IN THE HIGH COURT OF JUDICATURE AT MADRAS DATED: 17/03/2011 CORAM THE HON'BLE MR. JUSTICE G.RAJASURIA Application Nos. 2036, 2037, 2038, 2039, 2165 and 2166 of 2008 Application No. 5928 of 2009 in C.S. No. 665 of 2001 --- ORDER The parties, for the sake of convenience, are referred to hereunder as per their litigative status and ranking in the suit and the applications before this Court. 2. The Plaintiff namely Upasana Finance Limited has filed the suit seeking the following relief:- "(i) Directing the defendants jointly and severally to pay a sum of Rs.30,60,072.00 together with further interest at 36% per annum from the date of plaint till date of realisation' (ii) In default of payment of the amount as stated above for sale of the mortgaged property mentioned in the schedule to the plaint and apply the sale proceeds after deducting the sale expenses towards the amount due under the decree; (iii) In the event of sale proceeds not being sufficient to satisfy the decree grant liberty to the plaintiff for personal decree against the defendants; (iv) Directing the defendants jointly and severally to pay the costs of the suit (v) For such further or other reliefs as this Hon'ble Court may deem fit." 3. Pending suit, the plaintiff filed the Application No. 7360 of 2007 for attaching the properties found described in the schedule of the application. There are four items of properties mentioned in the schedule of the Application No. 7360 of 2007. Out of the four items of the properties, the item No.1 comprised of two properties described therein belonged to Rajendran, first defendant in the suit and the remaining three items namely item Nos. 2, 3 and 4 belonged to first defendant's wife namely Vijayalakshmi, the fourth defendant in the suit. This Court passed the order dated 09.01.2008, ordering attachment of the properties described in Application No. 7360 of 2007. Subsequently, the above said applications namely Application Nos. 2165, 2166, 2036, 2037, 2038, 2039 of 2008 were filed by the third parties, who purchased the properties from the first defendant as well as the fourth defendant for getting the order of attachment raised. Counter affidavits were filed by the respondent/Plaintiff. Application Nos. 2165 and 2166 of 2008 4. Application No. 2165 and 2166 of 2008 have been filed by P. Jayakumar and K. Manoharan, who have purchased item No.1 of the property from Rajendran, first defendant herein, by two separate sale deeds dated 01.08.2007 and 27.09.2007 registered as document Nos. 2625 of 2007 and 3325 of 2007 respectively on the file of Sub-Registrar, Uthukuli. 5. Compendiously and concisely, the facts which are absolutely necessary and germane for disposal of these applications namely Application Nos. 2165 and 2166 of 2008 would run thus:- 6. The order of attachment was passed by this Court in I.A. No. 7360 of 2007 on 09.01.2008 in respect of the four items of the properties mentioned therein. The fact remains that the applicants, in application Nos. 2165 and 2166 of 2008, who are third parties, purchased the item No.1 of the properties from the first defendant Rajendran by means of the sale deeds dated 01.08.2007 and 27.09.2007 respectively. According to the petitioners/third party purchasers, inasmuch as purchases had been made long prior to the order of attachment passed by this Court on 09.01.2008, it will not bind them. However, the respondent/plaintiff resisted such contention on various grounds. 7. The point for consideration in these applications is as to whether the order of attachment dated 09.01.2008 would bind the purchases made by the third party purchasers/applicants in I.A. No. 2165 and 2166 of 2008 or not. 8. The learned counsel for the petitioners/third party purchasers in these two applications would set forth and put forth his arguments thus:- (a) The petitioners are third parties to the suit as well as the application filed by the plaintiff for attachment of the properties and they had no knowledge about the pendency of the suit. They purchased the properties for valuable sale consideration and as such the attachment would have no binding effect on the properties purchased by them. Therefore, according to him, the attachment order passed by this Court has to be raised. 9. By way of torpedoing and pulversing the arguments as putforth and setforth on the side of the petitioners, the learned counsel for the respondent/plaintiff would advance his arguments, which could tersely and briefly be set out thus:- (a) The alleged sales affected anterior to the order of attachment are bogus and false and such sales were made for the purpose of defeating the rights of the plaintiff and other creditors over the property. Therefore according to him, the question of raising the attachment will not arise. 