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State Bank of Travancore Vs. A.K. Nanan and anr. - Court Judgment

LegalCrystal Citation
SubjectProperty;Civil
CourtKerala High Court
Decided On
Case NumberSecond Appeal No. 1309 of 1962
Judge
Reported inAIR1967Ker171
ActsTransfer of Property Act, 1882 - Sections 53; Limitation Act, 1908 - Article 91
AppellantState Bank of Travancore
RespondentA.K. Nanan and anr.
Appellant Advocate G. Viswanatha Iyer, Adv.
Respondent Advocate S. Easwara Iyer and; L.G. Potti, Advs.
Cases ReferredMina Kumari Bibi v. Bijoy Singh Dudhuria.
Excerpt:
property - sale deed - section 53 of transfer of property act, 1882 - whether sale deed made by first defendant in favour of contesting respondent is bona fide or fake for delaying justice - first defendant owed money to bank as well as contesting respondent - first defendant executed sale deed to discharge his liability in favour of contesting respondent - existence of debt to bank will not make transaction fraudulent - matter remitted to court to decide market price of land and debt owed to contesting respondent at time when document executed. - - d-6, still, if he owed moneys to the contesting respondent as well and he executed ex......the contesting respondent. the two important issues considered by the trial court were whether the suit properties were acquired in the name of the first defendant with the funds of the contesting respondent and held in trust for the latter: and whether the sale deed was a bona fide transaction supported by consideration or it was a mere sham and fictitious transaction to defeat or delay the bank. on both these issues the trial court held in favour of the contesting respondent, viz., that the properties were acquired in the name of the first defendant with the funds of the contesting respondent and held in trust for the latter; and that the transaction was a bona fide one supported by consideration and not intended to be a sham or fictitious one to defeat the bank.2. the matter was taken.....
Judgment:

T.C. Raghavan, J.

1. The State Bank of Travan-core, the plaintiff, is the appellant, and the second defendant, the second respondent, is the contesting respondent The suit was for cancellation of a sale deed (Ex. D-6) dated 27th October 1952 by the first defendant in favour of his brother, the contesting respondent. The two important issues considered by the trial court were whether the suit properties were acquired in the name of the first defendant with the funds of the contesting respondent and held in trust for the latter: and whether the sale deed was a bona fide transaction supported by consideration or it was a mere sham and fictitious transaction to defeat or delay the Bank. On both these issues the trial court held in favour of the contesting respondent, viz., that the properties were acquired in the name of the first defendant with the funds of the contesting respondent and held in trust for the latter; and that the transaction was a bona fide one supported by consideration and not intended to be a sham or fictitious one to defeat the Bank.

2. The matter was taken up in appeal by the Bank The appellate court held that the properties belonged to the first defendant, in other words, there was no trust for the contesting respondent: and that Ex. D-6 was fraudulent. However, the lower appellate court opined that the suit was barred by limitation, because Article 91 of the Limitation Act of 1908 applied to the case In the opinion of the lower appellate court, since Ex. D-6 was executed on 27th October 1952 and the suit was filed in June 1958 and since there was no allegation in the plaint that the Bank came to know of the transfer within three years of the institution of the suit, the suit was barred by limitation under Article 91 Again, in the opinion of the lower appellate court, the suit could not be treated as one under Section 53 of the Transfer of Properly Act. I may also add that the lower appellate court placed reliance on the decision of the Andhra Pradesh High Court in Subbaraidu v Satyanarayans Raju. AIR 1962 Andh Pra 25 Ultimately, the lower appellate court also confirmed the dismissal of the suit.

3. The first question to be considered is, whether the provision applicable to the case is Article 91 of the Limitation Act of 1908 as held by the District Judge. I think not. In my opinion Article 120 applies to the case. I do not think it is necessary to consider this matter elaborately; and I shall only refer to Mulla's Transfer of Property Act. 5th Edn., page 287 and to Rustomji's Law of Limitation and Adverse Possession. 6th Edn., page 528 and also to the decision of the Bombay High Court in Abdullakhan Darya khan v. Purshotlam Damodar. AIR 1944 Bom 267. The position is quite clear; and therefore, the District Judge is in error in holding that the suit was barred by limitation, because the document sought to be set aside (Ex. D-6) was dated 27th October 1952 and the suit was filed in June 1958, within six years of the document.

