Skip to content


Union of India (Uoi) Vs. Ram Peary Debi Kanoria - Court Judgment

LegalCrystal Citation
SubjectProperty
CourtKolkata High Court
Decided On
Case NumberSuit No. 851 of 1961
Judge
Reported inAIR1984Cal215,[1984]150ITR719(Cal)
ActsTransfer of Property Act, 1882 - Section 53; ;Code of Civil Procedure (CPC) , 1908 - Order 1, Rule 8 - Order 14, Rule 1; ;Income Tax Act, 1961 - Section 281
AppellantUnion of India (Uoi)
RespondentRam Peary Debi Kanoria
Respondent AdvocateP.N. Dey, Adv.
Cases ReferredKumaravelu Chettiar v. T.P. Rajaswami Ayyar
Excerpt:
- .....under the said deeds forthe benefit of the grand son and granddaughter of the said ram peary debikanoria who were beneficiaries under assaid deed of settlement. there was no consideration whatsoever for such transfer andthe said settlement were entered into safelyfor the purpose of defeating the claim of thecreditors. the said ram peary debi kanoriadied. as a result her death was recordedand the heirs and legal representatives ofthe said defendant had been substituted andbrought on the record. as such legal heirsand representatives they are under an obligation to discharge the income-tax dues of theoriginal defendant ram peary debi kanoria.the said sons had been directed to handover the said sum to the beneficiaries dineshkumar kanoria and urmila debi kanoria,the defendants nos. 4.....
Judgment:

Padma Khastgir, J.

1. Union of India filed a suit for a declaration that the two deeds of settlement both dated 22nd of March. 1957 and 25th of March, 1967 were not binding upon the creditors including the plaintiff of Smt. Rampeary Debi Kanoria.

2. The original defendant Rant Peary Debi Karioria was the widow of Ram Ballav Kanoria. For the purpose of income-tax she was assessed at Benaras previously. But since the assessment year 1952-53 she waa being assessed at Calcutta. The assessment for the year 1952-53 was completed on or about 29th March, 1957 and a sum of Rs. 1,90,000/- was included in the said assessment as undisclosed and secreted income. There were outstanding dues towards income-tax from the said Ram Peary Debi Kanoria. Full particulars had been given in para 2 of the plaint. The said Ram Peary Debi Kanoria failed and neglected to pay the said sum assessed against her.

3. During the course of assessment forthe year 1951-52 she collusively with theintent to delay or defeat the creditors including the plaintiff executed two deeds oftrust purporting thereby to convey twodifferent sums of Rs. 50,000/- to the defendant Hariram Dhurka and Shyam SundarDhurka as trustees under the said deeds forthe benefit of the grand son and granddaughter of the said Ram Peary DebiKanoria who were beneficiaries under assaid deed of settlement. There was no consideration whatsoever for such transfer andthe said settlement were entered into safelyfor the purpose of defeating the claim of thecreditors. The said Ram Peary Debi Kanoriadied. As a result her death was recordedand the heirs and legal representatives ofthe said defendant had been substituted andbrought on the record. As such legal heirsand representatives they are under an obligation to discharge the income-tax dues of theoriginal defendant Ram Peary Debi Kanoria.The said sons had been directed to handover the said sum to the beneficiaries DineshKumar Kanoria and Urmila Debi Kanoria,the defendants Nos. 4 and 5 upon attainment of the age of majority. Inasmuch asthe defendants were interested in denyingthe right, title and interest of the plaintiffthe instant suit was filed.

4. In the written statement it was stated that an appeal was preferred from the assessment year 1952-53 on 10th April, 1957 and the said appeal was disposed of on June 28. 1958. A sum of Rs. 4,90,080/- according to me defendants was wrongly and illegally assessed as purported to be undisclosed or secret income of the said Ram Peary Debi Kanoria as such Ram Peary Debi was under no obligation to pay the same to the plaintiff. According to the defendants at the time of the execution of the said two deeds of trust the original defendant No. 1 had no creditors as a result the said two deeds of settlement executed bona fide with the intention of providing for the grand children of the original defendant No. 1. Under the circumstances the suit filed by the plaintiff was vexatious, and harassing and as a result should be dismissed with cost. The following issues were raised and settled at the trial : --

ISSUES

1. Is the suit maintainable as framed?

2. Are the deeds of Settlement dated 22nd March. 1957 and registered on 25th March, 1957 void and not binding upon the plaintiff?

3. To what relief, if any, is the plaintiff entitled ?

5. The plaintiff gave evidence through Barun Kumar Chakraborty, a tax assistant in the Income-tax department who proved with the help of the demand register the taxes due and payable by Smt. Ram Peary Debi Kanoria.

