Appeal No 164 of 1962
Appeal from the judgment and decree dated june 191958 of the Andhra Pradesh High Court in Appeal Suit No 944 of 1953
K Bhimasankaram J V Kriahna Sarma and T Satyanarayana for the appellant
A Ranganadham Chetty Miss A Vedavalli N Rajeshwara Rao and A V Rangam for respondents 1 a and b
November 14
The judgment of the Court was delivered by AYYANGAR J
This appeal comes before us on a certificate of fitness granted by the High Court of Andhra Pradesh under article 1331a of the Constitution
57 The following facts are necessary to be stated to apperciate the contention  urged before us
We consider it would be convenient to refer to the parties by their array in the trial Court
The 2nd defendantfirm Hajee Abdul Kadir Sahib and Lala Batcha Sahib  Co had been apparently carrying on business in several places including Vizianagaram Bellary Madras etc in skins and hides since 1941 when the partnership was formed between the 3rd and the 4th defendants
It was common ground that from about 1947 or 1948 the firm had not been doing any businesss in Vizianagaram and by that time it had contracted quite a large volume of debts the tannery business there proving a loss
The two partners accordingly entered into a deed of dissolution dated March 31 1949 in which it is stated that the book debts stock in trade immovable properties and other assets including the goodwill of the firm were of the value of Rs 290000  and at the same time that the partnership which was admitted to be suffering losses owed debts to the extent
of Rs 2 12 lakhs
It  was agreed between the partners that the 3rd defendant Abdul Shukoor Saheb should go out of the partnership taking with him one item of property in Vaniyambadi valued at Rs 20000 while the suit tannery which was estimated as of the same value was to become the sole property of the 4th defendant who was described in the deed as the continuing partner
Soon after this deed of dissolution the 4th defendant entered into an agreement with the plaintiff for the sale to him of the suit property for a sum of Rs 19000  and later executed the deed of sale on May 20 1949
The plaintiff was however advised that it would be safer to have the conveyance in his favour executed by the other partner also and accordingly the 3rd defendant was also an executant of the sale deed
On the execution of the sale deed the plaintiff entered into possession and he claimed to have thereafter effected improvements to the property
58 While so the 1st defendant Arji Papa Rao filed suit O section 46 of 1950 in the Court of subordinate judge at Visakhapatnam for the recovery of a sum of Rs 1295058 against the 2nd defendant firm and its partners defendants 3  4 and obtained a decree for the sum claimed with interest and costs on June 19 1951
Soon after filing the plaint he obtained an order for attachment before judgment of the suit property and that order was on the passing of the decree made absolute subject however to the result of a claim petition which had been filed by the plaintiff for raising the attachment
The Subordinate judge of Visakhapatnam dismissed the plaintiff s claim and this has led to the suit O section 145 of 1951 out of which this appeal arises to set aside that summary order under O XXI r 63 Code of Civil Procedure
The plaintiff impleaded as parties to the suit besides the attaching decree holder who was made the 1st defendant the debtor firm and the two partners as defendants 2 to 4 respectively and the son of the 4th defendant who executed the sale deed as his agent under a power of attorney as the 5th defendant
The plaintiff claimed that he purchased the property bonafide and for its full value that since its purchase he having entered into possession was in enjoyment thereof in his own right paying the rates and taxes due thereon and had effected valuable improvements thereto and that consequently the property was not liable to be attached as belonging to the partnership or any of its partners
Broadly stated the defence of the 1st defendant the only contesting defendant the others either remaining ex parte or supporting the plaintiff was that the sale in favour of the plaintiff was either a sham and nominal transaction or in fraud of creditors of whom he was one
The trial court upheld the plaintiff s claim that the sale was real and was fully 59 supported by consideration
It also negatived the contention raised by  the first defendant that the sale was fraudulent as intended to defeat or delay creditors under section 53 1 of the 
The 1st defendant filed an appeal to the High Court and the learned judges reversed the decision of the trial judge and directed the dismissal of the plaintiff s suit
It is the correctness of this decision that is challenged in this appeal
Learned counsel for the appellant raised four principal points in support of the appeal  1 that on a proper construction of the written statement the only real and effective defence that was raised was that the sale in favour of the appellant was sham and nominal and that the Courts below were in error in proceeding on the basis that the sale was in the alternative impugned as brought about to defeat or delay creditors within section 53 1 of the  2 that on the facts and circumstances of the case it had not been established that the sale in favour of the appellant was vitiated by fraud against creditors falling within section 53 1 of the  3 that in any event the plaintiff was a purchaser in good faith and for valuable consideration and was therefore protected even on the basis that the transferor intended by the alienation to defraud his creditors 4 that on a proper construction of section 53 1 of the  as it now stands read in the light of the provisions of the Code of Civil Procedure particularly those relating to claim petitions under O XXI rr
58 to 63 a transfer which was voidable under section 53 1 could be avoided only by a representative suit filed on behalf of creditors and not by an individual creditor who may be defeated or delayed by way of defence to a suit to set aside a summary order under O XXI r 63 Code of Civil Procedure
