Skip to content


Ayyamperumal Chettiar (Died) and ors. Vs. Palaniandi Chettiar - Court Judgment

LegalCrystal Citation
SubjectProperty;Civil
CourtChennai High Court
Decided On
Reported in(1958)2MLJ540
AppellantAyyamperumal Chettiar (Died) and ors.
RespondentPalaniandi Chettiar
Cases ReferredChidambaram Chettiar v. R.M.A.R.S. Firm A.I.R.
Excerpt:
.....his claim that suit may well in certain circumstances be in essence a suit under section 53 of the transfer of property act. 302..10. it is now well-settled that in a suit of this nature where on account of ignorance or misapprehension there is no prayer that the decree that may be passed should be for the benefit of all the creditors, amedment should be freely allowed even at a late stage. 11. the rule is also now well established that the court may consider whether any relief on the ground of equitable considerations or equities as they are called, should be given to the person losing the benefit of his bargain, that is, a donee, devisee, alienee or any person deriving title or claiming title through him, as the case may be, and grant such relief as the nature and circumstances of the..........in e.a. no. 441 of 1948 in o.s. no. 494 of 1945 be restored and that it shall be declared that the suit property is liable to satisfy not only the decree debt in o.s. no. 494 of 1945 but also the debts, if any, of the other creditors of the judgment-debtor, we have no evidence here regarding the existence of other creditors to defeat whose claims the alienation in question would have been made. in making this modification it must not be understood that i have come to the conclusion that there were other creditors because the evidence as at present on record shows that only the decree-holder in o.s. no. 494 of 1945 was intended to be defrauded. in addition, equities require that this decree-holder should first proceed in the first instance against the properties allotted to the father.....
Judgment:

Ramaswami, J.

1. This Second Appeal is preferred against the decree and judgment of the learned Subrodinate Judge of Tiruchirappalli in A.S. No. 31 of 1954, reversing the decree and judgment of the learned District Munsif of Kulitalai in O.S. No. 499 of 1950.

2. The facts are: The appellant plaintiff instituted O.S. No. 494 of 1945 on the foot of two promissory notes for Rs. 150 and Rs. 160, dated 5th September, 1938 and 6th March, 1939, respectively executed by one Meenakshisundaram Pillai and his undivided sons and obtained a decree against them and in execution thereof attached the suit properties. The respondent defendant claiming to be a mortgagee of the said properties from Sellathammal, the daughter of Meenakshisundaram Pillai, who in her turn claims to be the vendee from her brothers to whom it is alleged that these properties were allotted in the partition between them and their father in 1941, filed E.A. No. 441 of 1949. That claim was allowed. Thereupon the suit out of which this second appeal arises was filed to set aside that claim order and the question that arose for consideration was whether the claim order was liable to be set aside. The learned District Munsif found the partition between Meenkshi-sundaram Pillai and his sons was unfair and that valuable properties were given to the sons with a view to defeat and delay the rights of the creditors. He also found that the sons of Meenakshisundaram Pillai had transferred the properties to their sister with a view to screen the same from the creditors and that it was not a bonafide sale. He further held that the mortgage in favour of the defendant was only a make-believe affair and that no title passed to the defendant thereunder. Therefore, the learned District Munsif set aside the claim order and gave a decree to the plaintiff.

3. On appeal the learned Subordinate Judge confirmed the findings of the learned District Munsif on the facts. He writes:

The cumulative effect of the aforesaid transactions is that it was a device adopted by Meenakshi sundaram to get his valuable property out of the reach of the creditors. I am therefore not satisfied that the defendant is bonafide mortgagee of thefsuit properties for valuable consideration. I am also satisfied that he has not been in possession. Therefore the claim order in E.A. No. 441 of 1948 is liable to be set aside.

