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2014 DIGILAW 667 (KER)

Balabhadran v. Sarada

2014-08-18

K.HARILAL

body2014
Judgment : (i) What is the legal effect and consequences of a declaration that the transfer of property is voidable under Sec.53 of the T.P. Act? (ii) Does that declaration wipe out the transaction or sale under the deed? (iii) Does the transfer in question become void for all purposes or is it only void against the creditors of the transferor? (iv) Does the transfer continue to be valid for all other purposes? (v) Can a party to the fraud plead his own fraud to seek indulgence of the Court; can he take advantage from his own such pleadings? These are the questions that sparked off from the issues debated at the Bar in this case. 2. The revision petitioner is the decree holder and the respondents are the judgment debtors in E.P.No.11/2003 and E.P.No.23/2004 in O.S.No.56/1999 on the files of the Subordinate Judge, Ottapalam. The decree holder is the son of the 1st judgment debtor as well as brother of judgment debtors 2 to 5. The above Original Suit was one for realisation of Rs.4,19,190/-with interest from the judgment debtors/defendants and the suit was decreed as prayed for. 3. The brief facts, necessary for disposal of this revision petition, can be summarised as follows: Originally, the Federal Bank filed O.S.No.52/1987 against one Raman, the father of the decree holder, the judgment debtors 2 to 5 as well as husband of the 1st judgment debtor, for realisation of the loan amount availed by him. Pending the suit, Sri. Raman died and the decree holder and the judgment debtors herein got impleaded in the said suit as legal representatives. The suit was decreed and in execution, the Bank sought for attachment and sale of the properties belonging to Raman. The decree holder herein has come forward and discharged the decreetal liability, to the Bank for all the legal heirs and got the properties released. Thereafter, the decree holder filed this suit for realising the due contribution of the judgment debtors herein towards Raman's liability, which had been discharged by him alone. The suit was decreed allowing the decree holder to realise Rs.4,19,190/- plus 6% interest from the assets of the deceased Raman, in the possession of the judgment debtors. Thereafter, the decree holder filed this suit for realising the due contribution of the judgment debtors herein towards Raman's liability, which had been discharged by him alone. The suit was decreed allowing the decree holder to realise Rs.4,19,190/- plus 6% interest from the assets of the deceased Raman, in the possession of the judgment debtors. It is that decree which the decree holder seeks, to be executed, by the sale of four items of properties in E.P.No.11/2003 and another one item in E.P.No.23/2004, alleging them to be the properties of Raman and now in the possession of the judgment debtors. 4. The judgment debtors resisted the Execution Petitions contending as follows: There is no personal decree against them. The decree is for realising the amount from the properties left by the deceased Raman and possessed by them; but they, along with the decree holder, had already sold out the scheduled properties for discharging certain liabilities left by the deceased Raman and that the scheduled properties sought to be proceeded against are not at all in their possession and the properties are in the possession of third parties. 5. In enquiry, Exts.A1 to A3 were produced and marked on the side of the decree holder and Exts.B1 to B6 were produced and marked on the side of the judgment debtors. 6. After analysing the evidence on records, the Execution Court dismissed the suit on a finding that the properties sought to be sold in execution for realization of the decree are not there with the judgment debtors and the properties had already been sold away by the decree holder and the judgment debtors together, even prior to the suit. 7. Heard both sides. Sri. T. Sethumadhavan, the learned counsel for the petitioner/decree holder, advanced arguments assailing the findings whereby the court below dismissed the application. On the other hand, Sri. P.B. Krishnan, the learned counsel for the respondents/judgment debtors advanced arguments to justify the said findings in the impugned order. The points canvassed by the learned counsel for the petitioner is seen set up on Exts.A1 to A3. Exts.A1 to A3 are the orders dismissing the claims filed under Order XXI Rule 58 by the purchasers of the property of the deceased Raman. The points canvassed by the learned counsel for the petitioner is seen set up on Exts.A1 to A3. Exts.A1 to A3 are the orders dismissing the claims filed under Order XXI Rule 58 by the purchasers of the property of the deceased Raman. The sale deeds in favour of those claim petitioners had been executed by the legal heirs, the decree holder and the judgment debtors herein, after the death of their father Raman. The finding of the Execution Court in Ext.A3 common judgment is that the claim petitioners are not the transferees in good faith and the assignment deed in favour of the claim petitioners are executed to defraud the decree holder in O.S.No.52/1997, the Federal Bank, by the legal heirs of Raman, the Additional defendants in that suit and thereby the transfer was hit by Sec.53 of the Transfer of Property Act. It was also held that the claimants under Ext.B1 sale deed executed by the legal heirs of Raman in favour of Prabhakaran from whom they purchased the property are not entitled to get any right over the property. In short, the sum and substance of the argument is that, in the light of Ext.A1 to A3 and B1, the properties sought to be attached and sold in execution of the decree can be deemed to be assets left by Raman and in possession of the judgment debtors, notwithstanding Ext.B1. 