THE HON’BLE SRI JUSTICE K.C.BHANU APPEAL SUIT NO. 320 OF 2006 DATED: 28-02-2011. Between K.Kalyani and others … Appellants-Defendants And G.Bhadraiah and others …Respondents-Plaintiffs THE HON'BLE SRI JUSTICE K.C. BHANU APPEAL SUIT NO.320 OF 2006 JUDGMENT: This appeal is directed against the judgment and decree, dated 06-12-2005, in O.S.No.119 of 2001, on the file of the Senior Civil Judge, Miryalaguda, whereunder and whereby the suit filed for cancellation of gift settlement deed and to declare the alienation of house through the gift settlement deed in favour of defendants 2 and 3 by defendant No.1 as fraudulent transfer, illegal, null and void, was decreed. 2. Appellants herein are the defendants and the respondents herein are the plaintiffs in the suit. 3. The averments of the plaint in brief are as follows: Defendants 1 and 4 are spouses and defendants 2 and 3 are their children and 1st defendant along with his family shifted to Huzurnagar town and purchased residential house bearing No.1- 22/2 and he had been doing trading in paddy and selling to the rice millers and that 1st defendant borrowed amounts by executing the pronotes in favour of the plaintiffs and determined to evade the loans borrowed from lenders and filed a false complaint alleging that he brought the paddy sale proceeds amount intending to distribute to paddy producers and sellers, but the police of Huzurnagar detected that 1st defendant lodged false complaint to evade the paddy sale amounts to producers and sellers and an amount of Rs.4,00,000/- hidden at Miryalaguda recovered in Cr.No.167 of 2000 and thereafter, the money lenders demanded to discharge the loan amount from 1st defendant. 1st defendant anticipated that lenders will sue him for recovery of debts and in order to evade the loans, he executed gift settlement deed No.44/01 transferring his house bearing No.1-22 situated at Huzurnagar to minor children, defendants 2 and 3 appointing his wife defendant No. 4 as guardian on 08-01-2001 which is later to incident of Cr.No.167 of 2000 and that the said transfer by way of gift settlement in favour of his children is fraudulent only to escape from the attachment of recovery of debts. Except plaintiff No.11, all the plaintiffs filed suits before the Junior Civil Judge for recovery of money against defendants No.1 and filed suits for attachment before judgment and that suits and petitions are pending. If the settlement deed is not cancelled, the plaintiffs cannot realize their amounts after decree. Hence, the suit. 4. The 1st defendant remained ex parte. Defendants 2 to 4 filed written statement denying the averments of the plaint. It is stated that 1st defendant started doing paddy business one year prior to filing of the suit by the plaintiffs and the said business is not joint family business and also the defendants 2 to 4 are not aware of the alleged incident in Cr.No.167 of 2000. Defendants 1 to 3 are coparceners of joint family consisting themselves and mother of 1st defendant and that 1st defendant shifted his residence from native place to Huzurnagar prior to 1990 and in the year 1991, he purchased open site for the benefit of the joint family after selling the agricultural property of joint family and he constructed house by selling the agricultural land to an extent of Ac.4.00. 4th defendant and mother of 1st defendant requested him to partition the joint family property and put a proposal that he will execute gift deed for the property entitled towards share of defendants 2 and 3. Instead of executing partition deed as such, the 1st defendant executed gift settlement deed No.44/01. Defendants 2 and 3 are entitled to 1/3 share in the joint family and 1st defendant is also entitled for 1/3 share, 4th defendant is entitled for residence and maintenance from the 1st defendant and as such, it cannot be said that the gift made by 1st defendant is fraudulent one and also there is no cause of action to file the suit and hence, they pray to dismiss the suit. 5. Basing on the above pleadings, the following issues were settled by the trial Court: 1. Whether the suit gift settlement deed is fraudulently executed by 1st defendant to avoid repayment of money to the plaintiffs? 2. Whether the said gift settlement deed is liable to be declared as null and void? 3. To what relief? 6. On behalf of the plaintiffs, P.W.1 was examined and Exs.A1 to A12 were marked. On behalf of the defendants, D.W.1 was examined and Exs.B1 to B9 were marked. 