Union Of India vs Moksh Builders And Financers Ltd. And ... on 27 October, 1976 Equivalent citations: 1977 AIR 409, 1977 SCR (1) 967 Author: P.N. Shingal Bench: P.N. Shingal, M. Hameedullah Beg PETITIONER: UNION OF INDIA Vs. RESPONDENT: MOKSH BUILDERS AND FINANCERS LTD. AND ORS. ETC. DATE OF JUDGMENT27/10/1976 BENCH: SHINGAL, P.N. BENCH: SHINGAL, P.N. BEG, M. HAMEEDULLAH CITATION: 1977 AIR 409 1977 SCR (1) 967 1977 SCC (1) 60 CITATOR INFO : RF 1978 SC1362 (31) ACT: Benami transaction--Proof of benami nature. Evidence Act (1 of 1872) ss. 17 and 33--Evidence of admissions-Admissibility. HEADNOTE: The appellant (plaintiff) filed a suit on behalf of and for the benefit of itself and of other creditors against the respondents (3 defendants) and prayed for a declaration that,, (1) the sale deed of the house in dispute by the 2nd defendant in favour of the 1st defendant was void as against the plaintiff and all other creditors of the 3rd defendant; and (2) that the house was and continued to be owned by the 3rd defendant. The house was sold in the name of the 2nd defendant for Rs. 69,000. He is the son of the 3rd defend- ant who was alleged to be the real purchaser. As the 3rd Union Of India vs Moksh Builders And Financers Ltd. And ... on 27 October, 1976  1 defendant failed to pay the arrears of income tax due from him the house was attached as his property. The 2nd defendant raised an objection but the objection was reject- ed. The 3rd defendant filed an appeal against the assess- ment of income tax and while the appeal was pending before the Appellate Assistant Commissioner, the 2nd and 3rd de- fendants, and five other persons formed a limited company, namely, the 1st defendant. The Appellate Assistant Commis- sioner allowed the 3rd defendant's appeal and ordered a fresh assessment of his income, and the Income Tax Officer made a fresh assessment. Soon after the 2nd defendant purported to convey the house of the 1st defendant for Rs. 1,00,000 of which Rs. 90,000/ were payable to the 2nd de- fendant in the shape of shares in the company. The house was again attached for recovery of the tax due from the 3rd defendant. The 1st defendant objected to that attachment. The objection was allowed and the parties were referred to the Civil Court for. redress and the suit was filed. The trial court decreed the suit, but the High Court, in appeal, set aside the judgment. Allowing the appeal to this Court, HELD: The evidence disclosed that the 3rd defendant 'was the owner of the house, and his son, the 2nd defendant, was merely a benamidar for him; and that the 1st defendant- Company was formed just to transfer the house to it in an effort to save it from attachment and sale for realisation of the income tax arrears of the 3rd defendant. [978 A-C] (a) In a case where it is asserted that an assignment in the name of one person is in reality for the benefit of another, it is necessary to find out the source whence the consideration came, and to examine who actually was enjoying the benefits of the transfer. [907 F-G] Gangadara Ayyar and others v. Subramania Sastrigal and others (A,I.R. 1949 F.C. 88) referred to Meenakshi Mills, Madurai v. The Commissioner of In- come-tax, Madras [(1956) S.C.R. 691] followed. (b) Although the. onus of establishing. g that a transaction is benami is on the plaintiff, where it is not possible to obtain evidence which conclusively establishes or rebuts the allegation., .the case must be dealt with on reasonable probabilities and legal inferences arising from proved. or admitted facts. While the burden initially rests on the party who would fail if no evidence is led at all, after the evidence is recorded, it rests upon the party against whom judgment would be given if no further evidence were adduced by either side. Thus, the burden of proof is not static, and may shift during the course of the trial Where the 968 entire evidence has been led by the contesting parties on the question in issue, abstract considerations of onus are out of place, and the truth or otherwise of the case must always be. adjudged on the evidence: led by the parties. It Union Of India vs Moksh Builders And Financers Ltd. And ... on 27 October, 1976  2 is therefore necessary to weigh the evidence in this case and to decide whether. even if it were assumed that there was nO conclusive evidence to establish or rebut the benami allegation, what would, on a careful assessment of the evidence, be a reasonable. probability and a legal inference from relevant and admissible evidence. [973 A-D] Kalwa Devadattam and two Others v. The Union of India and others [1964] 3 S.C.R. 191 followed. In the present case, the 2nd defendant, at the time of the sale, was just 18 years old, and did