- Section 101- Subhra Mukherjee & Anr. C vs Bharat Coking Coal Ltd. & Ors.
- Bench: Justice S.Rajendra Babu, Justice S.S.M.Quadri
Facts:
- On March 20, 1972, one coal Company by executing a sale deed, sold the property in dispute (hereinafter referred to as the “suit property”), to the Appellant for a consideration.
- Thereafter, the Coal Mines (Nationalisation) Act (hereinafter referred to as the “Act of 1973”)came into force on May 1, 1973,by virtue of which the property of owners in relation to coal mines specified in the Act of 1973, vested in the Central Government. Hence, the property sold to the Appellants vested in the Respondent, a Government Company named M/s. Bharat Coking Coal Ltd., as per the Act of 1973.
- The Respondents initiated proceedings against the Appellants for their eviction from the suit property since the Appellants did not hand over the possession to them.
- The Appellants filed a title Suit in the Trial Court, praying for a declaration of title in the suit property and for permanent injunction restraining the Respondents from interfering with their possession.
Issues:
Whether the burden to prove a transaction as sham, bogus and fictitious, lies on the person alleging it?
Contentions of the Appellants:
- The High Court ought to have held the sale of the suit property as genuine and valid,in absence of any rebuttal evidence regarding the facts proven by the Appellants in relation to the authenticity of the sale deed.
- The government authorities were in possession of all the records of the Company and they should have produced the original record to substantiate the allegation that the documents are antedated.
Contentions of the Respondents:
- The suit property vested in the Respondent from the appointed date.
- The alleged sale transaction in favour of Appellants was sham, collusive and without any consideration as the sale deed documents areantedated.
- The directors of the Coal Company which executed the sale deed, are the spouses of the Appellants, which shows that the sale deed was brought into existence only to avoid the effect of vesting of the suit property in the Respondentsunder the Act of 1973.
Background:
The Trial Court appreciated the evidence and heldno title of Appellants in the suit property and the sale deed to be sham, bogus and fictitious. The Appellants filed an appeal against the decision of the Trial Court, wherein the District Judge set aside the judgment of the Trial Court, in favour of the Appellants. Thereafter, the Respondent preferred second appeal before the High Court of Judicature at Patna (Ranchi Bench), which was dismissed but was allowed by the Supreme Court in civil appeal. The matter was remitted back to the High Courtwhich decided in favour of the Respondents, by virtue of which the Appellants approached the Supreme Court in the present appeal.
Judgment:
Where a sale deed for its immovable property executed by a company in favour of the wives of the directors of the company, is contended to be bogus and collusive, theCourt will be justified in piercing the veil of incorporation to ascertain the true nature of the transaction as to who were the real parties to the sale and whether it was genuine and bona fide.
With respect to the burden of proof, it was held that that theperson who attacks a transaction as sham, bogus and fictitious must prove the facts by evidence. However, in the instant case,as per Indian Evidence Act, the onus initiallylies on the Appellants to provevalidity and genuinenessof the sale transaction. After appreciation of evidence by the Appellants in favour of the transaction, the Respondent has to dislodge it by proving that it is sham and fictitious.
“When circumstances of the case and the intrinsic evidence on record clearly point out that the transaction is not bona fide and genuine, it is unnecessary for the court to find out whether the respondent has led any evidence to show that the transaction is sham, bogus or fictitious.”
Hence, the Court while dismissing the appeal, ruled that the sale deed in favour of the appellants, is neither bona fide nor genuine.