We shall deal with each of these points and in that order
There is no doubt that the written 60 Statement has not been artistically drafted keeping in view the real distinction between a sham and nominal sale which is not intended to pass title and a sale which is real but which is voidable at the instance of creditors because the transfer is intended in the language of section 53 1 of the to defeat and delay creditors
In paragraph 2 of the Written Statement the 1st defendant stated   The said sale deed is sham nominal and collusive document not intended to pass any title but brought about to screen the suit properties from the creditors of defendants 2 to 5
No consideration passed under the sale deed and the recitals thereof in the document are fictitious and make believe
 The paragraph
however further went on to add It is further submitted that even if the sale deed is true it is in fraud of creditors including the plaintiff and not binding on them In paragraphs 3 the allegation was made that the plaintiff was the relative of defendants 2 to 5 that the plaintiff and the vendors were natives of the same place and that the sale deed was clandestinely brought into existence at Madras at a time when defendants 2 to 5 were hard pressed by the plaintiff and other creditors and unable to pay their debts
 at Vizianagaram and that in order to put the properties beyond the reach of the creditors defendants 2 to 4 seem to have hit upon the frauds device
of the alleged We to the plaintiff
In the light of these averments it cannot be  said that the defendants did not raise two distinct pleas 1 that the sale was a sham a pretended Sale without any consideration and not intended to pass any title to the nominal purchaser and in the alternative 2 that even if it were a 61 real transaction supported by consideration and intended to pass title to the plaintiff still the same was having Tegard to the circumstances stated a fraud upon the creditors and therefore voidable at his instance
Though the pleading in the Written Statement was in this form the issues struck did not raise the two defenses as distinct pleas but rolled both of them into a single plea raising the question whether the plaintiff hid title to the suit property and whether the claim order was liable to be set aside
 Notwithstanding the indefiniteness in the frame of the issues it could not be said that when the parties proceeded to adduce evidence the same was not directed to both the above defences
As we have necessarily to consider thus evidence in dealing with the submissions made to us regarding the correctness of the dismissal of the plaintiff s suit by the High Court it is unnecessary to set out the details of the evidence which indicates that the defence based upon section 53 of the was borne in mind
At the stage of the arguments before the trial Judge it was the subject of keen contest between the parties
The learned trial judge first dealt with the question as to whether the sale was real as pleaded by the plaintiff or whether it was without consideration and sham and nominal not intended to pass any little and recorded a clear finding in favour of the plaintiff After having done so he considered in detail the various circumstances which were relied on by the first defendant in support of the plea that the sale was in fraud of creditors so as to be voidable under
section 531 of the 
He negatived this plea and upheld the plaintiff s claim to the Property and passed a decree in his favour
In these circumstances we consider that there is no force in the objection that there has not been a sufficient plea of a defence based upon section 53 of the as to justify or entitle the court to afford relief if satisfied that the same was proved
62 Before dealing with the second point it is necessary to make a few observations in relation to certain submissions made by learned Counsel for the appellant
This was in relation to the manner in which the learned judges of the High Court had approached this question and arrived at a conclusion adverse to his client
The learned judges had formulated the questions to be considered in the appeal as follows  The main point that falls to be considered in this appeal is whether the sale deed in favour of the Plaintiffs Exhibit A 2 is a genuine transaction supported by consideration and if on this point the finding is in favour of the plaintiff the further question that falls to be determined is whether the suit sale deed was executed in fraud of creditors and as such not binding on the first defendant and other creditors of defendants 2 to 5
If the finding on this issue is that the transaction was in fact in the fraud of creditors the further question that would arise for consideration is whether the plaintiff could claim to be the transferee in good faith and for consideration so as to claim the benefit of the exemption contained in section 53 of the 
Learned Counsel had no quarrel with the propositions as here set out or the mode of approach but his complaint was that in dealing with the appeal these were not kept in view
He urged that they did not consider either initially or even later the question as to whether the sale to the plaintiff was real or was sham and nominal unsupported by consideration and though they stated in one portion of the judgment that they did not propose to consider this question because they were satisfied that the decision on the other points might be sufficient to dispose of the appealyet they made passing observation which appeared to throw doubt on the reality of the sale
63 Again learned Counsel pointed out that though they had formulated the two questions viz 1 assuming the sale to be real whether the sale was intended by the transferor to defeat or delay creditors and 2 assuming the sale was voidable under section 531 of the whether the plaintiff was a bona fide purchaser in good faith as distinct and separate questions in the discussion which followed they did not keep these two points separate
