ORDER
S.S. Subramani, J.
1. The first defendant in O.S. No. 562 of 1977, on the file of the District Munsif’s Court, Vriddhachalam, is the appellant.
2. The plaintiff, who is the first respondent herein, filed the above suit for declaration of his title and permanent injunction to restrain the first defendant from interfering with his possession, and in the alternative, to recover possession from the defendants.
3. The material facts are as follows :-
Defendants 1 and 2 are brothers. The first defendant herein filed O.S. No. 246 of 1969, on the file of the District Munsif’s Court, Vriddhachalam, claiming half share in the plaint items in that suit. The sole defendant therein is the second defendant in the present suit. The suit was filed on 17.1.1969. A preliminary decree was passed on 26.3.1979, and a final decree was also passed on 20.3.1971. As per the final decree, the plaintiff therein was allotted half share and the second defendant herein was given the remaining half. The plaintiff was also awarded costs and mesne profits in the suit, allowing to recover the same from the second defendant herein.
4. Before execution was levied in the earlier suit, the second defendant executed a sale deed in favour of the plaintiff herein in respect of the portion of the property allotted to him on 15.5.1975. Ex.A-1 is the sale deed.
5. After the sale deed was executed, the first defendant levied execution for recovery of the costs and mesne profit awarded to him. He moved the application on 9.11.1976, and four items of properties belonging to the second defendant herein were attached. Item 4 in the schedule included the plaint item in this case. On 17.8.1977, the fourth item in the attachment schedule was sold, and the sale was confirmed on 19.3.1977. After confirmation of sale, he moved an application for delivery of the property or 17.11.1977, and delivery was recorded on 17.2.1978. In the meanwhile, the plaintiff herein filed the presentsuit on 24.11.1977 According to the plaintiff, he is not a party in O.S. No. 246 of 1965 and he purchased the property after paying consideration for the same. On the date of attachment, the property did not belong to the second defendant and he is bona fide purchaser for value. He apprehends that on the basis of the delivery list, the first defendant may interfere with his enjoyment, and consequently he wanted an injunction against him.
6. In the written statement filed by the first defendant (appellant herein), he disputed the validity of Ex.A-1 sale deed The main contention that was put forward by the appellant was that the sale deed was executed to defraud and delay the creditors, and Ex.A-1 has not come into effect. He also said that on the basis of Ex.A-1, the plaintiff did not get possession and the document is really sham. By effecting an attachment, he has really avoided the sale. According to him, the plaintiff will not get any right on the basis of the said document.
7. The trial court, after taking into consideration the evidence, both oral and documentary, has held that the plaintiff is a bona fide purchaser for value, and the document has come into effect, and consequent title and possession were declared.
8. The Appeal filed by the first defendant before the lower appellate court was not successful. The lower appellate court also found that the plaintiff is a bona fide purchaser for value. It also found that there are no circumstances vitiating the sale. The Appeal was dismissed. It is against the concurrent finding, the firs defendant has filed this Second Appeal.
9. In this Second Appeal, three Substantial questions of law have been raised for consideration :-
“1) Whether in law the Courts below were right in not presuming against the genuineness and truth of the sale particularly when the plaintiff himself admits that he had knowledge of the indebtedness of the first plaintiff?
2) Whether in law the Courts below were right in holding that Ex.A-1 is true and valid when it is not written on stamp paper and everything relating to the transaction was fraudulent? and
3) Whether in law the Courts below were right in holding that the suit was maintainable without a petition for raising the attachment?”
10. The learned counsel for the appellant has made the following Submissions and wanted this Court to interfere. He wanted this court to consider the following circumstances:- (1) Ex. A-1 sale deed was written on a plain paper, and the stamp duty was paid by the second defendant before the Sub-Registrar; (2) When the property was attached on 9.11.1976, the first defendant was not in the property, but the Amin who effected the attachment, has noted that the second defendant is in possession of the property, and he alone has signed the attachment warrant; (3) The first defendant was not in possession of funds for purchasing the property and the evidence mat is let in is that he borrowed the same from his sister, and (4) on the date when Ex. A-1 was executed, the second defendant was in insolvent circumstances, and he had debts to be cleared.
