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Before M. S. H. Quresh and Muhammad Habibullah, JJ
Mst. SAEEDA AKHTAR-Appellant
versus
LAL DIN--Plaintiff
Regular First Appeal No. 82 of 1974, decided on 29th March, 1981.
(a) Transfer of Property Act (IV of 1882)--
S. 53-Suit to avoid transfer of immovable property brought for benefit of all creditors-Held, must be regarded as suit under provisions of S. 53-Fact that such suit can be filed as a representative suit-Does not mean that it must be filed in that form alone.
Mst. Banto Devi v. Firm Rai Sahib Lal Shiv Parshad-Sri A I R 1943 Lah. 96; Deokab Partab v. Ram Devi and another A I R 1941 Rang. 76; Firm Rambhondas-Bulakidas v. Orambala Dassi and others A I R 1954 Cal. 440; Hajf Faqir Bux and others v. Pandit Thakar Prasad and others A I R 1941 Oudh 457 and Kallubandi Manjamma v. Kethe Rangappa and others A I R 1954 Mad. 173 distinguished.
(b) Transfer of Property Act (IV of 1882)
S. 53-Principles of S. 53 only applicable in Punjab-Suit cannot be defeated even if plaintiff fails to adhere strictly to technical requirements of section.
(c) Transfer of Property Act (IV of 1882)
S. 53 -Requirements of S. 53 on legal plane-Creditor, in a suit under S. 53, not prevented from making allegations indicating want of consideration and bad faith.
Sachitanand Tewari v. Radhapat Pathak A I R 1928 All. 234 not relevant.
Sh. Abdul Rashid and Mehar Allah Ditta for Appellant.
Mian Hidayat Ali Taib and Syed Iftikhar Ahmad for Respondent No. 1.
Nemo for Respondent No. 2.
Muhammad Yaqoob Khan for Respondents Nos. 3 to 7. '
Dates of hearing: 25th, 26th, 31st March ; 4th, 7th, 9th, 10th, I lth, 23rd and 24th April, 1980.
MUHAMMAD HABIBULLAH, J.--This is an appeal from a judgment and decree dated 16-10-1974, of Malik Muhammad Afzal, Civil Judge, Lahore, whereby he decreed the suit filed by respondent No. 1 for a declaration that the sale of property in dispute made by Siraj Din deceased in favour of his two daughters, the appellants herein, was fraudulent and without consideration, and had been made to defeat his creditors, and was therefore of no effect as against respondent No. 1 and other creditors of Siraj Din.
2. The facts of the case, in brief, are that Siraj Din, borrowed a sum of Rs. 40,000, from Barkat Ali and Muhammad Manzoor, and executed a pronote in their favour on 18-2-1963. He also borrowed another sum of Rs. 40,000, from Haji Chiragh Din and executed a pronote in his favour on 18-2-1963. Thereafter the three payees endorsed the two pronotes in favour of Lai Din respondent No. 1 for valuable consideration. Lai Din as holder of the pronotes pressed Siraj Din for payment, and upon the latter's refusal he brought two suits against him, each for recovery of Rs. 42,400, on the basis of the two pronotes. The two suits were heard together, and decreed on the basis of a compromise arrived at between the parties. By virtue of the compromise, Siraj Din admitted that the sum of Rs. 80,000, was due from him. Before coming to the other terms of the compromise, it is necessary to point out, that while the two suits were pending, respondent No. 1 had filed an application for attachment before judgment against Siraj Din in respect of the land which is in dispute in the present case. Learned Senior Civil Judge, who was hearing the two cases passed an interim order dated 3-3-1964, restraining Siraj Din from alienating the land. Notice of this order was servad on Siraj Din on 20-3-1964. The interim order was thereafter extended from time to time. It was during the continuance of the stay order that Siraj Din sold the land in dispute to his two daughters, the appellant, herein, ostensibly in consideration of Rs. 70,000, through a registered saledeed dated 10-6-1964 (Exh. D. 1). The land in dispute measures 681 kanals 16 marlas. It is situate in village Muhammad Sultanabad, Tehsil and District Lahore and is described fully in the plaint in the case in hand.