not have any money of his own. His father the. 3rd defendant was alive. The High Court did not examine the reliability of the 2nd defendant's evidence regarding the source. from which he received the sum of Rs. 60,000/- even though it was an important question and had been examined by the trial court with reference to the entire evidence on record. The rea- sonable preponderance of probability on the evidence is, that the 2nd defendant had failed to establish the source of the consideration of Rs. 60,000/- even though it was an important fact within his special knowledge. [973 E-H] (d) The 2nd defendant had also failed to prove that he enjoyed the benefit of the sale. [974-G] In order to find out whether the 3rd defendant was enjoying the benefit of the transaction, the finding of the High Court was clearly against the evidence on record. The admissions contained in the records before the Income Tax Officer proved that the house was purchased by the 3rd defendant out of his own funds in the name, of his son, the 2nd defendant, and that the 3rd defendant was enjoying the income accruing from. it as his own income. [975 E-F] (f)(i) The admissions by the 3rd defendant were substan- tive evidence of the facts admitted and such admissions, duly proved, were admissible evidence irrespective of wheth- er the party making them appeared in the witness box or not, and whether that party when appearing as a witness was confronted with those statements in case a statement con- trary to those admissions was made. They were taken into consideration against the 3rd defendant and not against the 2nd defendant. [975 H, 976 A-B] Bharat Singh and another v. Bhagirath [1966] 1 S.C.R. 606, followed. (ii) There is no requirement of the Evidence Act that unless the admissions were adverse to his interests when made, they could not be read against the person making them. [976 F] (iii) The contention that the evidence of the admissions is admissible only in terms of s. 33 of the Evidence Act was untenable because that section 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. [977 A-C] (g) The 2nd defendant, who had failed to obtain an order for the release of the house from attachment when it was Union Of India vs Moksh Builders And Financers Ltd. And ... on 27 October, 1976  3 first attached, hastened to sell the house when the assess- ment proceedings were pending before the Income-tax De- partment. The 1st defendant-Company was in fact dominated by the 3rd defendant and his close relations, it did not even pay the sale price. in cash, and there was no evidence' to show that it was able to transact any substantial busi- ness. Therefore, the sale of the house in favour of the 1st defendant was a sham transaction and was effected only to defeat and delay the creditors of the 3rd defendant. [978 A-B] JUDGMENT: CIVIL APPELLATE JURISDICTION: Civil Appeal Nos. 1739- 1740 of 1968. (From the Judgment and Decree dated 14-2-1967 of the Delhi High Court in Regular First Appeal Nos. 5-D, and 54-D of 1958). V. S. Desai and Girish Chandra, for the Appellant. Sachin Chaudhary, B.P. Maheshwar and Suresh Sethi, for the Respondent No. 1 in (CA. 1739/68) and for Respondent No. 2 in 1739/68) and Respondent No. 1 in (CA. No. 1740/68). A. K. Sen and D. Goburdhan, for Respondent No. 2 in (CA. No. 1740/68). The Judgment of the Court was delivered by SHINGHAL, J.,---These two appeals by certificate have been consolidated by an order of this Court dated April 15, 1969. They are directed against a common judgment of the Delhi High Court dated February 14, 1967, in Regular First Appeals Nos. 5-D and 54-D of 1958, by which the judgment and decree of the trial court dated January 13, 1958 have been set aside with costs throughout. As this has resulted in the dismissal of the suit raised by the Union of India, it has filed the present appeals. The facts giving rise to the appeals are quite simple. Harjas Rai Malhotra, defendant No. 3, is the father of Krishan Lal Malhotra, defendant No. 2. The liability of defendant No. 3 to income-tax and super-tax for the as- sessment year 1947-48, was fixed Rs. 1,25,090/11/- in March, 1952. A demand was made for its payment, but he neglected to meet it and a certificate was issued on October 8, 1952 to the Collector of Delhi for its recovery as ar- rears of land revenue. The Collector was asked to attach house No. 15, Keeling Road and house No. 9, Hailey Road in New Delhi, of defendant No. 3. Both the houses were attached on October 13, 1952. Meanwhile, defendant No. 3 appealed against the order of assessment. The Appellate Assistant Commissioner allowed the appeal on May 12, 1953, set aside the assessment and directed a fresh assessment. The order of fresh assessment was