Verizon Builders and Developers Ltd. v. Jyothi Susan John
2018-12-07
A.M.SHAFFIQUE, P.B.SURESH KUMAR, P.SOMARAJAN
body2018
DigiLaw.ai
JUDGMENT : Shaffique, J. RFA No.529/2015 has been filed by the plaintiff in OS No.28/2014 challenging an order passed in a claim petition filed as IA 838/2014. The claim petition has been filed by the first respondent herein under Order XXXVIII Rule 8 of the Code of Civil Procedure (for short 'CPC'). The Court below allowed the said application on a finding that the property under attachment was transferred in the name of the claimant/1st respondent by a registered sale deed dated 4/7/2014 prior to the order of attachment. In fact the plaintiff contended that the transfer was fraudulent and hit by S.53 of the Transfer of Property Act (for short 'TP Act'). But placing reliance on the judgment in Rajan @ v. Rajan Gopinathan v. Dr.D.Jayashree Nayar and another ( 2010 (1) KLT 142 ), it was held that adjudication of fraudulent transfer can be made only during execution proceedings and accordingly the claim petition was allowed vacating the order of attachment. 2. When the above matter came up for hearing before a Division Bench of this Court, the matter was referred to a Full Bench doubting the judgment in Rajan's case (supra) as per reference order dated 21/6/2016. It was observed that O.XXXVIII Rule 8 CPC is sufficient to adjudicate a claim in a property sought to be attached before judgment. 3. In RFA No. 777/2015 also, a similar question has arisen for consideration. In that case also, the plaintiff had preferred the appeal challenging order dated 1/8/2015 in IA 914/2014 in OS No.18/2014 of the Sub Court, Alappuzha. IA No.914/2014 was filed under Order XXXVIII Rule 8 for releasing the attachment. The application is filed by the 3rd respondent herein inter alia claiming right in respect of the property. It was contended that the order of attachment was dated 9/4/2014 and it was made absolute on 23/5/2014. The property was purchased by the petitioner/3rd respondent as per document No.2736/12 for valid consideration and that he is in possession of the property. Court below having referred to the judgment in Rajan's case (supra) observed that in so far as the claim petitioner had purchased the property prior to the date of attachment, the plaintiff's contention regarding fraudulent transfer of the property u/s 53 of the TP Act need not be considered at the original side and accordingly the application was allowed and the attachment was vacated.
When the above matter came up for hearing before the Division Bench, doubting the judgment in Rajan's case (supra), the matter was referred to be considered by a Larger Bench. 4. In the light of the aforesaid two reference orders, these two cases had been placed before us. 5. The counsel for the 1st respondent in RFA No.529/2015 has filed IA No. 1091/2018 seeking for dismissal of the appeal on the ground that decree has been passed in OS No.28/2014. We do not think that such an application can be entertained as a question of law involving divergent views had been referred to this Court, which requires to be answered. If the attachment of property can be sustained, there is no necessity for a further attachment if a decree is passed in favour of the plaintiff. 6. First let us examine the manner in which Rajan's case (supra) has been decided. It was held that in so far as the purpose of attachment before judgment is distinct and different from attachment in execution, the attachment before judgment would cease when the suit is dismissed on merits or if it is dismissed for default. The attachment before judgment will not revive on setting aside the order of dismissal of the suit for default and on restoration of the suit. It is observed that O.XXI R.58 (2) provides for determination of all questions including question relating to right, title or interest in the property attached, arising between the parties or their representatives and it is further qualified by the expression “relevant to the adjudication of the claim or objection”. Paragraphs 21 and 22 reads thus:- “21. In order to answer the question whether the defence under S.53 of the Transfer of Property Act should be adjudicated in a claim to the property attached before judgment, we have to read the provisions of Rr. 5 to 11-A of O.XXXVIII C.P.C. alongwith R.58 of O.XXI. The purpose of attachment before judgment is distinct and different from attachment in execution, though the attachment before judgment would enure to the stage of execution as well in view of R.11 of O.XXXVIII C.P.C. The attachment before judgment would cease when the suit is dismissed on the merits or when it is dismissed for default.
