JUDGMENT
Satya Brata Sanyal, J.
1. Plaintiffs’ second appeal is against a judgment of reversal. Plaintiff’s suit is for declaration of title and confirmation of possession or in the alternative recovery of possession of the schedule lands and for further declaration that the two sale deeds executed on 2-12-1961 by one Deonarain Singh in favour of defendants 5 to 20 are illegal, void and not binding upon them. Suit was decreed by the trial Court but the appellate Court set aside the said judgment and decree of the trial Court and dismissed the suit.
2. In short, the case of the plaintiffs is that late Biman Bihari Mitra and Banku Bihari Mitra, two brothers, held extensive Zamindari interest in the district of Gaya. They were proprietors of mouza Hitampur. P. S. Aurangabad, District Gaya of Tauzi No. 4858 having-/8/- annas share each. Banku Bihari created a trust and the executors of the trust were looking after the estate of Banku. Biman Bihari along with the executors of the estate of Banku Bihari, while having 16/- annas proprietory interest, purchased 55.9 acres of land of khata
No. 6 in a rent execution sale (Case No. 37/41 Sub Judge I Court, Gaya) and in due course they obtained delivery of possession of the same on 20-7-1944. It is said that since then the executor of the trust and Biman Bihari remained in possession of the purchased land as their bakasi. As the original tenants of the purchased land in question were creating trouble, the executors of Banku Bihahi made settlement of their -/8/-annas interest in the purchased land with the original tenants. The tenants of -/8/- annas share of Biman Bihari also were creating trouble and since Biman Bihari was living at Calcutta it was decided that a local man can deal with the situation more effectively and being thus motivated created a farzi oral settlement with one of his oldest and trusted gomasta Deonarain Singh.
3. As there was inconvenience in cultivation with the original tenants of the executor of the trust of Banku Bihari, it was thought that the land should be partitioned and, therefore, Biman Bihari through his farzidar Deonarain Singh got instituted a partition suit bearing Partition Suit No. 48/52 against the original tenants as well as the executor of estate of Banku Bihari. In the said suit Biman Bihari was one of the defendant. The suit was contested up to High Court and it was ultimately disposed of on 23-4-1959 in First Appeal No. 228 of 1955. The suit for partition was allowed. The purchased lands were partitioned to the extent of -/8/- annas share between Deonarain Singh and the original tenants of the executor of the trust. After this Deonarain Singh started committing misconduct and, therefore, Biman Bihari was constrained to terminate his service in the year 1960. On 2-12-1961. Deonarain Singh claiming to be the sole owner of -/8/-annas purchased land, which was given in farzi settlement, executed two sale deeds in favour of defendant Nos. 5 to 20. Biman Bihari died leaving behind the present plaintiffs as his sole heirs sometime in the year 1962. Since the sale deeds dated 2-12-1961 cast a cloud upon plaintiffs’ title and possession, the suit was brought in the year 1964, out of which the instant appeal arises.
4. Defendant Nos. 1 and 2 are the descendants of Deonarain Singh who filed written statement. Defendants 5 to 20, the purchasers, also filed separate
written statement and contested the suit. The defence of both the sets of the defendants are same and similar and their case, in short, is that the story of farzi settlement is baseless and the settlement with Deonarain Singh was real. Deonarain Singh himself instituted the Partition Suit No. 48 of 1952, in his own right and obtained a decree which confirmed the genuineness of the settlement made by Late Biman Bihari with him with respect to his -/8/- annas interest in the purchased land. While Deonarain Singh was enjoying possession pursuant to the settlement aforesaid, after the partition suit was disposed of finally, he transferred the suit land to defendants 5 to 20. It is said that the plaintiffs never came in possession of the suit land even for a day after the settlement. It is also contended that Biman Bihari even though a party defendant in the said partition suit having not raised any question of farzi settlement, plaintiffs are estopped from doing so in this suit.
5. Before the lower appellate Court an additional point was urged on behalf of the defendants, that it was incumbent for the trial Court to frame an issue whether at the time of vesting of the Zamindari. Biman Bihari was in khas possession of the suit lands, which clinch the issue, irrespective of the fact whether the defendants acquired any title pursuant to the settlement in question and subsequent sale. The lower appellate Court having found substance in the said submission framed an additional issue as to whether Late Biman Bihari was in khas possession of the suit land as bakast, on the date of vesting of his Zamindari.
6. Before I proceed to consider the arguments of the learned counsel for the parties, the admitted facts are: The plaintiffs are the residents of Calcutta; Deonarain Singh had been an old and trusted gomasta of the plaintiffs; he had been cultivating the land as an employee of his master till the year 1949; and the so-called settlement is oral.