made on November 30, 1953 and the incometax demand was reduced to Rs. 1,05,769.13. The as- sessments for 1944-45 and 1948-49 were completed on March 28 and 31, 1953, respectively, raising a tax demand for Rs. 1,94,738.15. A recovery certificate was issued to the Collector for the same on May 4, 1953 and the house at No. 15, Keeling Road was again attached on August 6, 1953. We are not concerned with the house at No. 9, Hailey Road, for the controversy before us relates to house No. 15, Keeling Road, hereinafter referred to as the house. That house had been ostensibly purchased by Union Of India vs Moksh Builders And Financers Ltd. And ... on 27 October, 1976  4 defendant No. 2 in December, 1946 for Rs. 60,000/-. He filed an application objecting to the attachment on the ground that the house belonged to him, but the Collector dismissed the objection holding that the house belonged to defendant No. 3. Defend- ant No. 2 did not appeal against that order and did not question it by a suit. Thus far, the facts are not in dispute. It was alleged in the plaint that the house was pur- chased by defendant No. 3, "benami", in the name of his son defendant No. 2, out of his "own funds drawn from his bank account" and that 'the "full beneficial ownership, right, title and interest in the said property has always belonged and continues to this day to belong to the 3rd defendant." The plaintiff alleged further that during the pendency of his appeal to the Appellate Assistant Commissioner against the assessment which had been made in March 1952 for 1947-48 and the assessment proceedings for 1944-45 and 1948-49, defendant No. 3 "in collusion and conspiracy with the 2nd defendant and certain other persons, and with the view, intent and purpose of defeating and delaying his creditors including the plaintiff, had recourse to diverse ways and means" as detailed in the plaint. He was thus alleged that, in February 1953, defendants Nos. 2 and 3 and five other persons purported to form a limited company known as Moksh Builders and Financiers Ltd., hereinafter referred to as the Company, which was arrayed as defendant No. 1 in the suit, with an authorised capital of Rs. 5,00,000/- divided into 5000 shares of Rs. 100/- each. There were 7 subscribers to the Memorandum and the Articles of Association of the Compa- ny and each of them took 10 shares, Soon after the Appel- late Assistant Commissioner made his aforesaid order dated May 12, 1953 for fresh assessment of the income-tax liabili- ty of defendant No. 3, a sale deed dated May 25, 1953 was brought into existence whereby defendant No. 2 "purported to convey" the house to defendant No. 1 for Rs. 1,00,000/- of which Rs. 90,000/- were payable in the shape of shares in the Company, Rs. 8,000/- payable to Sunrise .Investors Ltd. and Rs. 2000/- in cash. The plaintiff pleaded that "these transactions were all sham, colorable, and effected and entered into with the active aid, instigation and advice of the 3rd defendant and to subserve and carry out the object of placing his property, viz., No. 15, Keeling Road out of the reach of his creditors". It was further urged as fol- lows,-- "The consideration mentioned in the sale-deed of 25th May, 1953 was illusory. In effect and substances the 2nd defendant pur- ported to sell a house to the I st defendant in which company in return was to become a holder of shares . of controlling interest, the shares being the alleged price., Except for the legal fiction of the I st defendant Company being juristic person the 'sale was by the vendor to himself. . None of these de- vices and subterfuges could divest the 3rd', defendant of his ownership of the property in question. The 1st defendant company by its_promoters directors and office bearers was fully aware of all the facts of the case, including the true state of the title to the property No. 15, Keeling Road, the highly embarrassed financial circumstances of the 3rd defendant the facts that he owed to the plain- tiff" alone taxes to the amount of several lakhs of rupees etc. The 1st defendant is not a purchaser in good faith for consideration of the said property or without notice of the title of the 3rd defendant. On the other hand the sale deed dated 25th May, 1953 to the 1st defendant was executed by the name- lender the 2nd Union Of India vs Moksh Builders And Financers Ltd. And ... on 27 October, 1976  5 defendant at the instance of the true owner of the 3rd defendant with intent to defeat or delay the latter's creditors, and is voidable at the option of any of such creditors includ- ing the present plaintiff." Defendant No. 1 objected to the attachment of the house for the realisation of the arrears of income-tax of defend- ant No. 3. The