The purpose of attachment before judgment is distinct and different from attachment in execution, though the attachment before judgment would enure to the stage of execution as well in view of R.11 of O.XXXVIII C.P.C. The attachment before judgment would cease when the suit is dismissed on the merits or when it is dismissed for default. R.11A(2) of O.XXXVIII C.P.C. mandates that attachment before judgment would not revive on setting aside the order for the dismissal of the suit for default and on restoration of the suit. Sub-r.(2) of R.58 of O.XXI provides for determination of all questions including questions relating to right, title or interest in the property attached, arising between the parties or their representatives. But it is further qualified by the expression, namely, “relevant to the adjudication of the claim or objection”. What is relevant to the adjudication depends on the question whether it is an adjudication under O.XXXVIII or under O.XXI. If the determination of the question is to be made in execution, certainly the question of applicability of S.53 of the Transfer of Property Act would arise, since once for all it is to be determined whether the property is available to be proceeded against in execution. In the case of an attachment before judgment, that question need not be decided, going by the scheme of O.XXXVIII. The expression “relevant to the adjudication of the claim or objection” occurring in R.58 of O.XXI assumes importance in that context. At the stage of passing an order for attachment before judgment, nobody is sure whether the suit would be decreed. There are various situations in which the attachment before judgment may cease to exist. For example, the suit may be dismissed on merits, or it may be dismissed for default. Or else, the court may hold that it has no jurisdiction to decide the suit. Or, the suit may be dismissed on the ground of limitation. Why should “all questions including questions relating to right, title and interest in the property attached” be determined, irrespective of whether it is “relevant to the adjudication of the claim or objection” ? To our mind, only those questions which are relevant to the adjudication need be determined, as provided in R.58 of O.XXI, in the matter of a claim to the property attached before judgment.
To our mind, only those questions which are relevant to the adjudication need be determined, as provided in R.58 of O.XXI, in the matter of a claim to the property attached before judgment. R.58 of O.XXI speaks of “claims” and “objections” whereas, R.8 of O.XXXVIII speaks of only “claim”. Objection, if any, to attachment before judgment shall be determined under O.XXXVIII itself and not by recourse to R.58 of O.XXI. At the stage of determining the claim to the property attached before judgment, the requirements and limitations of R.5 of O.XXXVIII are relevant. But such requirements or limitations need not be relevant while adjudicating a claim to the property attached in execution. R.10 of O.XXXVIII is relevant while considering a claim to the property attached before judgment. But the ingredients constituting R.10 would not be conclusive at the stage of execution. It would be subject to further scrutiny under S.53 of the Transfer of Property Act. 22. Sub-r.(1) R.58 of O.XXI C.P.C. contemplates a claim or objection on the ground that “such property is not liable to such attachment”. The expression “relevant to the adjudication of the claim or objection” occurring in sub-r.(2), is to be read along with sub-r.(1) and also along with O.XVIII R.5. If so, it could be seen that all questions which may otherwise arise in a properly constituted suit need not necessarily arise in an adjudication under R.58 of O.XXI. The limitations under R.5 of O.XXXVIII cannot be got over by recourse to a defence in a claim petition, when such defence is not relevant for adjudication at that stage. It is also relevant to note that a fraudulent transfer is not void but only voidable. In the case of a fraudulent transfer, the creditor is not without remedy. He can file a suit to avoid the transfer. Or else, he can avoid the same in execution as well. A suit coming under S.53 of the Transfer of Property Act shall be instituted on behalf of, or for the benefit of, all the creditors. Sub-r.(4) of R.58 of O.XXI which provides that the order made on adjudicationshall have the same force as if it were a decree, is not a conclusive test as to the scope of enquiry in the matter of a claim made to the property attached before judgment.
