Legal Review and Analysis of L K Prabhu @ L Krishna Prabhu Died through LRs vs K T Mathew @ Thampan Thomas & Ors 2025 INSC 1364

Case Synopsis

L.K. Prabhu @ L. Krishna Prabhu (Died) through LRs vs K.T. Mathew @ Thampan Thomas & Ors

Citation: 2025 INSC 1364

Synopsis Headline: Supreme Court Shields Third-Party Rights: Prior Transfer Trumps Attachment Before Judgment

Synopsis: The Supreme Court, in a significant ruling on civil procedure, upheld the sanctity of a completed property transfer executed before the filing of a lawsuit. The Court held that attachment before judgment cannot legally attach a property that was already alienated by the defendant prior to the suit's initiation. It emphasized that a challenge to such a transfer as fraudulent must be pursued through an independent substantive suit under Section 53 of the Transfer of Property Act and cannot be adjudicated within the summary proceedings for attachment. The verdict reinforces the principle that procedural remedies cannot override the vested rights of bona fide transferees.

Legal Review and Analysis of  L.K. Prabhu @ L. Krishna Prabhu (Died) through LRs vs K.T. Mathew @ Thampan Thomas & Ors

1. Bench Details and Case Citation

Case Title: L.K. Prabhu @ L. Krishna Prabhu (Died) through LRs vs K.T. Mathew @ Thampan Thomas & Ors
Citation: 2025 INSC 1364
Court: Supreme Court of India
Jurisdiction: Civil Appellate Jurisdiction
Coram: Justice B.V. Nagarathna and Justice R. Mahadevan
Date of Judgment: November 28, 2025

2. Relevant Laws and Legal Provisions

The judgment authoritatively interprets and applies the following key statutory provisions:

• Code of Civil Procedure, 1908 (CPC):
  Order XXXVIII Rule 5: Provision for attachment before judgment.
  Order XXXVIII Rule 8: Adjudication of claims to property attached before judgment.
  Order XXXVIII Rule 10: Rights of strangers not affected by attachment before judgment.
  Order XXI Rule 58: Adjudication of claims to property attached in execution of a decree.

• Transfer of Property Act, 1882 (T.P. Act):
  Section 53: Fraudulent transfer of property.

• Indian Contract Act, 1872:
  Section 25: Past debt as valid consideration for a contract.

3. Judgment Analysis: Facts, Issues, and Reasoning

A. Factual Matrix

The predecessor of the appellants, L.K. Prabhu, entered into an agreement for sale with Defendant No. 3 in 2002. Upon Defendant No. 3's default, a registered sale deed was executed in favour of Prabhu on June 28, 2004. Subsequently, Respondent No. 1 (the plaintiff) filed a money suit against Defendant Nos. 2 to 4 on December 18, 2004. In this suit, the plaintiff obtained an order for attachment before judgment over the very same property on February 13, 2005. Prabhu, claiming to be the rightful owner, filed a petition under Order XXXVIII Rule 8 CPC for releasing the property from attachment. Both the Trial Court and the High Court rejected his claim, holding the sale to be fraudulent under Section 53 of the T.P. Act. The legal heirs of Prabhu appealed to the Supreme Court.

B. Core Legal Issues Addressed

The Supreme Court framed and answered the following core issue:

Whether a property, transferred through a registered sale deed prior to the institution of a suit, can be attached before judgment in that suit, and whether its validity can be challenged as a fraudulent transfer in the attachment proceedings themselves.

C. Ratio Decidendi: The Court's Reasoning and Core Principles

The Supreme Court allowed the appeal and set aside the orders of the courts below. The Court's reasoning was grounded in a meticulous analysis of the procedural law and the protection of third-party rights.

• The Primacy of a Completed Transfer Prior to Suit: The Court held that the fundamental condition for invoking attachment before judgment under Order XXXVIII Rule 5 CPC is that the property must belong to the defendant on the date of the institution of the suit. In this case, the sale deed was executed on June 28, 2004, and the suit was filed on December 18, 2004. Therefore, the property had already been transferred and did not belong to the defendant when the suit was filed. Consequently, the attachment order was fundamentally flawed.

• Distinction Between Procedural Remedy and Substantive Right: The Court drew a clear line between the procedural mechanism of attachment before judgment and the substantive right to challenge a transfer as fraudulent. The proceedings under Order XXXVIII Rule 8 are meant to be a summary inquiry to adjudicate the claims of third parties. They cannot be expanded into a full-fledged trial to decide the validity of a sale deed under Section 53 of the T.P. Act. The plaintiff's exclusive remedy in such a scenario is to file an independent suit under Section 53 of the T.P. Act to have the transfer declared voidable.

• Protection of Bona Fide Transferees and Pre-existing Rights: Relying on Order XXXVIII Rule 10 CPC and precedents like Hamda Ammal v. Avadiappa Pathar and Vannarakkal Kallalathil Sreedharan v. Chandramaath Balakrishnan, the Court reaffirmed that attachment before judgment is a protective measure that does not create any charge or right in favour of the plaintiff. It cannot affect the pre-existing rights of a bona fide transferee for value who is not a party to the suit.

• Burden of Proof for Fraud Not Discharged: The Court emphasized that the burden to prove that a transfer was made with intent to defeat or delay creditors lies squarely on the party alleging it. Mere suspicion, the relationship between the parties, or partial payment in cash cannot substitute for legal proof of fraudulent intent. The Court found that the plaintiff had failed to produce cogent evidence to discharge this burden.

4. Final Outcome and Directions

The Supreme Court allowed the appeal.

• The impugned judgments of the High Court and the Trial Court were set aside.

• The registered sale deed dated June 28, 2004, executed in favour of the original applicant (L.K. Prabhu) was declared valid.

• The attachment before judgment ordered on February 13, 2005, was held to be illegal and without jurisdiction and was consequently rendered unenforceable against the subject property.

MCQs Based on the Judgment

1. In the case of L.K. Prabhu vs K.T. Mathew (2025 INSC 1364), the Supreme Court held that a property which has been transferred via a registered sale deed before the filing of a suit can be attached before judgment in that suit under Order XXXVIII Rule 5 CPC if?
(a) The transfer is for inadequate consideration.
(b) The transferee is a relative of the defendant.
(c) The transfer is conclusively proven to be fraudulent in the attachment proceedings.
(d) It cannot be attached under Order XXXVIII Rule 5 CPC as it no longer belongs to the defendant.

2. According to the Supreme Court's ruling, what is the correct legal remedy for a creditor who alleges that a transfer of property made before the institution of their suit was fraudulent?
(a) To file an application under Order XXXVIII Rule 8 CPC in the original suit.
(b) To seek attachment of the property after obtaining a decree.
(c) To file an independent suit under Section 53 of the Transfer of Property Act, 1882.
(d) To challenge the sale deed in a claim petition under Order XXI Rule 58 CPC.