Nani and others v. Surendran and others

IN THE HIGH COURT OF KERALA AT ERNAKULAM THE HONOURABLE MR. JUSTICE A.HARIPRASAD FRIDAY, THE 13TH DAY OF APRIL 2018 / 23RD CHAITHRA, 1940 RSA.No. 916 of 2014 (A) AGAINST THE JUDGMENT AND DECREE DATED 28-01-2014 IN AS NO.101/2013 of DISTRICT COURT,PATHANAMTHITTA AGAINST THE JUDGMENT AND DECREE DATED 05-03-2013 IN OS NO.349/2009 of MUSNIFF'S COURT,ADOOR ## APPELLANTS/RESPONDENTS/PLAINTIFFS:- 1 NANI, AGED 73 YEARS, W/O.LATE KUNJUKUNJU, KUNNATHUAYYATHU, NADUVILE MURI, PANDALAM THEKKEKARA VILLAGE, THUMPAMON P.O., ADOOR TALUK, PATHANAMTHITTA DISTRICT. 2 RADHAKRISHNAN, AGED 46 YEARS, S/O.LATE KUNJUKUNJU, KUNNATHUAYYATHU, NADUVILE MURI, PANDALAM THEKKEKARA VILLAGE, THUMPAMON P.O., ADOOR TALUK, PATHANAMTHITTA DISTRICT. 3 RATHIKUMARI, AGED 44 YEARS, D/O.LATE KUNJUKUNJU, KUNNATHUAYYATHU, NADUVILE MURI, PANDALAM THEKKEKARA VILLAGE, THUMPAMON P.O., ADOOR TALUK, PATHANAMTHITTA DISTRICT. BY ADV.SRI.LIJI.J.VADAKEDOM ## RESPONDENTS/APPELLANTS/DEFENDANTS:-: 1. SURENDRAN, AGED 78 YEARS, S/O.KESAVAN, CHANNANAKUNNIL, MEZHUVELI VILLAGE, ELAVUMTHITTA P.O., KOZHENCHERRY TALUK, PATHANAMTHITTA DISTRICT - 689 645. 2. AJEESH, AGED 27 YEARS, S/O.BARJEE, PUTHUSERIKKIZHAKKECHARUVIL, PUTHUSERIMALA MURI P.O., RANNI VILLAGE, RANNI TALUK, PATHANAMTHITTA DISTRICT - 689 645. 3. SIVADASAN, AGED 69, S/O.K.K.DAMODARAN, MONDI VIHAR, PANDALAM VILLAGE, PANDALAM P.O., PRESENTLY RESIDING AT RAMACHANDRANAGAR HOUSING COLONY HOUSE NO.1366, PUTHIYANGADI PAVUNGADU, KOZHIKODE - 676 001. BY ADVS. SRI.JACOB P.ALEX SRI.JOSEPH P.ALEX THIS REGULAR SECOND APPEAL HAVING BEEN FINALLY HEARD ON 26.03.2018 ALONG WITH RSA NO.731 OF 2016, THE COURT ON 13-04-2018 DELIVERED THE FOLLOWING: ## **A.HARIPRASAD, J. -------------------------------------R.S.A. Nos.916 of 2014 & 731 of 2016 -------------------------------------Dated this the 13[th] day of April, 2018** ## **COMMON JUDGMENT** Appellants are the plaintiffs in O.S.No.349 of 2009 before the Court of Munsiff, Adoor and the respondents are the defendants in the suit. Substantive prayer in the suit is for a declaration that Exts.A2 and A8 sale deeds are null and void and therefore to cancel the same. It is specifically contended in the plaint that the said deeds are sham documents, under which no interest in the property had been transferred in favour of the defendants. 2. The trial court decreed the suit granting the reliefs sought for. The lower appellate court reversed the judgment and decree passed by the trial court. Felt aggrieved, the plaintiffs are in appeals. For the sake of convenience, the parties are hereinafter referred to as the plaintiffs and defendants. 3. Short facts, material for determination of the issues, are as follows: Plaint schedule property originally belonged to one Ayyappan, RSA Nos.916 of 2014 & 731 of 2016 2 who was the grant parent of plaintiffs 2 and 3. On the death of Ayyappan, his son Kunjukunju and daughters inherited the property. Later, as per Ext.A1 document of the year 1979, sisters of Kunjukunju settled their shares in the property in favour of Kunjukunju. Kunjukunju is the father of plaintiffs 2 and 3 and husband of the 1[st] plaintiff. He became the absolute owner of the property. After his death on 17.12.2001, the property devolved on the plaintiffs. 1[st] defendant is a local money lender, who had advanced `30,000/to the plaintiffs. For securing the money advanced, he insisted on execution of Ext.A2 sale deed in favour of himself and the 2[nd] defendant. Plaintiffs would contend that there was no transfer of property and the deed was executed only with an intention to ensure repayment of the loan amount with interest. It is the case in the plaint that `30,000/- was taken as loan from the 1[st] defendant with a stipulation to pay 2% interest per month because of the pressing situation prevailed in the family of the plaintiffs. 2[nd] plaintiff had repaid the entire outstanding debt with interest and demanded the 1[st] defendant to return the property. Instead of re-conveying the property to the plaintiffs, defendants 1 and 2 alienated the property to the name of 3[rd] defendant as per Ext.A8 in the year 2009. Plaintiffs’ house is situated on the extreme north of the entire property. Excluding the house site, the remaining property was included in Ext.A2, which was executed only as security for the RSA Nos.916 of 2014 & 731 of 2016 3 amount borrowed. Plaintiffs had no intention to sell the property and defendants 1 and 2 had assured them that they would not claim any title over the same. Since the defendants failed to fulfill their obligation, the suit was filed. 