1. Introduction
The principle of section 53 is based on the rule of justice,
equity and good conscience. The section enumerates fraudulent transfer. A
transfer made with intention to defeat any right of the transferee or of any
other person interested therein is called fraudulent transfer of property. Such
transfer is not void but voidable at the option of person named.
2. Relevant Provisions
(i) Section 53 Transfer of Property Act 1882.
(ii) Cross reference Section 17 of Contract Act
3. Meaning of Fraud
A false representation of a matter of fact, whether by words
or by conduct, by false or misleading allegations, or by concealment of that
which shall have been disclosed, which deceives and is intended to deceive
another so that he shall act upon it to his legal injury.
4. Meaning of Transfer
Transfer means an act of the parties, or of law, by which
the title to property is conveyed from one person to another.
5. Meaning of Fraudulent Transfer
A transfer of property the object of which is to defraud a
creditor or hinder or delay him or to put such property beyond his reach is
called Fraudulent Transfer.
6. Fraudulent Transfer of Property
Under Transfer of Property act, following points are
important to explain of fraudulent transfer of property.
(i) Voidable at option of Defeated or Delayed Creditor
Every transfer of immovable property, which is made with
intent to defeat or delay creditors of transferor, is voidable at option of any
creditor, who is so defeated or delayed. For example, Bashir is indebted to
Ahmad, and he attempts to sell his house, and is intentions to convert his
house into cash to defeat Ahmad. And if Rasheed is aware of Bashir’s
indebtness, but he purchases Bashir’s house, then such transfer is voidable at
option of Ahmad.
(ii) Rights of Transfer In Good faith and for
consideration
Transfer of immovable property, which is made with intent to
defeat or delay creditors of transferor, does not affect rights of transferee
in good faith and for consideration. For example, Bashir is indebted to Ahmad,
and he attempts to sell his house, and his intention is to convert his house
into cash to defeat Ahmad. And if Rasheed is not aware of Bashir’s indebtness,
but he purchases Bashir’s house against a consideration of ten lakh rupees,
then such transfer does not affect rights of Rasheed.
(iii) Law Relating to Insolvency
Transfer of immoveable property, which is made with intent
to defeat or delay creditors of transferor, does not affect any law, which is
in relation to insolvency and which is in force.
(iv) Institution of Suit
If a creditor institute’s suit to avoid a transfer on this
ground that it has been made with intends to defeat or delay the creditors of
transferor, it is considered that such suit is instituted on behalf of all
creditors or for benefit of all creditors.
(v) Voidable at Option of Subsequent Transferee
Every transfer of immoveable property, which is made without
consideration and which made with intent to defraud a subsequent transferee, is
voidable at option of such transferee.
Conclusion
To conclude, it can be stated that two points are important
as far as fraudulent transfer is concerned; first point is that transfer of
property act has discussed fraudulent transfer only in respect of immoveable
property. And second point is that person, who alleges fraudulent transfer, is
under burden to prove fraudulent transfer.
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