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Allahabad High Court · body

1983 DIGILAW 471 (ALL)

Phoolan Devi v. Surendra Prakash

1983-07-22

N.N.MITHAL

body1983
JUDGMENT :- This is a defendants Second Appeal in a suit filed by plaintiff-respondent No. 1 under Order 21, Rule 63 C.P. C. 2. Briefly stated, the facts which emerge are that the plaintiff-respondent had filed a suit for the recovery of various loans advanced to respondent No. 2 during 1963 to 1966. Suit No. 17 of 1969 was filed by the plaintiff respondent for the recovery of the amount due under the said loans which was decreed. In execution of that decree, the disputed property was attached on 2-2-1970. This prompted the appellant, who is the wife of respondent No. 2, to file an objection under Order 21, Rule 58 C.P. C. contending that her husband (the judgment debtor) had nothing to do with the property and she was the owner in possession thereof in her own right. This objection was allowed in July 1971 and thereafter the plaintiff-respondent instituted Suit No. 21 of 1971 purporting to be under Order 21, Rule 63 C. P. C. as it then was. 3. The respondent No. 2 did not put in appearance and the suit proceeded ex parte against him. In spite of hot contest by the appellant on a variety of grounds, the suit was ultimately decreed on 30-4-1973. The appeal filed by her resulted in failure on 17-4-1974. Hence, the present Second Appeal. .4. According to the appellant her husband, respondent No. 2 had first executed an unregistered deed of gift in her favour on 9-6-1956. Thereafter, a second gift deed was executed in her favour on 13-9-1966, this time it was a registered one. The Courts below have taken the view that the gift-deed was a sham and fictitious document and was designed to deprive the creditors of their means of recovering the money due from respondent No. 2. Both the Courts below have recorded concurrent findings in this respect. 5. The only question of law which survives for decision by this Court is whether the suit of the plaintiff was not maintainable for his failure to take steps under Order 1, Rule 8 C. P. C. It is contended that this suit is basically one under Section 53 of the Transfer of Property Act which required that the same ought to be filed for the benefit of the entire body of creditors. On this premise, it is further urged that since there were other creditors also, the suit by plaintiff alone was bad. Reliance was placed by the appellant on a Supreme Court decision in Abdul Shukoor Saheb v. Arji Papa Rao, AIR 1963 SC 1150 while the respondents seek to retrieve the situation by relying on a single Judge decision of this Court in Roshan Lal v. Ramji Lal, 1964 All LJ 1079 in which the above Supreme Court decision was not noticed. Before considering these cases it would be proper to see what Sec. 53 provides. Section 53 of the Transfer of Property Act as amended in 1929, reads as under : "53 (1) Every transfer of immoveable 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. Nothing in this sub-section shall impair the rights of a transferee in good faith and for consideration. Nothing in this sub-section shall affect any law for the time being in force relating to insolvency. 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 transferor, shall be instituted on behalf of, or for the benefit of, all the creditors. (2) Every transfer of immoveable property made without consideration with intent to defraud a subsequent transferee shall be voidable at the option of such transferee. For the purposes of this sub-section, no transfer made without consideration shall be deemed to have been made with intent to defraud by reason only that a subsequent transfer for consideration was made." 6. This Section, while safeguarding the rights of transferees in good faith and for consideration empowers the creditors to avoid any transfer of immoveable property made by the debtor with intent to defeat or delay the creditors. It, however, requires that such a suit must be instituted either in a representative capacity or for the benefit of all the creditors. 7. This Section, while safeguarding the rights of transferees in good faith and for consideration empowers the creditors to avoid any transfer of immoveable property made by the debtor with intent to defeat or delay the creditors. It, however, requires that such a suit must be instituted either in a representative capacity or for the benefit of all the creditors. 