7. Mr. Ghose appearing for the appellants contends that the appellate Court not only acted contrary to law in reversing the judgment of trial Court but completely misdirected itself in law. The appellate Court was obsessed with the question of estoppel and adopted wrong legal test in deciding the said
question. The entire approach of the Court below was erroneous in law. It failed to notice the crucial, significant and the real question that arose in the case. The crux of the question, according to the learned lawyer, is what was the character of the oral settlement. If it was farzi as is the case of plaintiffs, the question of estoppel will not at all arise inasmuch as the two most essential ingredients of the principles of estoppel, i. e., caused another person to belief and the representee acted upon such belief would be lacking. Deonarain Singh being a farzidar, question of his belief will not at all arise. Similarly, the admission of D. W. 5 in paragraph 8 that Deonarain Singh look initially farzi settlement demonstrates that the second set of defendants were also aware of the farzi nature of settlement. The reason which motivated, the plaintiffs to resort to the said kind of transaction in favour of one of their trusted and old employee, the plaintiffs’ father, who was defendant in the partition suit, could not have taken the stand, that the settlement was farzi in the suit for partition as that would have defeated and foiled the very purpose for which the farzi transaction was resorted to. In the circumstances the question of res judicata will not arise. He further submits that the defendants being aware of the farzi transaction and having purchased with their eyes open, the purchase cannot be held to be bona fide so as to be protected under Section 41 of the Transfer of Property Act. If the transaction was a farzi one, Deonarain’s cultivation of the land even after 1949 would be cultivating the same as an employee of the plaintiff and the land would be in their khas possession, therefore, the suit cannot be defeated under the provisions of the Bihar Land Reforms Act.
8. Mr. Asgar Hussain, on the contrary, submitted that the present suit is hit by res judicata and the defendant purchasers are protected under Section 41 of the Transfer of Property Act. He further submitted that the landlords having not filed their returns under Form K showing khas cultivating possession of the disputed land and, admittedly, the estate having been vested in the State, irrespective of the fact whether the defendants have acquired any title or not, the plaintiffs suit cannot be decreed. He further submitted that the
judgment of the lower appellate Court does not suffer from any legal vice nor is contrary to law, therefore, it should not be interfered with.
9. A mere glance to the lower appellate Court judgment manifests 1hat the lower appellate Court was obsessed with the idea of estoppel and, according to the lower appellate Court, the present suit “is barred by principle of estoppel and on that score alone.” The learned lower appellate Court opens its consideration of the case by observing as follows :–
“I cannot conceive of a better case for application of principle of estoppel than the present one regard being had to the facts and circumstances of this case….. In my view Section 115 of
the Evidence Act is so clear in its terms and the facts of the present case are also so eloquent that I do not find any hitch in application of this principle of estoppel in the present case.” The Court of appeal below approaches the question of farzi settlement in the very first paragraph by observing as follows :–
“As a corollary to aforesaid conclusion of mine when I have held that the present suit of the plaintiff barred by principle of estoppel there is no scope left for discussion and finding on this point as because under Section 115 Evidence Act: the plaintiffs being representative of Late Biman Bihari Mitra are estopped ….. The learned lower
Court has practically exhausted himself treating this as the main issue in this case without going deep into the matter whether this plea of farzi settlement was open to the present -plaintiffs or not.”
I find force in the submission of Mr. Ghose; that the learned lower appellate Court was completely pervaded with the idea of estoppel and, therefore, according to it the plaintiffs cannot raise the question of farzi, in this case in view of their conduct in Title Partition Suit No. 48/52. I will presently show that this question is wholly dependent on the question, whether the oral settlement of 1949 was a “Farzi one.”
10. The word “Farzi” is sometimes read synonymous with the word “Benami.’ The word “Benami” is used to denote two classes of transactions which differ from each other in their legal character and incidents. In one sense, it signifies a transaction which is real.
It also refers to a sham transaction when a person purports to sell his property to another without intending that his title should cease or pass to the other.
“The fundamental difference between these two classes of transaction is that whereas in the former there is an operative transfer resulting in the vesting of title in the transferee, in the latter there is none such, the transferor continuing to retain the title notwithstanding the execution of the transfer deed.”
