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Case Number

Cross Appeals Nos. 193 and 237 of 1929

Advocates

T.N Walavalkar, for the appellants.
G.S Mulgaonkar, for respondent No. 1.

Judges

Mr. Barlee
Mr. Sen, JJ.

Acts

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Smart Summary

Structured Summary of the Opinion — Sen, J. (with Barlee, J. concurring)

Factual and Procedural Background

This appeal arises from Regular Civil Suit No. 106 of 1927 before the First Class Subordinate Judge, Ratnagiri. The plaintiff (Waman) had been a partner in a Bombay trading/commission agent firm formed on 5 December 1921 with defendant No. 5 and Pandurang Yeshwant Vengurlekar (for whom defendant No. 6 passed promissory notes). The plaintiff contributed Rs. 5,000 in cash and advanced Rs. 10,000 on promissory notes from defendants Nos. 5 and 6. The firm continued until August 1924 when the plaintiff separated but remained a creditor.

The promissory notes were renewed on 3 December 1924. In August 1925 the plaintiff sued defendants Nos. 5 and 6 and obtained decrees in February 1926 on those promissory notes. The plaintiff obtained attachments over the plaint properties, but the attachments were raised after claims under Order XXI, rule 58 were preferred by defendants Nos. 1, 2 and 3. Those claimants asserted (a) a farkhat dated 8 April 1925 showing separation from the joint family, and (b) a decree dated 29 November 1925 upon an award effecting a partition which made defendants Nos. 5 and 6 responsible for the firm debts.

The plaintiff sued for a declaration that the properties were liable for attachment and sale in execution of his decrees against defendants Nos. 5 and 6 and that the farkhat and the award decree were fraudulent and should be set aside. The Subordinate Judge held that the case fell under section 53 of the Transfer of Property Act and set aside the award; these appeals challenge that decision.

Legal Issues Presented

Whether the suit should have been brought by the plaintiff in a representative capacity as required by section 53 of the Transfer of Property Act (i.e., whether a single creditor may sue to set aside an alleged fraudulent transfer without representing all creditors).
Whether a partition (here by farkhat and by decree on award, dividing immovable family property by metes and bounds) constitutes a "transfer" within the meaning of section 53 of the Transfer of Property Act.
Whether, as a matter of fact, the shares allotted to defendants Nos. 5 and 6 by the award decree were sufficient to discharge the debts for which they were made liable (including whether each defendant's individual share sufficed as to debts ascribable to him).
Whether the shares given to defendants Nos. 5 and 6 were less than their legitimate share (and conversely whether defendant No. 1 received more than his proper share) — i.e., whether the partition was fraudulent in allocation.

Arguments of the Parties

Appellants' Arguments

The plaintiff (appellant in one of the appeals) should have sued in a representative capacity under section 53; bringing the suit in his personal capacity contravenes the interpretation of that section adopted by this High Court in prior decisions (as relied on by the appellants).
A partition effected by a farkhat and an award decree does not amount to a "transfer" within the meaning of section 53 of the Transfer of Property Act, and thus could not be impeached under that provision.
Questions of fact were also pressed: whether the shares allotted to defendants Nos. 5 and 6 together (and separately) were sufficient to satisfy the debts for which they were held liable; and whether there was an improper distribution (i.e., that defendants Nos. 5 and 6 were given less than their legitimate shares).
One point mentioned but not pressed: whether the debts in question were debts of defendants Nos. 5 and 6 personally or debts of the whole joint family.

The opinion does not contain a detailed account of the respondents' (defendants') separate legal arguments beyond matters raised and the court's observations that defendants had waived certain procedural objections by failing to plead them.

