IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE P.R.RAMAN & THE HONOURABLE MR. JUSTICE T.R.RAMACHANDRAN NAIR WEDNESDAY, THE 16TH JULY 2008 / 25TH ASHADHA 1930 FAO.No. 135 OF 2008() --------------------- AGAINST THE ORDER DATED 11/04/2008 IN IA 5103/04 IN OS.407/2004 OF PRINCIPAL SUB COURT, KOLLAM APPELLANT/1ST COUNTER PETITIONER --------------------------------------------------------------- B. GOPINATHAN, SON OF BALAKRISHNAN, HOUSE NO.7, PANKAJA SADANAM, NETHAJI NAGAR, ASRAMAM, KOLLAM EAST VILLAGE, KOLLAM TALUK, KOLLAM DISTRICT. BY ADV. SRI.JOHNSON GOMEZ RESPONDENTS: PETITIONER & CR. PETITIONERS 2 & 3 ----------------------------------------------------------------------- 1. KUNJU KUNJU, S/O.LATE SRI.IDICHANDI, CHRISTIAN, AGED 67 YEARS, KALLUVILA VEEDU, EJAMADU VILLAGE, CHERUVAKKAL, KOTTARAKKARA, KOLLAM DISTRICT, PROPRIETOR, M/S.KALLUVILA CASHEWS KOLLAM (CLAIMANT). 2. S. SHAHEER, S/O. SARAFUDEEN, SHAMEER MANZIL, KILIKOLLOOR, KOLLAM (ORIGINAL 1ST DEFENDANT). 3. SAINUL ABDEEN SHAFEEF, S/O.SAINUL ABDEEN SHIHAB MANZIL, KALAKKODU, POOTHAKKULAM, PARAVUR (ORIGINAL 2ND DEFENDANT). BY ADV. SRI.V.PHILIP MATHEW SMT.PREETHY KARUNAKARAN THIS FIRST APPEAL FROM ORDERS HAVING COME UP FOR ORDERS ON 9.7.2008, THE COURT ON 16/07/2008, PASSED THE FOLLOWING: P.R. RAMAN & T.R. RAMACHANDRAN NAIR, JJ. = = = = = = = = = = = = = = = = = = = = F.A.O. NO. 135 OF 2008 = = = = = = = = = = = = = = DATED THIS, THE 16TH DAY OF JULY, 2008. J U D G M E N T Raman, J. This appeal is preferred against the order passed by the Principal Sub Court, Kollam on 11.4.2008, in I.A. 5103/2004 in O.S. 407/2004. I.A.5103/2004 was filed by the first respondent herein inter alia praying to lift the attachment against the petition schedule property claiming that he is a bona fide purchaser for consideration paid. By the impugned order, the claim petition filed by the first respondent herein was allowed and the attachment lifted. Hence the 1st counter petitioner/plaintiff has come up with this appeal. 2. Admittedly, the first respondent herein was a stranger who was not a party to the suit. The appellant herein is the plaintiff and Respondents 2 and 3 herein are defendants 1 and 2 respectively in O.S. 407/2004, which is a suit for recovery of an amount of Rs.6,78,205/- from the defendants. The petition schedule property was attached by an order of the court passed at the instance of the appellant herein. The first respondent herein preferred FAO 135/2008 :2: an application inter alia contending that he purchased the petition schedule cashew factory with all structures license rights and other accessories and fixed along with an extent of 30.94 Ares of properties, from its owner Sainul Abdeen Shareef, the second defendant in the suit. He has also contended that as the owner of the property was abroad, the sale deed was executed by duly authorised power of attorney holder for a consideration of Rs. 10 lakhs, that the factory was lying idle for one year prior to the execution of the sale deed and so he got it repaired and constructed a godown for shell by spending Rs. 3 lakhs, that the liabilities outstanding on the property was also discharged by him and thus, he is a bona fide purchaser for valuable consideration and the second defendant has no attachable or salable interest over the property, after its purchase by the claim petitioner on 2.9.2004. According to him, the encumbrance certificate obtained by him for the period from 1.1.1999 to 26.8.2004 also does not show any encumberance over the property and he had also no notice of any other debt or liability subsisting to be settled by the vendor who was also in absolute possession. Thus, the claimant became absolute owner of the property. 3. The appellant herein contended that the claim petition is bereft of FAO 135/2008 :3: any bona fides, that the claimant is only a name lender of the defendants in their attempt to commit fraud and foul play on him, that the document executed is a sham document dishonestly and fraudulently created by the claimant and the defendants/counter petitioners as an experiment to defeat his claim and that the power of attorney is not legally executed. The other allegations contained in the claim petition were denied. 4. The points arose for consideration are formulated in para 6 of the order impugned in this appeal. The history of the case would show that earlier, the claim petition was disposed of by order dated 9.6.2005 allowing the same. Thereafter, the appellant herein preferred an appeal before this Court as F.A.O. 222/2005 which was allowed and set aside the order by way of remand for fresh consideration by giving opportunities to both sides to adduce evidence in support of their contention. Subsequent to the remand, a commissioner was deputed to record evidence as per orders in I.A. 5179/2007 and he recorded evidence of the first respondent and marked Exts. A1 to A31 documents. Summons was also issued to the additional witnesses and they were examined as PW2 to PW4. Exts.A 32 to A35 were also marked. The appellant/plaintiff examined DWs 1 and 2 and marked Exts.B1 to B7. FAO 135/2008 :4: 5. Admittedly, the property scheduled in the claim petition is the subject matter in O.S. 407/2004. The property consists of an extent of 30.94 Ares in different survey numbers situated at Pathiyoor Village in Kayamkulam Taluk and a cashew factory situated therein. The suit is for realisation of money. The property is owned by the second defendant who was abroad. Ext.A1 is the power of attorney executed by the second