P. V. Mohammed v Mannil Abdul Gadhafi alias Abdul Gadhafi Mannil and Rajeev Menon and Sabiha

**“C.R.”** ## **IN THE HIGH COURT OF KERALA AT ERNAKULAM** ## **PRESENT** **THE HONOURABLE MR. JUSTICE ANIL K.NARENDRAN** ## **&** **THE HONOURABLE MR.JUSTICE P.G. AJITHKUMAR** **WEDNESDAY, THE 28[TH] DAY OF SEPTEMBER 2022 / 6TH ASWINA, 1944 R.F.A.(MISC.) NO. 1 OF 2019 (H)** **AGAINST THE ORDER DATED 01.12.2018 IN I.A.NO.2520 OF 2017 IN O.S.NO.230 OF 2016 OF THE PRINCIPAL SUB COURT, ERNAKULAM** ## **APPELLANT/PLAINTIFF:** ## **P.V.MOHAMMED,** **AGED 64 YEARS, S/O.VEERANKUTTY, RESIDING AT PUTHENPEEDIKAYIL, 265, CHELAKKODE, THALAPPILLY TALUK, THRISSUR DISTRICT. REPRESENTED BY HIS POWER OF ATTORNEY HOLDER, ABDUL AZEEZ, AGED 59 YEARS, S/O.MOHAMMED, RESIDING AT LAVANYA HOUSE, VADAKKEMANNA, KODUR MALABAR, MALAPPURAM DISTRICT-676 504** **BY ADVS. SUMATHY DANDAPANI (SR.) MILLU DANDAPANI** ## **RESPONDENTS/CLAIM PETITIONERS & DEFENDANTS 1 & 2:** - **1 MANNIL ABDUL GADHAFI ALIAS ABDUL GADHAFI MANNIL, AGED 42 YEARS, S/O.MANNIL RAYAROOTH ABDULLA, MANNIL HOUSE, PERINGATHUR P.O., PIN -670 675, KANNUR DISTRICT, REPRESENTED BY HIS POWER OF ATTORNEY HOLDER VIJAYA KRISHNAN, S/O.P.K.SIVAN PILLAI, AGED 29 YEARS, GIRIJA MANDHIR, UC COLLEGE P.O., ALUVA, PIN-683102.** 2 R.F.A.(Misc) No.1 of 2019 **2 RAJEEV MENON, S/O.LATE MADHAVAN NAIR, AGED 43 YEARS, FLAT NO. 606, KGL, MARINE DRIVE, ERNAKULAM, PIN -682 031.** - **3 SABIHA,** **W/O.RAJEEV MENON, S/O.LATE MADHAVAN NAIR, AGED 43 YEARS, FLAT NO.606, KGL, MARINE DRIVE, ERNAKULAM – 682 031.** **R1 BY ADVS. SRI.REJI GEORGE SRI.BINOY DAVIS SRI.R.P.SREENIVASAN SRI.RAMU RAJENDRAN** **THIS REGULAR FIRST APPEAL(MISCELLANEOUS) HAVING COME UP FOR FINAL HEARING ON 19.08.2022, THE COURT ON 28.09.2022 DELIVERED THE FOLLOWING:** 3 R.F.A.(Misc) No.1 of 2019 ## **JUDGMENT** ## Ajithkumar, J. The Principal Sub Court, Ernakulam, allowed I.A.No.2520 of 2017 in O.S.No.230 of 2016, which was filed under Order XXXVIII, Rule 8, read with Order XXI, Rule 58 of the Code of Civil Procedure, 1908. As per that order, attachment of A to C schedule properties made by the court in I.A.No.4876 of 2016 on 27.02.2017 was lifted. The said order is under challenge in this appeal filed under Section 96 read with Order XLI, Rule 1 of the Code. 2. O.S.No.230 of 2016 was filed by the 1[st] respondent seeking a decree of realisation of Rs.5.42 crores from respondent Nos.2 and 3. I.A.No.4876 of 2016 was filed by the 1[st] respondent seeking attachment of A to C schedule properties belonging to respondent Nos.2 and 3. As per the order dated 27.02.2017 those properties were attached under Order XXXVIII, Rule 5 of the Code. The 1[st] respondent, claiming that he came to know about the attachment when he obtained encumbrance certificates, filed I.A.No.2520 of 2017. 4 R.F.A.(Misc) No.1 of 2019 He contended that he purchased the said properties as per Exts.A1 to A3 sale deeds much before the order of attachment and he being a bona fide purchaser, the attachment was illegal and liable to be lifted. 3. The 1[st] respondent resisted the said application by filing a counter. He contended that the transaction between the appellant and respondents Nos.2 and 3 took place much earlier and when he realised the deception perpetrated by respondents Nos.2 and 3 to extract money from him, he made complaints before the police. Investigation into the matter was eventually taken over by the Central Bureau of Investigation in 2015 itself. Consequent to the dismissal of the application for anticipatory bail filed by them, respondent No.2 was arrested and detained in jail. It was much thereafter, in May 2016 alone, the 1[st] respondent purchased the petition schedule properties. He purchased knowing fully well about the transaction between the appellant and respondent Nos.2 and 3. Having purchased the properties with the knowledge of the pendency of criminal cases against respondents No.2 and 5 R.F.A.(Misc) No.1 of 2019 3, and their liability towards the appellant, the transfers in favour of the 1[st] respondent are fraudulent transactions and unsustainable in law. 4. The Sub Court received Exts.A1 to A3 and B1 to B12 in evidence. After hearing both sides, I.A.No.2520 of 2017 was allowed holding that there was nothing on record to show that at the time of sale, the 1[st] respondent was aware of the transaction or to probabilize that the assignments vide Exts.A1 to A3 were anyway fraudulent. 5. On 18.02.2019, this appeal was admitted. Operation of the impugned order was stayed initially for a period of two weeks. The stay has been extended from time to time and is still in force. 