4. Defendants 1 and 2 filed a written statement contending that Ext.A2 is an outright sale deed executed after receiving consideration. They are the bonafide purchasers for value. Title over the property had been transferred from the plaintiffs to the defendants 1 and 2 and therefore Ext.A2 is a concluded sale. 1[st] defendant is not a money lender as alleged. Immediately after Ext.A2, boundary stones were placed for separating the property from rest of the property retained by the plaintiffs. 1[st] defendant did not issue any acknowledgment for receiving money as alleged in the plaint. It must be a forged document. On 30.06.2009, defendants 1 and 2 had sold the property for consideration to the 3[rd] defendant as per Ext.A8 and now he is in possession of the property. Plaintiffs tried to trespass into the property and to commit mischief, which was resisted by the nephew of 3[rd] defendant. Though complaints were preferred before police, they failed to take action. The suit is liable to be dismissed. 5. 3[rd] defendant filed a counter claim, claiming that he is the owner of the property and the plaintiffs are trying to trespass upon the property by RSA Nos.916 of 2014 & 731 of 2016 4 obliterating the boundary marks. Therefore, he prayed for fixation of boundary and for a consequential prohibitory injunction. 6. Six witnesses were examined on the side of the plaintiffs and three on the side of the defendants. Exts.A1 to A10 are the documents relied on by the plaintiffs. Exts.B1 to B12 are documents relied on by the defendants. Exs.C1 to C6 are the commissioner’s reports and plans. 7. Trial court decreed the suit by declaring that Exts.A2 and A8 are void and therefore, they were ordered to be cancelled. Further, the plaintiffs are declared to have title and possession over the plaint schedule property. Consequently, prohibitory injunction was also granted in favour of the plaintiffs. 8. The defendants aggrieved by the judgment and decree of the trial court preferred A.S.No.101 of 2013 before Court of the District Judge, Pathanamthitta. Learned District Judge, after considering the rival contentions, allowed the appeal and dismissed the suit. Further, he decreed the counter claim giving reliefs to the 3[rd] defendant. Hence the plaintiffs have preferred two appeals, one against the dismissal of suit and the other, against the decree in the counter claim. 9. Heard the learned counsel for the plaintiffs/appellants and the defendants/respondents. RSA Nos.916 of 2014 & 731 of 2016 5 10. It is contended by the learned counsel for the plaintiffs that the lower appellate court ought to have favourably found that there is no right, title or interest in the property created in favour of the defendants by virtue of Exts.A2 and A8 sale deeds. The lower appellate court dismissed the suit mainly relying on the ratio in **Moosa v. Moiden (2001 (1) KLT 183)** , wherein it has been held that a suit, without a prayer for specific performance of the agreement to re-convey the property is not maintainable. According to the learned counsel, the facts situations in **Moosa** ’s case are totally different from the facts in this case. It is therefore contended that the ratio in **Moosa** ’s case was wrongly applied to a completely different set of facts, which resulted in a wrong judgment. I shall examine those aspects in the subsequent paragraphs. 11. It is interesting to note that the plaintiffs have preferred I.A.No.38 of 2014 when the matter was pending in appeal before the lower appellate court for incorporating a prayer for specific performance. That application was also dismissed by the learned District Judge. However, it is now contended by the learned counsel for the plaintiffs that he has no grievance regarding dismissal of the application, since such an amendment to the plaint is not required in the light of the specific case set up by the plaintiffs in their pleadings. 12. It is yet another complaint raised by the plaintiffs that despite RSA Nos.916 of 2014 & 731 of 2016 6 raising a specific challenge against Ext.A2 sale deed, that it was executed with no intention to transfer title over the property, 1[st] defendant never entered the witness box to deny the allegations of the plaintiffs. Still, the lower appellate court misread the evidence to arrive at the conclusion. According to the learned counsel, the lower appellate court did not take into account the evidence of PW5, who is a witness to Ext.A2 sale deed, which will specifically show that the 1[st] defendant is a money lender and Ext.A2 was executed only as a security for return of money. It is argued by the learned counsel for the plaintiffs that when the 3[rd] defendant testified as DW1, he gave answers probabilising the case of the plaintiffs that he is an accomplice to the 1[st] defendant's money lending business. In short, it is the case of plaintiffs that the evidence adduced and the documents produced were not properly appreciated by the lower appellate court. 