Decided on February 05,1953



Venkatarama Ayyar, J. - (1.) This is an appeal by the plaintiff against the judgment and decree in A. S. No. 26 of 1948 on the file of the District Court, Anantapur, which confirmed the decree of the District Munsif, Penukonda, in O. S. No. 238 of 1946. Defendants 6 and 7 are brothers and they owned items 1 and 2 and a half share in item 3 as cosharers, each being entitled to a moiety thereof. On 5-8-1932 they executed a deed of gift Ex. A, 1 settling the said properties along with others on the plaintiff who is the daughter of defendant 7. At that time defendant 6 was indebted to defendant 4 under pro-notes dated 15-3-1932 and 25-7-1932. On 20-7-1935 defendant 6 agreed to sell item 3 to defendant 4 in discharge of the promissory note dated 25-7-1932; and he having defaulted in executing a sale deed in pursuance of the agreement, defendant 4 filed O. S. No. 78 of 1937 on the file of the District Munsif's Court, Penukonda for specific performance of the agreement and that was decreed with costs on 3-3-1937. In execution of this decree, a sale deed was executed by the Court in favour 01 defendant 4 under Order 21, Rule 34, Civil P. C. and possession was also obtained under the sale deed. Defendant 4 then filed O. S. No. 232 of 1933, District Munsif's Court, Penukonda, for a declaration that the gift deed Ex. A. 1 was in fraud of creditors and not binding on them and that was decreed on 17-9-1940. There was an appeal against that decree, A. S. No. 161 of 1940, District Court, Anantapur, and therein the decree in O. S. No. 232 of 1938 was confirmed "with the clarification that the decree does not affect the half share of Kamam Ramaswami (defendant 7) in the properties gifted, but only the half share of defendant 1 (present defendant 6)." This decision was affirmed on appeal to the High Court in S. A. No. 858 of 1942. Defendant 4 then applied in execution to recover the costs decreed in O. S. No. 78 of 1937 and in E. P. No. 310 of 1943 items 1 and 2 were sold on 5-6-1944 and purchased by defendant 3. Thereupon, the appellant instituted the suit out of which the present appeal arises for establishing her title to items 1 to 3 on the basis of the gift deed Ex. A. 1. Both the Courts have held that by reason of the decree in O. S. No. 232 of 1938 her title cannot prevail as against that of defendants 3 and 4 and dismissed her action. The plaintiff prefers this second appeal.
(2.) Mr. A. Bhujanga Rao, the learned advocate for the appellant, urged that the decree in O. S. No. 232 of 1938 declared Ex. A. 1 void only as against the creditors of defendant 6; that the right now claimed by defendant 4 is not as a creditor of defendant 6 but as his transferee under an agreement dated 20-7-1935 and perfected by conveyance in execution of the decree in O. S. No. 78 of 1937, District Munsif's Court, Penukonda, and that Ex. A. 1 is not void as against such a transferee. It was further contended that the court sale of items 1 and 2 in execution of the decree in O. S. No. 78 of 1937 could not confer greater rights than the transfer in pursuance of that decree in favour of defendant 4 and that defendant 3 who is a purchaser of those items cannot set up his title as against the plaintiff, as he is neither a creditor of defendant 6 nor
(3.) It is undoubted law that when a transfer is declared void as against creditors under Section 53, T. P. Act, the result is not to annul it altogether, but only to render it inoperative as against creditors and that too only to the extent necessary to satisfy their claims; and subject to their claims, the transaction is valid and enforceable. In Story on "Equity Jurisprudence " Section 371, the law is thus stated: "A conveyance of this sort (it has been said, with great truth and force) is void only as against creditors; and then only to the extent in which it may be necessary to deal with the conveyed estate for their satisfaction. To this extent, and to this only, it is treated as if it had not been made. To every other purpose it is good. Satisfy the creditor, and the conveyance stands." The effect of the declaration made in O. S. No. 232 of 1938 that the gift deed was void as against creditors is, therefore, not to extinguish the title of the appellant under Ex. A. 1, but to render it subject to the claims of the creditors. The contention of the Advocate for the appellant thus far is unexceptionable.;

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