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Abdallakhan Daryakhan Vs. Purshottam Damodar - Court Judgment

LegalCrystal Citation
SubjectProperty;Limitation
CourtMumbai
Decided On
Case NumberLetters Patent Appeal No. 6 of 1944
Judge
Reported in(1947)49BOMLR875
AppellantAbdallakhan Daryakhan
RespondentPurshottam Damodar
DispositionAppeal dismissed
Excerpt:
transfer of property act (iv of 1882), section 53-indian limitation act (ix of 1908), articles 91, 120-suit by creditor for declaration that transfer fraudulent-suit whether governed by article 91 or 120-starting point of limitation-burden of proof.;1. a suit by a creditor under section 53 of the transfer of property act, 1882, for a declaration that a transfer by his debtor is intended to defeat or delay him and other creditors and is, therefore, not binding on them, is governed by article 120 and not by article 91 of the indian limitation act, 1908.;2. in such a suit limitation starts against the plaintiff when he is fixed with the knowledge about the fraudulent character of the transaction which he seeks to impeach in his suit. the burden of proof is on the defendant to show that the.....gajendragadkar, j.1. this appeal arises from a suit filed by the plaintiff under section 53 of the transfer of property act for a declaration that the sale-deed passed by defendant no. 1 in favour of one of his sons, defendant no. 2, on october, 19, 1929, was passed with intent to defeat or delay the creditors of defendant no. 1 and as such was not binding on the plaintiff and the other creditors of defendant no. 1. the plaintiff alleged that defendant no. 2 had left india for south africa some time in 1920 to earn his living, and that he succeeded in making large profits in the business undertaken, by him in that country. he used to send sums of money to his father in india from time to time. on october 19, 1929, the father, defendant no. 1, executed a sale-deed in favour of his son,.....
Judgment:

Gajendragadkar, J.

1. This appeal arises from a suit filed by the plaintiff under Section 53 of the Transfer of Property Act for a declaration that the sale-deed passed by defendant No. 1 in favour of one of his sons, defendant No. 2, on October, 19, 1929, was passed with intent to defeat or delay the creditors of defendant No. 1 and as such was not binding on the plaintiff and the other creditors of defendant No. 1. The plaintiff alleged that defendant No. 2 had left India for South Africa some time in 1920 to earn his living, and that he succeeded in making large profits in the business undertaken, by him in that country. He used to send sums of money to his father in India from time to time. On October 19, 1929, the father, defendant No. 1, executed a sale-deed in favour of his son, defendant No. 2, for Rs. 2,500, This sale-deed purported to convey all the immovable properties belonging to the father. This document was registered on October 21, 1929. On the same date the plaintiff filed suit No. 259 of 1929 against defendant No. 1 to recover Rs. 3,999. Thereafter on October 28, 1929, the plaintiff impleaded to the said suit all the sons of defendant No. 1. In June 1931, the said suit was dismissed against the sons, but was decreed against the father to the extent of Rs. 1,001. Against the said decree appeals were preferred both by the plaintiff and defendant No. 1. Both the appeals were, however, dismissed in 1933 and the decree passed by the trial Court was affirmed. In 1933 the plaintiff-decree-holder made an application to execute the decree; but the said application proved infructuous. In 1934 he filed another darkhast application and sought to recover the decretal amount by attachment and sale of crops standing on the land which along with other properties had been sold by defendant No. 1 to defendant No. 2 in 1929. Defendant No. 2 objected to the attachment of the crops, but apparently his objection was overruled and the crops were attached and sold. The decree-holder however realised only Rs. 36 as a result of the sale of the said standing crops. In 1936 a third darkhast was filed by the plaintiff decree-holder in which he claimed that the land belonging to defendant No. 1 itself should be attached and sold. Objections were raised to the attachment of the said land on behalf of defendant No. 2. The leanred Judge thereupon directed the plaintiff to obtain a declaration that the sale-deed under which the land in question had been sold to defendant No. 2 by defendant No. 1 was not binding on the plaintiff. As a result the plaintiff, had to bring the present suit for a declaration that the said sale-deed is fraudulent and does not bind the creditors of defendant No. 1. As required by Section 53 of the Transfer of Property Act this suit has been instituted by the plaintiff for and on behalf of all the creditors of defendant No. 1 under Order I, Rule 8, of the Civil Procedure Code.

