money recovery suit/ sp. appl. for injunc. O.39
S. Fernandes
(Querist) 28 March 2010
This query is : Resolved
I filed suit for money recovery of 31 lakhs from a registered partnership firm. The firm entered into MOU with 3rd party to dispose off its property. I filed for interim injunction O.39, to restraint firm form selling the property so that my recovery will not be affected. Summons were served on the respondents, i.e. firm & partners and order of injunction granted. However, during pendency of this litigation between the period of filling and order, firm sold the property along with all its machinery for 55 lakhs., now firm is only a name with no assets, and also no money, as money received is very little and used to pay secured creditor. Transferee has now mortgaged the property for 1 Cr. to Nationalised bank.
Will the principal of les pendend apply, will contempt apply what are my recourses,
Please help with advise.
Parveen Kr. Aggarwal
(Expert) 28 March 2010
Although principle of lis pendens shall not apply as the property was not the subject matter of the suit. However, principle contained in section 53 of the Transfer of Property Act, 1882 may apply. Section 53:
"53. Fraudulent transfer.-(1) Every transfer of immoveable 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."
Contempt will not apply. But Order 39, Rule 2-A of the Code of Civil Procedure, 1908 will apply as the defendants has committed breach of the order passed by Court granting temporary injunction.
N RAMESH.
(Expert) 28 March 2010
I agree with Mr.Parveen Kumar
B K Raghavendra Rao
(Expert) 28 March 2010
The property has been sold by the firm between the period of filing of the suit and the temporary injunction granted. Therefore, you cannot proceed against the firm either for contempt of court nor for breach of temporary injunction.
Suit would result in decree against the firm for recovery of money but the firm is pauper. You in reality may not recovery any money even if decreed in your favour.
Parveen Kr. Aggarwal
(Expert) 28 March 2010
As a partnership firm is not a separate legal entity and jointly the partners, the liability of partners is unlimited. Even if the firm is having no property, the decree passed can be got executed against the partners or any of them if the partner(s) are having properties.
a.manoharan
(Expert) 29 March 2010
i agree with all counsels
N.K.Assumi
(Expert) 29 March 2010
Well siad and done and nothing to add.
S. Fernandes
(Querist) 14 April 2010
Thank you v. much for your replies, from which I realise that my position is weak.However on further contemplation and reading I note that section 52 of tr. of property act explicitly dealing with "lis pendend" this sec tion clearly states that sale during pendency of suit or order is voidable, since the injunction was eventually passed in my favor, can it not be interpreted that the sale deed be set aside, since it was executed during the pendency of the order being decided to restrain the defendants from alienating the same property??