(See AIR 1957 SC 49 at page 66 Sree Meenakshi Mills Ltd. v. I.-T. Commr.) According to plaintiffs their case falls in the latter category. If this is found to be correct and the motivation true, no question of attraction of the provisions of Section 115 of the Evidence Act will at all arise, since there will be no question on the part of the settlee to believe the thing to be true and to act upon such belief. It is well settled that if the truth of the matter is known to both parties, there can be no estoppel, (See (1896) ILR 30 Cal 539 (P.C.)and AIR 1960 Pat 30 Union of India v. J. J. Patel & Co.), inasmuch as he cannot plead that he was induced to hold erroneous belief by reason of conduct of real owner of that property.
(See AIR 1965 SC 1812 Maddanappa v. Chandramma) The English Courts have also taken the same view. A good recent authority is the judgment of Lord wright in Canadian and Dominion Sugar Co. Ltd. v. Canadian National (West Indies) Steamships Ltd. (1947 AC 46 at page 56) where the law is summarised thus:–
“It is also true that he cannot be said to rely on the statement, if he knew that it was false: he must reasonably believe it to be true and therefore act on it.”
In the book “The Law Relating to Estoppel by Representation by George Spencer Bower and Sir Alexander Kingcome Turner, Third Edition, the author puts the proposition in paragraph 97 as follows :–
“If the representee does not believe the representation to be true how can he be said to have been induced by it.?” I am, therefore, of the opinion that if the transaction was not real to the knowledge of Deonarain Singh. he cannot plead estoppel nor could the other defendants, because there is an admission by P. W, 5 that the oral settlement was
initially farzi. This admission is wholly contrary to their joint stand that the oral settlement of 1949 was never a farzi one. It is not the case of the defendant that subsequent to 1949, at some point of time the character of the settlement changed. The evidence on the part of the defendants on this score is wholly lacking. I have tried to show that the obsession of the lower appellate Court, that in the title partition suit, Biman Bihari having not raised the question of farzi, therefore, the defendants were led to believe that the settlement was not a farzi transaction, and they acted relying upon the said belief to their detriment is not tenable in law. The criticism of the lower appellate Court that the trial Court has practically exhausted itself in treating the issue of farzi as the main issue is, in my opinion, not correct. On the contrary, the approach of the trial Court was legally valid and correct one. The lower appellate Court thus being obsessed that the plaintiffs’ suit is barred by principle of estoppel, very half-heartedly dealt with the question of farzi. The trial Court has dealt with the matter in paragraphs 17 to 37. The reasons assigned by the trial Court to hold the real settlement to be farzi are as follows:–
(a) There is no specific denial that the original tenants were creating trouble with regard to -/8/- annas share of Biman Bihari in the purchased property;
(b) The defendants admitted, in paragraph 13 of their written statement, that Deonarain Singh was a trusted employee of Biman Bihari;
(c) No Nazarana was paid by Deonath for the oral settlement. On the contrary, Deonath admitted, in Partition Suit No. 31/54, that nothing was paid for the said settlement (Ext. P).:
(d) No evidence that rent was paid to the landlord on the contrary Exts. A and A/1 for the year 1358 to 1360 F. S. (1951 to 1953) read with the deposition Ext. P show that the rent was paid by Deonarain to himself, he being Gumasta of the plaintiffs. The sale deeds (Exts. A and B), however, show that the arrears of rent were required to be paid by the vendee;
(e) Deonarain Singh was submitting account of the usufruct of the land after the alleged settlement to the landlord, as disclosed by Exts. 6/G and 7/G which is in the handwriting of Deonarain Singh;
(f) Deonarain Singh admitted in the title partition suit that he was cultiva-ing the land on behalf of his master prior to the settlement;
(g) There is no document of settlement of such a vast area even though admittedly the estate always used to grant settlement by registered document;
(h) After the vesting Deonarain Singh did not get his name mutated;
(i) The litigation expense of the title partition suit was borne by the plaintiff’s father which is disclosed by a letter showing receipt of fees (Ext. 4) issued by the Advocate in the High Court who was conducting the case. The cost for filing the suit was obtained from the estate as would be evident from Ext. 4/A etc.
After having so held the trial Court concluded that the plaintiff remained in possession of the property till the execution of the sale deed by Deonarain Singh.
11. The lower appellate Court brushed aside Ext. 4 and Ext. 4/A relating to the expense of the partition suit by the estate by stating:
“The custody and preservation of receipt is a mystery.”
