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IN THE HIGH COURT OF MADRAS
N. SESHASAYEE, J.
Nataraja Naidu and Ors. - Appellant
Versus
Soundararajan and Ors. - Respondent
S.A. No. 604 of 2008, M.P. No. 1, 2 of 2008
Decided On : 28-06-2019
Civil Procedure Code,1908 - Order 21 - Rule 54 - Transfer of Property Act, 1882 - Section 53 - Power of Attorney - Purchased present suit property - Property which was described as house site when present suit was laid was purchased by plaintiff from second defendant through his Power of Attorney defendants sale deed - He is a bona fide purchaser for value and later he came to know that property has been sold in a Court auction and delivery has been granted first defendant rest of allegations are that plaintiff learnt that first defendant had laid suit for recovery of money against second defendant file of District - In that suit first defendant had taken out for attaching suit property before judgment attachment was ordered and came to be effected - Two days prior to effecting attachment plaintiff had purchased present suit property - short point on which plaintiff has laid suit is that on date when property was attached there is no title vested with second defendant in order property could be subsequently sold in Court auction –Held, Provision provides two significant components to a fraudulent transfer - First must be one that must be done with an intent to defeat or delay creditor that bona fide transferee for value is saved even if there was fraudulent intent behind transfer of property - Courts decision must rest not upon suspicion but on legal grounds established by legal testimony - Point here is whether first defendant has been able to establish circumstances sufficient enough to label fraudulent transfer? argument based on circumstances detailed in paragraph best may indicate that second defendant might have entertained a fraudulent intent to defeat or delay first defendant his creditor - Unless it demonstrated plaintiff has shared same fraudulent intent it would not be possible to hold that plaintiff was not a bona fide purchaser - It might to be true that from timing of execution of Power of Attorney and followed by its registration and leading to execution sale deed might have assumed a Solomon Grundy born on Monday christened on Tuesday pattern - But in law Court looks for evidence that establishes if a transferee an alleged fraudulent transfer is privy to fraud - On this critical aspect evidence is vacuous - It may be true that plaintiff might have paid only towards sale consideration and entire consideration might have not been paid - But in law non-payment of entire sale consideration will not ipso facto invalidate very sale - Appeal allowed
JUDGMENT :
N. SESHASAYEE, J.
1. The first appellant herein has laid a suit for setting aside a Court auction-sale. The suit came to be decreed, but the first Appellate Court has reversed the same. Hence, the plaintiff is before this Court.
2.1. The suit property, which was described as a house site when the present suit was laid, was purchased by the plaintiff from the second defendant through his Power of Attorney, namely the defendants 3 and 4, on 13.8.1999, under Ext. A1, sale deed. He is a bona fide purchaser for value, and later he came to know that the property has been sold in a Court auction, and delivery has been granted to the first defendant. The rest of the allegations are that the plaintiff learnt that the first defendant had laid a suit for recovery of money against the second defendant in O.S. No. 272/99 on the file of District Munsif Court, Thiruvannamalai.
In that suit, the first defendant had taken out I.A. No. 684/99 for attaching the suit property, before judgment. The attachment was ordered on 27.07.1999 and came to be effected on 15.08.1999. Two days prior to the effecting the attachment, i.e., on 13.08.1999, the plaintiff had purchased the present suit property.
2.2. The short point on which the plaintiff has laid the suit is that on the date when the property was attached, there is no title vested with the second defendant, in order the property could be subsequently sold in the Court auction.
2.3. The trial Court has accepted this contention and decreed the suit, whereas the first appellate Court has held that the plaintiff is not a bona fide purchaser and dismissed the suit. Aggrieved by the decree of the first appellate Court, the plaintiff is before this Court in the second appeal.
3. The appeal was admitted on the following substantial questions of law:
2. Is the Lower Appellate Court justified in rendering a finding to the effect that Ex. A1 sale is the result of fraud practised by plaintiff and defendants 2 to 4 overlooking that there is no pleading or proof of fraud by the contesting 1st defendant in this connection?
4. The learned counsel for the appellants to start with, made his job easy by just presenting the date of attachment and date of sale, to bail out his title from the effect of the Court auction sale.
Date
Exhibit
Events
13.08.1999
A1
Sale Deed executed by defendants 3 and 4 as the Power of Attorney of the second defendant.
15.08.1999
B1
Attachment before judgment effected and made absolute in I.A.No.684/1999 in O.S..272/1999
Therefore, even going by the first defendant's statement, the plaintiff has purchased the property before the attachment was made absolute.
5.1. The learned counsel for the respondents came forward with two alternate arguments that he canvassed simultaneously:
(b) Ext. A1 sale is also a fraudulent sale that may be established by the following set of facts:
| Date | Exhibit | Event |
| 11.08.1999 | A2 | Power of Attorney executed by the second defendant in favour of defendants 2 and 3 and registered at Tirupattur Sub Registry |
| 12.08.1999 |
| The above said Power of Attorney registered as Document No.236/1999 at Tirupattur Sub Registry |
| 13.08.1999 | A1 | Sale deed |
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