Sub-r.(4) of R.58 of O.XXI which provides that the order made on adjudicationshall have the same force as if it were a decree, is not a conclusive test as to the scope of enquiry in the matter of a claim made to the property attached before judgment. A decree would be conclusive and binding on the questions decided in the suit or which might and ought to have been raised. When the court allows a claim to the property attached before judgment, on the ground that the transfer took place before the order of attachment, that would not preclude the attaching creditor from contending that the transfer is hit by S.53 of the Transfer of Property Act in appropriate proceedings. We are of the view, such a contention of fraudulent transfer would not attract Explanation IV of S.11 of the Code of Civil Procedure so as to bar the attaching creditor from raising the question in appropriate proceedings.” 7. Learned counsel for appellants argued that Rajan's case (supra) does not lay down the correct position of law, in so far as, it had failed to take note of the judgment of the Bombay High Court in SBI Home Finance Ltd v. Credential Finance Ltd and other (2001 KHC 3024) in the proper perspective, and the judgment of the Apex Court in Hamda Ammal v. Avadiappa Pathar [ (1991) 1 SCC 715 ] was not considered properly. 8. Learned counsel appearing for the contesting respondent while supporting the dictum laid down in Rajan's case (supra) contended that O.XXI R.58(2) contemplates a wide adjudicatory power of all questions and bars a separate suit and it is a substantive provision. It is argued that O.XXXVIII R.8 only indicates that the procedure for adjudication has to be in accordance with O.XXI R.58 and the scope of enquiry/adjudication has to be considered having due regard to the ambit of O.XXXVIII R.5. The object of O.XXXVIII R.5 is only preventive in so far as the Court should satisfy that transfers are going to be made and such transfers are made with the intention to obstruct or delay the execution of the decree which may be passed.
The object of O.XXXVIII R.5 is only preventive in so far as the Court should satisfy that transfers are going to be made and such transfers are made with the intention to obstruct or delay the execution of the decree which may be passed. When a property has already been sold, even before the institution of the suit, O.XXXVIII R.5 cannot have any application in so far as there would be no instance where the defendant was about to dispose of or remove his property with the intention to obstruct or delay the execution of decree. Therefore, when the property is already sold, the condition precedent to issue an order of conditional attachment or to attach the property does not arise at all. It is further argued that O.XXXVIII R.6 provides an opportunity for the defendant to show cause why his property should not be attached and R.8 provides an opportunity for third parties who have a right or claim in respect of the property to satisfy the Court that they have obtained title to the property prior to the order of attachment and their rights are protected under R.10 of O.XXXVIII, in which event, the order of attachment is hit by R.5(2). Therefore the only enquiry that is required to be considered is whether the property attached is still available with the defendant or not. In an instance where plaintiff takes a plea u/s 53 of the TP Act, on the allegation that transfer is vitiated by fraud on the creditors, an adjudication during the trial stage is not maintainable in so far as the creditor has not established the debt. It is also contended that S.53 of TP Act mandates that a suit instituted by a creditor shall be instituted on behalf of, or for the benefit of all the creditors. It is in fact a representative action to set aside fraudulent transfers which come within the purview of S.53, whereas a petition under O.XXXVIII R.8, is not a representative action. Learned counsel further submits that a distinction is recognised in law between a decree holder and an ordinary creditor. It is submitted that a larger Bench of the Madras High Court had held that a decree holder must be allowed to establish his plea in defence to the suit filed by the unsuccessful alienee-claim petitioner.