4. Again,

Though I agree with the learned District Munsif on the question of fact that the mortgage in favour of the defendant is a make-believe affair, I have to disagree with him on the point of law. It is unfortunate that the Madras decision Madina Bibi Sahiba v. Ismail Durga Association A.I.R. 1940 Mad. 789 was not brought to the notice of the learned District Munsif and therefore he was obliged to follow the ruling of the Bombay High Court, Guljar Khan v. Husen Khan : AIR1937Bom476 .

5. Therefore, he allowed the appeal and dismissed the suit. Hence this second appeal by the defeated plaintiff.

6. It is now well settled that where a suit is brought under Order 21, Rule 63, Civil Procedure Code, by an attaching creditor to establish his right to attach and bring to sale certain property by avoiding the transfer of the property on the ground that it had been made with intent to defeat his claim that suit may well in certain circumstances be in essence a suit under Section 53 of the Transfer of Property Act. The test is that if the suit is under Section 53 of the Transfer of Property Act and if the plaintiff succeeds in the action, the property claimed in the action would be available to the general body of creditors. If it would, then the action would in substance be an action under Section 53 of the Transfer of Property Act. The primary object of an action under Section 53 is to make the assets of the transferee available to the general body of creditors. Otherwise there will be multiplication of suits and collusion between the particular creditor and the judgment-debtor and disorderly distribution of the assets of the, debtor and it would become a case of 'each one for himself and the devil take the hindmost' and which it is the object of Section 53 of the Transfer of Property'Act and Sections 53 and 54 of the Provincial Insolvency Act, to prevent.

7. Therefore, when in any particular case there is only one creditor and that creditor did not know and could not know the existence of other creditors apd there is also no evidence showing the existence of a number of creditors, the suit filed for a declaration that the property sought to be proceeded against is liable to discharge that particular decree debt, need not strictly be filed in a representative capacity, because one creditor who merely resists the claim by a claimant in summary proceedings cannot be deemed to do it on behalf of other creditors. But even if the plaintiff is the only creditor, he can bring a representative suit for the benefit of or on behalf of all the creditors. Therefore, it is the duty of the trial Court to see whether the suit should be proceeded with in a representative capacity or not, apart from the fact that objection to the maintainability of the suit that it is not a suit in a representative capacity must be raised in the trial Court and not in appeal. That is why it is enjoined that amendment should be freely allowed to bring the suit in conformity with the requirements of Section 53 of the Transfer of Property Act if the Court considers that it is in substance an action under Section 53 of the Transfer of Property Act. It is then open to the Court to give a declaration which would make the property available not only for the debt of the particular creditor resisting the claim but also for the general body of creditors of the transferor.

8. These principles are deducible from the following decisions:

Jaina Muhammad Sheriff Maracalr v. Official Assignee, Madras : (1945)2MLJ318 , Seth Nandaramdas Atmaramv. Zulika Bibi : AIR1943Mad531 , Pethuraju Kone v. T. Muthuswami Ayyar : AIR1942Mad128 , Faquir Bux v. Thakur Prasad A.I.R. 1941 Oudh 457 Deokali v. Ramdevi A.I.R. 1941 Rang. 76, Shrimal v. Hiralal : AIR1938Bom289 , Girraj v. Sankatha Prasad A.I.R. 1938 Oudh 33, Ekkari Ghose v. Sideswar Ghose : AIR1936Cal783 , Nagappa v. Arunachalam A.I.R. 1934 Rang. 250 , Radhika Mohan v. Hari Bashi : AIR1933Cal812 , Ranganayakamma v. Jagayya : AIR1927Mad666 , Sri Thakurji v. Narsingh Narain Singh : AIR1921Pat53 , Puthia Purayil Pokker v. Kunhammad (1919) 36 M.L.J. 231 : I.L.R. Mad. 143, Arumuga Mudaliar v. Krishnaswami Naicker 42 Ind. Cas. 498 , Palaniyandi Chetty v. Appavu Chettiar : (1916)30MLJ565 and Waman Ramakrishna v. Ganpat Mahadeo A.I.R. (1936) Bom. 10.