7. The basic requisites for the applicability of this Section thus may be stated to be; (i) there should be a transfer of immovable property; (ii) the transfer ought to have been made with intent to defeat or delay the creditors and (iii) the suit must be brought by the creditor, acting on behalf of or for the benefit of the entire body of creditors, for avoiding such transfer. The primary requirement for the applicability of this section therefore appears to be the existence of a valid transfer. Where it is claimed that the transfer made by the debtor was a sham and fictitious transaction and there was no animus transferendi i.e. when the real intention of the parties was not to give effect to the supposed transfer at all and it was merely to be used as a shield or a facade for achieving some ulterior purpose, Section 53 of the Transfer of Property Act cannot legitimately be taken aid of. Policy of law always has been to frown upon all attempts at fraudulent transfers. While law favours exchange of property as a natural right of a person to deal with it in a normal manner, the law has always set its face against this privilege being abused to the detriment of the innocent public, creditors inclusive, who had dealt with transferor on the faith of the security of their debtor. Any attempt by the debtor to withdraw his assets from the control of his creditors therefore, has always received just condemnation by the courts of law who have compelled the debtor to make good the representation on the faith of which presumably he had obtained credit. In such circumstances, the Courts have never been loath in setting aside such transactions. Before Section 53 of the Transfer of Property Act can be applied, the creditor plaintiff must come to the court in the premise that although the transaction was genuine and effective, yet it was entered into with intent to delay or defeat the creditors. In such circumstances, the Courts have never been loath in setting aside such transactions. Before Section 53 of the Transfer of Property Act can be applied, the creditor plaintiff must come to the court in the premise that although the transaction was genuine and effective, yet it was entered into with intent to delay or defeat the creditors. It is only to such cases that Section 53 will in terms apply. 8. The nature of a suit filed by a defeated creditor under Order 21, Rule 63 of the Code of Civil Procedure, however, may stand on a different footing. The plaintiff-creditor in such a suit may either base his claim entirely on the very grounds on which a suit under Section 53 could be maintained or may, as an alternative, bring a suit on the premise that the transaction of sale sought to be avoided by him was not a genuine one and it did not result in actual transfer of property to the transferee, for example where the transfer was without any consideration or where the circumstances proves that the transaction was fraudulent one although its ultimate result may be to either defeat or delay the creditors. Learned Counsel for the defendant-appellant, however, has submitted that Section 53 of the Transfer of Property Act was applicable in the instant case in view of the plaint allegations. According to him, a suit of this nature could not be filed by the creditor in his own right and ought to have been filed by him either in a representative capacity or for the benefit of all the creditors. 9. Counsel for the respondent, however, countered these arguments by urging that it was not a suit under Section 53 of the Transfer of Property Act and was merely suit in pursuance of the requirements of Order 21, Rule 63 C. P. C. on the basis that the transaction of gift in favour of the contesting defendant was a sham and fraudulent one and was neither acted upon nor was intended to be acted upon. He also urged that the plaintiff being the only creditor, it was not necessary for him to file a representative suit. 10. He also urged that the plaintiff being the only creditor, it was not necessary for him to file a representative suit. 10. The Courts below have discussed the nature of the suit on the basis of the plaint allegations in detail and it has been rightly held by them that primarily the suit filed by the plaintiff was on the allegation that the deed of gift dt. 9-6-1959 was a bogus transaction as it was neither registered nor duly stamped. They have further rightly held that the second gift deed dated 13-9-1969 also was a fraudulent and sham transaction which was neither acted upon nor was really intended to transfer title in favour of the contesting defendant. These are concurrent findings of fact and have not been challenged before me. On these findings, therefore, the question arises whether the suit was not legally maintainable as contended by the defendant-appellant ?. In support of his submission, he has relied upon. Abdul Shukoor Saheb v. Arji Papa Rao, AIR 1963 SC 1150 (supra). In that case the suit property had been transferred by the defeated transferee from the debtor and the contesting defendent-respondent therein had pleaded that the sale deed was sham and collusive document not intended to pass any title but brought about only to screen the suit property from the creditors or the defendants Nos. 2 to 5 (debtors). In the alternative, it was pleaded that even if the sale deed was true, it was in fraud of creditors including the plaintiff and not binding upon them. The creditor-purchaser having failed in the courts below, the matter came up before the Supreme Court where it was contended that the plea taken in the written statement by the judgment creditors was barred under Section 53 (1) as the same had not been taken in a representative capacity as required under Section 53 of the