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Kottarathil Puthiyapurayil Pokker Vs. Balathil Parkum Chandrankandi Kunhamad, and ors. - Court Judgment

LegalCrystal Citation
SubjectCivil;Property
CourtChennai
Decided On
Reported in51Ind.Cas.714; (1919)36MLJ226
AppellantKottarathil Puthiyapurayil Pokker
RespondentBalathil Parkum Chandrankandi Kunhamad, and ors.
Cases ReferredHakim Lal v. Mooshahar Sahu I.L.R.
Excerpt:
.....transferee in good faith. 15. as the provisions in the statute of elizabeth and section 53 of the transfer of property act are practically the same, we may well adopt the english rule as a whole, but without giving any further scope to it either by allowing objections to the form of the suit being taken in appeal for the first time or by dismissing the suit because it is not in a representative character. the wording of section 53 itself gives the right to each individual creditor who has been defeated or delayed, a right to treat as voidable at his option, a transfer that falls within it. 25. in this case however the decree of the lower court can be supported on a much narrower ground as well; for the plaintiff here is not merely a creditor but an attaching decree-holder who was the..........or otherwise.' there is nothing to show that their lordships meant by a properly constituted suit a representative suit; they do not say so. the facts of the case show that proper allegations had not been made and proper parties, viz., the transferors, had not been joined to enable the court to set aside chutterpur's private purchase as fraudulent the observation referred to is apparently connected with these circumstances. i am there fire not able to treat it as an authority on the point before us.22. the observations in the next calcutta case on page 1006 is no doubt in point in appellant's favour; but as the decision in the case was that the conveyance was a valid one and not liable to be set aside under section 53 of the transfer of property act they are in the nature of obiter.....
Judgment:

Ayling, J.

1. In this case the Lower Appellate Court seems to me to have erred in supposing that unless the contested sale-deed, Exhibit V, is merely a sham transaction, the present suit is not maintainable. The ruling quoted, Palaniandi Ghetty v. Appavu Chettiar : (1916)30MLJ265 if examined, does not support such a view; nor does the later Full Bench ruling Subramania Iyer v. Muthia Chettiar I.L.R. (1917) M. 612 : 33 M.L.J. 705 which considered the same question, and to which I Was a party.

2. What was decided in these cases was this : that, where the validity of an alienation is impugned on the ground that it offends against Section 53 of the Transfer of Property Act, that alienation must be upheld until it is set aside in proceedings properly instituted for the purpose. The exact nature of the proceedings which should be instituted was not determined. In Palaniandi Chetty v. Appavu Chettiar : (1916)30MLJ265 Coutts Trotter, J., expressed the opinion that a creditor suing to set aside an alienation on this ground, must do so on behalf of all creditors, unless (as in the case before us) he was a judgment creditor who had taken attachment in execution of his decree. This view was dissented from by the other learned Judge, Seshagiri Aiyar, J., and the Full Bench expressly left the point undecided. No other light is thrown on the nature of the proceedings by either judgment.

3. What we have therefore to consider is whether the present suit should be treated as one properly instituted for the purpose of setting aside the assignment deed, Exhibit V.

4. It was brought by plaintiff under Order 21, Rule 63 Civil Procedure Code. 1st defendant had preferred a claim to the property attached by plaintiff, based on Exhibit V, which had been allowed under Order 21 R, 60. Plaintiff therefore brought this suit, as he was bound to do by Order 21 Rule 63, to establish the right which he claimed of bringing the property to sale, as that of his judgment-debtor's.

