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Case Number

A.S Nos. 91, 99 and 115 of 1965

Attorney(S)

For the Appellant: P.K. Krishnankutty Menon, P.C. Chacko, Cherian Joseph, S. Bhoothalinga Iyer, Advocates.
For the Respondent: George Vadakkel, K. Raman, Advocates.

Judges

T.C Raghavan
E.K Moidu, JJ.

Acts

Order XXXVIII Rule 5 and under Order XXI Rule 42
SECTION 53 TRANSFER OF PROPERTY ACT
SECTION 42 SPECIFIC RELIEF ACT
Order XXI Rule 63 and that Section 47
Order XXXVIII Rule 5, then Rule 8
Order XXXVIII Rule 5 of the CPC.
Order XXI Rule 63 of the CPC
Order XXXVIII Rule 5(3).4.
Rule 5 of Order XXXVIII
Order XXXVIII Rule 5;
O. XXXVIII Rule 5.8.
Order XXXIV Rule 6
Order XXI Rule 63
O. XXXVIII Rule 5,
O. XXI Rule 42

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Smart Summary

Structured Summary of the Opinion (Raghavan, J.)

Factual and Procedural Background

These three consolidated appeals arise from three suits brought by the common plaintiff (the first respondent) against the then first defendant (now deceased), who was the father of the appellants (each appellant being the second defendant in the respective suit). The suits sought to set aside claim orders and to declare three gift deeds (each in favour of one appellant) executed by the father to be sham and nominal, alleged to have been made to defraud the father's creditors.

Procedurally: the trial court and the lower appellate court decreed the suits. A learned Judge of this Court (Raman Nayar, J., as he then was) confirmed the decrees in second appeal but granted leave to appeal to a Division Bench; the present appeals were filed by the second defendants (the appellants).

Relevant factual sequence highlighted by the Court: in earlier proceedings (O.S. No. 103) the High Court passed a preliminary decree directing the first defendant to account for the first respondent's share of profits from certain immovable properties and directed the lower court to pass a final decree after assessing profits. While final decree proceedings were pending, the first defendant executed three impugned gift deeds (and another gift deed in favour of his four sons) conveying a major portion of his properties. On becoming aware of the gift deeds the first respondent applied under Order XXXVIII Rule 5 of the CPC for attachment of the properties; an interim attachment was ordered under Order XXXVIII Rule 5(3).

The appellants filed claim petitions. The court dealt with the claim petitions, the attachment petition and the final decree proceedings on the same day, concluding that the attachment under Order XXXVIII Rule 5 was not proper (the court held the attachment should have been under O. XXI R.42) and that the gifts were sham transactions intended to defraud creditors. Because the attachment was held bad by that court, the claim petitions were allowed and the attachment was raised. The first respondent then instituted the present three suits as representative suits on behalf of all creditors; the appellants objected to maintainability, an objection overruled by the lower courts and again before the second appellate court.

Legal Issues Presented

Whether the three suits are maintainable and whether they fall within Order XXI Rule 63 of the Code of Civil Procedure (CPC).
Whether the attachment effected by the first respondent pending final decree proceedings came within Order XXXVIII Rule 5 of the CPC (attachment before judgment) or should have been governed exclusively by Order XXI Rule 42 (attachment pending final decree after a preliminary decree).
Whether, alternatively, the suits could be sustained under Section 53 of the Transfer of Property Act or Section 42 of the Specific Relief Act.
Whether Section 47 of the CPC barred the suits (raised as an additional objection in two of the cases).
Whether any attached properties lay outside the territorial jurisdiction of the Alleppey Court, rendering the attachment (and hence the suits as to those properties) invalid.

Arguments of the Parties

Appellants' Arguments

The attachment effected by the first respondent while final decree proceedings were pending should have been under Order XXI Rule 42 (the special provision applicable after a preliminary decree) and not under Order XXXVIII Rule 5 (a general provision for attachment before judgment); because the attachment was made under Order XXXVIII Rule 5 it was said to be invalid and therefore Order XXI Rule 63 could not support the present suits.
In two of the cases the appellants additionally contended that Section 47 of the CPC barred the suits.
At the hearing counsel for an appellant argued that some of the properties attached were outside the territorial jurisdiction of the Alleppey Court and therefore the attachment of those properties should be held invalid (this contention was raised late, at the bar).
In one appeal (A.S. No. 99 of 1965) counsel argued that the case stood on a different footing because the trial court had held the suit not maintainable whereas the second appellate court had held it maintainable.