2. This claim was resisted by defendant No. 2 mainly on two grounds. It was contended that the transfer impeached in the suit was bona fide and for valuable consideration, and it was alleged that the said transfer was not intended to defeat or delay the creditors of defendant No. 1. It was further contended that the present suit under Section 53 of the Transfer of Property Act was barred by limitation under Article 91 of the Indian Limitation Act.

3. The learned trial Judge, however, negatived both the contentions of defendant No. 2 and granted the plaintiff the declaration claimed by him. The appeal preferred by defendant No. 2 in the Court of the District Judge at Ratnagiri failed and was dismissed. Defendant No. 2 made a second appeal against the decree of the District Court. It was heard by Mr. Justice Lokur on August 3, 1943. Mr. Justice Lokur accepted the concurrent finding recorded by the Courts below that the transfer was intended to defeat or delay the creditors. On the question of limitation he held that the suit was governed not by Article 91 as contended by defendant No. 2, but by Article 120 of the Indian Limitation Act. While dealing with the question as to when limitation could be deemed to have started against the plaintiff in the present case Mr. Justice Lokur referred to the fact found by both the Courts below that the plaintiff had known about the sale-deed in question within a week from its execution. He pointed out that even so the plaintiff had no reason to suppose that he could not recover his dues except by the sale of the property covered by the said sale-deed. He further observed that even assuming that the plaintiff's right to sue accrued when he obtained his decree, the suit would be within time since it had been filed within six years from the date of the appellate decree. In this connection Lokur J. referred to the decision of the Madras High Court in Narasimham v. Narayan Rao : AIR1928Mad66 , where Venkatasubba Rao J. and Madhavan Nair J. had differed on the question as to when limitation can be deemed to commence under Article 120, and he expressed his agreement with the view expressed by Venkatasubba Rao J. and held that 'the right to sue accrued to the plaintiff only when he decided to exercise the option given to him by Section 53 of the Transfer of Property Act to, challenge the transfer and to seek to recover his dues out of the property transferred.' Since on this view the suit was clearly in time, the second appeal preferred by defendant No. 2 was dismissed with costs (46 Bom. L.R. 613). It is against this decision that the present Letter Patent Appeal has been filed by defendant No. 2.

4. On behalf of the appellant Mr. Somjee has contended that the Courts below were wrong in holding that the transfer by defendant No. 1 to defendant No. 2 was intended to defeat or delay the creditors. He referred to the fact that defendant No. 2 had sent to his father, defendant No. 1, several sums of money from 1923 to 1929. He suggested that these sums would in all amount to more than Rs. 7,000. His argument was that though the son did not intend to treat these amounts as loans advanced to his father, the father felt that he should not remain indebted to his son, and it was with a view to compensate his son for the amounts voluntarily paid by him that the father executed the sale-deed in favour of his son. In support of his contention Mr. Somjee has relied on the provisions of Section 25(2) of the Indian Contract Act under which a conveyance to compensate, wholly or in part, a person who has already voluntarily done something for the promisor would be valid. It seems to us, however, impossible to accept this argument in the present case. It has been found by the Courts below that at the time when the sale-deed was executed by defendant No. 1 he was considerably indebted and probably anticipated that his creditors might file actions to recover their debts. In fact, within two days from the execution of the deed, and on the very day when the said deed was registered, the plaintiff had filed his suit to recover his debt. This document conveyed all the properties belonging to defendant No. 1, and in spite of its execution defendant No. 1 continued to live in the house conveyed in the document and likewise continued to manage the other properties as before. It is conceded that the son did not want to be compensated by his father. Indeed, he had sent the amounts from time to time through affection. Neither he nor the father treated them as loans. Under such circumstances it would not be permissible for defendant No. 1 to rely upon a part of the amounts thus received by him from his son as a valid consideration for the transfer made by him. The Courts below have held that the reference to the consideration made in the document was merely a device to justify the execution of the deed, and the object of the said document was clearly to defeat or delay the creditors of defendant No. 1. In view of this finding it is impossible for us to accept Mr. Somjee's argument that the transfer would be valid under Section 25(2) of the Indian Contract Act.