8. The learned counsel for the respondents resisted the said argument canvassing two points. Firstly, he drew my attention to the legal effect and consequences of a decree which declares that a sale deed is voidable under Sec.53 of the Transfer of Property Act. According to him, the decree holder cannot seek shelter under Ext.A1 to A3 under which Ext.B1 sale deed was held voidable, as such finding is applicable to the decree holder in that case only. In short, the findings under Sec.53 of the T.P. Act cannot be extended generally so as to make that transfer of property totally invalid. The learned counsel further cited the decisions reported in Karuna Kuries & Finance v. Kunju Vareed (1999 (2) KLT 118; Ramasubba Sastry v. Official Receiver (AIR 1963 Mysore 257) and Nanjamma v. Rangappa (AIR 1954 Madras 173) to fortify the said arguments. The learned counsel further cited the decisions reported in Karuna Kuries & Finance v. Kunju Vareed (1999 (2) KLT 118; Ramasubba Sastry v. Official Receiver (AIR 1963 Mysore 257) and Nanjamma v. Rangappa (AIR 1954 Madras 173) to fortify the said arguments. Secondly, the learned counsel contended that where the fraud in question was committed by both parties, one of the parties cannot plead his own fraud and no relief can be given by accepting the said fraud. To fortify the said argument, the learned counsel for the petitioner cited the decision reported in Immnani Appa Rao v. G. Ramalingamurthi ( AIR 1962 SC 370 ). 9. In view of the rival contentions raised at the Bar, let us consider the questions raised above as the beginning. For the sake of easy reference, I may begin by extracting Sec.53 of the Transfer of Property Act, which reads as under: "Sec.53. Fraudulent transfer.— (1) 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. 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." 10. On an analysis of the above Section, it could be seen that transfer of immovable property made with an intent to defeat or delay the creditors of the transferor shall be voidable, but not void, at the option of any creditor so defeated. Thus, the voidability is confined to creditor who exercised such option alone, not available to others, and such voidable transfer has to be got avoided by instituting suit. The legislature was so conscious in employing the expression "voidable" only and giving that option to creditor of the transferor. Thus, the voidability is confined to creditor who exercised such option alone, not available to others, and such voidable transfer has to be got avoided by instituting suit. The legislature was so conscious in employing the expression "voidable" only and giving that option to creditor of the transferor. It follows that a decree declaring a transfer voidable under Sec.53 of the Transfer of Property Act cannot be made in use by any person other than the creditor who obtained decree. The declaration making the transfer void under Sec.53 of the Act, does not wipe out the transaction or sale under deed and it is void against the creditor of the transferor, who obtained the decree to that effect. The validity of transfer continues and valid for all other purposes. Thus, the questions (i) to (iv) can be answered as above on an analysis of the legislative perspective itself. 11. This analysis is supported by the judicial precedents also. In Nanjamma v. Rangappa (AIR 1954 Madras 173), it is held as follows: "When transfer is declared void as against creditors under S.53, T.P. Act, the result is not to annul it altogether, but only to render it inoperative as against creditors and that too only to the extent necessary to satisfy their claims; and subject to their claims, the transaction is valid and enforceable." 