Additional Collector allowed the objection by a summary inquiry, and the Chief Commissioner dismissed the appeal on April 1, 1954. Both those officers, according to the plaintiff, proceeded on "prima facie considerations" and left the parties to seek their redress in the civil court. With these specific averments the,plaintiff raised its suit seeking leave to sue on behalf and for the benefit of itself and the other creditors, if any, of defendant No 3. It prayed for a declaration that (i) the sale deed dated May 25, 1953 was void as against the plaintiff and all other creditors of defendant No. 3, and (ii) the house is and continued to be owned by defendant No. 3. In the alterna- tive, the plaintiff prayed for a declaration that the shares allotted to defendant No. 2 belonged to defendant No. 3. It also prayed for a declaration that it was entitled to pro- ceed against the "properties which may be declared to be of 3rd defendant's" by attachment and sale to realise the tax arrears due from him. A prayer was made for setting aside the orders of the Additional Collector and the Chief Commis- sioner on the objection petition of defendant No. 2. Defendant No. 3 did not appear to contest the suit in spite of personal service and the trial court made an order on April 15, 1955 to proceed against him ex-parte. Separate written statements were filed by the Company and defendant The Company took the plea, inter alia, that it had been genuinely and properly formed and that it was a bona fide purchaser for value and the "transaction was quite real and genuine". It denied that the sale deed dated May 25, 1953, was executed at the instance of defendant No. 3, or that it was intended to defeat or delay his creditors. P was pleaded that defendant No. 2 was the rightful owner of the house which he had rightfully purchased with "his own money (Rupees 10,000/'- by cheque No. 32920 dated 14.11.1946 on the New Bank of India Ltd., New Delhi drawn by his mother K. Rani and Rs. 50,000/- paid in cash before Sub-Registrar)". The Company also pleaded that the transaction of sale in its favour was without notice of any body else's claim and was binding. Defendant No. 2 filed a short written statement stating that he was the owner of the house having purchased it with "his own money". He pleaded that he had paid Rs. 10,000/- by cheque on New Bank of India Ltd., New Delhi, and Rs. 50,000/- were paid before the SubRegistrar. He pleaded further that he had no knowledge of the Collector's order and that his order, if any, was ex-parte. As regards the Company, defendant No. 2 pleaded that it was a real and genuine Company and that out of his shares worth Rs. 90,000/- he had sold shares worth Rs. 74,000/-. 12 --1338SCI/76 The trial court found that the house was purchased "benami" in the name of defendant No. 2, by defendant No. 3 with his own money and that the sale of the house to the Company by defendant No. 2, was Union Of India vs Moksh Builders And Financers Ltd. And ... on 27 October, 1976  6 "sham and was effected in order to defeat or to delay the creditor of defendant No. 3 and that defendant No. 1 had no real existence." The trial court therefore granted a decree declaring that the sale deed dated May 25, 1953 was void as against the plain- tiff and all other creditors, if any, of defendant No. 3 and that the House" is and continues to be owned by the 3rd defendant and that the plaintiff is entitled to proceed against the said properties by way of attachment and sale to realise the tax arrears due from him." The trial court set aside the orders dated October 9, 1953 of the Additional Collector on the objection petition of defendant No. 2 and of the Chief Commissioner dated April 1, 1954. As the High Court has set aside the judgment' and decree of the trial court, the present appeals have been filed by the plaintiff as aforesaid. We shall refer to the findings of the High Court as and when necessary. The main point in controversy was whether the house was purchased by defendant No. 3 'benami' in the name of defend- ant No. 2? This was the subject matter of issue No. 1 in the trial court. We have made a reference to the plaintiff's plea that the purchase was "benami" and payment was made out of the funds of defendant No. 3, which were drawn by him from his own account. As has been mentioned, defendant No. 3 did not care to appear and contest the suit even though he was served and knew the nature of the plaintiff's claim and the basis thereof. Defendant No. 2 appeared at the trial and pleaded that he purchased the property "with his own money". The source of the money was within his special knowledge, but it will be recalled that he contended himself by pleading that Rs. 10,000/- were