Case: Kalwa Devadattam And Two Others Vs. The Union Of India And Others

property, after impleading him as a party to the execution proceeding, for we are definitely of the opinion that the High Court was right in holding that the partition was a sham transaction which was not intended to be operative.14. On March 14, 1947 the deed of partition was executed and registered. The object of this partition it is alleged was to protect the interest of his minor sons against their father who was acting to the detriment of his sons and was not even living with the family. The High Court relied upon a large number of circumstances in support of its view that the partition was nominal. The deed was executed within a week after the decree was passed by the High Court in Kumaji Sare Mals suit. Nagappa had acquired an extensive property which was on acquisition treated as joint family property and there was nothing to show that Nagappa was illdisposed towards his sons or was actuated by any desire to harm their interest. The real purpose of the partition was to save as much property as possible and to preserve it for his children. The deed of partition showed apparently an equal distribution of property valued at Rs. 1,24,600/- into four shares each of the value of Rs. 31,150/- but the properties allotted to the share of Nagappa were in reality not worth that amount. Nagappa had also to discharge a debt for Rs. 12,236/4/9 for which he was rendered liable under the deed and that debt could not be satisfied out of the property allotted to him. Again immediately after the deed of partition, Nagappa settled upon his wife Narayanamma a major fraction of that share and sold away one of houses. The intention of Nagappa to make it appear to the Income-tax Department that no useful purpose would be served by taking coercive steps as the property allotted to him and remaining after disposal of a good part of it as indicated above was wholly insufficient to meet the demands of the Department, is indeed clear. It was Nagappa who had instigated and prosecuted the suit. Narayanamma was illiterate and ignorant woman., who knew nothing about Nagappas transactions, and dealings. She did not even know what property had fallen to the share of her sons. Admissions made by her disclose that she did not manage the property though apparently she was treated as the guardian of her sons in the partition deed. The story that Nagappa was living with a mistress, and was not looking after the education and welfare of his minor sons does not appear to be supported by any reliable evidence. The eldest son was at the date of the alleged partition 14 years of age, and the youngest was three years old, and in the absence of any serious cause for the differences between Nagappa and Narayanamma partition of the estate could not have been thought of. Witness Singari Seshanna D. W. 1, has deposed that Nagappa, his wife and children were living together in the family house even at the date of the suit and that Nagappa was collecting rents from all the houses. This statement does not appear to have been challenged in cross-examination P. W. 5 Venkatsami the clerk of Narayanamma, who claimed to be looking after management of the properties on behalf of Narayanamma, admitted that he could not say which of the houses were leases and to whom; he was unable to give any particulars with regard to some of the houses. This ignorance on the part of the alleged manager lends support to the testimony of Singari Seshanna D. W. 1 that it was Nagappa who remained in management of the property, and that the family lived together and in fact there was no disruption of the joint family. It is true that many documents were produced to show that the properties were entered in the names of the sons after the deed of partition. It also appears that taxes were paid separately in respect of the houses to the local Municipality and receipts were issued in the names of persons in whose names they stood in the municipal records. But these receipts do no show the names of the persons by whom the amounts acknowledged in the receipts were paid. The High Court has believed the evidence of Singari Seshanna D. W. 1 that it was Nagappa who continued to remain in management. It is true that the plaintiffs have led evidence of two witnesses P. W. 6 and P. W. 7 who have deposed that they had assisted in making the partition. The deed of partition was undoubtedly executed and was registered, but the mere execution of the deed is not decisive of the question whether it was intended to be effective. The circumstances disclosed by the evidence clearly show that there was no reason for arriving at a partition. Counsel for the plaintiffs practically conceded that fact, and submitted that Nagappas desire to defeat his creditors, and to save the property for his sons, was the real cause for bringing the deed of partition into existence, Counsel claimed however that Nagappa had adopted the expedient of effecting a partition with the object of putting the property out of the reach of his creditors, and the genuineness of that partition should not be permitted to be blurred by the unmeritorious object of Nagappa. But the continued management or the property by Nagappa since the partition and the interest shown by him in prosecuting the suits do clearly support the inference that the deed of partition was a nominal transaction which was never intended to be acted upon and was not given effect to. If it be held that the partition was a sham transaction the plaintiffs suit for setting aside the summary order passed in execution proceeding on the application filed by the plaintiffs for setting aside the attachment must fail. The Appeal No. 624 of 1961 must therefore also fail.