3. Reverting back to the compromise which was made between the parties, it may be mentioned that the parties had agreed that Siraj Din would pay Rs. 80,000, to the decree-holder by executing a registered sale-deed in his favour in respect of one square of his land, which was valued at Rs. 95,000, and that at the time of registration Lai Din would pay the balance of Rs. 15,000, to Siraj Din. It was also stated in the compromise that Siraj Din had already transferred his lands in the name of his two daughters, the appellants herein, but he would be responsible for having the sale-deed executed on their behalf, failing which Lai Din would have the right to file a suit for specific performance. It was also mentioned in the compromise that if Lal Din backed out from purchasing the land, he would only be entitled to recover Rs. 40,000, and the balance would be treated as forfeited earnest money. If on the other hand Lai Din failed to secure the sale-deed on account of evasion by the appellants, he would be entitled to recover Rs. 80,000, through execution of the decree.
4. Siraj Din did not have the sale-deed, executed in favour of Lai Din, nor did he pay him any money under the two decrees. Lai Din therefore brought the present suit alleging that the sale made in favour of the appellants was made with the object of defeating the creditors and that it had been made without consideration. The appellants were also impleaded as defendants. During the pendency of - the suit Siraj Din died on 21-3-1969, and his legal representatives were brought on record. Legal representatives of the deceased other than, the appellants are his two widows (including the mother of the appellants), two daughters from the other wife, a brother, a sister and mother. The suit was contested by the appellants only. With the exception of the appellants' mother, the other legal representatives filed a written statement, supporting the plaintiff.
5. The case of the appellants in their written statement was that the suit did not lie in its present form, and that the only suit which respondent No. 1 could have filed was for possession through specific performance; that the respondent having admitted in the compromise deed that the land bad been sold to the appellants. was estopped from bringing the suit; and that the appellants being bona fide purchasers for value, the suit was liable to be dismissed.
6. On the pleadings of the parties the following issues were framed:
"(1) Is the suit competent in the present form O. P. P.
(2) Is the plaintiff estopped from challenging the alienation of the property in dispute by defendant No. 1 in favour of defendants Nos. 2 and 3 O.P.D.
(3) Whether the sale-deed dated 11-6-64 of property in dispute by defendant No. 1 in favour of defendants Nos. 2 and 3 has been effected to delay and defraud the creditors. If so, what is the effect O. P. P.
(4) Are the defendants Nos. 2 and 3 bona fide purchasers of the property in dispute from Defendant No. 1 for consideration without notice O. P. D.
(5) Relief.
Learned Civil Judge decided all the issues in favour of the plaintiff and decreed the suit. On Issue No. 1 he held that the principles of section 53 of the Transfer of Property Act were applicable in the Punjab, and as such the respondent had a right to obtain a declaration in terms of the provisions of this section that the sale made by Siraj Din was voidable at the option of creditors, if it was made to defeat or delay their rights. On Issue No. 2 the Court expressed that in the deed of compromise (Exh. P. 10) the respondent did not acknowledge that the sale made in favour of the appellants was valid and as such he was not estopped from challenging the alienation. The sale having been made to the appellants in contravention of the order of interim injunction, the plaintiff had a right to avoid the sale on the ground that it had beer. made to defeat his claim. While deciding Issue No. 3, learned Civil Judge kept in view mainly the following factors : firstly, that the sale in favour of the appellants had been made during the continuance of a prohibitory order made by a Court, which order was within the knowledge of Siraj Din; secondly, that there was evidence on record that Siraj Din had made the transfer to defeat his creditors; thirdly, that the evidence on record proved that the appellants did not pay any consideration for the sale; and fourthly, that Siraj Din had made a statement (Exh. P. 14) in another case that one Muhammad Yaqub had fraudulently got the sale-deed executed in favour of his daughters and that actually he had not sold the land to them. In view of these considerations the issue was decided in favour of the respondent. On Issue No. 4 the Court held that the appellants had failed to show that they were bona fide purchasers for value. It was also expressed in the judgment that no other property was proved to be existing in the name of Siraj Din, and as such, keeping also in view the other circumstances, it had to be held that the sale had been made to the appellants with a view to defeat the creditors. On Issue No. 1, the appellants' case is that the form of the suit was defective because the suit could not be said to be one under section 53 of the Transfer of Property Act. The appellants' learned counsel contended that certain requirements of the section, were found wanting in the suit. According to him the first such requirement was that the suit had to be brought on bebalf of all the creditors of the transferee, and not by just one of them, as was done in this case. He also asserted that under section 53, only a representative suit could be filed, which meant that the procedure prescribed by Order 1, rule 8, C. P. C. had to be followed, but the respondent did not follow such procedure. For making the above submissions reliance was placed on Mst. Banto Devi v. Firm Rai Sahib Lal Shlv Parshad Sri (AIR 1943 Lah.96 ), Deokab Partab v. Ram Devi and another (AIR 1941 Rang.76), Firm Rambhondas Bulakidas v. Orambala Dassi and others (AIR 1954 Cal. 440), and Ha/1 Faqir Bux and others v. Pandit Thakar Prasad and others (AIR 1941 oudh 457).
