2003 Supreme(P&H) 674
PUNJAB AND HARYANA HIGH COURT
Ashutosh Mohunta, J.
Rattan Singh - Appellant
Versus
Ram Singh - Respondents
Regular Second Appeal No. 204 of 1982.
Decided On : 9 May, 2003
For the Appellant :Mr. Gurcharan Singh, Advocate.
For the Respondents: None.
The central legal point established is that a transfer of property made with intent to defeat or delay the creditors is voidable under Section 53 of the Transfer of Property Act.
Headnote:
Fraudulent Transfer - Property Law - Transfer of Property Act, Section 53
Fact of the Case:
The plaintiff lent money to defendant No. 1, who later transferred his land to defendant No. 2 through a collusive decree to avoid repaying the debt. The plaintiff filed a suit to declare the transfer null and void.
Finding of the Court:
The court found that the transfer of the land was a fraudulent attempt to defeat the plaintiff's right to recover the debt.
Issues: Fraudulent transfer, Collusive decree, Intent to defeat creditor's right
Ratio Decidendi: The court relied on Section 53 of the Transfer of Property Act, which states that any transfer made with intent to defeat or delay the creditors of the transferor shall be voidable at the option of the creditor.
Final Decision: The court allowed the appeal, set aside the judgment and decree passed by the Additional District Judge, and restored the judgment and decree passed by the Sub Judge Ist Class.
Ashutosh Mohunta, J. - Rattan Singh plaintiff has filed this appeal against the judgment and decree dated October 23, 1981 passed by the Additional District Judge, Kurukshetra, vide which the judgment and decree dated April 21, 1980 passed by the Sub Judge Ist Class, Kurukshetra, were set aside, and the suit filed by the plaintiff was dismissed.
2. Briefly, the facts of the case are the Ram Singh defendant No. 1 borrowed a sum of Rs. 1500/- from the plaintiff-appellant and executed a pronote dated April 22, 1974. When Ram Singh failed to repay the said amount along with interest within the stipulated period, the plaintiff-appellant filed a suit for recovery of Rs. 1,800/- in the Court of Sub Judge Ist Class, Thanesar, against defendant No. 1. The said suit was decreed in favour of the plaintiff-appellant. The said defendant was owner of one-half share of the land measuring 16 Kanals 3 Marlas, and he in the meanwhile transferred the same in favour of his brother Atma Singh defendant No. 2, through a collusive decree. In this way, defendant No. 1 defrauded the plaintiff-appellant by alienating the land. The plaintiff-appellant filed a suit for grant of a declaration against the defendant-respondents to the effect that the fraudulent transfer of agricultural land made by defendant-respondent No. 1 in favour of defendant-respondent No. 2, by way of collusive suit is not binding on him and the same is liable to attachment and sale in execution of decree passed in his favour. The trial Court decreed the suit filed by the plaintiff-appellant and the collusive decree between the defendants was set aside by declaring it null and void. On appeal filed by Atma Singh, defendant No. 2, learned Additional District Judge, Kurukshetra reversed the finding given by the trial Court and held that the suit was not properly filed as required under Order 1 Rule 8, Civil Procedure Code It is against the judgment and decree passed by the Additional District Judge, Kurukshetra, that the plaintiff has filed the present regular second appeal.
3. Despite service, no one has put in appearance on behalf of the respondents.
4. I have heard the learned counsel for the appellant and have gone through the evidence brought on record.
5. Admittedly, both the defendants are real brothers. It is also not disputed that defendant-respondent No. 1 borrowed a sum of Rs. 1500/- from the plaintiff-appellant on April 22, 1974. The plaintiff filed a suit against defendant No. 1 for the recovery of the amount on February 13, 1976. The suit was decree on August 6, 1977. On the other hand, defendant No. 2 Atma Singh filed a suit against his brother defendant No. 1 Ram Singh on February 7, 1976. Written statement in the said suit was filed by defendant No. 1 on February 10, 1976 and he suffered a decree in favour of defendant No. 2 on February 11, 1976. It shows that the decree in the suit filed by defendant No. 2 was passed just within four days time. From this it can easily be inferred that the decree obtained in the said suit was a collusive decree in order to defraud the plaintiff-appellant of his amount, which he had lent to defendant No. 1. Section 53 of the Transfer of Property Act is to the following effect :-
"53. Fraudulent transfer. - (1) Every transfer of immovable property made with intent to defeat or delay the creditors of the transferor shall be voidable at the option of any creditor so defeated or delayed.
Nothing in this sub-section shall impair the rights of a transferee in good faith and for consideration.
Nothing in this sub-section shall affect any law for the time being in force relating to insolvency.
A suit instituted by a creditor (which term includes a decree-holder whether he has or has not applied for execution of his decree) to avoid transfer on the ground that it has been made with intent to defeat or delay the creditors of the transferor shall be instituted on behalf of, or for the benefit of, all the creditors.
(2) Every transfer of immova