Besides it was urged that there were some statements or assumptions made in the judgment which were entirely not warranted by the facts
We cannot say that there is not some force in these submissions
In view of this the course which we intimated to the teamed Counsel that we would adopt was that we would ourselves consider the entire evidence on the record and arrive at our own conclusions on such evidence in regard to the two issues a whether the sale was in fraud of creditors and b whether the plaintiff was a bona fide purchaser for value and that if it became necessary to arrive at any finding as regards the reality of the sale we would remand the appeal to the High Court for the matter being considered since the learned judges had expressly reserved the consideration of that question
We shall now proceed to consider the facts and circumstances of the case which are relevant to the issue as to whether the sale was to defeat or delay creditors
There was some argument before us about the burden of proof in such cases but learned Counsel for the appellant submitted that he would assume for the purpose of argument that the onus was upon the plaintiff purchaser and that he would satisfy us that burden had been discharged
This apart we consider that the question of onus of proof is merely academic at this stage because the entire evidence is before us and except in a rare case where the considerations are evenly balanced it would have little significance
64 The circumstances which are relevant for the consideration of this question are these The second defendant firm was in financial embarrassment at the time of the sale
The deed of dissolution dated March 31 1949 recites that the business carried on by the firm was resulting in losses and that the debts amounted to about 2 12 lakhs of rupees
No doubt it is there stated that the assets of the firm were by consent of the parties estimated of the value of Rs 290000 
This estimate however included the value of the goodwill which would not be of any real value in the case of a losing business of this sort and we do not know how much was attributed to this item
This apart the assets were said to be made up of book debts stock in trade immovable property etc
There is however no indication as to the relative value of these several components to judge whether or not the alienation of the suit property would have the effect of delaying if not defeating the creditors
It can however be asserted that the picture presented by the deed of dissolution is certainly of a firm whose financial position was far from satisfactory
There is no evidence on the record whether the partners or either of them had any property of their own besides the assets of the partnership for discharging the debts due to the firm s creditors
Though the 4th defendant filed a written Statement supporting the plaintiff the plaintiff did not choose to examine him as a witness in order to elucidate this matter or otherwise explain the circumstances in which the impugned sale  was effected
The next feature to be noticed is that the plaintiff and the 4th defendant were both members of the same community labbais of North Arcot district a fairly small and well knit community several of whom are engaged in the hides and skins business
The learned judges of the High Court have referred to the plaintiff and the 4th defendant as natives of the same place and as relatives
Learned Counsel 65 for the Appellant pointed out that whereas the 4th defendant was a native of Vaniyambadi the plaintiff was native of Parnambet and the suggestion made that they were relatives had been denied in the evidence
Learned Counsel might be right on these matters but we consider that not much turns on them
Both of them were conducting business in Madras and the plaintiff had also a business in Vizianagaram though it was in bidis and not in hides and skins
In these circumstances we consider that it matters little whether they were relatives or not
The significance of the plaintiff and his vendors being members of the same community and well known to each other consists in this that the plaintiff might have been chosen because of his willingness to take the sale without any searching enquiry as to the circumstances necessitating itand because there would be less publicity in the transaction being put through between them such as for instance inspection of the property or enquiries in the locality as regards value etc
 which would take place if the sale was to be to a total stranger which would attract the attention of the firm s creditors
The next circumstance is as regards the pressure exerted on the 3rd and 4th defendants by the creditors immediately prior to the impugned sale and which in the normal course of events would be relevant as providing that the sale was effected in order to put the property beyond the reach of creditors by converting it into cash
On April 20 1948 O section 162 of 1948 on the file of the District Munsiff s Court Vizianagaram was filed for the recovery of Rs 1016 on a promissory note for Rs 1000executed by the firm
On September 8 1948 it was reported as adjusted out of court
Besides this some other suits were filed for the recovery of amounts from the partnership but they were defended and were ultimately dismissed
Then we come to 66 O section 191 of 1949 in which the plaint was presented on April 4 1949 for recovery of a sum of Rs 1385and odd which was decreed with interest and costs on November 22 1949
The date on which this last mentioned suit was filed is of some significance because of another suit which was filed at about the same time
One Damayanti presented a plaint on March 9 1949 against the firm for the recovery of Rs 
3000 being the principal and interest due on a promissory note
The date fixed for the appearance by the defendant was April 4 1949