7. The trial Court after considering the oral and documentary evidence available on record, came to the conclusion that Ex.A1 transaction is fraudulent one so as to defeat the rights of the creditors of 1st defendant and accordingly, decreed the suit as prayed for. Aggrieved thereby, this appeal has been preferred by the defendants. 8. Now the points for determination are; (i) whether the gift settlement deed executed by the 1st defendant in favour of defendants 2 and 3 is true, valid and correct? and (ii) whether the judgment of the trial Court is correct, legal and proper? 9. For better appreciation of facts, the parties are referred to as depicted in the suit. 10. Learned counsel appearing for the appellants-defendants contended that a specific plea has been taken by the defendants 2 and 3 who are the minors during the pendency of the suit that the property covered under Ex.A1 is a joint family property, but not self acquired property of 1st defendant, that 1st defendant has no exclusive right to gift the property or settle the property except to the extent of his 1/3 share and in spite of taking a plea to that effect, no issue has been framed by the trial Court and hence, he prays to remand the matter to the trial Court. 11. On the other hand, learned counsel appearing for the respondents-plaintiffs contended that whether the gift settlement deed executed by the 1st defendant in favour of defendants 2 and 3 is a fraudulent transaction or not is the issue to be decided in the suit, that it is the specific case of the defendants 2 and 3 that the property covered under Ex.A1 was purchased after selling the ancestral agricultural land, that therefore, necessary evidence ought to have been adduced by the defendants 2 and 3 in the trial Court and no such evidence was let in, that the trial Court rightly held that the recitals in Ex.A1 would go to show that it was self acquired property of 1st defendant and in order to defeat the rights of the creditors, the 1st defendant brought into existence Ex.A1, which is fraudulent transaction and therefore, the impugned judgment needs no interference by this Court. 12. It is not in dispute before this Court that the 1st defendant incurred debts as per Exs.A2 to A11, whereunder and whereby the plaintiffs therein obtained money decrees against the 1st defendant. Those plaintiffs filed the present suit jointly. The case of the plaintiffs is that to get over the decrees that may be ordered against the 1st defendant, he brought into existence Ex.A1. The evidence of P.W.1 would go to show that he along with plaintiffs 2 to 10 instituted several individual suits against 1st defendant and they were decreed. Therefore, by the date of execution original of Ex.A1, absolutely there is no need for the 1st defendant to execute such gift deed, but still, he executed the gift deed in favour of defendants 2 and 3 who are his sons with sole intention to defeat the rights of his creditors. Execution of Ex.A1 gift deed appears to have been executed 10 days prior to the filing of several suits against the 1st defendant. Plaintiffs sold the paddy through the 1st defendant to the rice mill owners. Admittedly, the 1st defendant collected more than Rs.4,00,000/- from the rice mill owners and took the amount to the house for the purpose of distributing the same to the various plaintiffs. But the case of the 1st defendant is that when he kept the amount of Rs.4,00,000/- in the house, some unknown person committed theft of cash from his house by entering into the house through ventilator. Therefore, he lodged a complaint with the police and police registered a case and ultimately filed the charge sheet as in Ex.A12-CC No.27 of 2001 on the file of the Judicial Magistrate of I Class, Huzurnagar, stating that there was no scope or possibility for any third party to commit theft of by entering into the house through the ventilator and a false complaint was lodged. Therefore, an amount of Rs.4,00,000/- collected from the rice mill owners must have been appropriated by the 1st defendant for his own use. During the course of investigation, police seized the said amount from the brother-in-law of the 1st defendant and the same was deposited into the Court. The 1st defendant has not come to the witness box to speak as to under what circumstances he effect the transfer under original of Ex.A1 and whether it is a bona fide transfer. He is the person to speak about the bona fide nature of transaction, but he has not come to the witness box. The onus to prove the fraudulent transfer s on those who challenge the transaction. When they establish the same, the transferee will have to show that he had acted in good faith. It has to be seen whether