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IN THE COURT OF THE IV ADDL. DISTRICT JUDGE:: NELLORE

Friday, this the 7th day of April 2017
Present::CH. RAMACHANDRA MURTHY,
IV Addl. District Judge, Nellore.
A.S.No.157/2011

1. Thummala Ramanaiah
son of Rathnaiah, Hindu, aged
about 40 years, Agriculturist, and
residing at Ward No.3, Door No.220,
Baba Club, Nawabpet, Nellore. ..... Appellant/Petitioner
Vs.
1. Thirupati Sundaraiah,
son of Narasaiah, Hindu, aged about
…. First respondent/D.Hr
62 years, money lender, residing at
Leburu village, Indukurpet Mandal,
S.P.S.R.Nellore District

2. Shaik Wazida Begum

wife of Dasthagiri Saheb, aged
about 50 years, and residing at I.R.C
… Second Respondents/J.Dr
Colony, first Street, P.L.Naidu
Nagar, Mypadu Road, Nellore.
Appeal preferred under Order 41 Rule 1 of Code of Civil Procedure
against the Order Decree in E.A.No.258/2010 in EP 771/2008 in OS
361/2004 dated 9.11.2011 on the file of the Learned Principal Junior
Civil Judge, Nellore
Thummala Ramanaiah …. Petitioner

Vs.

1. Thirupathi Sundaraiah
2. Shaik Wazida Begum …. Respondents

This appeal coming on 28.3.2017 for final hearing before me in the

presence of Sri P.Gangadhar Reddy advocate for Petitioner/Appellant and
of Sri B.V.Ramana Reddy advocate for 1st respondent and of Sri Sk.Nanne
Saheb advocate for respondent No.2 and the matter having stood over
for consideration till this day, this Court made the following-
JUDGMENT
1. This appeal filed by the petitioner in EA258/2010 in EP 771/2008

in OS 361/2004 dated 9.11.2011 on the file of the Learned Principal

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Junior Civil Judge, Nellore against the dismissal of the petition under

order 21 Rule 58 of Code of Civil Procedure, vide order dated 9.11.2011.

2. The parties are referred to as petitioner and respondents as

arrayed before the court below.

3. The brief averments of the petition are that:

(I) Originally, the petition schedule property belonged to one

Pacchava Hema Chandra, who in turn sold away the same to one

Gangineni Saraswati through Registered Sale Deed dated 6.4.1984.

Gangnineni Saraswati sold away the same to the second

respondent/Judgment Debtor through a Registered Sale Deed dated

4.1.1997. Second respondent sold away the same to one M.Vengamma

through a Registered Sale Deed dated 2.3.2009 in pursuance of prior

agreement dated 7.11.2008. The said Vengamma sold away the same to

one Neeli Uma through a Registered Sale Deed dated 27.5.2009. In turn

Neeli Uma sold away the petition schedule property to the petitioner

through a Registered Sale Deed dated 14.12.2009. Petitioner has been in

possession and enjoyment over the petition schedule property. His

original title deeds were deposited with the bank and availed loan from

Andhra Bank, Nawabpet, Nellore.

(ii) Second respondent has not been in possession and enjoyment

over the petition schedule property. The property was attached on

22.3.2009. The second respondent is nothing to do with the petition

schedule property. Therefore, the petitioner requests to raise

attachment by allowing the petition.

2. Second respondent/Judgment Debtor, remained set exparte.

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3. First respondent/Decree Holder filed counter denying the

averments in the petition. He further contends that all the documents

are nominal and sham documents. The petitioner and second respondent

are jointly liable to pay the decreetal amount. Therefore, he requests to

dismiss the petition with costs.

4. On behalf of the petitioner, PW1 and PW-2 were examined

and Ex. P-1 to Ex. P-5 documents were marked.

5. On behalf of first respondent, Respondent No.1 himself

examined as RW1 and no documents are marked.

6. After hearing both sides and on appreciation of oral and

documentary evidence, the learned Principal Junior Civil Judge held that

all the transactions are sham and nominal brought into existence in order

to deprive the rights of decree holder. By observing the same, the

petition was dismissed without costs.