paid by him by a cheque and Rs. 50,000/ were paid before the Sub-Registrar. We have made a reference to the plea of the Company in this respect. It is no body's case that the sale of the house to defendant No. 2 was fictitious and that the title of the transferor was not intended to pass. What we have to examine is whether the title, on sale of the house in Decem- ber 1946, was transferred to defendant No. 3, who was. the real purchaser, and not to defendant No. 2, who was only the ostensible transferee and was no more than a "benamidar". It has been held in Gangadara Ayyar and others v. Subrarnania Sastrigal and others(1) that "in a ease where it is asserted that an assignment in the name 011 one person is in reality for the benefit of another, the real test is the source whence the consideration came" It is also necessary to examine in such eases who actually has enjoyed the benefits of the transfer. Both these tests were applied by this Court in Meenakshi Mills, Madurai v. The Commissioner of IncomeTax Madras.(2) It is therefore necessary, in the present case, to (1) A I.R. 1949 F.C. 88. (2) [1956] S.C.R. 691.] find out the source of the consideration for the. transfer, as also to find out who has been in enjoyment of the bene- fits of the transaction. It is equally well settled that, although the onus of establishing that a transaction is 'benami' is on the plaintiff, 'where it is not possible to obtain evidence which conclusively establishes or rebuts the allegation, the case must be dealt with on reasonable proba- bilities and legal inferences arising from proved or admit- ted facts." The burden of proof is, however not static, and may shift during the course of the evidence. Thus while the burden initially rests on the party who would fail if no evidence is led at all after the evidence is recorded, it rests upon the party against whom judgment would be given if no further evidence were adduced by 'either side, i.e. on the evidence on record. As has been held by this Court Kalwa Devadattam and others v. The Union of India and oth- ers(1) that where evidence has been Union Of India vs Moksh Builders And Financers Ltd. And ... on 27 October, 1976  7 led by the contesting parties on the question in issue, abstract considerations of onus and out of place, and the truth or otherwise of the case must. always be adjudged on the evidence led by the parties. This will be so if the court finds that there is no difficulty in arriving at a definite, conclusion. It is therefore necessary to weigh the evidence in this case and to decide whether, even if it were assumed that there was no conclusive evidence to establish or rebut the "benami" allegation, what would, on a careful assessment of the evi- dence, be a reasonable probability and a legal inference from relevant-and admissible evidence. The sale in question was admittedly made in December 1946. Defendant No. 2 had admitted in his statement date May 29, 1957 that he was born in 1928. He was therefore 18 years old at that time. His father (defendant No. 3) was also alive at that time, and it is not his case that he (defendant No. 2) had any money' of his own, for he has stated that he got Rs. 10,000/- from his mother and Rs. 50,000/- from his grandfather to constitute the sum of Rs. 60,000/- for which he purchased the house. It is however a significant fact that the defendant No. 2 did not disclose any such source of the money in his written state- ment dated April 15, 1955. It took ,him two years to come out with such a case. He was given an opportunity, during the course of his cross-examination, to explain the omission regarding the disclosure of the source of the sum of Rs. 50,000/- in his written statement, but he contented himself by saying that he could not give "any reason as to why he (I) omitted to mention in the written statement about receipt of Rs. 50,000/ from' his (my) grandfather". Similarly he failed to explain why he did not mention in his written statement that the cheque for Rs. 10,000/- was drawn by his mother. It is true that there is a mention in document Ex. D1 that out of the sum of Rs. 60,000/- "a sum of Rs. 10,000/- has already been paid to the vendor by the vendee by cheque No. 32920 dated November 14, 1946, on the New Bank of India Ltd., New Delhi," but it is again signifi- cant that while the document states that the payment of Rs. 10,000/- was made by (1) [1964] 3 S.C.R. 191. the vendee (defendant No. 2)'by the aforesaid cheque, he has stated in the trial court that the cheque for Rs. 10,000/- was issued by his mother, in favour of the vendor. He was not able to explain the discrepancy: and merely stated that his written statement (which did not disclose the source and the name of the