13. Per contra, learned counsel for the defendants would contend that the trial court’s judgment was reversed for valid reasons. Pleadings raised in the plaint are legally insufficient to hold that Exts.A2 and A8 are sham transactions. The lower appellate court rightly considered the oral and documentary evidence and rightly relied on **Moosa** ’s case for non-suiting the plaintiffs. 14. The substantial questions of law arising in common in the appeals RSA Nos.916 of 2014 & 731 of 2016 7 are thus: I. Whether the first appellate court is right in holding that the suit to declare Exts.A2 and A8 deeds as null and void is not maintainable for not incorporating a prayer for specific performance especially when the plea of the plaintiffs is that the said sale deeds conveyed no title and interest and the same are sham documents and are liable to be adjudged as null and void under Section 31 of the Specific Relief Act, 1963? II. Whether a plaintiff is barred from independently proving that a particular document which is injurious to him is a nullity under Section 31 of the Specific Relief Act, 1963? III. Whether a plaintiff is barred from proving real nature of a sale deed as a void one only because the plaintiff averred that the defendants made a promise to execute a reconveyance in favour of the plaintiff while the plaintiff executed a sale deed as a security document or a money transaction? 15 I shall refer to the relevant pleadings borne out from the plaint. Originally, the suit was one for permanent prohibitory injunction restraining the defendants from trespassing into the plaint schedule property and for a mandatory injunction decree ordering the defendants to re-transfer the plaint schedule property to the plaintiffs. Subsequently, as per order on I.A.No.1860 of 2012 dated 10.10.2012, the plaint was extensively amended. Certain RSA Nos.916 of 2014 & 731 of 2016 8 recitals have been added to the body of the plaint. It has been specifically pleaded that the plaintiffs never intended to sell the property to defendants 1 and 2 and they had no intention to purchase the same. It is also averred that the 1[st] defendant assured the plaintiffs that he would never claim any title over the same, nor would he oust the plaintiffs from possession of it. It is further pleaded that the 1[st] defendant also assured the plaintiffs that a deed of reconveyance would be executed as soon as the loan amount was paid back with interest. It is therefore contended that Ext.A2 did not convey any right, title or interest to defendants 1 and 2 and so much so, Ext.A8 does not confer any title to the 3[rd] defendant. According to the averments in the amended plaint, these documents are void abinitio as they are not supported by any consideration. Since no title had been passed in favour of defendants 1 and 2 initially and then to 3[rd] defendant, there is no occasion for claiming any specific performance of the agreement to reconvey the property. A prayer for declaration was also added after the amendment. 16. Learned counsel for the defendants contended that in the original pleading it was mentioned that the 1[st] defendant demanded transfer of 20 cents as security in addition to signed blank cheques and promissory notes. After the amendment, plaintiffs have taken up a different contention which is inconsistent with the original pleadings. It is therefore contended by the RSA Nos.916 of 2014 & 731 of 2016 9 learned counsel for the defendants that the plaintiffs have no consistent case regarding the nature of documents. 17. On a perusal of the amended plaint, it is now clear that the plaintiffs claimed a declaratory decree on the premise that Ext.A2 is void abinitio since it happened to be executed without any intention to transfer title to the defendants 1 and 2 and there was no consideration paid for sale of property. It was in fact a security arrangement, as insisted by defendants 1 and 2. At the time of execution of Ext.A2 itself there was an agreement to reconvey the property, after discharging the liability, although the same was not shown in Ext.A2. It is the contention raised by the learned counsel for the plaintiffs that such a separate agreement need not be specifically enforced through a court, since the plaintiffs can seek effective relief even without that claim; if they succeed in getting a declaration that Ext.A2 and the subsequent document Ext.A8 are sham documents and they are null and void for want of consideration. 