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Lingareddi Sreenivasulu Reddi (Died) and ors. Vs. D. Muniratnam Reddi and ors. - Court Judgment

LegalCrystal Citation
SubjectCommercial
CourtAndhra Pradesh High Court
Decided On
Case NumberSecond Appeal No. 102 of 1975
Judge
Reported inAIR1978AP173
ActsTransfer of Property Act, 1882 - Sections 128; Code of Civil Procedure (CPC), 1908 - Sections 2(11) and 50
AppellantLingareddi Sreenivasulu Reddi (Died) and ors.
RespondentD. Muniratnam Reddi and ors.
Appellant AdvocateR. Venugopala Reddy, Adv.
Respondent AdvocateE. Manohar, Adv.
Excerpt:
.....and 50 of code of civil procedure, 1908 - transfer of property by debtor - proceedings initiated by creditor against such property transferred by his debtor - property transferred with intention to defraud creditors - such transfer void - held, proceeding initiated by creditor against such property valid. - - in order to make good his submission, he has placed before me three facts. the two circumstances which have been pointed out to me are fairly strong. the learned appellate judge has recorded several circumstances and held that there was hardly any love and affection between the second defendant and the plaintiff. it is difficult to believe that the second defendant who is expected to live longer than the plaintiff and who is still alive would gift all his properties to the..........filed against him by his creditor to enforce a hypothecation, assuming the children are universal donees, a decree passed against the donor without the donees on record cannot bind them and cannot be executed against them. a creditor therefore cannot seek to proceed against the property in the hands of the donees on record cannot bind them and cannot be executed against them. a creditor therefore cannot seek to proceed against the property in the hands of the donee in execution of his decree to which they are not parties. this view is based upon the principle that the universal donees do not have the status as legal representatives any more than an ordinary transferee of the judgment-debtor would have. it has been further observed that a creditor's right against the donee cannot be any.....
Judgment:

1. First defendant filed O. S. 199 of 1960 against the second defendant for recovering a sum of Rupees 1,200/- with interest due on a promissory note executed on 5-7-1957. That suit was decreed in favour of the first defendant. Thereafter he filed execution petition No. 9/64 for execution of the decree by sale of the property of the second defendant on which attachment before judgment was levied. Plaintiff filed Execution Application No. 297 of 1964 in Execution Petition 9/64 for raising the attachment. He based his claim on the ground that the property under attachment belongs to him. That claim petition was rejected by the Executing Court. He therefore filed the present suit for declaration of his tittle and pleaded that the property under attachment was settled upon him by the second defendant under Ex. A-1 dated 27-6-1958. Second defendant (judgment-debtor) is the brother-in-law of the plaintiff and also his sister's son.

2. Learned trial Judge held that there was no unavoidable necessity for the second defendant to settle the property under attachment upon the plaintiff and that he had done so in order to escape his liability flowing from his debt. He also held that the plaintiff was the universal donee within the meaning of Section 128 of the T. P. Act and was therefore liable to discharge the debt of his donor. He therefore dismissed the suit in so far as it related to the plaintiff's declaration of title in regard to the property settled upon him by second defendant under Ex. A-1 but passed in his favour decree in relation to Item 3 which was not the subject-matter of settlement under Ex. A-1.

3. Plaintiff appealed against that decree to the appellate Court. The learned appellate Judge confirmed the findings recorded by the learned trial Judge and upheld the decree passed by him. He therefore dismissed the appeal.

4. It is that appellate decree which is challenged by the plaintiff in this second appeal.

5. Mr. Venugopala Reddy who appears on behalf of the plaintiff has contended that the sequence of events itself shows that the second defendant could not have executed the settlement deed fraudulently or in order to escape his liability flowing from the debt which he had incurred. In order to make good his submission, he has placed before me three facts. The promissory note was executed by the second defendant in favour of the first defendant on 5-7-1957. Second defendant executed the registered settlement deed in favour of the plaintiff on 27-6-1958. The first defendant filed against the second defendant O. S. 199 of 1960 on 4-7-1960. On these facts he has argued that it is inconceivable that the settlement deed could have been executed by the second defendant in favour of the plaintiff fraudulently even before the plaintiff filed the present suit though at that time the debt under promissory note was outstanding against him. The argument which he raised ex facie appeared to be attractive. However on behalf of the first defendant Mr. E. Manohar has pointed out to me a few facts of which it is necessary to take note. The promissory note was executed for a sum of Rupees 1,200/- on 5-7-1957. The property in respect of which the second defendant executed the deed of settlement in 1958 was worth only Rs. 1,930/-. It is also pointed out to me that the second defendant had no other debts. On those facts he has argued that in order to save his small estate of Rs. 1,930/- it was not unnatural that he executed the fraudulent settlement deed in order to defeat the outstanding promissory note debt of Rupees 1,200/-. He has added to the force of his argument by bringing into play one more fact which appears to be quite strange. Second defendant who executed the settlement deed in 1958 in favour of the plaintiff was aged 30 years while the plaintiff-donee was 60 years of age. According to him it is against the normal course of human behaviour and is unnatural that a Hindu donor of 30 years of age would settle properties upon the donee who is double his age. Normally speaking a donor settles his properties on a donee who is expected to live longer. The two circumstances which have been pointed out to me are fairly strong. The learned appellate Judge has recorded several circumstances and held that there was hardly any love and affection between the second defendant and the plaintiff. He has pointed out that the mother of the second defendant, who was the plaintiff's sister' was neglected both during her lifetime, and after her death by the plaintiff. This circumstance which the learned appellate Judge has referred to may not be of much consequence in view of the special facts of this case which Mr. Manohar has pointed out tome and the sequence of events which Mr. Venugopal Reddy has pointed out tome. Added to these two facts which Mr. Manohar has pointed out tome there is one more fact, Second defendant is still alive and under the settlement deed Ex. A-1 he has gifted all his properties to the plaintiff. It is difficult to believe that the second defendant who is expected to live longer than the plaintiff and who is still alive would gift all his properties to the plaintiff with good intention, thus voluntarily depriving himself of all his assets which he would require for living happily and comfortably a longer life in future than the plaintiff. These circumstances which Mr. Manohar has pointed out to me subject the transaction evidenced by Exhibit A-1 to strong suspicion. I am therefore not inclined to interfere with the finding recorded by the Courts below though the reasons which prevail with me are different from the reasons which prevailed with the Courts below.