6. Heard the learned counsel appearing for the appellant and the learned counsel appearing for the 1[st] respondent. Despite service of notice, respondents No.2 and 3 did not choose to appear before this Court. 7. The sole question that arises for consideration is, whether any interference to the order of the court below 6 ## R.F.A.(Misc) No.1 of 2019 lifting attachment of the petition schedule properties made as per the order in I.A.No.4876 of 2016 is required. 8. Exts.A1 to A3 are the sale deeds by virtue of which, the 1[st] respondent purchased A to C schedule properties. He purchased A-schedule property from the 2[nd] respondent on 18.05.2016 for a sale consideration of Rs.16,46,000/- as per Ext.A1. He purchased B-schedule property from the 3[rd] respondent for a sale consideration of Rs.34,70,000/- on 19.05.2016 as per Ext.A2. He purchased C- schedule property from the 3[rd] respondent on 30.05.2016 for a sale consideration of 1,10,00,000/- as per Ext.A3. Those properties were attached by the Sub Court, Ernakulam, as per order dated 27.02.2017 in I.A.No.4876 of 2016. Indisputably, the attachment was ordered much after the execution of Exts.A1 to A3. Therefore, the question arises is whether the transactions as per Exts.A1 to A3 are fraudulent ones coming within the purview of Section 53 of the Transfer of Property Act, 1882. 9. The provisions of Order XXI, Rule 58 of the Code 7 ## R.F.A.(Misc) No.1 of 2019 insists on conducting a detailed enquiry in a claim petition since questions to be considered are relating to the right, title or interest of the claimant in the property attached. The learned counsel appearing for the appellant would submit that, however, the court below acting upon Exts.A1 to A3 alone, held that the 1[st] respondent obtained valid title to the A to C schedule properties and hence the attachment would not sustain. 10. It is pointed out that a crime was registered by the C.B.I. against respondents No.2 and 3 as early as on 13.08.2015 as could be seen from Ext.B11 and having the second respondent been arrested and committed to judicial custody in the said case, the 1[st] respondent could not have shown ignorance of the transactions between the appellant and respondents No.2 and 3. Further, it is contended that three items of property worth crores of rupees were purchased by the 1[st] respondent by successive documents, executed on 18.05.2016, 19.05.2016 and 30.05.2016 and that by itself would show the clandestine nature of the 8 R.F.A.(Misc) No.1 of 2019 transactions. Three documents were registered at three different Sub Registrar's Offices, namely, Mavelikkara, Ernakulam and Virugambakkam in Chennai in quick succession which would further establish the fraudulent nature of the transactions. When the deception permeated by respondent Nos.2 and 3 upon the appellant is prima facie evident from the documents on record, the court below ought not to have lifted the attachment in such a peremptory manner. 11. The learned counsel appearing for the 1[st] respondent, on the other hand, would submit that the time gap between the dates of sale and attachment is enough to hold that there was no mala fides on the part of the 1[st] respondent. The learned counsel further would submit that the claim in the plaint was realisation of damages, which was unliquidated and such a claim cannot be termed as a debt coming within the purview of Section 53 of the T.P.Act, and therefore, it was not available for the appellant to contend that he was a creditor and the attachment should have been 9 R.F.A.(Misc) No.1 of 2019 sustained holding that Exts.A1 to A3 are fraudulent transactions. 12. The learned counsel appearing for the 1[st] respondent further would contend that the suit was rejected as early on 29.03.2019 and therefore the attachment ceased to exist with the result, the challenge to the impugned order dated 01.12.2018 lost its significance. The learned counsel appearing for the appellant pointed out that the dismissal of O.S.No.230 of 2016 as per judgment dated 29.08.2019 was set aside by this Court and when the suit has already been restored, the attachment would also revive. Therefore, the question, whether or not the attachment is liable to be sustained in the light of the claim raised by the 1[st] respondent needs to be answered. 13. The question whether an order of attachment before judgment under Order 38, Rule 5 of the Code will revive if the suit which happened to be dismissed for default is restored to file is no more _res integra_ . The majority judgment in **Vareed Jacob v. Sosamma Geevarghese and others** 10 R.F.A.