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Benami Transactions (Prohibition) Act 1988: s.4 – Benami transaction – Suit filed prior to the Act coming into force to recover the possession of benami property – Held: Would not be hit by the prohibition u/s.4 of the Act. Evidence Act, 1872: s.114 – Presumption of service – In the instant case, notice sent under postal certificate from one house to another house on the same road – Inference can be drawn u/s.114 that such notice must have been duly served in the normal course of business within 5 days.= Samittri Devi and another. …Appellants Versus Sampuran Singh and another …Respondents = published in http://judis.nic.in/supremecourt/helddis.aspx

Benami Transactions (Prohibition) Act 1988: s.4 – Benami transaction – Suit

English: The supreme court of india. Taken abo...

English: The supreme court of india. Taken about 170 m from the main building outside the perimeter wall (Photo credit: Wikipedia)

filed prior to the Act coming into force to recover the possession of
benami property – Held: Would not be hit by the prohibition u/s.4 of the
Act.

Evidence Act, 1872: s.114 – Presumption of service – In the instant case,
notice sent under postal certificate from one house to another house on the
same road – Inference can be drawn u/s.114 that such notice must have been
duly served in the normal course of business within 5 days.

Appellant no.1 purchased the suit house on 26.2.1985 for a consideration of
Rs. 40,000. The sale deed was, however, executed in the name of her son-
defendant-appellant no.2 and his brother-in-law- respondent no. 2. It was
the case of appellant no. 1 that appellant no.2 and respondent no. 2 sold
half share of the suit house to respondent no.1 without her consent and
knowledge. The said transaction of sale was executed by a registered sale
deed dated 13.4.1987 despite the fact that appellant no.1 had sent letter
dated 8.4.1987 to respondent no.1 informing him that she was the real owner
of the suit house.

Appellant no. 1 filed a suit for declaration that she was the real owner in
possession of the suit house. She also prayed for a permanent injunction
restraining the defendants from alienating any part of the suit house. By
amendment, she claimed an alternative relief for a decree of Rs. 40,000
with interest. Appellant no. 2 admitted the claim of appellant no. 1, but
respondent no. 2 disputed it and contended that half of the consideration
of Rs. 40,000 has been paid by him. He denied that it was a Benami
Transaction. Respondent no.1 contended in written statement that even if it
is proved to be a Benami Transaction, due to the recent legislation of
Benami Transactions (Prohibition) Act 1988, appellant no.2 and respondent
no.2 were the owners of the suit property, and that the alienation by
respondent no. 2 of his share in the property was effected legally.

Appellant No. 1 had produced before the trial court a copy of the notice
dated 8.4.1987 alongwith the certificate of posting which she had sent to
defendant no. 3, to state that she was the real owner of the suit house.
The trial court held that the delivery of the notice was not proved, and
therefore, respondent no.1 was a bonafide purchaser for valuable
consideration. It also held that the prohibition under Section 4 of the Act
to recover the Benami property was applicable to suits, claims or action
pending on the date of commencement of the Act. Appellant no.1 had filed
the suit on 30.9.1987. The Benami Transactions (Prohibition) Act 1988 came
into force on 5.9.1988. Thus, this suit was pending on the date on which
the Act came into force and the appellant no longer retained the right to
recover the property from the Benami holder. The suit was, therefore,
dismissed for being barred by virtue of the provisions of the said Act.

The first appellate court held that the suit was not prohibited by the Act
and respondent no. 1 could not be held to be a bonafide purchaser without
any notice of the rights of appellant no. 1 in the suit property. The first
appellate court, therefore, decreed the suit to the effect that appellant
no. 1 was the real owner in possession of the house and the sale deed dated
13.4.1987 was null and void. It also granted an injunction against the
defendants that they shall not alienate any part of the suit house and will
not interfere in her possession of the suit house.

The High Court did not give any importance to the notice dated 8.4.1987
being sent under postal certificate, but held that there was nothing on
record to prove that respondent no.1 had been served with that notice. The
High Court, therefore, found fault with the finding of the first appellate
court to the effect that respondent no. 1 was not a bonafide purchaser, and
further held that, it amounted to misreading of evidence. The Regular
Second Appeal was therefore, allowed and the judgment and decree of the
first appellate court was set aside. The appellants filed the instant
appeal challenging the order of the High Court.