11. Ex. A-2 is the attachment warrant issued in E.P. No. 19 of 1976 in O.S. No. 246 of 1969. We find mat four items of properties were attached and the fourth item included the plaint item also. Item No. 4 in Ex. A-2 has been valued at Rs. 250/- by the decree holder. The measurement of Item No. 4 in Ex. A-2 is 35 x 55 feet with a building thereon. The property which is purchased by the plaintiff is having anarea of 20 x 40 feet. It is vacant land. From the boundaries described therein, it canbe seen that a portion of the property was retained by the second defendant, the original owner. The building and the site were also retained by him. Ex. B-8, B-9 and B-12 were also refened to by the learned counsel for the appellant to prove that Hems 1 and 2 in Ex. A-2 are already encumbered and the properties were in possession of strangers. On the basis of the said documents, it is seen that during the years 1964 to 1967, the second defendant has executed certain mortagages in favour of third parties. Regarding Item No. 3, in Ex.A-2, the same is valued by the first defendant at Rs. 1040/-. The said property is free from encumbrances and is having an extent of 26 cents. The E.P. was filed for recovery of anamount of mearly Rs. 700/-.
12. Prima Facie, the document stands in the name of the plaintiff. The genuineness of the document is not disputed, though the legal validity is questioned Under Section 53 of the Transfer of Property Act. By virtue of the said Section, a creditor can avoid a transaction if he can prove that the transfer was effected to delay or defeat his right or that of the other creditors. It is settled law that for the purpose of invoking Section 53 of the Transfer of Property Act, a suit is not necessary. The appellant as the defendant, can question the validity of the transaction in defence. The same is settled in the decision (C. Abdul Shukoor Saheb v. Arjit Papa Rao). Paragraph 31 of the said judgment is relevant for our purpose. It reads thus:-
“We shall first refer to the purpose of the amendment. In decisions rendered prior to the amendment, there were a large number in which it was held, following certain English cases decided with reference to 13 Eliz. Ch.5 on which Section 53(1) was based, that suits by creditors for avoiding a transfer Under Section 53(1) was a representative action. To that general rule however, an exception was recognised in a number of decisions when the suit was to set aside a summary order under Order 21 Rule 63 and was brought by an attaching decree holder against whom an adverse order had been made in the summary proceedings, it being held that such a suit need not be in a representative capacity. The decisions on this point were however not uniform. It was merely to have a uniform rule and to avoid these conflicting decisions that the third paragraph was inserted so that after the amendment the rule that a suit by a creditor should be brought in a representative capacity would apply as much to a suit to set aside a summary order under Order 21 Rule 63 as to other suits. It was not suggested that there was anything to the terms of the amended Section 53(1) which referred to a defence to a suit and, infact, learned Counsel did not contend that if a defence Under Section 3(1) could be raised by a defeated attaching- creditor such a defence had to be in a representative capacity, and we consider that learned counsel was correct in this Submission. From a provision as to how a plaintiff, if he filed a suit, should frame it, we can see no legical process by which it could be held that a defendant cannot impugn the validity of the sale which is voidable at his instance. We have, therefore, no hesitation in rejecting the legal point urged on behalf of the appellant.”
So, the first defendant (appellant) is entitled to take a defence and if he Substantiates the same, the plaintiff is not entitled to get a decree. But, the law is also settled that to avoid a transation, he must prove that the document is invalid.
13. The evidence of the appellant as D.W.1 shows that from 1972 to 1976, he was not in station and was employed in Bombay. He is also not in a position to give the details of the indebtedness of the second defendant. He is in a position only to prove that on the basis of this decree, some amount is due to him towards mesne profits and costs. That comes only to nearly Rs.700/-. He also admits that Item No. 3 in Ex.A-2 is free from any attachment or encumbrance. He also admits that the second defendant is even now in possession of Item No. 4, ie., the residential portion of the property and that he is occupying the same. He also does not speak anything about the intention of the plaintiff and the second defendant regarding Ex.A-1 transfer. Only if D.W.1 is in a position to prima facie prove that Ex.A-1 was executed fraudulently, the plaintiff need prove his case by adducing rebutting evidence.
