Skip to content


Muniappa Pillai Vs. Periasami and anr. - Court Judgment

LegalCrystal Citation
SubjectProperty
CourtChennai High Court
Decided On
Reported in(1975)1MLJ236
AppellantMuniappa Pillai
RespondentPeriasami and anr.
Cases ReferredPalanivelu v. Ousepk Mathai
Excerpt:
.....of property act. every transfer of immovable property made with intent to defeat or delay the creditors of the transferor shall be voidable at the option of any creditor so defeated or delayed. 14. thus it is clear that the suit filed has to be construed only as a suit under section 53 of the transfer of property act, that exhibit b-1 is a deed transferring the right, title and interest of the releasor in favour of the releasee and as such it comes under the definition of section 5 of the transfer of property act and that in view of section 53 of the transfer of property act, the suit filed not in a representative capacity of the body of creditors under the provisions of order 1, rule 8 civil procedure code, has to fail......1966 he filed e.p. no. 217 of 1966 for attaching the half share of the first defendant in the suit property and for selling the same. on 5th july, 1966, attachment was effected. at that stage, the appellant herein, who is the second defendant, filed e.a. no. 388 of 1966 under order 21, rule 58, civil procedure code, for raising the attachment, claiming the property as his own. this claim the appellant put forth on the basis of exhibit b-1, dated. 24th november, 1964, which is a registered release deed executed by the first defendant in favour of the second defendant after getting rs. 2,000 from the second defendant. the district munsif allowed e.a. no. 388 of 1966 holding that the release is valid and accordingly raised the attachment on 13th september, 1966.3. aggrieved by the said.....
Judgment:

P.R. Gokulakrishnan, J.

1. Second defendant is the appellant. The first defendant is the son of the second defendant; and he has-remained ex parte throughout.

2. The suit was for setting aside the order of the District Munsif, Karur, passed in E.A. No. 388 of 1966 in O.S. No. 5 of 1965. O.S. No. 5 of 1965 was a suit to recover debts due on promissory notes, filed by the first respondent herein against the first defendant in the suit, viz., second respondent herein. On 31st May, 1965 the first respondent obtained a decree for Rs. 781.28. On 22nd March, 1966 he filed E.P. No. 217 of 1966 for attaching the half share of the first defendant in the suit property and for selling the same. On 5th July, 1966, attachment was effected. At that stage, the appellant herein, who is the second defendant, filed E.A. No. 388 of 1966 under Order 21, Rule 58, Civil Procedure Code, for raising the attachment, claiming the property as his own. This claim the appellant put forth on the basis of Exhibit B-1, dated. 24th November, 1964, which is a registered release deed executed by the first defendant in favour of the second defendant after getting Rs. 2,000 from the second defendant. The District Munsif allowed E.A. No. 388 of 1966 holding that the release is valid and accordingly raised the attachment on 13th September, 1966.

3. Aggrieved by the said decision, the first respondent herein filed O.S. No. 972 of 1966 for setting aside the summary order passed in E.A. No. 388 of 1966. No doubt the prayer in that plaint was to set aside the summary order in E.A. No. 388 of 1966. But the main contention of the first respondent in the plaint was that Exhibit B-1 is a false and colourable transaction brought about to defraud the first respondent, and was not supported by any true and valid consideration.

4. The trial Court set aside the order in E.A. No. 388 of 1966 holding that Exhibit B-1 is a frauduelnt document. Aggrieved by the said decision, the second defendant preferred an appeal. The Subordinate Judge, Tiruchirapalli, dismissed the appeal. Aggrieved by the decisions of the Courts below, the second defendant has preferred the above second appeal.

5. Thiru V. Venkataraman, the learned Counsel appearing for the appellant, submitted that Exhibit B-1 is a genuine document and was bona fide executed by the first defendant in favour of the second defendant, that the suit as framed has to be construed as one filed under Section 53 of the Transfer of Property Act, and that as such the same has to be dismissed in view of the fact that it has not been filed in a representative capacity for all the creditors concerned.

6. Thiru D. K. Srinivasagopalan, the learned Counsel for the first respondent, submitted that the release deed Exhibit B-1 is a false document, that in any event the same cannot be construed as a 'transfer' of property in order to attract Section 53 of the Transfer of Property Act and that if so the suit is independent of Section 53 and as such it need not be filed in a representative capacity for all the creditors. He also brought to my notice the provisions of Section 25 (d) and Section 41 of the Court-fees and Suits Valuation Act, and submitted that the suit was merely to set aside the summary order as per the provisions of Order 21, Rule 63, Civil Procedure Code, and not for any declaration as envisaged in Section 53 of the Transfer of Property Act. Such type of suits are contemplated independent of the provisions in Section 53 of the Transfer of Property Act, by the provisions in Sections 25 (d) and 41 of the Court-fees and Suits Valuation Act.