18. Learned counsel for the plaintiffs took me through the judgment passed by the lower appellate court. Much reliance has been placed by the lower appellate court on **Moosa** ’s case. That was also a suit for declaration that a sale deed executed by the plaintiff in favour of the defendant in respect of certain land was only executed by the plaintiff as security for the amount RSA Nos.916 of 2014 & 731 of 2016 10 borrowed and it did not create any title to the defendant. Plaintiff therein contended that he was always in possession of the property and therefore a prohibitory injunction relief was also sought. After analysing the materials, learned single Judge held that there was a concluded sale of property by the plaintiff therein in favour of the defendant. In paragraph 7, it has been observed that there are elements clearly establishing that the impugned transaction was a sale, nothing but a sale. After entering such a finding, the learned single Judge examined the plaint case to find that on a reasonable reading of the plaint it was evident that the plaintiff had set up a case of agreement for reconveyance of the property by the defendant to him. Taking note of the facts in that case in paragraph 9 it was held thus: _“I shall first consider the contention that the suit as framed is not maintainable which is framed as one of the substantial questions of law arising for decision in this Second Appeal. On a reading of the plaint it is clear that what the plaintiff has set up in a case of an agreement to reconvey the property on his paying a sum of Rs.2000 recited as consideration for the sale in Ext.A1. In the context of the plea raised by him what the plaintiff had to sue for is for specific performance of the agreement to reconvey. If the plaintiff has a case that no time for execution of the reconveyance was fixed in the agreement,_ RSA Nos.916 of 2014 & 731 of 2016 11 _he could have pronounced the theory of demand and refusal to bring the suit within time. Clearly time was of the essence of the contract in an agreement for reconveyance. Having specifically pleaded that the defendant insisted on a sale deed being executed and a sale deed was executed and having set up a parol agreement outside the sale transaction to the effect that the defendant had agreed to reconvey the property to the plaintiff on payment to him of the amount due, the plaintiff was bound to include a prayer for the relief of specific performance in the plaint. In the absence of such a prayer for specific performance, clearly the suit as framed is not maintainable.”_ 19. It is the contention raised by the learned counsel for the plaintiffs that the lower appellate court, without noticing the marked distinctions in the facts in **Moosa** ’s case and this case, applied the principles therein without any justification. This being a second appeal, this Court has limitation in reappreciating the facts. However, on consideration of the pleadings in this case and deposition of witnesses coupled with the recitals in the documents, I am of the view that the conclusion arrived at by the learned District Judge that the suit is not maintainable without a prayer for specific performance of the independent agreement to reconvey is incorrect in law. First of all, he should have entered a finding with reasons that Ext.A2 is a concluded sale and the plaintiffs’ title to the property had been conveyed to the defendants 1 and 2. RSA Nos.916 of 2014 & 731 of 2016 12 Without entering a definite finding in that regard, the lower appellate court committed an error in applying the principles in **Moosa** ’s case. 20. Learned District Judge relied on **N.V.Srinivasa Murthy and others v. Mariyamma (AIR 2005 SC 2897)** , **Bishwanath Prasad Singh v. Rajendra Prasad and another ((2006) 4 SCC 432)** and **Ramakrishna Rao v. Raj Murari (AIR 2008 SC 1182)** . On a perusal of the facts and circumstances in those cases, I am fully convinced that they are totally dissimilar and irrelevant in the factual context of this case. 21. The recitals in Exts.A2 and A8 themselves are relied on much by the District Judge for finding that they are genuine documents, forgetting the fact that the plaintiffs have a definite case that though the wording employed therein showed a concluded sale, in reality, they are documents executed to secure the money advanced. What is prohibited in Section 92 of the Evidence Act, 1872 (in short, “the Evidence Act”) is that no evidence of any oral agreement or statement shall be admitted as between parties to an instrument for the purpose of contradicting, varying, adding to, or subtracting from its terms, when the terms of such contract, grant or other dispositions of property, which law require to be reduced to the form of a document. But, Proviso (1) to Section 92 makes it very clear that any fact may be proved which would invalidate any document or which would entitle any person to any decree or RSA Nos.916 of 2014 & 731 of 2016 13 order relating