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

Explanation:
0[ds]In the present case no order under S. 25A(1) wasIt is common ground that the plaintiffs had no other source of income. As admitted by Nagappa and his clerk Venkatsami, Nagappa made large profits in his business and Rs. 18481/- out of the consideration payable under Ext. A-230 were actually paid to the vendors by Nagappa. There were before the Court two versions-one by the plaintiffs who alleged that the consideration for the sale-deed was supplied by Seshamma. That version, for reasons already stated, cannot be accepted. On the other hand there is the version that the funds belonged to the joint family of which Nagappa was the Manager and that Nagappa paid the consideration. No documentary evidence in support of either version is forthcoming : even Nagappas accounts have not been produced. But if the monies were actually paid by Nagappa and the story about Seshamma having provided the amount be disbelieved it would be a legitimate inference consistent with probability that Nagappa had for purchasing the property provided the funds out of the joint family earnings. It appears that Kumaji Sare mal who are the respondents in Appeal No. 642 of 1961 had in the suit filed by them in 1942 obtained an order for attachment before judgment over the immovable property of the joint family in the hands of Nagappa. This attachment before judgment was outstanding at the date of the sale-deed Ext. A-230. This order for attachment before judgment was vacated when the suit was dismissed by the Trial Court on August 31, 1944. This circumstance in the context of the other evidence strongly supports the contention of the Union that with a view to protect the properties from his creditors Nagappa thought of purchasing the properties in the names of his sons the plaintiffs and the consideration was advanced by him. The High Court was therefore right in holding that the properties Items 46 to 51 were of the joint family and liable to be attached and sold in enforcement of the liability for payment of income-tax. Civil Appeal No. 641 of 1961 must therefordo not think it necessary to express our opinion on the question whether the remedy of the creditor is to file a separate suit to enforce the pious obligation of a Hindu son to discharge the debts of his father, where since the decree against the father on a debt there has been a severance of the joint family status, or whether he can proceed to execute the decree against the sons interest in the property, after impleading him as a party to the execution proceeding, for we are definitely of the opinion that the High Court was right in holding that the partition was a sham transaction which was not intended to be operative.14. On March 14, 1947 the deed of partition was executed and registered. The object of this partition it is alleged was to protect the interest of his minor sons against their father who was acting to the detriment of his sons and was not even living with the family. The High Court relied upon a large number of circumstances in support of its view that the partition was nominal. The deed was executed within a week after the decree was passed by the High Court in Kumaji Sare Mals suit. Nagappa had acquired an extensive property which was on acquisition treated as joint family property and there was nothing to show that Nagappa was illdisposed towards his sons or was actuated by any desire to harm their interest. The real purpose of the partition was to save as much property as possible and to preserve it for his children. The deed of partition showed apparently an equal distribution of property valued at Rs. 1,24,600/- into four shares each of the value of Rs. 31,150/- but the properties allotted to the share of Nagappa were in reality not worth that amount. Nagappa had also to discharge a debt for Rs. 12,236/4/9 for which he was rendered liable under the deed and that debt could not be satisfied out of the property allotted to him. Again immediately after the deed of partition, Nagappa settled upon his wife Narayanamma a major fraction of that share and sold away one of houses. The intention of Nagappa to make it appear to the Income-tax Department that no useful purpose would be served by taking coercive steps as the property allotted to him and remaining after disposal of a good part of it as indicated above was wholly insufficient to meet the demands of the Department, is indeed clear. It was Nagappa who had instigated and prosecuted the suit. Narayanamma was illiterate and ignorant woman., who knew nothing about Nagappas transactions, and dealings. She did not even know what property had fallen to the share of her sons. Admissions made by her disclose that she did not manage the property though apparently she was treated as the guardian of her sons in the partition deed. The story that Nagappa was living with a mistress, and was not looking after the education and welfare of his minor sons does not appear to be supported by any reliable evidence. The eldest son was at the date of the alleged partition 14 years of age, and the youngest was three years old, and in the absence of any serious cause for the differences between Nagappa and Narayanamma partition of the estate could not have been thought of. Witness Singari Seshanna D. W. 1, has deposed that Nagappa, his wife and children were living together in the family house even at the date of the suit and that Nagappa was collecting rents from all the houses. This statement does not appear to have been challenged in cross-examination P. W. 5 Venkatsami the clerk of Narayanamma, who claimed to be looking after management of the properties on behalf of Narayanamma, admitted that he could not say which of the houses were leases and to whom; he was unable to give any particulars with regard to some of the houses. This ignorance on the part of the alleged manager lends support to the testimony of Singari Seshanna D. W. 1 that it was Nagappa who remained in management of the property, and that the family lived together and in fact there was no disruption of the joint family. It is true that many documents were produced to show that the properties were entered in the names of the sons after the deed of partition. It also appears that taxes were paid separately in respect of the houses to the local Municipality and receipts were issued in the names of persons in whose names they stood in the municipal records. But these receipts do no show the names of the persons by whom the amounts acknowledged in the receipts were paid. The High Court has believed the evidence of Singari Seshanna D. W. 1 that it was Nagappa who continued to remain in management. It is true that the plaintiffs have led evidence of two witnesses P. W. 6 and P. W. 7 who have deposed that they had assisted in making the partition. The deed of partition was undoubtedly executed and was registered, but the mere execution of the deed is not decisive of the question whether it was intended to be effective. The circumstances disclosed by the evidence clearly show that there was no reason for arriving at athe continued management or the property by Nagappa since the partition and the interest shown by him in prosecuting the suits do clearly support the inference that the deed of partition was a nominal transaction which was never intended to be acted upon and was not given effect to. If it be held that the partition was a sham transaction the plaintiffs suit for setting aside the summary order passed in execution proceeding on the application filed by the plaintiffs for setting aside the attachment must fail. The Appeal No. 624 of 1961 must therefore also fail.