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Case Number

O.S Appeals Nos. 79 of 1942 and 8 of 1943.

Advocates

Messrs. N. Subramanyam, E.R Krishnan and R. Rajagopala Ayyangar for Appts.
Messrs. C.R Rajagopalachari and M.A Srinivasan for Respts.

Judges

Sir Vere Mockett
Officiating C.J
Kuppuswami Ayyar, J.

Acts

provisions of S. 42 of the Specific Relief Act.That the provisions of S. 42
S. 53 of the Transfer of Property Act
S. 42 of the Specific Relief Act.
S. 42 Specific Relief Act,

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Smart Summary

Structured Summary of the Court Opinion

Factual and Procedural Background

The first respondent (plaintiff) instituted C.S. No. 109 of 1941 against Elayaperumal Naicker (first defendant), his wife E. Balammal (second defendant) and his daughter Krishnaveni Ammal (third defendant). The plaint also included a claim against Nataraja Pillai (fourth defendant), the first defendant's clerk, concerning the transfer of a motor car.

The plaintiff sought a declaratory decree that certain alienations made in favour of the wife and daughter were benami and fictitious, i.e., transfers in form only with the beneficial interest remaining with the husband, allegedly made to defraud the first defendant's creditors. The trial Judge, Chandrasekhara Aiyar, J., found that the transfers were benami and decreed the suit in favour of the plaintiff.

The second and third defendants appealed: the third defendant in O.S.A. No. 79 of 1942 and the second defendant in O.S.A. No. 8 of 1943. The opinion records that the plaintiff had earlier filed C.S. No. 121 of 1939 against the first defendant and that the decree in C.S. No. 121 of 1939 was not passed until November 1941.

Legal Issues Presented

Whether a creditor-plaintiff may maintain an ordinary declaratory suit (seeking a bare declaration that transfers by a judgment-debtor are benami and fictitious) when the alleged transfers are benami and therefore not transfers binding between the parties (i.e., whether S. 53 of the Transfer of Property Act applies).
Whether S. 42 of the Specific Relief Act can be invoked by a creditor in the absence of facts bringing the case within the procedural provisions (specifically Order 21, Rule 63 of the Civil Procedure Code) or other circumstances that confer on the plaintiff a legal character or right in the disputed property.
Whether, given the procedural alternatives available to creditors (for example, attachment before judgment under Order 38, Rules 5–13), the declaratory remedy sought is maintainable or whether the plaintiff's proper course was a procedural remedy leading, if necessary, to further proceedings under Order 21, Rule 63 CPC.

Arguments of the Parties

Appellants' Arguments

Following the trial Judge's finding that the transfers were benami (only transfers in form with beneficial ownership retained by the husband), the learned Judge should have dismissed the suit.
S. 42 of the Specific Relief Act could not be invoked by the respondent in the absence of facts that would attract the provisions of Order 21, Rule 63 of the Civil Procedure Code.
For these reasons, the suit could not properly be regarded as a declaratory suit maintainable under S. 42.

Respondent's Position / Trial Judge's Rationale (as described in the opinion)

The trial Judge held that S. 42 of the Specific Relief Act was not exhaustive of declaratory relief and that the suit could lie even though it was not a case falling under S. 53 of the Transfer of Property Act or strictly within S. 42 as worded.
The opinion records that the plaint proceeded on the basis that there was no real transfer (benami transactions), which the trial Judge accepted as a factual finding and then proceeded to grant the declaratory relief.

