Abdul Jalal v. Mariya Financiers

IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT: THE HONOURABLE MR.JUSTICE P.N.RAVINDRAN & THE HONOURABLE MR. JUSTICE K.RAMAKRISHNAN THURSDAY, THE 7TH DAY OF APRIL 2016/18TH CHAITHRA, 1938 Ex.FA.No. 35 of 2003 ( ) ------------------------- AGAINST THE ORDER/JUDGMENT IN E.A.NO.814/1997 IN E.P.NO.447/1997 IN OS 305/1994 of SUB COURT,THRISSUR DATED 12-08-2003 APPELLANT(S):CLAIM PETITIONER -------------------------------------- ABDUL JALAL, S/O. ASSAINER, AGED 55 YEARS, RESIDING AT AMBALATH HOUSE, CHAVAKKAD, THRISSUR DISTRICT. BY ADV. SRI.L.RAJESH NARAYAN RESPONDENT(S):RESPONDENTS 1 AND 2/PLAINTIFF AND JUDGMENT DEBTOR/DEFENDANT ----------------------------------------------- 1. M/S.MARIYA FINANCIERS, MUNICIPAL BUILDING, THRISSUR. 2. BEENA PAUL, W/O. PAUL, RESIDING AT CHIRAKKEKKARAN HOUSE, VAKAYIL LINE, KIZHAKKUMPATTUKARA, THRISSUR.\ R,1 BY ADV. SRI.T.KRISHNANUNNI (SR.) R1 BY ADV. SMT.MEENA.A. R1 BY ADV. SRI.VINOD RAVINDRANATH R1 BY ADV. SRI.K.C.KIRAN R1 BY ADV. SRI.M.DEVESH R1 BY ADV. SRI.VINAY MATHEW JOSEPH THIS EXECUTION FIRST APPEAL HAVING BEEN FINALLY HEARD ON 07-042016, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: KAV/ ## **P.N.RAVINDRAN & K.RAMAKRISHNAN, JJ. =-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-= Ex.F.A.No.35 of 2003** ## **=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-= Dated this the 7[th] day of April, 2016** ## **JUDGMENT** ## _**K.Ramakrishnan, J.**_ The claim petitioner in E.A.No.814 of 1997 in E.P.No.447 of 1996 in O.S.No.305 of 1994 on the file of the II Additional Sub Court, Thrissur is the appellant herein. The petition schedule property which forms part of the property included in E.P.No.447 of 1996 was purchased by the claim petitioner from one Rafi as per Ext.A1 document and he has been in possession of the property and when he came to know about the attachment of the property, he immediately filed the petition. The case of the claim petitioner in the petition itself was that the first respondent herein filed O.S.No.305 of 1994 on the file of the Sub Court, Thrissur for a money decree against the second respondent. The suit was filed as O.S.No.305 of 1994 on 7.3.1994 and the application for attachment before judgment was filed and the property was attached on 11.3.1994. But before the attachment was ordered, the defendant in that suit who is the judgment debtor herein had executed Ext.A2 sale deed on 4.3.1994 in favour of his vendor Rafi and it was registered on 11.3.1994 as document No.1668/94 and thereafter the said Rafi was in possession of the same from whom he ## **Ex.F.A.No.35 of 2003** ## **-:2:-** had purchased a portion of the property which is shown as schedule to the claim petition as per Ext.A1 document dated 30.6.1994. He was not aware of the attachment and he is a bonafide purchaser for value. So he prayed for lifting the attachment and release the property in his favour. 2. The decree holder filed counter in the claim petition contending that the suit was filed on 7.3.1994 and the property was attached on 11.3.1994 before judgment and knowing that the property is to be attached, the judgment debtor created a fraudulent document with date 4.3.1994 in favour of Rafi and contended that he had no attachable interest and that was rejected by the court and the attachment was made absolute and the suit was also decreed on 20.8.1995. Thereafter he filed E.P.No.447 of 1996 for execution of the decree and the present claim petition was filed. He prayed for dismissal of the application. 3. The judgment debtor also filed counter statement stating that the document was executed in the name of Rafi as insisted by the claim petitioner as he told that he will clear the debt due to the judgment debtor. The property was attached on 11.3.1994. It is later as insisted by the claim petitioner, Rafi executed the sale deed in respect of the claim petition property namely B schedule property of the claim petition in favour of the claim petitioner. Later she came to know that the neither Rafi nor the claim petitioner had cleared the ## **Ex.F.A.No.35 of 2003** ## **-:3:-** amounts due to the decree holder as promised and according to her, no consideration passed to the document and in order to protect the property and on the basis of the representation of the claim petitioner that she had executed the document of sale in favour of Rafi. 4. Earlier, the claim petitioner was examined as PW1 and Exts.A1 to A8 were marked on his side. The judgment debtor was examined as RW1 and one witness was examined as RW2 on the side of the decree holder. 5. Earlier, after considering the evidence on record, the execution court dismissed the claim petition on 22.8.2001. This was challenged by the appellant herein before this court by filing E.F.A.No.47 of 2001 and that was disposed of by this court by judgment delivered on 26.2.2002 setting aside the order passed and remanding the matter for considering the question of applicability of section 53 of the Transfer of Property Act in respect of the transaction in this case, as the contention of the decree holder was that the document was executed only on 11.3.1994 after knowing about the order of attachment passed. 