8. To examine these contentions it is necessary to refer to the provisions of section 53 of the Transfer of Property Act, subsection (1) of which is reproduced below for facility of reference:
"53.-(1) Every transfer of immovable property made with intent to defeat or delay the creditors of the transferor shall be avoidable at the option of any creditor so defeated or delayed.
Nothing in this subsection shall impair the rights of a transferee in good faith and for consideration.
Nothing in this subsection 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, or for the benefit of all the creditors."
9. It is apparent from the section that a transfer of immovable property made with intent to defeat creditors is voidable at the option of "any creditor". The section also gives the choice that a suit by any creditor may be filed either on behalf of or for the benefit of all creditors. There is, therefore, no merit in the contention that unless the suit was brought on behalf of all creditors it could not be regarded as one filed under section 53. It was therefore not necessary for Lal Din respondent to have filed a representative suit or to have adopted the procedure prescribed under Order I. rule 8, C. P. C. If a suit is brought for the benefit of all creditors, th condition prescribed stands fulfilled, and the suit must be regarded ass being under the provisions of section 53. It is true that a suit under section 53 can be filed as a representative suit, but it does not mean that it must be filed in that form alone. In the present case the prayer clause indicates that the suit was filed for the benefit of all creditors. This it appears, was done to fulfil the requirements of the section.
10. It is also pertinent to note that there is nothing on record to indicate that Siraj Din had creditors other than respondent No. 1. On the other hand Mst. Hamida Begum (D. W. 2 before the Local Commissioner) the wife of Siraj Din stated that there was no other creditor of Siraj Din besides Lal Din. Since the respondent was the only creditor, it was not possible for him to bring the suit on behalf of any other person.
11. It may also be mentioned here that we find considerable force in the stand taken on behalf of respondent No. 1, that only the principles of section 53 being applicable in the Punjab, his suit could not be defeated even if he had failed to adhere strictly to the technical requirements of the section .
12. The case-law relied upon by the appellants is of no avail to them. Mst. Banto Devi's case does not support the appellants. In that case a creditor had obtained a declaration under section 53 of the Transfer of Property Act, but his debt was discharged during the pendency of the debtor's appeal. Another creditor wanted to be impleaded as a party, clahning that the decree that had been passed enured for his benefit as well. The Court expressed that the provisions of Order 1, rule 8, C. P. C. having not been complied with, the decree enured for the benefit of the plaintiff alone, and the other creditor, if so advised, could maintain a separate suit for a declaration of her rights. The case actually supports the proposition that one creditor alone could bring a suit under section 53. Similarly Deokab Partab's case does not help the appellants either. In that case, a creditor had filed a suit under section 53, and it was contended that it had to be a representative suit, but the plaintiff represented no one except himself. It was held as follows:
"It is I think clear that the suit has been instituted on behalf or for the benefit, of all the creditors. The case to which reference was made in this connection is 12 Rang. 666: A I R 1934 Rang. 302. Even if the plaintiff were the only creditor, I do not see why he should not, in those circumstances, bring a suit of this kind."
13. The case of Firm Rambhonadas Bulakidas referred to on behalf of the appellants is distinguishable on facts. In that case a question as to the jurisdictional value of the suit was involved. The prayer made in the suit was as follows:
"It may be declared that the property described in the schedule to the plaint is owned and possessed by Defendant No. 3, and that the same is liable to attachment and sale in Exh. Case No. 80 of 1948, started by the plaintiff and that the plaintiff has the right to cause attachment and sale of the said property."
