Allowed

Ajeena.M.K. v. K.P.Sivanandan and Others.

Kerala HC27 Jul 2012RSA/1290/2008

Case brief

AI extract

What is this about?

The High Court allowed the appeal, holding that since the property transfer occurred before attachment before judgment, the lower courts were not required to examine its validity under Section 53 of the Transfer of Property Act via Rule 8 of Order XXXVIII CPC. The claim is allowed, leaving the fraud question open for execution proceedings under Order XXI Rule 58.

What did the court decide?

Impugned judgments and decrees set aside; IA Nos 1839, 1841, 1843 allowed subject to fraud being adjudicated in execution; directions issued for carriage of property and appearance in proceedings.

Ajeena.M.K. Vs K.P.Sivanandan and Others. — Partition | Kerala HC (2012)

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IN THE HIGH COURT OF KERALA AT ERNAKULAM

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PRESENT:

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THE HONOURABLE MR.JUSTICE THOMAS P.JOSEPH

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FRIDAY, THE 27TH DAY OF JULY 2012/5TH SRAVANA 1934 RSA.No. 1290 of 2008 (C) ------------------------

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AS.250/2006 of DISTRICT COURT,KOZHIKODE OS.108/2005 of III ADDL.SUB COURT, KOZHIKODE

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APPELLANT(S)/APPELLANT: ----------------------

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AJEENA.M.K, D/O. MADHUMAL DHARMAPALAN, AGED 37, RESIDING AT DHARMALAYAM KOODALI AMSOM DESOM, P.O. KOODALI, THALASSERY TALUK KANNUR DISTRICT. BY ADVS.SRI.RENJITH B.MARAR SMT.LAKSHMI.N.KAIMAL SRI.L.RAJESH NARAYAN

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RESPONDENT(S)/RESPONDENTS:

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K.P. SIVANANDAN, AGED 39, S/O. BALASUNDARAM, SREESAILAM

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KOMASSERY PARAMBA,GURUVAYOORAPPAN COLLEGE.P.O

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PALAZHI DESOM,KOZHIKODE TALUK,NOW R/AT PARADATH(H)

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KARUVASSERY AMSOM,, KOZHIKODE TALUK,

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REP.BY P/A HOLDER P.RAGHAVAN NAIR

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S/O.KRISHNAN NAIR, PARADATH HOUSE,

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KARUVASSERY AMSOM, KOZHIKODE TALUK.

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R.M. SUDARSHAN, AGED 45, S/O.R.M. KARUNAKARAN, CHILANKA KOTTOOLI AMSOM DESOM, KOZHIKODE TALUK.

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CONCORD LEASING AND HIRE PURCHASE PVT.LTD., REP. BY ITS DIRECTOR, R.M. SUDARSHAN WHITE LINE COMMERCIAL COMPLEX, PALAYAM KASABA AMSOM DESOM, KOZHIKODE.

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R1 BY ADVS. SRI.JACOB ABRAHAM & SMT.KOCHUMOL KODUVATH R2 BY ADV.SRI.P.SANTHOSH (PODUVAL)

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THIS REGULAR SECOND APPEAL HAVING BEEN FINALLY HEARD ON 27-07-2012, ALONG WITH R.S.A.NO.1291/2008 AND R.S.A.NO.1295/2008, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:

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amk

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THOMAS P.JOSEPH, J.

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=========================

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R.S.A. Nos. 1290 of 2008, 1291 of 2008 and 1295 of 2008

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============================ Dated this the 27^th day of July, 2012

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JUDGMENT

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Heard. Admit.

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The following substantial question of law is framed for

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a decision:

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Whether in view of the facts and circumstances, the trial and first appellate courts were correct in deciding whether the transfer in favour of the appellants is hit by Section 53 of the Transfer of Property Act (for short 'the Act') ?

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All the respondents except the 3^rd respondent in R.S.A No. 1291 of 2008 appear through counsel.

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So far as the 3^rd respondent in R.S.A. No. 1291 of 2008 is concerned, he is the brother of the 4^th respondent therein and one of the defendants. The decision in this appeal would not affect the interest of the 3^rd respondent. Hence further fresh notice to the 3^rd respondent is dispensed with.

