Patna High Court
Nauratan Lal vs Margaret Anne Stephen And Ors. on 28 July, 1922
Equivalent citations: 68IND. CAS.369, AIR 1922 PATNA 572
JUDGMENT Das, J.
1. This appeal arises oat of an order passed by the learned Subordinate Judge, First Court, Muzaffarpur, dated the 14th March 1921 and the first question which we have to consider is whether the order passed by the learned Subordinate Judge was one under Section 47 of the Code of Civil Procedure or one under Order XXI Rule 60 of the Code.
2. On the 30th June 19C9 the appellant recovered a decree against one Stephen for recovery of possession of certain properties and for ascertainment of mesne profits, In July 1909 Mr. Stephen executed a deed of trust, by which he transferred all the immoveable properties, of which he was then possessed, to his wife, Mrs. Margaret Anne Stephen, as trustee on her own behalf and on behalf of her minor children. The deed recited that the settler was desirous of making a settlement of his share in the properties conveyed for the benefit of his wife and children. It is admitted that the deed of settlement of the 23rd July 1909 covered all the properties to which Mr. Stephen was entitled or of which he was in possession. Mr. Stephen died on the 15th January 1915, and the applicants-respondents were substituted in the record of the suit as legal representatives of Mr. Stephen on the 26th June 1916. The Court which passed tie decree proceeded to ascertain the amount of mesne profits payable to the decree-holder and on the 3rd March 1917 it found that about Rs. 15,0i 0 was due to the decree-holder in respect of such mesne profits. It is to recover the sum awarded to him for and by way of mesne profits that the present execution proceedings were commenced by the decree-holder. On the 5th July 1920 Mrs. Stephen for herself and on behalf of her minor children presented a petition which purported to be a petition under Section 47 and Order XXI, Rule 58 of the Code by which they insisted that the properties attached in execution of the decree for mesne profits were their properties and not the properties of the judgment debtor and prayed that those properties be released from attachment. At the time when the petition of Mrs. Stephen and her miner children was presented to the Court they were in the record of the proceedings as the legal representatives of Mr. Stephen.
3. The learned Subordinate Judge has soma to the conclusion that, the transaction which resulted in the deed of settlement was a bona file transact on and has directed the properties to be released from attachment. If the order passed by the learned Sub-ordinate Judge was an order under Order XXI, Rule 60 of the Code, then no appeal lies from that order, bat if, on the other hand, the order was one under Section 47 of the Code, the order is appealable as a decree.
4. Section 47 of the Code provides that all questions arising between the parties to the suit in which the decree was passed, or their representative, and relating to the execution, discharge or satisfaction of the decree, shall be determined by the Court executing the decree and not by a separate suit. It has been held in oases far too numerous to mention that this section should receive the widest interpretation. It is not upon to doubt that at the time when the execution proceeding were taken the respondents had been substituted in the record of the suit as the representatives of the judgment-debtor. The question raised in this application is a question that arises between the parties to the suit in which the decree was raised or their representatives, and it undoubtedly relates to the execution, d if charge or satisfaction of the decree. It is no doubt claimed on behalf of the respondents that they have raised the question not as parties to the suit or as representatives of one of the' parties to the suit, but and claiming in their own right and by a title paramount to that of the judgment-debtor. It has, however, been held that an objection taken by a person who has became the representative of the judgment-debtor in the course of the execution of a decree to the effect that the property attached in satisfaction thereof is his own property, and cot held by him as such representative, is a matter cognizable only under Section 47 of the Code of Civil Procedure and not the proper subject matter of a separate suit by a party against whom an adverse order may have been passed. See Punchanun Bundopadhya v. Rabia Bibi 17 C. 711 : 8 Ind. Dec. (n. s.) 1016 (F. B.). This view of the law has been affirmed by the Calcutta High Court in the later case of Ago Koer v Gorak Nath 27 Ind. Cas. 321 : 19 C. W. N. 517s 20 C. L. J. 481. It appears to me that where qua the execution proceedings a person happens to be the representative of the judgment-debtor, any question raided by him can only be decided under Section 47 of the Code. The distinction between a proceeding under Section 47 and a proceeding under Order XXI, Rule 58 is this: that all objections to attachment raised by a party to the suit in which the decree was passed or his representative come under Section 47 : but objections to attachment raised by a third party come under Order XXI, Rule 58. In this case the objection was raised not by a third party bat by the representatives of a party to the suit. In my opinion, then the order passed by the learned Subordinate Judge was an order under Section 47 and is, therefore, appealable as a decree.
5. I now come to the merits Section 53 of the Transfer of Property Act provide as follows:---Every transfer of immoveable property, made with intent to defraud prior or subsequent transferees thereof for consideration, or co-owners a or other per oris having an interest in such property, or to defeat or delay the creditors of the transferor, is voidable at the option of any person so defrauded, defeated or delayed." Where the effect of any transfer of immoveable property is to defraud, defeat or delay any such person, and such transfer is made gratuitously, or for a grossly inadequate consideration, the transfer may be presumed to have been made with such intent as aforesaid. Nothing contained in this section shall impair the rights of any transferee to good faith and far consideration." Now in order to determine "the question which has been raised in this appeal it is necessary to remember first that the trust deed was executed within one month of the decree passed against Mr. Stephen for the ascertainment of mesne profits payable by him to the decree-holder; and secondly, the dead of settlement has in fast put out of the reach of the decree holder every item of immoveable property to which the judgment-debtor was entitled or of which he was in possession. The learned Subordinate Judge has, however, come to the corelusion that the judgment debtor was at (he time of the decree in a solvent position and that he was able to pay off any debts that he might have contracted. I regard this finding as a finding that the effect of the transfer was not to defraud, defeat or delay any creditor. It is, therefore, necessary to see whether his finding can be supported by the evidence in the record.
