Madras High Court
Alamelu Ammal vs Chinnaswamy Reddiar on 2 December, 1988
Equivalent citations: (1988)2MLJ395
JUDGMENT K.M. Natarajan, J.
1. This appeal is filed by the decree-holder against the judgment of the learned Subordinate Judge, Cuddalore reversing the judgment and decree passed by the District Munsif, Cuddalore.
2. The facts, which are necessary for the disposal of this appeal, can briefly be stated as follows:
The appellant herein obtained a money decree against one Harribabu on the basis of a promissory note dated 9-2-1976 for Rs. 6,000. She filed the suit on 6-11-1978 and attached the properties, which are the subject matter of this appeal, by way of attachment before judgment on 12-9-1978. Thereafter, she got a decree on 19-11-1979 and proceeded against the properties for realising the decree amount by way of execution. At that stage, the respondent herein, who is the claimant, filed a claim petition under Order 21, Rule 58, C.P.C., to raise the attachment contending that he purchased the property from the judgment-debtor on 12-6-1978 for Rs. 10,000 long prior to the date of attachment and as such the attachment is to be raised. The said application was resisted by the appellant herein, who is the respondent before the executing Court, contending that at the time of the alleged purchase, moratorium was in force and as such she could not file a suit to proceed against the property of the judgment-debtor because of the said moratorium by virtue of the Tamil Nadu Agricultural Relief Act 15 of 1976. Since the transfer of the immovable property was effected during the period of moratorium, which was in force from 15-1-1976 to 15-7-1978, by the debtor, it should be presumed to have been effected with a view to defeat and delay the creditors until the contrary is proved.
3. In support of the contention, the claimant examined himself as P.W.1 and three witnesses were examined and Ex. A-1 to A-17 were marked. On the side of the appellant herein, R.W.1 was examined and Ex.B.1 to B.3 were marked. The executing Court dismissed the claim application holding that in view of Section 6 of Act 15 of 1976. Ex-A.15 the sale deed in favour of the respondent/ claimant was brought into existence only with a view to defeat and delay the creditors of the judgment-debtor. Aggrieved by the same, the respondent herein preferred an appeal in C.MA.No. 106 of 1981 before the Subordinate Judge, Cuddalore and the learned Judge allowed the appeal. Aggrieved by the same, this Civil Miscellaneous Second Appeal is filed, on the following substantial questions of law:
1. Is the learned Subordinate Judge right in holding that the appellant cannot question the validity of the sale in favour of the respondent in a proceeding under Order 21, Rule 58, C.P.C., as it is not a suit when the Amendment Act 104 of 1976 made it clear that the proceedings under Order 21, Rule 58 C.P.C., is in the nature of a suit?
2. When the sale effected in favour of third party was in contravention of the provisions of Tamil Nadu Act 15 of 1976, is the learned Subordinate Judge, right in holding that these provisions do not affect the third party when admittedly the sale took place between the period mentioned in the said Act?
4. Learned Counsel for the appellant Mrs. Chitra Sampath mainly submitted that the learned appellate Judge is thoroughly wrong in holding that the validity of the sale in favour of the claimant in contravention of the provisions of Act 15 of 1976 cannot be questioned in the execution proceedings and that the remedy of the decree-holder is to file a seperate suit, relying on the decision of this Court reported in Rukkumani Ammal v. Kamachi Animal . According to the learned Counsel, the said decision was rendered prior to the amended Act 104 of 1976 wherein it is provided that the claim application filed under Order 21, Rule 58, C.P.C., is to be tried as a suit and not in a summary way. Further, the learned Counsel submitted that even in spite of questioning the validity of the sale, on the principle of Section 53 of the Transfer of property Act it can be raised by way of defence to the claim application itself in view of the ratio laid down in the decision reported in Abdul Shukoor Sahib v. Anji Papa Rao which approved the decision of the Madras High Court reported in Ramaswami Chettiar v. Mallappa Reddiar I.L.R. 43 Mad.760 (F.B.) : 39 M.L.J. 350 : 12 L.W.475.
