In a quietly intense courtroom on Friday, the Supreme Court settled a long-running dispute over a small but strategically located property in Ernakulam. The bench led by Justice R. Mahadevan ruled that a sale deed executed before a money recovery suit cannot be dragged into attachment proceedings later, unless the transfer is proved to be a fraud-not merely suspected. The judgment brings clarity to a recurring conflict between creditors and buyers who purchase property from troubled debtors.
Background
The case began more than two decades ago. In 2004, L.K. Prabhu-later represented by his legal heirs after his death-bought 5.10 cents of land with a building in Ernakulam from V. Ramananda Prabhu. The buyer even converted the place into guest houses, complete with Tourism Department recognition.
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Months later, creditor K.T. Mathew sued Ramananda Prabhu for nearly ₹44 lakh and sought attachment of the same property, claiming the sale was a sham meant to escape debts. The trial court and the Kerala High Court sided with the creditor, calling the transfer “fraudulent” and heavily relying on suspicions around the timing and internal family dealings.
But the buyer’s heirs insisted that the sale was genuine, supported by an earlier agreement (2002) and payments documented across endorsements. They argued the suit was filed after the property was already sold-so the attachment itself was legally unsustainable.
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Court’s Observations
The Supreme Court took a deep dive into the legal framework: Order 38 (attachment before judgment), Order 21 (execution), and Section 53 of the Transfer of Property Act (fraudulent transfers).
A key point emerged repeatedly-attachment before judgment is purely a protective measure, not a weapon to unsettle valid property rights. “Suspicion cannot substitute legal proof,” the bench remarked, gently but firmly reminding that courts must rely on evidence, not conjecture.
The judges noted that the sale happened on 28 June 2004, while the recovery suit was filed on 18 December 2004-almost six months later. For attachment to operate, the property must belong to the defendant on the date the suit is filed. Here, the buyer already held title and possession.
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The Court also rejected the High Court’s attempt to treat an attachment claim petition as if it were a full-fledged fraud trial under Section 53 TPA. “That procedure cannot be stretched into deciding whether a transfer is fraudulent,” the bench observed. Only a proper Section 53 action, with evidence of intent to defeat creditors, could achieve that.
On the question of fraud, the Court pointed out that the creditor had not produced concrete proof-only doubt and circumstances. Payments made, past liabilities cleared, and a registered deed in place together indicated a real transaction. “Parties may shift timelines by mutual consent; that does not make a sale fraudulent,” the Court noted.
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Decision
Holding that the sale was a valid pre-suit transfer, the Court set aside the Kerala High Court and trial court orders. The attachment ordered on 13 February 2005 “could not legally extend to the property,” it said.
The appeal was allowed, restoring the buyer’s title and ending nearly two decades of litigation.
Case Title: L.K. Prabhu @ L. Krishna Prabhu (Died) Through LRs vs. K.T. Mathew @ Thampan Thomas & Others
Case No.: Civil Appeal (Arising out of SLP (C) No. 15592 of 2023)
Case Type: Civil Appeal – Property Transfer / Attachment Before Judgment
Decision Date: 28 November 2025