(Misc) No.1 of 2019 **[(2004) 6 SCC 378]** answered that question. After considering the conflicting decisions on the point, majority view rendered on the question is that once the dismissal of the suit is set aside, the plaintiff must be restored to the position in which he was situated when the court dismissed the suit for default and therefore, interlocutory orders, which have been passed before the dismissal would stand revived along with the suit, unless the court expressly or by implication excludes the operation of such interlocutory orders. Here, the suit was dismissed on 29.03.2019. As per the judgment dated 14.03.2022 in O.P.(C) No.1830 of 2019 the order of dismissal of the suit was set aside. The learned counsel appearing for the appellant submitted that the suit was already restored on making payment of the balance court fees. In the light of the principle laid down in **Vareed Jacob** (supra), the order of attachment in I.A.No.4876 of 2016 dated 27.02.2017 had revived when the suit was restored, subject, of course, to the order dated 1.12.2018 in I.A.No.2520 of 2017. 11 R.F.A.(Misc) No.1 of 2019 14. Can a question that arises between the plaintiff and the third party claimant pertaining to an order under Order XXXVIII, Rule 5 of the Code be decided with reference to the provisions contained in Section 53 of the T.P.Act during pendency of the suit, is also a question mooted by the learned counsel appearing for the 1[st] respondent. Views on this question were also conflicting. In **Rajan @ Rajan Gopinathan v. Dr.D.Jayasree Nayar [2010 (1) KLT 142],** it was held that the objection to a claim petition based on the pleas available under Section 53 of the T.P.Act need not be considered if the claim was raised during the pendency of the suit, that is to say, by filing an application under Order XXXVIII, Rule 8 of the Code. Resolving the conflict and overruling the decision in Rajan’s case, a Full Bench of this Court in **Verizon Builders and Developers LAtd. and another v. Jyothi Susan John and others [2018 (5) KHC 821]** held as follows: “16. Therefore, we are of the view that insofar as the procedure under Order XXXVIII Rule 8 has incorporated Order XXI Rule 58 for adjudication of claims, any objection filed regarding the claim has to be adjudicated 12 R.F.A.(Misc) No.1 of 2019 in accordance with law. When a claim is made in respect of a property by a third party claimant stating that the property attached has been assigned in his favour, even prior to the date of attachment, necessarily, the plaintiff/respondent gets an opportunity to file an objection and contend that the transfer was fraudulent. Therefore, while considering the claim, it is quite inconceivable to observe that the objection to the claim petition regarding fraudulent transfer under Section 53 of the TP Act need not be considered. Hence, we are of the view that Rajan's case (supra) does not lay down the correct proposition of law.” (underline supplied) 15. Therefore, the plea raised by the appellant that the sales by virtue of Exts. A1 to A3 are fraudulent transactions requires consideration. As pointed out above, the 1[st] respondent purchased A to C schedule properties as per successive documents, Exts.A1 to A3. It is true that all the said documents were executed before the date of attachment. But the nature of transactions is curious. Three items of properties situated at Mavelikkara, Ernakulam and Chennai were sold by the respondent Nos.2 and 3 in favour of the 1[st] respondent on nearby dates. It was at a time when the 13 R.F.A.(Misc) No.1 of 2019 investigation in Crime No.RC5(E)2015 was being held by the C.B.I. against respondent Nos.2 and 3. Respondent No.2 was in jail for quite some time in connection with that case. The allegation was that those respondents giving false assurance that railway properties would be leased out and also by handing over forged documents in that regard extracted a huge sum of money from the appellant. A final report against respondents No. 2 and 3 in that crime has been filed in court also. Ext.P5 is a copy of the order of this Court in the Bail Application filed by respondents No. 2 and 3 in the said crime. In such circumstances, it can certainly be said that the appellant was the creditor and respondents No.2 and 3 were the debtors at the time when the sale as per Exts.A1 to A3 took place. The circumstances surrounding such sale deeds, which are pointed out above, speak for themselves that the intention of respondents No.2 and 3 was nothing but to defeat the interest of the appellant, who is a creditor. Therefore, the transactions under Exts.A1 to A3 certainly come within the mischief of Section 53 of the T.P.Act. 14 R.F.A.