Supreme Court Upholds Concurrent Findings on Collusive Decree in Property Dispute: Jaswant Singh & Ors. vs. Jaspal Singh & Ors. (2019) INSC 459 (07 May 2019)

Case Background

The case revolves around a property dispute where Jaspal Singh (Respondent No. 1), who was residing in West Germany, had authorized Kidar Singh to manage his affairs in India through a special power of attorney. Kidar Singh filed a suit on behalf of Jaspal Singh, seeking a declaration that a decree dated 29.07.1983, passed in Civil Suit No. 18 of 1983, was illegal and not binding on Jaspal Singh. This earlier decree had declared Jaswant Singh and others (the Appellants in the present case) as owners of the disputed land. Jaspal Singh also sought a declaration that a registered sale deed dated 05.06.1984, by which he sold the land to other parties, was valid.

Initially, Jaspal Singh had withdrawn the suit, but later, the purchasers of the property (Defendant Nos. 4 to 10) were transposed as plaintiffs, and the suit continued. The Trial Court ruled in favor of the plaintiffs, and this decision was upheld by both the First Appellate Court and the Second Appellate Court.

Timeline

Course of Proceedings

The Trial Court decreed the suit in favor of the plaintiffs. This decree was confirmed by the First Appellate Court and subsequently by the Second Appellate Court. The High Court of Punjab and Haryana also upheld the findings of the lower courts. The unsuccessful defendants then appealed to the Supreme Court of India. The Supreme Court was hearing an appeal against the concurrent findings of three courts.

Legal Framework

The judgment primarily deals with the validity of a decree obtained through collusion and its impact on subsequent transactions. There are no specific sections of any statute cited in the judgment. The core issue revolves around the principle that a collusive decree is not binding on parties who are not part of the collusion and whose rights are affected by it.

Arguments

The appellants argued that the decree in Civil Suit No. 18 of 1983 was valid and binding. They contended that the lower courts erred in holding it to be collusive.

The respondents argued that the decree was indeed collusive. They stated that the decree was obtained by the plaintiffs in Civil Suit No. 18 of 1983 (the appellants in the present case) by agreeing to deposit part of the pre-emption money in certain pre-emption suits filed by Jaspal Singh, in return for acquiring rights in the suit property. They argued that this was a way to transfer property without a valid sale deed. They further argued that Jaspal Singh had appeared in the said suit without summons and had admitted the entire case of the plaintiffs, leading to a hurried decree.

Issues Framed by the Supreme Court

The Supreme Court did not explicitly frame specific issues but dealt with the core question of whether the lower courts were correct in holding the decree of 29.07.1983 to be collusive and not binding on the plaintiffs.

Treatment of the Issue by the Court

Authorities

No cases or legal provisions were specifically cited in the judgment.

Judgment

The Supreme Court, after reviewing the facts and circumstances, concurred with the findings of the Trial Court, the First Appellate Court, and the Second Appellate Court. The Court observed that the decree in Civil Suit No. 18 of 1983 was a collusive decree, obtained by the plaintiffs in that suit (Defendant Nos. 1 to 3 in the present suit) by agreeing to deposit part of the pre-emption money in certain pre-emption suits filed by Jaspal Singh. This arrangement was made in exchange for acquiring rights in the suit property, essentially using the decree as a mode of transferring property without a valid sale deed.

The Court also noted that Jaspal Singh had appeared in the said suit voluntarily, without being summoned, and had immediately admitted the entire case of the plaintiffs, leading to a quick decree. Despite this decree, the suit property remained in the name of Jaspal Singh, who also continued to be in possession.

The Court found that Plaintiff Nos. 2 to 9, who had purchased the suit property from Jaspal Singh vide sale deed dated 05.06.1984, were bona fide purchasers for valuable consideration. The mutation pursuant to the decree dated 29.07.1983 was sanctioned after the execution of the sale deed. The Court also observed that possession of the suit property had been handed over to Plaintiff Nos. 2 to 9, though they were later dispossessed by an order of the Executive Magistrate.

The Court concluded that there was no valid reason to disagree with the reasons and conclusions arrived at by the lower courts. The appeal was, therefore, dismissed.

What weighed in the mind of the Court?

The Supreme Court was primarily influenced by the concurrent findings of the lower courts, which had consistently held that the decree in Civil Suit No. 18 of 1983 was collusive. The Court emphasized that the decree was obtained through an agreement to deposit pre-emption money, which was a way to transfer property without a valid sale deed, and that Jaspal Singh had appeared in the suit without summons and admitted the case hurriedly. The Court also considered the fact that the suit property remained in the name of Jaspal Singh, and that the subsequent purchasers were bona fide purchasers.

Key Takeaways

• ✓ A decree obtained through collusion is not binding on parties affected by it.
• ✓ Courts will scrutinize decrees that appear to be attempts to circumvent the law, such as using a decree in lieu of a sale deed.
• ✓ Bona fide purchasers for valuable consideration are protected under the law.
• ✓ Concurrent findings of lower courts are given significant weight by the Supreme Court.

Directions

No specific directions were given by the Supreme Court in this case.

Development of Law

The ratio decidendi of this case is that a collusive decree, obtained through an agreement to circumvent the legal process, is not binding on parties affected by it. This judgment reinforces the principle that courts will not uphold decrees that are obtained through fraud or collusion. The judgment does not introduce any new principles of law but reaffirms existing principles.

Conclusion

The Supreme Court dismissed the appeal, upholding the concurrent findings of the lower courts that the decree in Civil Suit No. 18 of 1983 was collusive and not binding on the plaintiffs. The Court emphasized that the decree was an attempt to transfer property without a valid sale deed and that the subsequent purchasers were bona fide purchasers.