Isabella Jose v Antony and Sherly Tomy

## **IN THE HIGH COURT OF KERALA AT ERNAKULAM** ## **PRESENT:** **THE HONOURABLE MR.JUSTICE THOMAS P.JOSEPH** **WEDNESDAY, THE 22ND DAY OF FEBRUARY 2012/3RD PHALGUNA 1933** **Ex.SA.No. 14 of 2004** **---------------------AS.252/2003 of ADDL.DISTRICT COURT-I, THRISSUR OS.149/2002 of PRL.SUB COURT,THRISSUR** **APPELLANT(S)/APPELLANT/APPELLANT/CLAIM PETITIONER:** **-------------------------------------------------** **ISABELLA JOSE, AGED 45, W/O. OLLUKARAN JOSE, EDAKUNNY VILLAGE & DESOM THRISSUR TALUK.** **BY ADVS.SRI.G.SREEKUMAR (CHELUR) SRI.RENJITH B.MARAR** **RESPONDENT(S)/PLAINTIFF & DEFENDANTS:** **-------------------------------------** **1. ANTONY, S/O.MADATHUPIDI POULOSE, THAIKATUSSERY DESOM, EDAKUNNY VILLAGE THRISSUR TALUK.** **2. SHERLY TOMY, W/O.OLLUKARAN TOMY, THAIKATUSERY DESOM EDAKUNNY VILLAGE, THRISSUR TALUK.** **R1 BY SRI.N.N.SUGUNAPALAN (SR.) R1 BY SRI.BALAKRISHNAN GOPINATH** **THIS EXECUTION SECOND APPEAL HAVING COME UP FOR ADMISSION ON 22-02-2012, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:** **stu** **THOMAS P. JOSEPH, J. -------------------------------------Ex.S.A. No.14 of 2004 -------------------------------------Dated this the 22[nd] day of February, 2012. JUDGMENT** Heard. Admit. 2. Following substantial question of law is framed: “Whether in the light of the decision of this Court in **Rajan v. Jayashree Nayar (2010 (1) KLT 142)** it was legally open to the courts below to go into the question whether assignment as per Ext.A1 is a fraudulent transfer?” 3. 1[st] respondent appeared through counsel. 2[nd] respondent though served, there is no appearance. 4. This appeal arises from the judgment of learned Additional District Judge-I, Thrissur in A.S.No.252 of 2003 which in turn is in challenge of the order dated 02.04.2003 on I.A.No.2171 of 2002 in I.A.No.1020 of 2002 in O.S.No.149 of 2002 of the court of learned Principal Sub Judge, Thrissur. 1[st] respondent filed O.S.No.149 of 2002 against the 2[nd] respondent in the Principal Sub Court, Thrissur for recovery of money from the 2[nd] respondent. 1[st] respondent filed I.A.No.1020 of 2002 for attachment before judgment property allegedly belonging to the 2[nd] respondent. Learned Principal Sub Judge passed order of attachment on 23.02.2002 and as learned counsel submits, attachment was **ExSA No.14/2004** 2 effected on 26.03.2002. While so, appellant filed I.A.No.2171 of 2002 in I.A.No.1020 of 2002 under Rule 8 of Order XXXVIII and Order XXI of Rule 58 of the Code of Civil Procedure (for short, “the Code”) requesting to lift the attachment claiming that she acquired right, title, interest and possession of the attached property as per Ext.A1, assignment deed No.4026 of 1999 dated 11.10.1999 and that on the date of attachment, 2[nd] respondent did not have any right, title, interest or possession of the said property. 1[st] respondent resisted I.A.No.2171 of 2002 contending that appellant is none other than the sister-inlaw of the 2[nd] respondent and that transfer in favour of the appellant by Ext.A1 is fraudulent, intended to defeat the claim being made by the 1[st] respondent against the 2[nd] respondent. Trial court was impressed by that contention and dismissed I.A.No.2171 of 2002. Appellant challenged that order before the learned Additional District Judge-I, Thrissur in A.S.No.252 of 2003. The order of trial court was confirmed and the appeal was dismissed. Hence this Second Appeal. 5. Learned counsel for appellant has contended that in the light of decision in **Rajan v. Jayashree Nayar** (supra) it was not open to the trial/first appellate courts to go into the question whether transfer as per Ext.A1 is a fraudulent transaction. According to the learned counsel, Rule 5 of Order XXXVIII of the Code has application only when the 2[nd] respondent/defendant with intent to defeat or delay execution of the decree that may be passed **ExSA No.14/2004** 3 against her was about to dispose of the whole or any portion of his property and going by the scheme of Rules 5 to 11 of Order XXXVIII of the Code it is the 2[nd] respondent/defendant who could furnish security for release of the property attached. Learned counsel contends that in so far as the property had already been assigned to the appellant as per Ext.A1, dated 11.10.1999 there was no question of 2[nd] respondent/defendant transferring the property to prevent or delay or obstruct execution of the decree on the day the application for attachment was made and hence question whether transfer is fraudulent or not was not required to be decided by the trial court. Learned counsel submits that in the light of above decision and position of law, trial court ought to have allowed I.A.No.2171 of 2002. 6. Learned counsel for 1[st] respondent has referred to various circumstances based on which the trial and first appellate courts held that transfer under Ext.A1 is fraudulent. According to the learned counsel in that view of the matter, there is no reason to interfere. 