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N.N.L. Ramaswami Chettiar Vs. Mallappa Reddiar - Court Judgment

LegalCrystal Citation
SubjectProperty
CourtChennai
Decided On
Reported in(1920)39MLJ350
AppellantN.N.L. Ramaswami Chettiar
RespondentMallappa Reddiar
Cases ReferredSubramania Ayyar v. Muthia Chettiar I.L.R.
Excerpt:
- - appavu chetti (1916)30mlj565 that a conveyance offending against the provisions of section 52 of the transfer of property act can only be avoided in a suit property instituted for that purpose, and that consequently in a suit by an unsuccessful claimant under order 21, rule 63 of the civil procedure code it is not open to the attaching decree-holder to plead that the transfer by the judgment debtor to the claimant was fradulent. 649 is right, and that there is nothing to prevent a creditor who has been defrauded, defeated or delayed from exercising the option given him by section 53 of the transfer of property act of avoiding the conveyance otherwise than by the institution of a suit for that purpose. the practice of requiring a creditor suing in chancery to set aside a deed of.....john wallis, kt, c.j.1. the decision of the full bench in subramaina aiyar v. muthia chettiar i.l.r. (1917) m. 612 affirmed the decision in palaniandi ghetti v. appavu chetti : (1916)30mlj565 that a conveyance offending against the provisions of section 52 of the transfer of property act can only be avoided in a suit property instituted for that purpose, and that consequently in a suit by an unsuccessful claimant under order 21, rule 63 of the civil procedure code it is not open to the attaching decree-holder to plead that the transfer by the judgment debtor to the claimant was fradulent. this ruling has since been questioned in two cases in this court, cheruthazath abdulla haji v. cheriyandi ibrahim kutli (1918) 50 i.c. 959 and pokker v. chandrankandi kunhamad (1918) 36 m.l.j. 231 as.....
Judgment:

John Wallis, Kt, C.J.

1. The decision of the Full Bench in Subramaina Aiyar v. Muthia Chettiar I.L.R. (1917) M. 612 affirmed the decision in Palaniandi Ghetti v. Appavu Chetti : (1916)30MLJ565 that a conveyance offending against the provisions of Section 52 of the Transfer of Property Act can only be avoided in a suit property instituted for that purpose, and that consequently in a suit by an unsuccessful claimant under Order 21, Rule 63 of the Civil Procedure Code it is not open to the attaching decree-holder to plead that the transfer by the judgment debtor to the claimant was fradulent. This ruling has since been questioned in two cases in this Court, Cheruthazath Abdulla Haji v. Cheriyandi Ibrahim Kutli (1918) 50 I.C. 959 and Pokker v. Chandrankandi Kunhamad (1918) 36 M.L.J. 231 as observed in the referring order of Spencer J, where many of Indian decisions are cited. The question has now been very fully argued before a Bench of five Judges, and after carefully considering all the arguments addressed to us I have come to the conclusion that the view taken by the two learned Judges of the Calcutta High Court in Abdul Kadir v. Ali Mia (1912) 15 C.L.J. 649 is right, and that there is nothing to prevent a creditor who has been defrauded, defeated or delayed from exercising the option given him by Section 53 of the Transfer of Property Act of avoiding the conveyance otherwise than by the institution of a suit for that purpose. If the framers of the Transfer of Property Act, who were of course thoroughly familiar with the English decisions on the subject, had intended that the creditor should only exercise this option by instituting a suit, I make no doubt that, in a measure which was. intended to be self-contained and to be administered in many places where English decisions are not readily available, they would have said so expressly. As they have not done so, we are in my opinion bound to apply the law that voidable transactions may be avoided by any open or unequivocal declaration, of an intention to avoid them as laid down by the House of Lords in Oakes v. Turquand (1867) L.R. 2 H.L. 325 and in numerous other cases.

