TMI Blog1920 (4) TMI 1X X X X Extracts X X X X X X X X Extracts X X X X ..... isions are cited. The question has now been very fully argued before a Bench of five Judges, and after carefully considering all the arguments addressed to us I have come to the conclusion that the view taken by the two learned Judges of the Calcutta High Court in Abdul Kadir v. Ali Mia (1912) 15 C.L.J. 649 is right, and that there is nothing to prevent a creditor who has been defrauded, defeated or delayed from exercising the option given him by Section 53 of the Transfer of Property Act of avoiding the conveyance otherwise than by the institution of a suit for that purpose. If the framers of the Transfer of Property Act, who were of course thoroughly familiar with the English decisions on the subject, had intended that the creditor should only exercise this option by instituting a suit, I make no doubt that, in a measure which was. intended to be self-contained and to be administered in many places where English decisions are not readily available, they would have said so expressly. As they have not done so, we are in my opinion bound to apply the law that voidable transactions may be avoided by any open or unequivocal declaration, of an intention to avoid them as laid down by th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fectively and is prepared to face the risk of having to pay damages should the conveyance ultimately be found not to have been fraudulent. That he can do so appears from two decisions cited by Sterling J, in Re Mouat (1899) I.Ch.D 31 where the creditor's rights at law and in equity are distinguished. In the very early case of Bethell v. Stanhope. (1601) Cro-Eliz 810 Where the testator shortly before his death had made a fraudulent gift of his goods to his daughter but had remained in possession of them, it was held that they were assets in the hands of his administrator, and that when the donee afterwards took them, it was a trespass against the administrator ; and in Shears v. Rogers (1832) 3 B Ad, 362 Littledale J. observed creditors had a right to the property which the deed purported to convey, and might enforce that right at law. The assignment was void as soon as the creditors claimed to treat it as such, though not till then. 4. The judgment creditor's right to take in execution goods which have been made the subject of a conveyance offending against the statute of Elizabeth without bringing a suit to set aside the conveyance has also been recognised in a numbe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntitled to a legacy which he was said to have fraudulently alienated, could not be said to be a debtor to the judgment-debtor in the amount of the legacy so as to entitle a creditor of the judgment debtor to take garnishee proceedings. In Clegg v. Bromley (1912) 3 K.B. 474 it was held that the assignment there in question was not in contravention of the statute of Elizabeth, and no question as to how such settlements could be avoided appears to have arisen. These decisions appear to have no bearing on the present question. 5. It is the less necessary to import restrictions into Section 53 of the Transfer of Property Act because the legislature in India has made what it considers sufficient provision for the rights of the other creditors in the provisions of the Code relating to the realization and distribution of assets in execution by allowing judgment-creditors who come in before the realization of the assets to share in them. 6. The actual question referred to us is whether it is open to an attaching decree-holder to plead in defence to a suit by the alienee whose claim has been rejected that the transfer to him was fraudulent under Section 53. For the reasons already give ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the property in dispute, Whether this suit be instituted by the attaching decree-holder or by the transferee claimant, it must equally be decided in favour of the former, if the transfer is shown to have been fraudulent ; because, in consequence of the fraudulent character of the transfer and its avoidance by the judgment-creditor, the result is that the transferee has not the right which he claims to hold the property free from attachment in execution by the judgment-creditor. 9. This view is entirely in accordance with the policy of these provisions of the Code as explained by the Privy Council in Sardhari Lal v. Ambika Pershad I.L.R(1888) . Cal. 521 which is to secure the speedy settlement of questions of title raised at execution sales. We have, however, been referred to the later decision of the Privy Council in Phul Kumari v. Ghanshyam Misra I.L.R.(1907) , Cal. 202. All that was decided in that case was that a suit by the unsuccessful party to establish his right under Section 283, now Order 21, Rule 63 of the Code of Civil Procedure was a suit to alter or set aside the summary decision or order of any of the Civil Courts not established by Letters Patent or of any R ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e alleged difficulty of combining in the decree in a suit under Rule 63 a recognition of the creditor's right with the protection, to which the claimant's interest is entitled, can be dealt with shortly. For, firstly such a decree will not declare generally that the transfer is void,but only, what Section 53 permits, that it is not binding as between the creditor and the claimant ; and next there will be nothing to prevent recognition of such right as the latter may establish by showing that as regards a portion of the consideration, the transfer to him was valid. The Court can meet either contingency as it would in a suit by the creditor, the one by a direction regarding the disposal of the balance of the sale proceeds after the creditor's decree has been discharged and the other by allowing him to proceed against the property only after he has paid any amount, to which the claimant is legitimately entitled. I turn to the two more substantial contentions relied on, that, the scope of the suit under Rule 63 being no greater than that of the investigation under Rules 59 and 60, only the possession which would be decisive in the latter, can be considered in the former and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... This failing, there remains the more substantial contention that the defendant-creditors cannot rely on any exercise of his option under Section 53, Transfer of Property Act in defence or unless he has brought and succeeded in a suit. On this point I respectfully accept the statement of the English law in the judgment just delivered and turn to the Indian authorities. There is no doubt that generally the exercise of the option to avoid a contract can be pleaded by the person entitled to exercise it in defence, as for instance in cases under Sections 19 and 20 Indian Contract Act. Vide Orr v. Sundara Pandia I.L.R (1898) Mad. 255 Laxmi Doss v. Roop Laul I.L.R. (1906) Mad. 169 Raja Rajeswara Dorai v, Arunachala Chetttar I.L.R. (1918) Mad. 321 and Renganath Sakharam v. Govind Narasing I.L.R(1901) . 