he deals (8). In such cases there is no deliberate intention on the part of the real owner to commit a fraud upon any one. But if he deliberately places all the means of committing a fraud in the hands of his benamidar, Equity will not allow him. to assert his title to the detriment of a person who has actually been defrauded.

creditors.

§ 370. A still stronger case is that in which property has Frauds upon been placed in a false name, for the express purpose of shielding it from creditors. As against them, of course, the transaction is wholly invalid (§ 368). But a very common form of proceeding is for the real owner to sue the benamidar, or to resist an action by the benamidar, alleging, or the evidence making out, that the sale was a merely colourable one, made for the express purpose of defrauding creditors. In other words, the party admits that he has apparently transferred his property to another to effect a fraud, but asks to have his act undone, now that the object of the fraud is carried out. The rule was for some time considered to be, that where this state of things was made out, the Court would invariably refuse relief, and would leave the parties to the consequences of their own misconduct; dismissing the plaint, when the suit was brought by the real owner to get back possession of his property (t), and refusing to listen to the defence, when he set it up in opposition to the person whom he had invested with the legal title (u). And persons who take under the real owner, whether as heirs or as purchasers, were treated in exactly the same manner as he was (v). On the other hand a contrary doctrine was laid down in more recent cases. In the first of these the plaintiff claimed

(8) Hakeem Meah v. Beejoy, 22 W. R. 8; Mancharji v. Kongseoo, 6 Bomb. Q. C. 59.

(t) Ramindur v. Roopnarain, 2 S. D. 118 (149); Roushun v. Collr. of Mymensingh, S. D. of 1846, 120; Brimho Mye v. Ram Dolub, S. D. of 1849, 276; Rajnarain v. Jujunnath, S. D. of 1851, 774; Koonjee v. Jankee, S. D. of 1852, 838; Bhowanny Sunker v. Purem Bebee, S. D. of 1853, 639; Ramsoonder v. Anundnuth, S. D. of 1856, 542; Hurry Sunker v. Kali Coomar, W. R. of 1864, 265; Alok Soondry v. Horo Lal, 6 W. R. 287; Keshub Chunder v. Vyasmonee, 7 W. R. 118; per curiam, 13 M. I. A. 402; 4 B. L. R. P. C. 28, 29.

(u) Obhoychurn v. Treelochun, S. D. of 1859, 1639; Ram Lall v. Kishen Chunder, S. D. of 1860, i. 436; per curiam, 12 B. L. R. (P. C.) 438.

(v) Luckhee Narain v. Taramonee, 3 W. R. 92; Purikheet v. Radha Kishen, ib. 221; Kalcenath v. Doyal Kristo, 13 W. R. 87.

Frauds upon creditors.

Principle of decision.

registration of title as vendee of certain parties, whom the defendant asserted to have been merely benamidars for her, she being actually in possession. The sale by the benamidars was found to be without consideration. It appeared, however, that in a former suit, to which the defendant and the benamidars were all parties, she had maintained that the latter were the real owners. It was also found that the property had been placed in the name of the benamidars by the defendant's late husband for the purpose of defrauding his creditors. On these two grounds the Judge held that the defendant could not now rely on the real state of the title. The High Court of Bengal reversed his judgment on both points. On the latter point, Couch, C. J., said: "In many of these cases, the object of a benami transaction is to obtain what may be called a shield against a creditor; but notwithstanding this the parties are not precluded from showing that it was not intended that the property should pass by the instrument creating the benami, and that in truth it still remained in the person who professed to part with it." He then referred to English decisions, and proceeded, " Although, no doubt, it is improper that transactions of this kind should be entered into for the purpose of defeating creditors, yet the real nature of the transaction is what is to be discovered, the real rights of the parties. If the Courts were to hold that persons were concluded under such circumstances, they would be assisting in a fraud, for they would be giving the estate to a person when it was never intended that he should have it" (x).

§ 371. Possibly the real rule is something intermediate between that which was laid down broadly in this last case, and in those which it appears to over-rule. Where a transaction is once made out to be a mere benami, it is evident that the benamidar absolutely disappears from the title. His name is simply an alias for that of the person beneficially interested. The fact that A, has assumed the name of B. in order to cheat X., can be no reason whatever why a Court should assist or

(x) Streemutty Debia v. Bimola Soonduree, 21 W. R. 422, followed Gopeenath v. Jado Ghose, 23 W.R. 42; Bykunt v. Goboollah, 24 W. R. 391. See too Birj Mohun v. Ram Nursingh. 4 S. D. 341 (435); Param Singh v. Lalji Mal, 1 All. 403.

