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Dadapa Vs. Vishnudas and ors. - Court Judgment

LegalCrystal Citation
SubjectCivil
CourtMumbai
Decided On
Judge
Reported in(1888)ILR12Bom424
AppellantDadapa
RespondentVishnudas and ors.
Excerpt:
insolvency - insolvent debtor--unfair preference--civil procedure code (act xiv of 1882), section 351. - - there was, clearly, an unfair preference shown to gokuldas by the debtor, although the latter did not apply to be declared an insolvent for nearly two years afterwards. and we would not be justified in interfering with the lower court's decision, unless we were satisfied to the contrary......600 passed to gokuldas four days before the decree against the appellant of itself constituted an unfair preference, and was one which put gokuldas in a more advantageous position as compared with the other creditors.2. it is clear that his passing that mortgage-bond to gokuldas, instead of letting the latter wait for the distribution of his assets under the insolvency rules, gave gokuldas a preference; and, prima facie, it was an unfair advantage given to him over the other creditors.3. it has been argued at much length that there was no unfair or fraudulent preference shown; and mr. shamrav vithal on behalf of the appellant has relied upon a decision in joakim v. the secretary of state for india. this decision appears to be opposed to several english rulings which bear directly upon.....
Judgment:

West, J.

1. In this case the Subordinate Judge determined that the transaction on the part of the present appellant amounted to an unfair preference, and as such, disentitled him to the benefit of Section 351 of the Code of Civil Procedure (XIV of 1882). The ground for his decision was that the bond for Its. 600 passed to Gokuldas four days before the decree against the appellant of itself constituted an unfair preference, and was one which put Gokuldas in a more advantageous position as compared with the other creditors.

2. It is clear that his passing that mortgage-bond to Gokuldas, instead of letting the latter wait for the distribution of his assets under the insolvency rules, gave Gokuldas a preference; and, prima facie, it was an unfair advantage given to him over the other creditors.

3. It has been argued at much length that there was no unfair or fraudulent preference shown; and Mr. Shamrav Vithal on behalf of the appellant has relied upon a decision in Joakim v. The Secretary of State for India. This decision appears to be opposed to several English rulings which bear directly upon the question in this case. The general doctrine is that a creditor can put pressure on a debtor to get payment of his claim, notwithstanding that the debtor may be in embarrassed circumstances; but it is also the general doctrine that a debtor who gives an unfair preference to one particular creditor by giving him a large proportion of his property, so as to reduce the aliquot share of the other creditors, acts fraudulently, and no title is given to that particular creditor as against the assignees who represent the creditors generally-Ex parte Halliday; In re Liebert L.R., 8 Ch. App. 283 ; also Marks v. Feldman L.R., 5 Q.B. 275 and Butcher v. Stead 7 E.& I. App.839 . In the last mentioned case Lord Hatherley says: 'I think the Legislature intended to say that if you, the debtor, for the purpose of evading the operation of the bankruptcy laws, and in order to give a fraudulent preference, make this payment or this charge it shall be wholly done away with except in cases where the person you have so favoured is wholly ignorant of your intention to favour him and receives payment simply for valuable consideration and bona fide, that is, without any notice of any intention on your part fraudulently to favour one creditor above another.' If there had been a new advance given by Gokuldas to the appellant, the conduct of the latter would not, perhaps, have been an act of bankruptcy. In the present case, however, the creditor was aware that the debtor was in embarrassed circumstances, and got an assignment of nearly the whole of his property only four days before a decree was passed against him. There was, clearly, an unfair preference shown to Gokuldas by the debtor, although the latter did not apply to be declared an insolvent for nearly two years afterwards. As a matter of fact, he applied as soon as execution of the decree was sought in the very suit, during the pendency of which he passed the bond charging his property with Rs. 600. This transaction the lower Court held to be a fraudulent preference; and we would not be justified in interfering with the lower Court's decision, unless we were satisfied to the contrary. We must, therefore, confirm the order of the Subordinate Judge.


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