10. On the side of the petitioners in these two applications namely Application Nos. 2165 and 2166, one of the purchasers/Petitioners namely Jayakumar examined himself as PW1 and he was cross- examined. Exs. A1 to A14 were marked. On the side of the respondent, no oral or documentary evidence was adduced. Discussion on points:- 11. At the outset, I would like to highlight the point that exfacie and prima facie, indubitably and indisputably, unarguably and incontrovertibly, it is clear that the order of attachment passed by this Court in Application No. 7360 of 2007 came to be passed long after the sales effected by the first defendant in favour of the petitioners by virtue of the two sale deeds referred to supra. No doubt, on the date of effecting the sale the suit was pending, but those properties are not the subject matter of the suit. I would like to observe here that the present suit is primarily a suit based on mortgage. In a mortgage suit, rarely, attachment would be ordered and that too, if there is enough exfacie evidence to show that the security has become a negative security. On the one hand, the petitioners/third party purchasers would contend that the properties furnished by the defendants in the suit by way of mortgage are worth more than One crore rupees. Even on the date of mortgage, the plaintiff himself, in the document concerned, valued the worth of the properties furnished as security in a sum of Rs.23 lakhs and that was in the year 1997. Therefore, according to the learned counsel for the petitioners/purchasers, those mortgaged properties would be worth more than Rs.1 crore at present, which would be much more sufficient to discharge the decree, if any, passed in the suit. 12. Whereas, the learned counsel for the respondent/plaintiff would submit that such a logic would not apply in a matter of this nature for the reason that the defendants had committed default in discharging the debt and the first defendant was also heavily indebted to several creditors as per the deposition of PW1 Jayakumar and in such case, transfers made by the first defendant were fraudulent transfers in favour of the petitioners/purchasers so as to defraud the creditors whereby Section 53 of the Transfer of Property Act would be squarely applicable. 13. The learned counsel for the petitioners/third party purchasers would rely on the following decisions in support of his case:- i) (M/s. Maxhemeijer Jr. (India) Pvt Ltd vs., Zainub Bi) 1974 Madras Law Weekly 455 would highlight that the intent to defeat or delay the creditors as a whole in the enforcement of this right is what is regarded as a fraudulent intention under this Section; the transfer of the immovable property should have been made with intent to defeat or delay the creditors of the transfers. ii) (P. Srinivasan vs. Suseelabai and two others) 1991 2 Law Weekly 404 would spot light that primary requirement under Section 53 of the Transfer of Property is that the impugned transfer should have been made to delay or defeat the general body of creditors and not an individual creditor; unless the plaintiff leads that there was more than one creditor, Section 53 of the Act cannot be invoked by the plaintiff. In the absence of any plea that there were more creditors than one, Sec.53 of the Transfer of property Act cannot be invoked by the plaintiff. iii) (Pinna Thevar vs. M.S. Manian and another) (2006) 5 CTC 245 would drive home the point that plurality of creditors must be affected to invoke Section 53 of the Act and no suit can be laid by single creditor whose interest alone has been defeated. 14. Placing reliance on these precedents, the learned counsel for the petitioners/third party purchasers would develop his argument that unless there is clear evidence to demonstrate and display that the intention of the transferor/debtor was to defraud the creditors, the question of ushering in Section 53 of the Transfer of Property Act would not arise. 15. At this juncture, I would like to point out that the affidavit accompanying the application No. 7360 of 2007 filed by the plaintiff for attachment of the property is bereft and niggard of any such contention concerning fraudulent transfer as referred to in Section 53 of the Transfer of Property Act. However, the learned counsel for the respondent/plaintiff would submit that on the date of filing the application for attachment, the plaintiff was unaware of such fraudulent transfers, but they only apprehended that the first defendant would take steps to effect such fraudulent transfers. Whereas, the learned counsel for the petitioners/purchasers would submit that had the plaintiff taken sufficient care to obtain an encumbrance certificate, they could have very easily come across such transfers effected already and therefore, according to the learned counsel for the petitioners/third party purchasers, the very application for attachment itself is not based on the plea concerning fraudulent transfers and in such case, invocation of Section 53 of the Transfer of Property Act is beyond the scope of these applications. 16. I would like to agree with the argument putforth on the side of the learned counsel for the petitioners/third party purchasers. At this juncture, I recollect the maxim Judicis est judicare secundum allegata et probata. The Judges duty is to decide according to the allegations and proof. 