6. After remand, PW2, the scribe of Exts.A1 and A2 was examined on the side of the claim petitioner and RW3, the vendor of the claim petitioner was examined on the side of the decree holder. On reappreciation of the evidence again, the court below came to the conclusion that the document was not executed on 4.3.1994 as ## **Ex.F.A.No.35 of 2003** ## **-:4:-** claimed by the claim petitioner and in fact there was no consideration passed and no title passed to the vendor of the claim petitioner and it was created in order to defeat the right of the decree holder and dismissed the claim petition again. The court below also on the basis of the evidence came to the conclusion that the document was executed and registered on the same day namely on 11.3.1994 after the attachment order was passed. Aggrieved by the same, the present appeal has been preferred by the appellant/claim petitioner before the court below. 7. Though the execution first appeal was filed on 17.10.2003, it was dismissed for non-prosecution on 14.12.2011. In the meantime, the property was sold in execution on 7.11.2001, after the claim petition was dismissed on the first occasion and the sale was confirmed on 21.8.2003, after the claim petition was dismissed on the second occasion and the sale certificate was issued on 22.8.2012 after the first appeal was dismissed for default and the decree holder who purchased the property applied for delivery of the property and it was delivered on 27.10.2012 and he had assigned the property to a third party on 2.9.2013 and it was thereafter that the application to restore the appeal dismissed for default was filed as M.J.C.No.584 of 2012 with a delay condonation application and it was allowed on 15.2.2016. 8. Heard Sri.Rajesh Narayan Iyer, learned counsel appearing for the appellant and Sri.T.Krishnanunni, learned Senior Counsel and ## **Ex.F.A.No.35 of 2003** ## **-:5:-** Smt.A.Meena, learned counsel appearing for the first respondent. 9. The points that arise for consideration are: - i. Whether the court below was justified in holding that the sale is a fraudulent transfer hit by section 53 of the Transfer of Property Act ? - ii. Whether the court below was justified in dismissing the application? 10. Points: Learned counsel appearing for the appellant submitted that it will be seen from the document namely Ext.A2 that the document was executed on 4.3.1994 and it was registered on 11.3.1994 and as per section 47 of the Registration Act, the registration will relate back to the date of the execution and as such, on the date of the attachment, the judgment debtor had no attachable interest in the property and if it is proved by the claimant that the document was executed prior to the attachment, then the decree holder is entitled only to proceed against the right if any available after the date of execution of the document and nothing more. He had also argued that the court below had gone beyond the scope of remand order as well. 11. On the other hand, learned Senior Counsel for the respondent/decree holder submitted that the evidence of RW3 will go to show that the document was prepared, executed and signed on the same day and was registered also on the same day namely 11.3.1994. ## **Ex.F.A.No.35 of 2003** ## **-:6:-** RW1 has deposed that the document was executed on the basis of the representation made by RW3 that he will discharge the liability but later he did not discharge the liability and there was no consideration passed for the property transferred. So the courts below were perfectly justified in dismissing the claim petition and no interference is called for. 12. It is an admitted fact that the suit was filed by the first respondent herein against the second respondent on 7.3.1994 and an application for attachment before judgment was filed and the property of the judgment debtor including claim B schedule property was attached on 11.3.1994. The case of the claim petitioner was that even before the filing of the suit, the second respondent had executed Ext.A2 assignment deed in favour of RW3, Rafi - his predecessor and the document was registered on 11.3.1994 and thereafter he purchased the property as per Ext.A1 document on 30.6.1994 as a bonafide purchaser. It is also an admitted fact that the petitioner had purchased only a portion of the property covered by Ext.A2. After remand, PW2 and RW3 were examined. The evidence of RWs.1 and 2 will go to show that RW1 executed the document on 11.3.1994 on the understanding that RW3 will pay off the debt and she had not received any amount from him. The evidence of PW2 is not helpful to prove that the document was executed on 4.3.1994 and he had not seen the actual execution. He had only deposed that he had prepared the ## **Ex.F.A.No.35 of 2003** ## **-:7:-** document as instructed by RW3. Further the evidence of RW3 will go to show that RW1 had come to the registrar's office only on one occasion and that it was on that day that the document was executed and it was also registered on the same day. So it will be seen from the evidence that the document was executed and registered on 11.3.1994 at 2.30 p.m. and the attachment was effected in the property on 11.3.1994 at 12.45 p.m. So it is clear from this that the document was executed and registered only after the attachment was effected. 