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1920 Supreme(Mad) 175

IN THE HIGH COURT OF MARAS
K John Wallis
N.N.L. Ramaswami Chettiar
Versus
Mallappa Reddiar
Decided On : 29 April, 1920

Headnote:

Transfer of Property Act - Interpretation of Section 53 - Summary of Acts and Sections: The court discussed the interpretation of Section 53 of the Transfer of Property Act and concluded that a creditor defrauded, defeated, or delayed has the option to avoid a conveyance without necessarily instituting a suit. The court referred to various Indian and English decisions, emphasizing that voidable transactions may be avoided by an open or unequivocal declaration of intention to avoid them.

Fact of the Case:

The court reconsidered the decision in Palaniandi Chetty v. Appavu Chettiar and Subramania Ayyar v. Muthia Chettiar, which had questioned the interpretation of Section 53 of the Transfer of Property Act. The court analyzed the scope of Order 21, Rules 58 to 63 and the rights of the attaching decree-holder and the transferee claimant in cases of fraudulent transfers.

Finding of the Court:

The court found that the attaching decree-holder has the right to plead in defense to a suit by the transferee claimant that the transfer to the claimant was fraudulent under Section 53 of the Transfer of Property Act. The court also clarified the scope of the suit under Rule 63, emphasizing that it is not restricted to an inquiry into possession but extends to litigating the title as between the parties involved.

Issues: The main issue was whether the attaching decree-holder could plead in defense to a suit by the transferee claimant that the transfer to the claimant was fraudulent under Section 53 of the Transfer of Property Act.

Ratio Decidendi: The court held that the attaching decree-holder has the right to plead in defense to a suit by the transferee claimant that the transfer to the claimant was fraudulent under Section 53 of the Transfer of Property Act. The court also clarified the scope of the suit under Rule 63, emphasizing that it is not restricted to an inquiry into possession but extends to litigating the title as between the parties involved.

Final Decision: The court concluded that the attaching decree-holder has the right to plead in defense to a suit by the transferee claimant that the transfer to the claimant was fraudulent under Section 53 of the Transfer of Property Act.

JUDGMENT

John Wallis, Kt, C.J.

1. The decision of the Full Bench in Subramaina Aiyar v. Muthia Chettiar (1917) I.L.R. 41 M. 612 affirmed the decision in Palaniandi Ghetti v. Appavu Chetti (1916) 30 M.L.J. 565 that a conveyance offending against the provisions of Section 52 of the Transfer of Property Act can only be avoided in a suit property instituted for that purpose, and that consequently in a suit by an unsuccessful claimant under Order 21, Rule 63 of the Civil Procedure Code it is not open to the attaching decree-holder to plead that the transfer by the judgment debtor to the claimant was fradulent. This ruling has since been questioned in two cases in this Court, Cheruthazath Abdulla Haji v. Cheriyandi Ibrahim Kutli (1918) 50 I.C. 959 and Pokker v. Chandrankandi Kunhamad (1918) 36 M.L.J. 231 as observed in the referring order of Spencer J, where many of Indian decisions are cited. The question has now been very fully argued before a Bench of five Judges, and after carefully considering all the arguments addressed to us I have come to the conclusion that the view taken by the two learned Judges of the Calcutta High Court in Abdul Kadir v. Ali Mia (1912) 15 C.L.J. 649 is right, and that there is nothing to prevent a creditor who has been defrauded, defeated or delayed from exercising the option given him by Section 53 of the Transfer of Property Act of avoiding the conveyance otherwise than by the institution of a suit for that purpose. If the framers of the Transfer of Property Act, who were of course thoroughly familiar with the English decisions on the subject, had intended that the creditor should only exercise this option by instituting a suit, I make no doubt that, in a measure which was. intended to be self-contained and to be administered in many places where English decisions are not readily available, they would have said so expressly. As they have not done so, we are in my opinion bound to apply the law that voidable transactions may be avoided by any open or unequivocal declaration, of an intention to avoid them as laid down by the House of Lords in Oakes v. Turquand (1867) L.R. 2 H.L. 325 and in numerous other cases.

2. I perfer to rest my opinion on the language of the section which we have to administer, but at the same time, I do not think that the English decisions, when properly understood, afford any support to the contrary view. The practice of requiring a creditor suing in Chancery to set aside a deed of fraudulent transfer to sue on behalf of all the creditors was, in my opinion, only another application of the well-known maxim that he who seeks equity must do equity. As observed by Mr. Kerly in his History of Equity at page 145, even after the two statutes of Elizabeth extended the powers of the Common Law Court to defeat fraudulent conveyances, recourse continued to be had to Chancery to set aside settlements in fraud of creditors, Naylor v. Baldevin. (1639-40) 1 Ch. Rep. 69 : 21 E.R. 528 This was no doubt owing to the superior facilities then possessed by the Court of Chancery for eliciting the truth in such cases owing to its power to examine the defendant and to grant discovery, which the Common Law Courts could not do. It is unnecessary to consider whether the Court of Chancery invariably required a judgment-creditor as a condition of obtaining relief to sue on behalf of all the creditors. In so far as it did so, it was merely an application of the well known equitable rule which was also applied in the more recent case of Reese River Silver Mining Co. v. Atwell (1869) L.R. 7 Eq. 347 It was there argued that there was no case in which a creditor had been allowed to bring such a suit when the debtor was still alive without first obtaining a judgment against him, but this contention was overruled, and a creditor who had not obtained judgment was allowed to sue; but, at the same time, leave was given to amend the bill (or plaint) by making it on behalf of all the creditors, a decision followed by Jen






































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