person who drew the cheque for Rs. 10,000/-) was correct. If it had been a fact that defendant No. 2 really obtained a cheque for Rs. 10,000/- from his mother, in the vendor's name, and, if it was not really a cheque drawn by his father, there was nothing to prevent him from establishing that f. act with reference to the counter-foil of his mother's cheque book or her account with the bank. The defendant has also not stated whether he repaid the money to his mother and, if so, when, or whether it was a gift to him and, if so, why, when she had another son also. As it is, it cannot be said that defendant No. 2 has been able to establish that it was he who paid the sum of Rs. 10,000/- to the vendor. According to the written statement of defendant No. 2, the balance of Rs. 50,000/- was paid before the Sub-Regis- trar. He has stated that about 7 or 8 days before his death, his grandfather Sohna Mal (who died in October 1946) paid him Rs. 50,000/'- after taking. out the money which was "lying underneath his pillow." He could not however stand the test of cross-examination, for he could not state where the money was kept by his grandfather and whether, he at all had a bank account. The High Court did not care to examine the reliability of the defendant's evidence regarding the source Union Of India vs Moksh Builders And Financers Ltd. And ... on 27 October, 1976  8 from which he received Rs. 60,000/- even though it was an important question and had been examined by the trial court with reference to all the other evidence on the record including the statement of Amar Nath Sharma D.W.3. We find that there is no reason for us to disagree with the trial court's view in the matter, based on the parol evi- dence on the record. In arriving at this conclusion, we have not relied on that part of the trial court's judgment where it has made a reference to the admission of defendant No. 3, for we shall deal with them separately. The reason- able preponderance of probability therefore is that defendant No. 2 has failed to establish the source of the consideration of Rs. 60,000/- even though it was art impor- tant fact within his special knowledge. He could not therefore be said to be the real owner of the house. It is also an important fact that defendant No. 2 has failed, to prove that he enjoyed the benefit of the sale. He claimed that he had shown the rent of the house in his income-tax returns, but he did not produce any rent note. Even the tenant who was 9aid to be living in the house on the date of the sale, has not been examined. While the trial court has examined this aspect of the controversy, the High Court has missed it altogether. The High Court went by the view that statement Ex. P. 1 of defendant No. 3, the income-tax return of defendant No. 3 showing the house as his property, his statement of account and the assessment order for the year 1948-49 showing the same, were not admissible in evidence against defendant No. 2 and that there was no evidence either of the plaintiff or the defendants on which a finding as to the "benami" nature Of the transaction could be based. That decision is obviously based on a misap- preciation of the law relating to "benami" transactions for, as has been stated, it was necessary to find out whether it was defendant No. 3 who had enjoyed the benefit of the transaction. Moreover, the finding of the High Court is against the evidence on the record, and must be set aside. We have therefore no hesitation in holding that the purchase of the house was "benami" and that its ostensible owner defendant No. 2 was not the real owner but was a "benamidar." The ancillary question is as to who was the real owner of the house for whom defendant No. 2 was the "benamider"?. We have not taken the admissions of defendant No. 3 into consideration so far, but they have a direct bearing on the question now before us. lie recorded a state- ment Ex. P. 1 dated August 12, 1950 before Puran Chand P.W. 1, Income-tax Officer, which has been proved by the wit- ness. It has been stated there as follows,-- "I purchased 15 Keeling Road on 12.12.46 for Rs. 60,000/- in the name of my son (Major Krishan Lal). This money was paid out of my bank accounts and I have shown the details and payments from my bank pass books." Then there is document Ex. P. 6 which is a copy. of the personal account of defendant No. 3. It was filed in connection with the return of his income-tax for 1947-48. An attempt was made to argue that the document had not been proved or marked as an exhibit. We have seen the original document and we have no doubt that the whole of it was tendered in evidence and was marked as Ex. P. 6. The identity of the document has been established by the state- ment