thereto; such as fraud, intimidation, illegality, want of due execution, want of capacity in any contracting party, want or failure of consideration or mistake in fact or law. It is therefore clear that a party to a document, though precluded from contradicting, varying, adding to, etc. the terms of any written document, is entitled to prove that the document impugned is not valid in law for certain legal reasons. Even though no authority is required, the decision in **George and another v. Annakutty and others (2017 (4) KLT 553)** rendered by a Division Bench is cited before me. The facts narrated in paragraph 3 of the judgment are almost similar to this case. In paragraph 13 the following observations are made by the Division Bench: _"13.Therefore, as held by the Apex Court, a party is entitled to show that the transaction as recorded in the document was never intended to be acted upon and that the document is a sham one. In the case at hand also, the vendors do not rely upon Ext.A1 and attempt to vary its terms, but it is the contention that Ext.A1 was never intended to be acted upon. According to the vendors the real transaction between the parties was some other agreement not recorded in the document. In Hathika v. Padmanabhan (1994 (1) KLT 345) a learned Single Judge of this Court held that the bar of S.92 of the_ RSA Nos.916 of 2014 & 731 of 2016 14 _Evidence Act applies when a party seeks to rely upon the document embodying the terms of the transaction and that the bar is not applicable when it is the case of the party that the transaction recorded in the document was never intended to be acted upon and that the document is a sham one. We do not think that it is necessary to multiply authorities. It is open to a party to contend that a document executed by him purporting to be a sale deed is only a fictitious or a nominal transaction and that it was never intended to be acted upon and that the transaction between the parties was an entirely different one.”_ The basic decision on this point can be seen in **Gangabai v. Chhabubai ((1982) 1 SCC 4)** , wherein it has been held thus: _"The bar imposed by Section 92(1) applies only when a party seeks to rely upon the document embodying the terms of the transaction and not when the case of a party is that the transaction recorded in the document was never intended to be acted upon at all between the parties and that the document is a sham. Such a question arises when the party asserts that there was a different transaction altogether and what is recorded in the document was intended to be of no consequence whatever. For that purpose oral evidence is admissible to show that the document executed was never intended to operate as an agreement but that some other agreement_ RSA Nos.916 of 2014 & 731 of 2016 15 _altogether, not recorded in the document, was entered into between the parties.”_ In this context, I have to observe that the learned District Judge by placing reliance on the recitals in the documents, found that they are genuine. It is the grievance of the plaintiffs that the attending circumstances revealed from evidence were not considered. 22. It is to be noticed that the plaintiffs have no case that Ext.A2 is a document falling within Section 58 of the Transfer of Property Act,1882, because it is not a mortgage by conditional sale. It is also clear from Ext.A2 that there is no condition embodied in the document to have a re-purchase. Plaintiffs set up a separate agreement. 23. It is settled proposition that sham transactions are not benami transactions. A learned single Judge in **Ouseph Chacko v. Raman Nair (1989 (1) KLT 767)** had taken such a view. Correctness of the view was examined by a Full Bench in **Bhargavy v. Janaki (1994 (2) KLT 262)** . After referring to various authorities, it was decided that the Benami Transactions (Prohibition) Act, 1988 does not apply to sham transactions. There is no case for any of the parties that Exts.A2 and A8 are benami transactions. But, then the distinction has to be clearly understood. 24. Learned counsel for the defendants contended that on an RSA Nos.916 of 2014 & 731 of 2016 16 evaluation of the preponderance of probabilities, it can be seen that Exts.A2 and A8 are genuine transactions and not sham transactions as contended by the plaintiffs. Ext.B1 (Ext.A2) was executed on 16.05.2006. Ext.B2, same as Ext.A8, was executed on 24.01.2009. Ext.A3 is purported to be a receipt executed by the 1[st] defendant in favour of the plaintiffs when they allegedly paid off the debt with interest. This document is denied by the defendants. Although oral evidence was adduced by the plaintiffs to substantiate Ext.A3, the 1[st] defendant did not mount the box to deny the same. Learned counsel for the defendants pointed out that Ext.B4 complaint before police was filed by one Krishnankutty, a relative of the 3[rd] defendant, on 14.08.2009 in respect of an incident allegedly happened on 13.08.2009. Ext.A9 is the complaint preferred from the plaintiffs' side before the Superintendent of Police, Pathanamthitta. Ext.A4 lawyer notice was issued on 12.08.2009 to which Ext.A6 reply was sent on 25.08.2009. It is the contention of the defendants that since the execution of Ext.A2, more than three years had elapsed for filing the suit which itself is an indication that it is a genuine transaction. 