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In view of the substantial question of law framed for a decision and on the facts admitted, it is not necessary to call for entire records. Hence the records of the trial court are

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R.S.A. Nos. 1290 of 2008, 2 1291 of 2008 & 1295 of 2008

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dispensed with.

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These second appeals arise from the common judgment and decree of learned District Judge, Kozhikode in A.S Nos. 250 of 2006, 249 of 2006 and 248 of 2006, respectively arising from the common order passed by the learned III Additional Sub Judge, Kozhikode on I.A. Nos. 1843 of 2006 (in O.S. No. 108 of 2005), 1839 of 2006 (in O.S. No. 91 of 2004) and 1841 of 2006 (in O.S No. 97 of 2006).

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The first respondent filed the said suits against respondents 2 onwards for recovery of money. The property allegedly belonging to the second respondent was placed under attachment before judgment. The appellant, common in all the appeals filed I.A Nos. 1839 of 2006, 1841 of 2006 and 1843 of 2006 under Rule 8 of Order XXXVIII of the Code of Civil Procedure (for short 'the Code') claiming the right over the property attached on the ground that she had purchased the said property from the second respondent even before the attachment was effected.

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The applications were resisted by the second respondent on the ground that the appellant/claimant is the wife of the

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R.S.A. Nos. 1290 of 2008, 3 1291 of 2008 & 1295 of 2008

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second respondent and that the transfer was effected with intend to defraud the creditors including the first respondent.

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The trial court held that the transfers are hit by Section 53 of the Act and dismissed the applications. That, the first appellate court has confirmed. Hence these second appeals.

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The learned counsel for the appellant has contended that finding of the trial and first appellate courts that the transfer in favour of the appellant is fraudulent is not sustainable. It is argued that for the mere reason of appellant being the wife of the second respondent, no such finding could be entered. At any rate, it is argued, since the transfer was before the attachment was effected, the second respondent had no right over the property to be attached and hence for that reason alone the claim ought to have been allowed. The learned counsel has placed reliance on the decision in Rajan Vs. Jayashree Nayar (2010(1) KLT 142).

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The learned counsel for the first respondent would contend that the facts and circumstances indicated that attempt of the appellant and the second respondent was to screen the property from being proceeded against in execution of the

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R.S.A. Nos. 1290 of 2008, 4 1291 of 2008 & 1295 of 2008

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decree that may be passed in the cases. It is submitted by the learned counsel that in all the cases the trial court has granted decree in favour of the first respondent for recovery of amount from respondents 2 onwards. It is also submitted by the learned counsel that the first respondent has initiated execution proceedings against respondents 2 onwards.

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The learned counsel for respondent 2 onwards (except the 3^rd respondent in R.S.A No. 1291 of 2008) contended that the property belonged to the second respondent and that he has been made a party to the suit only in his capacity as Director of the company. It is submitted by the learned counsel that the company has gone into liquidation and hence appropriate proceedings will be initiated in the company cases pending in the Hight Court of Madras.

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Now, I am only concerned with the question whether in view of the admitted fact that the 'transfer' in favour of the appellant was made before the attachment was effected, the trial and first appellate courts were required and justified in going into the question whether the said transfer was fraudulent or not and hence hit by Section 53 of the Act ?

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R.S.A. Nos. 1290 of 2008, 5 1291 of 2008 & 1295 of 2008

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It has to be borne in mind that an attachment before judgment is distinct from an attachment in execution; the former is only a step in aid of execution of the decree that may be passed in the case while the latter is a process in execution. It is admitted in these cases that the alleged 'transfer' in favour of the appellant by the second respondent was made even before attachment before judgment was effected. If that be so, it was not required for the trial and first appellate courts to have gone into the question whether the said 'transfer' was fraudulent and hit by Section 53 of the Act. The Division Bench of this court in Rajan Vs. Jayashree Nayar (supra) has held that in a claim under Rule 8 of Order XXXVIII of the Code, it is not necessary to go into the question whether the transfer is fraudulent under Section 53 of the Act. The Division Bench has drawn a distinction between an attachment before judgment and an attachment in execution. It is pointed out that while Rule 58 of Order XXI speaks about claims and objections, Rule 8 of Order XXXVIII only refer to a “claim”.