14. The circumstances also do not support the case of the appellant. If the second defendant wanted to defraud the creditors, he need not have retained a portion of Item No. 4 for himself. Again, the valution for the entire Item No. 4 in Ex. A-2 including the building is only Rs. 250/-. But the plaintiff has purchased a portion of Item No. 4 in Ex. A-2 excluding the building for Rs. 875/-. A reading of the document itself shows that the second defendant has retained a portion. Again, Item No. 3 is valued at Rs. 1,040/- even by the appellant. That alone will be sufficient to discharge the entire debt for which the execution was filed. Even though we find that the second defendant executed mortages as per Exx. B-8, B-9 and B-12, the ownership was retained by him and the appellant has valued the said items at Rs. 2,490/- and Rs. 3,870/-respectively. Exx. B-8, B-9 and B-12 were executed long before O.S. No. 246 of 1969 was filed. We have no evidence in this case that at that time the second defendant was indebted, to anyone. Those items, 1, 2 and 3 were also availabe and the second defendant continued to be the owner of those items. Item 3 and a portion of Item 4 were in his physical possession.
15. Both the courts below have factually held that Ex.A-1 is a genuine transaction and the plaintiff purchased the property after bona fide enquiry. P.W. 1 has stated that at the time when he purchased the property, he was not aware about the financial position of his vendor, nor about the decree. The plaintiff also would not have contemplated execution to be filed nearly two years after his purchase.
16. An argument was taken by the learned counsel for the Appellant that the document Ex. A-1 was written on a plain paper, but the stamp duty was paid by the second defendant. It shows that the second defendant was intending to create only a sham document prepared by himself so as to avoid the decree. The said contention cannot be accepted. P.W. 1 states that during the relevant time, stamp papers were not available and he paid Rs. 90/- for the purpose of stamp duty, through the second defendant. The trial court believed the said version and the lower appellate Court confirmed the same. No other circumstances was brought to our notice to take a different view.
17. It was further contended that at the time when the property was attached, the second defendant alone attested the warrant and he alone was present. According to the learned counsel for the appellant, the said conduct will show that the plaintiff was not in possession of the property, and on the basis of Ex. A-1, possession did not pass. The said contention also cannot be accepted, for if we read Ex. A-2, it can be seen that Item No .4 included the residential building of the second defendant and also the property around the same. The attachment was effected not with any notice to the plaintiff. The second defendant was entitled to reside in this house, for, that is not part of Ex. A- 1. When the property was attached inclusive of the residential building, naturally, the second defendant attached that also. That cannot lead to any adverse inference against the plaintiff, when, admittedly, the second defendant was also interested in the property attached.
18. The evidence of P.W.2 also shows that Ex. A-1 was executed for consideration and the plaintiff paid the consideration to the second defendant. The evidence of P.W.2 was criticised by the learned counsel for the appellant on the ground that the sale consideration might not have been paid since the plaintiff was not financially sound on that date. It is true that P.W.2 says that an amount of Rs. 500/- was advanced by the plaintiffs sister. That will not go against the case, for, we are concerned only with the question whether the document was supported by consideration. That is spoken to by P.W.2.
19. A Division Bench judgment of this court (Rejeswari and Co. and others v. The Union of India and Anr.) was relied on by the learned counsel for the respondents to show that unless the purchaser is also a party to the fraud, a sale deed cannot be set aside or avoided. At page 229 of the Reports, their Lordships followed an earlier decision of this court (Thaher Unnissa v. Sherfunnissa) wherein it was observed thus:-
“Section 53 will apply only when the transfer is made with intent to defeat and delay the creditors of the transferor, and not one single known creditor and that one, the executing decree- holder.”
The Learned Judge also relied on an earlier decision of this court reported in A.I.R. 1930 Madras 665 (Mohideen v. Md. Mustappa) wherein it was observed by the learned Judge (Anantakrishna Iyer, J.), after elaborately dealing with the principles applicable to a case arising Under Section 53, thus:-
“… if the transfer is for consideration and is made with the full intention that the title in the property should pass to the transferee, and if no benefit be intended to be retained by the transferor the transfer would be valid as against an attaching creditor even though the object of the transfer might have been to defeat an impending execution….”
The said decision was confirmed by the Supreme Court in (Union of India v. Rajeswari and Co. and Ors.).
