112-NLR-NLR-V-53-ARUMUGAM-et-al.-Appellants.-and-ARUMUGAM-Respondent.pdf
490
Arumugam v. Arumugam
1951Present : Gratiaen J. and GnnasebaFa J.ARUMUGAM et at., Appellants, and ARUMUGAM, Respondent8. C. 27—D. C. Jaffna, 4,635
Registration of Documents Ordinance {Cap. 101)—Section 7 (2)—“ Prior registration 'T
—“ Collusion
A. bought certain property from B. and entered into possession of it as itslawful owner. C. was aware of the transaction but, nevertheless, in the hopeof taking advantage of the fact that A. had registered his deed in the wrongfolio, purported subsequently to purchase from B., with knowledge of B.’sintended fraud, certain rights in the property. C. registered the laterdeed in the correct folio.
Held, that C. was guilty of “ collusion ” within the meaning of section 7 (2)of the Registration of Documents Ordinance and could not, therefore, claimthe benefit of prior registration.
uAlPPEAIi from a judgment of the District Court, Jaffna.
C. Thiagalingam, K.C., with V. Arulambalam and P. Somatilakam,for the defendants appellants.
C. Renganathan, with S. Sharvananda, for the plaintiff respondent.
Cur. adv. vult.
GBATXAEN J.—Arumugam c. Arumugom
491
June 6, 1951. Ghatiabn J.—
This action was instituted on 5th July, 1948, for the partition of aland in which -the plaintiff claimed an undivided -J share by right ofpurchase from the 3rd defendant Thambimuttu under the deed P5 of1st October, 1947. The main contest at the trial was between the plain-tiff on the one hand and the appellants (i.e., the 1st and 2nd defendants•who are husband and wife) on the other. The case for the appellantswas that under the deed 1D2 of 13th November, 1938, .they had alreadypurchased Thambimuttu’s undivided J share in the land which representedat that time the entirety of his interests in the property. They claimedthat Thambimuttu was therefore vested with no rights which he couldpass to the plaintiff under P5. In reply to this contention, the plaintiff■claimed the benefit of Section 7 of the Registration of Documents Ordi-nance (Cap. 101) on the ground that his deed P5, though later in pointof time, had been registered in the correct folio whereas the appellants’deed 1D2 had by some long-standing error been registered in the wrongfolio. The evidence certainly established that the folio which theplaintiff had selected for the registration of P5 was the earliest folio inwhich an instrument affecting a share in the corpus had been registered.
The appellants disputed the position that P5 was in fact correctlyregistered, but on this point the finding of the learned District Judgein favour of the plaintiff is, in my opinion, clearly right. The plaintiffcould therefore claim priority for his deed if he could satisfy the Courtthat he had given valuable consideration for the interests which passedto him under P5—unless, of course, the appellants were able to defeatthis priority by proving fraud or collusion on the part of the plaintiffeither in obtaining his instrument or in securing its prior registration,issues were raised at the trial for the learned Judge’s decision on all thesepoints of contest.