(Misc) No.1 of 2019 16. The learned counsel appearing for the 1[st] respondent raised yet another contention that going by the pleadings in the plaint in O.S.No.230 of 2016, the claim of the appellant is only compensation for the deceit said to have been perpetrated upon him and such a person cannot be a creditor. If so, the appellant has no right to contend even that the transactions that occurred much prior to the date of attachment are voidable. In this regard, the learned counsel for the 1[st] respondent invited our attention to the decision in **Resilikutty Chacko v. State of Kerala [1988 (2) KLJ 912]** and a passage at page No.354 in Winfield and Jolowics on Tort, 15[th] Edition, by W.V.H.Rogers. 17. In **Resilikutty Chacko** this Court observed that a debt can be defined as an obligation to pay an ascertained sum of money, and therefore, a claim for compensation does not come within that purview. In Winfield and Jolowics on Tort, the ingredients required to constitute ‘deceit’ for the purpose of initiating an action in tort are enumerated as follows:- 15 R.F.A.(Misc) No.1 of 2019 - “1. There must be a representation of fact made by words or conduct. 2. The representation must be made with the intention that it should be acted upon by the plaintiff, or by a class of persons which includes the plaintiff, in the manner which resulted in damage to him. 3. It must be proved that the plaintiff has acted upon the false statement. 4. It must be proved that the plaintiff suffered damage by so doing. 5. The representation must be made with knowledge that it is or may be false. It must be wilfully false, or at least made in the absence of any genuine belief that it is true.” 18. Going by the said observations the claim for damages by the appellant here is an action on deceit and the claim is for an unascertained sum of money. And, if the relief claimed in a suit is damages alone, the plaintiff may not be able to impeach, under the provisions of Section 53 of the T.P.Act, validity of the documents based on which the third party stakes a claim over the attached property. In this case, the position is totally different. The definite case of the appellant is that respondents No.2 and 3 received Rs.96 lakhs 16 R.F.A.(Misc) No.1 of 2019 from the appellant on the false promise of allotting railway property. Claiming that amount back and also compensation, amounting a total sum of Rs.5.42 crores, the suit was instituted. Therefore, it cannot be said that there is no claim in the plaint for any ascertained sum of money. It cannot also be said that there does not exist a creditor-debtor relationship between the appellant and respondents No.2 and 3. Hence, the said contention of the 1[st] respondent is unsustainable. 19. The question then is whether the 1[st] respondent is a transferee in good faith and for consideration. It is his burden to establish that fact. Apart from Exts.A1 to A3 there is nothing on record to ascertain the circumstances under which such transactions have taken place. Respondents No.2 and 3, who were facing serious charges of cheating and creation of false documents, had executed Exts.A1 to A3. It is impossible to believe that the 1[st] respondent, who claimed to have invested a huge amount for purchasing three properties in quick succession, which are situated at different places; not even in the same State, did not enquire about the liabilities of 17 ## R.F.A.(Misc) No.1 of 2019 the sellers. Quite curiously, it is not stated in Exts. A1 to A3 as to how the sale consideration was paid by the 1[st] respondent. Identical recitals Exts.A1 to A3 are that receipt of the consideration is acknowledged. It would further established the clandestine nature of the transactions. Considering all such facts and circumstances, we are of the view that the 1[st] respondent cannot be said a transferee in good faith and for consideration. 20. In the above view of the matter, we conclude that the court below totally erred in allowing I.A.No.2520 of 2017 so as to uphold the claim raised by the 1[st] respondent. That I.A could only be dismissed. Hence, the appeal is allowed and I.A.No.2520 of 2017 in O.S.No.230 of 2016 before the Principal Sub Court, Ernakulam is dismissed. **Sd/-** ## **ANIL K. NARENDRAN, JUDGE** **Sd/P.G. AJITHKUMAR, JUDGE** dkr 18 ## R.F.A.(Misc) No.1 of 2019 ## **APPENDIX** ## **PETITIONER ANNEXURES** **ANNEXURE A TRUE COPY OF THE NEWS ITEM APPEARED IN KAUMUDI ONLINE MEDIA DATED 24.05.2019. ANNEXURE B13 CERTIFIED COPY OF THE FINAL REPORT IN FIR RC 05(3)/2015/CBI/SCB/THIRUVANANTHAPURAM DATED 13.08.2015.**