Table of Precedents Cited

Precedent	Rule or Principle Cited For	Application by the Court
Shantilal Mewaram v. Munshilal Kewalram	Support for the view that a creditor bringing a suit to set aside a transfer under section 53 should do so in a representative capacity (following earlier rulings).	The Court noted this authority (and the rulings it follows) to show that this High Court had previously taken the view that non-representative suits by creditors might contravene the proper interpretation of s.53; the Court nevertheless held the procedural objection waived where not pleaded by defendants.
Burjorji Dorabji Patel v. Dhunbai	Earlier ruling relied upon (grouped with Ishvar Timappa) concerning procedural/representative requirements in suits under section 53.	Referenced as part of the chain of authority followed in Shantilal Mewaram; used to explain the High Court's prior approach but not applied to dismiss the suit because the defendants had waived the procedural objection.
Ishvar Timappa v. Devar Venkappa	Earlier ruling relied upon (grouped with Burjorji Dorabji Patel) concerning representative capacity in suits under s.53.	Same treatment as Burjorji Dorabji Patel: cited to show existing High Court precedent on representative suits; court held defendants had waived the objection.
Hakim Lal v. Mooshahar Sahu (Calcutta High Court)	Also supports the view that creditor suits to impeach transfers should be brought in a representative capacity.	Cited to show alignment of Calcutta High Court with the High Court's earlier view; Court contrasted this with Madras decisions but relied on waiver to refuse dismissal on this ground.
Atrabannessa Bibi v. Safatullah Mia	Articulates that the object of a suit for partition is to alter the form of enjoyment of joint property; partition involves surrender/exchange of rights and results in each becoming sole owner of allotted parts.	The Court adopted the reasoning expressed there to support the view that a partition effected by metes and bounds can amount to a "transfer" within s.53.
Rasa Goundan v. Arunachala Goundan (Madras High Court)	Adopts the Calcutta view that partition can be treated as a transfer under s.53; follows Atrabannessa Bibi and rejects Spencer, J.'s contrary dictum.	The Court relied on this Madras decision (which itself follows Atrabannessa Bibi) to reinforce its conclusion that an attempted partition by metes and bounds falls within the mischief of s.53 and therefore is a "transfer" for the purpose of that section.
Indoji Jithaji v. Kothapalli Rama (dictum of Spencer, J.)	Dictum asserting that partition effects a change in mode of enjoyment but is not an act of conveying property from one living person to another (i.e., a contrary view that partition is not a "transfer").	Cited as the contrary authority; the Court noted this dictum but observed that other authorities do not agree with it and consequently declined to follow that view for purposes of s.53.

Court's Reasoning and Analysis

The court's analysis proceeds in two related strands: (A) procedural/representative capacity; and (B) whether partition is a "transfer" under section 53 — followed by (C) factual valuation and application to the disputed shares and debts.

A. Procedural / Representative Capacity

The Court acknowledged authorities (including Shantilal Mewaram and related earlier cases, and the Calcutta High Court) holding that a creditor seeking to set aside transfers under section 53 should sue in a representative capacity on behalf of all creditors.
However, the Court examined the pleadings and procedural record and observed that the defendants did not plead this point. Under Order VIII, rule 2, matters showing the suit is not maintainable must be raised by pleading. Because defendants failed to raise that procedural objection in their pleading, the Court deemed the objection waived and refused to permit the defendants to raise it for the first time at the appellate stage.
Accordingly, although the Court recognized "considerable force" in the argument about representative suits, it declined to dismiss the plaintiff's suit on that basis because of waiver by the defendants in the lower court.

B. Partition as a "Transfer" under Section 53

The Court considered whether a partition effected by metes and bounds in a Hindu joint family is a transfer within the meaning of the Transfer of Property Act. The Act's definition of "transfer" (section 5) contemplates conveyance by a living person to one or more living persons.
After reviewing authorities, the Court found persuasive the reasoning in Atrabannessa Bibi (and the Madras decision in Rasa Goundan which follows it), which characterize partition as altering the form of enjoyment and involving surrender/exchange of joint rights, so that each co-sharer becomes sole owner of the allotted part.
The Court rejected the contrary dictum attributed to Spencer, J. in Indoji Jithaji v. Kothapalli Rama on the ground that few other authorities support it. The Court concluded that a partition by metes and bounds can be adequately described as a mixture of surrender and conveyance of rights, and thus can constitute a "transfer" within s.53.
Both Sen, J. and Barlee, J. expressed acceptance of the view that a partition which results in each member acquiring a sole interest is a conveyance and falls within the mischief of s.53.