7. Aggrieved by said order and decree, the petitioner preferred

the present appeal. In the grounds of appeal, it is contended that

1. The court below failed to observe that the sale transactions

were taken place prior to attachment of the petition schedule property.

2. The court below failed to consider the evidence of PW-1 and

the documents in Ex. P-1 to P-5.

Therefore, appellant requested to allow the appeal and set aside the

said order and decree and allow the petition as prayed for.

8. Heard the petitioner and perused relevant records. (No

representation on behalf of respondents. Arguments take it as heard.)

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9. Now the point for consideration in the present appeal is:

Whether the order and decree in E.A.No.258/2010 in

EP 771/2008 in OS 361/2004 dated 9.11.2011 on the
file of the Learned Principal Junior Civil Judge,
Nellore are liable to be set aside or not?
POINT

Whether the order and decree in E.A.No.258/2010 in

EP 771/2008 in OS 361/2004 dated 9.11.2011 on the
file of the Learned Principal Junior Civil Judge,
Nellore are liable to be set aside or not?

10. It is not in dispute that originally petition schedule property

belonged to one Pacchava Hema Chandra, who sold away the same to

one Gangineni Saraswati through a Registered Sale Deed dated 6.4.1994.

Gangineni Saraswati sold away the same to second

respondent/Judgment Debtor through a Registered Sale Deed dated

4.1.1997. It is evident from Ex.P-1 Certified copy of Registered Sale Deed.

In turn, second respondent/J.Dr sold away the same to one Mandela

Vengamma through Registered Agreement of Sale cum General Power of

Attorney dated 2.3.2009 (Certified copy of Registered General Power of

Attorney-cum-Agreement of sale dated 2.3.2009 is filed and available in

the record.) In turn, Mandela Vengamma sold away the same in favour of

Neeli Uma through a Registered Sale Deed dated 27.5.2005. It is evident

from Ex.P-2 Certified copy of Registered Sale Deed dated 27.5.2009.

Neeli Uma Sold away the same to the present petitioner and his wife

through a Registered Sale Deed dated 14.12.2009. It is evident from

Ex. P-3.

11. It is also not in dispute that first respondent/Decree Holder filed

suit in O.S. No. 361/2004 against Judgment debtor on the file of Principal

Junior Civil Judge, Nellore and obtained an exparte decree on 8.11.2005.

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The first respondent filed E.P. No.771/2008 for the sale of the petition

schedule property. The first respondent/Judgment debtor appeared in

execution proceedings and finally she was set exparte on 28.4.2009 as

she failed to file counter in Execution Petition. The petition schedule

property was attached on 23.3.2009. On verification of the record, it is

clear that E.P.No.771/2008 was terminated on 6.2.2012 on filing Full

Satisfaction Memo by the first respondent/Decree Holder.

12. The petitioner contends that the sale in favour of Mandela

Vengamma was taken place prior to the attachment of the petition

schedule property and the said sale prevails over the attachment. The

first respondent contend that the sale deeds were brought into

existence in order to defeat the rights of decree holder and those sale

deeds are sham and nominal documents.

13. The claim petitioner examined as PW-1. He stated that he obtained

loan by depositing the original title deeds with Andhra Bank, Stone

House Pet branch, Nellore. It is evident from Ex.P-5. He denied a

suggestion that the sale deeds are not valid and not binding on the

decree holder and they colluded with second respondent and brought

into existence of sham and nominal documents..

14. PW-2/Mandela Vengamma is vendor of the petitioner deposed that

she purchased the property through a Registered document dated

2.3.2009. She sold away the same to Neeli Uma. She deposed that she

does not know attachment of petition schedule property. She obtained

an agreement of sale prior to her purchase. She denied suggestion that

the documents are not valid and binding on the decree holder.
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15. First respondent/decree holder examined as RW-1. He categorically

deposed that the sale in favour of the petitioner is not valid and binding

on him. He expressed his ignorance whether PW-2 purchased property

and whether PW-2 sold away the property through Registered Sale Deed.

He does not know whether petitioner obtained loan from Andhra Bank

by depositing his title deed.