5. Mr. Somjee has further contended that the Courts below were wrong in holding that the present suit was governed by Article 120 of the Indian Limitation Act. He argues that the proper article to apply would be Article 91. Article 91 applies to suits to cancel or set aside instruments not otherwise provided for. Prima facie suits to set aside instruments can be filed only by persons who are parties to the instruments in question, and the object of such suits is, as the article itself expressly states, to cancel or set aside instruments. On the other hand, suits under Section 53 of the Transfer of Property Act are instituted by creditors who are not parties to the transactions impeached and the claim made in such suits is not to cancel or set aside such transfers, but to obtain a declaration that such transfers do not bind the creditors on whose behalf such suits are filed. Even if such suits are decreed, the instruments evidencing the transfers in question are not cancelled or set aside but are only held to be not binding on the creditors of the transferors. The nature of such suits is, in our opinion, substantially different from that of the suits referred to by Article 91. In that view we are not prepared to hold the suits brought by creditors under Section 53 of the Transfer of Property Act are governed by Article 91. In our opinion, such suits would be governed by Article 120 of Indian Limitation Act. In Saburdas Mahasukhram v. Gopalji Nandas (1942) 45 Bom. L.R. 526 this Court was dealing with a suit brought by a stranger to set aside a decree and the question which arose for decision was whether such a suit would be governed by Article 95 or Article 120 of the Indian Limitation Act. It was held that it is Article 120, and not Article 95, which would govern such a suit. The same view has been accepted in Lal Singh v. Jai Chand I.L.R. (1930) Lah. 262 and Parkash Narain v. Raja Birendra Bikram Singh I.L.R(1931) .Luck. 131 .

6. Mr. Somjee has, however, relied on the decision in Badhika Mohan Gope v. Hari Bashi Saha (1933) 37 C.W.N. 1141 in support of his contention that Article 91 applies to the present suit. This case was cited before Lokur J. and has been distinguished by him on the ground that the plaintiff in the said case was an auction-purchaser and as such may be regarded as the representative of the party to the deed itself. Mr. Somjee has contended that the auction-purchaser is not a representative either of the judgment debtor or of the decree-holder and cannot, therefore, be regarded as representative of the party to the deed itself. It is true that according to the view of this Court an auction-purchaser is not a representative of either of the parties to the suit (vide Hanmantagouda Nagangouda v. Shivappa Dundappa: District Local Board, Belgaum v. Shivappa Dundappa (1937) 42 Bom. L.R. 1123 Bai Mani v. Ranchodlal (1922) 25 Bom. L.R. 147 But the Allahabad and the Calcutta High Courts take a contrary view in this matter: Ishan Chunder Sirkar v. Beni Madhub Sirkar I.L.R.(1896) Cal. 62, Gulsari Lal v. Madho Ram I.L.R.(1904) All. 447 F.B.. In fact, Mr. Justice Mukerji, who decided Radhika Mohan's case, himself emphasised the fact that the plaintiff was an auction-purchaser and as such was a representative of one of the parties to the document. Strictly speaking, on the Calcutta view Mr, Justice Mukerji was justified in assuming that the plaintiff was a representative of the party to the document, and since his decision that Article 91 applied to the suit brought by such an auction-purchaser was based upon that ground, it would, we think, not be reasonable to hold that the said decision is an authority for the proposition that Article 91 would apply to suits which are filed by persons who cannot be regarded as representatives of the parties to the instruments. We, therefore, agree with Mr. Justice Lokur that the present suit is governed by Article 120 of the Indian Limitation Act.