of Puran Chand P.W. 1 that the scribbling on it was made by him. The document has therefore been proved beyond doubt. It shows that it was defendant No. 3 who spent Rs. 60,000/- on "property" in that assessment year. Both exhib- its P. 1 and P. 6 go to prove that the house was purchased by defendant No. 3 out of his Union Of India vs Moksh Builders And Financers Ltd. And ... on 27 October, 1976  9 own funds in the name of his son defendant No. 2 who, it will be recalled, was admittedly only 18 years old at that time and did not have any money of, his own. Moreover defendant No. 3 showed the income accruing from the house as his own income in his return for the years 1947-48 and 1948-49. Counsel for the respondents have urged for the exclusion of these admissions. The main attack was that they were admissions of a co-defendant and were not admissible against defendant No. 2. As has been stated, we have not taken them into consideration as evi- dence against that defendant. There is however no force in the other argument that they are not admissible in evidence against defendant No. 3 as he was not confronted with them in the, trial court and they were not adverse to the inter- est of their maker at the time when they were made. It has been held by this Court in Bharat Singh and another v. Bhagirath(1) that an admission is substantive evidence of the fact admitted, and that admissions duly proved are "admissible evidence irrespective of whether the party making them appeared in the witness box or not and whether that party when appearing as witness was confronted with those statements in case it made a statement contrary to those admissions." In taking.this view this Court has noticed the decision in Ajodhya Prasad Bhargava v. Bhawani Shanker Bhargava and another(2) also. The point has been considered and answered as follows in Wigmore on Evidence, Volume IV, 1048 (at page 3),-- "The theory of the Hearsay rule is that an extra judicial assertion is excluded unless there has been sufficient opportunity to test the grounds of assertion and the credit of the witness, by cross-examination by the party against whom it is offered (post, 1362); e.g. if Jones had said out of court. "The party--opponent Smith borrowed this fifty dollars", Smith is entitled to an opportunity to cross-examine Jones upon that assertion.. But if it is ,Smith himself who said out of court, I borrowed this fifty. dollars, cer- tainly Smith cannot complain of lack of opportunity to cross-examine himself before his assertion is admitted against him. Such a request would be absurd. Hence the objection of the Hearsay rule falls away, because the very basis of the rule is lacking, viz, the need and prudence of affording an opportunity of crossexamination." 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 tried 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. 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 unreasona- bly restricts the opportunity to prove the true state of affairs on the party's 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,-- Union Of India vs Moksh Builders And Financers Ltd. And ... on 27 October, 1976  10 "It follows that the subject of an admission is not limited to facts against the party opponent's 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 person's 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-opponent's utterance is sought to be used against him is ordinarily the reason noted above, in par. (1)b,. viz. that it exhibits (1) [1966] 1 S.C.R. 606. (2) A.I.R. 1957 All. 1. 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 admis- sions 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 Court's finding to the contrary has been viti- ated 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 court's finding in affirmative has not even been examined by the High Court. 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 incometax 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, has- tened 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 court's finding that sale of the house to the Company was a sham transaction and arose out of Union Of India vs Moksh Builders And Financers Ltd. And ... on 27 October, 1976  11 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 court's finding that the Company was formed just to transfer the house 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. In the result, we are constrained to allow the appeals. The impugned judgment and decree of the High Court dated February 14. 1967 are set aside and the decree of the trial court is restored with costs throughout one hearing fee. V.P.S. Appeals allowed. Union Of India vs Moksh Builders And Financers Ltd. And ... on 27 October, 1976  12