7. The decision referred supra was a case where attachment before judgment was made on a property regarding which a claim was made under Rule 8 of Order XXXVIII read with Rule 58 of Order XXI of the Code. There, the transfer in favour of claimant was before the attachment was made. It is argued that the transfer was fraudulent and hence that question could be considered by **ExSA No.14/2004** 4 the court while deciding the application under Rule 8 of Order XXXVIII of the Code. The Division Bench held in paragraph 20 that the question whether the transfer is hit by Sec.53 of the Transfer of Property Act (for short, “the Act”) need not be considered in a claim made by a transferee under Rule 8 of Order XXXVIII (read with Rule 58 of Order XXI) of the Code and that Rule 5 of Order XXXVIII of the Code would apply only in cases where it is shown that the “defendant” with intent to delay or obstruct execution of the decree is about to dispose of the whole or part of his property and if the property has already been transferred by the appellant, Rule 5 of Order XXXVIII of the Code would not at all apply. 8. If that be so, since by Ext.A1, assignment deed dated 11.10.1999, 2[nd] respondent/defendant had already transferred the property to the appellant, question of invoking Rule 5 of Order XXXVIII of the Code and passing the order dated 02.04.2003 on I.A.No.2171 of 2002 in I.A.No.1020 of 2002 did not arise. 9. As to the stage at which the plea of fraudulent transfer under Sec.53 of the Act could be raised, the Division Bench has referred to that in paragraph 22 of the judgment referred supra. It is held that a fraudulent transfer is not void but is only voidable and that in the case of fraudulent transfer the creditor is not without any remedy, he can file a suit to avoid the transfer or he can avoid the same in execution (of the decree). It is further observed that when **ExSA No.14/2004** 5 the court allows a claim to the property attached before judgment on the ground that transfer took place before the order of attachment, that would not preclude the attaching creditor from contending that transfer is hit by Sec.53 of the Act in appropriate proceedings. The Division Bench hastened to add that such a contention of fraudulent transfer would not attract Explanation - IV to Sec.11 of the Code so as to bar the creditor from raising the question in appropriate proceedings. 10. It is relevant to note that in the reported case, trial court had allowed the application for lifting the attachment before judgment on the ground that the transfer had already been effected before attachment was made. That order was confirmed by the Division Bench. 11. The above decision applies to the facts of this case. Ext.A1, assignment deed is executed in favour of the appellant on 11.10.1999. Therefore, there could be no attachment of the property on 23.03.2002 on I.A.No.1020 of 2002 as if the property belonged to 2[nd] respondent (here, the plea of the 1[st] respondent is fraudulent transfer). In that view of the matter trial court ought to have allowed I.A.No.2171 of 2011 and lifted the attachment. First appellate court was not correct in dismissing the appeal and confirming the order of trial court which I found is erroneous. **ExSA No.14/2004** 6 12. As the Division Bench has pointed out, 1[st] respondent is not without any remedy. If he has a contention that the transfer made under Ext.A1 is fraudulent he can either file a separate suit challenging the assignment as fraudulent or, raise the question in execution proceeding without being affected by the bar under Explanation -IV to Sec.11 of the Code. In that view of the matter, finding entered by the courts below regarding the nature of assignment has to go leaving it open to the 1[st] respondent to work out his remedy as provided under law and as observed earlier and in **Rajan v. Jayashree Nayar** . 13. The substantial question of law raised is answered accordingly. ## Resultantly this Execution Second Appeal is allowed as under: i. Judgment and decree of learned Additional District Judge-I, Thrissur in A.S.No.252 of 2003 and the order dated 02.04.2003 of the learned Principal Sub Judge, Thrissur on I.A.No.2171 of 2002 in I.A.No.1020 of 2002 in O.S.No.149 of 2002 are set aside. ii. I.A.No.2171 of 2002 will stand allowed and the attachment effected as per order on I.A.No.1020 of 2002 is lifted. **ExSA No.14/2004** 7 iii. The finding entered by the courts below as to the nature of transfer as per Ext.A1 is set aside leaving it open to the 1[st] respondent to raise that plea in appropriate proceedings as referred to above and pointed out by the Division Bench in **Rajan v. Jayashree Nayar** (supra). iv. Parties shall suffer their cost through out. All pending interlocutory applications will stand dismissed. **THOMAS P.JOSEPH, Judge.** **cks**