9. The following two passages from the A.I.R. Commentaries on the Code of Civil Procedure, Fifth Edition, at page 2427, and A.I.R. Commentaries on the Transfer of Property Act, Third Edition, page 705, are apposite:

When a suit is brought under this Rule (Order 21, Rule 63) by an attaching decree-holder to establish his right to attach and bring to sale certain property, and in order to succeed it is necessary to avoid a transfer of the property on the ground that the transfer has been made with intent to defeat or delay the creditors of the transferor, the stiit must be brought in the form of a representative suit on behalf of or for the benefit of all the creditors of the transferor as provided in Section 53 of the Transfer of Property Act as amended in 1929 and the provisions of Order 1, Rule 8, would be applicable to such a suit....But where the decree-holder's suit under this rule seeking to avoid a transfer in favour of the claimant is not based on such transfer having been made with intent to defeat or delay the creditors of the transferor, the suit need not be a representative suit Shri Mai v. Hiralal : AIR1938Bom289 , Guljarkhan v. Husenkhan : AIR1937Bom476 , Mt. Baskuer v. Gaya Municipality : AIR1939Pat138 and Md. Asgar Ali v. Md. lshaq Ali : AIR1940All72 . Thus, where the suit is based on the allegation that the transfer put forward by the other side is a sham, bogus or fictitious transaction, the case docs not come under Section 53 of the Transfer of Property Act and the suit need not be brought in a representative character Prabhu Math Prasad v. Sarju Prasad : AIR1940All407 . The transferee and the judgment-debtor, as transferor, will be necessary defendants in a suit under this rule by a decree-holder attacking an alienation of property by the judgment-debtor in favour of the successful claimant: Harchandrai v. Gopaldas A.I.R. 1939 Sind 177. It is not necessary to implead any transferee from the successful claimant after the order in the claim proceedings and before the institution of the suit, as such transferee must be held to be an alienee pendente lite Mt. Baskuer v. Gaya Municipality : AIR1939Pat138 and Hrishikesh Sanyal v. A.P. Bagchi A.I.R. 1940 Lah. 497.

In England a creditor who has not secured a judgment on his debt has to sue on behalf of himself and of all the other creditors of the transferor. But a creditor who has obtained a judgment on his debt may sue on his own behalf and not in a representative character.

In this country there was, in cases arising under the old section, a difference of opinion on the point. In some cases it was held following the English law, tnat a creditor should sue only in a representative character : Arumugha Mudaliar v. Krishnaswami Naicken A.I.R. 1918 Mad. 697; Lala Hakim Lai v. Mooshahar Sahoo I.L.R.(1907) Cal. 999; Sri Thakurji v. Narsingh Narain Singh : AIR1921Pat53 ; Shantilal v. Munshilal I.L.R.(1932) 56 Bom. 595. In others, that this was not necessary; Puthiyapurayil Pokker v. Chandrakandi Kunhamad (1918) 36 M.L.J. 231 : A.I.R. 1919 Mad. 257; Palaniyandi Chetti v. Appavu Chettiar : (1916)30MLJ565 ; Dhansukhdas v. Zangoo A.I.R. 1920 Nag. 80 I Namsimham v. Narayana Rao : AIR1926Mad66 . In a third class of cases, it was held that a judgment-creditor whose attachment has been raised and who is suing under Order 21, Rule 63 of the Code of Civil Procedure could bring his suit otherwise than in a representative character ; R.R.O.O.Chettiyar Firm v. Ma Seinyin A.I.R. 1928 Rang 1. In Palaniyandi Chettiar v. Appavu Chettiar : (1916)30MLJ565 Coutts-Trotter, J., expressed the opinion that a judgment-Creditor who had not taken out execution could not invoke the provisions of this section at all. In Lahore to which Province this Act does not apply it was held that a suit by creditor should be brought in a representative capacity ; Sunder Singh v. Ramnath A.I.R. 1926 Lah. 167. The view that a suit under Order 21, Rule 63, by a judgment-creditor, whose attachment has been raised need not be in a representative character was followed in Lok Math v. Thakar Das 71 Ind. Cas. 20.