It will be noticed that the deed of dissolution was executed on March 31 1949
The defendant did not enter appearance on the day fixed and the Court passed an ex parte decree on April 5 1949 for the amount claimed
She filed an application for execution on April 18 1949 and obtained an order on April 21 1949 for the attachment of the suit property though the attachment was actually effected on June 8 1949 because the court was closed for the summer vacation
Long before these dates the 4th defendant had made up his mind to alienate the suit property and we have a letter from the 4th defendant to the plaintiff as early as February 5 1949 which evidences negotiations for the sale of the property
There was apparently some giggling about the price which caused some delay and a few days after the attachment was ordered on April 27 1949 a formal agreement of sale was entered into between the plaintiff and the 4th defendant under which he agreed to purchase the property for a sum of Rs 19000and the agreement recited that the purchaser i e the plaintiff had paid a sum of Rs 10000 in advance as earnest money and the sale deed itself was executed on May 20 1949
In pursuance of the order dated April 21 1949 Damayanti attached the suit property as already stated on June 8 1949 and thereupon the plaintiff filed a claim under O XXI r 59 Code of Civil Procedure for raising the 67 attachment but this however was dismissed on November 16 1950 and thereafter the amount of the decree was paid up by the judgment debtor just a few days before tile expiry of the one year period of limitation for filing the suit under O XXI r 63 Code of Civil Procedure
A suggestion was made to the plaintiff while he was examined in the case that it was he who had paid up the decree debt of Damayanti but he denied it and we shall proceed on the basis that debt was discharged by the judgment debtors themselves
For the purpose of establishing that the firm was hard pressed by its creditors at the time of the negotiations which resulted in the sale impugned in these proceedings and at the time of the sale it matters little who paid this decree debt
Next we have the circumstance that though the properties were at Vizianagaram the document was registered at Madras and the suggestion made to the plaintiff was that this was meant as a measure of secrecy to keep this alienation from the knowledge of the firm s creditors
The explanation offered by the plaintiff was that having regard to the distance between the native places of the two parties from Vizianagaram and the proximity of these to Madras and the fact that both the Plaintiff as well as the executants were at Madras it was found more convenient to have the document presented for registration at Madras instead of incurring the expenses of a journy to Vizianagaram for having it registered there
The learned trial judge accepted this explanation and held that the registration of the sale deed at Madras was not a suspicious circumstance indicating an intention to keep the transaction secret
The learned judges of the High Court however considered it otherwise and expressed the view that this was done in order to keep the transaction secret
We are inclined to agree with the learned judges of the High Court 68 in their appreciation of this piece of conduct
Admittedly the 4th defendant had his agent at Vizianagaram and similarly the plaintiff himself had his men there to look after  his bidi business
There was no impediment in these circumstances and no expenses of traveling involved if only the 4th defendant had executed a power  of attorney in favourof some one at Vizianagaram to present the document for registration and admit its execution
In fact it may be mentioned that even the sale deed now impugned was executed not by the 3rd and 4th defendants but by the 4th defendant s son K L Abdulla in whose favour a general power of attorney was executed on April 26 1949 apparently immediately the agreement for sale was concluded
It is in the light of this feature that we are not disposed to dismiss as irrelevant the circumstance that the document was registered at Madras
The next feature of the case to which
we must direct attention relates to the purpose for which the sale was executed
As regards this there is no evidence led to indicate why exactly the 4th defendant desired with some urgency to dispose of the property at that juncture
The relevant circumstance in the present case is that there was a great deal of pressure from creditors who not having been paid the amounts due to them as and when they became due were forced to file suits and those which were decreed were those which were not defended and the firm was mulcted with costs under each of these decrees
In the circumstances one would expect an explanation as to why the sale was being effected
Ordinarily in circumstances such as in this case there could only be two alternatives  1 a sale in order to pay the creditors out of the proceeds obtained and 2 a sale in  order to convert immovable property which was capable of being attached and brought to sale for the realisation of the amounts due to the creditors 69 into cash which could either be secreted or used for the vendor s own purposes
If the purpose was as that indicated in the first of the above alternatives the proceeds of the sale would have been earmarked for the payment of particular debts for which pressure Was the greatest
It is needless to add that if this were the case and if creditors who were not so provided were defeated or delayed it would merely be a case of a fraudulent preference which could be impugned only under the law relating to insolvency and not as a fraud on creditors for which section 53 of the makes provision
It is however common ground that apart from the sale deed not making any provision that the consideration was to be utilised for the discharge of any particular debts it is not the case of the plaintiff that there was any such stipulation as to the application of the money or that without any stipulation therefor the money was so utilised
