1943 Present: Howard C.J. and Keuneman J.

RAJAH, Appellant, and NADARAJAH et al, Respondents.

160-D. C. Kandy 141.

Deed of transfer-Transfer to evade creditors-No contract of sale-Want of mutuality-Benami transaction.

Where a person executed a deed in favour of his minor son in the form of a transfer merely in order to put his property beyond the reach of his creditors and where the transferor remained in possession of the property,-

Held, that the transaction did not operate as an instrument of sale so as to give the son title to the property, owing to want of mutuality.

Held, further, that if the instrument be regarded as a donation it would be inoperative as there has been no acceptance on behalf of the minor or delivery of the property to him.

THE plaintiff a minor, by his next friend, instituted this action for declaration of title to one-third share of certain premises. He claimed title on a transfer P 3 from his father, the original added-defendant. The 2nd defendant in his answer pleaded that the deed P 3 was null and void as it was executed in fraud of creditors and that the added defendant had remained in possession of the property after the execution of P 3. The 2nd defendant claimed that he was entitled to the property

by virtue of a Fiscal's transfer D 31 of 1929 in his favour, the property having been sold in execution against the added-defendant. The District Judge held that the 2nd defendant was entitled to have the deed P 3 set aside and that prescription did not run against him.

N. E. Weerasooria, K.C. (with him L. A. Rajapakse and C. Renganathan), for plaintiff, appellant.-In this case there is a competition between a deed of transfer (P 3), executed by one Ambalavanar in favour of plaintiff, and a Fiscal's transfer in favour of 2nd defendant. The District Judge held that 2nd defendant was entitled to have P 3 set aside because it was executed in fraud of creditors and that prescription did not run against him. His view was that the right to have P 3 set aside arose only when 2nd defendant's rights were challenged by plaintiff inasmuch as 2nd defendant was in possession of the land in dispute. It is submitted that this view as regards prescription is incorrect. A Paulian action is prescribed in three years from the cause of action-Podisingho Appuhamy v. Lokusingho[(1900) 4 N. L. R. 81.]. The cause of action is the alienation sought to be impeached. In case of concealed fraud the cause of action arises when party impugning the deed becomes aware of the fraud, Fernando v. Peiris[(1931) 33 N. L. R. 1]. Bonser C. J.'s dictum regarding " cause of action" in Podisingho Appuhamy v. Lokusingho (supra) was explained by Garvin J. in Fernando v. Peiris (supra). In the present case the 2nd defendant was not merely aware of the fraud at the time of alienation but was in fact a party to it. There is therefore no question of concealed fraud. As regards concealed fraud see Dodwell & Co., Ltd., v. John[(1918) 20 N. L. R. 206.]. It is further submitted that no relief should be given to 2nd defendant because he participated in the scheme to defraud creditors.

N. Nadarajah, K.C. (with him C. E. S. Perera and P. Navaratnarajah). for 2nd defendant, respondent.-It is submitted that P 3 is void for two reasons: firstly, it was executed in fraud of creditors ; and, secondly, it purports to be a transfer which, viewed as a donation, is void for want of acceptance, and which, viewed as a sale, is void for want of mutuality.

On the first ground it is submitted that no cause of action arose till assertion of title. When a party is in possession on what he thinks is a good title and continues to possess the term " cause of action " must be considered in that light. As regards the right of an execution-purchaser who is a creditor to bring a Paulian action see Suppiah Naidu v. Meera Saibo[ (1907) 3 Bal. 129.]; Mohamedo v. Manupillai[ (1916) 3 C. W.