7. The next question which arises for decision is even if Article 120 applies, when can the period of limitation be deemed to have commenced against the plaintiff in the present case. Mr. Somjee has contended that the plaintiff is found to have known about this transaction within a week, and he has argued that since all the properties were conveyed by this transfer, it should be held that the plaintiff had knowledge about the fraudulent character of the transfer, and limitation must, therefore, be deemed to have commenced from the date of the plaintiff's knowledge. Under Article 120 the period of limitation begins from the time when the right to sue accrues. The expression 'the right to sue accrues' is wide and somewhat vague; but since Article 120 is a residuary article and applies to several suits falling under different clashes or varieties, Legislature has deliberately used this somewhat general expression which could apply to all such cases. In Bolo v. Koklan 32 Bom. L.R. 1596 the Privy Council pointed out that the terminus a quo under Article 120 is 'when the right to sue accrues,' and observed that there can be no 'right to sue' until there is an accrual of the right asserted in the suit and its infringement or at least a clear and unequivocal threat to infringe that right by the defendant, against whom the suit is instituted. In Annamalai Chettiar v. A.M.K.C.T. Muthukaruppan Chettiar 3 Bom. L.R. 168 the same view was again expressed by the Privy Council and it was held that the plea of limitation under Article 120 must fail when the defendant is unable to specify the particular date at which the claim asserted in the suit was infringed or unequivocally threatened by the defendant. The right asserted in the present suit is conferred upon creditors by Section 53 of the Transfer of Property Act, which provides that 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 delayed or defeated. Prima facie a creditor can sue for a declaration under this section at his option if and when he is defeated or delayed by a transfer made by his debtor. The term 'creditor' used in this section is correlative to 'debtor', and signifies a person to whom a debt, that is, a liquidated or specific sum of money, is due. It includes not only those creditors who have obtained decrees against their debtors, but also ordinary creditors whose claims have yet to be proved in a civil Court. The said term also includes not only creditors at the time when the transfer in question takes place, but also those who become creditors subsequent to such a transfer. (Vide Hooseinbhai v. Haji Ismail (1903) 5 Bom. L.R. 255 . The right to sue under Section 53 thus accrues to a person only if he is a creditor, and his right is defeated or delayed by a transfer made by his debtor with a view to defeat or delay his creditors. In view of the fact that even subsequent creditors are entitled to impeach transfers previously made by their debtors, it would be somewhat difficult to hold that in their case limitation can start from the date of the transfer itself, since at the date of the transfer they were not creditors and had no right which could be said to have been defeated or delayed by the said transfer. It is true that the words 'at the option of any creditor so defeated or delayed,' which occur in Section 53, seem to suggest that a suit may be brought by a creditor after he is defeated or delayed; but it cannot be said that limitation would always commence when the claim of the creditor is actually defeated or delayed. It is obvious that limitation cannot start against a person unless he has a right to sue, i.e. unless he is a creditor. But in the case of a creditor limitation may start even before he finds that he is actually defeated or delayed, since in the words of the Privy Council the right to sue in reference to a suit under Section 53 can well be said to have accrued to the creditor when the said right was infringed or when at least a clear and unequivocal threat to infringe that right had been given by the defendant against whom the suit is instituted. That is why the determination of the question as to when limitation can be deemed to have started in reference to suits under Section 53 of the Transfer of Property Act presents some difficulty. As I have already stated, suits which fall under Article 120 belong to different types, and considerations which may be relevant and material while dealing with the suit of one type may not be equally relevant and material while dealing with suits falling under a different type. In this connection it must be remembered that suits under Section 53 of the Transfer of Property Act are required to be filed in a representative character under Order I, Rule 8, and that naturally makes the question still more complicated. In O.Rm.O.M.Sp.(Firm) v. P.L.N.K.M. Nagappa Chettiar 43 Bom. L.R. 440 their Lordships of the Privy Council were dealing with a suit filed on behalf of two charities in which it was alleged that defendant No. 1 had appropriated monies belonging to the charities for reducing the liability of defendant No. 2 under his overdraft and a claim was made against defendant No. 1 for the recovery of the said amount on the basis that the appropriation of the moneys belonging to the charities for reducing defendant No. 2's liability constituted a breach of trust on the part of defendant No. 2 of which defendant No. 1 had notice and by which it had profited. The entries by which the said appropriation was made were made in the books of account of the bank on February 10, 1920, and the plaintiff had come to know about the said entries and the appropriation evidence by them in 1929. It was held by their Lordships of the Privy Council that the suit filed on behalf of the charities was governed by Article 120, and not Article 36, of the Indian Limitation Act, and that the period of limitation ran from the date in 1929 when the plaintiff came to know that the money of the charities was set off against defendant No. 2.'s debt to defendant No. I upon his overdraft. It was observed in the course of the judgment that the language of Article 120 makes no reference to the knowledge of the plaintiff, and is in this respect in contrast with that of other Articles, e.g., 90, 91, 92, 95, 96, 114. Sir George Rankin, who delivered the judgment of the Board, referred to the Board's earlier decision in Bolo v. Koklan 32 Bom. L.R. 1596 and pointed out that the judgment under appeal before them had proceeded on a principle (p. 462):

