What did the Supreme Court decide in Abdul Shukoor v. Arji Papa Rao?

The Court held that the tannery transfer was hit by Section 53(1) TPA—voidable at the creditor’s option—since it was meant to defeat or delay creditors.

Who must file a Section 53 TPA suit—one creditor or all creditors together?

A single creditor can sue to avoid the transfer for the benefit of all creditors. The decree protects creditor interests against the impugned transfer.

Does Section 53 apply if the debtor owns other properties?

Yes, if the impugned transfer was intended to defeat or delay creditors. Availability of other assets does not save a fraudulent transfer.

What about a buyer in good faith?

A transferee who purchased in good faith and for value is protected. The creditor bears the burden to show bad faith participation or knowledge.

Can creditors attach the property even before setting aside the sale?

Creditors may seek attachment to secure their dues; if the transfer is voidable for fraud, attachment aids in protecting the debt.

Abdul Shukoor v. Arji Papa Rao (1963)

Supreme Court of India 1963 AIR 1963 SC 1150 Transfer of Property ~7 min read

Author: Gulzar Hashmi

Location: India

Publish Date: 2025-11-01

Slug: abdul-shukoor-v-arji-papa-rao

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Quick Summary

This case asks: was the tannery sale a real deal or a shield against creditors? The Supreme Court said the transfer fell within Section 53(1) of the Transfer of Property Act: it was meant to defeat or delay creditors, so it was voidable at the creditor’s option. A buyer in good faith is protected, but here the facts showed knowledge and concurrence in the plan.

Issues

Was the sale deed a fraud on creditors and therefore not binding?
Was the sale in favour of the plaintiff genuine?
Must a Section 53 TPA suit be by all creditors or can one creditor sue?
Does Section 53 still apply if the debtor has other properties?

Rules

Section 53(1) TPA: A transfer made with intent to defeat or delay creditors is voidable at the option of any creditor.
Good faith shield: A transferee in good faith and for value is protected; the creditor must prove bad faith.
Who can sue: A single creditor may sue for the benefit of all creditors.
Other assets irrelevant: Even if the debtor owns other property, a fraudulent transfer can still be avoided.

The Court infers intent from surrounding facts: timing, debts, relationships, and the buyer’s knowledge.

Facts (Timeline)

Timeline for Abdul Shukoor v. Arji Papa Rao

A partnership firm (second defendant) had two partners: Hajee Abdul Kadir and Lala Batcha Sahib (third & fourth defendants). The firm worked in Vizianagaram since 1941.

In 1947–48, the firm ran into heavy debts. Partners executed a dissolution deed: Hajee took a property valued at ₹20,000; Lala took the tannery of equal value.

In 1949 at Madras, Lala sold the tannery to the plaintiff by a deed of sale.

The first defendant (a creditor) sued for ₹12,950, got a decree, and obtained attachment of the tannery. The attachment was made absolute after decree.

The plaintiff’s claim failed before the Subordinate Judge, Visakhapatnam. The present appeal followed.

Arguments

Appellant / Plaintiff

The sale was genuine and for value; not intended to defeat creditors.
Creditors cannot avoid a transfer against a good faith purchaser.

Respondent / Creditor

The transfer was a scheme to keep the tannery out of creditors’ reach.
The buyer knew and concurred in the plan; Section 53(1) applies.

Judgment

The Court found that the tannery transfer fell under Section 53(1) TPA.
It was voidable at the option of the creditor who had obtained the decree and attachment.
The facts showed knowledge/concurrence on the part of the plaintiff-buyer in the plan to defeat creditors.

Outcome: Creditor’s challenge sustained; plaintiff’s claim failed.

Ratio Decidendi

A transfer made with intent to defeat or delay creditors is voidable at the creditor’s option. A purchaser in good faith and for value is protected, but if the purchaser knows or joins the scheme, the transfer can be avoided.