Allowing the appeal, the court

HELD: 1.1. As far as the purchase of the suit house by appellant no. 1 from
her own money was concerned that finding of the trial court has remained
undisturbed all throughout and cannot be re-opened in the instant appeal.
Appellant no.1 led cogent evidence before the trial court, and it was held
in her favour that she had purchased the suit house that out of her funds.
The submission of respondent no. 2 that he had arranged the amount of Rs.
20,000/- through friendly loans was negated by the trial court since there
was no supporting evidence at all. There was no reason to disturb that
finding. Once the High Court held that appellant no.1 had purchased the
suit house out of her funds, it ought to have held that it follows that
respondent no. 2 had no right to deal with it or to sell his half share
merely because his name was shown as a purchaser alongwith appellant no.2.
Consequently, the purchase of the share of respondent no.2 by respondent
no. 1 without the consent of appellant no.1 gave him no rights whatsoever.
Therefore, the High Court ought to have held that the suit of appellant
no.1 for declaration of her ownership was valid and maintainable. The High
Court has, therefore, committed a serious error of law in holding that the
first appellate court has misread the evidence on record while coming to
the conclusion that the suit property was the Benami Property of appellant
no.1 and that her suit to enforce the right concerning the same shall not
lie. In fact, there was no such misreading of evidence on the part of the
first appellate court, and hence there was no occasion for the High Court
to frame such a question of law in view of the prevailing judgment in *R.
Rajagopal Reddy which was rightly followed by the first appellate court.
[Paras 15, 17] [207-F-H; 211-A-C]

*R. Rajagopal Reddy v. Padmini Chandrasekharan decided on 31.1.1995 and AIR
1996 SC 238 – relied on.

Mithilesh Kumari and Anr. v. Prem Behari Khare AIR 1987 SC 1247 – referred
to.

1.2. The appellant’s premises was situated on College Road, Pathankot and
so also the residence of the first respondent where the notice was sent.
Therefore, there was nothing wrong in drawing the inference which was
permissible under Section 114 of the Evidence Act that such notice must
have been duly served in the normal course of business before 13.4.1987. In
the present case it has already been established that the appellant had
purchased the property out of her own funds. Therefore, it could certainly
be expected that when she came to know about the clandestine sale of her
property to respondent no.1, she would send him a notice, which she sent on
8.4.1987. The notice is sent from one house on the College Road to another
house on the same road in the city of Pathankot. The agreement of purchase
was signed by the respondent no.3 five days thereafter i.e. 13.4.1987. The
appellant had produced a copy of the notice along with postal certificate
in evidence. There was no allegation that the postal certificate was
procured. In the circumstances, it could certainly be presumed that the
notice was duly served on respondent No.1 before 13.4.1987. The High Court,
therefore, erred in interfering in the finding rendered by the first
appellate court that respondent no.1 did receive the notice and, therefore,
was not a bona fide purchaser for value without a notice. [Paras 18, 23]
[210-F-G; 214-C-F]

Harihar Banerji v. Ramshashi Roy AIR 1918 PC 102; Gresham House Estate Co.
v. Rossa Grande Gold Mining Co. 1870 Weekly Notes 119; Ganga Ram v. Smt.
Phulwati AIR 1970 Allahabad 446; Mst. L.M.S. Ummu Saleema v. B.B. Gujaral &
Anr. 1981 (3) SCC 317; M.S. Madhusoodhanan v. Kerala Kaumudi (P) Ltd. and
others 2004 (9) SCC 204; VS Krishnan v. Westfort Hi-Tech Hospital Ltd. 2008
(3) SCC 363 – relied on.

2. The suit filed by appellant no.1 is decreed and it is declared that
appellant no. 1 is the owner of the suit house. There shall be a permanent
injunction restraining the defendants from alienating any part of the suit
house and forcibly interfering with the possession of the plaintiff of the
house in dispute. In view of the offer given by the appellants to
compensate the first respondent, the appellants shall pay him the amount of
Rs. 30,000/-, with simple interest at the rate of 10% for the period from
13.4.1987 till the decision of the first appellate court i.e. 22.2.1996,
within twelve weeks from today, though it is up to respondent no. 1 to
receive the amount. The interest is restricted upto 22.2.1996 for the
reason that respondent no.1 ought to have accepted the decision of the
first appellate court, particularly in view of the judgment of this Court
in *R. Rajagopal Reddy and should not have dragged the appellants to the
High Court. [Para 25] [215-B-E]

