1. This is an appeal by a claimant, Mt. Basanti Bai, arising out of certain insolvency proceedings. On an application presented by a creditor of the firm of Nanhe Mal, the firm, which was owned by Nanhe Mal and his three sons including Raj Narain, the youngest, was adjudicated an insolvent on the 9th of October 1922. On the 21st of April 1922 and the 11th of May 1922, Raj Narain had transferred by two registered sale-deeds two houses which had been previously acquired in his name, to Mt. Basanti Bai, the appellant. The first deed was for Rs. 800 and the second one for Rs. 2,500. The entire sale considerations of these two deeds were paid before the Sub. Registrar.
2. Jugal Kishore, one of the creditors, put in an application, on the 22nd of February 1923, before the Court stating that the two houses, which had been ostensibly sold in April and May 1922, were part of the assets of the insolvent firm and should be attached by the receiver. This application was sent to the official receiver with directions to take proceedings after an enquiry. The receiver submitted a report on the 6th of April 1923 stating that the case of the applicant that these two transfers were fictitious was supported by a number of witnesses. In his report he expressed the opinion that the transfers in question did not appear to have been made in good faith or for valuable consideration.
3. Apparently the learned District Judge did not treat the receiver as a party to these proceedings. The proceedings were initially started by Jugal Kishore, one of the creditors, and the order passed by the Judge and the formal order prepared by his office show that Jugal Kishore was represented as the applicant in the proceedings. It does, however, appear that the receiver, on behalf of the creditors, was allowed, to cross-examine the witnesses produced by Mt. Basanti Bai. The formal order which was prepared did not contain the name of the receiver in the array of the parties at all, with the result that when the appellant filed her appeal in this Court the did not implead the receiver.
4. The learned Judge had not before him either the statement on oath of the receiver or of the creditor or even of any of the witnesses mentioned in the receiver's report. He had, however, the report of the receiver which he treated as part of the evidence in the case. In our opinion the report of the official receiver in connexion with an enquiry under Section 53 or 54 of the Insolvency Act is not by itself legal evidence. It is to be noted that wherever it was intended by the legislature that the report, of an official receiver should be treated as evidence in the case, an express provision is made in the section dealing with that matter. We may draw attention to Sections 38 and 42 of the Provincial Insolvency Act. No such provision, however, is to be found in Sections 53 and 54. We must, therefore, hold that the report of the official receiver is not per se a legal evidence on which a finding could be based.
5. We also must hold that if is the official receiver at whose instance an enquiry into the fictitious nature of the transaction should have been made and it was the official receiver who should have been treated as a principal party representing the whole body of the creditors. It was held so in the cases of Jhabba Lal v. Shib Charan Das AIR 1917 All 160, Ram Sundar Ram v. Ram Charit Bhagat : AIR1924Cal827 , Gontu Appireddi v. Gonto Chinna Appireddi AIR 1922 Mad 246 and Hemraj v. Ramkishen Ram AIR 1916 Pat 279.
6. Furthermore, it is impossible to finally dispose of the case in the absence of the receiver. We cannot set aside the order of the District Judge and uphold the transfers behind the back of the receiver. The appeal without impleading him is incompetent. We have, however, mentioned the reason why his name has been omitted from the memorandum of appeal.
7. Having considered the case, we have come to the conclusion that the best thing to do is to set aside the order of the District Judge and remand the case to his Court with a direction that the receiver should be formally impleaded and that he should be allowed to produce any oral or documentary evidence he may like to produce. As, however, the receiver had an opportunity of cross-examining the witnesses produced by Mt. Basanti Bai, it seems useless to direct that her evidence should be tendered de novo.
8. As we are of opinion that the burden of proof, when it was admitted that these transfers took place within two years of the adjudication, lay upon the alleged transferee Mt. Basanti Bai, she would have no right to produce rebutting evidence. But, under the circumstances, we would allow her to produce supplementary evidence, in the first instance, if she is so advised. Section 53 of the Provincial Insolvency Act provides that any transfer of property not being a transfer... made in favour of a purchaser or incumbrancer in good faith and for valuable consideration shall, etc. It seems to us that the burden lies on the person who tries to bring himself within the exception by asserting that he was a purchaser or incumbrancer in good faith and for valuable consideration. This was the view taken by this Court in the case of Muhammad Habibullah v. Mushtaq Husain AIR 1917 All 32 and by the Patna High Court in the case of Hemraj Champa Lal v. Ramkishen Ram AIR 1916 Pat 279.
9. The result, therefore, is that this appeal is allowed and the order of the District Judge is sat aside and the case sent back to his Court for disposal in accordance with the directions given above. Costs will abide the event.