7. The contention of Thiru V. Venkataraman, the learned Counsel appearing for the appellant, that the release deed Exhibit B-1 is valid, has been found against by both the Courts below. Thiru Venkataraman, submitted that the Courts below have not discussed Exhibits B-2 to B-7 for the purpose of coming to the conclusion that Exhibit B-1 was acted upon and that the second defendant was enjoying the property in his own right. In my opinion, I do not think it necessary to consider Exhibits B-2 to B-7 which have been brought about in quick succession after the execution of Exhibit B-1, when especially the Courts below, on a proper discussion of the evidence on record, have found that Exhibit B-1 is a void document brought about with a view to defeat and defraud the plaintiff. This is a finding of fact arrived at by the Courts below; and, as such, the finding is confirmed.

8. Thiru V. Venkataraman, the learned Counsel for the appellant, in support of his contention that the suit must be construed as one filed under Section 53 of the Transfer of Property Act, that it ought to have been filed in a representative capacity and if it is not the case, the suit has to fail, relied on the decision in Adadina Bibi Sahiba v. Ismail Durga Association : AIR1940Mad789 In that decision, a Bench of this Court, repelling the contention of the respondent in the case to the effect that Order 21, Rule 63, Civil Procedure Code, gives to a decree-holder whose attachment has been disallowed the right to have the question decided by suit and the rule must be read entirely independent of the provisions of Section 53 of the Transfer of Property Act, held as follows:

Before Section 53 of the Transfer of Property Act was amended, there was a conflict in India on the question whether a decree-holder, who was compelled to file a suit as the result of a successful objection to the attachment, was compelled to sue on behalf of himself and all the other creditors. This Court was of opinion that it was not necessary for him to sue in a representative capacity. (See Pokker v. Kunhamed (1919) 36 M.L.J. 231 : I.L.R. (1919) Mad. 143 and Ramaswami Chettiar v. Mallappa Reddiar : (1920)39MLJ350 . The decision in the latter case was that of a Full Bench. The Calcutta and the Bombay High Courts were of the opinion that it was necessary for the plaintiff to sue in a representative capacity. (See Hakim Lal v. Moashahar Sahu) I.L.R. (1907) Cal. 999 The decisions of this Court and that of the Calcutta High Court arose out of suits which followed unsuccessful proceedings in execution. The Bombay cases are Burjorji Dorabji Patel v. Dhunbai and Ishvar Timappa v. Devar Venkappa I.L.R. (1892) 16 Bom. 1 and I.L.R (1903) 27 Bom. 146. These cases did not arise directly out of execution proceedings, but the Court indicated that a suit of the nature of the present one should be brought in a representative capacity. It seems to me that the amendment of Section 53 of the Transfer of Property Act, by the insertion of the provision that a suit instituted by a creditor shall be instituted on behalf of, or for the benefit of, all the creditors must have been intended to put an end to this controversy. The words in brackets ' which term included a decree-holder whether he has or has not applied for execution of his decree' which follow the word ' creditor' in the section, in my opinion, make this clear. If this is the case the association is clearly out of Court.

But even if the question had to be decided on the reading of Section 53, without taking into consideration what has gone before, it would still be difficult to accept the association's argument. As the suit admittedly is one of the nature contemplated by Section 53 of the Transfer of Property Act, surely the provisions of that section must be applied, especially as there is nothing in the section incompatible with Order 21, Rule 63, of the Code of Civil Procedure. Section 53 does not take away from the disappointed decree-holder the right to sue. His right to sue is left unaffected. All that the section says is that he must sue on behalf of all the creditors not, for himself alone, and this implies no hardship.

The requirement of Section 53 saves the filing of unnecessary suits and saves the judgment-debtor from being harassed by other creditors. I hold that it was necessary for the association to sue in a representative capacity and that, not having done so, the suit must fail.

This decision has been followed in Nandaramdas v. Zulika Bibi : AIR1943Mad531 , and also in the latest bench decision of Ismail and Natarajan, JJ. in A.S. No. 390, of 1967 dated 26th July, 1973 Since reported in : (1974)1MLJ455 . Hence I am of the view that the suit filed without invoking the provisions of Order 1, Rule 8, Civil Procedure Code, has to fail.

9. Thiru D. K. Srinivasagopalan, the learned Counsel for the first respondent, submitted that a release is not a 'transfer' and that the suit filed cannot attract the provisions of Section 53 of the Transfer of Property Act. As per Section 53, Thiru Srinivasagopalan said:

A suit instituted by a creditor (which term includes a decree-holder whether he has or has not applied for execution of his decree) to avoid a transfer on the ground that it has been made with intent to defeat or delay the creditors of the transfer, shall be instituted on behalf of, or for the benefit of, all the creditors.

