Tharu Cheru And Another v. Mary And Others

1. The plaintiffs in O.S No. 269 of 1959 on the file of the Munsif's Court, Peruvambvoor, are the appellants. The suit is one for declaration that Exhibit P-1, sale deed dated 5-1-1951, is in fraud of the creditors and is, therefore, liable to be cancelled. The trial Court dismissed the suit holding that the suit is barred by limitation. This finding of the trial Court was upheld by the Additional District Court, Parur, in A.S No. 144 of 1964 filed by the defeated plaintiffs. In the second appeal the main grounds raised are that the Courts below are in error in holding that the suit is barred by limitation, that being a suit under Section 53 of the Transfer of Property Act, the proper provision applicable is Article 120, not Article 11 of the Limitation Act of 1908, that the suit is not barred by res-judicata, and that the plaintiff, even as a single creditor, is entitlea to bring a suit under Section 53 of the Transfer of Property Act.

2. The facts of the case, briefly stated, are as follows: The first plaintiff to whom the second defendant owed money, obtained a decree in O.S No. 38 of 1951 on the file of the Munsiff of Trichur. In execution of that decree the plaintiff-decree-holder attached the plaint schedule property. The first defendant put in a claim stating that under Exhibit P-1 sale deed she is the owner of the property and that the second defendant had absolutely no interest whatsoever in that item. This claim was upheld as per the order dated 24-11-1956. Thereafter the 1st plaintiff instituted O.S No. 387 of 1957 on the file of the Munsiff's Court, Perumbavoor, for setting aside the order on the claim petition. That suit was filed on 4-12-1957, one year and ten days after the passing of the order on the claim petition. That suit was dismissed on the ground that under Article 11 of the Limitation Act, a suit under Order XXL Rule 63 of the CPC ought to have been filed within one year from the date of the order on the claim petition. The first plaintiff took up the matter in appeal, A.S No. 241 of 1958 on the file of the Additional District Court, Parur, but without success.

3. Subsequently, it would appear that the first plaintiff's right was transferred to the second plaintiff and the plaintiffs 1 and 2 jointly instituted O.S No. 269 of 1959 purporting it to be a suit under Section 53 of the Transfer of Property Act, impleading defendants 3 to 6, besides defendants 1 and 2. It was alleged that defendants 3 to 6 are impleaded, as they are understood to be the other creditors of the second defendant. The prayer in the suit was for a declaration that Exhibit P-1, sale deed, is vitiated by fraud to defeat the creditors of the second defendant and, therefore, liable to be cancelled.

4. Defendants 1 and 2 contended that the suit is barred by res-judicata by reason of the decree in A.S No. 241 of 1958 of the Additional District Court, Parur and also that it is barred by limitation. Defendants 3 to 5 filed statement stating that no amount is due to them from the second defendant. The 6th defendant, the State of Kerala represented by the Chief Secretary to Government, filed a statement stating that the amount due to the Government was already paid.

5. The trial Court tried issues 3 and 4, which respectively related to the question of res-judicata and limitation as preliminary issues and found that the suit is red by res-judicata as well as limitation and, therefore, dismissed the suit without going into the other questions, though as many as 17 issues were raised in the suit. Aggrieved by the decision on the trial Court, the plaintiffs took up the matter in appeal in A.S No. 144 of 1964 on the file of the Additional District Court, Parur. The learned District Judge also held that the suit is barred by limitation, holding that the proper article applicable is Article 11, not Article 120, of the Limitation Act, The first appellate Court did not consider other questions; in paragraph 5 of the judgment the only question for consideration is set out to be “whether it is Article 11 of the Limitation Act or Article 120 that is applicable”.

6. This point alone has been considered in the discussion under paragraph 6 of the judgment Having held that the suit is barred by limitation, the learned District Judge dismissed the appeal with costs. It is against the judgment and decree of the first appellate Court confirming the judgment and decree of the trial Court that this appeal has been filed by the plaintiffs.

7. The learned District Judge seems to think that, as the present suit O.S No. 269 of 1959, is not brought within one year after the date on which the claim was allowed, this suit is not maintainable. I do not think that this view of the learned District Judge is correct. No doubt a suit under Order XXI, Rule 63 of the CPC, has to be brought within one year from the date on which the order on the claim petition is passed. It is precisely for that reason that the suit O.S No. 387 of 1957 was dismissed, as the suit was brought only on 4-12-1957 whereas the order on the claim petition was passed on 24-11-1956. That suit was under Order XXI, Rule 63 of the CPC, for setting aside the order on the claim petition. The ground alleged was that Exhibit P-1 sale deed dated 5-1-1951 executed by the second defendant in favour of his wife, the first defendant, was a sham document. That suit, however, was not a creditor's suit under Section 53 of the Transfer of Property Act, The question then is whether the decision in O.S No. 387 of 1957, as confirmed by the decree in A.S No. 241 of 1958, is a bar to the institution of the present suit O.S No. 269 of 1959. The suit O.S No. 387 of 1957 was merely a suit for setting aside the order on the claim petition on the ground that Exhibit P-1 sale deed by the husband in favour of the wife was a sham document not intended to be acted upon. The decision in that suit can bind the decree-holder only with respect to the execution of the decree for the realisation of which the property was attached. This is the view that was taken in the Full Bench decision of the Madras High Court in Narasimhachariar v. Raghava Padayachi (AIR 1945 Mad. 333):

“……… an order on a claim petition filed under O. 21, R. 58 or a decree in a suit filed under R. 63 does not extend beyond the execution of the decree which has given rise to those proceedings.”