25. Per contra, learned counsel for the plaintiffs would contend that despite clearing off the liability, defendants 1 and 2 evaded re-conveyance of the property on one pretext or other. It is also contended on behalf of the defendants that if Ext.A2 was a sham document, why Ext.A3 happened to be RSA Nos.916 of 2014 & 731 of 2016 17 executed. Further, the defendants had effected mutation and they had paid basic tax for the property indicating that the transfer through Ext.A2 was a real one. In answer to this contention, the learned counsel for the plaintiffs contended that mutation was effected only after Ext.A8 in the year 2009 and there was no mutation of the property done immediately after Ext.A2. The time gap between these documents is about three years. It is, therefore, an indication that Ext.A2 is a sham document, according to the learned advocate for the plaintiffs. However, those are aspects in the relam of appreciation of evidence, which cannot be done in a full-fledged manner in this second appeal. 26. A three Judge Bench of the Supreme Court in **V.M.Salim v. Fathima Muhammed and others ((2011) 15 SCC 756)** has laid down the principles regarding the nature of a sham transaction. It reads as follows: _“8. A document will be “sham” if it ostensibly creates rights/obligations, which are not intended to be acted upon by the parties to the deed, and is executed in pursuance of a secret arrangement, with the ulterior motive of securing an undisclosed advantage to the owner (or executant as the case may be). It involves collusion between the parties to the document to achieve an illegal objective. Therefore, if anyone wants to establish that a sale transaction was sham and collusive,_ RSA Nos.916 of 2014 & 731 of 2016 18 _he ought to plead and prove a secret arrangement between the vendor and the purchaser, that the sale was nominal and that no right, title or interest passed or intended to pass to the purchaser under the sale, and the deed was executed with the sole intention of securing the eviction of the tenants or securing some other benefit to the vendor. Where direct evidence of such secret arrangement is not available, it may be possible to establish the sham nature of a document by some clinching circumstantial evidence. This may be done by showing that no sale consideration was paid to the vendor though shown to have been paid and that the expenses relating to stamp duty and registration of the sale deed were incurred by the vendor himself. It may also be established by proving that even after the sale, the vendor himself was recovering the rents and paying the property taxes and exercising all rights of an owner. No such evidence has been led in this case. On the other hand, the respondents merely relied on the following three circumstances in support of their contention that the transaction was sham and collusive: (a) the premises sold is a portion of a larger building; (b) that the price was meagre; and (c) the previous owner had earlier failed in his attempt to evict the respondents. They pointed out that the first proviso to Section 11(3) of the Act mandates the Rent Control Court not to direct eviction on the ground_ RSA Nos.916 of 2014 & 731 of 2016 19 _of landlord’s bona fide need for own occupation, if the landlord has another building of his own in his possession in the same city, except for special reasons. The contention of the respondents was that since the erstwhile owner could not evict the respondents, he having other buildings in the city, the shop was shown as sold to the appellant, who did not own any other building, under a sham document, so as to evict the respondents, for the benefit of the previous owner Ranjith. But the very circumstances mentioned by the respondents to contend that the transaction is sham, can actually be valid reasons for an owner to sell the premises. If the rental income from a property is very low, and the owner is not in a position either to get vacant possession or increase the rents, he may out of frustration or absence of an alternative, decide to dispose of such property at whatever price it may fetch, and use the sale price for some other useful purpose. Therefore, if an owner sells a property for a modest price as in this case, on account of the meagre returns therefrom and inability to either evict the tenant or increase the income therefrom, that by itself cannot lead to a presumption that the sale transaction is sham.”