The documents produced by the plaintiffs in support of farzi transaction was ignored by observing
“I failed to understand how it came to the custody of the plaintiffs”. The Vakalatnama filed in the title partition suit admittedly was handed over to the lawyer by a Karpardaz of the estate. According to the learned counsel it showed the estate of Biman Bihari was actually fighting the partition suit. This was rejected by holding it to be a farfetched reasons. Non-appearance of the plaintiffs in the title partition suit and the institution of the instant suit after 15 years of the settlement according to lower appellate Court is fatal. I have gone through those aspects of the consideration by the lower appellate Court and I find that it has not considered the several reasons which have been assigned by the trial Court in concluding otherwise by considering the evidence on the said question, both oral and documentary. As I have stated earlier, the appellate Court thought that the issue of farzi is a very subsidiary issue in the case and having first held that the plaintiffs are estopped from raising the said plea which I have al
ready shown to be illegal, he considered the farzi issue half-heartedly and did not care to bestow, the judicial thought which was required of him. The oft use expression of the learned lower appellate Court that the custody of the documents with the plaintiffs is a mystery, only manifests that the custody of the said documents was in consonance with the case of the plaintiffs that it was they who filed the partition suit in the name of Deonarain Singh. It was they who were engaging lawyers. It was they who were advancing costs of the suit and, therefore, they were having the correspondence with the lawyers, and in natural course they will be in possession of the said documents. I have not tried to appreciate the evidence nor I am entitled to do so but I have tried only to show that the entire approach of the lower appellate Court was erroneous. Once it is established that the principle of estoppal was wrongly relied upon by the lower appellate Court the very basis and foundation of the judgment of the lower appellate Court is completely shaken.
12. Coming of the question of res judicata, Mr. Ghose is correct that if the title partition suit was actually at the instance of the plaintiffs through Deonarain Singh, to deal with the local people who were creating trouble, they could not have disclosed the said fact in the said partition suit as that would have defeated the very purpose for which the title partition suit was filed. Unless the plaintiffs were in a position to raise that question in the said suit and the circumstances did not prevent them from doing so the principle of res judicata would be inapplicable.
(See AIR 1933 Pat 526 Rameshwar Singh v. Ramdhari Singh). Mr. Ghose further submitted that this question cannot be gone into because it has not even been pleaded.
(See AIR 1936 PC 258 — Jagadish Chandra Dev v. Gour Hari Mahato).
Mr. Asgar Hussain, however, contended that even though it has not been specifically pleaded but on a reading of paragraphs 18 and 19 of the written statement it is manifest that the parties had notice of the said question. He further submitted that in spite of not pleading the said question both the Courts having considered the said question of res judicata and evidence and materials
having been led on the said issue, the Court of appeal below was justified in concluding that the suit is hit by the principle of res judicata. I do not propose to decide this question because much will depend as to whether the transaction was a farzi one. If it is presumed for the sake of argument that the transaction is a farzi one and the title partition suit was actually filed at the instance of the plaintiffs themselves through their trusted employee, the consideration and the applicability of the principle of res judicata will obtain altogether a different colour and shade.
13. Similar is the question of applicability of Section 41 of the Transfer of Property Act. If the transaction was farzi one aad the suit was actually filed by the plaintiffs themselves, in the name of their employees and if the purchaser was in know of the transaction to be a farzi one as has been admitted by D. W. 5, Section 41 may not be at all applicable. If the transaction was farzi one and if it is a fact that Deona-rain Singh was rendering accounts of the usufructs of the disputed property to his masters, the plaintiffs will be in khas possession of the disputed land, getting it cultivated by their hired labourers and, therefore, Section 6 (c) of the Bihar Land Reforms Act will also hsve no application. These questions will depend upon the correct decision on the question of farzi and I for myself do not propose to express any opinion on these various questions.
14. In the foregoing paragraph I have tried only to show that the entire approach of the lower appellate Court to the question involved in the suit, was based on assumptions which are not legal and valid and it completely misdirected itself in law in dealing with the said question before it. The lower appellate Court has ignored the relevant considerations and based its judgment on irrelevant consideration and thus non-suited the plaintiffs. The lower appellate Court was not aware of the real question involved in the suit and if it had correctly approached the suit it might have come to different conclusion. The question of farzi having not recehed a fair deal in the hand of the lower appellate Court and the lower appellate Court having not considered the reasoning of the trial Court and having treated it to be an irrelevant considerations, I am constrained to remand the case to the lower appellate Court for deciding the case afresh in the light of the observations made above and dispose it of in accordance with law.
15. I may, however, make it clear that I should not be understood to have expressed any opinion on the merit of the case and the remand is an open one.
16. In the result, the appeal is allowed and the case is remitted back to the lower appellate Court for being disposed of in accordance with law. There will be no order as to costs.