Vengalaveeran vs Rajendran and Others

E. Padmanabhan, J.—The petitioner, who was unsuccessful in E.A.36 of 1994 on the file of Sub Court, Pattukottai, as well as C.M.A.No.

44 of 1995 on the file of District Court, Thanjavur, is the revision petitioner.

The revision petitioner filed E.A.No. 36 of 1994 in E.P.No. 2 of 1993 in O.S.No. 43 of 1986 on the file of Sub Court, Pattukottai under Order

21, Rule 58 C.P.C. to raise the attachment dated 3.2.1994. It is the case of the revision petitioner that he had purchased the property on

16.6.1986, that he is the exclusive and absolute owner of the suit property, that he has been in enjoyment of the same, that the order of attachment

effected on 3.2.1994 as if it is still owned by respondents 3 to 7 judgment debtors, is a misconception, that he property is not liable to be attached,

that deliberately his property had been attached and that the order of attachment is illegal, inoperative and the same is liable to be set aside.

The contesting respondents 1 and 2 filed a detailed counter. It has seen contended that the suit properties were owned by the judgment debtors,

that the sale deed in favour of the petitioner is a sham and nominal transaction that no sale consideration has been paid for the alleged purchase,

that with full knowledge of the order of attachment, the deed of conveyance had been executed, that in terms of Order 21, Rule 54(3) the order of

attachment shall be deemed to have been made against the transferees without consideration from the judgment debtor from the date of the order

of attachment and that the petitioner not being a bonafide purchaser, but a mere name lender, has not acquired valid title to the property and the

property has been attached by order dated 5.6.1986 and it is not as if it is now being attached only on 3.2.1994. It was further contended that the

application to raise the attachment filed by the petitioner is highly belated and it is not a bonafide application.

The petitioner filed Exs.P.1 to P.6 and examined P.Ws.1 and 2. Respondents 1 and 2 marked Exs.R.1 to R. 5 and examined R.W.1, the power

of attorney agent of the 1st respondent.

The executing Court, on a consideration of oral and documentary evidence, rendered a definite finding that with full knowledge of the attachment

order dated 5.6.1986, Ex.P.1 sale deed had been created without payment of any consideration, that a sham and nominal sale deed has been

created with a view to defeat the claims of the decree-holder, that the claim petition is highly belated as the first attachment was ordered on

5.6.1986 and the claimant had purchased the same only on 16.6.1986 with full knowledge of the order of attachment.

On appeal in C.M.A.No. 44 of 1995, the lower appellate court held that the petitioner cannot maintain the application as he had not established

that he was in possession on the date of attachment, when the earlier attachment is valid, that with full knowledge of the order of attachment, the

deed of conveyance had been executed with a view to defeat the claims of the creditors, that the attachment before judgment ordered on 5.6.1986

had been made absolute on 17.6.1986 and the purchase on 16.6.1986 by the petitioner is invalid and that the petitioner was very much aware of

the attachment ordered on 5.6.1986 as deposed by R.W.1.

The lower Appellate Court also found that the order of attachment was made in I.A.No. 189 of 1986 on the file of the vacation civil court,

Thanjavur on 5.6.1986, and that only with knowledge of the said order of attachment, the defendant in the suit had executed the conveyance deed

in favour of the petitioner with a view to screen the property from being proceeded. The first appellate court had confirmed the fair and decretal

order passed by the executing court.

In the present revision petition, learned counsel for the petitioner contended that the order of attachment before judgment ordered on 5.6.1986

was effected only on 17.6.1986 and as such, when the purchase has been completed on 16.6.1986, the attachment is of no consequence and the

attachment will not take away his rights as there has been a completed transfer in his favour just prior to the attachment. Learned counsel for the

revision petitioner contended that he is a bonafide purchaser for value and that he was not aware of the attachment ordered on 5.6.1986 and

effected on 17.6.1986 and he has filed the present application for raising the attachment ordered in the execution petition on 3.2.1994. It was

further contended that on the date when the order of attachment was passed in the execution petition, the petitioner was the owner as he had

purchased the property on 16.6.1986 as seen from Ex.P.1 and that the attachment is inoperative and invalid.

