Voidable transfer against creditors: tax department may question a defaulter's sale deed, subject to bona fide purchaser defence.

A transfer made with intent to defeat or delay creditors is voidable at the creditor's option under Section 53 of the Transfer of Property Act, 1882, and the tax department may therefore question a defaulter's sale deed and contend that the transfer is not binding on it. The purchaser may still raise the defence of being a bona fide purchaser, and the affected party may pursue appropriate civil relief. The writ challenge to the proposed encumbrance was not accepted in full, and the department was allowed to proceed in accordance with law.

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Issues: Whether the tax department could treat the transfer of the defaulter's immovable property as voidable and proceed against the sale deed, and whether the writ petitions challenging the proposed encumbrance deserved interference.

Analysis: Section 53 of the Transfer of Property Act, 1882 was applied to hold that a transfer made with intent to defeat or delay creditors is voidable at the option of the creditor. On that basis, the tax department was treated as entitled to take steps to question the sale deed and to establish that the transfer was not binding on it. At the same time, the purchaser was left at liberty to assert the defence of being a bona fide purchaser, and the petitioner was also left free to seek appropriate civil relief.

Conclusion: The challenge to the departmental action was not accepted in full, and the department was permitted to proceed in accordance with law, while the petitioner retained liberty to contest the transfer in appropriate proceedings.

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