Madras High Court
Mrs.T.Komati vs M/S.Sundaram Finance Limited on 12 March, 2018
Author: R.Subramanian
Bench: R.Subramanian
1
IN THE HIGH COURT OF JUDICATURE AT MADRAS
Reserved on Delivered on
20.02.2019 28.02.2019
CORAM:
THE HONOURABLE MR.JUSTICE R.SUBRAMANIAN
Application Nos.1034 and 1035 of 2019
in EP Nos.70 and 71 of 2016
Mrs.T.Komati ... Applicant in both the Petitions
Vs
1. M/s.Sundaram Finance Limited,
No.21, Pattulos Road,
Chennai 600 002.
2. T.Sadasivam Naveen Senthooran
3. P.R.Thirunavukarasu ... Respondents
Prayer: Applications are filed under Order XIV Rule 12 of the High Court,
1994, praying to set aside the order passed by the learned Master in (i)
A.No.1525 of 2017 in E.P.No.70 of 2016 (ii) A.No.1314 of 2017 in E.P.No.71
of 2016 dated 12.03.2018 respectively.
For Applicant : Mr.M.Nandakumar
for Mr.T.Nirmaleswar
For Respondents : Mr.T.Srinivasaraghavan
http://www.judis.nic.in
2
C O M M ON O R D E R
These applications have been filed by the third party claimant in the Execution proceedings challenging the orders of the learned Master dated 12.03.2018 made in Applications Nos.1314 of 2017 and 1525 of 2017 refusing to raise the attachment in respect of the schedule mentioned immovable properties at the instance of the third party claimant.
2. The brief facts that led to the filing of the Applications before the learned Master are as follows:
The first respondent decree holder had advanced monies to the second respondent/ judgment debtor for purchase of Motor Vehicles during the year 2012. Since the second respondent failed to repay the loan, the 1st respondent /decree holder repossessed the vehicles and sold them by way of auction. The sale proceeds were insufficient to satisfy the debt due. Hence the 1st respondent initiated Arbitration proceedings and Arbitral awards were passed by the sole Arbitrator. In execution of the Arbitral awards, the 1st respondent- decree holder filed the Execution Petitions in EP Nos.70 and 71 of 2016. In the Execution Petitions, the 1st respondent sought for attachment of the immovable property belonging to the 2nd respondent. The 1st respondent specifically alleged that with a view to defeat the rights under the decree, the 1st respondent had created certain http://www.judis.nic.in 3 documents thereby settling the property in the name of his mother the applicant herein.
3. The learned Master had passed an order of interim attachment. On passing of the order of interim attachment, the applicant had filed Application Nos.1314 and 1525 of 2017 seeking to raise the attachment. The sum and substance of the contention of the applicant before the learned Master is that, the 2nd respondent had executed a Registered Settlement Deed dated 11.04.2014, in and by which, he had settled the properties in favour of the applicant. Therefore, on the date when the Arbitration proceedings were initiated, the applicant was the owner of the property and the 2nd respondent had lost the title over the property on execution of the settlement deed. Therefore, according to the applicant, the properties could not have been attached in execution of the Arbitral awards passed against the 1st respondent.
4. This claim was resisted by the 1st respondent decree holder contending that the very settlement deed has been executed only with an intention to defraud the creditor, namely the 1st respondent. It is the further case of the 1st respondent that inasmuch as the debt was in existence on the date when the settlement deed came to be executed and the settlement http://www.judis.nic.in 4 being a gratuitous transfer, cannot confer a better title on the settle and the property would remain answerable to the debts of the settlor.
5. The learned Master, who heard the application concluded that the transfer hit by Section 53 of the Transfer of Property Act. Therefore, the 1st respondent had every right to proceed against the immovable property subject matter of the settlement deed dated 11.04.2014, as if it continued to belong to the 1st respondent- judgment debtor.
6. Aggrieved the applicant has filed these applications in the nature of the Appeal against the order of the Master.
7. I have heard Mr.T.Nirmaleswar, learned counsel appearing for the applicant and Mr.T.Srinivasaraghavan, learned counsel appearing for the respondent-decree holder.
8. Mr.T.Nirmaleswar, learned counsel appearing for the applicant would essentially submit that the transfer having taken place prior to the award, the 1st respondent decree holder has no right to proceed against the properties subject matter of the settlement. Relying upon Section 64 of Code of the Civil Procedure, he would submit that any private alienation made after the order of attachment alone can be treated as void. In the http://www.judis.nic.in 5 case of the alienation prior to the attachment unless the alienation is declared to be fradulent one within the meaning of Section 53 of the Transfer of Property Act, the Court cannot proceed to attach the immovable property. He would also draw my attention to Section 53 of the Transfer of Property Act, contend that unless the attaching creditor brings in a suit under Section 53 that too on behalf of the whole body of the creditors and seeks a declaration that the sale or transfer is fradulant within the meaning of Section 53 of the Transfer of Property Act, the creditor cannot proceed to attach the immovable property which has been transferred by the debtor prior to the order of attachment.
9. In support of the said submission Mr.T.Nirmaleswar, would rely upon the judgments of this Court in
(i) P.Srinivasan v. Suseelabai and Ors., reported in 1991 (2) LW 404, wherein, the Hon’ble Mr.Justice M.Srinivasan, had held that in order to maintain a suit under Section 53 of the Transfer of Property Act, it must be shown that there are more than one creditor inasmuch as Section 53 contemplates a suit representing the whole body of the creditors.