Table of Precedents Cited

Precedent	Rule or Principle Cited For	Application by the Court
Robert Fischer v. The Secretary of State for India in Council	Illustrates that suits seeking declarations of invalidity of governmental acts or orders may lie even if not strictly within S. 42; supports the proposition that S. 42 is not exhaustive.	Used as authority for the general proposition that S. 42 is not exhaustive of declaratory relief; distinguished on facts because those suits involved challenges to substantive rights.
Ramachandra Rao v. Secretary of State for India	Example of a declaratory suit (challenging an order debarring one from acting) being maintainable though not covered by S. 42.	Relied on to show that where a plaintiff's substantive legal right is attacked, declaratory relief may lie even if not strictly within S. 42.
Secretary of State for India v. Subba Rao	Affirms that a suit challenging an administrative order affecting a substantive right may be maintainable outside the literal scope of S. 42.	Quoted (Bardswell J.) as authority that S. 42 is not exhaustive; the court used this to define the limits of cases where declaratory relief will be entertained.
Sheoparasan Singh v. Ramanandan Prasad Singh	Sets the requirement that a plaintiff under S. 42 must be "entitled to a legal character or to a right as to property"; contains a warning against allowing declaratory suits that would provoke vexatious litigation.	The court relied on the Privy Council's treatment of S. 42 to hold that the present plaintiff lacked the necessary legal character or right in the property and therefore the suit failed.
Ramakrishna v. Narayana	Holds that declaratory relief generally will not be given for contractual/pecuniary relationships unless exceptional circumstances exist.	Referred to for the principle that S. 42 is not intended to create declaratory remedies for mere pecuniary disputes between parties.
Kathama Nachiar v. Doraisingha Tevar	Identifies reversionary suits as a special class which have been entertained by Courts ex necessitate rei.	Referred to as precedent recognising special categories of suits where declaratory relief has been entertained, distinguishing those limited classes from the present creditor's claim.
Sree Narain Mitter v. Kishan Soondary Dassee	Expresses a caution against converting declaratory suits into a source of vexatious litigation in India.	Quoted to reinforce the court's reluctance to allow creditors generally to maintain bare declaratory suits attacking alleged fraudulent transfers.
K.R.M.A. Firm by their Agent Meyyappa Chettiar v. Maung Po Thein	Holds that a plaintiff must show a substantive right "as to the property" rather than only a procedural right to attach; a claim limited to the right to attach is insufficient for S. 42 declaratory relief.	The court adopted and endorsed this reasoning as directly analogous: the plaintiff here claimed only a creditor's right to attach, not a substantive right in the property, so the suit was not maintainable as a declaratory suit.
Maung Ba Maung v. Maung Be Yin	Full Bench decision answering whether a creditor may sue under S. 42 for a bare declaration that a transfer was fraudulent; holds that the creditor's right to attach is procedural and does not give rise to declaratory relief under S. 42.	The court expressly agreed with this Full Bench and relied on Dunkley J.'s observation that the judgment-creditor's right to attach is procedural (not substantive) and thus cannot found a suit under S. 42.

Court's Reasoning and Analysis

The court proceeded from the factual finding accepted at trial: the alleged transfers to the wife and daughter were benami in form and fictitious, i.e., the property remained with the husband. From that premise the court analysed the legal remedies available to a creditor and the scope of declaratory relief under S. 42 of the Specific Relief Act.

First, the court agreed with the trial Judge that S. 53 of the Transfer of Property Act did not apply because, on the found facts, there was no transfer binding between the parties. Consequently, the question was whether a creditor could obtain a bare declaratory decree that such transfers were benami.

The court surveyed authority showing that S. 42 is not strictly exhaustive — there are cases where declaratory relief lies though not framed within the literal words of S. 42 — but it drew an important limiting principle from those authorities and the Privy Council: a plaintiff seeking declaratory relief must be "entitled to a legal character or to a right as to property." Where a plaintiff lacks such a substantive right in the property and only claims procedural remedies (such as the right to attach a judgment-debtor's property), declaratory relief for a bare declaration is not appropriate.

The court emphasised that the plaintiff here was in the position of an ordinary creditor at the time of the plaint (the decree in the earlier suit alleged in the plaint had not been passed yet). The appropriate and available remedy for such a creditor would have been to apply for attachment before judgment under the procedural rules (Order 38, Rules 5–13 CPC). If that procedural route had been pursued and established, further relief (including proceedings under Order 21, Rule 63) could have followed.

