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Abdul Majid Lebbai Vs. Papathi Ammal and anr. - Court Judgment

LegalCrystal Citation
SubjectProperty
CourtChennai High Court
Decided On
Case NumberSecond Appeal No. 880 of 1958
Judge
Reported inAIR1961Mad403; (1961)1MLJ235
ActsTransfer of Property Act, 1882 - Sections 53
AppellantAbdul Majid Lebbai
RespondentPapathi Ammal and anr.
Appellant AdvocateR. Gopalaswami Iyengar, Adv.
Respondent AdvocateN.R. Sesha Iyer, Adv.
DispositionAppeal allowed
Excerpt:
.....then such transfer would come within mischief of section 53 - in present case although sale was to discharge earlier mortgage but respondent obtained benefit for himself and retained it to detriment of his creditors - such sale came within mischief of section 53 and is not binding on appellant. - - it is also common ground that the appellant bad obtained a decree against the second respondent in s. 244 of 1955 clearly suggested that the sale was executed with a deliberate intent to frustrate the appellant and defeat and delay the creditors of the second respondent. it is no doubt well settled that if the effect of a transfer of immoveable property is only to defeat a particular creditor or to prefer a particular creditor or creditors of the transferor to another, such a transfer..........which the second appeal arises was instituted by the first respondent for a declaration that the suit property belonged to her and that it was not liable to be attached in execution of the decree in s. c. s. no. 934 of 1952 which the appellant had obtained against the second respondent. she claimed [hat she had purchased the suit property from the second respondent under a sale deed dated 23-9-1955. on 17-10-1955 in e. p. no. 392 of 1955 the appellant attached the suit property and the first respondent's claim in e. a. no. 708 of 1955 on the strength of the sale deed in her favour was rejected by the trial court. if is that order which the first respondent sought to set aside in the suit.2. the appellant's case was that the sale aforesaid executed in favour of the first respondent was.....
Judgment:

Veeraswami, J.

1. This second appeal by the first defendant is directed against the judgment and decree of the learned Subordinate Judge Tanjore, in A. S. No. 116 of 1957, which confirmed the decree of the trial court. The suit out of which the second appeal arises was instituted by the first respondent for a declaration that the suit property belonged to her and that it was not liable to be attached in execution of the decree in S. C. S. No. 934 of 1952 which the appellant had obtained against the second respondent. She claimed [hat she had purchased the suit property from the second respondent under a sale deed dated 23-9-1955. On 17-10-1955 in E. P. No. 392 of 1955 the appellant attached the suit property and the first respondent's claim in E. A. No. 708 of 1955 on the strength of the sale deed in her favour was rejected by the trial court. If is that order which the first respondent sought to set aside in the suit.

2. The appellant's case was that the sale aforesaid executed in favour of the first respondent was fraudulent find was voidable under Section 53 or the Transfer of Property Act, that it was executed during the enquiry for arrest in E. P. No. 244 of 1955 in execution of another decree which the appellant had obtained in S. C. No. 716 of 1952 against the second respondent, that the second respondent was actually living opposite to the house of the first respondent and was also related to her and that the sale should be presumed under Section 7 of the Madras Act 1 of 1955 to have been one made with intent to defeat and delay the creditors of the second respondent.

3. Although the trial court was of the view that the circumstances showed that the sale was intended to frustrate the appellant in his attempt to realise the fruits of his decrees, it nevertheless considered that the presumption under Section 7 of the Madras Act I of 1955 was rebutted by the fact that the sale was to discharge a pre-existing mortgage on the property and not to delay or defeat the vendor's creditors. The trial court, therefore, decreed the suit. The lower appellate court proceeded upon the footing that the appellant could not avail himself of the presumption under Section 7 of the said Act in the view that although the second respondent was an agriculturist till 12-4-1955, he was not an agriculturist after 28-9-1955, and agreed with the trial court that inasmuch as the sale was executed for the purpose of discharging an earlier mortgage it could not be held to be a transaction entered into with a view to defeat or delay the second respondent's creditors. In the result, the lower appellate court dismissed the appeal before it. The first defendant having lost in both the courts below has preferred this second appeal.

4. Mr. R. Gopalaswami Aiyangar, the learned counsel for the appellant, contended that the courts below went wrong in affirming the sale in favour of the first respondent. His contention was that although the sale purported to be in discharge of an earlier mortgage, inasmuch as the vendor got some benefit under the sale and retained the same to himself, the sale was one which was affected by Section 53 of the Transfer of Property Act, that the presumption under Section 7 of Madras Act I of 1955, applied to the sale and that the circumstances in which the sale was executed, far from rebutting the statutory presumption, went to support the same. It seems to me that this contention has force.

