Fraudulent Transfer - The Legal Chamber

In this judgment, the Supreme Court held that attachment before judgment under Order XXXVIII Rule 5 CPC cannot apply to property transferred prior to a suit, as the remedy for challenging such a transfer lies exclusively under Section 53 of the Transfer of Property Act. It clarified that claim proceedings cannot substitute a substantive inquiry into fraudulent transfers. Facts Of The Case: The dispute originated from a sale agreement dated May 10, 2002, between the original appellant, L.K. Prabhu, and the third defendant, V. Ramananda Prabhu, who acknowledged a liability of ₹17.25 lakhs. It was stipulated that upon default, the defendant would convey 5.100 cents of property with a building for ₹35 lakhs. On June 28, 2004, following further payments, a registered sale de...

The Supreme Court ruled that the NCLT has wide jurisdiction under Sections 397 and 398 of the Companies Act, 1956, to adjudicate on allegations of fraud, oppression, and mismanagement when integral to the complaint. It upheld that acts violating the Articles of Association and statutory provisions, including invalid share transfers and board meetings, constitute oppression, empowering the Tribunal to grant comprehensive relief. Facts Of The Case: The case involves Mrs. Shailja Krishna, a majority shareholder holding over 98% of a private company, and her husband, Mr. Ved Krishna. In December 2010, during a strained marital relationship, Mrs. Krishna allegedly resigned from her directorship and executed a gift deed transferring her entire shareholding to her mother-in-law. She contended s...

Tag: Fraudulent Transfer

Can a Creditor Attach Property Already Sold? Supreme Court Clarifies the Law