Learned counsel for the petitioner relied upon a Division Bench judgment of this court in Padmavathiammal v. Maruthachalam Pillai 1966 1 MLJ

413 and contended that before effecting the attachment the petitioner had purchased the property and merely because the order of attachment had

been made earlier in point of time, the attachment effected after the date of conveyance will not take away or in any manner affect the rights of the

petitioner, which he had purchased on 16.6.1986. In other words, the order of attachment passed on 5.6.1986 and effected on 17.6.1986 will not

have any effect on the purchase made by him on 16.6.1986. A Division Bench of this Court in Padmavathiammal v. Maruthachalam Pillai, 1966 1

MLJ 413 supports the said contention of the revision petitioner. But, in the present case, the two courts below have concurrently found that the

petitioner as well as his vendor with full knowledge of the order of attachment dated 5.6.1986 got the deed executed with the object of defeating

the claims of the creditor, at whose instance the order of attachment was passed on 5.6.1986, that the sale deed dated 16.6.1986 is not bonafide

and it is a sham transaction, without payment of sale consideration and that possession of the property continued with the judgment debtor even

after the alleged sale deed dated 16.6.1986. In the light of the said findings, which are concurrent, this court is not in a position to apply the

principles laid down in Padmavathiammal v. Maruthachalam Pillai, 1966 1 MLJ 413.

In this respect, learned counsel for the respondents relied upon Sub-rule (3) of Rule 54 of Order 21, C.P.C. and contended that the order of

attachment in question is deemed to have been made as against the transferees without consideration from the judgment debtor from the date of

order of attachment. For this statutory rule, there is no answer through learned counsel for the revision petitioner raised very many contentions.

The findings of the two courts below are that the transfer has been effected without consideration by the judgment debtor and factually also,

the judgment debtor as well as the present petitioner was very much aware of the order of attachment on the date when they presented the sale

deed for registration, as seen from the objection raised by the respondent. The depostition of R.W.1 had been accepted by the two courts below,

which would go to establish that the petitioner as well as his vendor was very much aware of the order of attachment dated 5.6.1986 and that they

have knowingly got the sale deed registered on 16.6.1986. The further findings are that possession continued with the vendor under Ex.P.1 and

that the sale transaction is not supported by consideration and it is only a sham and nominal transaction.

Learned Counsel for the petitioner also relied upon the judgment of K. Veeraswami, J, as he then was, in Varadarajulu Naidu v.

Inthiraniammal and Anr. 1969 1 MLJ 386 and sought to contend that his claim petition is not belated as he had come immediately after attachment

in the execution petition. This contention is not acceptable. In the said decision, it was held thus:-

It is urged for the petitioner that the second claim petition by the respondents was not maintainable. This is on the ground that the attachment

before judgment should be taken to continue right through. I think that this means that the attachment before judgment and the re-attachment could

co-exist, which can never be the effect of re-attachment is that the attachment before judgment, assuming that it continued when the earlier petition

was dismissed, merged in it. The result of it is the respondent would have another opportunity to file a claim. This view seems to receive support

from the observation of Ramesam, J., in Meyyappa Chettiar v. Chidambaram Chettiar, ILR1924 Mad.483."" The learned judge said:

Just as the effect of the two attachments of the same property in execution of the same decree is merely that the property is under attachment, the

first attachment merging in the second, similarly the effect of an attachment before judgment followed by a redundant re-attachment after judgment

is merely that the property is under attachment. In such cases, it is meaningless to say that the property is under two attachments. It is still more

meaningless to say that one attachment is dropped but another subsists. All the earlier attachments, in all such cases, merge into the last.

Where the earlier attachment merges in the ''last'', a second claim petition is competent; See The Dharapuram Janopakara Nidhi, Ltd. Vs. K.

Lakshminarayana Chettiar, which has been followed by me in S.A.No. 316 of 1963.