2. I perfer to rest my opinion on the language of the section which we have to administer, but at the same time, I do not think that the English decisions, when properly understood, afford any support to the contrary view. The practice of requiring a creditor suing in Chancery to set aside a deed of fraudulent transfer to sue on behalf of all the creditors was, in my opinion, only another application of the well-known maxim that he who seeks equity must do equity. As observed by Mr. Kerly in his History of Equity at page 145, even after the two statutes of Elizabeth extended the powers of the Common Law Court to defeat fraudulent conveyances, recourse continued to be had to Chancery to set aside settlements in fraud of creditors, Naylor v. Baldevin. 1 E.R. 528 This was no doubt owing to the superior facilities then possessed by the Court of Chancery for eliciting the truth in such cases owing to its power to examine the defendant and to grant discovery, which the Common Law Courts could not do. It is unnecessary to consider whether the Court of Chancery invariably required a judgment-creditor as a condition of obtaining relief to sue on behalf of all the creditors. In so far as it did so, it was merely an application of the well known equitable rule which was also applied in the more recent case of Reese River Silver Mining Co. v. Atwell (1869) L.R. 7 Eq. 347 It was there argued that there was no case in which a creditor had been allowed to bring such a suit when the debtor was still alive without first obtaining a judgment against him, but this contention was overruled, and a creditor who had not obtained judgment was allowed to sue; but, at the same time, leave was given to amend the bill (or plaint) by making it on behalf of all the creditors, a decision followed by Jenkins, C.J. in a similar case, Ishvar Tinappa v. Devar Venkappa. I.L.R(1902) 27 Bom. 146 That is not the question now before us, as the suit with which we are concerned is the statutory suit under Order 21, Rule 63.

3. This and the other Chancery cases cited in Palaniandi Chetty v. Appavu Chetty : (1916)30MLJ565 in my opinion, throw no light on the question whether under the statutes of Elizabeth it is not open to a creditor to avoid a fraudulent conveyance without suit or action, if he can do so effectively and is prepared to face the risk of having to pay damages should the conveyance ultimately be found not to have been fraudulent. That he can do so appears from two decisions cited by Sterling J, in Re Mouat (1899) I.Ch.D 31 where the creditor's rights at law and in equity are distinguished. In the very early case of Bethell v. Stanhope. (1601) Cro-Eliz 810 Where the testator shortly before his death had made a fraudulent gift of his goods to his daughter but had remained in possession of them, it was held that they were assets in the hands of his adminstrator, and that when the donee afterwards took them, it was a trespass against the administrator ; and in Shears v. Rogers (1832) 3 B & Ad, 362 Littledale J. observed 'creditors had a right to the property which the deed purported to convey, and might enforce that right at law. The assignment was void as soon as the creditors claimed to treat it as such, though not till then.

4. The judgment creditor's right to take in execution goods which have been made the subject of a conveyance offending against the statute of Elizabeth without bringing a suit to set aside the conveyance has also been recognised in a number of cases beginning with the early case of Turvil v. Tipper (1627) Latch. 222 where it was held that an alienee from the judgment-debtor under a fraudulent conveyance could not maintain an action of trespass against the bailiff of a Manor Court for seizing the goods, which were the subject of the conveyance, in execution against the judgment debtor. Later cases went further, and held that the sheriff or bailiff was not only entitled to seize in execution goods which had been fraudulently transferred by the judgment-debtor but was bound to do. In Lovick v. Crowder (1828) 8B.& C, 132 Lord Tenderdon said, ' Now, if a party be in possession of the goods apparently the property of the debtor, the sheriff who has a fieri facias to execute, is bound to inquire whether the party who is in possession is so bona fide ; and if he find the possession is held under a fraudulent bill of sale, he is bound to treat it as null and void, and levy under the writ '. The same rule was laid down by Baron Parke In Imray v. Magnay (1843) 11 M & W 267 in which a fraudulent judgment had been suffered by the debtor. ' The judgment is by the statute (13 Eliz) made void against creditors, but by implication it is void against a sheriff, who acts in right of a creditor ; as a deed is, which is fraudulent against creditors : Turvil v. Tipper (1627) Latch 322. And it is now of frequent occurrence, that the sheriff is bound to take goods which have been fraudulently conveyed or assigned to defeat creditors, and is responsible in an action for a false return at the suit of the creditor ; and the statute seems to us to put both (the judgment and the conveyance) on the same footing.' In Remmett v. Lawrence (1850) 15 Q.B.R. 1004 doubts were expressed as to how far the sheriff was bound to take notice that a judgment or conveyance was fraudulent but Imray v. Magnay (1843) 11 M & W 267 was subsequently affirmed in Christopherson v. Burton. (1848) 3 Ex. 160 It is unnecessary to pursue the question of the sheriff's liability. What is material is that the decisions of these eminent Judges proceeded on the view that the sheriff in execution, may do what the creditor could do himself viz., avoid the fraudulent conveyance without a suit. As regards Vyse v. Brown (1884) 18 Q.B.D. 199 all that was decided was that the defendant, who was the executor under a will by which the judgment-debtor became entitled to a legacy which he was said to have fraudulently alienated, could not be said to be a debtor to the judgment-debtor in the amount of the legacy so as to entitle a creditor of the judgment debtor to take garnishee proceedings. In Clegg v. Bromley (1912) 3 K.B. 474 it was held that the assignment there in question was not in contravention of the statute of Elizabeth, and no question as to how such settlements could be avoided appears to have arisen. These decisions appear to have no bearing on the present question.

