Judges : BALAKRISHNA MENON
ITHAKKU ABRAHAM - Appellant
Versus
KBSAVAN DAMODARAN - Respondent
Case No : E.S.A. No. 3 of 1981
Decided On : 03/02/1987
Advocates Appeared :
T.S. Venkiteswara Iyer; P.K. Balasubramanian; For Appellant K. Raman; K.G. Pavithran; For Respondents
voidable - partition - S.53 of the Transfer of Property Act - Ext.A2, S.53 T.P. Act, 0.21 R.58 CPC, S.97 of the Amendment Act, R.58 as amended - fraudulent partition - burden of proof - intent to defeat or delay creditors
Fact of the Case:
The claimant filed a claim under 0.21 R.58 CPC contending that the properties sought to be sold in execution of a decree did not belong to the judgment-debtor but had been separately allotted to the claimant in a partition. The lower appellate court found the partition to be fraudulent and intended to defeat the creditors, allowing the decree holder to proceed with the execution of the decree.
Finding of the Court:
The court found that the partition was a fraudulent transaction intended to defeat the creditors of the judgment debtor, and the decree holder was entitled to avoid the transaction and proceed with the execution of the decree.
Issues: The main issue was whether the partition was voidable at the instance of a subsequent creditor, and whether the claimant's defense based on S.53 of the Transfer of Property Act was valid.
Ratio Decidendi: The court held that a partition can be treated as a transfer for the purposes of S.53 of the Transfer of Property Act if it is fraudulent and intended to defeat the creditors. The burden of proof lies on the creditor to establish the fraudulent intent of the transaction.
Final Decision: The court dismissed the second appeal, upholding the lower appellate court's finding that the partition was fraudulent and intended to defeat the creditors, allowing the decree holder to proceed with the execution of the decree.
1. This second appeal by a claimant under 0.21 R.58 CPC was admitted on the following question of law:
"Whether Ext.A2 partition is voidable at the instance of a subsequent creditor is the substantial question of law arising in the case."
2. The deceased 1st respondent instituted a suit OS 61/1971 against one Ithakku Joseph on 22-5-1971 for recovery of the principal and interest due under a promissory note for Rs.6500/-. The suit was decreed ex parte on 30-6-1971. The decree holder filed EP No. 146/1972 for sale of the judgment debtor's half share in 1.75 acres of land in various sub divisions of Sy. No. 86 attached before judgment in the suit. When the attached properties were brought to sale, the appellant preferred a claim under 0.21 R.58 of the CPC (as it then stood) contending that the properties attached and sought to be sold in execution of the decree do not belong to the judgment-debtor and had been separately allotted to the claimant in partition Ext.A2 dated 31-7-1967 between the claimant and the judgment debtor. The decree-holder opposed the claim contending that the partition Ext.A2 and a contemporaneous sale deed Ext.A3 conveying the properties allotted to the judgment debtor to the claimant are both fraudulent and are intended to defeat the creditors of the judgment debtor. The defence to the claim petition was based on S.53 of the Transfer of Property Act.
3. The trial court accepting the partition Ext.A2 as valid and binding between the parties thereto upheld the claim for the reason that the property attached had been allotted to the claimant. In appeal by the decree holder the lower appellate court has found that Ext.A2 partition is a fraudulent transaction intended to defeat the creditors of the judgment debtor and the decree-bolder is therefore entitled to avoid the transaction and proceed to execute the decree by sale of the properties attached before judgment.
4. The promissory note on the basis of which the decree holder obtained a decree is of the year 1969, and is after the partition Ext.A2 between the judgement debtor and the claimant. But Exts.B5 to B13 documents relied on by the lower appellate court mow the prior dealings between the decree-holder and the judgment debtor and the promissory note sued on was 'apparently one executed on settlement of accounts between the parties. Even if the decree holder is to be considered as a subsequent creditor, there is nothing precluding him from resorting to the provisions of S.53 of the T.P. Act to avoid a transaction intended to defeat the creditors of the judgment debtor. A Division Bench of the Madras High Court in the decision reported in Umar Sait v. Union of India (AIR 1965 Madras 395) stated at page 397:
"It is now well settled that for the purpose of avoiding a transfer by a debtor under S.53 of the T.P. Act it is not necessary that the transferor should have been actually indebted at the time he makes the transfer, A transfer intended to cheat future creditors would be equally voidable at their instance."
This decision was followed by the Orissa High Court in the decision reported in Jayakrishna Debata v. Chaitan Pani (AIR 1973 Orissa 229).
5. Counsel for the claimant has raised a contention that a creditor seeking relief under S.33 T.P. Act is required by law to file a suit to avoid transactions of the judgment debtor in a representative capacity on behalf of all the body of creditors of the judgment debtor. Reliance is placed on the decision of Govindan Nair J. as he then was reported in Velama v. Raya Shenoy (1962 KLT 801) herein it is held that a suit under 0.21 R.63 CPC (as it then stood) by a creditor decree holder to avoid a transaction by the judgment debtor as intended to defeat the creditors should be in a representative capacity on behalf of all the creditors of the judgment debtor. Reliance is also placed on the decision in C. Bhandari v. Dy Cammed. Tax Officer (AIR 1976 SC 656) in support of the proposition that it is not open to a
Login now and unlock free premium legal research
Login to SupremeToday AI and access free legal analysis, AI highlights, and smart tools.
Login
now!
India’s Legal research and Law Firm App, Download now!
Copyright © 2023 Vikas Info Solution Pvt Ltd. All Rights Reserved.