17. It is not the case of the respondent/plaintiff here that they got the concerned properties attached on the ground that those properties were fraudulently transferred by the first defendant so as to defraud his creditors. When such was not the ground on which the attachment order was passed by this Court, I am of the view that certainly that cannot be the subject matter of probe or enquiry in these applications. However, if at all, the respondent/plaintiff is so advised, it is for them to proceed further in the way known to law and as of now, I am not inclined, in any way, to probe into the aspect as to whether such transfers of properties were fraudulently made or not. It is therefore crystal clear that the attachment effected subsequent to the sales made in favour of the petitioners/third party purchasers should necessarily be vacated and accordingly it is ordered to be raised. In view of the same, I would like to allow the application Nos. 2165 and 2166 of 2008 and the attachment ordered on 09.01.2008 in Application No. 7360 of 2008 shall stand vacated in so far as it relates to item No. 1. Application Nos. 2036, 2037, 2038, 2039 of 2008 and Application No. 5928 of 2009 18. Application Nos. 2036 and 2037 of 2008 have been filed by Karthikeyan, who purchased item Nos. 2 and 3 of the property by two sale deeds dated 31.03.2008 registered as document No. 3120 of 2008 from Vijayalakshmi, fourth defendant in the suit. Application Nos. 2038 and 2039 of 2008 have been filed by Duraisamy, who purchased item No. 4 of the property by means of a sale deed dated 31.03.2008, from Vijayalakshmi, fourth defendant in the suit. 19. Application No. 5928 of 2009 was filed by the fourth defendant in the suit namely Vijayalakshmi to raise the order of attachment dated 09.01.2008 passed in Application No. 7360 of 2007 in so far as it relates to item Nos. 2 to 4. Counter affidavits were filed by the respondent/Plaintiff. 20. The facts and figures as stood displayed from the records would run thus:- This Court, by the order dated 09.01.2008 passed an order of attachment in Application No. 7360 of 2007 as set out above.However, the order of attachment could not be given effect to immediately due to some difficulties. This Court also earlier granted interim injunction on 19.11.2007 mandating that the fourth defendant shall not alienate the properties and should maintain status-quo, which means that the fourth defendant should not alienate the properties. Axiomatically and obviously, such an order was passed because during the time granted for furnishing the security, there should not be any alienation. Indubitably and indisputably, unarguably and incontrovertibly, the fact remains that the fourth defendant Vijayalakshmi was not served with the order granting injunction or the order of attachment. In the meantime, the fourth defendant sold the item Nos. 2, 3 and 4 of the properties in favour of the petitioners Karthikeyan and Duraisamy by means of two sale deeds dated 31.03.2008. 21. According to the learned counsel for the petitioners/purchasers, they are not aware of the order of attachment or order of injunction granted by this Court and for that matter, the learned counsel for the fourth defendant also would submit that the fourth defendant was not aware of such orders passed by this Court. Accordingly, they, in unison, would pray for raising the order of attachment in so far as it relates to item Nos. 2, 3 and 4 of the properties mentioned in the Schedule of Application No. 7360 of 2007. 22. The learned counsel for the respondent/plaintiff, in a bid to challenge and impugn such arguments would submit that when once the order of injunction is passed by this Court, whether it is communicated or not, it must be taken that the order of injunction came into force from that date and any alienation subsequent to that date should be treated as void; similarly, the order of attachment, once passed, it should be taken as effective and even before effecting the attachment of the property concerned, if there would be any sale, then it should be treated as void. 23. In application No. 2036 of 2008, the Petitioner namely Karthikeyan was examined as PW1, through whom Exs. A1 to A6 were marked. Exs. C1 and C2 were marked as Court documents. In Application No. 2038 of 2008, the petitioner namely K. Duraisamy was examined as PW1 through whom Exs. A1 to A6 were marked. 24. The point for consideration in these applications is as to whether the fourth defendant and the third party purchasers had prior knowledge of the order of attachment and injunction granted by this Court, if so, whether those sales effected by the fourth defendant in favour of the third party petitioners are void? 25. The learned counsel for the petitioners/subsequent purchasers relied on the following decisions in support of their case. i) (Jagannath prasad vs. Mahabir Ram Kumar and another) AIR 1955 Patna 231 is on the point that an order of attachment operates only when it was actually made and not from the date when the order of attachment is made; it is only a transfer made subsequent to the actual attachment that is hit and not the one which has been made prior to the effecting of an attachment order, though an order of attachment was passed earlier. ii) (Keshrimal Jivji Shah and another vs. Bank of Maharashtra and others) 2004 Volume 122 Company cases 831 to emphasis the point that only when transfer of immovable property made in violation of an order of injunction or prohibition issued by a Court of law, it confers no right, title or interest in the transferee, as it is no transfer at all. 26. A perusal of the aforesaid precedents, and the law points governing this issue would exemplify and demonstrate that if any sale is effected before effecting the attachment over the property, then such sale would not be hit by the order of attachment or covered by such attachment. I am of the considered view that there could be no second opinion on that. In respect of the communication of order of injunction also, the decisions are to the effect that unless the party bound by the injunction was put on notice of such order, he cannot be mulcted with the liability as though he violated or contravened such injunction and thereby committed contempt. In this case, there is nothing to indicate and establish that the petitioners/third party purchasers had any knowledge about the order of attachment passed by this Court on 09.01.2008 in Application No. 7360 of 2007 and also about the order dated 19.11.2007 granting injunction. 