12. The effect of a declaration under Section 53 (1) of the Transfer of Property Act, 1882, came up forconsideration before the Division Bench of the Court of Travancore-Cochin in Anantha Raman v. Arunachalam (AIR (39) 1952 Travancore-Cochin 105) wherein it isheld that, where a document is executed to defeat or delay creditors, as between the parties thereto, the document is valid and it must remain valid for all times. The executant cannot impugn it on the ground that he executed it to defeat or delay creditors. That bar is not one personal to the executant alone. It would extend to all those who claim the properties through him as also to persons claiming under such persons. The principle that can be deducible from the above analysis in the light of judicial precedents is that there is no setting aside of a document when a declaration is made that a document is void under Section 53 of the Transfer of Property Act. The document exist and continue to exist as valid between the parties thereto. The principle that can be deducible from the above analysis in the light of judicial precedents is that there is no setting aside of a document when a declaration is made that a document is void under Section 53 of the Transfer of Property Act. The document exist and continue to exist as valid between the parties thereto. What is declared is that the document is not binding on the creditors. The document remains valid and it must remain valid for all times. It does not wipe out the transaction. It keeps the transfer intact but destroys its effect on the creditors of the transferor whose debt were intended to be defeated or delayed. 13. In view of the proposition, I hold that the decree holder cannot be heard to say that the property sought to be attached and sold away under Ext.B1 still remains in the hands of the respondents as legal heirs of the deceased Raman. No doubt, these properties cannot be sold in execution, for realisation of the decree, as the properties do not remain with the respondents and as rightly held by the court below the property had already been sold out by the decree holder and the judgment debtors together. 14. Coming to the last question under second point, Lord Mansfield, C.J., in Holman v. Johnson (1775 (1) COWP. 341), which is seen often quoted, deduced the principle in this way: "The objection, that a contract is immoral or illegal as between plaintiff and defendant, sounds at all times very ill in the mouth of the defendant. It is not for his sake, however, that the objection is ever allowed; but it is founded in general principles of policy, which the defendant has the advantage of, contrary to the real justice, as between him and the plaintiff, by accident, if I may say so. The principle of public policy is this: ex dolo malo non oritur actio. No Court will lend its aid to a man who founds his cause of action upon an immoral, or an illegal act. If, from the plaintiff's own stating or otherwise the cause of action appears to arise ex turpi causa or the transgression of a positive law of this country, there the court says he has no right to be assisted. If, from the plaintiff's own stating or otherwise the cause of action appears to arise ex turpi causa or the transgression of a positive law of this country, there the court says he has no right to be assisted. It is upon that ground the Court goes; not for the sake of the defendant, but because they will not lend their aid to such a plaintiff". 15. In Immani Appa Rao v. G. Ramalingamurthi ( AIR 1962 SC 370 ), it is held as follows: "15. There can be no question of estoppel in such a case for the obvious reason that the fraud in question was agreed by both the parties and both parties have assisted each other in carrying out the fraud. When it is said that a person cannot plead his own fraud it really means that a person cannot be permitted to go to a Court of Law to seek for its assistance and yet base his claim for the Court's assistance on the ground of his fraud. In this connection it would be relevant to remember that respondent 1 can be said to be guilty of a double fraud; first he joined respondent 2 in his fraudulent scheme and participated in the commission of fraud the object which was to defeat the creditors of respondent 2, and then he committed another fraud in suppressing from the Court the fraudulent character of the transfer when he made out the claim for the recovery of the properties conveyed to him." In Kurian Joseph v. Methew J. Mattam and others (AIR 1977 NOC 291 (KER)) this Court held that, "Where the benami acquisitions were made to defraud creditors, and the said object had been achieved, he could not be allowed to plead his own fraud and to prove the case of benami. Where the fraudulent or illegal purpose has actually been effected by means of the colourable grant, then the maxim applies: 'in pari delicto potior est conditio possidentis'." The principle is that no man is allowed to plead his own fraud and take advantage of the same. If that be so, in the execution of Ext.B1 the decree holder also was a party. So, he cannot plead and contend that Ext.B1 was a fraudulent document having no validity and the property remains with the executants – the respondents. 16. If that be so, in the execution of Ext.B1 the decree holder also was a party. So, he cannot plead and contend that Ext.B1 was a fraudulent document having no validity and the property remains with the executants – the respondents. 16. In view of the above analysis, I find that there is no illegality or impropriety in any of the findings of the court below and I do not find any kind of perversity in the appreciation of evidence also. This Revision Petition is devoid of merits and dismissed accordingly.