5. Whether it was the judgment-debtor's property or not depends solely on whether Exhibit V be upheld or set aside. The suit directly raises, and actually turns upon, the validity of the assignment by Exhibit V : and in my opinion, it must be regarded as one properly instituted to set aside that transaction. That the plaint only asks in terms for a declaration that the property is liable to sale in execution of the decree is immaterial. The form the suit has taken is determined by the peculiar position held by plaintiff. The law declares that an attaching decree-holder against whom the claim of a third party is allowed must sue within a year of the date of the order to establish his right; failing which the latter is extinguished. It puts him on a specially unfavourable position as regards limitation as compared with an ordinary creditor; but on the other hand in prescribing the exact nature of his remedy, it frees him from any other restrictions as to the nature of the suit to be brought which the latter may labour under. It seems to me impossible to hold that, as appellant's counsel contends, he is bound to bring two suits, one in his individual capacity under Order 21 Rule 63 to save himself from limitation, and another as a representative of the whole body of creditors impugning the validity of the alienation.

6. Quite apart from the provisions of Order 21 Rule 63, the exceptional position of a judgment-creditor is generally recognized even in English Law : vide 15 Halsbury 89. In Palaniandi Ghetty v. Appavu Chettiar : (1916)30MLJ565 Coutts Trotter, J., points out the distinction; and although it was ignored by the learned Judges in Hakim Lal v. Mooshahar Sahn I.L.R. (1907) Cal. 999 this may have been because the point was not raised and the decision of the case proceeded on altogether different grounds. Our attention has been drawn to no case in which a suit by an attaching judgment-creditor was dismissed simply because it was not brought in a representative capacity.

7. Whether an ordinary creditor who seeks to set aside an alienation as infringing Section 53 of the Transfer of Property Act must sue in a representative capacity we are not called upon to say. I must not be understood to hold that he is under any such obligation.

8. The present suit is, in my opinion, certainly not liable to dismissal on account of any defect of form; and on the concurrent findings of fact arrived at by both the lower Courts, plaintiff is entitled to a decree. I can see no ground for questioning these findings or for holding that defendants should have been allowed further opportunity of adducing evidence.

9. I would therefore dismiss the Second Appeal with costs.

Krishnan, J.

10. I agree with my learned brother that this Second Appeal fails. But as the point raised by the appellant's Advocate, Mr. Shenai, as to the necessity of bringing a representative suit under Section 53 of the Transfer of Property Act is an important one and has been argued at some length before us, I shall add a few words.

11. Both the Lower Courts found on the evidence in the case that Exhibit V, the sale-deed in favour of the appellant was intended to defeat the vendor's creditors of which plaintiff was one and that the appellant was not a transferee in good faith. The Subordinate Judge went further and found that the sale was a sham or colorable transaction which was void and did not require to be avoided. This last finding has been attacked before us and it is difficult to support it on the facts of the case, But in my view, it is an unnecessary finding and may be ignored, as the sale-deed was properly treated as unenforceable against the plaintiff on the other two findings.

12. It was however argued by Mr. Shenai that a creditor was not entitled to avoid'a transfer under Section 53 of the Transfer of Property Act unless he had brought a representative suit on behalf of all the creditors and got a decree setting aside the deed. He contended that as this was not such a suit, we must ignore the findings as to the fraudulent character of Exhibit V and treat it as in force and dismiss the plaintiff's suit. The result of his contention if adopted will be that we should be driven to uphold a sale-deed which has been proved to be fraudulent and voidable at plaintiff's option and enforce it against him simply because he has not brought what is called a representative suit. Such a result seems somewhat startling but Mr. Shenai contended that this proposition was supported by decided cases both in this country and in England; we must therefore examine the authorities relied on. It is conceded that there is no statutory rule on the point.

13. Mr. Shenai relied in the first instance on the English rule regarding cases under thS statute of Elizabeth, 13 Elizabeth Chap. 5; the provisions of that statute are practically the same as that of Section 53 of the Transfer of Property Act on this point. The English rule, as stated in Halsbury's Laws of England, Vol. XV, page 89, is as follows: 'In an action to set aside an alienation under the statute a creditor, should sue on behalf of himself and all other creditors of the. grantor except where he has recovered judgment for his debt, in which case he can obtain an order declaring the alienation as void against him and containing consequential directions for the satisfaction of his debt alone, without mention of any other creditors or their debts,'