5. It is the less necessary to import restrictions into Section 53 of the Transfer of Property Act because the legislature in India has made what it considers sufficient provision for the rights of the other creditors in the provisions of the Code relating to the realization and distribution of assets in execution by allowing judgment-creditors who come in before the realization of the assets to share in them.

6. The actual question referred to us is whether it is open to an attaching decree-holder to plead in defence to a suit by the alienee whose claim has been rejected that the transfer to him was fraudulent under Section 53. For the reasons already given, I am of opinon that it is open to the judgment-creditor by virtue of Section 53 the Transfer Property Act to attach as the property of the judgment-debtor property which has been fraudulently transferred to the claimant with intent to defeat or delay creditors. If he knows of the transfer when he applies for attachment the application is sufficient evidence of his intention to avoid it; if he only hears of the transfer when a claim petition is preferred under Order XXI, Ru]e 58 and still maintains his right to attach, that again is a sufficient exercise of his option to avoid entitles him to succeed in the subsequent suit under Rule 63 which has next to be considered.

7. When the claim is preferred, it becomes the duty of the executing Court to investigate it unless of opinion that it was designedly or unnecessarily delayed. What is to be investigated at this stage is provided by Rules 60 and 61 and is, not the creditor's right to attach, but the question whether the judgment-debtor was in possession (as defined in the Rule) of the attached property at the date of the attachment. If he was, the attchment is to continue and execution to proceed, subject, to the result of the suit which the claimant may institute within one year to establish his right; and according to the decision of the Full Bench in Venkata Ratnam v. Ranganayakamma I.L.R. (1918) Mad. 985 the result is the same under the present Code when the claim is rejected on the ground that it was designedly or unnecessarily delayed. On the other hand, if the judgment-debtor is found not to have been in possession as defined in the rule, the attachment is to be raised and execution against the attached property suspended until the judgment-creditor has established his right to attach in a suit under Rule 63. If the provisions of Rules 60 and 61 be pursued, the question whether the claim should be allowed or disallowed in the first instance will depend on whether the judgment-debtor or the transferee was in possession as defined in Rule 60 at the date of the attachment. I am not satisfied that it was intended to lay down a different rule in Ramu Aiyar v. Palaniappa Chetti I.L.R. (1911) Mad. 35 but, if it was, I am unable with great respect to follow that decision.

8. The resulting suit under Rule 63 is by the unsuccessful party to the claim petition ' to establish the right which he claims to the property in dispute,' Whether this suit be instituted by the attaching decree-holder or by the transferee claimant, it must equally be decided in favour of the former, if the transfer is shown to have been fraudulent ; because, in consequence of the fraudulent character of the transfer and its avoidance by the judgment-creditor, the result is that the transferee has not the right which he claims to hold the property free from attachment in execution by the judgment-creditor.