First Respondent's Arguments

The first respondent relied on the attachment effected under Order XXXVIII Rule 5 (application made and interim attachment granted) and proceeded to bring representative suits on behalf of all creditors to set aside the gift deeds as sham and nominal. The first respondent contended that the attachment was valid for the purposes for which it was sought.
The Court records that the second appellate Judge overruled the first respondent's contention (without reproducing full argument in this opinion) when holding that the attachment also fell under Order XXI Rule 42.

Table of Precedents Cited

Precedent	Rule or Principle Cited For	Application by the Court
Sakaria v. Joseph, 1965 Ker LT 341 : AIR 1965 Ker 288	The second appellate decision in the present matters; referenced as the reported second appellate decision considered by this Court.	Referenced as the earlier second appellate decision in these matters and as context for the appeals; the Court stated it was not necessary to restate facts already considered in that decision.
Jogemaya Dassi v. Baidyanath Paramaniek, AIR 1919 Cal 258	Held that after a preliminary decree in a mortgage suit and before the appointed day for payment into court, a plaintiff may attach other properties under Order XXXVIII Rule 5 if sale of mortgaged properties will be insufficient and the mortgagor is disposing of assets with intent to obstruct or delay execution of a personal decree under Order XXXIV Rule 6.	Used to support the proposition that Order XXXVIII Rule 5 can apply to attachments made after a preliminary decree but before the executable personal decree is passed; the Court relied on its reasoning to conclude Order XXXVIII Rule 5 covered the attachment in question.
Shyam Lal v. Bahai Rai, AIR 1936 All 408	Division Bench followed the Calcutta decision; affirmed that in a mortgage suit a decree-holder can apply under Order XXXVIII Rule 5 (before sale of mortgaged properties) if a personal decree would leave sums unpaid and the judgment-debtor is attempting to dispose of other properties to obstruct execution.	Cited as confirmatory authority that Order XXXVIII Rule 5 may properly be invoked in circumstances where a personal decree is anticipated and there is a risk of obstruction to execution; supported the Court's view that the attachment came within Order XXXVIII Rule 5.
Gopaldas Hiralal Marwadi v. Mahadu Dagdu Patil, AIR 1943 Bom 24	Division Bench held that even after a final decree in a mortgage suit, if liberty remained to apply for a personal decree under Order XXXIV Rule 6, the decree-holder could obtain attachment under Order XXXVIII Rule 5 before the personal decree if obstruction to execution was shown.	Cited to illustrate and support the broader principle (accepted by the Court) that attachment under Order XXXVIII Rule 5 may be appropriate in relation to an anticipated personal decree, and that the fact that a preliminary or final decree had been passed was immaterial to the applicability of Order XXXVIII Rule 5 in such contexts.

Court's Reasoning and Analysis

The Court proceeded primarily by considering whether the attachments effected by the first respondent came within Order XXXVIII Rule 5 of the CPC and, consequentially, whether the suits fell within Order XXI Rule 63.

1. The appellants' principal objection was procedural: they contended that because a preliminary decree had been passed earlier in related proceedings, any attachment pending final-decree proceedings should have been made under O. XXI R.42 (a provision for attachment where preliminary decrees exist) and not under O. XXXVIII R.5 (a general provision for attachment before judgment); therefore the attachment under Rule 5 was said to be ineffective and could not sustain suits under Order XXI Rule 63.

2. The Court reframed the question: it did not decide whether one provision was formally "special" and the other "general" in abstract; instead it asked whether the attachment in the present factual matrix falls within the language of Order XXXVIII Rule 5. The Court read Rule 5 as a provision for attachment before judgment where the "judgment" contemplated is a judgment which results in a decree capable of execution. In these cases the earlier preliminary decree was not itself executable; the executable decree would be the final decree to be passed later. Thus, an attachment sought before that executable decree could properly come within Order XXXVIII Rule 5.

3. The Court agreed with the second appellate Judge's conclusion that the attachment fell within Order XXXVIII Rule 5. It further agreed with that Judge's additional conclusion (which had overruled a contention of the first respondent) that the attachment also fell within Order XXI Rule 42. Because the attachment satisfied the requirements of Order XXI Rule 42 as well, it could not be excluded from also falling within Order XXXVIII Rule 5.

4. The Court endorsed authorities cited by the second appellate Judge (Jogemaya Dassi; Shyam Lal; Gopaldas Hiralal Marwadi) which demonstrated that, in mortgage-related contexts, attachments under Order XXXVIII Rule 5 have been upheld where the decree-holder could show a real risk that the judgment-debtor was disposing of assets to obstruct or delay execution of an anticipated personal decree. The Court found no principle-based objection to applying that reasoning in the present cases.