5. The sale in favour of the first respondent was for a consideration of Rs. 600 of which Rs. 522 went in discharge of an earlier mortgage of the property dated 30-6-1947. It is common ground that the second respondent received the balance of Rs. 78 before the Sub-Registrar at the time of the registration of the sale deed and had retained the benefit of that money. It is also common ground that the appellant bad obtained a decree against the second respondent in S. C. No. 710 of 1952, and had filed E. P. No. 244 of 1955 for the arrest of the second respondent in execution. The second respondent was actually arrested on 20-9-1955.

He then paid a sum of Rs. 10 and took time till 26-9-1955 for settlement of the outstanding debt due to the appellant under the decree. As I said, the sale of the suit property was executed by the second respondent in favour of the first respondent on 23-9-1955. It is true that on that date there was no subsisting attachment on the property. But the fact that it was executed after his arrest and before the adjourned date of E. P. No. 244 of 1955 clearly suggested that the sale was executed with a deliberate intent to frustrate the appellant and defeat and delay the creditors of the second respondent.

It is no doubt well settled that if the effect of a transfer of immoveable property is only to defeat a particular creditor or to prefer a particular creditor or creditors of the transferor to another, such a transfer cannot be held to be a fraudulent transfer within the meaning of Section 53, Transfer of Property Act. It has been frequently held that a transfer which defeats and delays creditors is not an instrument which prefers one creditor to another but an instrument which removes the property from the creditor to the benefit of the debtor. The test to see whether a transfer is a fraudulent transfer within the meaning of Section 53 of the Transfer of Property Act is to find out whether the debtor has retained a benefit for himself under the impugned transfer. If he has retained any benefit under a transfer, the transfer will clearly come, within the mischief of Section 53 of the Transfer of Property Act.

Now in this case it is not denied that the second respondent under the sale in favour of the first respondent retained for himself the benefit of a part of the consideration therefore, namely, Rs. 78. It does not appear that the second respondent was possessed of any other properly. In the circumstances, it seems to me that although the sale was substantially for discharging an earlier mortgage and the mortgage in fact was discharged by the first respondent, inasmuch as the second respondent obtained a benefit for himself under the sale to the extent of Rs. 78, which be could have applied in discharge of his Other debts, the sale was a fraudulent one within the meaning of Section 53 of the Transfer of Property Act

This conclusion is reinforced by the other circumstances already referred to and the particular time in which the sale was executed In my opinion, the sale dated 23-9-1955, was, therefore, viodable at the instance of the appellant and the mere fact that the bulk of the consideration for the sale went in discharge of an earlier mortgage on the very property covered by the sale did not, in any way, affect that position.

6. The second respondent in E. A. No. 117 of 1955 claimed that he was an agriculturist entitled to the benefit of Section 4 of Act I of 1955 and OK that ground prayed that the execution petition No. 116 of 1954 should be dismissed. That application was allowed by the learned District Munsif by his order dated 12-4-1955, on a finding that) the second respondent was an agriculturist entitled to the benefit of that Act. No fresh considerations appear to have been placed before the lower courts or proved by the respondents to justify the assumption that the second respondent ceased to be an agriculturist subsequent to 12-4-1955. In fact it was not disputed before me by the learned counsel for the first respondent that Act I of 1955 was applicable to the second respondent. Sub-section (1) of Section 7 of that Act states :

'Every transfer of immoveable property made by a debtor entitled to the benefits of this Act after the 1st October 1953 and before the complete discharge of his debt, shall, in any suit or other proceeding with respect to such transfer, be presumed until the contrary is proved, to have been made with intent to defeat or delay the creditors of the transferor.'

The sale deed in favour of the first respondent having been executed by the second respondent on 23-9-1955, the presumption enjoined by the above statutory provision applies to it and it has, therefore, to be deemed to be a transfer with intent to defeat or delay the creditors of the second respondent. The only way the trial court attempted to get over the presumption was by stating that the sale was to discharge an earlier mortgage.

But the fact is that the sale was not only to discharge an earlier mortgage but the second respondent obtained a benefit for himself though to the extent of only a minor portion of the consideration and retained it with him to the detriment of his creditors. On that ground and in the light of other circumstances mentioned by me, I have already held that the sale came within the mischief of Section 53 of the Transfer of Property Act. On the same reasoning it follows, therefore, that the statutory presumption applicable to the sale in question has not been rebutted.

7. Disagreeing with the courts below, I hold that the sale deed, Ex, A. 4, dated 23-9-1955, is not binding on the appellant and that the first respondent is not entitled to a decree as prayed for by her. The second appeal is allowed, the judgments and decrees of both the courts below are set aside and the suit will stand dismissed with costs throughout. But inasmuch as the first respondent had paid Rs. 522 and discharged the earlier mortgage under Ex. A. 1, the first respondent will have a charge on the suit property for that amount namely Rs. 522. In fact Mr. R. Gopalaswami Aiyangar, the learned counsel for the appellant, conceded that the first respondent is entitled to the charge. The charge in favour of the first respondent will therefore be provided for in the decree dismissing the suit. No leave.


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