A creditor can file a suit under Section 53 of the Transfer of Property Act (T.P. Act) representing the general body of creditors to avoid alleged fraudulent transfer. The suit must be filed on behalf of or for the benefit of all the creditors. The creditor seeking to represent the general body of creditors must comply with the mandatory requirements of Order I Rule 8 of the Code of Civil Procedure (C.P.C.) by disclosing the details of the general body of creditors and obtaining leave of the court.

ORDER :

M. Satyanarayana Murthy, J.

1. The civil revision petition is filed under Article 227 of the Constitution of India, challenging the order dated 18.03.2014 passed in I.A. No. 310 of 2012 in O.S. No. 252 of 2012 by the III Additional Senior Civil Judge, Kakinada, whereby the petition filed under Order I Rule 8 of Code of Civil Procedure (for short "C.P.C.") to sue in representative capacity i.e. representing General Body of Creditors against the respondents, was dismissed.

2. The petitioner filed suit O.S. No. 252 of 2012 to declare the alienations made by respondent No. 1 in favour of respondent Nos. 2 and 3 by registered sale deed dated 12.05.2011 is void and not binding on the plaintiff as well as other creditors of respondent No. 1 as it is fictitious, nominal, sham and devoid of lawful consideration. In the alternative, to declare that the alienations made by respondent No. 1 in favour of respondent Nos. 2 and 3, described in the schedule attached to the plaint are not binding on the plaintiff and other creditors of respondent No. 1 as it is made with an intent to defeat the lawful creditors of respondent No. 1 including the petitioner/plaintiff.

3. The petitioner/plaintiff is claiming to be the creditor of respondent No. 1 as respondent No. 1 borrowed Rs. 5,00,000/- from the petitioner/plaintiff on 13.05.2009 for his family expenses and to discharge sundry debts, executed promissory note agreeing to repay the same with interest at the rate of 24%, and also agreed to pay the same either to the plaintiff or to his order as and when demanded. As respondent No. 1 failed to repay the debt due under the promissory note, the petitioner/plaintiff filed O.S. No. 756 of 2011 on the file of the Principal Senior Civil Judge, Kakinada for recovery of the amount due under the promissory note, and also filed interlocutory application for attachment of property before judgment and the Principal Senior Civil Judge ordered attachment before judgment under Order XXXVIII Rule 5 of C.P.C.

4. While the matter stood thus, respondent No. 1 and respondent Nos. 2 and 3 who are henchmen of respondent No. 1 entered into transaction of sale as respondent No. 1 sold the schedule property to respondent Nos. 2 and 3 for Rs. 12,77,500/- on 12.05.2011, but the said sale is fictitious, nominal and fraudulent. Therefore, to avoid such fraudulent transfer, suit is filed claiming relief under Section 53 of the Transfer of Property Act (for short "T.P. Act"), sought relief stated supra.

5. It is specifically contended that respondent No. 1 borrowed amount from different persons, who are creditors of respondent No. 1, but to avoid legitimate debt due by respondent No. 1, a sale transaction was entered into by respondent No. 1 with respondent Nos. 2 and 3. Hence, the petitioner filed suit representing the general body of creditors. Along with the suit, the petitioner filed I.A. No. 310 of 2012 under Order 1 Rule 8 seeking leave of the Court to represent the general body of creditors.

6. The suit is being contested and the respondent Nos. 2 and 3 filed their independent written statements.

7. Respondent No. 2 filed counter denying all the material allegations made in the petition inter alia contending that respondent No. 1 never borrowed Rs. 2,50,000/-, executed any promissory note much less promissory note dated 26.05.2009 agreeing to repay the same with interest at the rate of 24% either to the petitioner or on his order as and when demanded and respondent No. 1 had no necessity to borrow any amount from the petitioner.

8. It is specifically contended that there are disputes between Olupudi Gova Raju and respondent No. 1 regarding chit transaction and in the course of disputes he got filed the petition through the petitioner by fabricating the alleged promissory note by forging the signature and thumb impression of respondent No. 1.

9. It is further contended that the henchmen of the petitioner also filed other suits i.e. O.S. No. 819 of 2011 on the file of I Addi