It would therefore not be an unreasonable inference to draw from the circumstances of the tale at the Juncture at which it took place that the Vendor s object was merely to convert this immovable property into cash so that it may not be available to the creditors
Before leaving this point it is necessary to advert to one matter which was suggested by learned Counsel for the appellant
He submitted that the property sold was only a part of the assets of the partners and that unless there was evidence to show that nothing was left available for the creditors after the impugned sale its validity could not be impugned under section 53 of the 
We consider that there is no force in  this submission
As a matter of fact there is no evidence as to what other properties the partners had beyond what is contained in the deed of dissolution on March 31 1949
But that apart the terms of section 531 are satisfied even if the transfer does not  defeat but only delays the 70 creditors
The fact therefore that the entirety of the debtors  property was not sold cannot by itself negative the applicability of section 531 unless there is cogent proof that there is other property left sufficient in value and of easy availability to render the alienation in question immaterial for tie creditors
In the present case as already pointed out we have no definite evidence as to the nature and quality of the property left as available to the creditors after the impugned alienation and though light on this could have been thrown by the 4th defendant being called as a witness the plaintiff did not choose to take the step nor indeed did  he even summon the production of the accounts of the firm which might have disclosed the true state of affairs
Each of these circumstances might be capable of some explanation consistent with the case that the transfer now impugned was effected in the normal and ordinary course of business by the 4th defendant for some purpose which did not involve an intention to defeat or delay his creditors but the question we have to consider is their cumulative effect and so viewed the conclusion appears irresistible that the object of the transaction was to put the property out of the reach of the creditors
The transfer was therefore plainly within the terms of the 1st paragraph of section 53 1 of the and was voidable at the instance of the 1st defendant who was a decree creditor
The next question is whether the plaintiff is a bona fide purchaser for value so as to be protected by the second paragraph of section 53 1 reading  Nothing in this section impairs the rights of the transferee in good faith and for consideration
As stated earlier the learned trial judge held that the Rs 19000  the sale price was the full value of 71 the property and that the consideration as recited in the document was paid by the purchaser
This finding has not been set aside by the High Court
We are therefore proceeding on the basis that the Transfer was real and supported by consideration
The narrow question is whether the plaintiff was a transferee in good faith
It was submitted on behalf of the appellant that the learned judges of the High Court had directed the dismissal of the plaintiff s suit even without a definite finding that the plaintiff was a party to the fraud on the part of the transferor to defeat or delay the creditors
There might be some force in this submission that there is no specific finding to that effect but that does not in any way assist the appellant
Where fraud on the part of the transferor is established i e by the terms of paragraph i of section 531 being satisfied the burden of proving that the transferee fell within the exception is upon him and in order to succeed he must establish that he was not a party to the design of the transferor and that he did not share the intention with which the transfer had been effected but that he took the sale honestly believing that the transfer was in the ordinary and normal course of business
When once the conclusion is reached that the transfer was effected with the intent on the part of the transferor to convert the property into cash so as to defeat or delay his creditors there cannot be any doubt on the evidence on record that the plaintiff shared that intent
For this purpose the following circumstances may be pointed out 1 The plaintiff and the vendor belong to the same community a small compact and well knit one and they must obviously have known each other having been in trade for several years in several places in common and must therefore have been wellacquainted with the financial and business affairs of each other
72 2 This general inference apart the plaintiff admittedly had with him a copy of the deed of dissolution dated March 31 1949 which disclosed that the firm s business had resulted in losses and that it was greatly indebted the debts amounting to Rs 2 12 lakhs
3 If as we have held that registration of the sale deed at Madras was with a view to keep the transaction secret from the creditors the plaintiff was as much a party to the secrecy as the transferor
4 One matter which would be of considerable relevance and significance in this connections would be the enquiries that the plaintiff made before he took the transfer
He no doubt led evidence to show that he consulted his lawyers about the title of the vendor but any attempt at an enquiry of the 4th defendant as to why he was effecting the sale of the only immovable property of the firm which was alloted to him under the deed of dissolution is significantly absent
In the circumstances it stands to reason that the plaintiff must be fixed with notice of the design in pursuance of which the transfer was effected
If the object of a transferor who is heavily indebted was to convert his immovable property into cash for keeping it away from his creditors and knowing it the transferor helped him to achieve that purpose it has naturally to be held that he shared that intention and was himself a party to the fraud
