AIR 1973 Ori 229 : (1973) 39 CLT 316
ORISSA HIGH COURT
JAYAKRISHNA DEBATA — Appellant
CHAITAN PANI — Respondent
( Before : S. Acharya, J )
Second Appeal No. 14 of 1970
Decided on : 23-01-1973
· Transfer of Property Act, 1882 — Section 53
Counsel for Appearing Parties
Samareswar Mohanty, for the Appellant; B.B. Mohanty, for the Respondent
Final Result : Allowed
S. Acharya, J.—The defendant has preferred this second appeal against the decision of the Additional Subordinate Judge, Cuttack in Title Appeal No. 202 of 1965 confirming the decision of the First Munsif, Cuttack in Title Suit No. 30 of 1960.
2. Defendant Jayakrishna Debata instituted Money Suit No. 112 of 1952 against one Jagannath Debata in the Court of the Subordinate Judge, Cuttack and obtained a money decree on 6-1-58 against the said Jagannath. When the said suit, instituted in 1952, was pending in the Trial Court, Jagannath Debata sold the suit property along with some other lands as per a registered sale deed dated 31-8-1956 in favour of the plaintiff and one Sari Debi. In execution of the decree obtained in Money Suit No. 112 of 1952 the defendant attached the suit property. The plaintiff, who purchased the suit land as mentioned above, preferred an objection under Order 21, Rule 58, CPC which was dismissed for default, whereupon he has filed this suit under Order 21, Rule 63, CPC for a declaration of his title and possession in respect of the suit property and for a permanent injunction on the defendant restraining him from selling the suit property in the said execution case.
3. The defendant, appellant herein, contests this suit, inter alia, on the ground that the sale deed dated 31-8-56 in favour of the plaintiff is a fraudulent and sham transaction and no consideration passed thereunder. The plaintiff was never in possession of the suit property and the said Jagannah Debata is still in possession thereof. It is also averred that the above-mentioned sale in favour of the plaintiff was with the intent to delay and/or defeat the defendant-creditor's claim against Jagannath Debata and it was not in good faith.
4. The learned Munsiff held that the sale deed was duly executed and was for consideration and that the plaintiff acquired good title to the suit property under the sale deed, and he has been in possession of the suit property since he purchased the same.
The Appellate Court on a consideration of the evidence on record confirmed the aforesaid findings of the Trial Court.
5. Mr. S.S. Mohanty, the learned counsel for the appellant, contends that the courts below proceeded to discuss this case entirely on an illegal and incorrect basis as they did not at all apply their minds to the various other aspects of the matter which they were called upon to decide in a suit of this nature. He also contends that the finding of the Appellate Court at paragraph 6 of its judgment that the question of fraud or defeating the claim of the creditor does not arise in this case as the plaintiff purchased the suit land long before the passing of the judgment in the money suit, and at that time there was no relationship of creditor or debtor between the parties to the money suit, is incorrect and illegal in view of the provisions of Section 53 of the Transfer of Property Act. He submits that in the aforesaid Money Suit it has been adjudged that the defendant in the present suit has some outstanding dues against Jagannath Debata, the plaintiff's vendor, and so the defendant, the decree-holder in the Money Suit, is in the position of a subsequent creditor in relation to Jagannath, the judgment-debtor in that suit, and accordingly the Court's decision to the above effect is absolutely incorrect and illegal. In support of this second contention Mr. Mohanty cites the Division Bench decision of the Madras High Court reported in AIR 1965 Mad 395, Umar Sait v. Union of India wherein it has been held:
"It is now well settled that for the purpose of avoiding a transfer by a debtor u/s 53 of the T. P. Act it is not necessary that the transferor should have been actually indebted at the time he makes the transfer. A transfer intended to cheat future creditors would be equally voidable at their instance."
Their Lordships after giving an illustration to support their above-mentioned view have quoted with approval the law on this subject as stated in Halsbury's Laws of England, 3rd Edition, Vol. 17 at page 660 which is as follows:
"With the above exceptions, all creditors who have been prejudiced by the alienation made with intent to defraud them, whether their debts were owing at the date it was made or were incurred subsequently, may avoid the alienation and share in the distribution of the property comprised therein. Although subsequent creditors have the same right to set aside an alienation made with intent to defraud them as creditors whose debts were due at the date of the alienation, they have a more difficult task than the latter class of creditors in proving a fraudulent intent on the part of the grantor in the case of a voluntary settlement. In such case they must prove either an express intent to defraud creditors, that, immediately after the settlement, the grantor had no sufficient means or reasonable expectation of being able to pay his then existing debts. In the absence of an express intent to defraud, a voluntary deed will not be set aside at the instance of a subsequent creditor if all creditors existing at the date of the deed have been paid off."