(ii) Pinna Thevar v. M.S.Maniam and S.Jayaseelan, reported in 2006 (4) MLJ 820, wherein Hon’ble Mr.Justice Muttaci Jeyapaul, reiterated the law declared by Hon’ble Mr.Justice..Srinivasan, in http://www.judis.nic.in 6 P.Srinivasan v. Suseelabai, supra.
10. The learned counsel would also rely upon the judgment of mine in Ammavasai v. Tulasikannu and Ors., reported in MANU/TN/1921/2017, wherein, I had followed the aforesaid two judgments and held that the suit under Section 53 can be maintained only when there is a plurality of creditors.
11. The learned counsel would also draw my attention to the judgment of Hon’ble Mr.Justice K.P.Sivasubramaniam, in M.Govinda Gounder v. Pichandi Pillai and Parasurama Gounder, reported in 2003 (2) LW 79, wherein the learned Judge has held that unless fraud or creditor is established the sale would be valid.
12. Contending contra Mr.T.Srinivasaraghavan, learned counsel appearing for the 1st respondent judgment debtor would draw my attention to the judgment of the Hon’ble Supreme Court in C.Abdul Shukoor Saheb v. Arji Papa Rao, reported in AIR 1963 SCC 1150, wherein the Hon’ble Supreme Court had held that a defence based on Section 53 is allowed and the said defence need not be in the representative capacity. While holding so, the Hon’ble Supreme Court had observed as follows.
“28. Section 53(1) Of the Transfer of Property Act http://www.judis.nic.in 7 rendered the transaction voidable at the instance of the creditors if the transfer was effected with the particular intent specified and the statute does not prescribe any particular method of avoidance. Referring to this the learned judges observed :
"If the creditor knowing of the transfer applies for attachment; the application is sufficient evidence of his intention to avoid it; if he only hears of the transfer when a claim petition is preferred under O. 21, R. 58, and still maintains his right to attach, that again is a sufficient. exercise of his option to avoid and entitles him to succeed in the subsequent suit under R. 63".
They further pointed out that "the suit under R. 63 is by the unsuccessful party to the claim petition ‘to establish the right which he claims to the property in dispute’. Whether this suit be instituted by the attaching decree holder or by the transferee claimant it must equally be decided in favour of the former if the transfer is shown to have been fraudulent; because, in consequence of the fraudulent character of the transfer and its avoidance by the judgment-creditor, the result, is that the transferee has not the right which he claims, namely, to hold the property free from attachment in execution by the judgment creditor."
29. The learned judges based their conclusion on this and on several other lines of reasons which we consider unnecessary to set out, but it is sufficient to say that we are in entire agreement with all of them. http://www.judis.nic.in 8 There is therefore no substance in the point, that there is anything 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 O. 21, R. 63, that the:
sale in favour of the plaintiff is vitiated by fraud of the type specified in the earlier quoted provision and the amendment has admittedly made no change in this matter.”
13. I have considered the rival submissions.
14. From the above judgment of the Hon’ble Supreme Court, it is clear that the attaching creditor can avoid a transfer by merely applying for attachment and if the purchaser or the transferee makes a claim over the property, it is open to the attaching creditor to defend the said claim, contending that the transfer itself is fraudulent. Therefore, from the above pronouncement of the three Judge Bench of the Hon’ble Supreme Court, it is clear that it is not necessary for a creditor, who wants to avoid a transfer under Section 53 of the Transfer of Property Act, to necessarily institute a suit. It is open to him to avoid the transfer by raising a defence in a Claim Petition or in a suit instituted under Order 21 Rule 63, as it stood prior to the amendment in 1976.
15. In the case on hand, I am of the opinion that the question of http://www.judis.nic.in 9 fraudulent intention or the question of the purchaser being a bona fide purchaser for value without notice do not arise at all. The very object of Section 53 of the Transfer of Property Act, is to protect a bona fide purchaser for value without notice of the fact that the transferor is indebted.
16. The transfer in the case on hand is a gratuitous transfer executed by the son, in favour of his mother, only with an intention to defeat the rights of the creditor namely, the 1st respondent. Being a gratuitous transfer, I am of the considered opinion that it will stand on a different footing from a transfer for consideration. The three judgments relied upon by the learned counsel for the applicant, related to alienations for consideration made by the judgment debtor and the suits were filed under Section 53 by the creditor, who wanted to have those alienations declared invalid as against his right to execute the decree. It was under those circumstances, it was held that in order to invoke Section 53, particularly by the creditor as a plaintiff, it should be shown that there were plurality of creditors and one single creditor cannot maintain a suit. But the factual position is little different in the case on hand. By attaching the property in question despite the fact that the same had been alienated the creditor has expressed his intention to avoid the transfer. Once the creditor expresses his or its intention to avoid the transfer, it is for the purchaser or the transferee show that, he or she is a bona fide purchaser or transferor for a value without http://www.judis.nic.in 10 notice of the claim. In the case on hand, the transfer being a gratuitous transfer, I do not think such a defence is open to the transferee.
17. In view of the above, I am of the considered opinion that the learned Master was perfectly justified in rejecting the claim of the applicant, holding that the properties in the hands of the applicant are liable to be attached in execution of decree obtained against the 1st respondent.
Therefore, these applications are liable to the dismissed and are accordingly dismissed. However, in the circumstances there shall be no order as to costs.
28.02.2019 jv Index : Yes Internet: Yes Speaking order http://www.judis.nic.in 11 R.SUBRAMANIAN,J.
jv Pre Delivery Order Application Nos.1034 and 1035 of 2019 in EP Nos.70 and 71 of 2016 28.02.2019 http://www.judis.nic.in