6. Amar Nath Ghosal proved with the help of the demand register being Ext. 'F' which was an extract from the demand collection register.

7. Tapan Kumar Chakraborty. the Income-tax Officer gave evidence that Ram Peary Debi was an assessee of his ward and from the demand collection register he gave evidence that demands were made in respect of the outstanding dues from Ram Peary Debi Kanoria Such demands were outstanding from 1945-46 up to 1962-63 which she failed to pay. From the original assessment order Ram Peary Debi preferred an appeal but such appeal was rejected by the Appellate Assistant Commissioner. From the order itself it appeared that a sum of Rs. 20,793/- in respect of the assessment year 1952-53 remained due and payable by the said Ram Peary Debi Kanoria. Such demands, had been carried forward from year to year in the demand registers. He also proved the transfers effected by Ram Peary Debi by two deeds of trust a total amount of Rs. 1 lakh in favour of her grand children.

8. All the original documents sent to Mr. S. K. Mondal. Central Govt. Solicitor could not be traced from, his office. A demand, was made for a sum of Rs. 1,38,742.02/-During the pendency of the income-tax- proceeding the trust deeds were executed.

9. The defendants chose not to give any evidence at the trial. The plaintiff disclosed the assessment forms, order of the Appellate Assistant Commissioner as also the extracts from the demand register to substantiate its claim.

10. Section 53 of the Transfer of Property Act provides as follows : --

'53. Every transfer of immoveable property made with intent to defeat or delay the creditors of the transferor shall be voidable fit the option of any creditor so defeated or delayed.'

11. The plaintiff gave evidence that such transfers were made fraudulently with an intent to defraud the creditors, more so the income-tax department who had huge claim against the said Ram Peary Debi during that period. No evidence was given in rebuttal by the defendant. Under the circumstances there has been no dispute as to the facts. As a result in view of the evidence tendered on behalf of the plaintiff and in view of the fact that no evidence in rebuttal had been given by the defendant so the facts remain unchallenged.

12. Mr. P. N. Dey, appearing on behalf of the defendant submitted that the suit was not maintainable first of all inasmuch as according to the provisions of Section 53 of the Transfer of Property Act, it would only be attracted in a case where there had been a transfer of immovable property and where such transfer had been made to defraud the creditors that is the whole body of creditors and not a single creditor like the plaintiff, inasmuch as the plaintiff had not been able to give evidence as to the other creditors of the said Ram Peary Debi Kanoria, under those circumstances the provisions of Section 53 of the Transfer of Properly Act would not be attracted. Further he submitted that the suit was in a representative capacity and falls under Order 1, Rule 8 inasmuch as there has been no advertisement carried out by the plaintiff this suit lost its character as of a representative suit. Under the circumstances the suit was not maintain-able by the plaintiff. Mr. Dey craved reference to the case reported in (1962) 66 Cad WN 912 and submitted that no evidence had been laid and that no notice was given by the plaintiff. He further craved reference to the case reported in AIR 1943 Mad 531 and submitted that inasmuch as such a suit is for the benefit of all the creditors the procedure as laid down for a suit of representative character ought to have been followed strictly by the plaintiff. In the case reported in AIR 1943 Mad 531, Namdaramdas v. Zulika Bibi it was held :

'Positive proof of a fraudulent intent Which is a matter of mind is rarely if ever possible. The intention has in the majority of cases to be inferred from the conduct of the party and the circumstances proved. When a person who is indebted to a considerable extent and is apprehensive of further liabilities arising in the future, makes no provision for any of them, but makes a gift of the bulk of his properties in favour of a near relation, the inference is almost it resistible that he did so with an intent to defraud creditors.

A suit under Section 53, T. P. Act should be instituted on behalf of or for the benefit of all the creditors and not merely on behalf of the plaintiff alone. Therefore, where a suit is filed on behalf of the plaintiff alone and the permission of the Court to me OB behalf of or for the benefit of all the creditors is not asked under Order 1, Rule 8, Civil P. C. the sort is wrongly framed and it liable to be summarily dismissed.' The provisions of Order 1, Rule 8 are designed to save time and expense and to ensure a convenient trial of question in which a large body of persons are interested, while avoiding at the same time a multiplicity of suits and consequent harasment to parties. Much of the benefit intended by the rule and the simplicity of procedure seemed by it would be lost by construsing it to mean that the entire body of person interested in the litigation are or should be deemed to be actually parties to it.'

