K P RAMASWAMI NAICK Vs. LAKSHMANA KUDUMBAN

JUDGEMENT

(1.) These two connected second appeals arise out of two suits, O.S. Nos. 237 and 274 of 1928, on the file of the District Munsif's Court of Koilpatti for a declaration that the properties which they purchased in Court auction in execution of a decree in S.C.S. No. 939 of 1926 on the file of the District Munsif's Court at Koilpatti against the 2nd defendant belong to the 2nd defendant.

(2.) The case for the plaintiffs is that one Alagirisami Naick, P.W. 3, instituted S.C.S. No. 939 of 1926 on the file of the District Munsif's Court of Koilpatti and obtained a decree on 28th January 1927 against defendant 2, obtained an attachment of his properties on 12 March 1927, and the properties were brought to sale in execution of the decree obtained therein; and on 17 November 1927 the plaintiff in O.S. No. 237 of 1928 purchased seven items and the plaintiff in O.S. 274 of 1928 purchased two items on 4 January 1928 and when the plaintiffs applied for delivery of possession they were obstructed by defendant 1 on the ground that the said properties had been conveyed to his father by a sale deed Ex. 1 dated 3rd January 1927. The plaintiffs filed a petition for removal of the obstruction on 30 January 1928 and the said petitions were dismissed and hence the present suits were instituted for setting aside the order passed and for a declaration that the sale in favour of defendant l's father was a benami transaction brought about to defraud creditors of defendant 2. The case for the defendants is that defendant l's father purchased these properties for valuable consideration, the consideration being discharge of a prior mortgage in favour of one Rama Naick covered by Ex, 2 and another mortgage for Rs. 1,150 covered by Ex. 3 executed by defendant 2 in favour of defendant 1's father and cash Rs. 150. Further, the plaintiffs being auction, purchasers would have no locus standi to maintain the suit.

(3.) The District Munsif who tried the suits found that at the time when Ex, 1 was executed in favour of defendant l's father, defendant 2 was heavily indebted and there was already an attachment before judgment of the said properties obtained by another creditor, that the consideration recited in Ex. 1, namely mortgage in favour of defendant 1 and the pro-note debt alleged to have been discharged was all fictitious and the whole transaction was a nominal transaction brought about with a view to remove the property from the creditors for the benefit of defendant 2 and decreed the plaintiff's claim. On appeal the learned Subordinate Judge was of opinion that Ex. 1 was supported by consideration to the extent of Rs. 850, namely, Es. 700 paid in respect of the mortgage in favour of the Rama Naick, Ex. 2, and another sum of Rs. 150 being cash paid; but the balance of the consideration covered by Ex. 3 was a fictitous item and that Ex. 3 was not a real transaction but that the property was intended to be conveyed to defendant 1 though the sale must be deemed to have been executed by defendant 2 for the purpose of defeating or defrauding creditors. Nevertheless he held that the plaintiffs being only auction-purchasers who purchased the suit properties more than seven months after Ex. 1 and therefore subsequent transferees are not entitled to impeach the transaction under Section 53, T, P. Act, and therefore dismissed the plaintiff's suits.