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in Civil Law Criminal Law
Asked August 31, 2017

Big amount loan to uncle and not recovered back as uncle gifted his property to daughter and declared insolvency

  • 1 Answer

I gave 20 Lacs loan to my Uncle and received promissory note. As I pressurised him to return money or face legal actions, he transferred his property as "gift settlement" to his daughter, giving nothing to his 2 sons. I filed money recovery suit against him and he received summons. Now he has applied for insolvency, stating that he is unable to pay his debts and listed me as creditor. He did not list his property. Daughter may sell and make cash, I'm worried about the property sale by daughter, the bonafide buyer will be protected by Law(section53) because he is not aware of the debt of father and pending money recovery suit. What is the best action to take to protect the property? My lawyer says, daughter did not borrow from me, she is not party in money suite, so I cannot seek injunction restraining daughter from selling her property. Can I seek permanent Injunction against Father and daughter, citing fraudulent transfer and filing insolvency? I cannot file "set aside" suit under section 53 of TP act to cancel the fraudulent transfer of property to daughter with intent to defeat or delay the creditor. I can file this suit ONLY after getting decree from money suite. But before getting decree, Daughter may sell and make cash. Can I file "set aside" before getting decree from money suite? I agree with my lawyer if uncle has not filed for insolvency. Please give your suggestions.

Answer 1




Dear Sir/madam,

As far as civil remedy is concerned, If the loan was given against the property (in question) then the Gift deed made gets outrightly null and void. Because as per law, the uncle is not entitled to transfer the property which is under loan. Only a property with a clear title is subjected to change hands. A property transferred, with any additional charge or encumbrance on it is void ab initio. Had this been the case, you were entitled to approach the civil court and file a Declaration suit.

Porceeding criminally, gives you certain remedies – namely Section 420 of the Indian Penal Code – Cheating and dishonestly inducing delivery of property, Section 405 – Criminal Breach of Trust, Section 467[1] – Forgery of valuable security, will, etc.




[1] Whoever forges a document which purports to be a valuable security or a will, or an authority to adopt a son, or which purports to give authority to any person to make or transfer any valuable security, or to receive the principal, interest or dividends thereon, or to receive or deliver any money, movable property, or valuable security, or any document purporting to be an acquaintance or receipt acknowledging the payment of money, or an acquaintance or receipt for the delivery of any movable property or valuable security, shall be punished with [imprisonment for life], or with imprisonment of either description for a term which may extend to ten years, and shall also be liable to fine.


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