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Issues Involved:
1. Applicability of Section 53 of the Transfer of Property Act in defense without instituting a separate suit. 2. Scope of investigation under Order 21, Rule 63 of the Civil Procedure Code. 3. Interpretation of judgments and precedents in relation to fraudulent transfers and creditor rights. Issue-Wise Detailed Analysis: 1. Applicability of Section 53 of the Transfer of Property Act in Defense Without Instituting a Separate Suit The primary issue was whether a creditor could plead that a transfer was fraudulent under Section 53 of the Transfer of Property Act without instituting a separate suit for that purpose. The judgment concluded 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." The court emphasized that the framers of the Transfer of Property Act would have expressly required a suit if that was their intention. The judgment referenced English law, particularly the House of Lords in Oakes v. Turquand, to support the view that voidable transactions could be avoided by any open or unequivocal declaration of intention. 2. Scope of Investigation Under Order 21, Rule 63 of the Civil Procedure Code The judgment examined whether an attaching decree-holder could plead in defense that the transfer to the claimant was fraudulent under Section 53. It was determined that "it is open to the judgment-creditor by virtue of Section 53 of the Transfer Property Act to attach as the property of the judgment-debtor property which has been fraudulently transferred to the claimant with intent to defeat or delay creditors." The court clarified that the investigation under Order 21, Rule 63, is to establish the right claimed by the unsuccessful party in the claim petition. The court held that "the resulting suit under Rule 63 is by the unsuccessful party to the claim petition 'to establish the right which he claims to the property in dispute.'" 3. Interpretation of Judgments and Precedents in Relation to Fraudulent Transfers and Creditor Rights The judgment discussed various precedents and their applicability. It was noted that the practice of requiring a creditor to set aside a fraudulent transfer by suing on behalf of all creditors was an application of the equitable rule that "he who seeks equity must do equity." The court reviewed cases such as Abdul Kadir v. Ali Mia, Reese River Silver Mining Co. v. Atwell, and others to conclude that the creditor could avoid a fraudulent conveyance without a suit if he could do so effectively. The court also referenced the Privy Council's decision in Sardhari Lal v. Ambika Pershad, which emphasized the speedy settlement of questions of title at execution sales. The judgment affirmed that the law in England regarding transfers offending against the statute of Elizabeth was in line with the interpretation of Section 53 of the Transfer of Property Act. Conclusion The judgment concluded that on the language of Section 53 of the Transfer of Property Act, the question referred must be answered in the affirmative. The court confirmed that a creditor could plead the fraudulent nature of a transfer in defense without instituting a separate suit, aligning with both Indian and English legal principles. The decision reaffirmed the rights of creditors to avoid fraudulent transfers through unequivocal declarations and actions, ensuring the protection of creditor interests in execution proceedings.
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