Our task as an appellate tribunal has been made more difficult byreason of the fact that the learned Judge has not recorded in his judgmentany specific finding as to whether or not in his opinion considerationhad passed on P5. The evidence of the plaintiff on this issue is certainlynot so convincing that we could safely infer that it has been acceptedby implication by the learned Judge. For instance, the plaintiff hadin the first instance stated that the entire consideration of Rs. 1,000 hadbeen paid to Thambimuttu in the presence of the attesting notary. It wasthen pointed out 'to him in cross-examination that this evidence was inconflict with the terms of the notary’s certificate in the attestation clause.In re-examination he gave a different version as to how and when thealleged consideration had been paid. “ I paid earlier than the deed oftransfer ”, he said. “ I paid- Rs. 500 on the transferring of the land.After arranging the settlement (whatever that-might mean) I paid Rs..300and on the day of the transfer deed Rs‘. 200 was paid. At the time thenotary attested the deed I did not pay any money ”, The only other personwho gave evidence on this issue was Thambimuttu . himself who ' wasrepresented by counsel at the trial an.d had presumably been presentin Court, in his capacity as the 3rd defendant, when the plaintiff gavehis version of the transaction. Thambimuttu was not called as a witnessby the plaintiff to suppor his case. He did give evidence, however,
493
GBATIA-EN J.—Arumugam v. Arumugam
on hia own behalf in Bupport of his claim to be allotted an undivided1/32 share in the proposed partition. This claim was rightly rejected,and his evidence was discredited on many points. It is significantthat neither in the course of his examination-in-chief nor of his cross-examination on behalf of the appellant did he testify to the passing ofany consideration on the deed P5. After he had been cross-examinedby the appellant's counsel, however, he answered certain questionswhich were put to him on behalf of the plaintiff. He then stated in asingle sentence, and without elaboration, that he had “ received Rs. 1,000from the plaintiff for the purchase of his share It is indeed a matterfor surprise that learned Counsel who appeared at the trial for the appel-lants did not ask for an opportunity .to cross-examine Thambimuttuonce again in order to test this item of evidence which had been introducedat so late a stage. Be that as it may, I consider that unless this appealcan satisfactorily be disposed of on some other ground, the case shouldbe sent back for re-trial upon this issue. The burden was on the plaintiffto establish that valuable consideration had passed on the deed P5 beforehe could claim the benefit of prior registration. I find it impossibleto adjudicate on this point in appeal in the absence of a decision on thepoint by the trial Judge. It must be borne in mind that the evidenceof the plaintiff and of Thambimuttu had not been accepted as truthfulon many other important points.
The question whether a re-trial should be ordered depends, therefore,on whether in our opinion the learned Judge was justified in holdingin favour of the plaintiff on the outstanding issues of fraud and collusion.As these issues only arise on the assumption that valuable considerationdid pass on P5, I shall so assume for the purposes of what follows inmy judgment.
The learned Judge has not directed himself properly on the issues offraud and collusion because he has not given his consideration to theeffect of many material matters which were relevant to his decision.Fortunately, however, his findings on some of these relevant questionshave been recorded in connection with certain other points of controversy(such as the issue of prescription) and 'it is for this reason that I findmyself in possession of sufficient material upon which I can form a definiteconclusion.
It was important to ascertain whether, at the time when the plaintiffnegotiated for the purchase of a share in the land from Thambimuttu.he was aware that the appellants were already the lawful owners inpossession of that share. On this point the learned District Judge hasexpressly accepted the 1st appellant’s evidence that he and his wife,who before 13th November, 1938, had been co-owners in possession tothe extent of an undivided had upon the execution of 1D2 entered intopossession of the additional share which they purchased from Thambi-muttu. Admittedly, the plaintiff was in a particularly favourableposition to know-the true facts, because he was a close relative of Thambi-muttu and had lived in the immediate neighbourhood since his childhood.He stated in evidence that to his knowledge Thambimuttu had afterNovember, 1938, continued in possession as ostensible owner of the sharewhich had been sold to the appellants. This evidence, as well as that ofThambimuttu which was to the same effect, was disbelieved. Not only
GBATIAEN J.—Arumugam o. A rumugam
493
did the plaintiff and Thambimuttu attempt to explain away by falsetestimony facts which were material to the issues of fraud and collusion,but they went further, and impugned the earlier deed in favour of theappellants as having been dishonestly obtained by some improper means.Thambimuttu’s evidence on this point was also disbelieved by thelearned Judge.
It is unnecessary to examine in detail the other suspicious featuresof the case which are material to these issues. In my opinion .this Courtcan safely assume, upon the basis of the learned Judge’s express findingsof fact and of the inferences which necessarily follow from them, thatboth Thambimuttu and the plaintiff were fully aware of the followingcircumstances at the time when the plaintiff purported to purchase ashare in the land from Thambimuttu on 1st .October, 1947: —
that Thambimuttu’s interests in the land had already effectivelypassed to the appellants for valuable consideration on the deed 1D2of 1938 ;
that this transaction had been acted upon by the appellants,and that since 15th November, 1938, the 1st appellant, on behalf ofhimself and his wife, had enjoyed possession ut dominus of that sharein its entirety ;
that all the parties, namely, Thambimu.ttu, the appellants andthe plaintiff himself were until shortly before October, 1947, underthe erroneous impression that the appellants’ deed 1D2 and the earlierdeed 1D1 under which Thambimuttu had acquired the share whichhe later sold, had been registered in the correct folio.