Learned counsel further submits that a distinction is recognised in law between a decree holder and an ordinary creditor. It is submitted that a larger Bench of the Madras High Court had held that a decree holder must be allowed to establish his plea in defence to the suit filed by the unsuccessful alienee-claim petitioner. That was a case in which a defeated claim petitioner filed a statutory suit. The said ratio was affirmed by the Apex Court in Abdul Shukoor Saheb v. Arji Papa Rao ( AIR 1963 SC 1150 ). 9. In fact, in Rajan's case (supra), Division Bench did not approve the judgment of Bombay High Court in SBI Home Finance Ltd (supra). In that case, a Division Bench of Bombay High Court held that normally by reason of R.10 of O.XXXVIII, an attachment before judgment could not be levied against properties which had already been sold. In so far as S.53 of the TP Act enables a creditor to avoid the transfer of immovable property, which has been made with intent to defraud, defeat or delay and such a transfer would be voidable at the option of any creditor so defrauded, defeated or delayed, the plaintiff would be entitled to avoid the transfer and in such a situation, the said property shall be treated as properties of the defendant. When a fraudulent attempt is made, to put the properties beyond the reach of the creditor, it would be a good reason to make an order of attachment before judgment under O. XXXVIII R.5 of CPC. Therefore, the issue as to whether circumstances contemplated by S.53 of the TP Act existed would have to be determined first. The Bombay High Court also placed reliance upon judgment of the Apex Court in Hamda Ammal (supra) wherein the Apex Court while considering the scope of O. XXXVIII Rule 5 held as under:- "The above provision itself makes it clear that the attachment before judgment would be made where the court is satisfied that the defendant is about to dispose of the whole or any part of his property or is about to remove the whole or any part of his property from the local limits of the jurisdiction of court with the intention to obstruct or delay the execution of any decree that may be passed against him.
Thus this provision would not apply where the sale deed has already been executed by the defendant in favour of a third person. A transaction of sale having already taken place even prior to the institution of a suit cannot be said to have been made with the intention to obstruct or delay the execution of any decree. It would be a different case altogether if a creditor wants to assail such transfer by sale under Section 53 of the Transfer of Property Act, 1882 (hereinafter referred to as ‘the Act’) on the ground of a fraudulent transfer. Such suit would be decided on totally different considerations in accordance with the provisions of Section 53 of the Act. Order XXXVIII Rule 10 CPC reads as under: “10. Attachment before judgment shall not affect the rights, existing prior to the attachment, of persons not parties to the suit, nor bar any person holding a decree against the defendant from applying for the sale of the property under attachment in execution of such decree.” This provision also makes it clear that attachment before judgment shall not affect the rights, existing prior to the attachment, of persons not parties to the suit.” In Hamda Ammal (supra) the Apex Court while observing that O.XXXVIII R.5 would not apply to an instance where sale deed has already been executed by the defendant in favour of a third person, carved out an exception to the said rule by further observing that “it would be a different case altogether if a creditor wants to assail such transfer by sale u/s 53 of the TP Act, 1882 on the ground of fraudulent transfer”. 10. It is not in dispute that O. XXXVIII R.8 had been substituted by Act 104 of 1976 w.e.f 1.2.1977. Prior to the amendment. R.8 read as under: “8. Investigation of claim to property attached before judgment” Where any claim is preferred to property attached before judgment, such claim shall be investigated in the manner hereinbefore provided for the investigation of claims to property attached in execution of a decree for the payment of money.” Such a claim had to be decided in terms of O.XXI R.63, which was omitted by the Amendment Act of 1976.
By substituting the provisions under O.XXI R.58, by Act 104 of 1976, an altogether different approach has been made by the legislature and substantive provisions had been incorporated to consider any claim preferred or any objection made to the attachment of any property in execution of a decree. 11. O. XXXVIII R.8 reads as under:- “8. Adjudication of claim to property attached before judgment:- Where any claim is preferred to property attached before judgment, such claim shall be adjudicated upon in the manner hereinbefore provided for the adjudication of claims to property attached in execution of a decree for the payment of money.” O.XXI R.58 reads as under:- "58. Adjudication of claims to, or objections to attachment of property. (1) Where any claim is preferred to, or any objection is made to the attachment of, any property attached in execution of a decree on the ground that such property is not liable to such attachment, the Court shall proceed to adjudicate upon the claim or objection in accordance with the provisions herein contained: Provided that no such claim or objection shall be entertained (a) where, before the claim is preferred or objection is made, the property attached has already been sold; or (b) where the court considers that the claim or objection was designedly or unnecessarily delayed. (2) All questions (including questions relating to right, title or interest in the property attached) arising between the parties to a proceeding or their representatives under this rule and relevant to the adjudication of the claim or objection, shall be determined by the Court dealing with the claim or objection and not by a separate suit. (3) Upon the determination of the questions referred to in sub-rule (2), the Court shall, in accordance with such determination,- (a) allow the claim or objection and release the property from attachment either wholly or to such extent as it thinks fit; or (b) disallow the claim or objection; or (c) continue the attachment subject to any mortgage, charge of other interest in favour of any person; or (d) pass such order as in the circumstances of the case it deems fit. (4) Where any claim or objection has been adjudicated upon under this rule, the order made thereon shall have the same force and be subject to the same conditions as to appeal or otherwise as if it were a decree.
