BANDARU SUBBARAIDU Vs. ALLURI SATYANARAYANA RAJU

JUDGEMENT

(1.) This second appeal is against the decree and judgment of the learned Subordinate Judge of Amalapuram, in A. S. No. 51 of 1955 which reversed the decree and judgement of the District Munsif, Razole, in O. S. No. 101 of 1953.( The trial court found that the mortgage (Ex. B-1) executed by defendants 2 to 6 on 25-2 1953 in favour of the 1st defendant is a sham and collusive document brought into existence with a view to defraud the creditors and that the plaintiff is entitled to a declaration that it is null and void. On appeal, the learned Subordinate Judge was of the view that what was alleged by the plaintiff is that Ex. B-1 was untrue and a sham transaction and that therefore the suit is not maintainable under Section 53 of the Transfer of Property Act. As the lower appellate court disposed of the appeal merely on the question of law which was taken as a preliminary point, I called for a finding in regard to issue No. 1. The learned Subordinate Judge submitted his finding that the transaction was entered into fraudulently with a view to defeat and delay the creditors of defendants 2 to 6 and that on the date of Ex. B-1, there were several creditors, viz., the plaintiff, defendants 7 and 8, P. Ws. 2 and 4, who were pressing the defendants 2 to 6 for payment. The result is while the plaintiff succeeded in getting concurrent findings in his favour on issue No. 1, he failed to obtain a decree as it is considered by the lower appellate court that this suit by a creditor to declare a mortgage in favour of another creditor as not binding is not one maintainable either under Section 53 of the Transfer of Property Act or under Section 42 of the Specific relief Act.

(2.) A few short facts need be noticed as they become necessary to appreciate the question of law that falls for consideration. Defendants 2 to 6 constituted a joint Hindu family and owned properties which is the subject matter of mortgage, Ex. B-1. The plaintiff obtained a decree against defendants 2 and 3 in S.C. 554/52 on the file of the District Munsifs Court, Razole on the foot of a promissory note dated 19-5-52 executed by the 2nd defendant in favour of the plaintiff and on two hand loans. When the plaintiff was about to take out execution of the decree of the Small Causes Court in his favour, defendants 2 to 6 executed the impugned mortgage Ex. B-1 on 24-2-1953 in favour of the 1st defendant for a sum of Rs. 1,500.00.It is urged that the 1st defendant is a close friend of defendants 2 and 3. Defendants 7 and 8 are other creditors of the joint family of the defendants 2 to 6, who obtained a decree in S. C. No. 547 of 1952 on the file of the District Munsifs Court, Razole. They have been bringing the properties for sale subject to the mortgage Ex. B-1 in execution of their decree. There are also other creditors, who are P. Ws. 2 and 4. At this stage, the plaintiff filed a suit out of which this second appeal arises for a declaration that the mortgage deed, Ex. B-1 dated 24-3-1953 is not true and valid and not supported by consideration with a view to defeat the claims of the creditors of defendants 2 to 6 and that it does not bind the plaintiffs and other creditors.

(3.) In the trail Court, the question of maintainability of the suit by the plaintiff who though a creditor has only a decree in his favour, had been mooted by the learned District Munsif. Apart from noting the contentions of the parties and observing that "a reading of the whole plaint and the approach to the case by the plaintiff appears to be one that falls within the scope of Section 53 of the Transfer of Property Act", he had not gone into the question fully. The learned Subordinate Judge took up the only question regarding the maintainability of the suits and construing the plaint as containing the allegations that the mortgage transaction was brought in to existence to screen the properties of defendants 2 to 6 and that it is also a sham transaction which is not supported by any consideration, held the view that what the plaintiff seeks to attack is not a real transaction which is fraudulent in nature, but a transaction which is sham and nominal in character and under which no title or interest was intended to be conveyed to the mortgagee 1st defendant and found, following the decision in Krishnaveni Ammal v. Soundararajan, AIR 1945 Mad 53, that the suit is not maintainable.