27. However, the learned counsel for the respondent/plaintiff inviting the attention of this Court to the fact by placing reliance on the criminal Original Petition, which the learned counsel would furnish details as Crl.O.P. No. 5826 of 2007, that on behalf of the fourth defendant, her counsel participated in the Lok Adalat and even offered to deposit Rs.5 lakhs, which according to the fourth defendant was her liability. The learned counsel for the respondent/plaintiff would also appropriately and convincingly point out that in the Criminal Original Petition filed by the defendants, the present suit was referred to and wherefore, the fourth defendant cannot plead ignorance about the pendency of the suit at that time, so to say earlier to effecting such order, which emerged subsequent to the filing of the Criminal Original Petition. 28. It would be too much on the part of the fourth defendant to contend that she was not aware of the pendency of C.S. No. 665 of 2001 even during the year 2006. No doubt, there was some delay on the part of the plaintiff in getting the summons served on the fourth defendant. The fact remains that the interloctuary application for attachment was filed by the plaintiff in the suit after the mediation took place among the parties in the Criminal Original Petition and in such case, there is nothing to indicate that the fourth defendant was aware of the order of injunction or the order of attachment passed by this Court subsequently. Be that as it may, instead of probing further into the details, I would like to concentrate on the fact that the liability of the fourth defendant in the suit is only to the extent of Rs.5 lakhs under a Hundi and not to the entire suit amount. However, the learned counsel for the respondent/plaintiff would clarify that the said sum of Rs.5 lakhs coupled with interest also, the fourth defendant is liable to pay towards part of the suit amount. The liability of the fourth defendant is alleged to have arisen, as per the plaintiff, in view of a tripartite arrangement between the plaintiff, the first defendant and the fourth defendant. The fact remains that the fourth defendant supplied goods to the first defendant for which the first defendant was liable to pay, but it was the plaintiff, who actually paid the said amount to the fourth defendant on the understanding that in the event of the plaintiff unable to recover the amount from the first defendant, the fourth defendant should pay the amount with interest; however, no interest rate is found mentioned therein. In such case, at the most, the plaintiff can insist upon the fourth defendant for recovery of the amount of Rs.5 lakhs with necessary interest for which the learned counsel for the fourth defendant as well as the purchasers of the properties from the fourth defendant would submit that on dishonour of the hundi, the plaintiff should have issued notice as per the Negotiable Instruments Act and from that date onwards, the liability arises and since that was not done so, the plaintiff is not entitled to enforce the Hundi against the fourth defendant and consequently against the petitioners. Therefore, according to the learned counsel for the fourth defendant, the attachment order is having no legs to stand and it should be vacated. 29. These complicated issues have to be gone into after framing issues in the suit. As of now, this Court, while disposing of these applications, can merely safeguard and secure the interest of the plaintiff by directing the fourth defendant to deposit Rs.5 lakhs which is contemplated in the Hundi with additional sum of Rs.3 lakhs being the tentative interest which might have accrued till the filing of the suit. It appears that in the Hundi, there is no reference to interest, however, Section 80 of the Negotiable Act stipulates that if the negotiable instrument is silent about payment of interest, it can be calculated at the rate of 18% per annum from the date on which the amount contemplated therein ought to have been paid by the party charged. 30. Here, the Hundi is dated 04.06.1997 and the suit was filed during the year 2000. Atleast to that much extent, interest has to be calculated and if it is calculated by rough and ready method, it would be around Rs.3 lakhs, as such, the hundi amount of Rs.5 lakhs plus Rs.3 lakhs being tentative interest, would come to Rs.8 lakhs and the fourth defendant shall deposit the same before this Court and in such event, the order of attachment shall stand raised. 31. In the result, the following order is passed:- i) The fourth defendant is directed to deposit Rs.8 lakhs (Rupees Eight Lakhs Only) within a period of one month from this date to the credit of C.S. No. 665 of 2001 before this Court, whereupon, the amount shall be deposited by the Registry in any one of the Nationalised Banks in a fixed deposit renewable periodically till the disposal of the suit and whomsoever succeeds in the suit shall be entitled to take back the amount with accrued interest thereon. ii) On such deposit by the fourth defendant, the order of attachment shall stand automatically vacated. 32. Accordingly, all the applications are disposed of. No costs. rsh