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Muhammad Habib-ullah Vs. Mushtaq HusaIn and ors. - Court Judgment

LegalCrystal Citation
SubjectProperty
CourtAllahabad
Decided On
Judge
Reported in(1917)ILR39All95
AppellantMuhammad Habib-ullah
RespondentMushtaq HusaIn and ors.
Excerpt:
.....are made voidable at the instance of the creditors so defrauded or defeated, and it is also declared that where such transfers have the effect of defeating or delaying creditors they would be presumed to have been made with that intent, if they are made gratuitously or for grossly inadequate consideration. under both these sections transferees in good faith and for valuable consideration are protected. tej bahadur sapru has again argued that the dower debt is like an ordinary debt and that such a debt is valuable consideration, and a transfer made to the wife to satisfy the claim for dower is a transfer for valuable consideration. another point for consideration would be whether the transfers were made in good faith. it is not, however, necessary to prove the absence of good faith..........wife of the insolvent. the amount of the debt is said to be rs. 4,100 due on a ruqqa on account of dower debt which the insolvent had executed in the name of his son. the last creditor is one saiyed-un-nissa, who is said to be, the wife of a brother of the insolvent or some other near relative. the amount of debt is rs. 300 under a ruqqa. it may be noted that ashiq husain, the son of the insolvent, is quite a young man who has attained majority. the insolvent in this case has admitted that his son has taken the theka of a jungle in the central provinces, and that he, mushtaq ahmad, is working on his behalf under a power of attorney executed by his son. the creditor habib-ullah complains that this is a mere blind to defraud the creditors, the real thekadar being mushtaq husain himself,.....
Judgment:

Walsh and Sundar Lal, JJ.

1. This appeal arises out of proceedings instituted under Act No. III of 1907. One Mushtaq Husain, who is a resident of mauza Kara in the district of Allahabad, used to carry on business as a contractor and dealer in timber. He entered into a contract for the supply of a certain number of sleepers to one Habib-ullah, a merchant of Agra. He was not able to perform his part of the contract, and Habib-ullah consequently brought a suit against him on the 15th April, 1913,, for the. recovery of a sum of Rs. 2,468 for the breach of the contract. The exact date on which the suit was filed is not noted on the copy of the plaint on the record, but the copy shows that it was verified by the plaintiff on the 15th of April, 1913, which we take to be the date of the institution of the suit. Soon after the institution of the suit the plaintiff Habib ullah applied for the attachment of a deposit held by a bank which is described as Jamal Ahmad Bank at Kara. The court granted the application on the 18th of April, 1913, and directed the issue of an injunction to Mushtaq Husain restraining him from drawing the deposit and also an order to the bank restraining it from paying it over to Mushtaq Husain. Both these orders were handed over in a cover to one Ali Muhammad, who was a servant of Habib-ullah, to expedite the delivery to the Civil Court at Allahabad for service on the persons concerned. It, however, appears that Mushtaq Husain was not found at his house in Kara and the injunction issued to him was affixed to his house and the bank returned an answer that it had paid away the money before services of the injunction. A decree for the amount claimed was passed by the Agra court in due course and transferred fair execution to Bilaspur in the Central Provinces where Mushtaq Husain had a stack of sleepers owned by him, The proceedings were taken to attach and bring to sale the sleepers at Bilaspur, Mushtaq Husain, thereupon, applied on the 23rd of December, 1914, to the District Judge of Allahabad to be adjudicated an insolvent under Act No. III of 1907. In the schedule of creditors attached to the application the name of Habib-ullah stands first as a creditor for Rs. 2,500 under a decree in suit No. 93 of 1913. This is the Agra suit to which reference has already been made. The next creditor set out is one Safdar Ali of Allahabad who had a decree for Rs. 450 of the Court of Small Causes at Allahabad. The third creditor is Ashiq Husain, son of the insolvent, but who is described as son of Nabir-un-nissa, the first wife of the insolvent. The amount of the debt is said to be Rs. 4,100 due on a ruqqa on account of dower debt which the insolvent had executed in the name of his son. The last creditor is one Saiyed-un-nissa, who is said to be, the wife of a brother of the insolvent or some other near relative. The amount of debt is Rs. 300 under a ruqqa. It may be noted that Ashiq Husain, the son of the insolvent, is quite a young man who has attained majority. The insolvent in this case has admitted that his son has taken the theka of a jungle in the Central Provinces, and that he, Mushtaq Ahmad, is working on his behalf under a power of attorney executed by his son. The creditor Habib-ullah complains that this is a mere blind to defraud the creditors, the real thekadar being Mushtaq Husain himself, who has used his son's name to protect the property. He also alleges that the debt alleged under the fourth item is also a bogus debt. In the schedule of property owned by the insolvent the stack of sleepers is mentioned, as also a few trumpery articles of very little value. No zamindari or house property which is said to belong to the debtor is set out. The learned Judge on the 6th of March, 1915, examined the insolvent. He was asked about the two transfers which he had made on the 23rd of May, 1913, and the 30th of May, 1913.

2. By the first of these transfers he had disposed of a valuable house and other property to his son Ashiq Husain, and two other minor children he had by his first wife, for a sum of Rs. 900. He also disposed of another item of property said to be worth Rs. 100 in favour of his second wife. This transfer is said to have been made to satisfy the claim for dower which the heirs of the first wife had against him as also the claim for the dower which the second wife had on the husband. The second document is for Rs. 400, which is said to be the balance of the dower debt due to the second wife. By these two documents he disposed of practically all his property, and if these documents are upheld the claims of the creditors will be defeated for all practical purposes. The learned Judge, therefore, in his order of the 6th of March, 1915, directed that the sum of Rs. 4,100 said to be due to the insolvent's son, Ashiq Husain, should not be entered in the schedule without his special order, and he also further 'directed as follows : April 16th will be fixed for the parties to adduce their evidence under Section 36 of the Act as to whether the transfers in favour of the applicant's sons and wife should be set aside, and in case these transfers are found to be fraudulent, to show cause why he should not be punished under Section 43 of the Act.' It is under this order that the proceedings from 'which this appeal has arisen were initiated.