9. This view is entirely in accordance with the policy of these provisions of the Code as explained by the Privy Council in Sardhari Lal v. Ambika Pershad I.L.R(1888) . Cal. 521 which is to secure the speedy settlement of questions of title raised at execution sales. We have, however, been referred to the later decision of the Privy Council in Phul Kumari v. Ghanshyam Misra I.L.R.(1907) , Cal. 202. All that was decided in that case was that a suit by the unsuccessful party to establish his right under Section 283, now Order 21, Rule 63 of the Code of Civil Procedure was 'a suit to alter or set aside the summary decision or order of any of the Civil Courts not established by Letters Patent or of any Revenue Court' within the meaning of Article 17 of Schedule II of the Court Fees Act. Their Lordships proceeded on the ground that a suit under Section 283, Rule 63, was not only the appropriate but the only means of setting aside the order passed on the claim petition, and held that this was sufficient to bring the suit within the terms of the Article. They, no doubt,referred in one place to the suit under Section 283 to establish the right of the unsuccessful party to the claim petition as an 'action of appeal' and to the plaint in such a suit as 'a plaint for review of a summary decision' but this language must be read with reference to the question before them. The effect of the judgment in a suit under Section 283, now Rule 63, as stated by the Privy Council in Sardhari Lal v. Ambika Pershad I.L.R. (1888) Cal. 521 and as appears from the provisions of the Code which I have examined, is to settle, as between the attaching-decree-holder and the claimant, the question of title arising in execution, with the result that the order on the claim petition (which in the judgment of Phul Kumari v.Ghanshyam Misra I.L.R(1907) . Cal. 202 is referred to as a decree) is either set aside or confirmed. All that their Lordships decided in the latter case was that this latter result was enough to bring the suit within the operation of Article 17 of Schedule II of the Court Fees Act.

10. On the whole, I have come to the conclusion that, on the language of Section 53 of the Transfer of Property Act, the question referred to us must be answered in the affirmative, and I am confirmed in this view by the conclusion to which I have come that the law is the same in England with regard to transfers offending against the statute of Elizabeth.

Oldfield, J.

11. The cases we have to consider are those, in which the claimant, having failed to obtain an order under Order XXI, Rule 60, C.P.C. brings the suit authorised by Rule 63 ' to establish the right which he claims to the property in dispute'. We are asked to decide whether the attaching creditor, defendant in such a suit, can plead that the transfer, on which the claimant relies, offends against Section 53, Transfer of Property Act or whether he must reserve that plea for separate proceedings to be instituted by him for its avoidance.

12. Of the arguments, by which the latter alternative is supported, that based on the alleged difficulty of combining in the decree in a suit under Rule 63 a recognition of the creditor's right with the protection, to which the claimant's interest is entitled, can be dealt with shortly. For, firstly such a decree will not declare generally that the transfer is void,but only, what Section 53 permits, that it is not binding as between the creditor and the claimant ; and next there will be nothing to prevent recognition of such right as the latter may establish by showing that as regards a portion of the consideration, the transfer to him was valid. The Court can meet either contingency as it would in a suit by the creditor, the one by a direction regarding the disposal of the balance of the sale proceeds after the creditor's decree has been discharged and the other by allowing him to proceed against the property only after he has paid any amount, to which the claimant is legitimately entitled. I turn to the two more substantial contentions relied on, that, the scope of the suit under Rule 63 being no greater than that of the investigation under Rules 59 and 60, only the possession which would be decisive in the latter, can be considered in the former and that no plea regarding the character of the claimants transfer as binding on the creditor can be considered, until or unless the latter has negatived that character by obtaining a decree.

13. The first of these contentions is involved in some confusion, because it is no doubt true that Subordinate Courts in fact are not dealing with claims only with reference to possession and are erroneously considering the character of the title, On which the claimant relies ; and they are supported in doing so by the head-note to Ramu Aiyar v. Palaniappa Chetty I.L.R. (1911) Mad. 35 If that were really the result of that decision, I should with all deference doubt its correctness. But in fact it decided only that the rejection of a claim by an order, which was based on a finding as to possession and which was not attacked within a year by a suit, was final as against the claimant's right, even as based on his title ; and, if there are some observations in the judgment arising from the reference in that order to title as well as and in connection with possession, it does not follow from them that the learned Judges meant more than that the adjudication as to the latter became final by implication also as to the former. More certainly would have been inconsistent with the marked distinction between the references to possession in Rules 59, 60 and 61 in connection with the preliminary order under the two last mentioned and the reference in Rule 63 to the establishment in the subsequent suit of the right claimed by the plaintiff. But, as the investigation is restricted to the question of possession, that distinction is sufficient to negative the applicability of a similar restriction to the last stage of the proceedings ; nor can any support for such application be found, as Mr. Krishnasami Ayyar contends, in the reference by the Judicial Committee in Phul Kumari v.Ghanshyam Misra I.L.R. (1907) Ca1. 202 to the suit under Rule 63(or the provision previously corresponding therewith) as simply ' a form of appeal related to a prior decree,' which constituted the cause of action. For their Lordships were not dealing in that case with any question of the substantive rights of the parties or the contentions open to either of them, but only with a question of Court fees, in connection with which the character of the relief asked for by the plaintiff would be decisive.