The court relied on the Rangoon High Court decisions (K.R.M.A. Firm and Maung Ba Maung) which held that a creditor's right to attach is procedural, not a substantive right in the property, and therefore does not found a declaratory suit under S. 42. Applying those holdings, the court concluded that the present plaintiff asserted only a procedural right (to attach) and not a substantive legal character or right in the properties; therefore the declaratory suit was not maintainable.

The court further noted a policy concern also expressed in prior authorities: permitting such bare declaratory suits by creditors would transform declaratory relief into a means of widespread and vexatious litigation. For that reason, the court refused to expand the category of declaratory suits to encompass the present facts.

Holding and Implications

Holding: The appeals are ALLOWED and the suit is DISMISSED. The court ordered costs against respondents 3–7 and dismissed the suit without costs.

Immediate consequences for the parties:

The decree previously entered in favour of the plaintiff (based on the finding of benami transactions) was set aside by allowing the appeals and dismissing the suit.
Costs were awarded against respondents 3–7 as directed; the suit was dismissed without costs (as to the party or parties described in the final direction).

Broader implications (as articulated by the court):

The court reaffirmed the limiting principle that declaratory relief under S. 42 (or by way of analogous proceedings) is not available to a plaintiff who is not "entitled to a legal character or to a right as to property" in the subject matter of the suit.
The decision emphasises that the remedy available to creditors who suspect fraudulent or benami transfers is generally procedural (for example, attachment before judgment) and that such procedural rights do not convert into substantive rights permitting a bare declaratory action under S. 42.
The court warned against allowing the law of declaratory relief to be used as a vehicle for widespread creditor litigation attacking debtor transactions, observing the potential for vexatious suits if the rule were otherwise applied.

Note: This summary is prepared strictly from the contents of the provided opinion and does not attempt to introduce any information or inference not contained in that text.

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Krishnaveni Ammal And Another v. M.D Soundararajan (Deceased) And Others

The Officiating Chief Justice:—In these connected appeals the first respondent filed a suit C.S No. 109 of 1941 against Elayaperumal Naicker as first defendant, his wife E. Balammal as second defendant and his daughter Krishnaveni Ammal as third defendant. There was also a claim against one Nataraja Pillai, the fourth defendant, the first defendant's clerk relating to the transfer of a motor car. The second and third defendants appeal and so far as they are concerned the form of the suit was for a declaration that certain alienations made in favour of the wife and daughter respectively were benami in nature for the purpose of defrauding the first defendant's creditors. The learned trial Judge, Chandrasekhara Aiyar, J., decreed the suit in favour of the plaintiff and the third defendant appeals in O.S.A No. 79 of 1942 and the second defendant in O.S.A No. 8 of 1943. The form of the plaint, and this is made clear by the prayer, is for a declaration that the properties transferred to the appellants were benami in nature. Paragraph 5 states that the transactions are benami and fictitious. This means that the plaintiff alleges not that there was an actual transfer to the defendants but that there was only a transfer in form, the actual property remaining with the transferor. The learned Judge has so found. Accordingly the learned Judge held that S. 53 of the Transfer of Property Act had no application, it not being a transfer binding between the parties. It was therefore not voidable at the instance of the creditor. The plaint, however, as already stated, proceeds on the basis that there was no real transaction, the transfers being benami, that is to say, in the name of the wife and the daughter, but the property actually remaining with the husband.

The appellants have contended before us that following upon this finding the learned Judge should have dismissed the suit and that S. 42 of the Specific Relief Act could not be called in aid by the respondent in the absence of facts attracting the provisions of O. 21, R. 63 of the Civil Procedure Code. The appellants argued that for these reasons the suit could not be regarded as a declaratory suit. It is not suggested that any claim or objection had arisen for investigation within the meaning of R. 63. The learned Judge, however, held that S. 42 was not exhaustive and that the suit although not within S. 53 of the Transfer of Property Act would lie apart from the provisions of S. 42 of the Specific Relief Act.