which has been accepted as applicable to this article in a number of cases in several of the High Courts: Venkateswara Ayyar v. Somasudaram Chettiar [1918] M.W.N. 244. Viswanadham v. P. Narayana Das : AIR1928Mad837 , Lal Singh v. Jai Chand I.L.R. (1930) Lah. 262,Mathura Singh v. Rama Rudra Prasad Sinha I.L.R(1935) Pat. 824 and Basavayya v. Bapana Rao A.I.R.[1930] Mad. 173[The effect of these decisions is to hold] that it would be in consonance with the scheme of the Act if the right to sue should be deemed to accrue under Article 120 from the time of the plain tiff's knowledge of the fraud, misconduct or mistake where such a ground was the basis of the suit Their Lordships can see some difficulties in this reasoning as a matter of interpretation of the language of the statute,' [observed Sir George Rankin,] and had the matter been res Integra, they are not certain that this interpretation would have prevailed with them. But the decisions in India have established a rule of limitation under Article 120 by which the plaintiff in the cases to which the rule applies cannot be debarred of his remedy unless with knowledge of his rights he has been guilty of delay.

8. The judgment then proceeded to point out that the decisions which were referred to were given in cases where the plaintiff sought to set aside a decree passed against him when a minor owing to the negligence of his guardian, or a mortgage of property which belonged not to the mortgagor but to a temple, or a transfer by a debtor to defeat his creditors. The nature of the suit with which the Privy Council were dealing was obviously different, but their Lordships were prepared to apply the principle laid down by the said Indian decisions to the case before them and to hold that it was within time.

9. It may be convenient to refer to two of the decisions cited by the Privy Council with approval in this judgment. In Lal Singh v. Jai Chand it was held that a suit brought under Section 53 of the Transfer of Property Act was governed by Article 120 and that the right to sue cannot be said to have accrued unless the plaintiff came to know of the transfer. While dealing with the question of knowledge in reference to a representative suit under Section 53 of the Transfer of Property Act, it was held that it would be wrong to take the date of the knowledge of one creditor as the starting point because some other creditor might have had knowledge before that date while the suit was a representative suit. In this connection the learned Judges referred to Narasimham v. Narayan Rao : AIR1926Mad66 and agreed with the view expressed in the said case that the inaction of one creditor could not bar the general body of creditors though the right under Section 53 being an individual right, it would ensue for the benefit of the general body of creditors.