14. As pointed out by Coutts Trotter, J., in Palaniandi Chetty v. Appavu Chettiar (1916) 30 M.L.J. 555 the equity Courts used to insist that after getting a judgment in his favour, the creditor should sue out a writ of Fi fa or elegit before seeking their help to set aside a deed of transfer in equitable execution of his decree. If we adopt the rule in the restricted manner with the exception as above stated, the present suit will be a validly constituted one as it is by a judgment-creditor who has attached immoveable property, which corresponds in a general way to suing out the writ of elegit. Apart from that, it has not been shown that the rule itself was ever used for the purpose of dismissing a suit by a single creditor. No authority has been cited where such a procedure was followed in England. The cases cited in support of the rule, viz., Bott v. Smith (1857) 52 English Reports, 957 Be Mouat (1899) 1 Ch. 831 Cornish v. Clark (1872) L.R. 14 Eq. 184 Ideal Bedding Go. v. Holland (1907) 2 Ch. 157 and Reese, River Silver Mining Go. v. Atwell (1869) L.R. 7 Eq. 347 when examined, show either that the suit was brought by the plaintiff himself on behalf of all the creditors or as happened in the last case cited, the suit was allowed to be amended for the purpose in the trial Court. On the contrary in the case of Re, Maddever--Three Towns Banking Go v. Maddever (1881) 27 Ch. D. 523 though the suit was by a single creditor, no objection was apparently taken as to its form but the decree gave as a matter of form a declaration that the conveyance in question was void against the plaintiff and all other, if any creditors of the debtor. It seems to me therefore that even in cases of ordinary creditors, where the rule applied and not the exception, suits were not dismissed for not being Brought on behalf of all the creditors, but were allowed to be amended in the trial Court or wfyere the transfer was to be set aside, a decree was passed setting it aside on behalf of all the creditors.

15. As the provisions in the statute of Elizabeth and Section 53 of the Transfer of Property Act are practically the same, we may well adopt the English rule as a whole, but without giving any further scope to it either by allowing objections to the form of the suit being taken in appeal for the first time or by dismissing the suit because it is not in a representative character. As pointed out by Coutts Trotter, J., in the case in Palaniandi Chetty v. Appavu Chetty : (1916)30MLJ565 already cited, the rule has already been, to some extent, adopted in India.

16. There are indications in the Indian Law to show that a creditor may bring a suit under Section 53 of the Transfer of Property Act in his individual character without joining the other creditors or suing on their behalf. The wording of Section 53 itself gives the right to each individual creditor who has been defeated or delayed, a right to treat as voidable at his option, a transfer that falls within it. He has not got to exercise his option in conjunction with his co-creditors. He thus gets a cause of action for himself and there is nothing in the Code of Civil Procedure to prevent him from seeking relief by himself.

17. Again it would seem from the wording of the form of the decree under the Civil Procedure Code in a suit to set aside a transfer in fraud of creditors, see form No. 13, first schedule of Appendix D, a suit to which all the creditors are not parties either personally or otherwise is contemplated; for the form of the decree in Be Maddever's case above cited, is adopted. The use of the words ' if any' shows that all the creditors are not before the Court.

18. I am therefore of opinion that there is no rule either in the English or in the Indian Law, justifying the dismissal of a suit-brought under Section 53, Transfer of Property Act, because it is not brought in a representative capacity. To avoid the difficulty of multiplicity of suits pointed out by Coutts Trotter, J., in Palaniandi Chetty v. Appavu Chetty : (1916)30MLJ565 . I think the trial Court may, of its own motion, and should if moved by the transferee defendant, direct that a suit by a single creditor under Section 53, Transfer of Property Act should be amended so as to make it a suit on behalf of all the creditors, as was directed to be done in Ishvar Timappa v. Devar Venkappa I.L.R. (1902) B. 146. The Court should also take care when passing a decree setting aside a transfer, even in a single creditor's suit, to adopt the form No. 13 in Appendix U above referred to. But if a suit had been proceeded with, without any objection being taken to its form on the ground of its not being on behalf of all the creditors and a decree had been passed setting aside a transfer as fraudulent, it seems to me that there is no justification for allowing such an objection to be raised for the first time in appeal or for ignoring the findings arrived at by the Lower Court and dismissing the suit as not being of a representative character. Such a course will make the Court really an instrument for the support of a proved fraud.

