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Muthu K.R.V. Alagappa Chetty Vs. Dasapa Chettiar and ors. - Court Judgment

LegalCrystal Citation
SubjectProperty
CourtChennai
Decided On
Reported in(1913)24MLJ293
AppellantMuthu K.R.V. Alagappa Chetty
RespondentDasapa Chettiar and ors.
Cases ReferredHakim Lal v. Mooshahar Sahu I.L.R.
Excerpt:
- - this is the real meaning of the word colorable and it would be well to avoid using it where all that is meant is that an alienation is voidable by third parties on the ground of fraud......a claim petition and subsequently instituted this suit for a declaration of his rights under the sale-deed. defendants contended that the sale-deed was not supported by consideration, that it was colourable and executed to defraud the creditors of the vendor. the district munsif upheld the defendants' contention. he gives in his judgment several reasons in support of his view. he says that veeravasantha chetty disposed of all his properties about the time that the sale deed was executed, that he was deeply involved in debts, that the plaintiff was his brother and that the vendor suspended business shortly after he executed the sale-deed. he also points out that though the sale-deed sets out that the object of selling the property was to discharge the debts due to certain madras.....
Judgment:

1. The plaintiff obtained a sale-deed from one Veeravasantha Chetty in 1906. The property was afterwards attached by the defendants for a debt due to them. The plaintiff then put in a claim petition and subsequently instituted this suit for a declaration of his rights under the sale-deed. Defendants contended that the sale-deed was not supported by consideration, that it was colourable and executed to defraud the creditors of the vendor. The District Munsif upheld the defendants' contention. He gives in his judgment several reasons in support of his view. He says that Veeravasantha Chetty disposed of all his properties about the time that the sale deed was executed, that he was deeply involved in debts, that the plaintiff was his brother and that the vendor suspended business shortly after he executed the sale-deed. He also points out that though the sale-deed sets out that the object of selling the property was to discharge the debts due to certain Madras creditors, those creditors had, as a matter of fact, made no demand for their debts, and that more than a month elapsed after the execution of the sale-deed before payment to them was made. None of them was present either personally or by proxy at the execution of the sale-deed. He came to the conclusion that, as a matter of fact, Veeravasantha Chetty did not pay the debts to the three creditors mentioned in the sale-deed out of the money received from the plaintiff. He found the 1st issue ' whether the plaint sale is genuine and supported by consideration or whether it is colourable and was executed in fraud of creditors concerned ' in the affirmative. Whether he meant that although the consideration was paid before the Sub-Registrar, it was not retained by the vendor or whether he meant that in order to defeat the creditors Veeravasantha Chetty converted his immoveable property into cash so as to place it beyond the reach of his creditors, is not clear from his judgment.

2. In appeal the District Judge took the question for decision to be whether the sale was in fact made to defeat or delay creditors and whether the plaintiff was a bona fide purchaser for consideration. The learned Judge finds that money passed from the plaintiff to the vendor and that the three creditors mentioned in the sale deed were in fact paid after the sale. He then says 'I do not think that more can be demanded.' He does not meet any of the reasons given by the Munsif for his conclusion that at the time of the execution of the sale-deed it was not the intention of the vendor to use the money received as consideration of the sale for the purpose of paying off the creditors mentioned therein. He does not refer to the reasons given by the District Munsif for his view that the vendor really paid the debts out of his own money and not out of the money paid by the plaintiff. Apparently the view that he took was that it would be sufficient if, as a matter of fact, the vendor subsequently paid off the creditors for the discharge of whose debts the sale deed purported to be executed. The District Munsif referred to the cases cited in Hakim Lal v. Mooshahar Sahu I.L.R. (1907) C. 999. The District Judge says that that case was not properly understood by the District Munsif. It does not appear for whit purpose the District Munsif made reference to Hakim Lal v. Mooshahar Sahu I.L.R. (1907) C. 999; but there can be no doubt that as laid down in that case if a person in involved circumstances with the intention of defeating or delaying his creditors, converts the immoveable property of his which could be easily got hold of by his creditors into money, the mere fact that consideration was paid for the sale would not enable the vendee to maintain the contention that the sale was not voidable under Section 53 of the Transfer of Property Act. Of course, notwithstanding any fraudulent intent on the part of the alienor, a bona-fide transferee taking a transfer without notice of the alienor's fraudulent intention would be protected. 16, as found by the District Munsif the consideration was not intended to be used for paying off the three creditors one of two inferences would seem to follow, viz., either that it was not intended by the vendor to retain the consideration or that it was intended to keep it for his own benefit. In the circumstances we think it necessary to ask the District Judge to return a fresh finding on the question whether the sale to the plaintiff was voidable under Section 53 of the Transfer of Property Act. Both parties are at liberty to adduce fresh evidence. The finding will be submitted within two months from the date of the re-opening of the District Court and seven days will be allowed for filing objections.

3. The District Judge upon the issue thus remitted whether the sale was invalid under Section 53 of T.P.A. observed, 'I find that, considering the vendor's impending bankruptcy, the fact that plaintiff is his brother, that the vendor did not pay the debts for which he purported to effect the sale for one month, that on the same day he sold other properties to other near relations and has not accounted for the use of those monies, and that plaintiff and the attestor contradict each other as to all circumstances of the execution of'the document and that the payment of Rs. 560 odd to Karuppa Goundan is a most suspicious item, this sale to plaintiff must be held to have been colourable and intended to defeat and delay creditors and is therefore voidable under Section 53 of the Transfer of Property Act.'

4. This Second Appeal came on for final hearing before their Lordship. Mr. Justice Benson and Mr. Justice Sundara Atyar and

5. The finding of the Judge is that several alienations were made by the debtor on the 22nd and 23rd of March 1906 for a total consideration of about Rs. 6,000 and that he paid off only debts amounting to Rs. 2,1.60. No doubt the particular debts paid off were those for the discharge of which the properties in question in this suit were sold to the plaintiff, but we cannot say that the Judge was bound to find that the payments were made out of moneys received from the plaintiff. The Judge was entitled to infer from the circumstances that the sale in question was part of a scheme of fraudulent alienations. We accept the finding that the alienation was invalid as against creditors under Section 53 of the Transfer of Property Act. We do not think that the Judge intended to hold that the sale was altogether a sham not intended to be operative as between the parties to it. This is the real meaning of the word colorable and it would be well to avoid using it where all that is meant is that an alienation is voidable by third parties on the ground of fraud.

6. We reverse the decree of the Lower Appellate Court and restore that of the District Munsiff with costs here and in the Lower Appellate Court.


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