5. After hearing the arguments of both sides and on going through the judgment of the lower appellate court, I find that the learned Judge has not property understood the amended provision of Order 21, Rule 58, C.P.C., and the presumption raised under Tamil Nadu Act 15 of 1976 in the case of alienation during the period of moratorium. Further, the learned Judge, as rightly pointed out by the learned Counsel for the appellant, relied on Rukkumani Animal v. Kamachi Animal , and held that such questions can be agitated only by a seperate suit either under Section 53 of the Transfer of Property Act or by resorting to the provisions of the insolvency Act and the same cannot be gone into in these proceedings. The decision relied on by the lower appellate Court in Rukkumani Animal v. Kamachi Ammal , was one rendered prior to the amended Act 104 of 1976. But the learned Judge failed to consider the effect of the amended provision of Order 21, Rule 58, C.P.C., in view of Act 104 of 1976. In Southern Steelmet and Alloys v. B.N. Steel , a Bench of this Court held that "the adjudication referred to under Order 21, Rule 58, C.P.C. (as amended in 1976) is not summary and it is the intention of Legislature under the amended C.P.C., that it should be a decision as if rendered in a regular suit resulting in an appelable decree, the fuller examination of the rights of parties has to be held after giving them adequate opportunity to place all relevant materials before the Court so that the court could ultimately decide and adjudicate on all questions including questions relating to title or interest in the property attached." It is clear (from the ratio laid down in the abovesaid decision that) in view of the amended provisions of Order 21, Rule 58, C.P.C., the question of filing a seperate suit is barred and all questions relating to title or interest in the property attached have to be decided and adjudicated only in the claim proceedings and not by a seperate suit.
Even prior to the amended provision of Act 104 of 1976, their Lordships of the Supreme Court in Abdul Shukoor, v. Anji Papa Rao , had observed as follows:
It is not correct to say that a transfer which is voidable under Section 53(1) of the Transfer of Property Act can be avoided only by a suit filed by a creditor impugning the transfer on behalf of himself and the other creditors and not by way of defence to a suit under Order 21, Rule 63 C.P.C., by a transferee-claimant whose application has been rejected in summary proceedings under Order 21, Rules 58 to 61, C.P.C. After the amendment of Section 53 Transfer of Property Act in 1929, the rule that a suit by a creditor should be brought in a representative capacity would apply as such to a suit to set aside a summary order under Order 21, Rule 63, C.P.C. as to other suits. But the amended Section 53(1) does not refer to a defence to a suit and if a defence under Section 53(1) could be raised by an attaching creditor defeated under the Section, such a defence need not be in a representative capacity. There was nothing in Section 53(1) as it originally stood which precluded a defence by an attaching creditor to a suit to set aside a summary order under Order 21, Rule 63, C.P.C., that the sale in favour of the plaintiff is vitiated by fraud and the amendment has admittedly made no change in this matter.
The above view was already taken by this Court in a Full Bench decision reported in Ramaswami Chettiar v. Mallappa Reddiar I.L.R. 43 Mad. 760 (F.B.) wherein also it was held:
In a suit by an alienee, whose claim to property attached under a decree has been rejected, to set aside the order and establish his title, it is open to the attaching creditor to plead in defence that the transfer was in fraud of creditors.
It is clear from the ratio laid down in the above decisions that the attaching creditor need not file a separate suit under Section 53 of the Transfer of Property Act in a representative capacity to put forth his case that the transfer was in fraud of creditors and that he is entitled to plead by way of defence in the claim proceedings. In view of the Full Bench decision of this Court and that of the Supreme Court quoted above the decision reported in Rukkumani Ammal v. Kamachi Ammal is No Longer The Good Law, and it is unfortunate that the decision of the Full Bench of this Court was not brought to the learned Subordinate Judge. It is found from the judgment of the lower appellate Court that the presumption was laid only under Section 3 of Act 15 of 1976, while the presumption was raised only under Section 6 of the said Act. In view of the amended provision of Order 21, Rule 58, C.P.C. by virtue of the amended act 104 of 1976, which has been interpreted by a Division Bench of this Court in Southern Steelmet and Alloys v. B.N. Sttel , the view taken by the learned appellate Judge that the attaching creditor has to put forth his contentions in a separate suit and not in a claim proceeding, is not tenable and sustainable. Since the learned Appellate Judge had not approached the case in the light of the above well-established legal principles, but on the contrary, opposed to the same, and allowed the claim, it has become necessary for this Court to set aside the judgment and decree of the appellate Court, and remand the matter to the lower appellate Court for fresh disposal according to law. Since this Court is now remanding the matter, it is needless to express any opinion or give any finding on the question with regard to the nature of the transaction in favour of the claimant in view of the presumption under Section 6 of Act 15 of 1976. However, the substantial questions of law are answered accordingly in the light of the above legal principles.
6. In the result, this appeal is allowed, the judgment and decree of the lower appellate Court are hereby set aside and the matter is remitted back to the lower appellate Court which is directed to restore the appeal to its file and give due opportunity to both the parties and then dispose of the appeal on the materials available, on merits according to law and in the light of the observations made in this order as expeditiously as possible in any event within three months from the date of receipt of the records and this judgment. There will be no order with regard to costs in this appeal.