19. I shall now refer to the Indian cases relied on by Mr. Shenai. To start with, he relied on the Madras cases reported in Palaniandi Chetty v. Appavu Cketty : (1916)30MLJ565 and in Subramania Ayyar v. Muthia Chettiar I.L.R. (1917) M. 612 : 38 M.L.J. 705. The latter case is a Full Bench decision. The point decided in both these cases was that a defendant to an action cannot plead in defence, his right to avoid a transfer under Section 53 of the Transfer of Property Act; and that if he wishes to exercise his option under that section he can do so only as a plaintiff and not as a defendant. If this question were res-integra I should find some difficulty in adopting this view. But it is not necessary to discuss it as the question before us now is quite different. The creditor here is not seeking to set up his right as a plea in defence but he has come to Court as a plaintiff and the question raised is whether he should do so in a representative suit only. On that question I consider that neither case is an authority. In the judgment in the Full Bench case, this question has been expressly excluded from consideration. No doubt there is an observation in it that the sale should be set aside ' in proceedings properly instituted for the purpose'. There is, however, no indication in the judgment what these proceedings are and as my learned brother who made the observation considers that the present suit is such a proceeding, it cannot be relied on as an authority against the respondent.

20. If the 30 Mad. L.J. case is examined it will be found that Seshagiri Aiyar, J., definitely ruled that no representative suit was necessary. The view of Coutts Trotter, J., on the point is not quite clear; but it seems to be that a representative suit is necessary except in the case of attaching decree-holders. The difficulty in understanding his view arises from the fact that he apparently overlooked that the case before him was that of a decree-holder who had not only attached property but had obtained an order in his favour in the claim petition. From his judgment it would appear that he would have supported the decree in the case if he had not treated it as one of a mere decree-holder. However that may be, if the learned Judge is to be taken as holding that a creditor's suit should be dismissed in second appeal if it is not brought in a representative capacity, with all respect, I am unable to follow him. I am inclined to agree with the view of Seshagiri Aiyar, J., on this point though I am doubtful about his view as to the applicability of Section 11, Expl. VI of the Civil Procedure Code; for in a case which ends in favour of the transferee, it may be difficult to hold that the creditors who were no parties to the suit are also barred from disputing the validity of the transfer.

21. The other cases relied on by Mr. Shenai are Burjorji Dorabji Patel v. Dhunbai I.L.R. (1891) Bom. 1 Ishioar Timappa v. Devar Venkappa I.L.R. (1902) Bom. 146 Hakim Lal v.Mooshahar Sahu I.L.R. (1907) Cal 999 and Chatterput Singh v. Maharaj Bahadur (1904) I.L.R. 32 Cal. 193 (P.C.). The last one is a Privy Council ruling and the observation relied on is on page 217: ' such an issue could be raised and such a decree could be made only in a suit properly constituted for that purpose and this suit was not so constituted either as to parties or otherwise.' There is nothing to show that their Lordships meant by a properly constituted suit a representative suit; they do not say so. The facts of the case show that proper allegations had not been made and proper parties, viz., the transferors, had not been joined to enable the Court to set aside Chutterpur's private purchase as fraudulent The observation referred to is apparently connected with these circumstances. I am there fire not able to treat it as an authority on the point before us.

22. The observations in the next Calcutta case on page 1006 is no doubt in point in appellant's favour; but as the decision in the case was that the conveyance was a valid one and not liable to be set aside under Section 53 of the Transfer of Property Act they are in the nature of obiter dicta. It was also pointed out to us that the learned Judges had not noticed the exception recognized in the English Law to the general rule in favour of the attaching decree holder, though the case before them was one of such a decree-holder. With every respect I am unable to follow their view that a suit under Section 53 of the Transfer of Property Act is liable to be dismissed if not brought in a representative capacity. They have also not, expressed a definite opinion whether the objection should be allowed to be raised for the first time in appeal, though they were apparently inclined to hold that it should not. As I have already stated 1 am also of the same opinion that it should not be allowed.