Case Law Reference:

AIR 1987 SC 1247 Referred to Para 10
AIR 1996 SC 238 Relied on Para 11
AIR 1918 PC 102 Relied on Para 19
1870 Weekly Notes 119 Relied on Para 19
AIR 1970 All 446 Relied on Para 20
1981 (3) SCC 317 Relied on Para 21
2004 (9) SCC 204 Relied on Para 22
2008 (3) SCC 363 Relied on Para 22

CIVIL APPELLATE JURISDICTION : Civil Appeal No. 846 of 2011.

From the Judgment & Order dated 10.09.2009 of the High Court of Punjab &
Haryana at Chandigarh in R.S.A. No. 1367 of 1996.

Sai Krishna Rajagopal, Hari Shankar K., Vikas Jangra, Bharat S. Kumar for
the Appellants.

V.K. Monga for the Respondents.

REPORTABLE
IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO. 846 OF 2011

ARISING OUT OF SPECIAL LEAVE PETITION (C) NO. 1305 OF 2010
Samittri Devi and another. …Appellants
Versus

Sampuran Singh and another …Respondents
JUDGMENT

Gokhale J.

Leave Granted.
2. This Appeal by Special Leave raises the question as to whether the

suit of the first appellant for the recovery of her house property filed prior to the

Benami Transactions (Prohibition) Act, 1988 coming into force could be

considered to be prohibited by Section 4 of that Act.
3. This appeal seeks to challenge the judgment and order passed by a

Learned Judge of the Punjab and Haryana High Court dated 10.9.2009 in Regular

Second Appeal (R.S.A) No. 1367 of 1996 (O & M), whereby the Judge has
2

allowed the Second Appeal filed by Respondent No. 1 herein, and set aside the

judgment and order dated 22.2.1996 passed by the Additional District Judge,

Gurdaspur in Civil Appeal No. 203 of 1991 filed by appellant No.1 herein. The

Learned Additional District Judge had allowed the Civil Appeal filed by appellant

No. 1 herein whereby he decreed Civil Suit No. 138 of 1987 filed by appellant

No.1, which suit had been dismissed by the Sub-Judge at Pathankot by his

judgment and order dated 3.10.1991.
4. Short facts leading to this appeal are as follows:-
The appellant No.1 herein purchased a house property situated at

Pathankot from Sarvashri Romesh Chand and Chatar Chand sons of Shri Kartar

Singh, vide registered sale deed dated 26.2.1985 for a consideration of

Rs. 40,000/-. This sale deed was, however, executed in the name of her son

namely Shri Kamal Chand (the appellant No.2 herein) and his brother-in-law

Shri Jiwan Kumar (respondent No.2 herein). The appellant no.1 paid the money

by two bank drafts for purchasing the house property which was actually in the

possession of a tenant of the previous owner i.e. Home Guard Department and it

continues to be in their possession.
5. It is the case of the appellant No.1 that taking advantage of her old

age (presently 93 years), the above referred Kamal Chand and Jiwan Kumar

stealthily removed the sale deed from her possession, and this Jiwan Kumar sold

half share of the suit house to one Sampuran Singh (Respondent No. 1 herein)
3

and that too without her knowledge and consent. The sale was executed by a

registered sale deed dated 13.4.1987 despite the fact that appellant No.1 had

sent, in the meanwhile, a letter dated 8.4.1987 to Respondent No. 1 herein

informing him that she was the real owner of the Suit House.
6. The appellant No. 1 therefore, filed Suit No. 138 of 1987 on

30.9.1987 for a declaration that she was the real owner in possession of the Suit

House shown in red in the site plan attached by letters A B C D part of No.

Khasra 574/1, No. Khawat 262, No. Khatauni 401, as entered in the Jamabandi

for the year 1976-77 situated in village Daulatpur HB No. 331, Pathankot. She

prayed for a permanent injunction also restraining the defendants from

alienating any part of the suit house and forcibly interfering with the possession

of the plaintiff of the suit house. By moving an amendment, she claimed an

alternative relief for a decree of Rs. 40,000/- with interest. Her son Kamal

Chand was joined as defendant No. 1, his brother-in-law the above referred

Jiwan Kumar as defendant No. 2, and the purchaser Sampuran Singh as

defendant No. 3. They are appellant No.2, respondent No.2 and respondent No.