In this connection there is one circumstance which is rather significant
Even when the plaintiff was fixed with notice that the firm s business had been running at a loss and had accumulated a very large volume of debts as disclosed by the recitals in the deed of dissolution which was placed in his hands the purchaser did not insist that the consideration which he was paying should be utilised for the discharge of at least some 73 of the debts
We are therefore satisfied that the Plaintiff was not a transferee in good faith and that the transfer itself was a scheme by the transferor with the knowledge and concurrence of the transferee to put the property out of the reach of the creditors The result therefore would be that the plaintiffs suit was liable to be dismissed for the reason that the defence plea invoking section 53 1 of the was made out
What remains for consideration is a point of law that was raised on behalf of the appellant that a transfer which is voidable under section 53 1 of the can be avoided only by a suit filed by a creditor impugning the transfer on behalf of himself and the other creditors and not byway of defence to a suit under O 21
r 63 Code of Civil Procedure by a claimant whose application has been rejected in summary proceedings under O 21 rr 58 to 61 Code of Civil Procedure
Section 53 1 of the  as it stands at presented is as amended by the Transfer of Property Amendment Act Act 20 of 1929
As part of the argument on this head was based on a comparison of the provisions of the section before and after the same was amended we shall set out in parallel columns section 53 1 as it stood before it was
amended in 1929 and as it stands as amended section 531as it stood before section 53 1 as it stands the Amending Act 1929 after the Amending Act 1929 Every transfer of Every transfer of immov immovable property able property made with made with intent to de intent to defeat or delay fraud prior or subsequent the creditors of 1 the 74
section 53 1 as it stood before section 53 1 as it standsafter the Ameding Act 1929
transferees thereof for consideration or coowners or other persons having an interest in such property or to defeat or delay the creditors of the transferor is voidable at the option of any person so defrauded or delayed
Where the effect of any transfer of immovable property is to defraud defeat or delay any such person and such transfer is made gratuitously or for a grossly inadequate con sideration the transfer may be presumed to have been made with such intent as aforesaid
Nothing contained in this section shall impair the rights of any transferee in good faith and for consideration after the Amending Act 11929
transferor shall be voidable at the option of any creditor so defeated or delayed
Nothing in this sub section shall impair the rights of a transferee in good faith and for consideration
Nothing in this subsection shall affect any law for the time being in force relating to insolvency
A suit instituted by a creditor which term includes a decree holder whether he has or has not applied fore execution of his decree to avoid a transfer on the ground that it has been made with intent to defeat or delay the creditors of the transferor shall be instituted on behalf of or for the benefit of all the creditors
 Two points were made by the learned Counsel in support of this submission the first being independent of the amendment effected by the Act of 1929 75 and the other based on the provision as amended
The former was based on the impact of the nature G of the proceedings under O 21 rr
58 to 61 Code of Civil Procedure and of the order that would be passed therein and particularly of the questions that would arise in a suit under O 21 r 63 Code of Civil Procedure to set aside summary orders while the latter was based on the amendment by which a creditor s suit was required to be in a representative capacity
It would be seen that so far as the first point was concerned the amendment made no change and that if the learned Counsel were right the position would have been the same even on the section as it stood before it was amended
It was conceded that on the section as it stood prior to the amendment there was a direct decision against this argument of a Full Bench of five 6 judges of the Madras High Court as early as 1920 Ramaswami Chettiar vs Mallappa Reddiar 1 which had been consistently followed by every other High Court in India up to this date without any doubt or dissent
Gleamed Counsel however urged that this Court was not precluded from considering the correctness of this decision notwithstanding its having held the field for over forty years without question As a legal proposition Counsel is undoubtedly right but the question is whether any reasons have been adduced before us to consider that decision was wrong
We shall be presently setting out the reasoning on which it is contended that an attaching creditor who has succeeded in the summary proceedings under O XXI rr 58 to 61 cannot in a suit to set aside the summary order under O XXI r 63 raise by way of defence the plea that the sale in favour of the plaintiff the transferee claimant is vitiated by fraud under section 531 of the  but 1 Mad
760 76 before doing so it is necessary to point out that this very argument was urged before the Full Bench referred to and after elaborate consideration rejected by them Now the argument as regards the inference to be drawn from the nature of the enquiry in the summary proceedings for investigating
claims to property which has been attached is briefly as follows s 53 of the assumes that there is a real transfer intended to pass title to the transferee but that the transfer is vitiated by fraud which renders it voidable
In the summary proceedings under O XXI rr 58 to 61 having regard to the terms of r 61 the Court is 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 tranferee 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 plaintiffq If he figures as a plaintiff the suit would have to be in a representative capacity that is under O 1 r 8 Code of Civil Procedure