5. The Court then observed that Rule 8 of Order XXXVIII provides that a claim preferred against property attached under Rule 5 shall be investigated in the manner provided for claims to properties attached in execution of a decree for payment of money. That connection, in turn, attracts Order XXI Rule 63. For that reason the Court concluded that the three suits fall within Order XXI Rule 63.

6. Given this finding, the Court did not undertake an analysis of the alternative statutory bases (Section 53 Transfer of Property Act or Section 42 Specific Relief Act), since a finding under any one of these provisions would suffice for maintainability; and the Court's conclusion under Order XXI Rule 63 made further consideration unnecessary. The Court also observed that its conclusion rendered the appellants' objection under Section 47 of the CPC ineffective.

7. The Court declined to entertain, at this stage, a late contention raised at the bar that some attached properties were outside the territorial jurisdiction of the Alleppey Court; the Court refused to embark upon an investigation of that jurisdictional question at the present appellate stage and therefore disallowed the contention.

8. As to the specific point raised in A.S. No. 99 of 1965 (that the trial court had held the suit not maintainable while the second appellate court held it maintainable), the Court explained that the trial court had in fact held the suit hit by Section 47 but nonetheless found the particular gift deed to be sham and that the properties were liable to attachment; that decree was confirmed by the lower appellate court and in second appeal Raman Nayar, J. had held the suits maintainable under Order XXI Rule 63 and that Section 47 did not apply. The present Court agreed with that approach and perceived no real conflict.

Holding and Implications

Holding: The Division Bench dismissed the appeals. The Court held that the attachments effected by the first respondent came within Order XXXVIII Rule 5 of the CPC (and also within Order XXI Rule 42), and consequently that the three suits fall within Order XXI Rule 63 of the CPC and are maintainable. The appeals were dismissed with costs payable to the first respondent-plaintiff.

Implications:

Direct effect on the parties: the lower courts' concurrent conclusions upholding the suits were sustained; the appeals filed by the second defendants/appellants were dismissed with costs to the first respondent.
The Court did not find it necessary to decide whether the suits could alternatively be sustained under Section 53 of the Transfer of Property Act or Section 42 of the Specific Relief Act, having resolved the maintainability issue under Order XXI Rule 63.
The late contention that some attached properties lay outside the Alleppey Court's jurisdiction was not permitted to be investigated at this appellate stage and was disallowed.
Administrative note: the Court expressly stated that any rights the appellants may have under Act 11 of 1970 shall not be prejudiced by this decision.
No broader legal changes or new precedent beyond the resolution of these appeals is discussed in the opinion; the decision addresses the direct effect on these parties and upholds the applicability of Order XXXVIII Rule 5 (in the facts before the Court) and Order XXI Rule 63 as the procedural basis for the suits.

Disposition recorded in the opinion: "Appeals dismissed."

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Ouseph Sakaria And Others v. Cherian Joseph And Another

Raghavan, J.:— The appellant in each of these three appeals against second appeals is a brother of the other appellants in the other appeals. The appeals arise out of three suits, in which the common plaintiff is the first respondent and the common first defendant now deceased, was the father of the appellants, each of whom being the second defendant in the respective suit. The suits were for setting aside claim orders and also for declaring three gift deeds, each in favour of each of the appellants, by their father as sham and nominal and were Mended to defraud the creditors of the father. The trial court and the lower appellate court decreed the suits; and a learned Judge of this Court (Raman Nayar, J. as he then was) confirmed the decree in second appeal. However, the learned Judge granted leave to appeal to a Division Bench and hence these appeals, each by the second defendant in each suit.

2. The second appellate decision is reported as Sakaria v. Joseph, 1965 Ker LT 341 : (AIR 1965 Ker 288). We do not think it is necessary to state the facts in any detail. However, we shall just state lie essential facts to bring out the questions to be decided by us.

3. In O.S No. 103 of 1117 of the District Court of Alleppey, the High Court in appeal passed a preliminary decree directing the first defendant to account to the first respondent for the latter's share of the profits from some immovable properties. The High Court also directed the lower Court to pass a final decree after assessing the profits. The suit went block to the lower court; and pending the final decree proceedings, the first defendant executed the three impugned gift deeds and another gift deed in favour of his four sons, three of whom are the appellants, regarding the major portion of his properties. Immediately on knowing about these gift deeds, the respondent filed an application under Order XXXVIII Rule 5 of the CPC for attaching the properties covered by the gift deeds. And an order of interim attachment was also passed by the court under Order XXXVIII Rule 5(3).

