JUDGMENT
1. This is plaintiffs second appeal arising out of a suit for declaration that the sale deed executed by him in favour of defendant No. 1 on 17-10-1967 was a fictitious transaction as well as for permanent injunction restraining the defendant from interferring with his possession. A further relief was claimed asking the defendant No. I to return the consideration of the subsequent sale effected by him in favour of defendant No. 2 to 5.
2. The trial court had decreed the suit. On appeal by the defendant No. 1 the decree passed by the trial court was set aside and the suit of the appellant was dismissed. Thereafter this second appeal.
3. The second appeal was admitted on the following question of law:
"Whether the decree for cancellation of the sale deed could be refused on the ground that the parties were pari-delicto although it was found that the sale deed was in fact a fictitious transaction entered into by the plaintiff with the object of defrauding his creditors."
4. For the determination of the aforesaid question the relevant facts may be briefly stated thus: The plaint case was that the land detailed at the foot of the plaint was his bhumidhari and he was in possession of the same. The defendant No. 1 was very intimate to him. The plaintiff suffered heavy losses in business and had become indebted to a number of creditors. Accordingly with a view to save the property from attachment and sale at the instance of his creditors for the satisfaction of their debts, the plaintiff and the defendant No. 1 entered into a transaction in the shape of a sale deed in favour of the latter so that the property may go out of the reach of the creditors. In spite of the sale deed, however, the plaintiff continued in possession. Subsequently, the defendant No. 1 turned against the plaintiff for some reason and on the strength of that sale deed started asserting his title over the property and in pursuance of the same executed a sale deed of the disputed property in favour of defendant No. 2 to 5 who threatened to give effect of the sale deed as the suit.
5. Two written statements were filed --one by the defendant No. 1 and the other by the defendants 2 to 5. The defendant No. 1 asserted that the sate deed was valid and is binding on the plaintiff and that it was wrong to say that same had been executed to defeat the interest of the creditors. The defence of the defendants 2 to 5, on the other hand, was that the defendant No. 1 was an ostensible owner and they have purchased the property in good faith and have paid valuable consideration. The suit was hence barred by Section 41 of the Transfer of Property Act.
6. On the pleadings of the parties, relevant issues were framed. The trial court accepted the case of the plaintiff as to the nature of the transaction and the circumstances in which it was entered into and decreed the suit.
7. On appeal, the lower appellate court endorsed the finding of the trial court as to the true nature of the transaction and the intent with which the sale deed was executed by the plaintiff in favour of defendant No. 1. It however, disagreed with the trial court and held that in the facts and circumstances of the case the plaintiff was not entitled to be extended any assistance by the court in view of the fact that on his own showing that the plaintiff and defendant No. 1 had entered into a conspiracy with a view to save the property from the hands of the creditors and inasmuch as the plaintiff himself was the perpetrator of the fraud. He should not be granted any discretionary relief by the court in shape of declaration or injunction as no one ought to be permitted to take advantage of his own fraud.
8. It is in this background that I have to examine this question posed by the learned Judge admitting the appeal that if the parties are in pari delicto in regard to the subject-matter of a suit the plaintiff cannot be granted any relief by the court.
9. The point involved is well settled by several decisions of this and other courts. I will, however, content myself by referring to one decision only of this court reported in AIR 1936 All 401, Nawab Singh v. Daljit Singh. In this case a Devision Bench of this court comprising the celebrated Chief Justice Sulaiman and Justice Bennet had occasion to examine this question in depth. After a learned analysis of the law, their Lordships held that once it is found that the parties are in pari delicto the court will not assist the party who enters into an illegal transaction and makes that transaction the basis of his claim, and in all cases where the plaintiff relies on a deed stated to be fraudulent, the defendant is entitled to give evidence as to the circumstances under which the document came into existence and when these circumstances include an allegation of fraud by both the plaintiff and the defendant, then it is the duty of the court to look into the matter, and if the court comes to the conclusion that the parties were acting in consort with a view to perpetrating fraud and did in fact perpetrate fraud, the court shall decline to assist either party as there is no difference in the degree of the guilt of the plaintiff and the defendant.
10. The ratio of this decision applies with full force to the facts of the present case. Indeed in the present case the plaint case itself discloses that the transaction was fraudulent designed to defeat the plaintiffs' creditors. We have in any case the finding of both the courts below that the sale deed was executed by the plaintiff for the purpose of saving the property from the creditors and in this conspiracy the defendant No. 1 was a party. There is thus no manner of doubt that both the parties were equally guilty of a fraudulent design intended to defeat the creditors of the plaintiff.
11. Learned counsel, however, submitted relying on this very case that there is nothing to indicate that the fraud was carried into effect. I regret I cannot agree. Fraud was fully carried into effect both in letter and spirit. The sale deed was in fact executed. With the execution of the sale deed the property went out of the reach of the creditors. Whether the creditors in fact proceeded against this property or not was of no consequence inasmuch as the plaintiff did in fact execute the sale deed with the fraudulent object mentioned above. The sale deed had the effect of passing the title into the hands of the defendant No. 1. Thus neither the plaintiff nor the defendant No. 1 could be permitted to take advantage of this transaction.
12. The same conclusion is reached by another process of reasoning quite apart from the dictum of pari delicto. There is a more fundamental principle attracted to the present case and that is that no one can be permitted to take advantage of his own fraud. In this case from the plaint averments and the evidence of the plaintiff himself the conclusion is inescapable that the transaction was fraudulent intended to take the property out of the reach of the creditors.
13. In view of what has been stated above, the appeal fails and is dismissed. But I make no order as to costs.
14. Appeal ismissed.