The evidence clearly establishes that shortly before 1st October, 1947,if not earlier, Thambimuttu (whose financial condition during thatperiod may be gauged from the circumstance that at the time of the trialhe was drawing a charitable allowance from the Ceylon Government)conceived the idea of dishonestly defeating the appellants’ rights ofownership by purporting to sell again some part of his interests whichwere no longer his to dispose of. The plaintiff, with full knowledge ofthe true position, and fortified by his recent discovery that the earlierconveyance 1D2 had in fact been registered in the wrong folio, agreedto purchase from Thambimuttu a share (which had already been effec-tively disposed of) in order that he might secure to himself a personaladvantage to the appellants’ detriment. In pursuance of this commondesign he secured the execution of the deed 1D2 and promptly causedit to be registered in what he had discovered to be the correct folio. Inother words, he entered into a collusive transaction with Thambimuttuand lent himself as a party to the latter’s intended fraud on his previousvendors. This thoroughly disreputable transaction took place withina short time of the date on which the appellants’ rights under 1D2 wouldhave been strengthened by the acquisition of prescriptive title to theJ share purchased by them in 1938.
On these findings of fact I am satisfied .that the plaintiff is hot entitledin law to claim the benefit of the provisions of the Registration of Docu-ments Ordinance because he had been guilty of collusion with Thambi-muttu in obtaining the execution of the conveyance 1D2 in order to defeat
491
GRATIAEN J.—Artimugam. V. Arumugam
the appellants’ rights of which he was fully aware. This is not a caseof a genuine purchaser who was only affected by " mere -notice ” of a priorunregistered instrument which admittedly would not by itself providesufficient evidence of fraud so as to deprive his deed of the priority con-ferred by law. On the contrary, this is a case of a person who, withknowledge of the vendor's intended fraud, joined the wrongdoer in atransaction for their mutual benefit. Such conduct amounts to“ collusion ” which was designed “ to defraud .the persons entitled tothe land under the prior instrument of their lawful rights ”.—Per LordMaugham in Abeysundera v. Ceylon Exports Limited 1. The judgment ■of the Privy Council to which I have referred upheld the decision of thisCourt in 35 N. L. R. 417 where Dalton J. held that the defendant inthat case was guilty of ’* collusion ” because he knew of the earlierconveyance over which he claimed priority, and “ was aware of a greatdeal more than the existence of a prior and unregistered conveyanceIt is unnecessary to discuss the long line of authorities dealing with casesof this nature. It suffices to follow, with respect, the dictum of BertramC.J. in Ferdinando v. Ferdinando 2, that there is “ collusion ” withinthe meaning of the Registration of Documents Ordinance wheneverthe evidence establishes “ the joining of two parties in a common trick
Human ingenuity is such that the categories of fraud and collusionare far too varied to permit of any comprehensive definition which would■fit every possible ease which might arise for adjudication betweencompeting instruments affecting land under the Registration of Docu-ments Ordinance. The provisions of Section 7 (2) are by no meansconfined to transactions where some fiduciary relationship exists or-where the subsequent purchaser to whom fraud or collusion is imputedis proved to have taken an active part in the earlier sale over which heclaims priority. If any person, knowing that his proposed vendor hadeffectively parted with his interests in a property in favour of someonewho has entered into possession of the property as its lawful owner,nevertheless, and in the hope of taking advantage of some recently detectedflaw in the registration of the earlier deed, purports to purchase fromthat vendor certain rights in the property which have already beendisposed of, he is guilty of " collusion ” within the meaning of Section7 (2) of the Ordinance. The law does not grant the benefit of priorregistration to transactions of this kind.
In taking the view that no fraud or collusion had been establishedagainst the plaintiff, the learned trial Judge misdirected himself by nottaking into account the effect of the incriminating circumstances to whichI have referred. For these reasons, I would hold that no titlepassed to the plaintiff under the deed P5 of 1947, and he thereforepossessed no interest in the land which enabled him to institute theseproceedings under the Partition Ordinance. I would therefore set asidethe judgment appealed from, and dismiss the plaintiff’s action. Theplaintiff ■will pay t° the appellants their costs both here and in the Courtbelow.
Gunasekaba J.—I agree.
Appeal allowed.
* (1921) 23 N. L. R. 143.
* (1936) 38 N.L.R. 117.