4. Then, the District Judge seems to think that the suit as framed will not come within Section 53 of the Transfer of Property Act. Here also, I am of opinion that the District Judge is in error, because there are sufficient allegations in the plaint to bring the suit within the scope of Section 53. It is true that there is no, other creditor of the first defendant: still, it is not necessary to bring a suit within Section 53 that there should be another creditor existing to the knowledge of the plaintiff. The recitals in the amended plaint and the prayers therein indicate that the suit was instituted for the Bank and also for and on behalf of all the other creditors of the first defendant, if any. The law does not require that at the time of the institution of the suit more than one creditor should be in existence. The representative suit is a suit that would fall within Order 1, Rule 8 of the Code of Civil Procedure; and the form of the decree in such a suit is shown in Schedule I, Appendix D, No. 13 of the Code. This shows that the transfer should be held void as against the plaintiff and all other creditors, if any, of the defendant. There are also decisions holding that subsequent creditors would also come within the rule enunciated in Section 53 (vide Thomas Pillai v. Muthurama Chettiar, (1909) ILR 33 Mad 205; Murli Motirara v. Rewachand Dhanomal. AIR 1946 Sind 137; Ram Das v. Debu, AIR 1930 All 610 and Dookali Pattah v. Ramdevi, AIR 1941 Rang 76). I may point out that the decision of the Rangoon High Court last cited above holds that even if the plaintiff is the only creditor, he is entitled to maintain a representative suit on behalf of the creditors, if any. Therefore, the fact that the Bank was the only creditor cannot non suit the Bank.

5. Considering the recitals in the plaint, as already stated, it can only be held that two cases in the alternative were pleaded by the Bank: one, that the sale deed was not supported by consideration in the sense that it was merely nominal or benami intended to secrete the properties from the creditors; and two, that in case it was found otherwise, viz., that the sale was not merely nominal, then it might be declared as a fraudulent transaction to defeat or delay the creditors of the first defendant. A similar plaint containing similar prayers was interpreted by the Supreme Court in this manner in Abdul Shukoor Saheb v. Arji Papa Rao, AIR 1963 SC 1150. The suit is therefore one under Section 53 of the Transfer of Property Act.

6. The counsel of the appellant then argues that even if the suit does not fall within Section 56 of the Transfer of Property Act, it will fall within Section 42 of the Specific Relief Act of 1877. In support of this contention he draws my attention to the decision of Ramau Nayar J. in Skariya v. Cherian Joseph, J965 Ker LT 341 : (AIR 1965 Ker 288). My learned brother has disagreed with the decision of the Andhra Pradesh High Court in AIR 1962 Andh Pra 25 on which the District Judge has placed reliance. Raman Nayar J. has relied on an observation by Beaumont C. J. in Jamnabai v. Dattatraya, AIR 1936 Bom 160 that 'right as to any properly' in Section 42 of the Specific Relief Act is wider in scope than 'right to any properly'; and has held that the former expression is wide enough to cover the right of a creditor to proceed against the property of his debtor for recovering his debt. The learned Judge has held further that even without an attachment a creditor can file a suit to declare that a particular properly is properly belonging to his debtor under Section 42 of the Specific Relief Act, because 'right as to any properly' in that section is wide enough to include such a case within its ambit.

7 Again, my attention is drawn to a Division Bench ruling of the Madras High Court to the effect that Section 42 of the Specific Relief Act is itself not exhaustive of the categories of declaratory suits; and that the law does allow suits for a mere declaration which may not strictly fall within that section. The said decision is Thiruvengada Mudaliar v. Narayana Reddiar. AIR 1959 Mad 141. The argument of the counsel of the appellant is that even if the present suit does not come within Section 53 of the Transfer of Property Act, the suit will still be maintainable either under Section 42 of the Specific Relief Act or even otherwise on the strength of the aforesaid Madras Division Bench ruling. Since I have already held that the suit conies within Section 53 of the Transfer of Property Act, I need not express any opinion on this aspect.

8. The further question is whether the properties covered by Ex, D-6 were purchased with the funds of the contesting respondent and held by the first defendant in trust for the former. On this question the Subordinate Judge held in the affirmative, while the District Judge answered the question in the negative. As pointed out by the District Judge, the properties were purchased under Ex. D-l, D-2, D-9 and D-3 between Meenam 1114 and Meenam 1121 (between April 1939 and April 1946). From the money order acknowledgments produced, Exs. D-7 to D-7(e), the amount received by the first defendant from the contesting respondent up to the last date mentioned above was only Rs. 1,225. The total consideration under Exs. D-l, D-2, D-3 and D-9 was Rs. 6,306. Therefore, it is clear that the first defendant could not have purchased the suit properties with the amounts sent by the contesting respondent; and consequently, it is difficult to hold that the properties were purchased with the funds furnished by the contesting respondent for his benefit or in trust for him. To this extent the conclusion of the District Judge is correct.