1 respectively to this appeal.
7. Defendant No. 1 admitted the entire claim of the appellant, but the

defendant No. 2 disputed it, and contended that half of the consideration of Rs.

40,000/- had been paid by him. He denied that it was a Benami Transaction.

Defendant No. 3 filed his written statement and contended in para 5 thereof that

even if it is proved to be a Benami Transaction, due to the recent legislation of
4

Benami Transactions (Prohibition) Act 1988, the defendants Nos. 1 & 2 were the

owners of the Suit property, and that the alienation of his share in the property

by defendant No. 2 in his favour had been effected legally. He contended that

he had purchased the share of the defendant No. 2 by sale deed dated

13.4.1987 for a consideration of Rs. 30,000/-, and that he was a bonafide

purchaser for value, and that the Suit should be dismissed.
8. The trial court framed the necessary issues including whether the

sale deed dated 26.2.1985 was Benami, and whether the sale deed dated

13.4.1987 was illegal, and also whether defendant No. 3 was a bonafide

purchaser without notice.
9. The appellant No. 1 laid the evidence amongst others of a clerk

from a branch of State Bank of Patiala at Chaki, Pathankot, who deposed to the

fact that the appellant had made the payment for the sale consideration from her

account. Defendant No. 2 had contended that he had arranged Rs. 20,000/-

from friendly loans to purchase half the share of the Suit House, but he did not

lead any evidence for proving the availability of such funds with him. The Trial

Court therefore, held that it was obvious that the payment was not made by

defendant nos. 1 & 2, but by the plaintiff i.e. the appellant No.1 herein.
10. The appellant No.1 had produced before the trial court a copy of

the notice dated 8.4.1987 which she had sent to defendant no. 3, to point out to

him that she was the real owner of the suit house. She produced the same
5

alongwith the certificate of posting. The sale deed between defendant Nos. 2 &

3 was executed on 13.4.1987. The trial court held that the delivery of the notice

was not proved, and therefore, defendant No. 3 was a bonafide purchaser for

valuable consideration without notice. That apart, at the time when the Suit was

decided on 3.10.1991, the law laid down by this Court in Mithilesh Kumari and

Anr. Vs. Prem Behari Khare [AIR 1987 SC 1247] : [1989 (2) SCC 95]

was governing the field viz. that the provisions of Benami Transactions

(Prohibition) Act 1988 were retroactive. It had been held that the prohibition

under Section 4 of the Act to recover the Benami property was applicable to

suits, claims or action pending on the date of commencement of the Act. The

appellant No.1 had filed her suit on 30.9.1987. The Benami Transactions

(Prohibition) Act 1988 came into force on 5.9.1988. Thus, this Suit was pending

on the date on which the Act came into force. The Trial Court, therefore,

followed the judgment in Mithilesh Kumari (supra), and held that the appellant

no longer retained the right to recover the property from the Benami holder.

The suit was, therefore, dismissed for being barred by virtue of the provisions of

the said Act, though without any order as to costs.
11. The appellant No.1 carried the matter in first appeal to the

Additional District Judge, Gurdaspur. As we have noted, the trial court had

already held that appellant No. 1 had purchased the suit house by making the

payment from her account. It had, however, declined to decree her suit on two

grounds, firstly due to the prohibition under Section 4 of the Benami
6

Transactions (Prohibition) Act 1988 as interpreted in Mithilesh Kumari judgment

(supra), and secondly on the ground that the appellant did not prove the service

of her notice dated 8.4.1987 on respondent No. 1 herein. By the time the first

appeal was being heard, the judgment of the two Judges bench in Mithilesh

Kumari (supra) had been over-ruled by a bench of three Judges of this Court in

R.Rajagopal Reddy Vs. Padmini Chandrasekharan decided on 31.1.1995

and reported in [AIR 1996 SC 238] : [1995 (2) SCC 630]. This Court had

held that Section 4 or for that matter the Act as a whole was not a piece of

declaratory or curative legislation. It creates substantive rights in favour of

benamidars and destroys substantive rights in favour of the real owners. It

creates a new offence of entering into such benami transactions. It had

therefore, been held that when a statutory provision creates a new liability and a