4. The appellants then filed claim petitions; and the claim petitions, the petition for attachment and fie final decree proceeding were all disposed of by the court on the same day. The court held that the attachment under Order XXXVIII Rule 5 was not proper (according to the court, the attachment should have been under O. XXI Rule 42) and that the gifts were sham transactions intended to defraud the creditors of the first defendant. In the view the court took that the attachment was bad, the court allowed the claim petitions and raised the attachment. The first respondent then filed the three suits, which have given rise to these appeals, as representative suits re-resenting all the creditors of the first defendant; and the appellants objected that the suits were not maintainable. This objection has been overruled by all the lower courts; and the question we have to consider is whether the said concurrent decision of the lower courts is liable to be disturbed.

5. The provision of law under which the suits were brought is not mentioned in the plaints. But, it is sought to be justified either under Order XXI Rule 63 of the CPC or under Section 53 of the Transfer of Property Act or under Section 42 of the Specific Relief Act. If the first respondent succeeds in establishing that any of the aforesaid three provisions applied, me decision of the lower courts has to be upheld. In two of the cases, an additional objection is also taken by the appellants, viz., that Section 47 of the CPC is a bar to the suits.

6. We shall first take up the question whether the suits fall squarely under Order XXI Rule 63 of the CPC. The objection of the appellants to this is that the attachment effected by the first respondent pending the final decree proceeding (after the passing of the preliminary decree) should have been under Order XXI Rule 42 and should not have been under Order XXXVIII Rule 5; and that, since the attachment was effected under the latter provision, it was no attachment at all, with the result that Order XXI Rule 63 cannot be pressed into service to sustain the suits. This objection has been considered by the learned second appellate fudge; and the learned Judge has come to the conclusion that the attachment falls both under Order XXXVIII Rule 5 and under Order XXI Rule 42 of the Code.

7. Mr. P.K Krishnankutty Menon, the counsel of the appellant in A.S No. 91 of 1965, contends that the conclusion of the learned second appellate Judge that the attachment falls Tinder Order XXXVIII R. 5 also is erroneous. The argument of the counsel is that the provision contained in Order XXXVIII Rule 5 is a general provision for attachment before judgment and the provision contained in Order XXI R. 42 is a special provision for cases in which preliminary decrees are passed and attachment is sought pending final decree proceedings. The counsel proceeds that if the special provision contained in Order XXI Rule 42 applies, then the general provision contained in Order XXXVIII Rule 5 must be excluded. We are not concerned with the question whether the one is a special provision and the other is a general provision. The relevant question is whether the attachment in question comes under Order XXXVIII Rule 5. The provision is for attachment before judgment; and the judgment contemplated, must obviously be a judgment which results in a decree which is capable of execution. In the cases before us, the preliminary decree passed in the earlier suit by the High Court was not such an executable decree; and the final decree that had to be passed later was the only executable decree. Therefore, if, before such an executable decree was passed, an attachment was sought, the attachment would come within Order XXXVIII Rule 5 of the CPC. This is evident from the language of Rule 5 of Order XXXVIII itself. The second appellate Judge has gone further and has also held, overruling the contention of the first respondent, that the attachment falls under Order XXI Rule 42 as well. We are in agreement with this view too. For the reason that the attachment falls under O. XXI Rule 42 as well, it cannot be said that the attachment cannot fall under O. XXXVIII Rule 5.

8. We do not think that this position calls for any authority to substantiate it, since as already observed by us, the language of Rule 5 of Order XXXVIII is itself clear. However we may refer to the three decisions considered by the second appellate Judge in paragraph 13 of his judgment. The first decision is Jogemaya Dassi v. Baidyanath Paramaniek, AIR 1919 Cal 258 (2) by Greaves T. of the Calcutta High Court, wherein the learned Judge has held that, after the preliminary decree in a suit on a mortgage and before the appointed day for payment into court of the amount due on the mortgage, the plaintiff is entitled to get other properties of the mortgagor attached under Order XXXVIII Rule 5, if he can satisfy the court that the sum realised by the sale of the mortgaged properties will not be sufficient to satisfy the mortgage decree and that the mortgagor is trying to dispose of his other properties with intent to obstruct or delay the execution of any personal decree that may be passed against him under Order XXXIV Rule 6 of the CPC.