The last paragraph of Sub-section (1) now makes it quite clear that a suit by a creditor, whether he is a judgment-creditor or not and whether he has or has not applied for execution of decree, to avoid a transfer executed with intent to defeat or delay the creditors shall be brought in a representative capacity, that is to say, in accordance with the procedure prescribed by Order 1, Rule 8, of the Code of Civil Procedure: Jaina Muhammad v. Official Assignee, Madras : (1945)2MLJ318 . The reason of the rule is, firstly, that the debtor or the transferee should not be harassed by a multiplicity of suits, and, secondly, that the primary object of an action under this section is to make the assets of the transferor available to the general body of creditors. A view has been expressed in Budhermal v. Verharam A.I.R. 1946 Sind 78 that a creditor suing under Order 21, Rule 63, to establish his rights against the transferee from the judgment-creditor need not sue in a representative capacity.

It has been held by the Chief Court of Oudh that a creditor, who when proceeding under Order 21, Rule 63, does not know the existence of other creditors, is not bound to bring a representative suit and that it is for the defendant to object that there are other creditors and that a representative suit should be filed : Suraji Bakhsh Singh v. Thakur Das .

A suit which is not meant to be for the benefit of all the creditors is not a suit under this section and need not be brought in a representative capacityj: Radhika Mohan v. Hari Bashi : AIR1933Cal812 . So also is a suit which does not involve the avoidance of any transfer : Chidambaram Chettiar v. R.M.A.R.S. Firm A.I.R. 1934 Rang. 302....

10. It is now well-settled that in a suit of this nature where on account of ignorance or misapprehension there is no prayer that the decree that may be passed should be for the benefit of all the creditors, amedment should be freely allowed even at a late stage.

11. The rule is also now well established that the Court may consider whether any relief on the ground of equitable considerations or equities as they are called, should be given to the person losing the benefit of his bargain, that is, a donee, devisee, alienee or any person deriving title or claiming title through him, as the case may be, and grant such relief as the nature and circumstances of the particular case may require.

12. Bearing these principles in mind, if we examine the facts of this case, we find that the dismissal of the suit by the learned Subordinate Judge cannot be supported and that the amendment applied for should be allowed and that the decree and judgment of the learned District Munsif should be restored subject to the modification that the decree setting aside the order in E.A. No. 441 of 1948 in O.S. No. 494 of 1945 be restored and that it shall be declared that the suit property is liable to satisfy not only the decree debt in O.S. No. 494 of 1945 but also the debts, if any, of the other creditors of the judgment-debtor, we have no evidence here regarding the existence of other creditors to defeat whose claims the alienation in question would have been made. In making this modification it must not be understood that I have come to the conclusion that there were other creditors because the evidence as at present on record shows that only the decree-holder in O.S. No. 494 of 1945 was intended to be defrauded. In addition, equities require that this decree-holder should first proceed in the first instance against the properties allotted to the father under partition and if such properties are not available for being proceeded against, then against the properties allotted to the sons in the partition other than the property alienated in favour of the respondent before me. If no such properties are available for being proceeded against, then the property alienated in favour of the respondent should be proceeded against last for the satisfaction of the decree in O.S No. 494 o 1945. The decree-holder in O.S. No. 494 of 1945 should also proceed last against the father and the 2 sons personally as provided for in the decree and then proceed last against the alienated property.

13. In the result, the decree and judgment of the lower appellate Court are set aside and the decree and judgment of the learned District Munsif are restored subject to the two modifications set out above. In as much as this appeal has been necessitated by the appellant not framing his suit, out of abundant caution, on behalf of the' general body of creditors, each party will bear his own costs throughout.

14. C.M.P. No. 6029 of 1955 is allowed and the memorandum of cross-objections dismissed.


Save Judgments// Add Notes // Store Search Result sets // Organizer Client Files //