Section 5 of the Transfer of Property Act states:

'Transfer of Property ' means an act by which a living person conveys property, in present or in future, to one or more other living persons, or to himself, or to himself and one or more other living persons, and ' to transfer property ' is to perform such act.

According to Thiru Srinivasagopalan, there is no 'transfer of property' as such by the release deed since a release deed cannot be construed as a transfer of property. In support of his contention that the release deed in question, Exhibit B-1 is a sham and nominal document and as such the suit filed will not attract the provisions of Section 53 of the Transfer of Property Act, the learned Counsel cited the decision in Swaminatha Aiyar v. Rukmani Ammal (1920) 11 LW. 106 : 55 I.C. 766. Apart from the fact that that decision was rendered before the amendment of Section 53 of the Transfer of Property Act, it was held in that decision that Section 53 has no application to a sham sale deed, not intended to pass title though intended to defeat creditors and as such the deed does not require to be set aside. But, as far as Exhibit B-1 on hand is concerned, it has been alleged that it was intended to be a valid document and was brought about in order to defeat and defraud the first respondent.

10. The next case cited by Thiru Srinivasagopalan for the contention that a 'release' is not a 'transfer of property' as defined in Section 5 of the Act, is Kutchi Gawder v. Bheema Gowder : AIR1960Mad33 In, that decision, a Bench of this Court held:

A release deed would not be effective to transfer title. A release deed can only feed title but cannot transfer title. If for example, the plaintiff claims that he has acquired title to the defendant's 1/6th share in the estate by adverse possession and the defendant contests that position, a release deed by the defendant would be effective to place beyond doubt the fact of the plaintiff having acquired title by adverse possession. If two persons claim title to the same property adversely to each other, a release deed by the one to the other may be effective to complete or place beyond doubt the latter's title to the property.

The facts of the above case can be easily distinguished on the ground that there is no question of any transfer of title or interest in the property by the release deed considered in that decision.

11. The next case cited is the one reported in Kuppuswamy Chettiar v. Arumugam Chettiar : [1967]1SCR275 , In that case, the High Court considering the release deed as one transferring the title of the releasor and as such the deed has the effect of a 'conveyance' coming under the Transfer of Property Act, dismissed the suit, which was brought to set aside the release deed. In that case, the Supreme Court observed:

In the present case, the release was without any consideration. But property may be transferred without consideration. Such a transfer is a gift. Under Section 123 of the Transfer of Property Act, 1882, a gift may be effected by a registered instrument signed by or on behalf of the donor and attested by at least two witnesses. Consequently, a registered instrument releasing the right, title and interest of the releasor without consideration may operate as a transfer by way of a gift, if the document clearly shows an intention to effect the transfer and is signed by or on behalf of the releasor and attested by at least two witnesses. Exhibit B-1 stated that the releasor was. the owner of the properties. It showed an intention to transfer his title and its operative words sufficiently conveyed the title. The instrument, on its true construction, took effect as a gift. The gift was effectively made by a registered instrument signed by the donor and attested by more than two witnesses.

The Supreme Court further held:

It cannot be disputed that a release can be usefully employed as a form of conveyance by a person having some right or interest to another having a limited estate, e.g., by a remainderman to a tenant for life, and the release then operates as an enlargement of the limited estate. But in this case, we are not concerned with a release in favour of the holder of a limited estate. Here, the deed was in favour of a person having no interest in the property and it could not take effect as an enlargement of an existing estate. It was intended to be and was a transfer of ownership. A deed called a deed of release can, by using words of sufficient amplitude, transfer title to one having no title before the transfer.

Thus it is clear from the abovesaid. observations of the Supreme Curt that a deed of release has to be properly construed, whether it transfers title of the releasor in favour of the releasee. As, far as Exhibit B-1 in this case is concerned, the releasor admittedly had a half right in the suit property and the releasee had only a half right in the property. By the deed of release, the releasor after getting a sum of Rs. 2,000 from the releasee, has transferred his right, title and interest in the half share of the suit properties absolutely in favour of the releasee. In effect Exhibit B-1 cannot be construed as enlarging the limited right of the release but it has given absolute right in the half share which belonged to the releaser. Hence Exhibit B-1 has to be construed as a deed of transfer of title and as such it clearly comes under the definition of Section 5 of the Transfer of Property Act.