In every case therefore when a transfer is real but is liable to be set aside under section 53 1 on the provisions of O XXI rr 58 to 61 Code of Civil Procedurethe transferee is bound to succeed in the summary proceedings and the attaching decree holder would have to figure as a plaintiff and the suit would be a representative suit
From this it is said that it follows that in no case can an attaching creditor who defends a suit to set aside a summary order in his favour resist it on the plea of fraud under section 531
It would however be seen that this last step which is vital for the argument to have force does not follow for the argument does not proceed on any construction of the terms of section 531 nor on any legal 77 theory as to the mode or procedure by which the intention to avoid the transaction which the attaching creditor claims is voidable at his instance may be expressed or enforced
The argument would only establish that if the Court investigating claims under O XXI
r 58 etc conformed strictly to the terms of those provision is the transferee under a real sale would succeed in those proceedings and he would be a defendant and need not be a plaintiff in suits to set aside the summary order under O XXI r 63
This line of reasoning does not take into account at least the following possibilities 1 The claim or objection by the transferee may be rejected not on the merits but because it has been designedly or unnecessarily delayed vide O XXI r 58 Code of Civil Procedure
It is certainly not the contention of learned Counsel that when there is a rejection of a transferee s claim under this provision the order of rejection is any the less final and has not to be set aside by a suit contemplated by O XXI r 63 Code of Civil Procedure in order to overcome the effect of that finality
2 The Court making the summary enquiry might come to an erroneous conclusion that the transfer is sham and not real or that the transferee is in possession for the benefit of the judgmentdebtor
In the suit filed by the transferee to set aside  this erroneous order the plaintiff would have to establish his title and even if he succeeds in showing that the sale to him was real and effective still the question would remain whether having regard to the circumstances of the transfer the same is not voidable under section 531
Thus there would be occasions when a defeated transferee whose transfer is real might have to figure as a plaintiff in a suit to set aside a summary order under O 21 r 63 Code of Civil Procedure
3 The attaching decree holder might raise in the summary proceedings two alternative defenses to a transferee s claim a that the sale was sham and nominal and therefore the possession 78 of the transferee was really on behalf of the judgment debtor and b that even if the sale be real and intended to pastitle it was voidable as a fraud on creditors
It is no doubt true that the second or the alternative defence is not open in the claim proceedings but if however the same were erroneously entertained and an order passed rejecting the claim of the transferee the same would nevertheless be an order which would have to be set aside by a suit by the defeated transferee and he cannot ignore it
It would thus be seen that the entire argument as regards the impact of the nature of the enquiry under O 21 r 59on the defences which would be open in a suit under O 21 r 63 depends on two factors 1 the summary order being passed on the merits and not because the making of the claim was designedly or unnecessarily delayed and 2 the summary order being right on the merits and strictly in conformity to the provisions of the Code
As we have already pointed out the points urged before us as regards the scope of the enquiry into claim petitions was also the subject of elaborate argument and consideration by the learned judges of the Madras High Court in the Full Bench
Sadasiva Ayyar J classified the cases of transferees who failed in their claim petitions and had to file suits to set aside summary orders under O 21 r 63 under three heads  a Where the transferee was a mere benamidar b Where he was a fraudulent transferee in possession and c Where he was a fraudulent transferee not in possession
The learned Judge said  A creditor decree holder who is in most cases a stranger cannot reasonably be expected to know of his own knowledge whether a transfer 79 by his judgment debtor is only fraudulent or is wholly nominal or partly nominal and partly fraudulent and whether the transferee is in possession and if in possession whether he is so for him self or for the judgment debtor
He would therefore  usually both in the claimpetition and in the suit which afterwards arises out of the order against the claimant be obliged to raise and be justified in raising alternatively all the pleas open to him and the Court which decided the claim against the claimant might in its conclusions on each of the three points be either right or wrong He further pertinently pointed out that to hold that a plea based on the transfer being voidable under section 531 could not be raised in defence to a suit to set aside a summary order would mean that  The creditor decree holder would be in a much worse position for his success in the summary claim proceedings than if he had lost in those proceedings
Section 531 of the rendered the transaction voidable at the instance of the creditors if the transfer was effected with the particular intent specified and the statute does not prescribe any particular method of avoidance
Referring to this the learned judges observed  If the creditor knowing of the transfer applies for attachment the application is sufficient evidence of his intention to avoid it if he only hears of the transfer when a claim petition is preferred under O 21 r 58 and still maintains his right to attach that again is a sufficient
