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Hormusji and Ratanji Minor by their Guardian and Uncle Bapuji Vs. Cowasji and ors. - Court Judgment

LegalCrystal Citation
SubjectCivil
CourtMumbai
Decided On
Judge
Reported in(1889)ILR13Bom297
AppellantHormusji and Ratanji Minor by their Guardian and Uncle Bapuji
RespondentCowasji and ors.
Excerpt:
fraudulent conveyance - gift ill fraud of creditors--subsequent sale by creditorsin execution of subject-matter of gift--purchase at execution sale for inadequate price by means of fraud--suit by donee to set aside sale for fraud--rescision when granted. - - the subordinate judge held this to be a good defence on the english decisions mentioned in his judgment. the well-established rule of equity in england--and the rule is equally applicable to this country--is that a transaction cannot generally be rescinded unless the party seeking it is able to rescind it in toto, except where the transaction is severable......father, on the ground that the property had previously been given to them by ardesir by a deed of gift dated 19th june, 1875.2. the defendant cowasji pleaded that the deed of gift was void as against the creditors of ardesir, and, therefore, could not be set up to invalidate his title under the auction sale. the subordinate judge held this to be a good defence on the english decisions mentioned in his judgment. those authorities, although turning upon the proper construction and application of the english statute of elizabeth, enunciate a principle of equitry which is equally applicable to the circumstances of this country, and they were, therefore, properly relied on by the subordinate judge in disposing of the question before him. the deed of gift under consideration included.....
Judgment:

Charles Sargent, C.J.

1. The plaintiffs seek to recover the property mentioned in their plaint and which was purchased by the defendant Cowasji at an auction sale on the 26th and 27th June, 1879, in execution of a decree obtained by one Bhikaji against Ardesir Edulji, the plaintiffs' father, on the ground that the property had previously been given to them by Ardesir by a deed of gift dated 19th June, 1875.

2. The defendant Cowasji pleaded that the deed of gift was void as against the creditors of Ardesir, and, therefore, could not be set up to invalidate his title under the auction sale. The Subordinate Judge held this to be a good defence on the English decisions mentioned in his judgment. Those authorities, although turning upon the proper construction and application of the English Statute of Elizabeth, enunciate a principle of equitry which is equally applicable to the circumstances of this country, and they were, therefore, properly relied on by the Subordinate Judge in disposing of the question before him. The deed of gift under consideration included all Ardesir's property, and it is not denied, was executed at a time when he was in great pecuniary difficulties.

3. There can, therefore, be no doubt upon the above authorities, of which it is only necessary to refer to the decisions of Lord Westbury in Spirett v. Willows 34 L.J. Ch. 365 and of Lord Justice Giffard in Freeman v. Pope 5 Ch. App. 538 that the gift to the plaintiffs was void at least as against all existing creditors at the time, of whom Bhikaji was one. In the latter case Lord Justice Giffard says (p. 545): 'If after deducting the property which is the subject of the voluntary settlement, sufficient available assets are not left for the payment of the settler's debts, then the law infers intent...and if at the date of the settlement the person making the settlement was not in a position actually to pay his creditors, the law would infer that he intended, by making the voluntary settlement to defeat and delay them.' Here there were no available assets left after the deed of gift was passed to the plaintiffs to pay creditors--of whom Bhikaji was one--in respect of a debt of Rs. 1,914-10-0 found by the Court below to have been due, and which finding it has not been attempted to dispute on the hearing of this appeal. The plaintiffs cannot, therefore, now be allowed to set up their deed of gift as against the proceedings in execution by Bhikaji under which the defendant Cowasji acquired his title to 5/7ths of the property as purchaser at the auction sale.

4. But they contend that at any rate (subject to Bhikaji's rights), they are entitled to have the sale set aside on, the ground that Cowasji fraudulently induced people not to bid by telling them that he was going to buy on behalf of the family of Ardesir; and that he was thus enabled to become the purchaser at much less than it would otherwise have fetched at the sale. The Subordinate Judge held that this was proved to have been the case, but was of opinion that the plaintiffs could have no relief in their suit, because they were not the only persons interested in the property, Cowasji and his son having a 2/7th share in the property of Edulji, of which the property in question was part, and Ardesir's wife being one of the donees with the plaintiffs under the deed of gift; that until the plaintiffs' interest had been determined by a suit for partition, they could not set aside the sale in respect of such interest, and that it Was too late to turn it into a suit for partition. But it is to be remarked that Cowasji and his son had no interest in the property attached and put of for sale, which was only the 5/7th inherited by Ardesir, and that it is only with the 5/7th thus purchased by Cowasji that we are now concerned. However, the auction sale was of the entire 5/7th share as the property of Ardesir. If, therefore, the sale is to be aside by the plaintiffs, it can only be in respect of the entire 5/7th share and not merely of the plaintiffs' interest in that share. The well-established rule of equity in England--and the rule is equally applicable to this country--is that a transaction cannot generally be rescinded unless the party seeking it is able to rescind it in toto, except where the transaction is severable. See Kerr on Frauds, p. 269. In the present ease the plaintiffs being tenants-in-common with Ardesir's wife, and owners, therefore, only of their respective shares, cannot claim to rescind the sale in toto. Nor could she now join in rescinding, as she must have known of the fraud as alleged in the plaint in 1879, her husband having immediately after the sale endeavoured to set aside the sale on the same ground as it is now sought to do. The plaintiffs can, therefore, only seek reparation (if at all) by damages.

5. We must, therefore, confirm the decree with costs, except as to the costs of Cowasji, which he must pay himself.


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