12. Apart from this, Thiru Venkataraman, the learned Counsel appearing for the appellant, cited the decision in Official Assignee of Madras v. T.D. Tehrani : AIR1972Mad187 . Palaniswami, J., deciding the case, has held that Section 5 of the Transfer of Property Act defines the expression 'transfer of property' as meaning an act by which a living person conveys property. The word 'convey' is used in a wider sense to include a release also. The word 'transfer' in Section 53 of the Transfer of Property Act is therefore wide enough to cover all sorts of devices that may be practised or suffered by an insolvent to deprive the creditors of the benefit of his property; any transaction by the insolvent in favour of his wife styling the document as a release may amount to a transfer within the meaning of the Act and the transaction is liable to be impugned in insolvency proceedings. Palaniswami, J., has further observed;

It is contended on behalf of the first respondent that the impugned transaction is one of release, that such a transaction cannot be called a 'transfer' within the meaning of Section 53 of the Transfer of Property Act and that, therefore, the Official Assignee is not entitled to impugn the transaction. Section 5 of the Transfer of Property Act defines the expression 'transfer of property' as meaning an act by which a living person conveys property in present or in future, to one or more other living persons, or to himself, or to himself and one or more other living persons and 'to transfer property' is to perform such act. Section 53 inter alia provides:Every transfer of immovable property made with intent to defeat or delay the creditors of the transferor shall be voidable at the option of any creditor so defeated or delayed.

Placing reliance upon the aforesaid definition of 'transfer of property' and the expression 'every transfer' occurring in Section 53, Mr. Radhakrishnan, Counsel for the first respondent, contended that release is not a 'transfer of property' within the meaning of the Transfer of Property Act and that, therefore, the impugned transaction is not hit by Section 53.

The word 'transfer' is defined in Section 5 with reference to the word 'convey'. This word in English Law in its narrower and more usual sense refers to the transfer of an estate in land; but it is sometimes used in a much wider sense to include any form of an assurance inter vivos. The definition in Section 205 (1) (ii) of the English Law of Property Act is.

Conveyance includes a mortgage, charge, lease, assent, instrument, disclaimer, release and every other assurance of property or of any interest therein by any instrument except a will.

This is a special definition adopted for the purposes of the Law of Property Act, 1925. The word 'conveys' in Section 5 of the Indian Act is obviously used in the wider sense referred to above. That was the meaning given to the word 'transfer'' occuring in Section 53 while dealing with a transaction of gratuitous remission of debt due to the debtor, in Lakshmi Ammal v. Srinivasa lyengar 37 I.C. 269 : A.I.R. 1916 Mad. 481.

The Bench observed at page 482:

The effect of a creditor voluntarily remitting the whole or a portion of a debt will be to put it out of the reach of his creditor just as much as a gift of the debt to a third person. In either case there is no consideration for the transaction and though Section 53 of the Transfer of Property Act will not apply in terms, the principle on which it is based will apply. It is not necessary under Section 53 that the transferor should reserve a benefit to himself, as gifts to a third party are as much voidable as other transfers. Supposing that the only property he has is a large sum due to him from a relation of him and that he to defeat his creditors, remits the debt, is there any principle on which the case can be distinguished from one where he makes a gift of the debt to a third person We think not. No authority has been cited for such a distinction being drawn, and it would open a wide door to fraud if the remission of a debt is placed on a different footing from a transfer.

Following this principle, it was held by Mockett, J., in Official Assignee v. Kanniah Naidu : (1935)69MLJ360 , while dealing with a case under Section 55 of the Presidency Towns Insolvency Act, that the expression ' voluntary transfer ' is wide enough to cover all sorts of devices that may be practised or suffered by an insolvent to deprive the creditors of the benefit of his property and that, as such, the remission of a debt without consideration amounts to a 'voluntary transfer' within the meaning of Section 55 of that Act. I find that though the second respondent has chosen to execute a document styling it only as a release deed in favour of his wife, the transaction amounts to a 'transfer' within the meaning of the Act and that the transaction is liable to be impugned in this proceeding.'

Thus it is clear from the above said decision that Exhibit B-1 in this case will squarely come under the definition of 'transfer' under Section 5 of the Transfer of Property Act and, as such, it has to be construed that the suit will come only under Section 53 of the Transfer of Property Act, as contended by the learned Counsel for the appellant herein.

13. No doubt Thiru Srinivasagopalan cited the decision in Palanivelu v. Ousepk Mathai : AIR1973Mad309 . That was a decision rendered by Ramamurti, J., dealing with a case of surrender by a life-tenant in favour of the remainderman. In that case, Ramamurti, J., has held that there was no transfer of property from the life-tenant and there was merely an effacement or extinguishment of the rights of the life-tenant with the result the rights of the remainderman got accelerated. I do not think that that decision will be applicable to the facts of the case on hand.

14. Thus it is clear that the suit filed has to be construed only as a suit under Section 53 of the Transfer of Property Act, that Exhibit B-1 is a deed transferring the right, title and interest of the releasor in favour of the releasee and as such it comes under the definition of Section 5 of the Transfer of Property Act and that in view of Section 53 of the Transfer of Property Act, the suit filed not in a representative capacity of the body of creditors under the provisions of Order 1, Rule 8 Civil Procedure Code, has to fail.

15. In these circumstances, the second appeal is allowed with the result the suit is dismissed. There will be no order as to costs. No leave.


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