9. Still, there is other evidence in the case. e.g. Exs, D-7 (f) to D-7 (z), to establish that several other amounts were also sent by the contesting respondent to the first defendant. It has also emerged that the wife of the contesting respondent came to India from Singapore in 1940; and that it was during her stay in India that Ihe house in one of the items of the properties was constructed. The evidence shows that she and her children lived there; and that the house itself was named after her eldest child, Indira. It is also quite likely (though for that reason it cannot be held that the house itself belonged to the contesting respondent in trust) that the wife of the contesting respondent brought amounts from Singapore when she came away in 1946 and these amounts were also spent for the construction of the house, which was completed for the use of her children and herself. In these circumstances, the counsel of the contesting respondent argues that even if the properties were not held in trust by the first defendant, he owed amounts to the contesting respondent and the sale under Ex. D-6 was only a boua fide transaction in discharge of the debt due by the first defendant to the contesting respondent. In other words, the argument is that, at any rate, the conclusion of the District Judge that the transaction was fraudulent is not correct. The counsel invites my attention to an observation of the Privy Council in Mina Kumari Bibi v. Bijoy Singh Dudhuria. AIR 1916 PC 238 to the effect that a debtor, for all that is contained in Section 53 of the Transfer of Property Act, may pay his debts in any order he pleases and prefer any creditor he chooses. The counsel proceeds that whatever may be suspected and whatever may be the relationship between the first defendant and the contesting respondent, there is no positive evidence in this case from which any fraudulent intention can be gathered; and if really amounts were due by the first defendant to the contesting respondent, the transaction might be a bona fide one to discharge that liability.

10. The argument appears to have considerable force. Whatever might be the position in the insolvency law if a preference in favour of one creditor is made by the debtor, under Section 53 of the Transfer of Property Act, unless it is established that the transfer was intended to defeat or delay the creditors of the transferor, the transfer cannot be annulled. In other words, with reference to the present case, even if the first defendant owed moneys to the Bank at the time of Ex. D-6, still, if he owed moneys to the contesting respondent as well and he executed Ex. D-6 bona fide to discharge that liability, the fact of the existence of the debt to the Bank will not make the transaction a fraudulent one. In view of this, the questions become material as to what was the market price of the properties at the lime of Ex, D-6 and as to what was the amount owed by the first defendant to the contesting resdent then. In other words, the material question is whether the market price of the properties at the time and the amount then due by the first defendant to the contesting respondent were more or less equal so as to enable the court to conclude that the document was a bona fide one in discharge of a real and existing debt

11. The consideration mentioned in Ex. D-6 is only Rs. 5,000 but, it has come out in evidence that much more was due to the contesting respondent from the first defendant The recital of consideration in Ex. D-6 is in no way conclusive, because, as rightly pointed out by the Subordinate Judge, it might have been shown at a smaller figure merely for the purpose, of reducing stamp duty and registration expenses. No materials are placed before me to arrive at a conclusion as to what was the market value of the properties at the time of Ex. D-6 and also to arrive at a conclusion as to what was the actual amount due by the first defendant to the contesting respondent including amounts spent by the wife of the latter, if any, for the construction of the house Without further materials on these aspects I find it difficult to conic to a conclusion whether the transaction was a fraudulent one to defeat or delay the creditors of the first defendant.

12. Therefore, I set aside the decision ofthe lower appellate court and remit the appealto it for fresh disposal. The lower appellatecourt will consider the question as to what wasthe market price of the properties conveyedunder Ex. D-6 on the date of that document:the lower appellate court will also consider asto what amount was then due by the first defendant to the contesting respondent includingamounts said to have been spent by the wifeof the contesting respondent, if any, in the construction of the house If necessary, the lowerappellate court may take additional evidence aswell on this question; and it will then decidewhether Ex. D-6 was intended to defeat ordelay the creditors of the first defendant or wasa bona fide transaction in discharge of theliability of the first defendant to the contestingrespondent. The parties will suffer their, respective costs in the second appeal; and thelower appellate court will provide for the costsof the lower courts in the decree it will ultimately pass.


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