Section 53 of the Transfer of Property Act deals with fraudulent transfers of property made with the intent to defeat or delay creditors. A fraudulent transfer will be voidable at the option of any creditor defeated or delayed by such transfer. Case law has established several factors that may indicate a fraudulent transfer, including lack of consideration, insolvency of the transferor, and retention of benefits by the transferor. The scope of the section is broad and includes any transfer intended to delay creditors, even if not intended to defeat them entirely. For a transfer to be considered fraudulent under this section, there must be clear proof of intent to defraud or delay creditors.

1. Fraudulent Transfer of property
INTRODUCTION:
Section 53 of the Transfer of the Property Act, 1882 deals with the requirement of the
fraudulent transfer of the Property in the Union of India. The present provision was substituted
by Act 20 of 1929, Section 15. It can be defined as per latest provision as follows:
(1) Every transfer of immoveable property made with intent to defeat or delay the creditors
of the transferor shall be voidable at the option of any creditor so defeated or delayed.
Nothing in this sub-section shall impair the rights of a transferee in good faith and for
consideration. Nothing in this sub-section shall affect any law for the time being in
force relating to insolvency. A suit instituted by a creditor (which term includes a
decree-holder whether he has or has not applied for execution of his decree) to avoid a
transfer on the ground that it has been made with intent to defeat or delay the creditors
of the transferor shall be instituted on behalf of, or for the benefit of, all the creditors.
(2) Every transfer of immoveable property made without consideration with intent to
defraud a subsequent transferee shall be voidable at the option of such transferee. For
the purposes of this sub-section, no transfer made without consideration shall be
deemed to have been made with intent to defraud by reason only that a subsequent
transfer for consideration was made.]
COMMENTARY:
1. Object- in Thakurji vs. Narsinghji (1928), the Patna High Court observed that the
primary object of sub-section (1) of the Section 53 of the Act is to make assets of the
Transferor available to the general body of the creditors.
2. Scope- The application of the section will be in force even if the transfer doesn’t
“defeat” but only “delays” the creditors. In case of C. Abdul Shukoor Saheb vs. Arji
Papa Rao (1963), the fact that the entirely of the debtor’s property was not sold cannot
by itself negative the applicability of the section unless there is cogent proof that there
is other property left, sufficient in value and of easy availability to render the alienation
in question immaterial for the creditors.
3. Requirement- The requirement of the section is to avoid the possibilities of the retention
of all the benefits by the debtor. In case of Chogmal Bhandari vs. Dy. CTO (1976), it
was held that, if a person proves challenges the validity of a transaction under Section

2. 53 of the Act, he has to prove that the document in question was executed with clear
intention to defraud or delay the creditors.
4. Wide Extent- In case of Sushila vs. Anandilal (1983), the court stated that, even though
the section may not apply in terms, its principle would apply in cases of fraudulent
transfers.
5. Applicability- In the case of Mahendra vs. Suraj Prasad (1957), the court held that the
provisions of Section 53 of the Act come into operation only where the document is
fraudulent in the sense that, though the transfer is real, the object was to defraud the
creditors of the transferor. In the case of V.S. Murthy vs. Laksho Narayana (1960), the
court held that if a father transfers the property to his son for a sum of Rs. 5000, while
the debt due from the father to the son did not amount to even Rs. 4000, there is an
evidence of an intent to defraud creditors generally and the transfer will be hit by the
section.
In case of Gharbhoya vs. Deodatta (1937), the court held that Section 53 doesn’t apply
where the debtor doesn’t retain any benefit for himself and if it is found that the transfer
was for adequate consideration which was entirely expanded in satisfaction of genuine
debts of the debtor. In case of Jamnabai vs.Dattatraya (1936), the Bombay High Court
held that Section 53 would not apply when to the purchase of the property in the name
of another as benamdar. In case of Union of India vs. Rajeswari (1986), the court held
that, the section would be exempted to the transferor genuinely satisfied the debts by
payment of sale proceeds.
6. Voidable Transfers- Chief Justice Wallis in the case of Rama Swami Chettiar vs.
Mallappa Reddiar, held that, “It is open to the judgement-debtor, property which has
been fraudulently transferred to the claimant with intent to defeat or delay creditors. If
he knows of the transfer when he applies for attachment, the application is sufficient
evidence of his intention to avoid it; if he hears of the transfer when a claim petition is
preferred under Order 21, Rule 58, and still maintains his right to attach, that again is a
sufficient exercise of this option to avoid.
7. Transfer meaning- In the case of Natha vs. Dhunbaji, it was stated that, the word
‘transfer’ mentioned in Section includes a settlement by which the settlor conveys all
his interest in the property to trustees or a surrender by a Hindu widow of her life
interest in favour of the reversionary.
8. “Intent” explained- In the case of Bhagwant vs. Kedari Sahu, the court observed that
the term ‘intent’ referred in the section implies “aim” and connotes the one object for

3. which the transfer is made. It has reference to the dominant motive without which it
would not have been made.
9. Defeat or Delay- In case of Mohammad Ali vs. Bisneillah (1930), person carrying in
business which was certain extent hazardous and with opportunity of utilizing the
property of other for his own purpose, executed a gift deed in favour of his wife. It was
held that the effect of the deed would delay or defeat any future acclaims and thus was
bad in nature.
10. Factors constituting Fraudulent transfer- In the case of Muniayammal vs. Thyagaraja
(1958), the court laid down following factors relating to fraudulent transfer such as:
 Continuance of the transferor in possession of the property he has purported to
transfer, when such continuance in possession is not in accordance with the
tenor and object of the transfer
 Insolvency or indebtedness of the transferor
 Lack of consideration for the transfer
 Reservation of benefit to the transferor
 Relationship between the transferor and the transferee
 Pendency or threat of litigation, secrecy or concealment
 Transfer of the debtor’s entire estate, or substantially the whole of the estate
 Fact that the transfer is made after execution has been issued or a writ has been
issued against the transferor
REFERENCES:
 Textbook on The Transfer of Property Act, Dr. Avtar Singh, Universal Law Publishing
Co. Pvt. Ltd., 2006
 The Transfer of Property Act, Dr. Hari Singh Gour, Delhi Law House, 2004
AUTHOR DETAILS:
Vaibhav Goyal is a 3rd year BA.LLB (H) student of Panjab University, Chandigarh.