_ If Ext.A2 is a sham transaction, certainly Ext.A8 will not confer any right on 3[rd] defendant. RSA Nos.916 of 2014 & 731 of 2016 20 27. Learned counsel for the plaintiffs relying on the decision in **Laliteshwar Prasad Singh v. S.P.Srivastava ((2017) 2 SCC 415)** contended that the lower appellate court utterly failed in its duty to appreciate the pleadings and evidence forgetting the fact that it is the last court on facts. The Supreme Court in paragraphs 13 and 14 of the judgment held as follows: _“_ _**13** . An appellate court is the final court of facts. The judgment of the appellate court must, therefore, reflect the court’s application of mind and record its findings supported by reasons. The law relating to powers and duties of the first appellate court is well fortified by the legal provisions and judicial pronouncements. Considering the nature and scope of duty of the first appellate court, in Vinod Kumar v. Gangadhar ((2015) 1 SCC 391:(2015)1 SCC (Civ) 521), it was held as under: (SCC pp.394-96, paras 12-15)_ _“12. In Santosh Hazari v. Purushottam Tiwari ((2001) 3 SCC 179), this Court held as under :(SCC pp. 188-89, para 15)_ _15. .......... The appellate court has jurisdiction to reverse or affirm the findings of the trial court. First appeal is a valuable right of the parties and unless restricted by law, the whole case is therein open for rehearing both on questions of fact and law. The judgment of the appellate court must, therefore, reflect its conscious application of_ RSA Nos.916 of 2014 & 731 of 2016 21 _mind and record findings supported by reasons, on all the issues arising along with the contentions put forth, and pressed by the parties for decision of the appellate court. ....... while reversing a finding of fact the appellate court must come into close quarters with the reasoning assigned by the trial court and then assign its own reasons for arriving at a different finding. This would satisfy the court hearing a further appeal that the first appellate court had discharged the duty expected of it.’_ _The above view has been followed by a three-Judge Bench decision of this Court in Madhukar v. Sangram ((2001) 4 SCC 756), wherein it was reiterated that sitting as a court of first appeal, it is the duty of the High Court to deal with all the issues and the evidence led by the parties before recording its findings._ _13. In H.K.N. Swami v. Irshad Basith ((2005) 10 SCC 243), this Court stated as under:(SCC p.244, para 3) ‘3. The first appeal has to be decided on facts as well as on law. In the first appeal parties have the right to be heard both on questions of law as also on facts and the first appellate court is required to address itself to all issues and decide the case by giving reasons. Unfortunately, the High Court, in the present case has not recorded any finding either on facts or on law. Sitting as the first appellate court it was the duty of the High Court to deal with all the issues and the evidence led by the parties before recording the_ RSA Nos.916 of 2014 & 731 of 2016 22 _finding regarding title.’_ _14. Again in Jagannath v. Arulappa ((2005) 12 SCC 303), while considering the scope of Section 96 of the Code of Civil Procedure, 1908, this Court observed as follows:(SCC p.303, para 2)_ _‘2. A court of first appeal can reappreciate the entire evidence and come to a different conclusion.’_ _15. Again in B.V.Nagesh v. H.V.Sreenivasa Murthy ((2010) 13 SCC 530:(2010) 4 SCC (Civ) 808), this Court taking note of all the earlier judgments of this Court reiterated the aforementioned principle with these words: (SCC pp.530-31, paras 3-5)_ _‘3. How the regular first appeal is to be disposed of by the appellate court/High Court has been considered by this Court in various decisions. Order 41 CPC deals with appeals from original decrees. Among the various rules, Rule 31 mandates that the judgment of the appellate court shall state:_ - _(a) the points for determination;_ - _(b) the decision thereon;_ - _(c) the reasons for the decision; and_ - _(d) where the decree appealed from is reversed or varied, the relief to which the appellant is entitled._ _4. The appellate court has jurisdiction to reverse or affirm the findings of the trial court. The first appeal is a valuable_ **==> picture [223 x 31] intentionally omitted <==** _right of the parties and unless restricted by law, the whole case is therein open for rehearing both on questions of fact and law. The judgment of the