Transfer of Property Act. The creditor-purchaser having failed in the courts below, the matter came up before the Supreme Court where it was contended that the plea taken in the written statement by the judgment creditors was barred under Section 53 (1) as the same had not been taken in a representative capacity as required under Section 53 of the Transfer of Property Act. In these circumstances, the Supreme Court after considering the legislative history and the background in which the Section was amended in 1929 observed as under (At p. 1160): "It was merely to have a uniform rule and to avoid these conflicting decisions that the third paragraph was inserted so that after the amendment the rule that a suit by a creditor should be brought in a representative capacity would apply as much to a suit to set aside a summary order under Order 21. Rule 63 as to other suits." 11. It is these observations which are relied upon by the appellant and it is urged that every suit under Order 21, Rule 63 C. P. C. must comply with the requirements of Section 53 of the Transfer of Property Act. That was not the case before the Supreme Court for this is what the Supreme Court intended to decide when it made the above quoted observations. In that class of cases which do not fall under Section 53 of the Transfer of Property Act at all i.e. where the transaction itself is alleged to be fraudulent and sham and showy one, those principles cannot be applied. As I have observed earlier, a suit under Rule 63 can be either on the basis that the judgment creditor was entitled to proceed against the property notwithstanding, the gift deed executed by the judgment debtor as the same was sham and fraudulent and in that event Section 53 is not at all attracted. The judgment creditor also could bring a suit on the allegation that although the transaction was proper yet the same was executed to delay and defeat the creditor and as such the same could legally be avoided by him. In the latter case, Section 53 would in terms apply and must be brought in a representative capacity or for the benefit of the creditors at large. In the latter case, Section 53 would in terms apply and must be brought in a representative capacity or for the benefit of the creditors at large. This distinction has been most clearly, brought out in the decision of this court in Roshan Lal v. Ramji Lal, 1964 All L3 1079. Learned Counsel for the appellant also relied upon Prasad v. V. Govindaswami Mudaliar, AIR 1982 SC 84 and attention was particularly sought to be drawn towards paragraphs 13, 18 and 54 of the report, I have gone through the said case and the paragraphs referred to above. None of them has any relevance to the facts and circumstances of the present case. The facts of that case were entirely different and can be of no assistance for the proposition which is sought to be raised before me. 12. It was faintly urged by the respondents that the plaintiff creditor being the sole creditor and there being no proof that there were other creditors also, it would not be necessary to undergo the empty formality of having recourse to Order 1, Rule 8 C. P. C. in the present case. This argument, however, does not appear to be well founded. The plaint allegations make it quite clear that there were admittedly some other creditors also and repeatedly the plaintiff had made a reference that the gift deed in question had been executed by the debtor with a view to defeat and delay the plaintiff as well as his other creditors. In the face of such allegations, merely because the appellant was not able to recount the various creditors and had been unable to state about the amounts taken on loan by her husband from various sources, it cannot be said that there were no other creditors of the husband. This is particularly so as a large number of certified copies of decree in various suits filed against the husband have been placed on record and it cannot be said that the amounts due under the same had become extinguished by payment or were satisfied otherwise. Maybe, there is no proof by the transferee that these decrees still stood against the debtor on the date of the suit, yet the own allegation made in the plaint showed that there were other creditors. Maybe, there is no proof by the transferee that these decrees still stood against the debtor on the date of the suit, yet the own allegation made in the plaint showed that there were other creditors. In these circumstances I do not consider it proper to refer to various cases cited by the learned Counsel for the respondent in this behalf because the same would not be applicable to the facts established in this case. 13. However, in view of the fact that the suit was not one under Section 53 of the Transfer of Property Act and was one under Order 21, Rule 63 simpliciter. I do not find any force in the contentions of the appellant and the suit cannot be held to be barred on the ground that it was not on behalf of and for the benefit of the entire body of creditors. 14. The appeal, therefore, has no force and is accordingly dismissed with costs. Appeal dismissed.