10. In Venkateswara Ayyar v. Somaswundaram Chettiar [1918] M.W.N. 244 the Madras High Court were dealing with a similar suit under Section 53 of the Transfer of Property Act and it was held that until a creditor became aware of the alienation, which he attacked as being in fraud of creditors, his right to sue did not accrue. In Viswanadham v. Narayna Das Phillips J., who was a party to the decision in Venkateswara Ayyar's case, explained his earlier decision by observing that the mere execution of a deed of alienation will not necessarily give the plaintiff the right to sue, since if there is no fraud he cannot impeach the alienation though it may defeat or delay his rights. It is only if the creditor knows that the transfer is fraudulent that it can be said that he has the right to bring a suit. It was accordingly held that the time cannot be said to run in respect of a claim asserted in a suit unless it is shown that the plaintiff had knowledge of the fraud on which the suit is based.

11. Having regard to the decision in O.Rm. O.M.Sp. (Firm) v. P.L.N.K.M. Nagappa Chettiar it must now be taken to be settled that in regard to suits falling under Article 120 the right to sue cannot accrue until the right asserted is infringed or unequivocally threatened, and in cases where the right is based upon an allegation of fraud, limitation cannot commence unless the party asserting the right had knowledge of the said fraud. It is obvious that under Section 53 of the Transfer of Property Act creditors can impeach only such transfers as are intended by the debtor to defeat or delay his creditors. The right to sue accrues not only because the creditor is defeated or delayed, but because he is defeated or delayed owing to a fraudulent transfer. It is quite conceivable that a debtor may make bona fide transfers for consideration and such transfers may defeat the claims of his creditors. But that would be no ground for setting aside such transfers, since the essential element of the fraudulent intention is absent in such cases. As observed by the Privy Council in Rahimbhoy Habibbhoy v. Charles Agnew Turner I.L.R(1892) . 17 Bom. 341 'the burden of proof is on the defendant to show that the plaintiff had clear and definite knowledge of the fraud for more than the period of limitation' and the fact that the plaintiff had 'some hints and clues', which may perhaps raise his suspicion, would not be enough evidence to discharge the said onus.

12. I may point out that in Dattatraya v. Lakshman : AIR1932Bom15 it was held by this Court that a suit to set aside an alienation was governed by Article 120 and that the cause of action for such a suit arises when the alienation is made and not when the alienation becomes known to the plaintiff. To the same effect is the decision of the Madras High Court in Venkatachella Reddiar v. The Collector of Trichinopoly I.L.R. (1914) Mad. 1064. These decisions were apparently not cited before the Privy Council in O.Rm.O.M.Sp. (Firm) v. P.L.N.K.M. Nagappa Chettiar, but having regard to the observations of the Privy Council in the said case it is very difficult to hold that the view expressed in the said decisions can now be regarded as good law. In any case, in suits where the relief claimed by the plaintiff is based upon the fraud or misconduct of the defendant, limitation cannot be said to start against the plaintiff unless he is fixed with the knowledge of the fraud or misconduct in question.

13. But while applying the test of knowledge for the purpose of deciding the question of limitation in suits under Section 53 of the Transfer of Property Act, there is this further difficulty that such suits are brought in a representative character under Section I, Rule 8. In such cases the plaintiffs on the record may have had the material knowledge more than six years before the suit whereas the other creditors on whose behalf the suit is filed may not have the said knowledge or vice versa. In fact, as I have already stated, in Lal Singh's case the Lahore High Court had to deal with this point. This aspect of the matter was not considered by the Privy Council in O.Rm.O.M.Sp. (Firm) v. P.L.N.K.M. Nagappa Chettiar, since it did notarise for decision in the suit with which their Lordships were dealing. It is true that the decision in Lal Singh's case was cited with approval by the Privy Council, and to that extent the view taken by the Lahore High Court that the inaction of one creditor could not bar the general body of creditors might perhaps be regarded as having received their Lordships' approval. However, in the circumstances of this case it is unnecessary to pursue this point any further, since defendant No. 2 has not suggested that any other creditor of defendant No. 1 had knowledge about the transfer and its fraudulent character more than six years before this suit was filed; and the only question which we have to decide is whether it is shown that the plaintiff had such knowledge more than six years before the date of the suit.