16. Admittedly, on 2.3.2009 the second respondent executed

Registered Agreement of Sale Cum General Power of Attorney in favour

of PW-2 after receiving consideration of Rs.5,05,000/-. The property was

attached on 23.3.2009, after the date of execution of registered

document in favour of PW-2. It is the contention of the first respondent

that the second respondent drag on the proceedings and fraudulently

executed Registered document in favour of PW-2 after she was set

exparte in execution proceedings.

17. Learned advocate for the petitioner relied upon the decision

reported in Gopisetty Venkata Lakshmi Narasimha Rao Vs. M/s. Sri

Satya Financial Services, Narasapuram, Represented by its Proprietor,

Sri Meka Sridhar Chowdhary and another and contend that in

Execution Petition no finding can be recorded as to the fraudulent

transfer of property and that PW-2 obtained registered document

prior to attachment of petition schedule property and the said

document prevails over attachment.

18. In a decision reported in

The Bombay High Court in SBI Homes's case, referred to the

decision of the Supreme Court in Hamda Ammal, and held thus:
"19. In Hamda Ammal v. Avadiappa Pathar, (1991) 1 SCC
715, also the Supreme Court emphasised that order XXXVIII
Rule 5 would not apply where a sale- deed had already been
executed by the Defendant in favour of third person. It was
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pointed out that a transaction of sale, having already taken

place even prior to the institution of a Suit, it could not be
said to be made with intention to obstruct or delay the
execution of any decree. Interestingly, the Supreme Court
further observed, "It would be a different case altogether if a
creditor wants to assail such transfer by sale under S.53 of
the Transfer of Property Act, 1882." The Supreme Court no
doubt emphasised Order XXXVIII Rule 10 to show that an
attachment before judgment shall not affect the rights
existing prior to the attachment of persons not parties to the
Suit. We are unable to accept the contention of the
Respondents that this case indicates that the issue of
alienation could not be raised in the proceedings for
adjudication of the claim to the property or that it could be
raised only in a substantive Suit. The Supreme Court has
merely indicated that S.53 is a different cup of tea, without
indicating the manner in which S.53 had be pressed
forward."

20. As per Order XXI Rule 58(2) of Code of the Civil

Procedure,1908, the executing Court is empowered to adjudicate the

questions relating to right, title or interest in the property attached in

the claim petition.

21. In a decision reported in Vannarakkal K. Sreedharan's case

1990 SCR (1) 832, 1990 SCC (3) 291, the Apex Court held that

sale will prevail over the attachment as contractual obligation created

by the pre-attachment agreement of sale is in respect of ownership of

the land while the attachment is only of right, title and interest of the

judgment debtor. But, in the case on hand, the agreement of sale is

not genuine, it is collusive in nature and it is brought into existence to

defeat the fruits of the decree obtained by respondent No.1. The

ownership of the property and/or right, title or interest therein may

necessarily involve the determination of the validity or otherwise of

the agreement of sale, as has been done by the executing Court in this

case. Therefore, the contention raised by the learned counsel for the
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petitioner that the executing Court has got no jurisdiction and power

to determine the validity of the agreement of sale cannot be accepted.

22. In a decision reported in Hamda Ammal vs Avadiappa

Pathar 1991 SCC (1) 715, the Apex Court held that “sale deed

executed prior to attachment before judgment can be registered

subsequently and will prevail over the attachment”. In the case on

hand, respondent No.2 executed Registered Agreement of Sale-cum

General Power of Attorney dated 2.3.2009 and where as the

attachment was effected on 22.3.2009, after the date of execution of

document in favour of PW-2.

23. In a decision reported in Madhavarapu Haranadhababa vs

Kaligineedi Mahalakshmamma 2004 (1) ALD 416, 2004 (1)
ALT 655, the attachment before judgment is after execution of the
regular sale deed by the judgment debtor therein. This decision is also
applicable to the facts of the case on hand since respondent No.2
executed oa Registered agreement of sale-Cum-General Power of
Attorney in favour of PW-2.