exercise of his option to avoid and entitles him to succeed in the subsequent suit under r 63
They further pointed out that the suit under r 63 is by the unsuccessful party to the claim petition to establish the 80 right which he claims to the property in dis pute
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 transfere has not the right which he claims namely to hold the property free from attachment in execution by the judgments The learned judges based their conclusion on this and on several other lines of reasons which we consider unnecessary to set out but it is sufficient to say that we are enentire agreement with all of them
There is therefore no substance in the point that there is anything in section 531 as it originally stood which precluded a defence by an attaching creditor to a suit to set aside a summary order under O 21 r 63 that the sale in favour of the plaintiff is vitiated by fraud of the type specified in the earlier quoted pro vision and the amendment has admittedly made no change in this matter
It was next urged that the third paragraph of the amended section 53 1 has effected a change in the law and that thereafter transfers voidable under 1st paragraph of section 53 1 could be avoided only in suits filed by a defeated or delved creditor as plaintiff suing on behalf of himself and other creditors
We consider that there is no substance in this objection either
We shall first refer to the purpose of the amendment
In decisions rendered prior to the amendment there were a large number in which it was held following certain English cases decided with reference to 13 Eliz Ch 5 on which section 531 was based 81 that suits by creditors for avoiding a transfer under section 53 1 was a representative action
To that general rule however an exception was recognised in a number of  decisions when the suit was to set aside a summary order under O 21
r 63 and was brought by an attaching decree holder against whom an adverse order had been made in the summary proceedings it being held that such a suit need not be in a representative capacity
The decisions on this point were however not uniform
It was merely to have a uniform rule and to avoid these conflicting decisions that the third paragraph was inserted so that after the amendment the rule that a suit by a creditor should be brought in a representative capacity would apply as much to a suit set aside a summary order under O 21 r 63 as to other suits
It was not suggested that there was anything in the terms of the amended section 53 1 which referred to a defence to a suit and in fact learned Counsel did not contend that if a defence under section 53 1 could be raised by defeated attaching creditor such a defence had to be in a representative capacity and we consider that learned Counsel was correct in this submission
From a provision as to how a plaintiff if he filed a suit should frame it we can see no logical process by which it could be held that a defendant cannot impugn the validity of the sale which is voidable at his instance
We have therefore no hesitation in rejecting the legal point urged on behalf of the appellant
The result is that the appeal fails and is dismissed with costs


Summary:
The appellant purchased the suit property under a sale deed executed by defendant 4 on May 20 1949
Defendants 3 and 4 had been doing business in partnership which how
ever was dissolved on March 31 1949
The deed of dissolution showed that the partnership owed debts to the extent of Rs 2 12 lakhs and that the suit property was allotted to defendant 4
The first respondent to whom money was due from the partnership obtained a decree on june 19 1951 and had the suit property attached
The appellant filed a claim petition for raising the attachment but it was dismissed
He then instituted a suit to set aside the summary order under O 21 r 63 of the Code of Civil Procedure
The first respondent s defence inter alia was that the sale was fraudulent intended to defeat or delay
creditors and therefore was invalid under section 53 1 of the 
The appellant pleaded that on a proper construction of section 53 1 of the Act a transfer which was voidable under the section could be avoided only by a representative suit filed on behalf of creditors and not by an individual creditor by way of defence to a suit to set aside a claim order
The evidence in the case showed that the appellant was not a transferee in good faith and that the transferor itself was a scheme by the transferor with the knowledge and concurrence of the transferee to put the property out of the reach of the creditors
Held  1 that section 53 1 of the  rendered a transaction voidable at the instance of the creditors if the transfer was effected with the particular intent specified and that the statute did not prescribe any particular method of avoidance
There was nothing in section 53 1 as 56 it originally stood before the amendment of the section in 1929 which precluded a defence by an attaching creditor to a suit to set aside a summary order under O 2 1 r 63 Code of Civil Procedure that the sale in favour of the plaintiff was vitiated by fraud  and the amendment made no change in this matter
2 that it was merely to have a uniform rule and to avoid conflicting decisions that the third paragraph was inserted in section 53 1 so that after the amendment the rule that a suit by a creditor should be brought in a representative capacity would apply as much to a suit to set aside a summary order under O 21 r 63 as to other suits
3 that the terms of section 53 1 were satisfied even if the transfer did not defeat but only delayed the creditors
The fact that the entirety of the debtor s property was not sold could not by itself negative the applicability of the section unless it was proved that there was other property left sufficient in value and of easy availability to render the alienation in question immaterial for the creditors
Ramaswami Chettiar vs Mallappa Reddiar Mad 760 approved