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TMI Blog2001 (1) TMI 1023X X X X Extracts X X X X X X X X Extracts X X X X ..... me of the salient facts required for decision of the Appeal may be recounted. 2. There is an agreement for bill discounting on certain terms and conditions between the Appellant-original Plaintiff and the first Respondent (original first Defendant) under which the Plaintiff had extended certain facilities to the first Respondent. These were guaranteed by the second Respondent (original second Defendant). The Appellant, therefore, brought a Money Suit for recovery of Rs. 13,42,00,023/- against the first and second Respondents. The Notice of Motion was taken out for attachment before Judgment of two tangible assets of the first Respondent being two office premises at Nariman Point, Mumbai. It was alleged in the affidavit-in-support of the Notice of Motion that the first Respondent owed a large sum of moneys to the Appellant and the claim of the Appellant was virtually admitted. It was pointed out that a Suit had been filed in the Calcutta High Court against the first Respondent wherein an attachment before judgment was ordered against the first Respondent. The first Respondent did not appear, but the attachment order was modified from time to time at the instance of the second Res ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and fourth Respondents as Respondents to the Notice of Motion and applied for attachment before judgment of the two office premises which were disclosed to have been sold even before the Suit was filed. The main premise on which the said relief was sought against the third and the fourth Respondents was that the transfer of the two office premises to the said Respondents was made with intent to defraud or delay the creditors of the transferor (first Respondent) and. therefore, it was hit by Section 53 of the Transfer of Property Act, 1882 and voidable at the option of the Appellant creditor. The Notice of Motion was dismissed as against the second Respondent and the relief of attachment of the office premises was declined by the learned Single Judge by the impugned order. Apart from dismissing the Notice of Motion as against the second Respondent, the learned Single Judge also vacated the ad-Interim injunction orders against the third and the fourth Respondents. Being aggrieved thereby, the Appellant is before this Court. 5. A perusal of the order of the learned Single Judge [Rebello, J.) shows that the only reason for which the learned Single Judge refused the reliefs is found ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... available to such party. Reliefs against Respondent Nos. 1 and 2 must, therefore, be rejected. 6. Mr. Tulzapurkar, learned Counsel for the Appellant, urged that the reasoning of the learned Single Judge is erroneous in law. He contends that there is nothing In Section 53 of the Transfer of Property Act, 1882 which requires a creditor Intending to take advantage of the Section to necessarily bring a Suit for avoiding the transaction by which his debtor has fraudulently, or with intent to defraud or delay, alienated valuable property. He contends that a transfer of property voidable at the option of the creditor under Section 53 of the Transfer of Property Act. 1882 would continue to be the property of the debtor and, therefore, be liable to attachment before judgment under Order XXXVIII Rule 5 of the Civil Procedure Code, notwithstanding the provisions of Rule 8, if the attaching creditor seeks to avoid the transaction between the creditor and the third party by invoking Section 53 of the Transfer of Property Act. 1882. He urged that the learned Single Judge was wrong in his assumption that the third and the fourth Respondents (transferees of the office premises) were necessary ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re judgment shall not affect the rights existing prior to the attachment of persons who are not parties to the suit, nor bar any person holding a decree against the Defendant from applying for the sale of the property under attachment in execution of such decree. 8. Order XXI Rule 58 of the Civil Procedure Code deals with the procedure for adjudication of claims or objections to attachment of property. Whenever property is attached in execution of a decree, any person who has any claim in the property or objects to such attachment, can lodge his claim or objection before the executing Court and all questions including questions relating to right, title and interest of the property attached have to be adjudicated by such Court dealing with the claim for objection and not by a separate Suit. Such an adjudication order is given the same status as a decree under the Civil Procedure Code, subject to the same conditions as to Appeal or otherwise in a Suit for decree. Such a claim or objection may be summarily rejected by the Court if made after the property has been sold in execution or after an unreasonable delay. If the Court declines to adjudicate the claim/objection to the attache ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ld fall within the ambit of Section 53 of the Transfer of Property Act, 1882, the Appellant would be entitled to avoid the transfer. In such a situation, the said properties shall be treated as properties of the first Respondent itself, and the fact that a fraudulent attempt was made to put them beyond the reach of the Appellant creditor, would be good reason to make an order of attachment before judgment under Order 38 Rule 5 of the Civil Procedure Code. We would have, therefore, thought that the issue as to whether the circumstances contemplated by Section 53 of the Transfer of Property Act, 1882 existed would have been first determined. Unfortunately, the learned Single Judge proceeded only on an assumption. If it be assumed that the circumstances contemplated by Section 53 of the Transfer of Property Act, 1882 do exist, then is the Appellant entitled to raise the said issue and have it adjudicated in the present Notice of Motion or is the Appellant obliged to bring a substantive suit for having this issue adjudicated, is the next question for determination. 12. In Abdul Kadir v. Ali Mia and Ors.,, the Calcutta High Court, in a case arising prior to the 1976 Amendment, had to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent of the Supreme Court in C. Abdul Shukoor Saheb v. Arji Papa Rao (deceased) after him his heirs and legal representatives and Ors.,. This judgment, in terms, cites with approval and upholds all propositions laid down in the Full Bench judgment of the Madras High Court in Ramaswami Chettiar v. Mallappa Reddiar, which had held the field for more than forty years. This was a case arising much before the Amending Act of 1976 and, as such, the claims were to be investigated in summary proceedings under Order XXI Rules 58 to 61. The Supreme Court pointed out that in such summary proceedings, having regard to the terms of Rule 61, the Court was concerned only with the question as to whether the transferee is in possession of the property in his own right and not on behalf of the judgment-debtor. When a transfer is real, though it is liable to be impeached as a fraud on creditors, and the transferee has entered into possession, he would succeed in the summary proceedings, with the result that It Is the defeated attaching creditor who would have to figure as a Plaintiff. In every case, therefore, when a transfer is real but is liable to be set aside under Section 53(1) of the Transfer of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... deliberately not dealt in extenso with the observations of the Full Bench of the Madras High Court as the said judgment has been considered and approved by the Supreme Court and it is held that in order to avoid the transaction by putting forth Section 53 of the Transfer of Property Act, 1882, the creditor need not bring forth a substantive Suit. Even in the erstwhile days, when the proceedings for determination of the claims/objections to property attached in execution of a decree were summary, the Supreme Court was of the view that the very attachment made at the instance of the creditor would be indicative of his intent to exercise the option of avoiding the transfer which falls within the ambit of Section 53 of the Transfer of Property Act, 1882. 17. In our view, the situation after 1977 has radically changed. Gone is the summary procedure for determination of claims or objections to properties under attachment. Every such claim or objection has now to be adjudicated and no substantive Suit can be brought for such adjudication. The order made on such adjudication would have the force of a decree subject to Appeal. There is nothing in the provisions of the Transfer of Proper ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it brought by the Appellant against the first and second Respondents. The money Suit had nothing to do with the property. Property would come in only at the stage of execution of a decree or attachment before judgment as in the instant case. 18. Two judgments of the Supreme Court were cited in support by the Respondents. In Vannarakkal Kallalathil Sreedharan v. Chandramaath Balakrishnan and Anr.,1. there was an agreement of sale which had been entered into before attachment and a conveyance followed the attachment order. The Supreme Court took the view that the agreement for sale had created an obligation on the ownership of the property and since the attaching creditor is entitled to attach only the right, title and interest of the Judgment-debtor, the attachment cannot be free from obligations incurred under the contract for sale. There is nothing in this judgment which helps the Respondents. The Supreme Court was not concerned with the issues which have been presented to us for determination. 19. In Hamda Ammal v. Avadiappa Pathar and Ors., also the Supreme Court emphasised that Order XXXVIII Rule 5 would not apply where a sale-deed had already been executed by the Defenda ..... X X X X Extracts X X X X X X X X Extracts X X X X
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