That the provisions of S. 42 are not exhaustive is well established by authority; Robert Fischer v. The Secretary of State for India in Council (1) Ramachandra Rao v. Secretary of State for India (2) and Secretary of State for India v. Subba Rao (3). In each of those cases on the facts the defendants had challenged a substantive right of the plaintiff. In Robert Fischer v. The Secretary of State for India in Council the plaintiff prayed for a declaration that an order of the Government to his prejudice be declared invalid. In Ramachandra Rao v. Secretary of State for India a suit for a declaration that an order debarring one from acting as Vakil for another in a village Court was void, was held to be maintainable, though not covered by S. 42 of the Specific Relief Act. In the latest Madras decision, The Secretary of State for India v. Subba Rao Beasley C.J and Bardswell J. held that a suit by a karnam for a declaration that an order of the Board of Revenue was invalid as being to his prejudice, was maintainable although not comprehended by S. 42 of the Specific Relief Act. At page 755 Bardswell J. discusses the question as to what extent S. 42 is not exhaustive of declaratory suits and he refers to the decision of the Privy Council in Sheoparasan Singh v. Ramanandan Prasad Singh (4). At page 704 of the Privy Council case Sir Lawrence Jenkins makes the following observations regarding S. 42:

“A plaintiff coming under this section, must, therefore, be entitled to a legal character or to a right as to property. Can these plaintiffs predicate this of themselves? Clearly not; and this is, in effect, stated in the plaint, where they described themselves as entitled to Bachu Singh's estate in case of an intestacy after the death of the defendant widows.”

Sir Lawrence Jenkins went on to say that the suit must fail at the very outset, the plaintiffs not being clothed with a legal character or title which would authorise them to ask for a declaratory decree sought by the plaint. In Ramakrishna v. Narayana Napier J. held that although S. 42 was not intended to be exhaustive, declaratory relief would not be given in respect of rights arising out of a contract affecting only the pecuniary relationship between the parties unless there were exceptional circumstances to take it out of the ordinary rule. The learned Judges at page 83 stated that no such case had been brought to their notice. In Sheoparasan Singh v. Ramanandan Prasad referred to above their Lordships refer to Kathama Nachiar v. Doraisingha Tevar wherein it is stated that reversionary suits were in a special class and had been entertained by the Courts ex necessitate rei.

It is well to consider the exact allegations of the plaintiff in his plaint. The effect of the plaint may be stated as follows: Paragraph 3 alleges that the first defendant owes the plaintiff a large sum of money in respect of which he, the plaintiff, had filed C.S No. 121 of 1939 in the High Court. Paragraph 4 alleges the first defendant was heavily indebted to various creditors. Paragraph 5 and following paragraphs allege the transfers by the first defendant to his wife and daughter, the subject of the suit. Such facts are of almost daily occurrence in the various Courts of this Presidency and the usual and proper remedy in such circumstances would have been for the plaintiff to apply to the Court for an order for attachment before judgment. Had he obtained such an order, he could have attached the properties transferred to the wife and daughter as being the properties of the first defendant. That would have been a perfectly logical course in that he alleges in paragraph 5 that the transfers were made in the name of the wife and daughter. It may be added that the decree in C.S No. 121 of 1939 was not passed until November 1941, so that, at the time of this plaint the plaintiff was in no different position from any other creditor of the first defendant. I am of opinion that this suit does not lie and should have been dismissed. It was clearly not within S. 53 of the Transfer of Property Act as with respect the learned Judge rightly held. It is not, I consider, a suit to which S. 42 of the Specific Relief Act applies. There is no authority for the proposition that on the facts such as these an ordinary declaratory suit can lie. If it were so, the Courts would be flooded with suits by creditors attacking transactions made by debtors. As already stated the machinery of the Code relating to attachment before judgment, O. 38, Rr. 5 to 13, is available to creditors. In such proceedings, if adopted, for example in this case, it would have been for the present appellants to establish, their title and very probably a suit could have been properly instituted under O. 21, R. 63 of the Civil Procedure Code.