C. Factual Valuation and Application

The Court emphasized that to set aside a partition as fraudulent under s.53, the plaintiff must prove that the partition deprived creditors of assets sufficient to satisfy their debts — i.e., that the shares allotted to the debtors were insufficient to pay debts for which they were made liable.
The Subordinate Judge's valuation figures (based on a Commissioner) were reproduced and accepted by both sides on appeal. The Court adopted those figures (with a correction as to the valuation of a ship given to defendant No. 6), and recalculated the values:

Defendant No. 5: originally Rs. 28,200 (excluding the ship "Sakri"); the ship valued at Rs. 1,000–1,200 — Court accepts Rs. 1,000–1,200 and takes defendant No. 5's share at Rs. 29,200.
Defendant No. 6: Subordinate Judge's estimate Rs. 13,500 (including ship "Satyavati" at Rs. 1,000), but the Subordinate Judge elsewhere valued that ship at Rs. 10,000 — Court adjusts defendant No. 6's share upward by Rs. 9,000 to Rs. 22,500.
The combined value of defendants Nos. 5 and 6's shares thus totals Rs. 51,700.

The secured debts for which the two were made liable amounted to Rs. 22,900 with interest Rs. 10,000 (together Rs. 32,900). The debts constituting the subject matter of the plaintiff's suit were Rs. 10,000 more, making total debts Rs. 42,900.
Because Rs. 51,700 (value of the two shares) exceeds Rs. 42,900 (total debts), the Court concluded that the shares allotted to defendants Nos. 5 and 6 together were sufficient to satisfy the debts for which they were made liable.
The Court further examined the position of each defendant separately: defendant No. 5's liability (half the secured debts with interest plus Rs. 5,000 due under the plaintiff's decree) totals Rs. 21,450 — which the Court found to be covered by his allotted share. Regarding defendant No. 6, the subordinate judge had found no reason to complain about the partition as to him; therefore no separate inquiry into comparative shares was required.
The Court noted that the decrees in question had been entered against defendants Nos. 5 and 6 personally (and were not pressed as being decrees against the whole family), which supported treating their personal liability as the operative debts for this analysis.
Given the sufficiency of the allotted shares to discharge the debts, the Court held there was no intent to defraud creditors by effecting the partition, and consequently the award decree need not be set aside under section 53.

Holding and Implications

Holding: The Court's dispositive rulings are as follows:

The award decree is not liable to be set aside under section 53 of the Transfer of Property Act on the facts of this case because the shares allotted to defendants Nos. 5 and 6 were sufficient to pay the debts for which they were made liable.
Appeal No. 237 of 1929 is allowed and the suit is dismissed; the plaintiff is ordered to pay the costs throughout.
Appeal No. 193 of 1929 is dismissed with costs, and those costs are to be paid to defendant No. 3.
The Court recorded that the decree was varied (as indicated in the short concluding notation).

Implications:

On the principal legal issue, the Court held (in accord with Calcutta and Madras authorities it found persuasive) that a partition of immovable joint family property by metes and bounds can amount to a "transfer" within the meaning of section 53 of the Transfer of Property Act. Thus, partitions can fall within the scope of s.53 in appropriate circumstances.
Practically, on the facts here the Court found no fraudulent intent because the allotted shares were sufficient to satisfy the liabilities; therefore the award-decree was upheld and not set aside. The direct consequence is the dismissal of the plaintiff's suit and allocation of costs as above.
The Court also clarified a procedural point: objections that a plaintiff should have sued in a representative capacity under s.53 are procedural and must be pleaded; failure to do so waives the objection at later stages.
While the Court addressed a point described as "new to this Court" (the question whether partition is a transfer under s.53), the decision applied existing judicial reasoning to hold that partition may be treated as a transfer for the purposes of s.53; the Court did not purport to set aside a broader unsettled rule beyond the case's facts.

Decree varied.

This summary is limited strictly to the matters contained in the provided opinion; no external facts or inferences have been added.