the object of the transaction was to put the property out of the reach of the creditors. Intention of party in case of fraudulent transfer is a question of fact. The evidence of P.W.1 is very clear that transaction covered by Ex.A1 is a fraudulent transaction, which defeats his rights and rights of other plaintiffs. The evidence of P.W.1 is also very clear that 1st defendant knows full well that if he does not discharge the debts borrowed and incurred, the creditors will sue him, that he along with other plaintiffs and other money lenders started demanding the 1st defendant for discharge of loan amounts with a view to defraud the genuine creditors, Ex.A1 was brought into existence. Practically, his evidence remained unchallenged. 13. D.W.1, who is no other than the wife of 1st defendant stated that the property covered under Ex.A1 is the joint family property and it is not the self acquired property of 1st defendant and the 1st defendant purchased the same after selling some agricultural lands of joint family in the village. Thereafter, after selling some agricultural land, he constructed a house in the village. Therefore, the sum and substance of the evidence of D.W.1 is that the property covered by Ex.A1 is the ancestral property. As the defendants 2 and 3 who are the sons of 1st defendant, takes a specific plea that it is the ancestral property, the burden is on them to establish the same. D.W.1 is the guardian and mother of defendants 2 and 3. Her evidence would go to show that after selling some agricultural lands of joint family in the village, in the first instance, 1st defendant purchased vacant site and thereafter after selling some more agricultural land, he constructed a house therein. If really, the said contention is to be accepted as true and correct, certainly D.W.1 would have obtained certified copies of sale deeds whereunder her husband sold the agricultural lands of joint family. Under Section 114 (g) of the Indian Evidence Act, 1872, the Court may presume that evidence which would be and is not produced, be unfavourable to the person who withholds it. The illustration refers to the presumption raised from withholding of evidence and from suppression of evidence. If a man wrongfully withholds evidence, every presumption to his disadvantage consistent with the facts admitted or proved will be adopted. As D.W.1 in possession of best evidence which would throw light in controversy withholds it, the Court can draw an adverse inference against her. Therefore, in the absence of any documentary evidence, oral evidence of D.W.1 that the 1st defendant purchased the house site and constructed a house therein with the sale proceeds of the joint family property, cannot be accepted. No explanation was forthcoming as to why such important documents, which would throw light with regard to the controversy, has not been filed. Therefore, the trial Court rightly held that Ex.A1 was executed with a view to defraud the creditors of 1st defendant because by that time, the plaintiffs supplied paddy to the 1st defendant as an agent for selling the same to the rice mill owners. As an agent, the 1st defendant has collected money from the rice mill owners. He has to pay the amount of more than Rs.4,00,000/- to the poor ryots. With a view to avoid payment, at the first instance, he sets up a plea of theft of cash from his house and thereafter, he executed original of Ex.A1 so as to defeat the rights of the plaintiffs. Therefore, from the conduct of 1st defendant, it can safely be presumed that transaction covered under A1 is a fraudulent one and perhaps that is the reason why, the trial Court rightly placed an implicit reliance on the evidence of P.W.1 and the said aspect has not been denied or disputed even by the 1st defendant by coming to the witness box. As far as case set up by the defendants 2 and 3 is concerned, they failed to establish that the site and constructed house were out of the income derived from the joint family properties or sale of the joint family properties. In the absence of any evidence, it can safely be said that the property covered under Ex.A1 is the self-acquired property of 1st defendant and perhaps that is the reason why a specific recital has been mentioned in Ex.A1 that it is self acquired property of 1st defendant. The trial Court after proper appreciation of evidence on record, rightly decreed the suit and absolutely, there are no grounds to interfere with the impugned judgment. 14. Accordingly, the Appeal Suit is dismissed. No order as to costs. _______________ K.C. BHANU, J DATED: 28-02-2011 Hsd