permit B. to cheat A. But if A. requires the help of the Court to get the estate into his own possession, or to get the title into his own name, it may be very material to consider whether A. has actually cheated X. or not. If he has done so by means of his alias, then it has ceased to be a mere mask, and has become a reality. It may be very proper for a Court to say that it will not allow him to resume the individuality, which he has once cast off in order to defraud others. If, however, he has not defrauded any one, there can be no reason why the Court should punish his intention by giving his estate away to B., whose roguery is even more complicated than his own. This appears to be the principle of the English decisions. For instance, persons have been allowed to recover property which they had assigned away in order to confer a parliamentary qualification upon a friend, who never sat in parliament; or in order to avoid serving in the office of a sheriff, where they ultimately paid the fine, instead of pleading that they had no property in the country; or where they had intended to defraud creditors, who in fact were never injured (y); or in order to avoid the effects of a conviction for a felony, which the grantor supposed he had committed, but which in fact he had not, and could not have committed (2). But where the fraudulent or illegal purpose has actually been effected by means of the colourable grant, then the maxim applies, "In pari delicto potior est conditio possidentis." The Court will help neither party. "Let the estate lie where it falls (a). But it was suggested by Lord Eldon that perhaps this rule would not be enforced in case of one who claimed under the settlor, but was himself not a party to the illegality or fraud (b). And in order to enable the grantee to retain the property, he must expressly set up the illegality of the object, and admit that he is holding

Has fraud gone beyond inten

tion.

(y) Birch v. Blagrave, Amb. 264; Cottington v. Fletcher, 2 Atk. 156; Platamone v. Staple, G. Coop. 250; Young v. Peachey, 2 Atk. 254; Symes v. Hughes, L. R. 9 Eq. 475; per Lord Westbury, Tennent v. Tennents, L. R. 2 Sc. & D. 9; Cecil v. Butcher, 2 Jac. & W. 565.

(z) Davies v. Otty, 35 Beav. 208; Manning v. Gill, L. R. 13 Eq. 485. (a) Duke of Bedford v. Coke, 2 Ves. Sen. 116; Muckleston v. Brown, 6 Ves. 68; Chaplin v. Chaplin, 3 P. W. 233; Brackenbury v. Brackenbury, 2 Jac. & W. 391; Doe v. Roberts, 2 B. & Ald. 367; Lewin, 93; Story, Eq. Jur. § 298.

(b) Lewin, 93; 6 Ves. 68.

Original purchase made as benami.

Insolvency.

Effect of decrees.

for a different purpose from that for which he took the property (c).

§ 372. Even before the recent decisions, it was held in Bengal that there was nothing to prevent a man enforcing his rights against a benamidar, where he had made a new purchase, taking the conveyance in the name of a stranger, even though he had done so for the purpose of preventing the property from being seized by creditors. The Court, after referring to the cases already cited, said, "In this case the plaintiff does not seek to render void an act done by him in fraud, or, in other words, to be relieved from the effect of his own fraudulent act. He simply sues to have a legal act enforced, an act legal in itself, though in the present instance done with a motive of keeping the property out of the reach of his creditors" (d). It may also be well to remember that the rules which govern benami transactions have no application to the case of gifts made in contemplation of insolvency, and with the intention of defrauding creditors (e). Nor to cases in which property has been sold or handed over to one creditor, in order to defeat an expected execution by another creditor (f). If the transfer is really intended to operate, and is not colourable, it is not a benami transaction. Whether it is valid or not, depends upon other considerations.

§ 373. Decrees are conclusive between the parties both as to the rights declared, and as to the character in which they sue. It is allowable for a third person, who was not on the record, to come in and show that a suit was really carried on for his benefit. So it is allowable for a person who is on the record, to show that a suit was carried on really against a person who was not a party to it. But where judgment is given in an apparently hostile suit, it is not allowable for either party to come in and assert that the fight was all a sham, and for the defendant on the record to show, that so far from being really a defendant he was the plaintiff, and that so far from judgment

(c) Haigh v. Kaye, L. R. 7 Ch. 469.

(d) Suboodra v. Bikromadit, S. D. of 1858, 543, 548.

(e) See Gnanabhai v. Srinavasa, 4 Mad. H. C. 84.

(f) Sankarappa v. Kamayya, 3 Mad. H. C. 231; Pullen v. Ramalinga, 5 Mad. H. C. 368; Tillakchund v. Jitamal, 10 Bomb. 206.

should be a

party.

having been recovered against him, he had really recovered Benamidar judgment (g). Hence as a general rule it is desirable, if not necessary, that the benamidar should be a party to all suits which affect the property of which he is the nominal owner. But this is not necessary when there is no dispute as to his title being only apparent (h).

(g) Bhowabul v. Rajendro, 13 W. R. 157.

(h) Mt. Kurreemonissa v. Mohabut, S. D. of 1851, 356.