Musahar Sahu and Another v. Lala Hakim Lal and Another, 43 I.A. 151 (P.C. 1915). Section 53 - Fradulent transfer

Musahar Sahu and Another v. Lala Hakim Lal and Another, 43 I.A. 151 (P.C. 1915). 

This citation indicates that the case was decided by the Privy Council (P.C.) in 1915, and reported in volume 43 of the Indian Appeals (I.A.), starting from page 151. 

The case of Musahar Sahu and Another v. Lala Hakim Lal and Another was a dispute over the validity of two conveyances of land executed by a debtor, Kishun Benode, to his relatives, Kamta Prashad and Hakim Lal, on 2nd September 1901. The plaintiff, Musahar Sahu, was a creditor of Kishun Benode who had obtained a judgment against him on 5th December 1901. The plaintiff sought to set aside the conveyances on the ground that they were made with intent to defeat or delay his claim, under section 53 of the Transfer of Property Act, 1882.

The courts gave different verdicts on the two conveyances. The first conveyance, in favour of Kamta Prashad, was set aside by the Subordinate Judge and the High Court, as it was found to be without consideration, fictitious, and fraudulent¹. The second conveyance, in favour of Hakim Lal, was upheld by the High Court, reversing the decision of the Subordinate Judge, as it was found to be based on real consideration and not fraudulent¹. The High Court held that the debtor had the right to prefer one creditor over another, and that the mere intention to defeat an anticipated execution by the plaintiff was not enough to invalidate the conveyance under section 53.

The plaintiff appealed to the Privy Council, which dismissed the appeal and affirmed the judgment of the High Court. The Privy Council agreed with the High Court that the second conveyance must stand or fall on its own merits, and that the concurrent finding that the consideration for the deed was real reduced the case to one of preference, which was not prohibited by section 53. The Privy Council also rejected the argument that the debtor must not retain a benefit for himself, as there was no evidence that he did so in this case.

The case is significant as it illustrates the application of section 53 of the Transfer of Property Act, 1882, which is still in force in India, and the distinction between fraudulent and preferential transfers of property by a debtor.