R M NAGARATHNA MUDALIAR Vs. SMCHIDAMBARAM CHETTIAR

JUDGEMENT

(1.) This appeal arises out of a suit for specific performance filed by the plaintiffs against defendants 1 to 6.

(2.) The case for the plaintiffs is that defendants 1 to 3 were carrying on business as merchants, that there were dealings between the plaintiffs and defendants 1 to 3, such dealings consisting in the plaintiffs advancing moneys to the defendants and also standing sureties for them in the Bank of Madras, that about the date of the agreement to sell, evidenced by Ex. A, about Rs. 18,000 was due to the bank in respect of the suretyship transaction, that Rs. 8,000 odd was due to the plaintiffs themselves by defendants in respect of moneys given as loans, that the defendants wanted money to pay some other pressing debts and asked for a loan and that Rs. 8,000 odd was advanced in cash and that for this sum of Rs. 35,000, made up of these transactions referred to, the defendants executed a promissory note filed as Ex. B in the case and an agreement to sell ten velis of land evidenced by Ex. A in the case, the agreement being that, if the amount due on the promissory note, Ex. B, was not paid in one month, the lands specified in Ex. A covering about 10 velis should behold for the consideration of Rs. 35,000. Defendants 1 to 3 were adjudicated insolvents and the Official Receivers have been brought on the record. The Official Receivers are defendants 7 and 8 in the case. Defendant 5 and 6 are attaching creditors and defendants 4 is the minor brother of defendant 3. Defendant 1 was ex parte and the plea of defendants 2 and 3 was that, as there was no consideration for the agreement, it was not binding on them. It was pleaded that there was a variation, a material alteration, in the agreement Ex. A, that the original agreement which stipulated six months for payment was altered into one month. It is contended that that alteration vitiates the transaction and makes the contract-unenforceable. It is also pleaded that the transaction was a transaction which was entered into not bona fide but to defraud creditors and that the agreement cannot be specifically enforced because it was in fraud of creditors.

(3.) The Subordinate Judge finds that there was full consideration for this document. He also finds that there was no alteration and that, although six months was originally mentioned in the document, it was before execution altered into one month, but he is of the opinion that the transaction evidenced by Ex. A cannot be enforced as, in his view, although the full consideration passed, the transaction was entered into with a view to defeat, defraud and delay creditors. It is not clear from his judgment whether he relies on Section 53, T. P. Act, or Section 54, Prov. Ins. Act. The remarks in the concluding portion of his judgment seem to imply that he had these two sections in view. He dismissed the suit for specific performance, but passed a decree for Rs. 35,525, against defendants 1 to 3 personally and the joint family properties of defendant 4. Against this decree the plaintiffs have appealed.