14. This failing, there remains the more substantial contention that the defendant-creditors cannot rely on any exercise of his option under Section 53, Transfer of Property Act in defence or unless he has brought and succeeded in a suit. On this point I respectfully accept the statement of the English law in the judgment just delivered and turn to the Indian authorities. There is no doubt that generally the exercise of the option to avoid a contract can be pleaded by the person entitled to exercise it in defence, as for instance in cases under Sections 19 and 20 Indian Contract Act. Vide Orr v. Sundara Pandia I.L.R (1898) Mad. 255 Laxmi Doss v. Roop Laul I.L.R. (1906) Mad. 169 Raja Rajeswara Dorai v, Arunachala Chetttar I.L.R. (1918) Mad. 321 and Renganath Sakharam v. Govind Narasing I.L.R(1901) . 28 Bom. 639; and it has not been shown to be material that the person concerned under Section 53 Transfer of Property Act is not the executant of the contract or that his plea involves his right to avoid it, not absolutely, but only as between him and the party to it, who has claimed. There is therefore nothing contrary to principle in the authorities relied on by Spencer J., in the order of reference ; and Rajani Kumar Dass v. Gaur Kishore Shaha I.L.R. (1908) Cal. 1051 may also be mentioned in connection with another argument already referred to as an instance of a case in which partial effect was allowed to the plaintiff's transfer. Most of these decisions were no doubt given, not in connection with the claim procedure, but in ordinary suits brought on a transfer without a previous order rejecting a claim by the plaintiff. But that cannot affect their weight in the present discussion in view of the very comprehensive scope of the special remedy allowed in Rule 63 and the description of its purpose by the Judicial Committee in Sardhari Lal v. Ambika Pershad I.L.R. (1888) Cal. 521 as the speedy settlement of questions of title arising at execution sales. It is, as these decisions show, essential only that the attaching creditor, pleading Section 53 Transfer of Property Act in defence, shall have exercised his option in some unequivocal way ; and that he will have done, if not in all cases by his attachment, at least when he afterwards opposes the transferee's claim with full knowledge of it in the proceedings under Rule 59. In these circumstances I agree with the answer proposed by the learned Chief Justice.

Sadasiva Aiyar, J.

15. Whenever English decisions are quoted before us, 1, no doubt, receive much instruction and guidance when the decisions deal with questions of general jurisprudence, with the common law rights of the crown and the subject and with the application of universal maxims of justice, equity and good conscience to a given state of facts. But when such English decisions are quoted as deal mainly with forms of action, with the practice as to the impleading of particular parties in particular actions, with procedure in execution, with the distinctions between actions at common law and at equity, I have always felt myself going beyond my depths, even when acute and able lawyers like Mr. A. Krishna-sawmi Aiyar handle such cases with ease and confidence, and I am free to confess that I am often inclined to exhibit signs of impatience when I so feel myself unable to appreciate the-relevancy of arguments based of such cases.

16. In the present case, I am glad that I need feel no anxiety that my imperfect knowledge of English procedure and precedents might have led me into serious error as my Lord the Chief Justice has fully dealt with the English decisions quoted before us and has shown that they lend little or no support to the respondent's contention.

17. On the question of the interpretation to be placed on the language of the provisions contained in Order 21, Rules 58, 59, 60 and 63, the matter has been dealt with fully by Krishnan J, in Pokker v. Chandrakanti Kunhamma (1918) 36 M.L.J. 231 by Spencer J., in his referring order and by my Lord in the judgment now pronounced by him ; and I have nothing to add except to say that with the greatest respect, I dissent from the observations found in Ramu Aiyar v. Palaniappa Chetty I.L.R. (1911) Mad. 35 as regards the scope of Order 21, Rules 59 and 60. That when inquiring in summary proceedings held in accordance with certain statutory provisions intended for speedy disposal of (what I may call) 'emergent' disputes, the Court may be prohibited from going into complicated questions of title or investigating complicated questions like fraud, trust and so on, while giving the party defeated in the summary inquiry the right to have the whole matter and all the questions which are in dispute fully investigated in an ordinary regular suit is not at all a strange or uncommon provision of the statute-law. (See Section 9 of the Specific Relief Act, the possession chapter of the Criminal Procedure Code and the analogous provisions in the Succession Certificate Act, the Estates Land Act, etc.