6. The learned Subordinate Judge has relied upon the evidence of Mrs. Stephen and on the following circumstances; first, upon the letter, Exhibit 2, dated the 29th January 1910 which constitutes an admission by one Knowles Mr. Stephen to the effect that he owed Mr. Stephen Rs. 26,109,11-3 : secondly, upon the pass-book of Allahabad Bank whish shows that in June 1912 two separate sums consisting of Rs. 1,040 and Rs. 17,450 were transferred to the account of Mrs. Stephen from the account of Mr. Stephen; thirdly, upon the fact that Mr. Stephen had several accounts with several Banks. I shall coma to the evidence of Mr. Stephen presently; but so far as the other circumstances relied upon by (he learned Subordinate Judge are concerned, they do not, in my opinion, establish that on the 23rd July 903 he was in insolvent circumstances. The letter of Mr. Knowles, Exhibit 2, is datel the 29th January 1910 and it appears to me that for the purpose of his losing of the paint whish has been raised in the case, it is not material to consider what the circumstances of Mr. Stephen were in 1910. Apart from this, all that the letter establishes is that there was a sum of money dm to Mr. Stephen from Mr. Knowles. Mr. Stephen's evidence establishes that this Bum of money was due to Mr. Stephen on account of a share which he had in the business which was being managed by Mr. Knowles. Although Mrs. Stephen does not admit, taut the business has failed, she admits that the business never at any time paid anything substantial to Mr. Stephan I regard the letter of the 29th January 1910 as entirely irrelevant.
7. The extract from the pass book of the Allahabad Bank, Exhibit 3, upon which the learned Subordinate Judge relies, shows that a certain sum of man y was transferred to the account of Mrs. Stephen from 4 1/2 percent, fixed deposit account. The learned Subordinate Judge has assumed without any evidence whatever that this sum of money was transferred to her account from the account of her husband. Mrs. Stephen did indeed make an attempt to establish that these Stuns of monies were transferred to her account from the account of Mr. Stephen; but she had to admit is re-examination that the fixed deposit accounts were her own accounts and that there was no transfer to her account from the account of her husband. This was, therefore, not a circumstance on which the learned Subordinate Judge should have relied for coming to the conclusion that Mr. Stephen had funds out of which the demands of his creditors avoid have been met. The learned Subordinate Judge then says that Mr. Stephen had accounts with several Banks whish presumably means that ha had a large sum of money standing to his credit in several Banks. There is, however, no evidence on this point. All that Mrs. Stephen does say in her evidence is that she thinks that Mr. Stephen had a banking account in 190), but that she does not know in what Bank he had an ancient. The learned Subordinate Judge has completely misunderstood thee Vidmea on the point. Mrs. Stephen's evidence shows that he had several account in several Banks She admits that she had no money of her own and that she started these accounts with monies given to her by her husband. Her evidence also shows that her husband was speculating in stocks and shares. Her husband's pass-books have not been produce in the case, It was possible for Mrs. Stephen to produce the pass-books of her husband if it be her case that he had several backing accounts. The evidence of Mrs. Stephen leaves no doubt in my mind that Mr. Stephen put all his money in the name of his wife and that at no time did Mr. Stephen have a banking account of his own. In my opinion, the learned Subordinate Judge was not justified in naming to the conclusion that Mr. Stephen was in a solvent condition in 1909. The trust-deed effectively put out of the reach of the decree-holder ail the immoveable properties that Mr. Stephen had, So far as actual money is concerned, he put it all in the name of his wife while he was gambling in stocks and shares. Mrs. Stephen has not shown that there was any fund against which the decree-holder could have proceeded for the realization of the money found due to him by the decree for mesne profits. The effect of the transfer of the 23rd July 1909 has undoubtedly bean to defendent, defeat or delay the decree-holder. We must accordingly presume that the transfer was made with the intent to defraud, defeat or delay the creditors. The transfer was, as I have said before, made within one month of the decree and I have no doubt whatever in my mind that it was made with intent to defeat the decree-bolder. Mrs. Stephen herself says in her evidence that when they heard that her husband had lost the suit which the decree-holder has instituted against him she and other people advised her husband to execute a deed to safeguard the interest of herself and her children. There is no apparent reason why he should have executed the trust deed. Mrs. Stephen in her evidence says that her husband anticipated trouble with his step mother and step-sister; but why he should have anticipated the trouble has not been made dear in the evidence. Mrs. Stephen docs say that after the execution of the trust-deed she was in possession of the properties; hut she admits that she has lost all the accounts dealing with the trust estate and that she has no counter-foils of the receipts granted by her to the tenants. She admits that she executed a power-of-attorney in favour of her husband to enter into all business transactions on her behalf. I have no doubt whatever that possession remained with Mr. Stephen notwithstanding the execution of the trust-deed. I hold that the trust deed of the 23rd July 1909 was a fraudulent device to defeat the appellant and that he is entitled to proceed with his execution proceedings notwithstanding that document. The transaction resulting in the execution of the trust-deed is, therefore, voidable at his option and the feet that he has instituted execution proceedings in respect of those properties establishes that he has exercised the option to avoid the transaction.
8. I would allow this appeal, set aside the order passed by the learned Subordinate Judge and direct that execution proceedings do proceed. The appellant is entitled to his costs throughout.
Coutts, J.
9. I agree.