Every transfer of immovable property by way of sale made with an intention to defeat or delay the creditor of the transferor is voidable at the option of the creditor so defeated or delayed. This is what is stated in Section 53 of the Indian law of Transfer of Property.
If the transferee purchased the property after proper enquiries and in good faith and belief, the transfer is valid and he will not be liable.
However, the creditor can institute a suit against the transferor. If the transfer was made without sufficient consideration or with the intention to defeat or defraud the creditors, the transfer is voidable at the option of the transferee also.
The following are some of the essential elements of Fraudulent Transfer:
1. A transfer must be made by a debtor to a third person for consideration.
2. The intention behind the transfer was to defeat or defraud the creditors.
3. The transfer is voidable at the option of the creditor.
4. The creditor can file suit on behalf of himself and all other creditors.
5. If the property was purchased by the transferee in good faith, he will not be liable.

Post a Comment

  1. Dear Experts,

    I have the following situation:
    I would like to buy a property of a firm which is in heavy debt with so many creditors. The management of the firm is willing to sell their properties one by one to repay the debts. They have sold some of the properties to settle some of their debts. The firm has created a list of creditors who are to be paid by selling the property which I am interested to buy, even though the list does not include all their creditors of the firm or even 1% of their entire creditors.

    However, the firm is finding difficulty to get prospective buyers for their property.

    How can i deal with the firm to buy the property without risking my interests. Is there any way, i can confirm that the transfer will not be a fraudulent transfer (under section 53 of Transfer of property act)? I am expected to pay the prevailing government rate fixed for the property in that area by paying full white money through bank transfer to their accounts. The party intending to sell are not my relatives, friends. I only recently cam to know about them.

    I want to 100% confirm and document that the transfer is not fraudulent to avoid issues from remaining creditors in the future. Please advise..



Do not use abusive language