18. I am therefore clear that the Court is bound to order the release of an attached property if it finds possession in the claimant on his own account, even if there is title and disposing power remaining in the judgment-debtor. Such a release is, however, not an adjudication that the decree-holder had not got the right under Section 60, C.P.C. to attach or that he could not successfully nullify the release orders in a'suit brought under Order 21, Rule 63. Under Section 60 of the Civil Procedure Code the property liable to attachment need not be in the possession of the judgment-debtor, because all saleable property, moveable or immoveable, belonging to the judgment-debtor or over which or the profits of which he has a disposing power which he may exercise for his own benefit whether the same be held in the name of the judgment-debtor or by any other person in trust for him or in his behalf can be attached. Order 21, Rules 59 and 60 however seem to make it clear that even if a trespasser is in actual possession of such property (the evidence to prove and the character of such actual possession varying of course with the nature of the property attached), the Court is bound to release the property to the extent of such possession subject to the right to attach being established in a suit under Order 21, Rule 63. In such a suit, the plaintiff-decree holder, might, of course, prove that the claimant was really not in possession notwithstanding that the court which inquired into the claim petition held the contrary (and therefore the summary order releasing the attachment was wrong) but he can also prove that the judgment-debtor, notwithstanding the trespass by the claimant had not lost his rights and that the property could therefore be attached under Section 60.

19. Mr. Krishnaswami Aiyar, as I understood him, did not dispute the proposition that a third person against whom a transaction is voidable can avoid it by an unequivocal declaration, or by unequivocal conduct disclosing that he knew of the transcation and had treated it as avoided by him, see Bijoy Gopal Mukerji v. Krishna Mahashi Debi. I.L.R.(1906) Cal. 329 If when a person is bound to avoid it by bringing a suit in a court to set it (transaction) aside (owing to a statutory law expressly or impliedly prescribing such a course as the only means of avoiding it or by his having been himself a party to the transaction sought to be avoided) and he does not to do so within the time allowed by law for such a suit, he could after the expiry of such a period, plead the voidability by way of defence is a moot question on which I prefer to reserve my opinion, notwithstanding the decision in Lakshmi Doss v. Roop Lall I.L.R. (1906) Mad. 169 (F.B.). But no such question arises in this case.

20. A rather far-fetched argument was based on the decision of the Privy Council in Phul Kumari v. Ghanshyam misra I.L.R. (1907) Cal. 202 that for purposes of the Court fees, a suit under Order 21, Rule 63, should be held to be a suit to set aside the prder on the claim-petition, as it is of the nature of an appeal in the form of a suit. That argument has been adequately dealt with (if I may be respectfully permitted to do so) by my lord and I need say.no more on that point.

21. Two other arguments which Mr. Krishnasami Iyer put forward with his usual resourcefulness might be shortly noticed. On the language of Order 21, Rule 54 which says that the attachment of immoveables in execution should be made by an order prohibiting the judgment-debtor from transferring or charging the property in any way, etc., he argued that the legislature impliedly intended that no valid attachment could be made of property which had been fraudulently (but not nominally) transferred ; as the prohibition by the attachment order addressed to the judgment-debtor alone who had no power to make a further transfer would be futile in such a state of facts and the form of the order prescribed for such a case would have been a prohibition to the fraudulent transferee from making any further transfer by himself. This ingenious argument is based on the assumption that the egislature, whilst enacting a general provision as to the form in which an order of attachment should be issued for the purpose of securing due publicity intended that the general form should take into account and contain appropriate words to cover all possible contingencies and all possible complications of facts which may arise such as the case of the creditor being entitled to avoid the transfer (by the judgment-debtor) to a fraudulent transferee under Section 53 of the Transfer of Property Act and the consequent result that so far as the creditor's remedies are concerned against the transferred property, the transfer is void though the judgment-debtor would himself be unable to transfer it again whether an attachment order is or is not issued prohibiting him from doing so.

22. A general and single form of order for proclamation to the public was provided which would be applicable to the facts of most cases and the legislature enacted that when an order is passed in such a form it shall constitute a valid attachment of the property in execution in all cases and under all circumstances, after the order is proclaimed in the prescribed manner.