appellate court must, therefore, reflect its conscious application of mind and record findings supported by reasons, on all the issues arising along with the contentions put forth, and pressed by the parties for decision of the appellate court. Sitting as a court of first appeal, it was the duty of the High Court to deal with all the issues and the evidence led by the parties before recording its findings. The first appeal is a valuable right and the parties have a right to be heard both on questions of law and on facts and the judgment in the appeal must address itself to all the issues of law and fact and decide it by giving reasons in support of the findings. (Vide Santosh Hazari v. Puthushottam Tiwari ((2001) 3 SCC 179) (SCC p.188 para 15) and Madhukar v. Sangram ((2001) 4 SCC 756)_ _5. In view of the above salutary principles, on going through the impugned judgment, we feel that the High Court has failed to discharge the obligation placed on it as a first appellate court. In our view, the judgment under appeal is cryptic and none of the relevant aspects have even been noticed. The appeal has been decided in an unsatisfactory manner. Our careful perusal of the judgment in the regular first appeal shows that it falls short of considerations which are expected from the court of first_ RSA Nos.916 of 2014 & 731 of 2016 24 _appeal. Accordingly, without going into the merits of the claim of both parties, we set aside the impugned judgment and decree of the High Court and remand the regular first appeal to the High Court for its fresh disposal in accordance with law.’”_ _**14.** The points which arise for determination by a court of first appeal must cover all important questions involved in the case and they should not be general and vague. Even though the appellate court would be justified in taking a different view on question of fact that should be done after adverting to the reasons given by the trial Judge in arriving at the finding in question. When the appellate court agrees with the views of the trial court on evidence, it need not restate effect of evidence or reiterate reasons given by the trial court; expression of general agreement with reasons given by the trial court would ordinarily suffice. However, when the first appellate court reverses the findings of the trial court, it must record the findings in clear terms explaining how the reasonings of the trial court are erroneous.”_ 28. As pointed out by the learned counsel for the plaintiffs, I am of the view that the learned District Judge, without understanding nice, but clear, distinctions in the facts in **Moosa** ' s case, applied the principles pronounced therein to this case, wherein the facts situations are different. The very same documents impugned were considered in order to ascertain whether the RSA Nos.916 of 2014 & 731 of 2016 25 transaction purported to be done through them are genuine or not. The contention of the plaintiffs that Ext.A2 was a sham transaction and therefore Ext.A8 has no legs to stand was not considered in the light of totality of evidence. As pointed out earlier, keeping in mind the limitations of this Court to appreciate the evidence in a second appeal, I am compelled to set aside the judgment and decree of the lower appellate court and remand the case for a fresh determination. The substantial questions of law raised are answered to the effect that if Exts.A2 and A8 are null and void transactions, the plaintiffs' claim for declaration can be considered even without seeking a relief for a specific performance of the oral agreement said to have been made contemporaneous to Ext.A2. If Ext.A2 and consequently Ext.A8 are genuine transactions, then certainly principles in **Moosa** 's case will apply. It is fundamental that the plaintiffs are legally entitled to prove that Exts.A2 and A8 are sham transactions and therefore a relief under Section 31 of the Specific Relief Act, 1963 could be claimed by them. As mentioned above, bar under Section 92 of the Evidence Act will not apply in a case where the principles in the first proviso to Section 92 of the Evidence Act could be employed. Substantial questions of law raised are answered as above. In the result, the appeals are allowed. The judgment and decree passed by the lower appellate court are set aside and the matter is remitted **==> picture [223 x 31] intentionally omitted <==** back to the lower appellate court for a further consideration in the light of the observations made above. Parties shall appear before the court below on 23.05.2018. The lower appellate court shall dispose of the appeal as expeditiously as possible, at any rate, before 21.08.2018. All pending interlocutory applications will stand closed. ## **A. HARIPRASAD, JUDGE.** **cks**