N N L RAMASWAMI CHETTIAR Vs. MALLAPPA REDDIAR

JUDGEMENT

(1.) The decision of the Full Bench in Subramaina Aiyar v. Muthia Chettiar (1917) I.L.R. 41 M. 612 affirmed the decision in Palaniandi Ghetti v. Appavu Chetti that a conveyance offending against the provisions of Section 52 of the Transfer of Property Act can only be avoided in a suit property instituted for that purpose, and that consequently in a suit by an unsuccessful claimant under Order 21, Rule 63 of the Civil Procedure Code it is not open to the attaching decree-holder to plead that the transfer by the judgment debtor to the claimant was fradulent. This ruling has since been questioned in two cases in this Court, Cheruthazath Abdulla Haji v. Cheriyandi Ibrahim Kutli (1918) 50 I.C. 959 and Pokker v. Chandrankandi Kunhamad (1918) 36 M.L.J. 231 as observed in the referring order of Spencer J, where many of Indian decisions are cited. The question has now been very fully argued before a Bench of five Judges, and after carefully considering all the arguments addressed to us I have come to the conclusion that the view taken by the two learned Judges of the Calcutta High Court in Abdul Kadir v. Ali Mia (1912) 15 C.L.J. 649 is right, and that there is nothing to prevent a creditor who has been defrauded, defeated or delayed from exercising the option given him by Section 53 of the Transfer of Property Act of avoiding the conveyance otherwise than by the institution of a suit for that purpose. If the framers of the Transfer of Property Act, who were of course thoroughly familiar with the English decisions on the subject, had intended that the creditor should only exercise this option by instituting a suit, I make no doubt that, in a measure which was. intended to be self-contained and to be administered in many places where English decisions are not readily available, they would have said so expressly. As they have not done so, we are in my opinion bound to apply the law that voidable transactions may be avoided by any open or unequivocal declaration, of an intention to avoid them as laid down by the House of Lords in Oakes v. Turquand (1867) L.R. 2 H.L. 325 and in numerous other cases.

(2.) I perfer to rest my opinion on the language of the section which we have to administer, but at the same time, I do not think that the English decisions, when properly understood, afford any support to the contrary view. The practice of requiring a creditor suing in Chancery to set aside a deed of fraudulent transfer to sue on behalf of all the creditors was, in my opinion, only another application of the well-known maxim that he who seeks equity must do equity. As observed by Mr. Kerly in his History of Equity at page 145, even after the two statutes of Elizabeth extended the powers of the Common Law Court to defeat fraudulent conveyances, recourse continued to be had to Chancery to set aside settlements in fraud of creditors, Naylor v. Baldevin. (1639-40) 1 Ch. Rep. 69 : 21 E.R. 528 This was no doubt owing to the superior facilities then possessed by the Court of Chancery for eliciting the truth in such cases owing to its power to examine the defendant and to grant discovery, which the Common Law Courts could not do. It is unnecessary to consider whether the Court of Chancery invariably required a judgment-creditor as a condition of obtaining relief to sue on behalf of all the creditors. In so far as it did so, it was merely an application of the well known equitable rule which was also applied in the more recent case of Reese River Silver Mining Co. v. Atwell (1869) L.R. 7 Eq. 347 It was there argued that there was no case in which a creditor had been allowed to bring such a suit when the debtor was still alive without first obtaining a judgment against him, but this contention was overruled, and a creditor who had not obtained judgment was allowed to sue; but, at the same time, leave was given to amend the bill (or plaint) by making it on behalf of all the creditors, a decision followed by Jenkins, C.J. in a similar case, Ishvar Tinappa v. Devar Venkappa. (1902) I.L.R 27 Bom. 146 That is not the question now before us, as the suit with which we are concerned is the statutory suit under Order 21, Rule 63.

(3.) This and the other Chancery cases cited in Palaniandi Chetty v. Appavu Chetty in my opinion, throw no light on the question whether under the statutes of Elizabeth it is not open to a creditor to avoid a fraudulent conveyance without suit or action, if he can do so effectively and is prepared to face the risk of having to pay damages should the conveyance ultimately be found not to have been fraudulent. That he can do so appears from two decisions cited by Sterling J, in Re Mouat (1899) I.Ch.D 31 where the creditor s rights at law and in equity are distinguished. In the very early case of Bethell v. Stanhope. (1601) Cro-Eliz 810 Where the testator shortly before his death had made a fraudulent gift of his goods to his daughter but had remained in possession of them, it was held that they were assets in the hands of his adminstrator, and that when the donee afterwards took them, it was a trespass against the administrator ; and in Shears v. Rogers (1832) 3 B and Ad, 362 Littledale J. observed "creditors had a right to the property which the deed purported to convey, and might enforce that right at law. The assignment was void as soon as the creditors claimed to treat it as such, though not till then.