23. The other argument was that the Civil Procedure Code contained no special provisions which would place a fraudulent transferee (whose transfer was avoided by a decree-holder acting under Section 53 of the Transfer of Property Act) in the position of the judgment-debtor himself so that notices of attachment, notices for settlement of sale proclamations, etc. may be issued to the fraudulent transferee instead of to the judgment-debtor or in addition to the judgment-debtor and so that the balance of sale proceeds remaining after the sale of the attached property might be paid to the fraudulent transferee instead of to the judgment-debtor and so that he might get the benefit of Section 310 and 310(A) of the Civil Procedure Code as to setting aside sales by payment within 30 days and so on. There is also no provision made for the fraudulent transferee when another decree-holder applies for rateable distribution under Section 73 to intervene and prove to the Court that that particular creditor was estopped by his conduct from treating the transfer as voidable by him also and as entitling him to rateable distribution. I am wholly unable to appreciate the argument, that the failure of the legislature to carefully look after the interest of the fraudulent transferee is a reason for holding that the decree-holder sought to be defrauded by him cannot avoid the fraudulent transfer except by a suit in which he is the plaintiff or cannot bring a suit except in a representative capacity or except in such a manner as to enable the Court to convert it into a creditor's administration suit or cannot set up in defence to a suit by a fraudulent transferee that the decree-holder had avoided the fraudulent transfer by an unequivocal act or declaration ; though the plain words of the statute law and the principles of general jurisprudence give him such rights. I must admit that I was not at all moved by the tale of the alleged hardships and inconveniences (which would result according to Mr. Krishnaswainy Aiyar) to the fraudulent transferee by the absence of such express provisions in the Civil Procedure Code. On the other hand, my sympathies are with the honest creditors and decree-holders who are the favourites of the law.

24. It must be admitted that it was unquestionably assumed in this High Court and in all the mofussil Courts before the decision in Palaniandi Chetty v. Appavu Chettiar : (1916)30MLJ565 (as pointed out in that decision itself) that the decree-holder when he is the defendant in a suit brought under Order 21, Rule 63 could in defence plead that he had avoided the fraudulent transfer either under Section 53 of the Transfer of Property Act or under general principles of jurisprudence embodied in the Statute of Elizabeth and that hence plaintiff's suit should be dismissed. Much inconvenience and hardship would result to the decree-holder if the law allowed a fraud-lent transferee plaintiff to successfully raise a purely technical demurrer to such a plea of the decree-holder, defendant.

25. The cases in which the judgment-debtors's transferee who failed in his claim petition and came in as the plaintiff in a suit under Order 21, Rule 63 may be classified as follows:

(a) Where the transferee is a mere nominal transferee ;

(b) Where he is a fraudulent transferee in possession ;

(c) Where he is a fraudulent transferee not in possession;

26. A creditor decree-holder who is in most cases a stranger cannot reasonably be expected to know of his own knowledge whether a transfer by his judgment-debtor is only fraudulent or is wholly nominal or partly nominal and partly fraudulent and whether the transferee is in possession and if in possession, whether he is so for himself or for the judgment-debtor. He would therefore usually both in the claim petition and in the suit which afterwards arises out of the order against the claimant be obliged to raise and be justified in raising alternatively all the pleas open to him and the Court which decided the claim against the claimant might, in its conclusion on each of the three points be either right or wrong. In the suit also, the Court of first instance may decide in favour of the plaintiff transferee or against him and may decide these three points rightly or wrongly (tbe right decision being of course assumed to be that he was merely a fraudulent transferee and not a mere nominal transferee) and there might be appeals and Second Appeals before the questions are finally decided rightly. That the decree-holder who bona fide pleads that the transfer is a nominal one in the alternative and who cannot be sure whether and when the defeated claimant would bring his suit and whether there would be appeals and second appeals if the transferee fails in the first stages of the suit, that he should finally after a great delay be obliged to set aside the transfer by obtaining a formal decree of court in a suit of his own before he could proceed with his execution by attachment and sale of the fraudulently conveyed property would in my opinion be a much more serious hardship on the decree-holder for no fault of his than the minor hardships and inconveniences to the fraudulent transferee mentioned by the respondent's learned vakil. As shown in one of the later decisions, he would be in a much worse position for his success in the summary claim proceedings than if he had lost in those proceedings.

27. Finally I agree both with the answer proposed by my Lord to the question referred to the Full Bench and with the propo-sitions of law laid down in support of that answer in his judgment.

Spencer, J.

28. As the judgments of my lord and of the two other learned Judges which have just been delivered are in favour of the view that I took in my order of reference, I have nothing to add beyond expressing my concurrence with them.

Seshagiri Aiyar, J.

29. Ever since the decision in Palaniandi Chetty v. Appavu Chettiar : (1916)30MLJ565 was pronounced, there has been a growing feeling in the profession that it should be reconsidered. Almost every one of my learned colleagues felt great disinclination to accept it as good law. It certainly has upset the practice which has hitherto obtained in such matters. I myself said in the decision that my conclusion was reluctantly come to. In the last paragraph of that judgment, I referred to the judgment of the Judicial Committee in Phul Kumari v. Ghanshyam Misra I.L.R. (1907) Cal. 202 as compelling me to take the view I did. In these circumstances, I am not unwilling to reconsider my decision.

30. I still hold that the judgment of the Judicial Committee, if it is regarded as a considered pronouncement, fully justifies my view. Their Lordships say distinctly that a wrong idea about the nature of the suit under Order 21, Rule 63 is prevalent and that that idea is responsible for the view taken regarding the amount of Court fee in such suits. They then point out what in their view is the true scope of suits of this description. The majority of the Full Bench have come to the conclusion that this decision should be confined to matters relating to Court fees and should not be further extended. I have felt doubts whether it is permissible for us to read a judgment of the Judicial Committee in the way suggested. But there have been precedents in this Court wherein the dicta of the Judicial Committee have been restricted to the real matter in controversy in litigation. There is also the classic pronouncement of Lord Halsbury that a judgment of the highest tribunal is only authority for the point actually decided and that the decision should not be divorced from the facts on which it was based. For all these reasons, I do not feel it necessary to adhere to the view which I took in Palaniandi Chetty v. Appavu Chetty. : (1916)30MLJ565 Upon one matter, I feel little doubt after hearing the full argument addressed to us now and that is that the scope of Order 21, Rules 58 to 63 should be restricted to an enquiry into the question of possession and should not be relied on for investigating titles to property. I fee) considerable doubt however upon the interpretation to be placed on the language of Rule 63. Even supposing that we do not accept the letter of the ruling of the Judicial Committee in Phul Kumari v. Ghanshyam Misra I.L.R. (1907) Cal. 202 it seems to me that a suit instituted by a party against whom an adverse order has been passed in a claim proceeding should be confined to litigating the title as between himself and the successful claimant. I am not, as at present advised, prepared to hold that the limitation placed upon the summary enquiry should be wholly ignored in dealing with the suit following the enquiry. The view that the result of the summary enquiry only furnishes an opportunity for ventilating every possible right in respect of the claims of parties to the inquiry seems to go further than is warranted by the language of the rules.

31. Even taking this view, the question still remains whether the language of Section 53 of the Transfer of Property Act should be read as contemplating suits by the person who alleges that the alienation is in fraud of his rights.

32. Mr. Krishnasami Ayyar did not dispute the proposition that a party who is entitled to come to Court as a plaintiff to impeach a voidable transaction is ordinarily entitled to put it forward as a defence when he is attacked. The observations in Oakes v. Turguand (1867) 2 H.L. Case 325 that an open and unequivocal declaration of intention to avoid will have as good an effect as an attaek by way of suit is as applicable to India as to England. In that view, is there any reason for construing the words ' that every transfer of immoveable property is voidable at the option of any person so defrauded, defeated or delayed' as compelling the defrauded to institute a suit? I see no sufficient reason for insisting on this view. As I said before the only real difficulty is in interpreting the decision of the Judicial Committee in, Phul Kumari v. Ghanshyam Misra (1867) L.R. 2 H.L. 325. If the result of the suit under Order 21 Rule 63 is to place the parties in status quo ante by removing the fetters placed on execution during the claim proceedings, then it stands to reason to hold that as on the date of the removal of the impediment, the transaction between the vendor and the vendee was valid interse, there was no interest of the judgment-debtor available for attachment on that date and none came into existence by virtue of the decision in the suit but if the other view that the suit under Rule 63 although based upon the result of the claim proceedings, is an independent action which is not restricted in any way by the previous enquiry is to prevail, the decisions in Palaniappa Chetty v. Appavu Chettiar : (1916)30MLJ565 and in Subramania Ayyar v. Muthia Chettiar I.L.R. (1917) Mad. 612 cannot be supported.

33. This is my answer to the reference.


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