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Waman Ramkrishna Ghotge v. Ganpat Mahadeo Nevagi

Sen, J.:—

These are two appeals against the decision of the First Class Subordinate Judge, Ratnagiri, in Regular Civil Suit No. 106 of 1927 in which the plaintiff sued for a declaration that the properties mentioned in the plaint were liable for attachment and sale in execution of the plaintiff's decrees against defendants Nos. 5 and 6, and that the farkhat and award referred to in the plaint were fraudulent and therefore liable to be set aside.

The facts, in this case, in brief, are as follows:—On December 5, 1921, the plaintiff and defendant No. 5 and one Pandurang Yeshwant Vengurlekar formed a partnership named “Motiram Waman Vengurlekar” as traders and commission agents in Bombay, and while Waman, the plaintiff, subscribed Rs. 5,000 towards the capital, defendant No. 5 for himself and defendant No. 6 for Vengurlekar each passed a promissory note for Rs. 5,000 to plaintiff who advanced Rs. 10,000 towards the capital on those promissory notes. The firm continued to do business until August 1924, when the plaintiff separated from the firm, though he continued to remain a creditor of the firm. On December 3, 1924, the promissory notes of defendants Nos. 5 and 6 were renewed. In August 1925 the plaintiff sued defendants Nos. 5 and 6 and got decrees in February 1926 against both of them for the amounts due under the promissory notes. He filed darkhasts and got the plaint properties attached. The attachment was, however, raised on claims having been preferred by defendants Nos. 1, 2 and 3 under Order XXI, rule 58, contending that defendants Nos. 2 and 3 had separated from the joint family of the defendants by a farkhat dated April 8, 1925, and, secondly, that on November 29, 1925, there had been a decree passed on an award by which there had been a partition between defendant No. 1 on the one hand and defendants Nos. 5 and 6 on the other. By that decree defendants Nos. 5 and 6 were made responsible for the debts of the firm.

The main reasons of the plaintiff for bringing this suit were that both the farkhat and the award decree were obtained or got passed with the intention of defrauding the creditor, i.e, the plaintiff, and the learned Subordinate Judge has held that this case accordingly falls under section 53 of the Transfer of Property Act. The alleged fraud, so far as it is alleged to arise from the award decree, consists in this that defendants Nos. 5 and 6 are alleged to have been given less than their legitimate share in the family property, and that these shares, taken together, do not suffice to pay off all the debts for which these two defendants were made liable under the decree.

In the arguments advanced by the learned advocates for the two appellants, the following two law points have been raised, viz., (1) that the suit should have been filed by the plaintiff in a representative capacity, as required by section 53 of the Transfer of Property Act, and (2) that the partition under the farkhat and the award decree do not amount to a transfer within the meaning of that section. Besides these the following points have also been argued, viz., (1) whether as a matter of fact the share of defendants Nos. 5 and 6 taken together was sufficient to pay off the debts for which they were made responsible, and also whether the share of each of them would be sufficient to pay the debts which would fall to the share of each; (2) whether defendants Nos. 5 and 6 were given less than their legitimate share, and whether that of defendant No. 1 was more than his proper share of the family property. A point which has been mentioned but not been pressed in this appeal is whether the debts in question were those of defendants Nos. 5 and 6, or whether they were the debts of the whole joint family.

Defendants Nos. 1, 2 and 3 are the sons of Mahadev who had a quarter share in the family property of the defendants, defendant No. 5 had a half share and defendant No. 6 a quarter share in the suit property. Defendants Nos. 5 and 6 together, therefore, have a twelve annas share, and one reason for making them responsible for the family debts would appear to be that they had such a large share in the property.

