Dismissed

Adapala Vijaya Kumar Reddy, v. Yeddula Chandrasekhar Reddy

Telangana HC13 Jul 2011CRP/5680/2010

Case brief

AI extract

What is this about?

The High Court dismissed a civil revision petition challenging the impleadment of a creditor as a second plaintiff in a suit under Section 53 of the Transfer of Property Act. The Court held that a creditor suing to avoid fraudulent transfers has locus standi to represent the general body of creditors.

What did the court decide?

Civil Revision Petition No.5680 of 2010 was dismissed; no order as to costs.

Adapala Vijaya Kumar Reddy, Vs Yeddula Chandrasekhar… — Banking and Recovery | Telangana HC (2011)

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THE HONOURABLE SRI JUSTICE G. CHANDRAIAH CIVIL REVISION PETITION No.5680 of 2010

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ORDER:

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This Civil Revision Petition is filed aggrieved by the order dated 06-10-2010 in I.A.No.483 of 2010 in O.S.No.250 of 2008 on the file of the II Additional Senior Civil Judge (Fast Track Court), Nellore.

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2. The petitioner herein is the first defendant in the suit and second respondent in I.A.No.483 of 2010. The said I.A. was filed by a proposed party, under Order 1 Rule 10 of the Code of Civil Procedure seeking to implead him as one of the plaintiffs. By order dated 06-10-2010 the said application was allowed by the lower Court. Aggrieved by the same, the first defendant in the suit filed the present Civil Revision Petition.

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3. Learned counsel for the petitioner submits that the application was filed by the proposed party seeking to come on record as second plaintiff under Order 1 Rule 10 of the Code of Civil Procedure and the said application is not maintainable, as he can file a separate suit against the plaintiff or against the second defendant. In support of his contention, he relied upon a judgment

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reported in Bandikatta Satyavathi v. Bandikatta Venkata Ra o^[1] ,

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wherein paragraph No.6 reads as follows:

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“Keeping in view of the fact that the only issue which would arise for consideration before the learned Judge was as to whether the defendant in the suit was liable to pay arrears of rent to the plaintiff-petitioner, the same could not have been directed to be converted into a suit for declaration of title and other consequential reliefs by and between the plaintiff and the third-party in relation whereto, the defendant-respondent had not raised any question. The said question of title, therefore, is beyond the scope of the suit, and the third party respondent was thus neither a necessary party nor a proper party.”

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4. On the other hand, learned counsel for the first respondent submits that the order passed by the learned Judge does not suffer from any illegality or infirmity. He submits that the first respondent herein is one of the creditors and that the second respondent filed a suit against the defendant therein seeking for declaration of the relinquishment deed dated 06-12-2006 executed in favour of third defendant, registered sale deed No.6757/05 dated 06-05-2005 executed in favour of second defendant by the first defendant and registered sale deed No.566/2007 dated 19-05-2007 executed in favour of fourth defendant by the first defendant are nominal and fraudulent transactions and the sale deed No.1076/2005 dated 25-12-2005 purchased as ostensible transferee in the name of third defendant as Benamidar and the first defendant as real owner and therefore, the said transfers are not binding either on the plaintiff and other creditors of first defendant, and hence permit for attachment and sale of the aforesaid properties for recovery of plaintiff’s debt due to him Rs.4,27,484/- with future interest and costs from them mentioned in ‘B’ schedule properties as item Nos.1 to 4.

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5. He further submits that under Section 53 of the Transfer of Property Act, to avoid transfer of property in dispute and for the benefit of creditors, the suit can be instituted and that the present proposed plaintiff No.2, who is admittedly a creditor, can come on record and he has locus standi. In support of his contention, learned counsel relied upon a judgment reported in Kishan Dass Talwar and another v. Adeshwar Lal Jain and other s^[2] , wherein paragraph No.6 reads as follows:

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“The suit has been instituted under Section 53 of the Transfer of Property Act for avoiding the transfer of the property in dispute and the suit had been instituted on behalf of and for the benefit of all the creditors. The counsel for the defendants have urged that the plaint does not conform to the form prescribed in Appendix A attached with the Code of