(4) Where any claim or objection has been adjudicated upon under this rule, the order made thereon shall have the same force and be subject to the same conditions as to appeal or otherwise as if it were a decree. (5) Where a claim or an objection is preferred and the Court, under the proviso to sub-rule (1), refuses to entertain it, the party against whom such order is made may institute a suit to establish the right which he claims to the property in dispute; but, subject to the result of such suit, if any, an order so refusing to entertain the claim or objection shall be conclusive.” 12. There is no dispute about the fact that O. XXXVIII R.8 refers to adjudication of “any claim” with reference to the property attached before judgment and the Court is bound to adjudicate “such claim” and “in the manner herein before provided for the adjudication of claims to property attached in execution of a decree for payment of money.” In Rajan's case (supra), one of the main reason stated by the Division Bench was regarding the difference in the language used in O.XXI R.58. The adjudication under O.XXI R.58 refers to “any claim” and also “any objection made to the attachment”. A claim is apparently made by a third party to the proceedings and the objection is made by the defendant or judgment debtor in the execution proceedings. At any rate, be it either claim or objection, the intention is to vacate the order of attachment or in other words, to ensure that the property involved cannot be sold in execution of the decree. As far as O. XXXVIII R.5 is concerned, there is not much difference in the scope of adjudication. O. XXXVIII R.5 is a procedure to attach the property of the defendant during the pendency of a suit. The defendant is called upon to furnish security or to appear and show cause why he should not furnish security. The words in O. XXXVIII R.5 calling upon the defendant to “show cause why he should not furnish security” is apparently the objection he could raise regarding attachment of property. Therefore, the defendant in the case is given an opportunity to seek release of the attachment during trial stage itself when conditional order of attachment is passed under O.XXXVIII R.5(3).
The words in O. XXXVIII R.5 calling upon the defendant to “show cause why he should not furnish security” is apparently the objection he could raise regarding attachment of property. Therefore, the defendant in the case is given an opportunity to seek release of the attachment during trial stage itself when conditional order of attachment is passed under O.XXXVIII R.5(3). Apparently that is the reason why O. XXXVIII R.8 only refers to any claim to the property attached before judgment. In other words, what is contemplated under O. XXXVIII R.8 is an adjudication of a claim by a third party whereas an objection of the defendant will be considered even while making the attachment absolute in terms of O. XXXVIII R.6 and if sufficient cause is shown by the defendant or the defendant furnishes security, the attachment will be withdrawn under O. XXXVIII R.6(2). 13. Yet another reason stated by the Division Bench in Rajan's case (supra) was with reference to the language used in O.XXI R.58(2) which provides that all questions including questions relating to right, title or interest in the property attached arising between the parties to a proceeding or their representatives under this rule and relevant to the adjudication of the claim or objection shall be determined by the Court. Under O.XXXVIII R.8, when the statute had clearly provided that “claim shall be adjudicated upon in the manner” “provided for the adjudication of claims to property attached in execution of a decree for payment of money, virtually it is an incorporation of O.XXI R.58 into O. XXXVIII R.8. 14. “Attachment of immovable property” during execution stage is contemplated under O.XXI R.54. The attachment is ordered by prohibiting the judgment debtor from transferring or charging the property in any way, and all persons from taking any benefit from such transfer or charge. While issuing the prohibitory order, the judgment debtor is also called upon to attend Court on a specified date to take notice for settling the terms of proclamation. If any person has any claim in respect of the property which was attached in execution, he has to make a claim under O.XXI R.58, in which event, it is settled law that the decree holder is entitled to contend that the transfer in favour of the claimant was a fraudulent transfer to defeat the creditors in terms of S.53 of the TP Act.