20. In AIR. 1968 Madras 256 (Errachi Reddiar and Anr. v. Vellayya Reddiar) also, the principles for avoiding a transfer have been discussed. The relevant portion of the said decision reads thus:-
“Under the Transfer of Property Act, the onus of proof, when a transfer is alleged to be in fraud of creditors, is left to the general law of evidence. The effect of Section 7 of Act I of 1995 is only to indicate the burden and place it squarely on the transferee. For a transfer to fall Under Section 53 of the Transfer of Property Act, the intention must be to defeat or delay creditors generally and not preference of one creditor to another. The transfer must be one which removes the property from the creditors to the benefit of the debtor. The intention in the transfer should not be for the debtor to reserve a benefit to himself. If the debtor sells property to another creditor in discharge of debts due to him, but it is found that the price realised is considerably in excess of the debt to be discharged, it will be a fair inference that there was an intention to defraud creditors while preferring one.
As one of the essential ingredients for invalidating a transfer Under Section 53 of the Transfer of Property Act is a fraudulent intention to defeat or delay creditors, the intention has to be found. A man is presumed to intend the natural and normal consequence of his acts. The intention with reference to a particular act must be judged only from the consequences of the Act in the background of the surrounding circumstances. If the effect of a sale is necessarily to leave in the hands of the transferor, a large amount of cash, which could have been avoided by sale of lesser extent, an inference of fraudulent intent may follow.
Equally, if the. cash left in the hands of the vendor is unsubstantial and could not have been avoided having regard to the property available for sale and the sale is a prudent one, fraudulent intent is not a necessary deduction from the mere fact that the transferor had received some cash. Again, in all these cases for Section 53 of the Transfer of Property Act to apply, the transferee must share the fraudulent intent. He must help the transferor in his intention of securing the cash to himself to the detriment of other creditors. The question essentially is a matter for inference from all the circumstances of the case; but for a finding in this regard to have a finality as a finding of fact the Court of fact must bear in mind that the ingredients that are required to vitiate a transfer under the provision. IF THE TRANSFEROR HAS OTHER PROPERTIES AVAILABLE FOR MEETING THE DEMANDS OF HIS CREDITORS, AN INFERENCE TO DEFEAT THE CREDITORS BY SALE OF A SINGLE ITEM IS REBUTTED.”
(Empahsis supplied).
21. Learned counsel for the appellant Submitted that the suit is also had under Order 21 Rule 58, C.P.C. According to him, unless the attachment is also attacked and sought to be set aside, the suit is not maintainable. The said Submission is also not correct. Order 21 Rule 58, C.P.C. contemplates a case where an attachment is effected and it also contemplates where a separate suit is filed when there is an Order by the executing Court itself stating why the claim petition cannot be entertained. If a claimant files an application before the executing Court, then the executing court refuses to entertain such a Claim Petition if the property is already transferred by the Judgment debtor before the attachment, or for the reason that it is intended to delay the execution. In such a case, if the purchaser files a Claim Petition and the executing Court refuses to entertain it, the purchaser is entitled to file a suit. In that case, he may have to attack the attachment. But in this case, the suit is one filed Under Section 34 of the Specific Relief Act. What the plaintiff wants is only a declaration of his title and the interference of his possession should be curbed by an order of injunction. Such suit is maintainable Under Section 9 of the Code of Civil Procedure, and it is not barred under Order 21 Rule 58, C.P.C. The question of setting aside an attachment does not arise. Here, the plaintiff treats the attachment as a nullity. If he is in a position to prove his title, no other question arises. The Judgment, even if there is any, will have no binding force, and he will be entitled to a decree as prayed for. The questions whether ExA-1 is valid, and whether it was executed to defeat or delay the creditors, are all pure questions of fact. In this case, Even if the appellant has shown a Prima facie case, the presumption, if any, stands rebutted in view of the finding that the transferor had other properties available for meeting the demands of the creditor. All the questions of law raised in this Appeal are found against the appellant. I hold that Ex.A-1 is genuine, and the findings of the Courts below that the plaintiff is the absolute owner of the property and that he is a bona fide purchaser for value are, therefore, confirmed. The Appeal is accordingly dismissed with costs.
