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Kusum Harilal Soni v. Chandrika Nandlal Mehta and Anr.

Civil Appeal · Neutral citation not assigned (Civil Appeal No. 3785 of 2016)Decided 12 Apr 2016
Civil Appeal No. 3785 of 2016
Justice V. Gopala Gowda · Justice Arun Mishra

Background

The appellant had obtained a final eviction and compensation order against respondent no. 1 (the tenant/licensee), who failed to pay the ordered monthly compensation even after handing over possession. When the appellant sought to execute the decree and attached another flat belonging to respondent no. 1, the respondent's daughter (respondent no. 2) came forward claiming she had purchased that very flat from her mother years earlier under a Memorandum of Understanding (1995) and an unregistered agreement (2001), and the High Court accepted this claim and set aside the attachment.

Decision Breakdown

The Supreme Court found the MOU and the unregistered agreement between mother and daughter to be collusive and fabricated specifically to frustrate execution of the compensation order, pointing out that the mother had never mentioned any such sale when making statements to the competent authority in 2000, that the unregistered document was created only after the eviction order became final, and that the MOU's own terms (requiring the "purchaser" daughter to continue maintaining her mother even after the daughter's marriage, while the mother remained in possession) made no commercial sense for a genuine sale. The Court held the High Court erred in setting aside the attachment on the basis of these sham documents, set aside the High Court's order, and allowed the appellant to proceed with execution and recover the compensation from the attached flat.

Lesson Learnt

Courts will look past the paper form of a family transaction (like an unregistered "sale" between relatives) to its real substance and timing: a transfer created only after a judgment debtor has lost in court, and designed to frustrate execution of a decree, will not be allowed to defeat a creditor's legitimate claim.

Official source (sci.gov.in)View Judgment (PDF)

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