8. A Full Bench of the Andhra Pradesh High Court also has taken a similar view in Chimpiramma v. Subramanyam (AIR 1957 Andh Pra 61) (F.B). Subba Rao, C.J, who delivered the judgment of the Full Bench had quoted, with agreement the decision of the Full Bench of the Madras High Court in AIR 1945 Mad 333 referred to above. The Supreme Court also had occasion to consider this point in Mangru v. Taraknathji (AIR 1967 SC 1390) and it was held as follows:

“in view of the orders passed against the plaintiff in the claim proceedings and his failure to institute suits under O. 21, R. 63, the plaintiff was precluded from claiming that he had the right to attach the suit lands in execution of his money decree, but that did not preclude him from claiming that he had the right to sell the lands in execution of his mortgage decree.”

9. From the dictum laid down by the Supreme Court it is clear that an order on a claim petition under O. 21, R. 58 of the CPC, or a decree in a suit under O. 21, R. 63 for setting aside an order on a claim petition, would preclude the decree-holder from claiming that he had the right to attach the property in question in execution of the very same decree, but does not preclude the decree-holder from attaching the same property in execution of another decree he may have. This being the correct position, the view taken by the Courts below that, because the, plaintiffs' suit O.S No. 387 of 1957 for setting aside the order on the claim petition was dismissed, the plaintiff is precluded from instituting another suit, a creditor's suit under Section 53 of the Transfer of Property Act and Order 1, Rule 8 of the CPC, is wrong.

10. The learned counsel appearing for the respondent points out that the suit O.S No. 387 of 1957 itself could have been instituted only as a representative suit and, therefore, the present suit is incompetent. In support of the proposition that a suit under O. 21, R. 63 ought to be a representative suit, my attention has been drawn to two decisions, one of this Court and the other of the Supreme Court. In Velama v. Raya Shenoy (1962 Ker LT 801 : (AIR 1963 Ker 356),) Govindan Nair, J., held as follows:

“Section 53 of the Transfer of Property Act provides a specific remedy for avoiding a document which is meant to defeat or delay creditors. If the principles in that section are invoked, the action must be a representative one. Since the benefit of such an action can and must accrue to the whole body of creditors, they must be brought on record. Order 21, Rule 63 merely provides that the order passed on the claim petition shall be final subject to the decision in a suit instituted for vacating that order; Such suits may be filed on various grounds. Where it is contended, that the document was executed for defeating the creditors of the debtor, the plaintiff seeking to set aside an order passed in execution is relying on the principle embodied in Section 53 of the Transfer of Property Act for the purposes of achieving the and of having the order vacated. Therefore, the suit should have been brought by the plaintiff as a representative one on behalf of the body of creditors and after complying with the provisions of Order 1, Rule 8.”

11. This view has been expressed by the Supreme Court also in Abdul Shukoor Saheb v. Arji Papa Rao (AIR 1963 SC 1150), in which case it was held that—

“……it was merely to have a uniform rule and to avoid conflicting decisions that the third paragraph was inserted in Section 53(1) 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 O. 21, R. 63, as to other suits.”

12. The ruling in the two decisions referred to above cannot be applied to the facts of this case. Firstly, the suit O.S No. 387 of 1957 was not purported to be a creditors suit under Section 53 of the Transfer of Property Act, Secondly, the suit O.S No. 387 of 1957 was for setting aside the order on the claim petition on the ground that Exhibit P-1 sale deed dated 5-1-1951 was a sham document. It is significant to note that it was a suit for the cancellation of the sale deed or for the avoidance of the transfer on the ground that the sale is in fraud of the creditors. It may be that a suit under O. 21, R. 63 based on the allegation that the transfer is in fraud of creditors has to be brought as a representative suit for find on behalf of all the creditors; otherwise that suit may have to fail on that ground. However, a decision in a suit purported to be under O. 21, R. 63 alleging the transfer deed to be a sham document not intended to be acted upon will not operate as res-judicata against the decree-holder, instituting another suit seeking a declaration that the impugned sale is one in fraud of the creditors and is not binding on the creditors including the plaintiff. I, therefore, hold that the decision in O.S No. 387 of 1957 does not operate as res-judicata against the present suit, O.S No. 269 of 1959.

