GOVINDA MARAR Vs. GOVINDA KURUP

JUDGEMENT

(1.) THE plaintiff has come up in second appeal. He sued for redemption of a usufructuary mortgage as successor-in-interest of the mortgagor. THE plaint schedule property belonged to one Padmanabha Marar who had executed a mortgage deed to the defendant on 3 158 for a sum of Rs. 75. Padmanabha Marar assigned his jenmom right to the plaintiff on 181161. THE plaintiff thereupon instituted the suit on 23 3 62. THE mortgage was admitted by the defendant; but his contention was that he was already in possession of the property under a varom arrangement and even if the mortgage is redeemed the varom will survive. Padmanabha Marar had executed two promissory notes to him on the strength of which a suit, O S. 115/61, was filed by him and decree obtained. On the 8th of November, 1961 he applied for attachment of plaint schedule property in execution of the decree. Padmanabha Marar knowing about this, executed an assignment in favour of the plaintiff, who is his elder brother, benami without any consideration. THE document is affected by lis pendens and it is also invalid being one executed in fraud of creditors. THE trial court held that the assignment of the equity of redemption to the plaintiff is valid and allowed redemption. On appeal the learned District judge, however, has held that the assignment is in fraud of creditors and as such hit by the bar of S. 53 (1) of the Transfer of Property Act. THE suit was, therefore, held to be not maintainable, and it was accordingly dismissed.

(2.) IN this second appeal, the point arising is whether ex-Pi assignment in favour of the plaintiff was a sham document intended to defeat or delay the creditors of the assignor. On this point evidence is really lacking. The two circumstances relied on by the learned appellate judge in coming to the conclusion that Ex-P1 is a fraudulent document are: (1) that the executee is the executant's own brother; and (2) that it was executed soon after the passing of the money decree in O. S. 115/61 against the executant. I do not think that these circumstances by themselves are sufficient to justify the finding that the document is sham and fraudulent. Pw1 the assignee has sworn before court that the entire amount minus Rs. 75 reserved for redemption of the mortgage was paid in cash under Ex-P1. The amount was received by him to discharge some of his debts and also to meet the expenses in connection with his illness. Even if the finding that it is a sham transaction is upheld it can be declared so, only to the extent of the defendant's claim. The entire transaction cannot be declared cull and void at the instance of the defendant, who is only one of the creditors, and the amount due to him is what is covered by the decree in O. S. 115/61. This position is well covered by authority. Venkatarama Iyer. J. , has observed in Nanjamma v. Rangappa (AIR. 1954 Mad. 173)that: "when a transfer is declared void as against creditors under S. 53 the result is not to annual 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. The learned judge has, in the course of his judgment, quoted Story on 'equity Jurisprudence" S. 371, wherein it was 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 conveyance, therefore, can be declared void and unenforceable only as against the defendant to the extent of the debt outstanding in his favour.

(3.) TO the same effect is a Bench Decision of the Kerala high Court in People's Cooperative Bank v. Ayyana Pillai (1958 K. LT. 925 ). The following observation of the learned judges in that "case would repay perusal in the present case also. " The learned judges held: "it has been found by the two lower courts and also accepted, by our learned brother Mr. Justice Joseph, that the delivery to the plaintiff under Ex-C was not actual delivery but only a symbolical delivery. From the dates mentioned at the beginning of the judgment it will be clear that the attachment, decree and delivery proceedings in favour of the defendant were all during the pendency of 'the mortgage suit in which the plaintiff became ultimately the purchaser of the properties. That a court sale in execution of a money decree held subsequent to the institution of a mortgage suit is vitiated by the doctrine of lis pendens, is laid down in Subramonian Iyer v. Vaidyanatha iyer (1943 T. L. R. 133) TO a similar effect is the decision of 'the Division Bench of the T. C. High court reported in Madachi. v. Lakshmi (1950 I. L. R. T. C. 636)by Mr. Justice Koshi (as he then was) and Mr. Justice Sankaran. The learned judges have reviewed the case law and held that, it is. settled law that the sale of the property involved in a mortgage suit, conduced during the pendency of that suit is affected by the doctrine of lis pendens. It is not necessary here also to multiply authorities on this point, excepting to refer also to the decision of the Privy Council reported in Jadunath v. Parameswar (AIR. . 1940 P. C. 11 ). There, their Lord ships have put very clearly the position of a mortgagee decree-holder auction purchaser in relation to that of a money decree holder auction purchaser. TO quote: