Meaning of the expression fraudulent transfer.

This Second Appeal by the first defendant is directed against the Judgment and Decree of the learned Subordinate Judge of Tanjore in A.S. No. 116 of 1957 which confirmed the decree of the trial Court. The suit out of which the Second Appeal arises was instituted by the first respondent for a declaration that the suit property belonged to her and that it was not liable to be attached in execution of the decree in Small Cause Suit No. 934 of 1952 which the appellant had obtained against the second respondent. She claimed that she had purchased the suit property from the second respondent under a sale-deed, dated 23rd September 1955. On 17th October, 1955, in E.P. No. 392 of 1955, the appellant attached the suit property and the first respondent’s claim in E.A. No. 708 of 1955 on the strength of the sale-deed in her favour was rejected by the trial Court. It is that order which the first respondent sought to set aside in the suit.

The appellant’s case was that the sale aforesaid executed in favour of the first respondent was fraudulent and was voidable under section 53 of the Transfer of Property Act, that it was executed during the enquiry for arrest in E.P. No. 244 of 1955, in execution of another decree which the appellant had obtained in S.C. No. 716 of 1952 against the second respondent, that the second respondent was actually living opposite to the house of the first respondent and was also related to her and that the sale should be presumed under section 7 of the Madras Act (I of 1955) to have been one made with intent to defeat and delay the creditors of the second respondent.

Although the trial Court was of the view that the circumstances showed that the sale was intended to frustrate the appellant in his attempt to realise the fruits of his decrees, it nevertheless considered that the presumption under section 7 of the Madras Act (I of 1955) was rebutted by the fact that the sale was to discharge a pre-existing mortgage on the property and not to delay or defeat the vendor’s creditors. The trial Court, therefore, decreed the suit. The lower appellate Court proceeded upon the footing that the appellant could not avail himself of the pre- sumption under section 7 of the said Act in the view that although the second respondent was an agriculturist till 12th April, 1955, he was not an agriculturist after 28th September, 1955 and agreed with the trial Court that inasmuch as the sale was executed for the purpose of discharging an earlier mortgage it could not be held to be a transaction entered into With a view to defeat or delay the second respondent’s creditors. In the result, the lower appellate Court dismissed the appeal before it. The first defendant having lost in both the Courts below has preferred the Second Appeal.

Sri R. Gopalaswami Ayyangar, the learned counsel for the appellant, contended that the Courts below went wrong in affirming the sale in favour of the first respondent. His contention was that although the sale purported to be in discharge of an earlier mortgage, in as much as the vendor got some benefit under the sale and retained the same to himself, the sale was one which was affected by section 53 of the Transfer of Property Act, that the presumption under section 7 of Madras Act (I of 1955) applied to the sale and that the circumstances in which the sale was executed, far from rebutting the statutory presumption, went to support the same. It seems to me that this contention has force.

The sale in favour of the first respondent was for a consideration of Rs. 600 of which Rs. 522 went in discharge of an earlier mortgage of the property, dated 30th June, 1947. It is common ground that the second respondent received the balance of Rs. 78 before the Sub-Registrar at the time of the registration of the sale-deed and had retained the benefit of that money. It is also common ground that the appellant had obtained a decree against the second respondent in S.C.No. 716 of 1952 and had filed E.P. No. 244 of