24. In a decision reported in T. Nabi Saheb vs V.P. Sivaiah And Ors.

on 6 February, 2004 2004 (6) ALD 488, 2004 (2) ALT 751
“the decree holder is known about executing of agreement of sale by
the judgment debtor in favour of third party and at the time of agreement of
sale, the property in question was delivered to third party”.
25. In a decision reported in Gopisetti Venkata Lakshmi
Narasimharao Venkata Ramayya v. Satya Financial Services
Narasapuram, the agreement of sale is registered one, whereas in
the case on hand, the agreement of sale is not registered and
fabricated.
26. In a decision reported in Madhavarapu Haranadhbaba VS

Kaligineedi Mahalakshmamma, 2004 ALT (1) 655 in the

context of Section 53 of Transfer of Property Act, 1882 (TP

Act) and Section 6 of Provincial Insolvency Act, 1920, relying

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on Hamda Ammal v Avadiappa Pathar (1991) 1 SCC 715 , this

Court observed as under.

There is one another remedy. Section 6 of the

Provincial Insolvency Act defines acts of insolvency. If
a debtor makes a transfer of his property or any part
thereof with intent to defeat or delay his creditors, he
would be committing one of the acts of insolvency
enumerated in the above provision. If an act of
insolvency is committed, the remedy of the affected
creditor is to present a petition against the debtor
within a period of three months from the date of the
debtor committing an act of insolvency to get the
order of adjudication of debtor as an insolvent. These
two remedies are available to the affected creditor. In
a claim application filed by the purchaser the court is
not entitled to consider and decide whether the
transaction is a collusive, fraudulent or sham
transaction and whether it is intended to defeat or
delay the creditor. Such a question falls for
consideration either in a proceeding launched under
the provisions of Provincial Insolvency Act or in a suit
field under Section 53 of Transfer of Property Act to
avoid the transaction in question. It is necessary to
emphasise that the proceedings invoking the
provisions either in Section 53 of Transfer of Property
Act or in Provincial Insolvency Act are to be instituted
in a representative capacity and they are intended to
benefit not a particular creditor but to benefit all the
creditors of the transferor. It is thus clear that both
the courts below committed a serious error in
considering in a claim application the question
whether the transaction covered by Ex.A.1 is a
collusive transaction, etc., and on the basis of the
findings recorded on that issue dismissing the claim
application.

27. Therefore, having regard to the facts and circumstances of the

case and in the light of the above discussion, I hold that the Executing

Court came to a wrong conclusion observing that the judgment debtor

fradulently executed Registered documents. In view of the decision

referred to above, the Decree holder has to file suit under Section 53

of Transfer of Property Act for declaration that the registered

documents executed by second defendant are not valid and binding

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and they are fradulent transactions. The Decree Holder also has to file

Insolvency Petition within stipulated time against the second

respondent/Judgment debtor and adjudge him as insolvent. The

decree holder did not take any steps as contemplated under Law and

as observed in the decision of Apex Court. Admittedly, the Registered

document was executed by second respondent in favour of PW-2

before the date of attachment of petition schedule property. The said

document is supported by consideration and valid and the said sale

prevails over the attachment of property, which was effected

subsequent to the date of sale of PW-2. As stated above, the Executing

Court is only competent to decide the right and title of the parties

under Order 21 rule 58 of Civil Procedure Code. The Executing Court

is not competent to decide whether the sale deeds executed by second

respondent are fradulent transactions and executing Court cannot

declare that those documents are not valid and binding on the decree

holder. Hence, in the above mentioned circumstances, the order

passed by the trial court is not valid and it is liable to be set-aside by

allowing the appeal. Accordingly, this point is answered.

28. In the result, the Civil Appeal preferred by Thummala Ramanaiah ,

son of Rathnaiah/appellant/Claim Petitioner against the order and
decree dated 9.11.2011 in E.A.No.258/2010 in E.P.No.771/2008 and in
O.S.No.361/2004 13.10.2014 in EA 35/2013 in EP 520/2012 in OS
803/2008 on the file of Principal Junior Civil Judge, Nellore is hereby
allowed without costs by setting aside the said order and decree.
Consequently, the claim petition under Order 21 Rule 58 of C.P.C., is
hereby allowed without costs .
Typed on my direct dictation by the Steno-Typist and corrected and
pronounced by me in open Court on this the 7th day of April 2017.

IV ADDITIONAL DISTRICT JUDGE

NELLORE
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APPENDIX OF EVIDENCE
---NIL---

IV ADDITIONAL DISTRICT JUDGE

NELLORE.
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