In the case reported in AIR 1954 Mad 173 at p. 176 (Kallubandi Nanjamma v. Kethe Rangappa) their Lordships have observed that u/s 53 of T. P. Act it is not merely the creditors who are in existence at the date of the transfer but also subsequent creditors that are entitled to avoid it.
In Magnibai Kishorjee v. Kesrimal Sewairam, AIR 1955 Madh Bha 159, it has been held that the word "creditors" in Section 53 would include even the future or subsequent creditors. Their Lordships have also held that any creditor whether he be one at the time of transfer or even a subsequent one is clothed with a substantive right u/s 53 of the Transfer of Property Act to avoid such a transfer.
In the case reported in AIR 1948 Bom 265, (Abdullakhan Daryakhan v. Purshottam Damodar) it is held:
"It (the term "creditor") includes not only those creditors who have obtained decrees against their debtors, but also ordinary creditors whose claims have yet to be proved in a Civil Court."
The decision reported in AIR 1931 333 (Oudh) is also to the same effect.
I am in full agreement with the above-mentioned decisions on this question.
6. It is provided in the last paragrah of Sub-section (1) to Section 53 of the T. P. Act and conceded by Mr. B.B. Mohanty, the learned counsel for the respondent, that the term "creditor" includes a decree-holder. Mr. B.B. Mohanty, however, contended that as the decree was passed subsequent to the aforesaid sale, the decree-holder was not in the position of a creditor in relation to the said Jagannath at the time of the said sale, and so the provisions of Section 53 of the T. P. Act will not enure to the benefit of the defendant-decree-holder. In view of the law as well settled in the above-mentioned decisions this contention is not acceptable, as for the purpose of avoiding a transfer by a debtor, u/s 53 of the T. P. Act it is not necessary that the money claims put forward against him should have been proved and decreed in the Civil Court or that the transferor should have been actually indebted at the time he makes the transfer. Moreover as seen from the above decisions the word "creditor" in Section 53 of the T. P. Act would include even the future or subsequent creditor. In the above view of the matter the defendant, being a subsequent decree-holder, is in the position of a subsequent creditor in relation to Jagannath, the judgment-debtor in the Money Suit. So the substantive right conferred u/s 53 of the T. P. Act will be available to him if the other requirements of the section are established in this case.
7. On the facts of this case and in view of the well settled law on the subject as mentioned above, the approach of the Court to the above particular aspect of the matter and its conclusions thereon as stated in paragraph 6 of the impugned judgment are entirely illegal and incorrect. Thus the above-mentioned second, contention of Mr. B.B Mohanty is correct and justified.
8. On a perusal of the judgments of the two courts below and on hearing the counsel appearing for both the parties I also find that both the parties in the suit and the two courts below have not at all bestowed any consideration to and have not approached the matter in controversy in the correct legal perspective. Both the courts below bestowed their attention mostly to enquire and decide as to whether the sale deed executed in favour of the plaintiff was a valid one, whether the plaintiff acquired good title to the suit property under the same, and whether he was in possession of the same. The Trial Court of course correctly framed two issues (Issue Nos. 7 and 8) to decide whether the transfer made in favour of the plaintiff was with the intent to defeat or delay the creditors and whether the said transfer was made in good faith and for consideration. The aforesaid issues are the two most important issues in this case and are in conformity and/or in consonance with the provisions of Section 53 of the T. P. Act. But on a perusal of the judgments of the courts below I am left with the impression that neither the parties nor the courts below understood the true implication of the said two issues, or the scope of the suit, the matter in controversy and the specific questions which arise for consideration and decision in this case in the perspective of the provisions of Section 53 of the T. P. Act. The counsel for both the parties state that from the records of the case it is quite evident that both the parties were not correctly advised to bring into record the proper evidence necessary to decide issues Nos. 7 and 8 in the correct legal perspective. They are justified in their above submission. That being the position, in the interest of justice, the case should go back to the Trial Court in order to enable both the parties another opportunity to adduce fresh evidence on Issues Nos. 7 and 8 framed in this case. The Trial Court after recording fresh evidence, if adduced, to the above effect, should dispose of the matter in accordance with law keeping in view the provisions of Section 53 of the T. P. Act and the findings and observations contained in this judgment. The concurrent finding of fact that the sale deed in favour of the plaintiff was duly executed and it was for consideration and that the plaintiff has been in possession of the suit land since he purchased the same, shall not be disturbed, and the Trial Court should decide the matter in the context of the said concurrent finding.
9. In the result, therefore, the judgments and decrees of both the courts below are set aside and the suit is remanded to the Trial Court for a fresh decision of the matter in accordance with law and in accordance with the observations and directions given above.
The appeal accordingly is allowed. Costs will abide by the final decision of the case. The L. C. R. be sent back soon to the Trial Court.