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1977 Supreme(AP) 227

Andhra Pradesh High Court
Judges : S.H.SHETH
Lingareddi Sreenivasulu Reddi (Died) - Appellant
Versus
D.Muniratnam Reddi - Respondent
Decided On : 08-02-77

A universal donee is liable to discharge the debt of his donor, and the properties of the donor in the hands of the universal donee can be proceeded against by the creditor even though the universal donee was not a party to the suit.

Headnote:

TRANSFER OF PROPERTY ACT, 1882 - SECTION 128 - CIVIL PROCEDURE CODE, 1908 - SECTION 2(11), 50 - UNIVERSAL DONEE - LIABILITY TO DISCHARGE DEBT OF DONOR - EXECUTION OF DECREE AGAINST PROPERTY IN HANDS OF UNIVERSAL DONEE - WHETHER PERMISSIBLE.

Fact of the Case:

Plaintiff filed a suit for declaration of title to a property settled upon him by the judgment-debtor (second defendant) under a settlement deed. The first defendant, who had obtained a decree against the second defendant, filed an execution petition for sale of the property under attachment. The plaintiff filed a claim petition, which was rejected by the Executing Court. The plaintiff then filed the present suit for declaration of his title.

Finding of the Court:

The trial court and the appellate court dismissed the suit, holding that the settlement deed was executed fraudulently by the second defendant to escape his liability flowing from the debt and that the plaintiff, as the universal donee, was liable to discharge the debt of his donor.

Issues: 1. Whether the settlement deed was executed fraudulently by the second defendant to escape his liability flowing from the debt? 2. Whether the plaintiff, as the universal donee, was liable to discharge the debt of his donor? 3. Whether the properties of the second defendant in the hands of the plaintiff could be proceeded against by the first defendant even though the plaintiff was not a party to the suit?

Ratio Decidendi: 1. The court held that the sequence of events and the circumstances surrounding the execution of the settlement deed raised strong suspicion that it was executed fraudulently by the second defendant to defeat the outstanding promissory note debt. 2. The court held that the plaintiff, as the universal donee, was liable to discharge the debt of his donor under Section 128 of the Transfer of Property Act, 1882. 3. The court held that the properties of the second defendant in the hands of the plaintiff could be proceeded against by the first defendant even though the plaintiff was not a party to the suit, as the universal donee is a "legal representative" within the meaning of Section 2(11) of the Civil Procedure Code, 1908.

Final Decision: The appeal was dismissed with costs.

S. H. SHETH, J.

( 1 ) FIRST defendant filed O. S. 199 of 1960 against the second defendant for recovering a sum of Rupees 1,200/- with interest due on a promissory note executed on 5-7-1957. That suit was decreed in favour of the first defendant. Thereafter he filed execution petition No. 9/64 for execution of the decree by sale of the property of the second defendant on which attachment before judgment was levied. Plaintiff filed Execution Application No. 297 of 1964 in Execution Petition 9/64 for raising the attachment. He based his claim on the ground that the property under attachment belongs to him. That claim petition was rejected by the Executing Court. He therefore filed the present suit for declaration of his tittle and pleaded that the property under attachment was settled upon him by the second defendant under Ex. A-1 dated 27-6-1958. Second defendant (judgment-debtor) is the brother-in-law of the plaintiff and also his sisters son.

( 2 ) LEARNED trial Judge held that there was no unavoidable necessity for the second defendant to settle the property under attachment upon the plaintiff and that he had done so in order to escape his liability flowing from his debt. He also held that the plaintiff was the universal donee within the meaning of Section 128 of the T. P. Act and was therefore liable to discharge the debt of his donor. He therefore dismissed the suit in so far as it related to the plaintiffs declaration of title in regard to the property settled upon him by second defendant under Ex. A-1 but passed in his favour decree in relation to Item 3 which was not the subject-matter of settlement under Ex. A-1.

( 3 ) PLAINTIFF appealed against that decree to the appellate Court. The learned appellate Judge confirmed the findings recorded by the learned trial Judge and upheld the decree passed by him. He therefore dismissed the appeal.

( 4 ) IT is that appellate decree which is challenged by the plaintiff in this second appeal.

( 5 ) MR. Venugopala Reddy who appears on behalf of the plaintiff has contended that the sequence of events itself shows that the second defendant could not have executed the settlement deed fraudulently or in order to escape his liability flowing from the debt which he had incurred. In order to make good his submission, he has placed before me three facts. The promissory note was executed by the second defendant in favour of the first defendant on 5-7-1957. Second defendant executed the registered settlement deed in favour of the plaintiff on 27-6-1958. The first defendant filed against the second defendant O. S. 199 of 1960 on 4-7-1960. On these facts he has argued that it is inconceivable that the settlement deed could have been executed by the second defendant in favour of the plaintiff fraudulently even before the plaintiff filed the present suit though at that time the debt under promissory note was outstanding against him. The argument which he raised ex facie appeared to be attractive. However on behalf of the first defendant Mr. E. Manohar has pointed out to me a few facts of which it is necessary to take note. The promissory note was executed for a sum of Rupees 1,200/- on 5-7-1957. The property in respect of which the second defendant executed the deed of settlement in 1958 was worth only Rs. 1,930. 00. It is also pointed out to me that the second defendant had no other debts. On those facts he has argued that in order to save his small estate of Rs. 1,930. 00 it was not unnatural that he executed the fraudulent settlement deed in order to defeat the outstanding promissory note debt of Rupees 1,200/ -. He has added to the force of his argument by bringing into play one more fact which appears to be quite strange. Second defendant who executed the settlement deed in 1958 in favour of the plaintiff was aged 30 years while the plaintiff-donee was 60 years of age. According to him it is against the normal course of human behaviour and is unnatural that a Hindu donor of 30 years of age wou









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