13. The Courts below have also held that this cannot be characterised to be a representative suit under Section 53 of the Transfer of Property Act, for the reason that defendants 3 to 5 have filed a statement that no amount was due to them from the second defendant and the 6th defendant had also filed a statement stating that whatever money was due from the second defendant had already been realised leaving the plaintiff alone as that sole creditor. The assumption of the Courts below that a single creditor cannot bring a suit under Section 53 of the Transfer of Property Act does not appear to be correct. In Mohideen v. Muhammad Mustappah (AIR 1930 Mad 665), it has been held that—

“If there be only one creditor, then the act of the debtor in transferring all his property to a stranger with a view to secrete the same and defeat the creditor would be fraudulent and the transfer could be set aside if the transferee had notice of the circumstances, and of the debtor's evil design.”

14. A Division Bench of the Andhra Pradesh High Court in Bhaskara v. Creditors of Piler K. Saheb, (AIR 1965 Andh Pra 68) has held thus:

“Section 53 applies even where a debtor disposes of his property with the intention of defeating one single creditor. There is no distinction between a case where a transferor had a single creditor and a case where so had several creditors.”

15. Raghavan J., as he was then, in State Bank v. A.K Nanan (AIR 1967 Ker 171) held as follows:

“It is true that there is no other creditor of the first defendant; still it is not necessary to bring a suit within Section 53 that there should be another creditor existing to the knowledge of the plaintiff. The recitals in the amended plant and the prayers therein indicate that the suit was instituted for the Bank and also for and on behalf of all the other creditors of the first defendant, if any. The law does not require that at the time of the institution of the suit more than one creditor should be in existence.”

16. I am in agreement with the view taken by Raghavan J., in the decision referred to above and hold that the Courts below were in error in holding that the suit was not maintainable under Section 53 of the Transfer of Property Act inasmuch as out of the alleged creditors defendants 3 to 5 stated that no amount was due to them from the 2nd defendant and the 6th defendant filed a statement to the effect that money due to the Government from the 2nd defendant has already been realised.

17. The learned counsel appearing for the respondent has drawn my attention to the Division Bench ruling of the Madras High Court in K. Parambil Saharabi v. Chekkutti (AIR 1923 Mad 295) wherein Venkatasubba Rao, J. has held as follows:—

“The combined effect of Order 21, Rule 63 of the CPC and Article 11 of the Limitation Act is to not down the usual period of limitation which in many instances is 12 years to a year when the case falls within the terms of the said sections. The result is if a person whose property is attached takes no steps under the summary procedure available to him to get his right established, he has the usual period of limitation. But if he prefers a claim and an order is made against him he is bound to file a regular suit within a year of the order.”

18. To my mind the decision referred to above could have application only to cases where the suits are filed under O. 21, R. 63 of the CPC. Of course, as has already been held in 1962 Ker LT 801 : (AIR 1963 Ker 356) and AIR 1963 SC 1150, such a suit to be valid has to be filed under Section 53 of the Transfer of Property Act also inasmuch as the declaration sought for is that the transfer is fraudulent of creditors. However, where the suit (as in the case of O.S No. 387 of 1957 here) is not purported to be one under Section 53 of the Transfer of Property Act alleging specifically fraud, to defeat creditors, as a ground, it cannot be held that the decree-holder is precluded from bringing a representative suit because the cause of action does not depend upon the order on the claim petition. No doubt, in the present suit also, there is a prayer for a declaration that the decree-holder would be entitled to proceed against the property that was attached in execution of the decree in O.S No. 38 of 1951. While I hold that prayer cannot be granted, there is no justification or legal basis for holding that the present suit which is in essence and substance one for declaration that Exhibit P-1 sale deed dated 5-1-1951 is a transfer in fraud of creditors, and that the creditors are entitled to proceed against that property for realisation of the amounts due to them. I also make it clear that the appellant is not entitled to proceed against the plaint schedule property in execution of the decree in O.S No. 38 of 1951 on the file of the Munciff's Court, Trichur. The result is that I hold the proper article applicable to the case on hand on the question of limitation is Article 120, not Article 11, of the Limitation Act of 1908 and that the Courts below were in error in holding that the suit is barred by limitation. The Courts below have also gone wrong in taking the view that where there is only one creditor, a suit under Section 53 of the Transfer of Property Act cannot be brought also hold that the dismissal of the suit O.S No. 387 of 1957 does not operate as a bar to the present suit for a declaration under Section 53 of the Transfer of Property Act that Exhibit P-1 sale deed is in and of creditors. The trial Court disposed of the suit without a trial on all issues, only on the basis of the finding entered on the preliminary issues Nos. 3 and 4 which dealt with the questions of res-judicata and limitation. The first appellate Court has considered only the question of limitation. My conclusion, in the fight of the foregoing discussion, being that the findings of the Courts below on both these issues are erroneous, I set aside the judgments and decrees of the Courts below and remand the matter to the trial Court for a fresh disposal as expeditiously as possible. The court-fee paid by the appellant in this second appeal will be refunded. No order as to costs in this second appeal.

19. Ordered accordingly.