defendant in favour of one Tajudeen who executed the sale deed in favour of the claim petitioner and Ext.A7 is the sale deed produced in the case. Ext.A4 encumbrance certificate relating to the period 1.1.1999 to 26.8.2004 does not show any encumbrance. After effecting sale, mutation was also effected and the factory licence was transferred in favour of the claimant. Though it was contended by the appellant that Ext.A7 is a fraudulent transfer hit by Section 53 of the Transfer of Property Act, the court did not accept the same. The contention that Ext.B1 power of attorney was not capable of investing power or authority to the executant of the document was also repelled. Ext.A10 is the power of attorney authorising conveyance of property as found by the court below. The contention of the appellant is that it is not a registered power of attorney. So long as the sale deed itself is executed by the power of attorney and presented by himself before the FAO 135/2008 :5: registering authority, the non registration of the power of attorney in no way will invalidate the document. The owner of the property has no case that he had not executed such a power of attorney in favour of Tajudeen. At any rate, it is not for the appellant to say that such a power of attorney is not valid in law in so far as admittedly, the property belongs to the second defendant who by virtue of a power of attorney executed in favour of Tajudeen had conveyed title of the property in favour of a stranger namely, the claim petitioner. According to the appellant, Ext.A7 is a sham document. In this regard, it is stated that the consideration as shown in the sale deed is very low but as rightly pointed out by the respondent, the property was heavily encumbered in favour of the bank and the same was discharged by the claimant over and above the payment of consideration as shown in the document. Therefore, such huge liabilities discharged by the buyer of the property should also be taken into account to see whether the property purchased is for considerably low price. Ext.A7 sale deed clearly show that Rs. 10 lakhs was paid by way of consideration and that he paid an amount of Rs. 3,25,292/- to the Kerala Financial Enterprises, Aleppey branch. The court below also found that the licence and ownership of the factory was transferred in favour of the claim petitioner, that Ext.A1 to FAO 135/2008 :6: A35 documents are genuine and the oral evidence adduced by PWs 2 to 4 are true and correct and there is no reason to disbelieve them. True that the court below made an observation that the transaction is only voidable, the appellant ought to have challenged the same by filing any independent proceedings. Though we do not agree with this reasoning, since when the first respondent claims that he is the absolute owner of the property and seeks to lift the attachment, it is open to the appellant to contend that the sale deed is fraudulent and hit by Section 53 of the Act. But on facts and on the basis of the evidence adduced, there is hardly any material to show that the sale in favour of the first respondent herein is with a view to defraud the creditors and therefore, is a fraudulent transaction. 6. Admittedly, the property was purchased long before the order of attachment passed in this case and mutation was also effected before the attachment order. It is contended by the learned counsel appearing for the respondent that when the defendant had other properties in his possession, without proceeding to attach the said properties, the attempt to attach the properties in question after the purchase of the same by his client is also to help the defendants and even to be suspected as a collusion between the plaintiff and the defendants in this behalf. In the factual situation, we find FAO 135/2008 :7: that the sale itself is prior to the date of petition for attachment. The appellant has no case that he had given any notice to the vendor about the pendency of the case. There is no charge on the property for the plaint claim and that the property was heavily encumbered with the financial institution are also not disputed. The fact that the claim petitioner purchased the property for a consideration of Rs. 10 lakhs and he discharged the liabilities in favour of the financial institution also proves his title as borne out by both documentary as well as oral evidence adduced in the case. The allegation that consideration paid for the property is inadequate is solely based on the consideration shown in the document. But when we take into account that the property was already encumbered and the purchaser had discharged the liabilities, the allegation of inadequacy falls to the ground. 7. The first respondent herein is a stranger to the proceeding. Subsequent to the purchase of the property, mutation was effected and the factory was re-started. Further, encumbrance certificate produced in the case was obtained by the first respondent before purchase of the property also does not disclose any encumbrance created on the property. Therefore, the normal care and caution has been taken by the vendor before he FAO 135/2008 :8: purchased the property. In the above facts and circumstances, we find that the allegation that the transaction is hit by Section 53 is not substantiated by any materials. On the other hand, the said allegation is disproved by the evidence adduced by the first respondent. We find no merit in this appeal. It is accordingly dismissed. P.R. RAMAN, (JUDGE) T.R. RAMACHANDRAN NAIR, (JUDGE) knc/-