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Since there was a 'transfer' (valid or not as the respective parties contended) before attachment, prima facie

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R.S.A. Nos. 1290 of 2008, 6 1291 of 2008 & 1295 of 2008

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there was nothing left with the second respondent to be attached at the time the attachment before judgment was effected. No doubt the first respondent could assail the transfer as invalid on the ground that it is hit by Section 53 of the Act or for any other reason whatsoever as may be available. But, such an enquiry is not contemplated under Rule 8 of Order XXXVIII of the Code as held by the Division Bench. It follows that the finding entered by the trial and first appellate courts that the 'transfer' in favour of the appellant is hit by Section 53 of the Act cannot be sustained (for the reason that the trial and first appellate courts were not required to hold an enquiry into that matter).

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It is not as if the first respondent is without any remedy. It is open to the first respondent to proceed against the property in execution if the first respondent has a case that the 'transfer' is fraudulent and intended to defeat the creditors including herself. In that proceeding the appellant would get an opportunity to move under Rule 58 of Order XXI of the Code. It is in that proceeding the question whether the 'transfer' made by the second respondent in favour of the appellant is fraudulent or not or, otherwise invalid is required to be enquired into and

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R.S.A. Nos. 1290 of 2008, 1291 of 2008 & 1295 of 2008

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decided.

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Having heard the learned counsel on both sides, I am inclined to think that as it now stands, as the 'transfer' was made prior to the attachment was effected, the claims are to be allowed leaving it open to the first respondent to proceed against the property in execution if the first respondent has a case that the 'transfer' in favour of the appellant is fraudulent. Therefore, the question whether the transfer in favour of the appellant is fraudulent or not has to be left open vacating the finding entered by the courts below in that regard.

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It is submitted by the learned counsel on both sides that the property is being brought-up for sale. It follows in the light of my above finding, that first respondent, in case she decides to proceed against the property has to attach the property in execution and takes steps to bring the property for sale. I make it clear that I have not referred to the action that the second respondent has proposed to take before the company court concerned.

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The substantial question of law is answered as above. Resultantly,

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R.S.A. Nos. 1290 of 2008, 1291 of 2008 & 1295 of 2008

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The second appeals are allowed as under:-

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Common judgment and decree of learned District Judge, Kozhikode in A.S. Nos. 248, 249 and 280 of 2006 are set aside.

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The order passed by the learned IIIrd Additional Sub Judge, Kozhikode on I.A Nos. 1839 of 2006 (in O.S. No. 91 of 2004), 1841 of 2006 (in O.S. No. 97 of 2005) and 1843 of 2006 (in O.S. No. 108 of 2005) are set aside.

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I.A. Nos. 1839 of 2006, 1841 of 2006 and 1843 of 2006 will stand allowed subject to the following:

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a) The finding entered by the courts below that the 'transfer' made by the second respondent in favour of the appellant is fraudulent is vacated and left open for the decision in the execution proceedings.

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b) If the first respondent has a case that the 'transfer' made in favour of the appellant is fraudulent, it is open to the first respondent to proceed against the said property in execution of the decrees the first respondent has obtained against respondents 2 onwards and as provided under the law.

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c) In case the first respondent proceeds against the said

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R.S.A. Nos. 1290 of 2008, 9 1291 of 2008 & 1295 of 2008

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property and brings the property under attachment, it is open to the appellant, as law permits to make a claim or objection as the case may be and as provided under Rule 58 of Order XXI of the Code.

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d) In such proceeding if any, it is open to the parties to agitate the question whether the 'transfer' in favour of the appellant is fraudulent or not or is otherwise invalid and if such question is raised, the executing court shall decide the said question and enter appropriate finding.

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e) Appellant is directed not to transfer, encumber or induct third parties in the possession of the property for a period of three (3) months from this day.

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g) Parties shall suffer their cost though out.

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All pending interlocutory applications will stand dismissed. Sd/-

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THOMAS P.JOSEPH, JUDGE //True copy//

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P.A To Judge

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smv

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The word '3^rd ' occurring in paragraph 3, and in the last and last but one sentence of paragraph 4 of the judgment dated 27/07/2012 are corrected and substituted as '4^th ', vide order dated 07/10/2013.

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Sd/-

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Registrar (Judicial)

Ajeena.M.K. v. K.P.Sivanandan and Others.

Case brief

What is this about?

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Ajeena.M.K. v. K.P.Sivanandan and Others.

Case brief

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