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Category: Transfer of property under litigation, Fraudulent Transfer

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Transfer of property under litigation, Fraudulent Transfer

Abdul Shukoor v. Arji Papa Rao AIR 1963 SC 1150

ISSUE:

Whether the suit tannery sale deed was executed in fraud of creditors and thus, not binding?
Whether the sale deed in favour of the plaintiff is a genuine transaction?
Whether a suit under Section 53 of the Transfer of Property Act was to be filed by a representative of all the creditors and not just a single creditor?
Whether if the debtor had other property that would serve the interests of the creditors, would Section 53 still apply?

RULE:

In the present case, the court considered multiple factors to come to the conclusion that the transfer of the suit tannery was done with an intention to delay/defeat the creditors.
Knowledge and concurrence on behalf of the plaintiff was enough to prove that the sale of the suit tannery was a scheme by Lala to put the property out of the reach of creditors.

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Transfer of property under litigation, Fraudulent Transfer

Guruswamy Nadar v. P Lakshmi Ammal through LRs & Ors (2008) 5 SCC 796

ISSUE:

What issue would lis pendens (pending legal action) have on the subsequent sale of the property to the second buyer?

RULE:

In normal circumstances, the Court’s decision would only be binding on the parties to the dispute. In this case, however, the second purchaser was also bound by the Court’s decision.
The rights of a subsequent buyer are not to be annulled but simply be made subservient to the rights of parties already in litigation.

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Transfer of property under litigation, Fraudulent Transfer

Jayaram Mudaliar v. Ayyaswamy AIR 1973 SC 569

ISSUE:

Whether lis pendens would apply to the sale in question?
Whether public auctions are an exemption to Section 52 of the Transfer of Property Act?

RULE:

Section 52 applies not only to actual transfers or rights but to other dealings by any party to the suit or proceeding so as to affect the right of another party.
Where it is an outside agency which proceeds against the subject matter of the litigation without provocation by the litigating party, the transaction will be unaffected by Section 52 of the Transfer of Properties Act.

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Transfer of property under litigation, Fraudulent Transfer

Madhukar Nivrutti Jagtap v. Smt. Pramilabai (2020) 15 SCC 731

ISSUE:

Whether the transfer made during the pendency of suit to third parties is illegal?

RULE:

The effect of doctrine of lis pendens is not to annul all the transfers effected by the parties to a suit but only to render them subservient to the rights of the parties under the decree or order which may be made in that suit.

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