9. The next decision is Shyam Lal v. Bahai Rai, AIR 1936 All 408 by a Division Bench of the Allahabad High Court. Harries speaking for the Division Bench, has followed the Calcutta decision by Greaves, J. This decision was also in a suit on a mortgage; and the Division Bench has held that if the mortgagee-decree-holder is entitled to a personal decree and he satisfies the court that there would be sum due and owing to him after the sale of the mortgaged properties and that the judgment-debtor is trying to dispose of the whole or part of his other properties or to remove the same out of the jurisdiction of the court in order to obstruct or delay the execution of the personal decree that might be passed, he can, before proceeding with the sale of the mortgaged properties or part thereof apply for attachment trader Order XXXVIII R. 5 of the CPC.

10. The next decision is of the Bombay High Court by a Division Bench in Gopaldas Hiralal Marwadi…Plaintiff v. Mahadu Dagdu Patil…Defendant 1 ., AIR 1943 Bom 24. This decision again was in a suit on a mortgage. But, the argument advanced in this case went further and claimed that even after a final decree was passed in a mortgage suit, if liberty was reserved for applying for a personal decree under Order XXXIV Rule 6, it would be open to the plaintiff to make an application for attachment under O. XXXVIII Rule 5, after the final decree and before the court passed the personal decree if the plaintiff could convince the court that the judgment-debtor was trying to obstruct the execution of such personal decree when obtained. The Bombay High Court has agreed with this. Though it was not necessary to go so far in this decision, the argument went thus far. In other words, in a suit on a mortgage where a preliminary decree and a final decree are passed with freedom for the decree-holder-mortgagee to ask for a personal decree, the mortgagee can effect an attachment under Order XXXVIII Rule 5 if the necessary requirements contemplated by that provision are satisfied before the personal decree is passed. On principle, we do not find anything wrong in this proposition, for, in relation to the personal decree, the attachment is an attachment before judgment, and the question whether a preliminary decree alone was passed or a preliminary decree and a final decree were both passed is immaterial. We, therefore, agree that the attachment in these cases comes under Order XXXVIII Rule 5 of the CPC.

11. If the attachment thus comes under Order XXXVIII Rule 5, then Rule 8 of the same Order makes it clear that a claim preferred in such a case shall be investigated in the manner provided for the investigation of claims to properties attached in execution of a decree for payment of money. And this would attract Order XXI Rule 63, with the result that the three suite which have given rise to these appeals fall under O. XXL, R. 63 of the Code. In view of this finding, we need not embark on a consideration of the other questions whether the suits will fall under Section 53 of the Transfer of Property Act or under Section 42 of the Specific Relief Act. As pointed out by us at the commencement of this judgment, if the suits fall within any of these three provisions, the suits are maintainable. We also add that, in view of this conclusion of ours, the objection that Section 47 of the Code is a our cannot also hold good.

12. Mr. Krishnankutty Menon has then attempted to argue that some of the properties attached were outside the jurisdiction of the Alleppey Court which effected the attachment, and for that reason, the attachment of those properties should at least be held to be Invalid and ineffective with the result that the suits in so far as those properties are concerned are not maintainable. This contention does not appear to have been raised till now until the counsel has attempted it at the bar. We do not think we will be justified if we embark upon an investigation of this question at this stage. Therefore, this contention is disallowed.

13. The counsel of the appellant in A.S No. 99 of 1965 has argued that this case stood on a different footing in that the trial Court in this case held that the suit was not maintainable and that it was only the second appellate Court that held that the suit was maintainable. We do not think that this contention is quite correct. What appears to have been held by trial Court in O.S No. 64 of 1959 out of which this appeal has arisen is that the suit was hit by Section 47 of the Code. Still, the trial court held that the particular gift deed (Ex. P5) was a sham transaction and that the properties covered by the said document were still liable to be attached. And this decree was confirmed by the lower appellate Court. In second appeal, Raman Nayar, J. has held that all the three suits are maintainable under Order XXI Rule 63 and that Section 47 does not apply, with which we have agreed. Thereafter, we fail to see any difference in this case.

14. The appeals are dismissed with costs of the first respondent-plaintiff. The rights, if any, of the appellants trader Act 11 of 1970 will not be prejudiced by this decision.

15. Appeals dismissed.

Ouseph Sakaria And Others v. Cherian Joseph And Another

Structured Summary of the Opinion (Raghavan, J.)

Factual and Procedural Background

Legal Issues Presented

Arguments of the Parties

Appellants' Arguments

First Respondent's Arguments

Table of Precedents Cited

Court's Reasoning and Analysis

Holding and Implications

Ouseph Sakaria And Others v. Cherian Joseph And Another

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