13. In the decision reported in **Abdul Jalal v. Mariya Financiers** [2002 (2) KLT 107] , it has been held that under a contract of sale entered into before attachment, the conveyance after attachment in pursuance of the contract passes on good title in spite of the attachment. The agreement for sale indeed creates an obligation attached to the ownership of 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 the obligations incurred under the contract for sale. Though section 64 of the Code of Civil Procedure was intended to protect the attaching creditor, but if the subsequent conveyance is in pursuance of an agreement for sale which was before the attachment, the contractual obligation arising therefrom must be allowed to prevail over the rights of the attaching creditor. The rights of the attaching creditor shall not be allowed to ## **Ex.F.A.No.35 of 2003** ## **-:8:-** override the contractual obligation arising from an antecedent agreement for sale of the attached property. Thus, if a person in whose favour the agreement for sale is executed, he can avoid the attachment. Certainly a person in whose favour the sale is executed before attachment has valid claim. In the decision it has only held that if there is a pre-contractual obligation between the judgment debtor and the purchaser, entered into between them prior to the attachment, then the right of the attaching creditor shall not be allowed to override the contractual obligation arising from an antecedent agreement of sale of the attached property. When it was argued that whether the sale is hit by section 53 of the Transfer of Property Act, has not been considered by the execution court, the matter has been remanded for the purpose of considering the question as to when the document was executed and registered and whether it was hit by section 53 of the Transfer of Property Act as well. 14. So once the matter has been remanded for that purpose, the trial court is entitled to consider the question as to whether the execution of the document was done as claimed by the claim petitioner and it was antedated and it was executed and registered on the same date on which the registration was effected as well. Only if the claim petitioner is able to establish that the document was executed on a prior date and it was registered on a subsequent date, then only section 47 of the Registration Act will come into play and the ## **Ex.F.A.No.35 of 2003** ## **-:9:-** registration can relate back to the date of the execution of the document and in such cases, the decree holder may not have any attachable right in the property and even if the attachment was effected on 11.3.1994, then he will not get any right in the property and the right of the bonafide purchaser for value will be protected. 15. But in this case the evidence will go to show that there was no consideration passed for the transaction and the document was executed on the basis of the representation made by the vendor RW3 Rafi and the claim petitioner, PW1, that he will discharge the liability of the decree holder and save the property and it was on that understanding that the document was executed without getting any consideration for the document. RW3 or PW1 had no case that they had discharged the liability of the decree holder as undertaken by them as claimed by RW1 as well. In order to avoid the effect of section 53 of the Transfer of Property Act, the purchaser has to prove that he purchased the property for consideration in good faith without notice of the debt. But in this case the evidence of RW1 to RW3 will go to show that at the time when it was purchased, both Rafi and the claim petitioner were aware of the pendency of the debt and it was on the basis of the understanding that the purchaser will clear the debt of the vendor and save the property that the document was executed but it was not fulfilled and no amount was paid to the vendor by the purchaser. So under the circumstances, the court below was perfectly ## **Ex.F.A.No.35 of 2003** ## **-:10:-** justified in coming to the conclusion that Ext.A2 document is without any consideration and it was executed and registered on 11.3.1994 and it was not executed on 4.3.1994 as claimed by the claim petitioner and no title passed to RW3 on the basis of the document and it is a fraudulent creation and hit by section 53 of the Transfer of Property Act and the claim petitioner has not obtained any right on the basis of the document so as to get the attachment lifted and release the property covered by Ext.A1 document and rightly dismissed the application. We do not find any reason to interfere with the findings entered by the court below. In the result, the appeal is dismissed. We do not find any reason to disallow cost to the first respondent decree holder. So the appeal is dismissed with costs to the first respondent. Sd/- ## **P.N.RAVINDRAN JUDGE** Sd/- **K.RAMAKRISHNAN JUDGE** **vpv**