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Civil Procedure and therefore, the suit is not maintainable. I do find that the heading of the plaint does not indicate that the suit has been instituted for and on behalf of all the creditors but in the body of the plaint particularly in paragraph 7 towards the end it is specifically mentioned after giving the names of 13 creditors, that the suit is filed in a representative capacity and there are several other creditors whose names and addresses are not known to the plaintiffs and who are also creditors to defendant No.1 and are interested in the subject-matter of the suit. It has further been mentioned in paragraphs 15 and 16 that the plaintiffs claim that the decree for partition in dispute is a nullity so far as the plaintiffs and other creditors are concerned and the same does not bind them and so the plaintiffs and the creditors can recover their debts from the property in dispute. This shows that in substance the suit has been instituted under Section 53 of the Transfer of Property Act and it satisfies its requirements with regard to the locus standi of the plaintiffs. The issue is, therefore, decided in favour of the plaintiffs.”

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6. Learned counsel for the respondent, supporting the impugned order, sought for dismissal of revision.

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7. The second respondent herein who is the petitioner in I.A.No.483 of 2010, was one of the creditors and revision petitioner specifically admitted the debts in the written statement filed by him and the plaintiff filed a suit in the representative capacity on behalf of the creditors of the first defendant and the name of the creditors and amount due to them by the first defendant with rate of interest and particulars of their address are mentioned in A-schedule annexed to the plaint. The learned counsel for the respondent also draw the attention of the Court that the name of the second petitioner herein has been shown at serial No.12 of ‘A’ schedule to show that he is one of the creditors.

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8. At this juncture, it is necessary to note Section 53 (1) of the Transfer of Property Act, 1882, which reads as follows: “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.

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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.”

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9. A reading of the above provision makes it clear that if a transfer of immovable property is made with an intention to defeat or delay the creditor or suit by a creditor to avoid the said transfers, is maintainable on behalf of or for the benefit of all the creditors.

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10. The first respondent herein has filed an application in I.A.No.483 of 2003 contending that plaintiff in the suit filed in a representative capacity on behalf of the general body of the creditors of Adapala Vijaya Kumar Reddy, the partner of M/s.Sri Vijayalakshmi Financiers Registered Firm, Nellore. He stated that the said Adapala Vijaya Kumar Reddy borrowed amount from several creditors and transferred the properties in the name of his family members for screening his assets, to prevent distribution of amount to the creditors. The plaintiff expressed his inconvenience to contest the case due to his hearing trouble. The defendants admitted the plaint debt, but falsely contended that he discharged that amount.

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11. It is also stated that the first respondent filed O.S.No.248 of 2007 for recovery of Rs.5,00,000/- with interest thereon on the file of I Additional Senior Civil Judge, Nellore, against Adapala Vijaya Kumar Reddy and obtained decree on 19-08-2008 and filed E.P.No.250 of 2008 in O.S.No.248 of 2007 and in that proceedings claim application was filed by Adapala Mythily. The Court gave finding to contest his case along with the general body of the creditors. It is also stated that the suit is in representative

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capacity. In view of the inconvenience of the plaintiff the first respondent herein filed the I.A. for the benefit of General Body of the creditors to contest the suit in the representative capacity as one of the judgment creditor of Adapala Vijaya Kumar Reddy, the partner of M/s.Vijayalakshmi Financiers Registered Firm, Nellore. The defendants have admitted several debts in their written statement.

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12. Therefore, in the light of the above facts and circumstances and the admission of the defendants and also in view of provisions contained in Section 53 of Transfer of Property Act and the law laid down by Apex Court in the decision cited 2 supra, the Court below rightly allowed the prayer of respondent No.1 herein to implead him as second plaintiff for the benefit of general body creditors of M/s.Vijayalakshmi Financiers Registered firm.

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13. Therefore, I do not see any error in the order passed by the trial Court in allowing the application in I.A.No.483 of 2010.

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14. Accordingly, the Civil Revision Petition is dismissed. There shall be no order as to costs.

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___________________________ JUSTICE G. CHANDRAIAH

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July 13, 2011 Pn

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THE HONOURABLE SRI JUSTICE G. CHANDRAIAH

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CIVIL REVISION PETITION No.5680 of 2010