As regards the point that the suit should have been brought by the plaintiff in a representative capacity, our attention has been drawn to the decision of this Court in Shantilal Mewaram v. Munshilal Kewalram, where it has been held, following the rulings in Burjorji Dorabji Patel v. Dhunbai and Ishvar Timappa v. Devar Venkappa, that a suit brought by a creditor to set aside a transfer of property under section 53 of the Transfer of Property Act would seem to contravene the interpretation put on that section by this High Court in case the plaintiffs have not brought the action in a representative capacity as representing themselves and all the other creditors of the defendants. To the same effect is the decision of the Calcutta High Court in Hakim Lal v. Mooshahar Sahu. The Madras High Court, however, appears to have held a contrary view, and it is contended that the learned Subordinate Judge was wrong in relying on the Madras view in preference to the view of this High Court and the Calcutta High Court. It seems to us that there is considerable force in this argument, but it does not appear to us that this point was raised in the pleadings in the lower Court, though a reference to this point is to be found in the judgment of that Court. Under Order VIII, rule 2, the defendant must raise by his pleading all matters which show that the suit is not maintainable, or that the transactions impeached are either void or voidable in point of law, and, as this is a point of procedure, the defendants must be held to have waived their objection on this head in the lower Court; and we do not think that we can make this a ground either for dismissing the suit, or for taking any step to bring all possible parties on the record at this stage. We must hold that the defendants having waived their right of raising an objection on this head cannot be allowed to do so at this stage in the present appeal.

As regards the second point, the question is whether a partition in a Hindu family by which the joint family property has been divided by metes and bounds can be held to operate as a transfer within the meaning of section 53 of the Transfer of Property Act. That Act defines “transfer” in section 5 as an act by which a living person conveys property in present or in future to one or more other living persons. We do not find any ruling of this Court specifically on this point. Our attention has been drawn to the judgment in Atrabannessa Bibi v. Safatullah Mia, in which his Lordship said (p. 509):—

This argument has been adopted in a Madras case reported in Rasa Goundan v. Arunachala Goundan. There a dictum of Spencer, J. in Indoji Jithaji v. Kothapalli Rama bharlu, to the contrary effect, has been referred to, viz., “It (partition) effects a change in the mode of enjoyment of property, but it is not an act of conveying property from one living person to another”. Their Lordships, however. on the ground that no other authority is to be found in agreement with the opinion of Spencer, J., adopted the argument in the Calcutta case and held that a partition is a transfer of property within the meaning of section 53. It seems to us that the line of reasoning on which the view of the Calcutta High Court is based is sound, and that for purposes of section 53 of the Transfer of Property Act. “partition,” where the immoveable property has been partitioned among co-owners by metes and bounds, must beheld to be “transfer.” This does not appear to be an unreasonable or far-fetched interpretation: Partition can in fact be adequately described as a mixture of the surrender and the conveyance of rights in property. There can be no doubt that a partition can be effected with as fraudulent an intent as a transfer in the ordinary sense, and we have no sufficient reason to suppose that the mischief sought to be remedied by this section does not include the fraudulent conveyance of rights involved in a fraudulent partition. We would, accordingly, hold that the partition in this case was a transfer within the meaning of this section.

Coming now to questions of fact, the main question that arises in this case is whether the share allotted to defendants Nos. 5 and 6 under the award decree was sufficient to pay off the debts for which these two defendants were responsible. It is evident that if their share was sufficient for this purpose, the members of the family could not have intended to defraud or delay their creditors by effecting such partition. It is, therefore, essential for the plaintiff to prove that the share which went to defendants Nos. 5 and 6 was insufficient to pay off these debts. On this point the learned Subordinate Judge, at page 6, paragraph 14, of his judgment, has computed the value of the different shares that were allotted to the different defendants. The plaintiff does not appear to have raised any objection to these figures, which were based on the valuations made by the Commissioner appointed in this case. The figures are also accepted by both sides in this Court. According to those figures the value of the property allotted to defendant No. 5 has been taken as Rs. 28,200. This, it has been pointed out by Mr. Valavalkar, does not include the value of the ship called “Sakri”. That value has been estimated by the learned Subordinate Judge at Rs. 1,000 or Rs. 1,200 and we see no reason for not accepting that figure. The value of defendant No. 5's share thus comes to Rs. 29,200. The value of the share allotted to defendant No. 6 is estimated by the learned Subordinate Judge at Rs. 13,500. This includes Rs. 1,000 taken as the value of the ship “Satyavati”, which was given to defendant No. 6. Mr. Valavalkar has shown us that the learned Subordinate Judge himself put the value of this ship at Rs. 10,000. We think, therefore, that the value of his share must be taken at Rs. 9,000 more, i.e, at Rs. 22,500. The two shares together thus come to Rs. 51,700. The secured debt for which the two defendants were made liable come to Rs. 22,900 with interest Rs. 10,000, i.e, in all Rs. 32,900. These do not include the debts which are the subject-matter of this suit amounting to Rs. 10,000. The total debts, therefore, come to Rs. 42,900. It is, therefore, evident that the value of the shares of defendants Nos. 5 and 6 taken together is more than sufficient to pay off all the debts for which they have been made liable.