6. The next contention which has been raised by Mr. Venugopal Reddy is that though the plaintiff was the universal donee from the second defendant within the meaning of S. 128 of the T.P. Act, the properties which he got from the second defendant could not have been attached straightway in execution of a decree against the second defendant. According to him the universal donee is certainly liable to discharge the debts of his donor. But that liability can be fastened upon him only after impleading him as a defendant to the suit or by filing a suit against him. In support of his contention Mr. Venugopal Reddy has referred to the decision of Travancore and Cochin High Court in Muthamathu Kunju v. Muhammathu Kunju (AIR 1952 Trav Co 23). The view which has been expressed in that decision by the Bench is that where a donor makes a gift of property to his children before the suit is filed against him by his creditor to enforce a hypothecation, assuming the children are universal donees, a decree passed against the donor without the donees on record cannot bind them and cannot be executed against them. A creditor therefore cannot seek to proceed against the property in the hands of the donees on record cannot bind them and cannot be executed against them. A creditor therefore cannot seek to proceed against the property in the hands of the donee in execution of his decree to which they are not parties. This view is based upon the principle that the universal donees do not have the status as legal representatives any more than an ordinary transferee of the judgment-debtor would have. It has been further observed that a creditor's right against the donee cannot be any the higher because under their personal law they happen to be the legal heirs of the deceased judgment-debtor. Therefore a creditor-decree-holder cannot seek any relief against donees from properties in their hands by straightway proceeding in execution.

7. As against that decision there is the decision there is the decision of the Madras High Court in Dayanandan v. Venugopal : AIR1964Mad78 . The learned single Judge has differed from the view taken by the Travaacore & Cochin High Court referred to above and held that the universal donee who by reason of a gift enters upon possession of the estate of the deceased donor is a ' legal representative' of the deceased within the meaning of S. 2 of the Civil P.C. which gives a very wide definition of the expression ' legal represenative'. It has next been observed that apart from a universal donee being a legal representative he takes the estate of the donor subject to his liabilities because S. 128 of the T.P. Act fastens liability upon the universal donee in respect of all debts due by the donor at time of gift though such liability is confined only to the extent of the properties comprised in the gift.

8. Section 2(11) , Civil P.C. defines ' legal representative' so as to mean ' a person who in law represents the estate of a deceased person and includes any person who intermeddles with the estate of the deceased and where a party sues or is sued in a representative character the person on whom the estate devolves on the death of the party so suing or sued'.

9. This definition makes it clear that even intermeddlers are the legal representatives of the deceased. The view expressed by the learned single Judge of the Madras High Court is based upon the wide amplitude of the definition of 'legal representatives' given in S. 2(11) of the C.P.C. The decision of the Travancore and Cochin High Court is based only upon the principle of devolution.

10. It has also been argued by Mr. Venugopal Reddy that S. 2(11) of the C.P.C. should be read with S. 50 there of. According to him if they are so read, it means that the decree can be executed against the ' legal representative' within the meaning of S. 2(11), Civil P.C. even though he was not a party to the suit only in cases where the judgment-debtor is dead and the decree-holder seeks to proceed against his legal representatives. In my opinion S. 2(11),. C.P.C. read with S. 50, C.P.C. does not make any difference in the application of the principle laid down by the learned single Judge of the Madras High Court because S. 50, is not exhaustive of the circumstances in which decree can be executed against a legal representative. On persuing the reasoning given in the two decisions to which I have referred, I am in agreement with the view expressed by the learned single Judge of Madras High Court. Therefore, the properties of the second defendant in the hands of the plaintiff could be proceeded against by the first defendant even though the plaintiff was not a party to the suit.

11. These are the two contentions which Mr. Venugopal Reddy has raised before me. Both of them fail and are rejected. The appeal therefore fails and is dismissed with costs.

12. Appeal dismissed.


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