3. Notice of these proceedings does not seem to have been given to the transferees; but the matter is of no importance, as Babu Datti Lal appeared on their behalf on the 2nd of July, 1915, and he was also present (as would appear from the order sheet) on the 24th of July, 1915, the date on which the order appealed against was made. The learned Judge by his order of that date held that one of the transfers, namely that of the 30th of May, 1913, was fraudulent, and he set it aside. But he held that the other transfer of the 23rd of April, 1913, must be upheld Habib-ullah, the creditor, has appealed to this Court against so much of the order as dismisses the claim in respect of the earlier transfer of the 23rd of April, 1913. Dr. Tej Bahadur Sapru, on behalf of the transferees has preferred objections under Rule 22 of Order XLI against so much of the order of the court below as has set aside the second transfer of the 30th May, 1913. Dr. Sen on behalf of the appellant has urged that the transfer was bad under Section 53 of the Transfer of Property Act. The proceedings in the court below were taken under Section 36 of Act No. III of 1907. Dr. Tej Bahadur Sapru in reply has argued that the court below has no jurisdiction to entertain the proceedings for setting aside the transfers except on grounds mentioned in Sections 36 and 37 of the Act,

4. Provisions analogous to those contained in Section 36 of the Act are to be found is Section 47 of the English Bankruptcy Act of 1883, and Statute 13 Elizabeth, Ch. V, and 27 Elizabeth, Ch. IV. The language of each of these Statutes is slightly different. Each case, therefore, must be considered in the language of the Statute concerned. In our opinion Section 36 of Act III of 1907 is wider in its scope than Section 53 of Act IV of 1882. Under the latter section transfers made with the intent to defeat or delay creditors or subsequent transferees are made voidable at the instance of the creditors so defrauded or defeated, and it is also declared that where such transfers have the effect of defeating or delaying creditors they would be presumed to have been made with that intent, if they are made gratuitously or for grossly inadequate consideration. Under Section 36 of the Act, no such intent is necessary. All that is required is that it must be made within two years of the adjudication of the insolvency of the debtor. Under both these sections transferees in good faith and for valuable consideration are protected. Section 36 also protects transfers 'made before and in consideration of marriage.' We think it is, therefore, not necessary for Dr. Sen to avail himself of the provisions of Section 53 of Transfer of Property Act.

5. Neither of these transfer are transfers 'made before and in consideration of marriage' within the meaning of these words as used in the section. No doubt in both these cases, as a part of the marriage contract, some dower is made payable to the wife, but the dower stands on the same footing as any ordinary debt. The transfer in these cases were made long after the marriage and not before or in consideration of the marriage. They were made to satisfy the dower debt long after the marriage had taken place. Dr. Tej Bahadur Sapru has again argued that the dower debt is like an ordinary debt and that such a debt is valuable consideration, and a transfer made to the wife to satisfy the claim for dower is a transfer for valuable consideration. He relied upon the case of Suba Bibi v. Balgobind Das (1886) I.L.R. 8 All. 178. To enable us, however, to decide the point, it is necessary to ascertain the exact amount of the dower due to each lady. The first wife is said to have died in 1909. A suit for recovery of a dower debt must be filed within the time prescribed by Articles 103 and 104 of schedule I of the Limitation Act. For the purpose of considering the application of these articles the nature of the dower debt would be an important element for consideration. The application of Section 7 of the said Act would also have to be considered as some of the heirs are still minors. In all these cases it is a matter for careful consideration whether a real transfer was intended by the transferor or whether it was merely fictitious and no transfer was intended. Another point for consideration would be whether the transfers were made in good faith. It is not, however, necessary to prove the absence of good faith in both the transfers on the part of the transferee; Mackintosh v. Pagose (1895) 1 Ch. 505. The value of the property transferred would be another point for consideration. In this case it seems that the existing buildings have been altered by some party or other and it might be a question as to who has made these alterations whether the transferee or transferor, and who has been realizing the rents and profits of the property. All these and a number of other considerations will have a material bearing upon the question. The onus of proving the good faith of the transferee is upon him; Nilmoni Chaudhri v. Bashanta Kumar Banerji (1914) 19 C.W.N. 865 : 29 Indian Cases 814. The court below has not determined some of these points at all. There are no sufficient materials on the record to enable us to dispose of these points satisfactorily. We have therefore no option but to remand the following issues for determination to the court below under Rule 25 of Order 41 of the Code. The issues for determination are:

(1) Are the two transfers impugned real and genuine transfers or are they fictitious transfers made to protect the property from the creditors?

(2) Was there any, and if so, what dower debt legally due to the heirs of the first wife and to the second wife, respectively, on the dates of the two transfers?

(3) What was the market value of the property conveyed in each case on the dates of the transfers?

(4) Were the transfers impugned made in good faith and for valuable consideration?

(5) If not, was there want of good faith on the part of the transferee?

6. We have in our judgment indicated generally the matters which the court below should take into consideration in determining these issues, We have set them forth at some length, as we find that in many cases inquiries made under the Act are conducted rather summarily in the courts below. It is scarcely necessary to say that inquiries under this section are no less important than inquiries in regular suits and should be made as thoroughly and fully as in those cases.

7. The parties will be permitted to adduce additional evidence. The findings together with the evidence taken will be returned to this Court and the usual ten days will be allowed for objections.


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