Next, taking each of these defendants separately, the debts for which defendant No. 5 can be held responsible would be half the secured debts with interest, i.e, Rs. 16,450 plus Rs. 5,000 due under the decree against him obtained by the plaintiff, i.e, in all he is liable for Rs. 21,450. The value of his share as estimated by us is, it will again be seen, sufficient to pay off these debts.

As regards defendant No. 6 the learned Subordinate Judge has held that there is no reason for the plaintiff to complain about the partition. That being so, it does not seem to us to be necessary to inquire whether defendants Nos. 5 and 6 were given less, or others were given more, than their respective legal shares.

The other point, viz., whether the debts were the debts of defendants Nos. 5 and 6, or those of the family, was not pressed, but it is evident that the decrees in question were passed against the two defendants personally and not against the other members of the family.

In this view of the case we must hold that the learned Subordinate Judge was not right in holding that the award is liable to be set aside as repugnant to the provisions of section 53 of the Transfer of Property Act. In the result, therefore, we allow the Appeal No. 237 of 1929 and dismiss the suit. The plaintiff to pay the costs throughout.

Appeal No. 193 of 1929 is dismissed with costs which should be paid to defendant No. 3.

Barlee, J.:—I agree.

As a point of law, which is new to this Court, has been raised, I shall add a few words.

A partition is not specifically mentioned in the Transfer of Property Act; but if it be a conveyance, it may come under the definition of “transfer” in section 5. If a partition in a joint family be carried into effect so that each member acquires a sole interest in a part of the joint family property, I think the transaction amounts to a conveyance. It is certain that each member loses his interest in the property awarded to the other, and it is difficult to see how there can be a loss without a corresponding gain. Partition is certainly a transaction within the mischief of the section. This view was accepted by a Bench of the Madras High Court in Rasa Goundan v. Arunachala Goundan which follows a decision of Mookerjee, J. in Atrabannessa Bibi v. Safatullah Mia. The point decided was that a benamidar cannot maintain a suit for partition of joint immoveable property, but the ground of the decision was that a suit for partition of immoveable property should be included in the same category as a suit for possession of land, and the learned Judge decided as follows (p. 509):—

“The object of a suit for partition is to alter the form of enjoyment of joint property by the co-owners; or, as has sometimes been said, partition signifies the surrender of a portion of a joint right in exchange for a similar right from the co-sharer. Partition is thus the division made between several persons, of joint lands which belong to them as co-proprietors, so that each becomes the sole owner of the part which is allotted to him.”

Thus his Lordship puts the case of a partition in the category of exchange, and we accept this view as the correct one.

On the facts, I agree with my learned brother that Appeal No. 193 must be dismissed and Appeal No. 237 succeed.

Decree varied.

J.G.R

Waman Ramkrishna Ghotge v. Ganpat Mahadeo Nevagi

Structured Summary of the Opinion — Sen, J. (with Barlee, J. concurring)

Factual and Procedural Background

Legal Issues Presented

Arguments of the Parties

Appellants' Arguments

Table of Precedents Cited

Court's Reasoning and Analysis

A. Procedural / Representative Capacity

B. Partition as a "Transfer" under Section 53

C. Factual Valuation and Application

Holding and Implications

Waman Ramkrishna Ghotge v. Ganpat Mahadeo Nevagi

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