Division Bench in Rajan's case (supra) has no doubt about the said proposition as well, and such a proposition cannot be disputed. In such an event, when a claim could be adjudicated during execution stage and when under O. XXXVIII R.8, a procedure under O.XXI R.58 has to be followed while considering a claim, a similar adjudicatory procedure has to be followed by the Court. When the same adjudicatory procedure is followed, necessarily, it will include the right to adjudicate on a defence u/s 53 of the TP Act as well. 15. In Rajan's case (supra), the Court proceeded on the basis that if the suit is dismissed on merits or it is dismissed for default, or on the ground of limitation, why should the Court consider the questions relating to right, title and interest in the property attached, and only those questions which are relevant to the adjudication need be determined as provided under R.58 of O.XXI. It was therefore observed that the limitations under R.5 of O.XXXVIII cannot be got over by repose to a defence in a claim petition when such a defence is not relevant for adjudication at that stage. We are of the view that the Division Bench had only thought about a situation where suit may be ultimately dismissed in which event an objection by the plaintiff need not be considered. But the Division Bench did not think about a situation where a decree would be passed in a suit. If the objection of the plaintiff that it was a fraudulent transfer u/s 53 of TP Act is not considered at the stage of suit, under O.XXXVIII R.8, the consequence would be withdrawal of the attachment order. Thereafter the suit will be decreed and only in execution proceedings, the plaintiff will be in a position to attach the property. By the time, several transfers would have taken place and several third party rights would have been created. Even assuming that fraudulent transfers could be avoided during execution stage, it will lead to unnecessary litigation. Probably it is to avoid such a contingency that while incorporating O.XXI R.58 as per Act 104 of 1976, O.XXXVIII R.8 had been substituted by which the Trial Court while adjudicating a claim in respect of an attached property is called upon to adjudicate the said claim in terms of O.XXI R.58.
Probably it is to avoid such a contingency that while incorporating O.XXI R.58 as per Act 104 of 1976, O.XXXVIII R.8 had been substituted by which the Trial Court while adjudicating a claim in respect of an attached property is called upon to adjudicate the said claim in terms of O.XXI R.58. If such a procedure is not provided, it will lead to undue hardship to a successful plaintiff. 16. Therefore, we are of the view that in so far as the procedure under O. XXXVIII R.8 has incorporated O.XXI R.58 for adjudication of claims, any objection filed regarding the claim has to be adjudicated in accordance with law. When a claim is made in respect of a property by a third party claimant stating that the property attached has been assigned in his favour, even prior to the date of attachment, necessarily, the plaintiff/respondent gets an opportunity to file an objection and contend that the transfer was fraudulent. Therefore, while considering the claim, it is quite inconceivable to observe that the objection to the claim petition regarding fraudulent transfer under Section 53 of the TP Act need not be considered. Hence, we are of the view that Rajan's case (supra) does not lay down the correct proposition of law. 17. Before finalising the judgment, the contention urged by the learned counsel for the respondents also requires to be addressed. Reference is made to judgment in Asnew Drums Private Ltd and Others v. Maharashtra State Finance Corporation [ (1971) 3 SCC 602 ] to contend that O.XXXVIII R.8 only contemplates that the claim to property attached before judgment shall be adjudicated in the manner provided under O.XXI R.58 and the manner only means the procedure and the provision for an appeal. We do not think that anything turns out of understanding the word 'manner'. The entire Code of Civil Procedure deals with procedural law and O.XXI R.58 provides for the procedure to be adopted while considering a claim or objection to property attached in execution of the decree. O.XXXVIII R.8 is also a procedure to consider a claim made against attached property and the procedure to be followed is under O.XXI R.58. Contention urged is that the legislature never thought it necessary that an enquiry or adjudication under O.XXI R.58 has to be followed while considering an enquiry or adjudication under O.XXXVIII R.8.
