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Whether transfer of property by trust deed will be invalid if it was effected during pendency of suit?

IN THE HIGH COURT OF CALCUTTA

S.A. 442 of 2016 and CAN 9187 of 2016

Decided On: 03.04.2017

Nirmal Kumar Neogi
Vs.
Samar Ghosh and Ors.

Hon’ble Judges/Coram:Jyotirmay Bhattacharya and Asha Arora, JJ.

Citation: AIR 2017(NOC) 907 Cal

1. This second appeal is directed against the judgement and decree dated 11th May, 2016 passed by the learned Additional District Judge, 11th Court, Alipore, 24-Parganas (South) in Title Appeal No. 110 of 2014 affirming the judgement and decree dated 31st March, 2014 passed by the learned Civil Judge (Senior Division), 1st Court at Alipore in Title Suit No. 189 of 1984 at the instance of the plaintiff/appellant.

2. Let us now consider as to whether any substantial question of law is involved in this appeal for which the appeal is required to be admitted for hearing under the provision of Order XLI Rule 11 of the Code of Civil Procedure.

3. Here is the case where we find that a suit for partition was filed by the plaintiff/appellant against his mother and his elder brother, claiming 1/3rd share in the suit property. It was alleged that Atul Krishna Neogi was the original owner of the suit property. He died intestate on 27th December, 1954 leaving behind him the plaintiff viz., Nirmal Kumar Neogi (younger son), the original defendants viz., Sukumar Neogi (elder son), Niva Rani Neogi (wife) and six daughters. Since the said Atul Krishna Neogi died before Hindu Succession Act came into effect, the daughters could not inherit any share in the suit property left by Atul Krishna Neogi. The interest of Atul Krishna Neogi in the suit property, thus, devolved upon his widow and two sons in equal share. Thus, each of them inherited 1/3rd share in the suit property. The plaintiff/appellant, thus, claimed 1/3rd share in the suit property.

4. During the pendency of the suit, the plaintiff/appellant came to know that his mother and his elder brother executed a deed of trust on 3rd May, 1985 for settling their 2/3rd interest in the suit property in favour of the beneficiaries under the said trust. When this fact regarding execution of the said deed of trust by the original defendants came to the knowledge of the plaintiff, the plaintiff amended his plaint challenging the legality, validity and due execution of the said deed of trust. Both the settlors died during the pendency of the suit. The legal representatives of those settlors were substituted in the place of the settlors.

5. The plaintiff/appellant claimed that the deed of trust executed by the original defendants being invalid and illegal, the 2/3rd share which those defendants had in the property ultimately devolved upon the plaintiff/appellant and the other legal representatives of those settlors by way of succession according to Hindu Succession Act.

6. Thus, the plaint was amended challenging the legality and/or validity of the said deed of trust. The plaintiff/appellant claimed that the plaintiff, in fact, became the owner of 17/21th share in the suit property as in addition to the share which he inherited from his father, he also along with the other legal heirs of the original defendants inherited their 2/3rd share in the suit property in equal share.

7. Fact remains that the elder brother of the plaintiff/appellant died bachelor. As such, his interest in the suit property would have devolved upon all the living brother and sisters of the elder brother, had no deed of trust been executed by him. Similarly, the interest of the mother would have devolved upon all her legal representatives including the plaintiff/appellant had she not executed the deed of trust. However, if the deed of trust is found to be valid, then of course, the plaintiff cannot inherit any share in the estate of those original defendants. Even the plaintiff cannot claim any interest in the trust property as he was not included in the list of beneficiaries under the said trust deed.

8. The defendants contested the said suit by filing written statement as well as additional written statement supporting the legality and/or validity of the deed of trust. They claimed that the deed of trust was duly executed by the settlors and the same was duly registered. They, thus, contended that as beneficiaries under the said trust, they are entitled to 2/3rd share which was settled by the settlors in favour of the beneficiaries under the said deed of trust.

9. The parties led evidence in support of their respective claims.

10. The learned Trial Judge after considering the pleadings of the parties and their evidence ultimately passed a preliminary decree in the said partition suit declaring 1/3rd share of the plaintiff in the suit property.

11. Being aggrieved by and dissatisfied with the said preliminary decree passed by the learned Trial Judge in the said suit, the plaintiff filed an appeal before the learned first Appellate Court.

12. The learned first Appellate Court set aside the said preliminary decree passed by the learned Trial Judge as the learned first Appellate Court found that the said preliminary decree was passed by the learned Trial Judge without deciding the issue regarding validity and legality of the deed of trust executed by the settlors. The suit was, thus, remanded back to the learned Trial Judge for fresh trial.

13. An additional issue to the following effect was framed:-

“Whether the deed of trust dated 3rd May, 1985 is valid in the eye of law or not ?”
14. After remand, the learned Trial Judge decided all the issues including the additional issue afresh and held that the deed of trust was duly executed by the settlors and the same was also duly registered. The learned Trial Judge thus, held that the deed in question was a genuine document and as such, the plaintiff could not inherit any interest in the 2/3rd share of those settlors as no interest of the settlors was given to the plaintiff under the said deed of trust. Thus, ultimately the learned Trial Court again passed a preliminary decree declaring 1/3rd share in favour of the plaintiff.

15. Being aggrieved by and dissatisfied with the said preliminary decree passed by the learned Trial Court after remand, the plaintiff again filed an appeal before the learned first Appellate Court. The learned first Appellate Court affirmed the said findings of the learned Trial Judge and ultimately dismissed the said appeal.

16. The instant second appeal is directed against the said judgement and decree passed by the learned first Appellate Court.

17. Let us now consider as to how far the learned courts below were justified either in passing the preliminary decree by the learned Trial Court or in maintaining the said decree in appeal by the learned first Appellate Court in the facts of the instant case.