Whilst the exact facts of this case are not covered by authority in this High Court, there are two decisions of the High Court of Rangoon on the topic. In K.R.M.A Firm by their Agent Meyyappa Chettiar v. Maung Po Thein and others , the plaintiffs in the suit claimed a declaration of their right to attach certain properties in execution of a decree in another suit. The learned Judges, observing that the suit before them did not fall within the provisions of O. 21, R. 63, proceeded to discuss the applicability of S. 42 of the Specific Relief Act. They noted that the plaintiffs had not adopted their remedy by attachment. At page 24 there appears the following observations,

“Before appellants can succeed they must show that they have a right ‘as to the property’ in suit. The only right which they claim is a right to attach that property under a decree for money. They do not claim that they have themselves any title to the property or to any part of it. All that they are seeking to establish is that their judgment-debtors have rights as to the properties.”

They held that the suit was rightly dismissed since the plaintiff claimed no right of his own in the property. More recently in Maung Ba Maung v. Maung Be Yin (5), a Full Bench of the Rangoon High Court considered the following question,

“Can a creditor sue under S. 42 Specific Relief Act, for a bare declaration that a transfer has been made by his judgment-debtor fraudulently with intent to defeat or delay his creditors, or must he sue for cancellation of the deed of transfer either as his sole remedy or as a relief further to that declaration?”

The learned Judges held that K.R.M.A Firm by their agent Meyyappa Chettiar v. Maung Po Thein was rightly decided. They discuss cases within S. 42 of the Specific Relief Act where the suit for a bare declaration could only lie when the plaintiff is entitled to any legal character or to any right as to any property. Dunkley J. at page 71 observes:

“It is essential to bear in mind the distinction between a substantive right and a right which is conferred by rules of procedure. The right of a judgment creditor to attach the property of his judgment-debtor is a mere procedural right, conferred by the Civil Procedure Code. It is not a substantive right as to the property, and therefore cannot give rise to a right of suit under S. 42 of the Specific Relief Act.”

I respectfully agree with the decisions in both K.R.M.A firm by their agent Meyappa Chettiar v. Maung Po Thein and Maung Ba Maung v. Maung Be Yin .

It is true, as laid down in the various decisions to which I have referred, that the general view is that S. 42 of the Specific Relief Act is not exhaustive, but there is no authority for the proposition that a suit for a declaratory decree will lie when the plaintiff is neither entitled to any legal character nor to any right in the suit property. To return to the judgment of their Lordships in Sheoparasan Singh v. Ramanandan Prasad Singh , their Lordships repeat the warning given in Sree Narain Mitter v. Kishan Soondary Dassee where it was stated,

“There is so much more danger in India than here of harassing and vexatious litigation that the Courts in India ought to be most careful that mere declaratory suits be not converted into a new and mischievous source of litigation.”

I consider that this suit should have been dismissed for exactly the same reason as given by their Lordships in Sheoparasan Singh v. Ramanandan Prasad Singh to which reference has already been made, namely, because the plaintiff in the appeals before us is clothed with neither a legal character nor title to the suit property. I will conclude by adding that their Lordships after noticing the facts in relation to the plaintiff's legal position did not even discuss whether the suit would lie aliundi.

For the above reasons I consider that these appeals should be allowed with costs against respondents 3-7 and the suit dismissed without costs.

Kuppuswami Ayyar, J.—I agree.

N.R.R

Krishnaveni Ammal And Another v. M.D Soundararajan (Deceased) And Others

Structured Summary of the Court Opinion

Factual and Procedural Background

Legal Issues Presented

Arguments of the Parties

Appellants' Arguments

Respondent's Position / Trial Judge's Rationale (as described in the opinion)

Table of Precedents Cited

Court's Reasoning and Analysis

Holding and Implications

Krishnaveni Ammal And Another v. M.D Soundararajan (Deceased) And Others

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