new offence, it would naturally have a prospective operation, and Section 4 will

not apply to pending suits which were already filed and entertained prior to the

Act coming into force. The first appellate Court therefore, held that the suit filed

by appellant No.1 was not prohibited by the said Act. As far as the notice dated

8.4.1987 is concerned, the Court held that there was a presumption under the

law that the letter which was proved to have been posted well in advance must

have reached the addressee. The first appellate court therefore, held that the

notice will have to be presumed to have been served, and yet respondent No. 1

herein got the sale deed executed on 13.4.1987. It was therefore, held that

respondent No. 1 could not be held to be a bonafide purchaser without any

notice of the rights of appellant No.1 in the suit property. The first appellate
7

court therefore, decreed the suit filed by appellant No.1 to the effect that she

was the real owner in possession of the house and the sale deed dated

13.4.1987 was null and void. It also granted an injunction against the

defendants that they shall not alienate any part of the suit house and will not

interfere in her possession of the suit house. The Court awarded cost of

Rupees 1,000/-.
12. Feeling aggrieved by this decision, the first respondent herein filed

a Regular Second Appeal bearing RSA No. 1367 of 1996. The Learned single

Judge of the High Court, who heard the matter, framed the following substantial

question of law – “Whether the Learned Additional District Judge has misread the

evidence on record while coming to the conclusion that the suit property was

benami property of the plaintiff.” The Learned Judge did not dispute the fact

that appellant No. 1 had purchased the suit house out of her money, but he

noted that the office of the Home Guard continued in that property. The

Learned Judge did not give any importance to the notice dated 8.4.1987 being

sent under postal certificate, but held that there was nothing on record to prove

that defendant No.3 had been served with that notice. The Learned Single

Judge therefore, found fault with the finding of the Additional District Judge to

the effect that defendant No. 3 (Respondent No. 1 herein) was not a bonafide

purchaser, and further held that, it amounted to misreading of evidence. The

Regular Second Appeal was therefore, allowed and the judgment and decree of

the Addl. District Judge was set aside.
8

13. Being aggrieved by the judgment and order passed by the High

Court this Appeal has been filed by the appellant. This time, the son of appellant

No.1, the original defendant No.1 has joined her as appellant No. 2.

Mr. Saikrishna Rajagopal, learned counsel appearing for the appellants pointed

out that the order passed by the High Court does not deal with the law laid down

in the judgment of this Court in R. Rajagopal Reddy case (Supra). The

Judgment was binding on the Learned Judge, and in view thereof the suit filed

by the appellant No.1 was not hit by the prohibition under Section 4 of the Act.

He also pointed out that the appellants as well as the respondent No. 1 were

staying in the same area i.e. College Road, Pathankot, and therefore, the

Learned Additional District Judge was right in his inference that the notice dated

8.4.1987 must be presumed to have been duly served on respondent No. 1 prior

to 13.4.1987 when respondent No. 3 purchased half share of the suit house. He

submitted that the appellants were ready to return the amount of Rs.30,000/-

with interest to respondent No. 1 which amount he claims to have paid to

respondent No. 2 to purchase his half share in the property.
14. As against this submission of the appellant, Mr. V.K. Monga,

learned counsel appearing for respondent No. 1 repeated the same submissions

made in the courts below, namely, that he was a bonafide purchaser without

notice, and that the original defendant No. 2 had purchased half the share of the

suit house from his money, and from him the respondent No.1 had purchased

that share, and therefore, the present appeal should be dismissed.
9

15. We have noted the submission of the rival parties. As far as the

purchase of the suit house by the appellant No. 1 from her own money is

concerned that finding of the trial court has remained undisturbed all throughout

and cannot be re-opened in this appeal. The appellant No.1 led cogent evidence

before the trial court, and it had been held in her favour that it is out of her

funds that she had purchased the suit house. The submission of the original

defendant no. 2 that he had arranged the amount of Rs. 20,000/- through

friendly loans was negated by the trial court since there was no supporting

evidence at all. There is no reason for us to disturb that finding. Once the High