In support of his contention that the value of the suit was determined by the value of the property and not the decretal amount, the appellants' counsel had contended that it was a suit under section 53 of the Transfer of Property Act. The Court observed as follows:-
"There was no clear averment that the suit was being filed on behalf of the plaintiff and all other creditors or the debtor, defendant No. 2. The suit cannot, therefore be regarded as one under the provisions of section 53, Transfer of Property Act."
14. It is apparent from the prayer that suit was not filed under section 53. The prayer clause in the present case however obviously shows that the suit was filed for the benefit of all creditors, and it was therefore filed under the principles of that section.
15. The case of Haji Faqir Bux, referred to on behalf of the appellants, does not help them either. The plaintiff in that case had obtained a money decree and in execution thereof had purchased the debtor's property in a Court-auction. The debtor in the meanwhile had transferred a portion of the property to his wife by gift, and the. property had also been further alienated to others. The plaintiff's suit was for a declaration to the effect that the gift deed and subsequent sale-deeds were void and ineffective - against him, and he was the absolute and sole owner of the auctioned property. In the context of determining whether it, was a suit under section 53 of the Transfer of Property Act, the Court observed as follows:-
"The proper test to apply when a question of this nature is raised is to see whether if the plaintiffs succeed in the .auction, the property claimed in the auction would be available to the. general body of creditors."
Applying this test to the present case, we find that there is no doubt that if the plaintiff succeeds in the action, the property would be available to him, who happens to be the only creditor.
16. It was also contended on behalf of the appellants that for bringing an action under section 53 of the Transfer of Property Act, a plaintiff had to accept the genuineness of the sale, before he could assert that it was voidable at the option of the creditors. Learned counsel relies on the observation made in Kallubandl Manjama v: Kethe Rangappa and others (A 1 R 1954 Mad. 173):
"It is undoubted law that when a transfer is declared void as against creditors under section 53 of the Transfer of Property Act, the result is not to annul it altogether, but only to render it inoperative as against creditors and that too only to the extent necessary to satisfy their claims; and subject to their claims, the transaction is valid and enforceable."
It was asserted that the respondent in the present case having challenged the validity of the sale itself, his suit could not be regarded as one under section 53 of the Transfer of Property Act.
17. Before examining the nature of allegations made in the plaint it is necessary to examine the requirements of section 53 on the legal plane.) The section lays down to the effect that a sale made with a view to defeat or delay creditors is voidable at the option of any creditor. However, there is a proviso in the section, which lays down that nothing in the section shall impair the rights of a "transferee in good faith and for consideration." It follows therefore that in an action under section 53 one of the relevant questions is whether the questioned sale was made in good faith and for consideration. A creditor, therefore, is not prevented in a suit under section 53, from making allegations indicating want of consideration and bad faith. Where the falsity of a transaction is alleged by a plaintiff to demonstrate bad faith, the suit must nevertheless be regarded as one under section 53, provided it is also alleged in the plaint that the debtor had made the transfer with intention of defeating or delaying creditors, and the prayer in the plaint seeks relief for the creditors only. It - is apparent from the prayer made in the plaint in this case that Lal Din was not challenging the sale made in favour of the appellants in its entirety. He only prayed that it did not have any effect on his rights and, those of other creditors of Siraj Din and that they were not prevented from satisfying their claims from the property. The record does not indicate that there was any other creditor besides the plaintiff himself. It was therefore a suit based on the principles of section 53 of the Transfer of Property Act, and no objection could be taken to the form of the suit. Issue No. 1 was, correctly decided by the trial Court.
