Fraudulent Transfers In Indian Property Law: Rethinking Section 53 Of The Transfer Of Property Act, 1882 In The Insolvency Era
- IJLLR Journal
- Jul 2
- 2 min read
Vanshika Gupta, Vivekananda Institute of Professional Studies
ABSTRACT Section 53 of the Transfer of Property Act, 1882 has long been the primary statutory remedy available to individual creditors seeking to set aside fraudulent transfers of immovable property by insolvent debtors. Rooted in the English Statute of Elizabeth, 1571, the provision protects creditors from deliberate pre-judgment alienations designed to defeat their claims. However, the enactment of the Insolvency and Bankruptcy Code, 2016 has substantially altered this landscape. The Code introduced a comprehensive set of avoidance provisions, including Sections 43, 45, 49, and 66, that allow a resolution professional to challenge preferential, undervalued, and fraudulent transactions on behalf of all creditors collectively. This paper examines the resulting doctrinal tension between these two regimes. It identifies four principal fault lines: (i) the forum conflict between civil courts and the National Company Law Tribunal; (ii) the divergence between intentbased and effect-based standards for avoidance; (iii) the asymmetry in temporal scope, particularly the absence of a look-back period under Section 53 as compared to the defined windows under the IBC; and (iv) the differential scope of property covered by each regime. Analysing the judgments in Anuj Jain v. Axis Bank Ltd., Gujarat Urja Vikas Nigam Ltd. v. Amit Gupta, and the Jaypee Infratech proceedings, this paper argues that Section 53 TPA has not been rendered redundant but has been structurally subordinated to the IBC within the domain of insolvency. It survives as an independent remedy for individual creditors dealing with non-corporate debtors and in contexts where no insolvency proceeding is pending. The paper concludes by identifying critical legislative gaps, including the problem of parallel proceedings, unresolved res judicata questions, and the absence of a unified standard for fraudulent intent, and calls for statutory harmonisation between the TPA and the IBC.
