Fraudulent transfer of property to a close relative after the debt was incurred and pending the suit is considered fraudulent under Section 53 of the Transfer of Property Act.

ORDER

1. Leave granted.

2. A suit for the recovery of money was filed by Arumugham, the predecessor of the first respondent against T.B.Babu, his son-in-law in the Court of the Principal Sub-Judge, Thrissur, Kerala, OS No 359 of 1999. The suit was decreed on 31 July 2006 in the following terms:

"In the result, the suit is decreed with cost. Plaintiff is entitled to realise Rs.5,15,726/- with 12% interest for the principal amount of Rs.4,47,420/- from the date of the suit till the date of decree and thereafter at the rate of 6% till the realisation of the amount with cost from the defendant and his assets."

3. The decree holder(s) filed execution proceedings. In the course of execution proceedings the immovable property which forms the subject matter of the dispute was attached on 13 November 2006. A sale proclamation was issued. The property was sold in execution on 27 January 2010. The property was purchased on 10 April 2006 by a registered deed of sale by the decree holder. An application was filed to set aside the sale under Order XXI Rule 90 of the Code of Civil Procedure 1908. Other claim petitions were filed under Order XXI Rules 58 and 97. The Executing Court dismissed all the execution applications. F.A.O. No. 62 of 2012 and Ex. F.A. Nos. 19 of 2015 and 17 of 2016 were filed before the High Court. The High Court found that the sale had taken place in favour of the appellant after the debt was incurred and pending the suit. Moreover, the transfer was to a close relative. Hence, the High Court held that the transfer was fraudulent, in terms of Section 53 of the Transfer of Property Act. Consequently, the order passed by the Executing Court was affirmed.

4. On 9 December 2016, notice was issued in these proceedings subject to the deposit of an amount of Rs.10 lakhs and status quo was directed to be maintained. In pursuance of the order of this Court, the appellant deposited an amount of Rs.10 lakhs which has been invested by the Registry.

5. Respondent no. 1 has filed his reply stating inter alia that as on 5 July 2017, an amount of Rs. 13,48,513 is due and payable to him under the decree. During the course of hearing, we have indicated to the learned counsel for the parties that having regard to the facts and circumstances of this case it would be appropriate, particularly, having regard to the fact that the decree was simplicitor a money decree, if an amount of Rs.15 lakhs is paid over to the decree holder(s) in full and final settlement towards all claims and in satisfaction of the decree.

6. Having due regard to the fact that the decree in the present case was in a suit for the recovery of money simplicitor, and the claim under the decree is computed at Rs. 13,48,513 as on 5 July 2017, which is not disputed, we are of the view that the appellant should pay a total amount of Rs.15 lakhs. The appellant shall deposit an amount of Rs.5 lakhs within a period of six weeks from today in the Registry of this Court. On deposit, the decree holder(s) would be entitled to withdraw the amount of Rs.10 lakhs which has already been deposited along with the interest accrued thereon as well as the additional amount of Rs.5 lakhs. Conditionally, on the deposit of the additional amount of Rs.5 lakhs by the appellant, the impugned order of the High Court shall stand set aside and the Executing Court shall mark the decree as satisfied. In that event, the sale dated 27 January 2010 in favour of the decree holder(s) shall stand set aside.

7. However, if the appellant fails to deposit the additional amount of Rs.5 lakhs he shall not be entitled to take the benefit of the present order of this Court and the appeal shall accordingly be dismissed.

8. There shall be an order in the above terms. The appeals are accordingly disposed of. No order as to costs.