O.XXXVIII R.8 is also a procedure to consider a claim made against attached property and the procedure to be followed is under O.XXI R.58. Contention urged is that the legislature never thought it necessary that an enquiry or adjudication under O.XXI R.58 has to be followed while considering an enquiry or adjudication under O.XXXVIII R.8. We are of the view that the aforesaid argument is fallacious in so far as no such restriction can be inferred when the statute had clearly incorporated O.XXI R.58 as the procedure to be followed while adjudicating a claim under O. XXXVIII R.8. 18. It is true that the object of an order of attachment before judgment is only a guarantee against a decree becoming infructuous for want of property available to satisfy the decree and it is only preventive in nature until a decree had been passed. S.53 of the TP Act is a substantive provision which declares that 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. When a property is attached before judgment, the plaintiff proceeds on the basis that it is the property of the defendant. Only when a claim is raised, the plaintiff comes to know that the property has already been sold. While considering the question whether while adjudicating the said claim, the plaintiff gets an opportunity to say whether the transfer already made was with the intention to defeat or delay the creditors of the defendant. As already stated, it is a substantive right available to a creditor, which right cannot be restricted at any point of time. S.53 of TP Act of course provides for a suit to be filed as well. But it is settled law that a suit is not the only remedy and as held by the Apex Court in Hamda Ammal (supra) an objection could be raised. Plaintiff who is aware of the transfer can seek for attachment of the property by contending that the property sought to be attached had been fraudulently transferred or else if the plaintiff was not aware of such a transfer and when a claim is made by a third party, transferee, he could object to the claim petition by contending that the transfer was fraudulent.
If such a procedure is not adopted, it would deprive the plaintiff the opportunity to ensure that sufficient security is available to execute the decree, if any passed in his favour. 19. Learned counsel for the respondents relied upon the judgment in Hamda Ammal (supra). We have already dealt with Hamda Ammal (supra) as the said judgment clearly carves out an exception to the general rule in respect of fraudulent transfers. The argument is that R.8 only contemplates adjudication of claims of property on the basis of the transfer of the attached property. The contention urged is that while entering upon an adjudication in terms of O. XXXVIII R.8, the Court should stop short of adjudicating a plea u/s 53 of the TP Act. Learned counsel submits that when such a plea is taken, in effect, the direction is that the defendant should not further transfer the property, which is not warranted. Secondly it is contended that a full fledged trial to prove the elements requisite to sustain a claim u/s 53 of TP Act is not contemplated and a claim petition under R.8 may be even preferred at the threshold of the suit proceedings. Both these contentions, according to us, cannot be sustained. As already stated, and as held in the judgment in SBI Home Finance Ltd (supra), when a plaintiff objects to a claim contending that the transfer is fraudulent, it necessarily means that the defendant is still the owner of the property and the attachment could continue only on such a finding. If the court finds that the claim is justifiable, necessarily, the attachment has to be vacated. 20. When the legislature deemed it fit that “any claim” to attach property is to be considered under O. XXXVIII R.8, there is no reason why the power of the Court should be curtailed and should stop short of a plea u/s 53 of TP Act. The procedural difficulties in considering a claim u/s 53 should not be a reason to deprive the Court from considering a claim and the defence. Civil courts are enjoined to consider the disputes between the parties and when substantive rights are created and such rights are being flouted, it is for the civil court to consider the respective contentions and arrive at a proper decision.
Civil courts are enjoined to consider the disputes between the parties and when substantive rights are created and such rights are being flouted, it is for the civil court to consider the respective contentions and arrive at a proper decision. That the consideration of such matters would be comprehensive should never be a reason to take away the jurisdiction of a civil court. Civil Court is bound to consider all suits of a civil nature except, suits of which their cognizance is expressly or impliedly barred. 21. In the light of the above discussion, we are of the view that judgment in Rajan's case (supra) does not lay down the correct law. While considering an application under O.XXXVIII R.8, the Court is enjoined with the power to consider whether the transfer is fraudulent in terms of S.53 of the TP Act. 22. In the light of the aforesaid finding, the impugned orders of the Court below in the above appeals stands set aside and the matter is remitted back to the Court below to consider whether the transfers effected prior to the date of attachment are hit by S.53 of the TP Act. Appeals are disposed of as above.