18. On Issue No. 2, the appellants' learned counsel contended that the compromise deed dated 25-2-1965 necessarily presumed that Siaj Din had sold the land to his daughters, otherwise respondent No. 1 would not have agreed to the condition that Siraj Din would be responsible for getting a sale deed executed by his daughters in favour of respondent No. 1. It was argued that since the respondent had agreed to regard the sale in favour of the appellants to be valid, he was estopped from challenging its validity by filing the present suit. Reliance in this behalf was placed on Sachitanand Tewarl v. Radhapat Pathak (A I R 1928 Aft. 234); in which it is observed as follows:
"Under section 53, T. P. Act, a transfer with intent to defeat or delay a creditor is "avoidable at the option" of the person so defeated or delayed. When such a person becomes aware 'of the transaction which he has an option to avoid, he must not affirm it expressly or do any act which amounts to an affirmation of the transaction so as to destroy his right of avoiding it. He has the election of either accepting the transaction or of avoiding it. Once he has decided to do one thing he loses the other option, and cannot be allowed to reprobate what he has approbated. "
19. We do not find any substance in this contention: The sum and substance of the compromise deed is that despite the .alienation of the land made in favour of the appellants; respondent Lal Din was not prevented from satisfying his claim from the said land. The same is the prayer made by him in his plaint. We therefore agree with the trial Court that no question of any estoppel arises in this case.
20. Issues Nos. 3 and 4 are being dealt with together. The sale deed (Exh. D-1) made in favour of the two appellants, was executed by Siraj Din on 10-6-1964. At that time, the two suits filed by Lal Din, each for the recovery of Rs. 42,400, were pending against Siraj Din. In those suits, Lal Din filed an application for attachment of Siraj Din's property before judgment. In this application, learned Civil Judge passed an interim order dated 3-3-1964, (Exh. P. 2) restraining Siraj Din from alienating the land in dispute. The order was served on Siraj Din, and the process-server Muhammad Afzal (P. W. 4) submitted his report in this behalf on 20-3-1964. The stay order was extended from time to time through orders Exhs. P. 4 to P. 8, and lastly through order dated 23-9-1964 (Exh. P. 9), the stay was extended till further orders. It is clear, therefore, that the sale in favour of the appellants was made by Siraj Din during the pendency of the two suits, and during the continuance of the stay order, prohibiting the sale of the land in dispute.
21. The appellants' learned counsel contended that the existence of the stay order did not detract from the validity of the sale made in favour of the appellants. We do not find it necessary to comment on the validity of this argument, because the question with which we are concerned in this case is whether Siraj Din had made the sale to defeat or delay his creditor. Since he executed the sale-deed while the suits were pending, and the stay order was in operation, and knew about it, the inference that he had sold the property to defeat his creditor Lal Din is irresistible.
22. It is not controverted that both the appellants were unmarried at the time of execution of the sale-deed. They did not have any independent source of income so as to be able, to pay Rs. 70,000, to Siraj Din. Their case is that their would-be-in-laws had paid the money half and half. The sale deed shows that money was paid before the registrar by the mother of the appellants; namely Mst. Hamida Begum. Mst. Hamida Begum was examined by the Local Commissioner as D. W. 2, before whom she stated that it was actually Muhammad Yaqub who had "shown" the money before the subregistrar. Muhammad Yaqub is the son-in-law of Mst. Hamida Begum, being the husband of her daughter born of a previous marriage. It is hard to believe that the in-laws of the appellants had paid the money, at a time when the appellants had not yet been .given awayi in marriage. What is more, the appellants did not produce any cogent evdence to prove that their in-laws paid the money. Muhammad Sharif the husband of Mst. Saeed Akhtar appellant appeared as a D. W. but his testimony shows that he owned no property nor did he have any independent source of income to be able to pay Rs. 35,000. He admitted that he paid no Income-tax. The husband of Nasreen did not appear as a witness, presumably because at the time of evidence, her Rukhsati had not taken place. Mst. Hamida stated that he was working in a Studio but his salary had not been fixed till then. She did not show how much he earned. It is, therefore, obvious that the story of payment of consideration by the in-laws of the appellants is not believable. It is also pertinent to note that the appellants have failed to show that Siraj Din had any other property -from which he could satisfy the debt. In. view of the above circumstances we hold that Siraj Din had conveyed the land in dispute with the objective of defeating , his creditor, namely Lal Din respondent;- and that the transaction of sale was without consideration. The effect of this finding is that respondent No. 1 is entitled to the declaration prayed for by him. Both the issues were correctly decided by the trial Court.
23. In view of the above findings this appeal is dismissed with costs.
S. Q. Appeal dismissed.
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