Case: Union of India Vs. Moksh Builders and Financers Limited and Others Etc

the rule is lacking, viz, the need and prudence of affording an opportunity of cross-examination." 15. Moreover, the defendant No.3 had full opportunity, . to appear and defend himself, but he did not do so and the case proceeded against him ex-parte. The plaintiff even tri ed to examine him as his own witness, but his appearance could not be secured in spite of the prayer for the issue of summonses and a warrant. There is therefore force in the argument to the contrary. 16. So also, there is no force in the argument that the aforesaid admissions or statements of defendant No. 3 could not be read against him as they were not adverse to his interest when made. There is no such requirement of the Evidence Act and the argument is untenable as it unreasonably restricts the opportunity to prove the true state of affairs on the partys own showing and to demolish his subsequent claim as self-contradictory. This point has also been dealt with in Wigmore on Evidence, 1048 (at page 4) in this way, --"It follows that the subject of an admission is not limited to facts against th e party opponents interest at the time of making it. No doubt the weight of credit to be given to such statements is increased when the fact stated is against the persons interest at the time; but that circumstance has no bearing upon their admissibility. On principle, it is plain that the probative reason why a party-opponents utterance is sought to beused against him is ordinarily the reason noted above, in par. (1)b, . viz. that it exhibits an inconsistency with his present claim, thus tending to throw doubt upon it, whether he was at the time speaking, apparently in his own favour or against his own interest. The contrary view, has been characterised by Wigmore as "a fallacy. in the fullest sense." Another argument which has been advanced against the admissibility of the aforesaid admissions of defendant No. 3 is that they could be evidence only in terms of section 33 of the Evidence Act. That argument is also quite untenable because section 33 deals with statements of persons who cannot be called as witnesses, and does not restrict or override the provisions relating to admissions in the Evidence Act. The High Court also committed a similar error of law in its impugned judgment. The aforesaid admissions of defendant No. 3 are therefore satisfactory evidence to prove that he himself was the owner of the house and his son, defendant No. 2 was merely a "benamidar" for him. It would thus appear that the finding of the trial court on issue No. 1 which dealt with the question whether the house was purchased by defendant No. 3 "benami" in the name of defendant No. 2, was correct and should be restored as the High Courts finding to the contrary has been vitiated by the substantial errors of law mentioned above. The other important question is whether the sale of the house in favour of the Company (defendant No. 1 ) was a sham transaction and was effected to defeat and delay the creditors of defendant No. 3. This was the subject matter of issue No. 2 and the trial courts finding in affirmative has not even been examined by the High Court. 17. We find that the admitted facts of the case are by themselves sufficient to show that the finding of the trial court is justified and does not call for any interference. Defendant No. 3 was assessed to income-tax for a sum of Rs. 1, 25, 090/11/- for assessment year 1947-48 in March 1952. Defendant No. 3 failed to pay that amount on demand and a recovery certificate was issued on October 8 , 1952. The house was therefore attached on October 13, 1952. Defendant No. 2 raised an objection, and prayed for the release of the house. The Collector rejected the objection on March 3, . 1953. No appeal, or other remedy was sought against .that order. The Appellate Assistant Commissioner however allowed the appeal of defendant No. 3 against the assessment of income-tax and ordered a fresh attachment by his order dated May 12, 1953. In the meantime, the Company was incorporated in February, 1953. The assessment of income tax for the years 1944-45 and 1948-49 was completed in March 1953 raising the tax demand to Rs. 1, 94, 735.15, and a recovery certificate was issued on May 4, 1953. It was in these circumstances that defendant No. 2, who had failed to obtain an order for the release of the house as aforesaid, hastened to sell it to the Company on May 25, 1953. As has been stated, a fresh recovery certificate was issued to the Collector on May 4, 1953 and the house was again attached on August 6, 1953. These facts speak for themselves and are quite sufficient to justify the trial courts finding that sale of the house to the Company was a sham transaction and arose out of the anxiety to save the house some how from sale for realisation of the income-tax. The Company was in fact dominated by defendant No. 2 and his close relations and did not even pay the sale price in cash. It is also significant that the shares of the other relations were insignificant. Moreover the Company could not lead evidence to show that it was able to transact any substantial business whatsoever. We have therefore no reason to disagree with the trial courts finding that the Company was formed just to transfer the ho use to it in an effort to save it from attachment and sale for realisation of the income-tax arrears of defendant No. 3. The finding of the trial court on the issue is quite correct and the High Court committed a serious error of law in not examining this aspect of the matter at all even though it had a great bearing on the controversy. 18.

Decision (1 = appeal accepted, 0 = rejected): 1

Explanation:
1[ds]No appeal, or other remedy was sought against .that order. The Appellate Assistant Commissioner however allowed the appeal of defendant No. 3 against the assessment ofx andordered a fresh attachment by his order dated May 12, 1953. In the meantime, the Company was incorporated in February, 1953. The assessment of income tax for the years5 and9 was completed in March 1953 raising the tax demand to Rs. 1, 94, 735.15, and a recovery certificate was issued on May 4, 1953. It was in these circumstances that defendant No. 2, who had failed to obtain an order for the release of the house as aforesaid, hastened to sell it to the Company on May 25, 1953. As has been stated, a fresh recovery certificate was issued to the Collector on May 4, 1953 and the house was again attached on August 6, 1953. These facts speak for themselves and are quite sufficient to justify the trial courts finding that sale of the house to the Company was a sham transaction and arose out of the anxiety to save the house some how from sale for realisation of the. The Company was in fact dominated by defendant No. 2 and his close relations and did not even pay the sale price in cash. It is also significant that the shares of the other relations were insignificant. Moreover the Company could not lead evidence to show that it was able to transact any substantial business whatsoever. We have therefore no reason to disagree with the trial courts finding that the Company was formed just to transfer the ho use to it in an effort to save it from attachment and sale for realisation of thex arrears of defendant No. 3. The finding of the trial court on the issue is quite correct and the High Court committed a serious error of law in not examining this aspect of the matter at all even though it had a great bearing on the controversy.