There is no quarrel over the proposition laid down by Veerasami, J. But, on facts, the petitioner had full knowledge of the first attachment and

he had kept quiet for several years without filing an application to raise the attachment or a claim petition. The petitioner had claimed that he had no

knowledge of the first attachment but it is to be pointed out that the first attachment continued throughout even after the decree that has been

passed in the suit. As such, it cannot be contended that on the second attachment or re-attachment, the petitioner has got right to put forth his claim

and seek to raise the attachment. This is because, the petitioner had full knowledge of the first attachment, and he kept silent for years together and

hence on facts, the decision relied on by learned counsel for the petitioner has no application to the facts of this case.

It was next contended by learned counsel for the petitioner that the order of attachment takes effect only from the date or time on which it was

effected and not from the moment it was passed. In this respect, learned counsel for the petitioner relied upon the judgment of Suryamurthy, J., in

Viswanathan Vs. Muthuswamy Gounder and Others, . In the said decision, Suryamurthy, J. was concerned about the order of attachment and the

attachment passed in execution of money decree and the payment that has been ordered by the Court. The learned Judge had held that the order

of attachment takes effect from the moment it is brought to the notice of the garnishee and not from the moment it is passed. This is not the case

here. In the present case, the statutory rule, viz., Sub-rule (3) of Rule 54 of Order 21 stares at the petitioner and he had full knowledge of the

order of attachment and his action is deliberate as found by the two courts below and his transaction is not supported by consideration, nor the

sale had been given effect to by the petitioner being inducted into possession, nor there has been payment of sale consideration as found by the

courts below.

It was next contended by learned counsel for the petitioner that the fraud on the creditor, which was one of the ground, on which his petition

has been rejected, has to be raised in the form of a suit and not as a defence in the application. This contention, in my view, has to be stated and

rejected in view of the pronouncement of the Apex Court in S.P.A.V. AN. Kannappa Chettiar Vs. Commissioner of Income Tax, . In the said

decision, it has been held that Section 53(1) of the Transfer or Property Act, does not prescribe any method of avoidance and it could be well

realised in defence as well. It has been held in the said decision as follows:-

He further pertinently pointed out that to hold that a plea based on the transfer being voidable u/s 53(1) could not be raised in defence to a suit to

set aside a summary order would mean that ""the creditor decree-holder would be in a much worse position for his success in the summary claim

proceedings than if he had lost those proceedings.

Section 53(1) of the Transfer of property Act rendered the transaction voidable at the instance of the creditors if the transfer was effected with the

particular intent specified and the statute does not prescribe any particular method of avoidance. Referring to this the learned Judge observed:

If the creditor knowing of the transfer applies for attachment; the application is sufficient evidence of his intention to avoid it; if he only hears of the

transfer when a claim-petition is preferred under Order 21, Rule 58, and still maintains his right to attach, that again is a sufficient exercise of his

option to avoid and entitles him to succeed in the subsequent suit under Rule 63.

It is further pointed out that

the suit under Rule 63 is by the unsuccessful party to the claim petition ''to establish the right which he claims to the property in dispute.'' Whether

this suit be instituted by the attaching decree-holder or by the transferee-claimant, it must equally be decided in favour of the former if the transfer is

shown to have been fraudulent; because in consequence of the fraudulent character of the transfer and its avoidance by the judgment-creditor, the

result is that the transferee has not the right which he claims, namely, to hold the property free from attachment in execution by the judgment-

creditor.

The learned judges based their conclusion on this and on several other lines of reasons which we consider unnecessary to set out, but it is sufficient

to say that we are in entire agreement with all of them. There is therefore no substance in the point that there is anything in Section 53(1) as it

originally stood which precluded a defence by an attaching creditor to a suit to set aside a summary order under Order 21, Rule 63 that the sale in

favour of the plaintiff is vitiated by fraud of the type specified in the earlier quoted provision and the amendment has admittedly made no change in

this matter.

It was next urged that the third paragraph of the amended Section 53(1) has effected a change in the law and that thereafter transfers voidable

under 1st paragraph of Section 53(1) could be avoided only in suits filed by a defeated or delayed creditor as plaintiff suing on behalf of himself

and other creditors. We consider that there is no substance in this objection either.

Learned counsel for the petitioner referred to various other decisions, which have no application to the facts of the present case.

In the circumstances, the revision petition is dismissed, but without costs. C.M.P.No. 2425 and 5737 of 1996 are consequently dismissed.