23. I have already referred to the case in Iswar Timappa v. Devar Venkappa I.L.R. (1902) B. 146 and I am in agreement with the learned Judges there that suitable amendments may be directed by the trial Court to make a suit brought by a single creditor under Section 53 of the Transfer of Property Act, a representative suit. The actual decision in that case was that a creditor who has not obtained a decree in his favour is nevertheless entitled to sue under that section. In the case in Burjorji Dorabii Patel v. Dhunbai I.L.R. (1891) B. 1 the suit was not dismissed on the ground of its not being a representative suit, though no doubt the learned Judge was of opinion, that the suit was liable to be dismissed on that ground. This opinion however was really only an obiter dictum, for it was found by him that plaintiffs were claiming under the transferor himself and could not therefore impeach his transfer. It was not a case of creditors at all and was not under Section 53 of the Transfer of Property Act as the act did not then apply to Bombay. As already pointed out, the English authorities the learned Judge follows, do not show that the suit should be dismissed if not brought in a representative character. I do not therefore consider that this case which, it will be noted, is the decision of a single Judge is an authority against the view I am taking and which I should follow.

24. I have thus for the reasons, above stated come to the conclusion that even looking upon plaintiff as no more than an ordinary creditor of the vendor, the appellant's contention that we should now dismiss his suit should be overruled. In my view the Subordinate Judge was wrong in allowing the point to be raised for the first time in appeal.

25. In this case however the decree of the Lower Court can be supported on a much narrower ground as well; for the plaintiff here is not merely a creditor but an attaching decree-holder who was the defeated party in a claim petition filed by the transferee defendant under Order 21, Rule 60, C.P.C., I have already pointed out that adopting the English rule he will have as attaching decree-holder, a personal right to sue by himself to avoid the transfer. Again as the defeated party in a claim petition, he has a statutory right of suit given to him under R, 63 and that suit must necessarily be one brought by himself alone and is not a representative suit. Under that rule he can sue to establish the right which he claims to the property in dispute and that right is that it can be attached and sold for his decree. The present suit is exactly that suit and it cannot therefore be defeated by any rule of practice which has no statutory basis. Asit is necessary to find whether Exhibit V is valid against him to give him the relief claimed, the Court, I think, was bound to decide that question and he could not be referred to another suit for the purpose. In fact the suggestion of the appellant's counsel that after bringing this suit plaintiff should have at once launched another suit of a representative character to set aside Exhibit V and get a stay of this suit pending that suit if he wanted to save it from dismissal does not seem to me to be at all reasonable nor the course proposed necessary; it is perhaps even impracticable; I do not see why plaintiff should be driven to bring 2 suits for the same purpose. To hold that plaintiff cannot get the deed set aside except in a representative suit, will be a practical denial of his statutory right of suit; a suit which he has to bring as pointed out by my learned brother, within one year at the risk of losing his right to attach the property if he does not do so.

26. The only case cited to us which was a case of an attaching decree-holder defeated in a claim petition suing, is the one in Hakim Lal v. Mooshahar Sahu I.L.R. (1907) Cal. 999 already referred to. But in that case the learned Judges did not consider his special and peculiar right to sue in his own name under Rule 63. I have already stated that I am unable to follow their view as to the character of the suit to be brought, under Section 53. It is therefore no authority against the respondent.

27. I agree with my learned brother that the appellant's contention that the present suit should be dismissed because it was not a representative suit on behalf of all the creditors, fails, and that the Lower Courts were right on their findings in holding that Exhibit V was not valid against the plaintiff and in giving relief on that footing.

28. I agree the Second Appeal should be dismissed with costs.


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