Skip to content


St. A.M. Palaniappa Chettiar Vs. Kuttayan Chettiar and ors. - Court Judgment

LegalCrystal Citation
SubjectProperty
CourtChennai
Decided On
Reported in(1937)2MLJ865
AppellantSt. A.M. Palaniappa Chettiar
RespondentKuttayan Chettiar and ors.
Cases ReferredVenkanna v. Official Receiver
Excerpt:
- - the lower court has found that there is no substance in this plea and that the transactions are bona fide very detailed and elaborate evidence has been adduced to show that consideration passed and it had been subjected to close scrutiny and we must hold that the eighth defendant has signally failed to make out his contention. 2. under section 53 of the transfer of property act, in addition to consideration, good faith is an essential condition of the validity of the transfer. but it is not sufficient to show want of good faith on the part of the transferor alone;.....detail the course of this litigation, for, it is sufficient to state that the privy council by the decree passed in june, 1921, awarded the eighth defendant a third share and the other members of the coparcenary the remaining two-thirds, and remitted the case to india for the passing of the final decree. there was a direction in the final decree that was ultimately passed in 1924, that the other members of the family were to pay the eighth defendant a considerable sum for mesne profits. the mortgages to which the present appeals relate, were executed in october, 1921, that is to say, soon after the preliminary decree made by the judicial committee and long before the final decree was passed. as already stated, the mortgagors became entitled to a two-thirds share in the family property.....
Judgment:

Venkatasubba Rao, J.

1. We have heard Mr. Sesha Aiyangar fully and do not propose to call on the respondents. The suits have been brought to enforce certain mortgages granted on behalf of a joint family by one Muthukaruppa and his son the first defendant, the adult members thereof. The eighth defendant is Muthukaruppan's son by another wife and there was a partition suit filed by him against the other members of the coparcenary about the year 1909. It is unnecessary to describe in detail the course of this litigation, for, it is sufficient to state that the Privy Council by the decree passed in June, 1921, awarded the eighth defendant a third share and the other members of the coparcenary the remaining two-thirds, and remitted the case to India for the passing of the final decree. There was a direction in the final decree that was ultimately passed in 1924, that the other members of the family were to pay the eighth defendant a considerable sum for mesne profits. The mortgages to which the present appeals relate, were executed in October, 1921, that is to say, soon after the preliminary decree made by the Judicial Committee and long before the final decree was passed. As already stated, the mortgagors became entitled to a two-thirds share in the family property under the judgment of the Privy Council and it is this two-thirds share that has been made the subject of the mortgages in question. The contest in the present appeals is between the plaintiffs, that is, those claiming from the mortgages on the one side and the eighth defendant on the other. The contest arises' in this way. In execution of his decree for mesne profits, the eighth defendant had attached the mortgaged properties and on that account he has been impleaded as a party to the present actions. He now raises the plea that the mortgages were executed with intent to put the property out of his reach and that they are on that ground void as against him. The lower Court has found that there is no substance in this plea and that the transactions are bona fide Very detailed and elaborate evidence has been adduced to show that consideration passed and it had been subjected to close scrutiny and we must hold that the eighth defendant has signally failed to make out his contention. Much of the evidence is documentary and has been fully adverted to in the lower Court's judgment. As we agree with its view that consideration passed, we do not propose to give our reasons in any detail.

2. Under Section 53 of the Transfer of Property Act, in addition to consideration, good faith is an essential condition of the validity of the transfer. But it is not sufficient to show want of good faith on the part of the transferor alone; the know ledge and intention of the transferee are the determining factors. This being so, granting that the mortgagors' intention to defraud has been proved, there is nothing in the evidence to justify the suggestion that the mortgagees were also parties to the fraud.'

3. There is yet another matter which has been lost sight of. In the case of each of these mortgages, it was granted in satisfaction either wholly or substantially of a pre-existing debt. In other words, the transferees were not third parties but the mortgagors' creditors. A fraudulent preference can be attacked under the Bankruptcy Law but not under Section 53 of the Transfer of Property Act. This proposition has been very tersely stated in the judgment of Lord Wrenbury in Musabur Sahu v. Hakim Lal (1915) 30 M.L.J. 116: L.R. 43 IndAp 104: I.L.R. 43 Cal. 521 . So long as the question does not arise under the law of bankruptcy, the transfer made in favour of one or more creditors cannot be impeached, for, what Section 53 prohibits is, not an instrument which prefers one creditor to another, but an instrument which removes property from the creditors for the benefit of the debtor. So long therefore as a transfer is in satisfaction of genuine debts and without reservation of any benefit to the debtor, no ground for im-peaching it arises. Lord Wrenbury quotes a passage (which we need not reproduce) from the judgment of Palles, C.B., in Moroney, In re (1888) 21 Jr. 27 which states the principle on which this rule is based (see also Venkanna v. Official Receiver, East Godavari (1934) 68 M.L.J. 57). Although the lower Court has not viewed the present cases in this aspect, its' judgment can be supported even on this short ground.

4. Two minor matters now remain. The argument based on the doctrine of lis pendens, as the lower Court points out, has no application. Nor is there any substance in the contention, that a charge has been created over the properties in question for the mesne profits awarded.

5. In the result, the decrees of the lower Court are confirmed and all the four appeals are dismissed with costs. We make an order fixing the costs as follows: A consolidated sum of Rs. 525 (both for fees and out-fees) in Appeal No. 402 of 1931 and a similar sum of Rs. 110 in each of the three other appeals Nos. 44, 45 and 46 of 1932.


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