A Transfer of Property to Defeat Creditors Can Be Set Aside Terming it as Fraudulent
A transfer of property may be set aside terming it as fraudulent under Section 53 of the Transfer of Property Act, 1882 (“the Act”) if it was made with the intent to defeat, defraud or delay creditors. This applies in cases where the property transferor had any sustaining debt to be paid in instalments at the time of the transfer and he subsequently defaulted in payment, forcing the guarantor of the debt to make payment for borrower’s default. Then guarantor can seek setting aside of the property transfer and recovery of the money he paid against the transferor’s debt.