Summary
| Category | Data |
|---|---|
| Court | Supreme Court of India |
| Case Number | C.A. No.-014407-014407 – 2025 |
| Diary Number | 23491/2023 |
| Judge Name | HON’BLE MR. JUSTICE R. MAHADEVAN |
| Bench |
HON’BLE MRS. JUSTICE B.V. NAGARATHNA HON’BLE MR. JUSTICE R. MAHADEVAN |
| Precedent Value | Binding authority on limits of attachment before judgment and scope of Section 53 TPA |
| Overrules / Affirms |
|
| Type of Law | Civil Procedure Code; Transfer of Property Act |
| Questions of Law | Whether a sale deed executed prior to institution of suit precludes attachment before judgment under Order XXXVIII Rule 5 CPC, and whether fraudulent transfer must be challenged exclusively under Section 53 of the Transfer of Property Act |
| Ratio Decidendi | The Court held that attachment before judgment under Order XXXVIII Rule 5 CPC requires that the property belong to the defendant on the suit-date; a deed executed prior to filing cannot be attached. Attachment before judgment is a protective remedy and cannot be converted into a substantive inquiry under Section 53 TPA. Fraudulent transfer must be challenged under that Act. |
| Judgments Relied Upon |
|
| Logic / Jurisprudence / Authorities Relied Upon | Interpretation of Order XXXVIII Rules 5–10 and Order XXI Rule 58 CPC as amended in 1976; statutory scheme distinguishing protective attachment procedures from substantive fraud proceedings; burden of proving intent to defraud under Section 53 TPA resting on creditor |
| Facts as Summarised by the Court | The appellant purchased property by registered sale deed dated 28 June 2004. A suit for ₹ 43.8 lakhs was filed on 18 December 2004 and attachment before judgment was ordered on 13 February 2005. The trial and High Courts held the transfer fraudulent under Section 53 TPA and remanded quantification of sale consideration. The purchaser appealed to the Supreme Court. |
Practical Impact
| Category | Impact |
|---|---|
| Binding On | All subordinate courts |
| Persuasive For | Other High Courts |
| Follows |
|
What’s New / What Lawyers Should Note
- Reaffirms that Order XXXVIII Rule 5 CPC cannot support attachment of property already transferred before suit-filing.
- Clarifies that third-party claim petitions under Order XXXVIII Rule 8 read with Order XXI Rule 58 CPC cannot substitute for Section 53 TPA proceedings.
- Emphasises burden of proof for fraudulent intent rests on the alleging creditor; suspicion or partial cash consideration is insufficient.
- Confirms that duly registered sale deeds with consideration prevail over subsequent attachment before judgment.
Summary of Legal Reasoning
-
Statutory scheme
- Order XXXVIII Rules 5–10 CPC provide a protective remedy to secure prospective decrees, requiring property to belong to the defendant on suit-date for attachment.
- Order XXI Rule 58 CPC (1976 Amendment) and Rule 8 CPC integrate third-party claim adjudication into execution and pre-execution proceedings.
- Section 53 TPA exclusively governs voidable fraudulent transfers with saved rights of bona fide transferees.
-
Application to facts
- Registered sale deed dated 28 June 2004 completed prior to the 18 December 2004 suit; essential condition for attachment under Rule 5 unmet.
- Trial and High Courts erred by treating claim petition as Section 53 TPA inquiry; claim under Rule 8 must respect pre-existing rights.
- No cogent evidence of intent to defeat or delay creditors; mere suspicion or antecedent liabilities do not satisfy Section 53 requirements.
-
Precedential support
- Hamda Ammal: sale deed execution pre-suit prevails over attachment.
- Vannarakkal & Rajender Singh: an antecedent agreement for sale creates an obligation attaching to property, limiting attachment rights.
Arguments by the Parties
Petitioner (Appellant)
- Attachment before judgment (Order XXXVIII Rule 5) cannot attach property transferred before suit-institution.
- Courts below wrongly treated claim petition as Section 53 TPA dispute; registration of sale deed prevails.
- No evidence of mala fide intent; burden of proof for fraud on respondent, not transferee.
- Delay in filing claim petition did not prejudice bona fide transferee.
Respondent No. 1 (Plaintiff)
- Order XXXVIII Rule 8 read with Order XXI Rule 58 CPC allows adjudication of fraudulent transfer claims within attachment proceedings.
- 1976 Amendment broadened scope to include Section 53 TPA issues; Hamda Ammal exception does not apply to fraud cases.
- Narrow construction would enable debtors to defeat creditors by collusive transfers.
Factual Background
In May 2002 an agreement for sale was executed acknowledging a ₹ 17.25 lakh liability. On 28 June 2004 the seller executed a registered sale deed in favour of the purchaser upon payment of balance consideration. The purchaser took possession and ran guest houses. On 18 December 2004 the creditor sued for ₹ 43.8 lakhs and obtained attachment before judgment on 13 February 2005. The purchaser filed a claim petition in April 2007; the trial and High Courts held the transfer fraudulent under Section 53 TPA and remanded quantification issues.
Statutory Analysis
- Order XXXVIII Rules 5–10 CPC: Provide for attachment before judgment as a protective remedy; require that property belong to defendant on suit-date; integrate third-party claims via Rule 8.
- Order XXI Rule 58 CPC: Post-1976, mandates execution courts to determine all questions of right, title or interest in attached property, giving orders decree-like effect; Rule 8 extends this to pre-judgment attachments.
- Section 53, Transfer of Property Act: Voidable transfers made with intent to defeat or delay creditors; saves bona fide transferees for consideration; creditor’s exclusive remedy via substantive suit or execution objection.
Alert Indicators
- ✔ Precedent Followed