GUNTUR NARASIMHAM Vs. NYAPATI NARAYANA RAO GARU

JUDGEMENT

(1.) The question to be decided in this appeal is one of limitation. This suit was filed under Section 53 of the Transfer of Property Act. The plaintiff, being the Receiver in insolvency represents the body of creditors of the insolvent. The transaction impeached is a mortgage, dated 27 July 1908, executed by the insolvent in favour of the defendant. The suit was filed on the 15 of February 1918.

(2.) The first question that arises is what is the Art. that is applicable? Article 120 seems to be the appropriate Article. The decisions seem to be to the same effect: see Authikesavaloo Naicker V/s. Shalt Abdulla 29 Ind. Cas. 62 : 2 L.W. 479 : (1915) M.W.N 337 and Venkateswara Aiyar V/s. Somasundram Chettiar 44 Ind. Cas. 551 : 7 L.W. 280 : (1918) M.W.N. 244. It was conceded before us, and, in my opinion, rightly that the Art. applicable is Art. 120. The more difficult question, however, is what is the starting point of limitation? On this point, there is no authority. Phillips, J., in Venkateswara Aiyar V/s. Somasundram Chettiar 44 Ind. Cas. 551 : 7 L.W. 280 : (1918) M.W.N. 244 expressed the view that the time runs from the date when the plaintiff had knowledge of the facts entitling him to relief. This though an obiter dictum is entitled to great weight as the point was fully considered by him. Krishnan, J , in the judgment under appeal, as I understand it, is not quite definite on the point. He thinks that limitation runs from the date when the creditor exercises his option; in the alternative from the date when he has knowledge of the facts that give him a right to relief. As I read his judgment he is more inclined to take the former than the latter view. It seems to me that he expressed the alternative view, as on the facts, whichever view was taken the same result followed. Krishnan, J., having held that the suit was filed in time, the defendant has filed this appeal and Mr. Jagannadha Das has argued the case very fully on his behalf. His contention is that the date of alienation gives the starting point. He supports his contention by relying on what I may describe as grounds of convenience. Before adverting to these grounds, I shall deal with the point with reference to the two provisions of law that have a bearing, viz.... Section 53 of the Transfer of Property Act and Art. 120 of the Limitation Act. Under Section 53 a transfer that offends against the rule enacted in it is voidable at the option of any person defrauded, defeated or delayed. Under Art. 120 the suit may be brought within six years of the date when the right to sue accrues. The question resolves itself into this. When does the light to sue accrues? If the transaction is voidable at the option of a creditor he may avoid it at any time at his pleasure. Section 53 does not say that, after the lapse of a certain time, he shall not be able to avoid the transaction. It does not prescribe a limit of time. What then constitutes the exercise of the option? In the words of Wallis, C.J. In Ramaswami Chettiar V/s. Mallappa Reddiar 59 Ind Cas 917 : 43 M 760 : (1920) M.W.N. 572 39 M.L.J. 350, 28 M.L.T. 173, 12 L.W. 475 a voidable transaction may be avoided by any open and unequivocal declaration of an intention to avoid it, see page 769 Page of 43 M.--[Ed.]. The right to sue accrues when this option is exercised. Under Art. 120 the suit may be instituted within six years from the date when the right to sue accrues. As that , right accrues, as I have shown, when the plaintiff exercises his option, the suit may be filed within six years from the date of the exercise of the option. The proper construction of the sections compels us to take this view and it seems to me that this is what Krishnan, J., intended to hold. If so, I entirely agree with him.

(3.) The alternative view, namely, that time begins to run from the date when the plaintiff becomes aware of the facts that entitle him to relief found favour with Phillips, J., in Venkateswara Aiyar V/s. Somasundram Chettiar 44 Ind. Cas. 551 : 7 L.W. 280 : (1918) M.W.N. 244. But a perusal of his judgment shows that only two theories were put forward before him namely,. (1) the date of alienation gives the starting point, (2) the date of knowledge. These were the two rival views that were placed before him and he preferred the view that knowledge gives the starting point.. His judgment leaves no doubt in my mind that if what may be compendiously described as the option theory was suggested to him, he would have gladly adopted it. Indeed in this connection, he uses the word "option" but does not go the necessary length. Section 53, it is needless to point out, does not take note of knowledge at all. It speaks of option and not of knowledge. Under Art. 95 of the Limitation Act which relates to a suit for relief on the ground of fraud, knowledge, no doubt, would be a material element, ior the prescribed period of three years runs from the date when the fraud becomes known to the party wronged. But the suit contemplated by Section 53 is not one for relief on the ground of fraud, and the knowledge of fraud to which Art. 95 refers is, therefore, not a material circumstance. Moreover, it is not necessary that there should be actual fraud to invalidate a transaction unless Section 53 as the second Clause of that section shows, which runs as follows:-- Where the effect of any transfer of immoveable property is to defraud, defeat or delay any such person, and such transfer is made gratuitously or for a grossly inadequate consideration, the transfer may be presumed to have been made with such intent as aforesaid.