Court held that the appellant had purchased the suit house out of her funds, it

ought to have held that it follows that the defendant No. 2 had no right to deal

with it or to sell his half share merely because his name was shown as a

purchaser alongwith the appellant No. 2. Consequently the purchase of the

share of the defendant No. 2 by the respondent No. 1 herein without the consent

of the appellant No. 1 gave him no rights whatsoever. Therefore, the High Court

ought to have held that the suit of appellant No. 1 for declaration of her

ownership to be valid and maintainable.
16. The High Court has clearly erred in ignoring the binding judgment of a

Bench of three Judges of this Court in R. Rajagopal Reddy (supra). By this

decision, this Court had reversed its earlier judgment in Mithilesh Kumari (supra)

and had held in terms that suits filed prior to the application of the act would not
10

be hit by the prohibition under Section 4 of that act. Section 4(1) of the Benami

Transactions (Prohibition) Act 1988 reads as follows:
“Prohibition of the right to recover property held benami.-
(1) No suit, claim or action to enforce any right in respect of any
property held benami against the person in whose name the
property is held or against any other person shall lie by or on
behalf of a person claiming to be the real owner of such property.”

While reversing the earlier decision of this Court in Mithilesh Kumari

(supra), a bench of three Judges observed in para 11 of

R. Rajagopal Reddy (supra) as follows:-
“Before we deal with these six considerations which weighed
with the Division Bench for taking the view that Section 4 will apply
retrospectively in the sense that it will get telescoped into all
pending proceedings, howsoever earlier they might have been
filed, if they were pending at different stages in the hierarchy of
the proceedings even up to this Court, when Section 4 came into
operation, it would be apposite to recapitulate the salient feature of
the Act. As seen earlier, the preamble of the Act itself states that it
is an Act to prohibit benami transactions and the right to recover
property held benami, for matters connected therewith or
incidental thereto. Thus it was enacted to efface the then existing
right of the real owners of properties held by others benami. Such
an Act was not given any retrospective effect by the legislature.
Even when we come to Section 4, it is easy to visualise that sub-
section (1) of Section 4 states that no suit, claim or action to
enforce any right in respect of any property held benami against
the person in whose name the property is held or against any other
shall lie by or on behalf of a person claiming to be the real owner
of such property. As per Section 4(1) no such suit shall thenceforth
lie to recover the possession of the property held benami by the
defendant. Plaintiff’s right to that effect is sought to be taken away
and any suit to enforce such a right after coming into operation of
Section 4(1) that is 19-5-1988, shall not lie. The legislature in its
wisdom has nowhere provided in Section 4(1) that no such suit,
claim or action pending on the date when Section 4 came into
force shall not be proceeded with and shall stand abated. On the
contrary, clear legislative intention is seen from the words “no such
11

claim, suit or action shall lie”, meaning thereby no such suit, claim
or action shall be permitted to be filed or entertained or admitted
to the portals of any court for seeking such a relief after coming
into force of Section 4(1).” (Emphasis supplied)

17. In the impugned judgment, the High Court nowhere refers to the

judgment in R. Rajagopal Reddy’s case (supra) although the same was very

much referred to and relied upon by the appellant to counter the contrary

submission of the respondent No. 1. The High Court has therefore, committed a

serious error of law in holding that the Additional District Judge has misread the

evidence on record while coming to the conclusion that the suit property was the

Benami Property of the plaintiff-appellant No.1 herein and that her suit to

enforce the right concerning the same shall not lie. In fact there was no such

misreading of evidence on the part of the first appellate court, and hence there

was no occasion for the High Court to frame such a question of law in view of

the prevailing judgment in R. Rajagopal Reddy which had been rightly followed

by the first appellate court.
18. The High Court has held that there is nothing on record to suggest that

respondent No.1 herein had, in fact, been served with the notice dated 8.4.1987

and thereby reversed the finding rendered by the first appellate court. It is

material to note in this behalf that it was canvassed by respondent No.1 before

the first appellate court that a certificate of posting is very easy to procure and it

does not inspire confidence. The Additional District Judge observed that there

was no dispute with this proposition of law, but there was no such averment or

even allegation against appellant No.1 herein, that she had procured the
12

certificate of posting nor was there any such pleading to that effect. It is on this

background that the first appellate court has drawn the inference that the notice

must be deemed to have been served within the period of five days thereafter

i.e. before 13.4.1987, the date on which the respondent No.1 herein entered into

an agreement to purchase the suit property. It is also material to note that the

appellant’s premises are situated on College Road, Pathankot and so also the

residence of the first respondent where the notice was sent. Therefore, there

was nothing wrong in drawing the inference which was permissible under Section

114 of the Evidence Act that such notice must have been duly served in the

normal course of business before 13.4.1987.
19. We may fruitfully refer to a few judgments laying down the

propositions relating to service of notice. To begin with, we may note two

judgments in the context of the notice to quit, sent to the tenants under Section

