gur Narayan & Ors. v. Sheo Lai Singh & Ors. (2) the right of a  benamidar  to  sue  upon  a  transaction  which  is  only ostensibly  in  his  favour was not  recognised  by  several

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courts  in  India.  Relying upon this decision it  was  con- tended before us on behalf of the appellant that in view  of this decision it must be held that it is the benamidar alone who  could  maintain a suit but not  the  beneficial  owner. That,  however,  is  not what  the  Privy  Council  decided. Indeed,   that  was  never  a  question  which   arose   for consideration before the Privy Council.  Apart from that  on principle the real beneficiary under a transaction cannot be disentitled to enforce a right arising thereunder. In  this  view we uphold the decree of the  High  Court  and dismiss the appeal with costs. Appeal dismisssed. (1)  42 I.A. 202, 2)5. (2)  46 I.A. 1. 158