14. It seems to us that the question as to when the right to sue can be said to have accrued would be a question of fact to be determined on the evidence in each case. The defendant must show in such a case that the plaintiff knew about the fraudulent nature of the transaction more than six years before he filed the suit. The knowledge of the execution of the sale-deed itself can hardly be regarded as sufficient to bring home to the plaintiff the knowledge that the sale-deed was fraudulent. Mr. Somjee has laid considerable emphasis on the fact that the plaintiff must be deemed to have known that all the properties had been conveyed by defendant No. 1 under the sale-deed in question. On the record of this case we see no justification for making such an assumption. Besides it has been found as a fact by the lower appellate Court that 'it was only when he (the plaintiff) realized that the son was setting up an independent title to the immovable property by virtue of the sale-deed that he decided to take effective action by bringing a darkhast against that property,' and that it was for the first time when defendant No. 2 raised the objection that the plaintiff learnt about the fraudulent intention of his debtor. This finding is obviously binding on the parties in the present Letter Patent Appeal. On this finding it is impossible for us to accept the contention of Mr. Somjee that the plaintiff should be deemed to have known about the fraudulent nature of the transaction as soon as he knew about the sale-deed itself. The defendant has got to prove that the facts which the plaintiff knew were such as would irresistibly have led to the inference that the transfer was fraudulent. Even if the plaintiff knew some facts such as would raise a bare suspicion, it would not be enough to hold that he had knowledge about the fraudulent intention of his debtor so that limitation could be deemed to commence against him from that time. As I have already stated these are questions of fact on which the Courts below have made findings against the defendants. That being so, we think that the plaintiff's suit is not barred by limitation.

15. It is, however, necessary to point out that the view expressed by Mr. Justice Lokur that the right to sue accrued to the plaintiff only when he decided to exercise the option given to him by Section 53 does not in our opinion appear to be justified in view of the decision of the Privy Council in O.Rm.O.M.Sp. (Firm) v. P.L.N.K.M. Nagappa Chettiar, which was obviously not cited before Lokur J. In most, if not all, cases the option given to creditors by Section 53 would be exercised by them by filing suits to avoid the transfers in question, and in such cases the test adopted by Lokur J. would mean that the starting point of limitation is the dates on which such suits are filed, and in that sense the question of limitation cannot arise at all. In the earlier portion of his judgment, Lokur J. himself has referred to Lal Singh's case in support of his conclusion that Article 120 applies to such suits. It appears that his attention was not invited to the fact that in the said decision the Lahore High Court had taken the view that limitation under Article 120 starts against a party when he is fixed with the necessary knowledge about the fraudulent character of the transaction which he seeks to impeach in his suit. In this connection there is another point which deserves to be mentioned. In dealing with the question as to when limitation starts in such cases Lokur J. has referred to the divergence in the opinions expressed by Madhavan Nair J. and Venkatasubba Rao J. respectively in Narasimham v. Narayan Rao, and has observed that he would prefer to adopt Venkatasubba Rao J.'s view in the matter. But subsequently the said view of Venkatasubba Rao J. has been expressly disapproved of by a division bench of the Madras High Court in Official Receiver v. Alagappa Chettiar [1946] A.L.R. mad. 236. In our opinion in determining the question of limitation in reference to suits filed under Section 53 of the Transfer of Property Act it cannot be said that the starting point of limitation under Article 120 is the date on which the plaintiff decides to exercise his option of avoiding the transfer. We are therefore unable to approve of the test applied by Lokur J. in holding that the suit is in time. That however does not materially affect the result of this Letter Patent Appeal, since we have held that it has not been shown that the plaintiff knew about the fraudulent nature of the transaction in question more than six years before the date of the suit and that the suit must therefore be held to be in time.

16. The result is the Letter Patent Appeal fails and is dismissed with costs.


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