106 of the Transfer of Property Act 1882, though both the judgments are

concerning the notices sent by registered post. Firstly, the judgment in the case

of Harihar Banerji Vs. Ramshashi Roy [AIR 1918 PC 102], wherein the

Privy Council quoted with approval the following observations in Gresham

House Estate Co. Vs. Rossa Grande Gold Mining Co. [1870 Weekly

Notes 119] to the following effect:
“……….if a letter properly directed, containing a notice to quit, is
proved to have been put into the post office, it is presumed that
the letter reached its destination at the proper time according to
the regular course of business of the post office, and was received
by the person to whom it was addressed. That presumption would
13

appear to their Lordships to apply with still greater force to letters
which the sender has taken the precaution to register, and is not
rebutted but strengthened by the fact that a receipt for the letter is
produced signed on behalf of the addressee by some person other
than the addressee himself.”

20. Secondly, we may refer to the judgment of a Full Bench of the Allahabad

High Court in the case of Ganga Ram Vs. Smt. Phulwati [AIR 1970

Allahabad 446], wherein the Court observed in paragraphs 12 and 13 as

follows:
“12. When a registered article or a registered letter is handed
over to an accepting or receiving post office, it is the official duty of
the postal authorities to make delivery of it to the addressee.
Human experience shows that except in a few exceptional cases
letters or articles received by the post office are duly, regularly and
properly taken to the addressee. Consequently as a proposition it
cannot be disputed that when a letter is delivered to an accepting
or receiving post office it is reasonably expected that in the normal
course it would be delivered to the addressee. That is the official
and the normal function of the post office.

13. Help can also be taken from Section 16 of the Indian
Evidence Act which reads as follows:-

“When there is a question whether a particular act was done, the
existence of any course of business, according to which it naturally
would have been done, is a relevant fact.

Illustrations:

(a) The question is, whether a particular letter was dispatched.
The facts that it was the ordinary course of business for all letters
put in a certain place to be carried to the post, and that that
particular letter was put in that place, are relevant.

(b) The question is, whether a particular letter reached A. The
facts that it was posted in due course, and was not returned
through the Dead Letter Office, are relevant.”
14

21. As far as a notice sent under postal certificate is concerned, in Mst.
L.M.S. Ummu Saleema Vs. B.B. Gujaral & Anr. [1981 (3) SCC 317], a
bench of three judges of this Court on the facts of that case, refused to accept
that the notice sent under a postal certificate by a detenue under the
Conservation of Foreign Exchange and Smuggling Activities Act, 1974, to the
Assistant Collector of Customs, retracting his original statement had been duly
served on the concerned office. This was because the respondent rebutted the
submission by producing their file to show that such a letter had not been
received in their office in the normal course of business. However, the
proposition laid down in that case is relevant for our purpose. This Court
observed in paragraph 6 of that judgment as follows:

“6. …………The certificate of posting might lead to a presumption
that a letter addressed to the Assistant Collector of Customs was
posted on August 14, 1980 and in due course reached the
addressee. But, that is only a permissible and not an inevitable
presumption. Neither Section 16 nor Section 114 of the Evidence
Act compels the court to draw a presumption. The presumption
may or may not be drawn. On the facts and circumstances of a
case, the court may refuse to draw the presumption. On the other
hand the presumption may be drawn initially but on a
consideration of the evidence the court may hold the presumption
rebutted and may arrive at the conclusion that no letter was
received by the addressee or that no letter was ever despatched as
claimed. After all, there have been cases in the past, though rare,
where postal certificates and even postal seals have been
manufactured. In the circumstances of the present case,
circumstances to which we have already referred, we are satisfied
that no such letter of retraction was posted as claimed by the
detenu.”

