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1970 Supreme(P&H) 180

PUNJAB & HARYANA HIGH COURT
D.K.Mahajan and Bal Raj Tuli JJ.
Shallo Devi
Versus
Mohinder Singh
of,
First Appeal No. 389 of 1961,
C. M. No. 1680 of 1962,
Decided On : OCTOBER 28, 1970

A creditor who has been defeated or delayed by a fraudulent transfer of property can avoid the transfer by any act that clearly and unambiguously shows an intention to avoid it.

Headnote:

FRAUDULENT TRANSFER - TRANSFER OF PROPERTY ACT, 1882 - SECTION 53 - VOIDABLE TRANSFER - ATTACHMENT AND SALE OF PROPERTY - CREDITOR'S RIGHT TO AVOID COLLUSIVE DECREE.

Fact of the Case:

Plaintiffs-appellants filed a suit under Order 21, Rule 63, Civil P. C. for a declaration of ownership and possession of attached land, claiming that defendant 2 had no concern with the land and that defendant 1 had no right to attach and sell it in execution of his decree against defendants 2 and 3. The plaintiffs based their title on a decree obtained against defendant 2 on May 5, 1959, alleging that defendant 2 had gifted the land to them in Pakistan before partition and that they continued to possess it in India after partition. Defendant 1 contested the suit, alleging that the decree was collusive and obtained to defeat and delay creditors, including himself.

Finding of the Court:

The court found that the decree obtained by the plaintiffs against defendant 2 was collusive and manoeuvred to make the land unavailable to defendant 1 and other creditors. The court held that the transfer of the land to the plaintiffs was voidable under Section 53 of the Transfer of Property Act, 1882, as it was made with the intent to defeat or delay creditors.

Issues: 1. Whether the plaintiffs were the owners in possession of the suit property? 2. Whether the decree obtained by the plaintiffs against defendant 2 was collusive and intended to defraud creditors?

Ratio Decidendi: The court held that a creditor who has been defeated or delayed by a fraudulent transfer of property can avoid the transfer by any act that clearly and unambiguously shows an intention to avoid it. In this case, defendant 1 avoided the collusive decree by attaching and selling the land in execution of his decree. The court also held that it was not necessary for defendant 1 to file a suit under Section 53 of the Transfer of Property Act to avoid the collusive decree, as the Act is not in force in the State of Haryana.

Final Decision: The court dismissed the appeal, holding that defendant 1 was entitled to attach and sell the land in suit in execution of his decree and that it was not necessary for him to file a suit to avoid the collusive decree.

Judgment


1. The plaintiff-appellants filed a suit under a suit under Order 21. Rule 63, Civil P. C. for a declaration that they are the owners in possession of the attached land mentioned in para 1 of the plaint and defendant 2 had no concern or connection therewith, and that for this reason, defendant 1 had no right to get that land attached and sold in execution of his decree against defendants 2 and 3. The plaintiffs are the wives of the sons of defendant 2, Vishan Singh who is the fathers brother of Girdhar Gopal, defendant 3. A sum of Rs.5,250.00 was due to defendant 1 (Mohinder Singh) from defendants 2 and 3 on the basis of a bond dated August 31, 1958. Since he was not being paid the amount, he served notices through his counsel on defendants 2 and 3 for the payment of the amount due to him. the notices are dated March 28, 1959 but were sent by registered post to the two defendants on April 6, 1959. A copy of the notice is Exhibit D.1 while postal receipts are Exhibits D.2 and D.3. On May 1 1959, the plaintiff-appellants filed a suit in the Court of Shri Nathu Ram Sharma, Subordinate Judge First Class, Karnal for the possession of 150 kanals of land against Vishan Singh defendant 2 on the allegation that the defendant 2 on the allegation that the parties were living in Shujabad, district Multan, before the partition of the country and defendant 2 had gifted about 70 acres of his land to the plaintiffs for their maintenance as well as that of their children. The gift was pleaded to be oral accompanied by possession. They continued to be in possession. They continued to be i possession of that place owing to te partition of the country and for this reason mutation of the land in their favour could not take place. Since the land was not mutated in their names in Pakistan, and continued to remain in the name of defendant 2, the latter was allotted land in lieu thereof in India, but he gave possession of that land to the plaintiffs who continued to receive its produce. Defendant 2 gold them that he would get the land mutated in their names after proprietary rights were conferred upon him. the proprietary rights, were conferred on defendant 2 in 1955, but he refused to get the land mutated in the names of the plaintiffs so much so that he took possession of the land about a year prior to the institution of the suit. For this reason, they were forced to file the suit for possession of the land against defendant 2. This suit was registered on May 4, 1959, and summons were ordered to be issued to the defendant for May 16, 1959, but on May 5, 1959, the plaintiffs and the defendant appeared before the Court and a decree was passed in favour of the plaintiffs against the defendant as prayed on the admission of the plaintiffs claim by Vishan Singh defendant. This admission was contained in an application filed by the parties on May 5, 1959, to the effect that they had compromised the matter as a result of which the defendant had admitted the claim of the plaintiffs. The plaintiffs based their title to the land on that decree.

2. Defendant 1 contested the suit and pleaded that the decree obtained by the plaintiffs against defendant 2 on May 5, 1959, was a collusive one and had been manoeuvred by defendant 2 in order to defeat and delay his creditors including himself. The said defendant had obtained the decree for Rs.5,300.00 against defendants 2 and 3 on the basis of an award made by an arbitrator and agreed to by all the parties. This decree was passed on May 28, 1959. Defendant 1 pleaded that the decree passed in favour of the plaintiffs against defendant 2 for the possession of the land on May 5, 1959, was not binding on him and he was entitled to get the land attached and sold as belonging to defendant 2. The learned trial court framed the following issues on the pleadings of the parties:1. Whether the plaintiff is the owner in possession of the suit property? D. P.2. Whether the decree has been obtained collusively and with a vi




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