18. Mr. Das, learned senior counsel appearing for the appellant submits that neither the learned Trial Court nor the learned first Appellate Court adhered to the directions passed in the remand order passed by the learned first Appellate Court while remanding the suit back to the learned Trial Court for fresh trial.

19. By drawing our attention to the order of remand, Mr. Das submits that while sending the suit on remand to the learned Trial Court for fresh consideration, the learned first Appellate Court directed the learned Trial Court not only to decide the issue regarding due and valid execution of the deed of trust but also directed the learned Trial Court to decide the issue regarding legality and validity of the said registered deed of trust.

20. By drawing our attention to the judgement and decree of the learned Trial Court passed after remand and the impugned judgement and decree passed by the learned first Appellate Court, Mr. Das submits that though the learned Trial Court and the learned first Appellate Court decided the issue regarding due execution and registration of the said deed of trust after remand, but the issue regarding validity and/or legality of the said deed of trust were not considered either by the learned Trial Court after remand or by the learned first Appellate Court in the impugned judgement.

21. Mr. Das ultimately submits that since the deed of trust was registered as per the provision of the Registration Act, the execution of the said deed of trust and attestation thereof by the witnesses are not challenged by his client in the instant appeal. He thus, restricted his submission with regard to the legality and/or validity of the deed of trust. According to him, the deed of trust is not valid in the eye of law for two fold reasons.

22. Firstly, such deed having been executed during the pendency of the suit without taking permission from the court, such transfer, according to him, is hit by the provision of Section 52 of the Transfer of Property Act.

23. Secondly, the deed of trust is also illegal as it was opposed to Section 4 of the Indian Trusts Act, 1882.

24. Mr. Das points out that Section 4 of the Indian Trusts Act deals with lawful purpose for which such deed can be executed. Five circumstances are mentioned in the said section providing that infringement of any one of them will invalidate the trust deed.

25. Those five circumstances are as follows:-

“a) if creation of such trust deed is forbidden by law, or

b) if creation is of such a nature that, if permitted, it would defeat the provisions of any law, or

c) if the trust deed is fraudulently created, or

d) if creation of the trust deed involves or implies injury to the person or property of another, or

e) the trust deed will be invalid if the Court regards it as immoral or opposed to public policy.”

26. According to Mr. Das, the trust deed executed by the settlors is invalid as creation of such trust deed involved or implied injury to the person or property of the plaintiff.

27. He thus, invited this Court to admit this appeal for hearing under the provision of Order 41 Rule 11 of the Code of Civil Procedure.

28. Let us now consider the impact of such submission of Mr. Das in the facts of the present case.

Section 52 of the Transfer of Property Act:-

29. The impact of the doctrine of lis pendens as enunciated under Section 52 of the Transfer of Property Act was considered by the Hon’ble Supreme Court in several decisions. Some of which may be referred to herein.

“1. In the case of Thomson Press (India) Ltd. v. Nanak Builders and Investors Pvt. Ltd. reported in MANU/SC/0192/2013 : AIR 2013 SC 2389,

2. In the case of A. Nawab John v. V.N. Subramaniyam MANU/SC/0516/2012 : (2012) 7 SCC 738,

3. In the case of T.G. Ashok Kumar v. Govindammal, MANU/SC/1044/2010 : JT 2010(13) SC 390.”

30. It was uniformly held by the Hon’ble Supreme Court in all those decisions that Section 52 of the Transfer of Property Act does not declare a pendente lite transfer by a party to the suit as void or illegal but only makes the pendente lite purchaser bound by the decision in the pending litigation. It was also held that if ultimately title of the pendente lite transfer is upheld in regard to the transferred property, the transferee’s title will not be affected. Thus, if title of the pendente lite transferor is recognised or accepted only in regard to a part of the transferred property, then the transferee’s title will be saved only in regard to that extent.

31. Thus, it was held by the Hon’ble Supreme Court in those decisions that transfer during the pendency of the suit itself does not invalidate the transfer.

32. Thus, we hold that the deed of trust executed by the settlors cannot be held to be illegal and/or invalid as such deed was executed by the settlors during the pendency of the suit without taking leave of the Court, as contended by Mr. Das.

33. Let us now consider the other part of the submission of Mr. Das that the deed of trust became invalid as it involved or implied injury to the person or property of the plaintiff. In this regard, we have considered the provision of Section 4 of the Indian Trust Act, particularly with reference to the condition as mentioned in Section 4(e) thereof.

34. Admittedly, the settlors inherited 2/3rd share in the suit property from Atul Krishna Neogi, after his death. The settlors executed the said deed of trust by settling their 2/3rd share in the suit property without affecting the 1/3rd share of the plaintiff. It is not a case where the settlors executed the entire property left by Atul Krishna Neogi. Had it been so, then the interest of the plaintiff to the extent of his 1/3rd share would have been injured. In that event, we could have held that the deed of trust is illegal being opposed to Section 4 of the Indian Trust Act.

35. Since the settlors executed the said deed of trust by settling their 2/3rd share in the suit property, we hold that the deed of trust was validly executed by the said settlors and the said deed of trust is not opposed to the provision of Section 4 of the Trust Act.

36. Accordingly, we hold that no substantial question of law is involved in this second appeal for which the appeal is required to be admitted for hearing under the provision of Order 41 Rule 11 of the Code of Civil Procedure. We, thus, decline to admit this appeal.

37. The appeal is, thus, dismissed.

38. In view of the disposal of the appeal itself, no further order need be passed on the stay application. The said application for stay being CAN 9187 of 2016 is, thus, deemed to be disposed of.

39. Urgent Photostat certified copy of this order, if applied for, be supplied to the Learned advocates for the parties immediately.

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