28 Bom. 639; and it has not been shown to be material that the person concerned under Section 53 Transfer of Property Act is not the executant of the contract or that his plea involves his right to avoid it, not absolutely, but only as between him and the party to it, who has claimed. There is therefore nothing contrary to principle in the authorities relied on by Spencer J., in the order of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has fully dealt with the English decisions quoted before us and has shown that they lend little or no support to the respondent's contention. 17. On the question of the interpretation to be placed on the language of the provisions contained in Order 21, Rules 58, 59, 60 and 63, the matter has been dealt with fully by Krishnan J, in Pokker v. Chandrakanti Kunhamma (1918) 36 M.L.J. 231 by Spencer J., in his referring order and by my Lord in the judgment now pronounced by him ; and I have nothing to add except to say that with the greatest respect, I dissent from the observations found in Ramu Aiyar v. Palaniappa Chetty I.L.R. (1911) Mad. 35 as regards the scope of Order 21, Rules 59 and 60. That when inquiring in summary proceedings held in accordance with certain statutory provisions intended for speedy disposal of (what I may call) emergent disputes, the Court may be prohibited from going into complicated questions of title or investigating complicated questions like fraud, trust and so on, while giving the party defeated in the summary inquiry the right to have the whole matter and all the questions which are in dispute fully investigated in an ordinary regular suit is n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 6) Cal. 329 If when a person is bound to avoid it by bringing a suit in a court to set it (transaction) aside (owing to a statutory law expressly or impliedly prescribing such a course as the only means of avoiding it or by his having been himself a party to the transaction sought to be avoided) and he does not to do so within the time allowed by law for such a suit, he could after the expiry of such a period, plead the voidability by way of defence is a moot question on which I prefer to reserve my opinion, notwithstanding the decision in Lakshmi Doss v. Roop Lall I.L.R. (1906) Mad. 169 (F.B.). But no such question arises in this case. 20. A rather far-fetched argument was based on the decision of the Privy Council in Phul Kumari v. Ghanshyam misra I.L.R. (1907) Cal. 202 that for purposes of the Court fees, a suit under Order 21, Rule 63, should be held to be a suit to set aside the order on the claim-petition, as it is of the nature of an appeal in the form of a suit. That argument has been adequately dealt with (if I may be respectfully permitted to do so) by my lord and I need say.no more on that point. 21. Two other arguments which Mr. Krishnasami Iyer put forward with h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of to the judgment-debtor or in addition to the judgment-debtor and so that the balance of sale proceeds remaining after the sale of the attached property might be paid to the fraudulent transferee instead of to the judgment-debtor and so that he might get the benefit of Section 310 and 310(A) of the Civil Procedure Code as to setting aside sales by payment within 30 days and so on. There is also no provision made for the fraudulent transferee when another decree-holder applies for rateable distribution under Section 73 to intervene and prove to the Court that that particular creditor was estopped by his conduct from treating the transfer as voidable by him also and as entitling him to rateable distribution. I am wholly unable to appreciate the argument, that the failure of the legislature to carefully look after the interest of the fraudulent transferee is a reason for holding that the decree-holder sought to be defrauded by him cannot avoid the fraudulent transfer except by a suit in which he is the plaintiff or cannot bring a suit except in a representative capacity or except in such a manner as to enable the Court to convert it into a creditor's administration suit or canno ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rt which decided the claim against the claimant might, in its conclusion on each of the three points be either right or wrong. In the suit also, the Court of first instance may decide in favour of the plaintiff transferee or against him and may decide these three points rightly or wrongly (tbe right decision being of course assumed to be that he was merely a fraudulent transferee and not a mere nominal transferee) and there might be appeals and Second Appeals before the questions are finally decided rightly. That the decree-holder who bona fide pleads that the transfer is a nominal one in the alternative and who cannot be sure whether and when the defeated claimant would bring his suit and whether there would be appeals and second appeals if the transferee fails in the first stages of the suit, that he should finally after a great delay be obliged to set aside the transfer by obtaining a formal decree of court in a suit of his own before he could proceed with his execution by attachment and sale of the fraudulently conveyed property would in my opinion be a much more serious hardship on the decree-holder for no fault of his than the minor hardships and inconveniences to the fraudul ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y for the point actually decided and that the decision should not be divorced from the facts on which it was based. For all these reasons, I do not feel it necessary to adhere to the view which I took in Palaniandi Chetty v. Appavu Chetty. (1916)30MLJ565 Upon one matter, I feel little doubt after hearing the full argument addressed to us now and that is that the scope of Order 21, Rules 58 to 63 should be restricted to an enquiry into the question of possession and should not be relied on for investigating titles to property. I fee) considerable doubt however upon the interpretation to be placed on the language of Rule 63. Even supposing that we do not accept the letter of the ruling of the Judicial Committee in Phul Kumari v. Ghanshyam Misra I.L.R. (1907) Cal. 202 it seems to me that a suit instituted by a party against whom an adverse order has been passed in a claim proceeding should be confined to litigating the title as between himself and the successful claimant. I am not, as at present advised, prepared to hold that the limitation placed upon the summary enquiry should be wholly ignored in dealing with the suit following the enquiry. The view that the result of the summary e ..... 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