22. The proposition laid down in this judgment has been followed in two

subsequent cases coming before this Court in the context of Section 53(2) of the

Companies Act 1956 providing for presumption of service of notice of the board

meeting, sent by post. In M.S. Madhusoodhanan vs. Kerala Kaumudi (P)

Ltd. and others [2004 (9) SCC 204], a bench of two Judges of this Court
15

referred to the proposition in Mst. L.M.S. Ummu Saleema (supra) in para 117 of

its judgment, and held in the facts of that case, that the notice by postal

certificate could not be presumed to have been effected, since the relations

between the parties were embittered, and the certificate of posting was suspect.

As against that, in a subsequent matter under the same section, in the case of

VS Krishnan Vs. Westfort Hi-Tech Hospital Ltd. [2008 (3) SCC 363],

another bench of two Judges referred to the judgment in M.S. Madhusoodhanan

(supra), and drew the presumption in the facts of that case that the notice sent

under postal certificate had been duly served for the purposes of Section 53(2)

of the Companies Act, 1956, since the postal receipt with post office seal had

been produced to prove the service. Thus, it will all depend on the facts of each

case whether the presumption of service of a notice sent under postal certificate

should be drawn. It is true that as observed by the Privy Council in its above

referred judgment, the presumption would apply with greater force to letters

which are sent by registered post, yet, when facts so justify, such a presumption

is expected to be drawn even in the case of a letter sent under postal certificate.
23. Having seen the factual and the legal position, we may note that in the

present case it has already been established that the appellant had purchased

the property out of her own funds. Therefore, it could certainly be expected that

when she came to know about the clandestine sale of her property to

respondent No.1, she would send him a notice, which she sent on 8.4.1987. As

noted earlier, the notice is sent from one house on the College Road to another
16

house on the same road in the city of Pathankot. The agreement of purchase is

signed by the defendant No.3 five days thereafter i.e. 13.4.1987. The appellant

had produced a copy of the notice along with postal certificate in evidence.

There was no allegation that the postal certificate was procured. In the

circumstances, it could certainly be presumed that the notice was duly served on

respondent No.1 before 13.4.1987. The High Court, therefore, erred in

interfering in the finding rendered by the Additional District Judge that

respondent No.1 did receive the notice and, therefore, was not a bona fide

purchaser for value without a notice.
24. The judgment of the High Court, therefore, deserves to be set

aside. The appellants through their counsel have, however, in all fairness

offered to compensate the first respondent herein by paying him the amount of

Rs. 30,000/- with appropriate interest. The first respondent did not evince any

interest in this suggestion. Yet, the end of justice will be met, if this amount of

Rs. 30,000/- is returned by the appellants to him as offered by them with simple

interest at the rate of 10%.
25. In the circumstances this appeal is allowed. The Judgment and

order dated 10.2.2009 passed by the High court in R.S.A No. 1367 of 1996 and

that of the Sub-Judge, Pathankot in Civil Suit No. 138 of 1987 dated 3.10.1991

are set aside. The judgment and order dated 22.2.1996 passed by Addl. District.

Judge, Gurdaspur in Civil Appeal No. 203 of 1991 is confirmed. The suit filed by

the appellant No.1 bearing Civil Suit No. 138 of 1987 is decreed and it is declared
17

that the appellant No. 1 is the owner of the suit house. There shall be a

permanent injunction restraining the defendants from alienating any part of the

suit house and forcibly interfering into the possession of the plaintiff of the house

in dispute. In view of the offer given by the appellants to compensate the first

respondent, the appellants shall pay him the amount of Rs. 30,000/-(Rupees

thirty thousand only), with simple interest at the rate of 10% for the period from

13.4.1987 till the decision of the first appellate court i.e. 22.2.1996, within twelve

weeks from today, though it is up to the respondent No. 1 to receive the

amount. The interest is restricted upto 22.2.1996 for the reason that respondent

No.1 ought to have accepted the decision of the First Appellate Court,

particularly in view of the judgment of this Court in R. Rajagopal Reddy (supra),

and should not have dragged the appellants to the High Court in Second appeal.
26. The first respondent will pay a cost of Rs. 10,000/- to the 1 st appellant

for this appeal.
………………………………….J.
( Dalveer Bhandari )
…………………………………..J.
( H.L. Gokhale )

New Delhi
Dated: January 21, 2011

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