13. But in the case reported in : AIR1973Ker125 it was held that even if there is a single creditor fee can file a suit under Section 53 of the Transfer of Property Act to set aside a fraudulent transfer. It was further held that there need not be more than one creditor in existence for tile purpose of availing of the provisions of Section 53 of the Transfer of Property Act, Reciting therein the case reported in AIR 1930 Mad 665 where it was held that even if there was only one creditor then the act of the debtor in transferring all his property to a stranger with a view to secrete the same and defeat tile creditor would be fraudulent and such transfer could be set aside. A Division Bench of Andhra Pradesh High Court in the case reported in : AIR1965AP68 held that Section 53 would apply even where a debtor disposes of his property with the intention of defeating one single creditor. There was no distinction between a case where a transferor had a single creditor and a case where he had several creditors. Similarly in the case reported in : AIR1967Ker171 similar view was expressed by holding that the letter (sic) did not require and at the time of institution of the suit more than one creditor should be in existence.

14. So far issue No. 1 is concerned save and except pleading in the written statement that the suit is not maintainable the defendant has not stated apart from such bald statement why the suit was not maintainable as framed by the plaintiff. Under the circumstances the defendant was not entitled to urge without such pleading that the suit was not maintainable. In the case reported in AIR 1971 Assam 143 (para 10) where it was held :

'That a Court should decline to frame an issue as to maintainability of a suit in absence of specific averment in the written statement as to how and in what circumstances the same is not maintainable in law. A mere vague recital in the written statement, without anything more, cannot be the basis for raising such an issue. Issues are framed for a right decision of the case with an object to pinpoint the real and substantial points of difference between the parties specifically and unnambiguously emerging out of the pleadings. Vague issues, suggested in a mechanical way, should not be framed to keep the door open for astute casuistry as a soft proceeds at different levels leading inevitably to the law's delay. The Court has to own its own responsibility in framing issues.'

15. So far Mr. Dey's submission that no notice had been served of the suit having been filed in the representative capacity under Order 1, Rule 8 is concerned in the case reported in AIR 1925 Cal 547, Abdul Hakim v. Abdul Gani it was held:--

'That issuance of a notice under the rule is not a mere matter of formality but the wording showed that it was the duty of the Court to cause the service of the notice of the publication of the advertisement, on being moved for that purpose, Under the circumstances in a case where such notice bad not been given the suit could net be dismissed on account of the failure of the Court to perform its own duty.'

16. In the case reported in AIR 1933 PC 183, Kumaravelu Chettiar v. T.P. Rajaswami Ayyar where it was held that when permission under Order 1, Rule 8 is granted and on such permission being given it becomes the imperative duty of the Court to direct notice to be given to the absent parties. Under the circumstances it was contended on behalf of the plaintiff that in the absence of the notice being given by the Court the plaintiff's suit should not be defeated in the absence of such notice being published or given.

17. The principle as laid down in Section 53 of the Transfer of Property Act had also been extended to cases of an assignment of a decree on the principle of justice, equity and good conscience. The same principle was also made applicable in cases of transfer of moveables by some High Courts. Apart from that Section 281 of the Income-tax Act which provides :--

'281.(1) Where during the pendency of any proceeding under this Act or after the completion thereof, but before the service of notice under Rule 2 of the Second Schedule, any assesses creates a charge on, or parts with the possession (by way of sale, mortgage, gift, exchange or any other mode of transfer whatsoever) of, any of his assets in favour of any other person, such charge or transfer shall be void as against any claim in respect of any tax or any other sum payable by the assessee as a result of the completion of the said proceeding or otherwise :

Provided that such charge or transfer shall not be void if it is made--

(i) for adequate consideration and without notice of such proceeding or, as the case may be, without notice of such tax or other sum payable by the assessee; or

(ii) with the previous permission of the Income-tax Officer.

(2) This section applies to cases where the amount of tax or other sum payable or likely to be payable exceeds five thousand rupees and the assets charged or transferred exceed ten thousand rupees in value.

Explanation : In this section, 'assets' means loans, building, machinery, plant, shares, securities and fixed deposits in banks, to the extent to which any of the assets aforesaid does not form part of the stock in trade of business of the assessee.'

18. Moreover the defendant did not plead or give any evidence to indicate that the said Ram Peary Debi had other, creditors. The question whether there are other creditors besides the plaintiff is a question of fact of a particular case and unless there is any proof that there are other creditors the defence that the suit is liable to be dismissed inasmuch as no notice had been served as such the suit could not be held for and on behalf of the body of the creditors is untenable. In any event in view of the provisions as contained in Section 281 of the Income-tax Act, the plaintiff is entitled to claim the relief as prayed for. Under the circumstances in view of the facts and circumstances of the case this Court answers the issues in the manner following:--

Issue No. 1 in the affirmative. Issue No. 2 in the affirmative. So far issue No. 3 is concerned this Court passes a decree in terms of prayers (b) and (f).


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