SUBRAMANIA PILLAI Vs. DAKSHNAMURTHI MUDALIAR

JUDGEMENT

(1.) This is an application to revise the judgment of the Subordinate Court of Tinnevelly in Small Cause Suit No. 1476 of 1909. The plaintiff is the assignee of the rights of Nallu kannan, a ticket-holder in a chit conducted by the 1st defendant. Defendants Nos. 2 to 4 are the sons of the 1st defendant. The plaintiff gave notice of the assignment made to him to the 1st defendant. Subsequent to this notice, Nallakannan s right was attached by Subramania Pillai, who had obtained a decree against Nallakannan, and was brought to sale and purchased by the 5th defendant. The result is, there are two persons claiming the rights which Nallakannan originally had--the plaintiff who got an assignment from him, and the 5th defendant who purchased his right in Court-auction. The 5th defendant contended that the assignment in favour of the plaintiff was intended to defraud the creditors of Nallakannan and that, therefore, he and not the plaintiff was entitled to recover from the 1st to the 4th defendants the amount due for the ticket. This plea has been upheld by the Subordinate Judge, who finds that out of the consideration of Rs. 140 for the assignment, Rs. 105 was not paid for discharging a debt due by Nallakannan, as alleged by the plaintiff. The remaining Rs. 35 is said to have been paid to Nallakannan in cash before the Sub-Registrar. That amount is not said to have been used for the purpose of discharging any other debt of Nallakannan. I must accept the finding that the assignment in the plaintiff s favour was intended to defeat the creditors of Nallakannan. In fact the petition does not impeach the finding.

(2.) The question raised by the learned Counsel for the petitioner is that, even taking this to be the fact, he is entitled to recover, as his assignment, which was by a registered instrument, was completed by notice being given to the 1st defendant. There can be no doubt that the assignment was complete as between the plaintiff and Nallakannan and could not be impeached by the latter. But I think it is settled law that, although as between the transferor and transferee in the case of an assignment which is intended to defeat creditors, the assignor s rights must be regarded as having vested in the assignee, the creditors of the assignor are not bound by such an assignment and are entitled to attach the property assigned as being still the property of the assignor so far as the debts are concerned. It is the practice for creditors to attach property fraudulently assigned away by their judgment-debtors as being still property available for the satisfaction of their debts in execution of their decrees. When such an attachment is made, the assignee puts in a claim petition and the question is tried by the Court, whether the assignment is valid as against creditors, or invalid and, therefore, as not standing in the way of execution by the creditor who attaches the property as still belonging to the judgment-debtor so far as the satisfaction of the creditor s decree is concerned. And if the claim is allowed or disallowed and a regular suit is instituted either by the judgment-creditor or by the assignee, the validity of the assignment is determined in an original suit. So far, therefore, as Subramania Pillai, who obtained the decree against Nallakannan Pillai, was concerned, he must be regarded as having been entitled to attach the property notwithstanding the assignment in the plaintiff s favour; and if he could do so and impeach the plaintiff s right as assignee, I can find no good reason for holding that the purchaser at a sale held in pursuance of his attachment cannot also impeach the plaintiff s right.

(3.) The 5th defendant must have the same rights as Subramania Pillai to call in question the assignment in the plaintiff s favour; for otherwise the privilege that a decree-holder has to attach property that has been fraudulently assigned away, would be practically useless. I must, therefore, hold that the 5th defendant is entitled to show that his purchase is good as against the plaintiff s rights as assignee from Nallakannan Pillai.