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Ram Charan Lal and anr. Vs. Basdeo Sahai and anr. - Court Judgment

LegalCrystal Citation
SubjectProperty
CourtAllahabad
Decided On
Reported inAIR1927All731
AppellantRam Charan Lal and anr.
RespondentBasdeo Sahai and anr.
Excerpt:
- .....1915, mortgaged the same share to shadi lal husband of mt. ganga dei for rs. 2,000. by that time, debi sahai had become finally embarrassed and it is alleged that he then commenced to make fictitious transfers of his property with a view to defraud his creditors and possible subsequent bona fide transferees for value of his property. on the 17th august 1915, he executed a deed of gift of the entire 2 biswas share in favour of his son manmohan sahai. in december 1916 he executed a deed of gift in favour of jaggannath prasad of all the plots in dispute in the suits giving rise to the present appeals. these plots appertained t6 the 2 biswas share, and the validity of this deed of gift was assailed in the present litigation.3. a few days after the execution of the deed of gift debi sahai.....
Judgment:

Iqbal Ahmad, J.

1. The two appeals Nos. 1379 and 1380 of 1924, arise out of two suits for possession of certain plots of land.

2. The facts giving rise to the two suits are shortly these:

One Debi Sahai was the owner of a 2 biswas share in mahal Gulabi, of village Jalib Nagla. On the 15th June 1915, he mortgaged that share to his sister, Mt. Hanga Dei, for Rs. 1,000. He again by a subsequent mortgage dated 16th August 1915, mortgaged the same share to Shadi Lal husband of Mt. Ganga Dei for Rs. 2,000. By that time, Debi Sahai had become finally embarrassed and it is alleged that he then commenced to make fictitious transfers of his property with a view to defraud his creditors and possible subsequent bona fide transferees for value of his property. On the 17th August 1915, he executed a deed of gift of the entire 2 biswas share in favour of his son Manmohan Sahai. In December 1916 he executed a deed of gift in favour of Jaggannath Prasad of all the plots in dispute in the suits giving rise to the present appeals. These plots appertained t6 the 2 biswas share, and the validity of this deed of gift was assailed in the present litigation.

3. A few days after the execution of the deed of gift Debi Sahai applied to be declared an insolvent, and was adjudged an insolvent on the 19th January 1917. On the 12th May 1917, Manmohan Sahai, his son, committed suicide. On the death of Manmohan Sahai Debi Sahai gave out that Manmohan Sahai had made an oral will bequeathing the entire 2 biswas share that had been gifted to him by the deed of gift dated 17th August 1915, in favour of his stepmother Mt. Chameli, and on; the 22nd May 1917, Debi Sahai executed a deed of relinquishment with respect to that share in favour of Mt. Chameli. On the same date viz., the 22nd May 1917, both Debi Sahai and Mt. Chameli, executed a sale deed of half of the property (1 biswas) in favour of Mt. Ganga Dei and Mt. Sarup Dei wives of Shadi Lal, and thereby wiped off the two mortgages of the year 1915. The next day that is on the 23rd May 1917, Debi Sahai and Mt. Chameli executed a sale-deed of the remaining 1 biswas share in favour of Basdeo Sahai and by the consideration of that sale-deed, the debts of the remaining creditors of Debi Sahai were paid off. Mt. Ganga Dei, Mt. Sarup Dei and Basdeo Sahai applied for mutation of names, and their names were entered in the revenue papers as against the shares purchased by them.

4. In the meantime Jagannath Prasad applied in the revenue Court for the formation of a hakit-i-mutfarriqua (miscellaneous property) of the plots gifted to him in 1916, aggregating in area to 71 bighas 8 biswas, and this application was allowed. Thus, though the names of Mt. Ganga Dei, Mt. Sarup Dei and Basdeo Sahai were entered as against the share purchased by them, the formation of the haqiat-i-mutfarriqua deprived them of the major portion of the property purchased by them, and this led to the institution of two suits, one by Mt. Ganga Dei and Mt. Sarup Dei, and the other by Basdeo Sahai, for possession of the plots gifted to Jagannath Prasad in 1915. The plaintiffs of both the suits claimed possession of half of those plots. Their case was that the deed of gift executed by Debi Sahai in favour of Jagannath Prasad was fictitious and collusive and, was executed with a view to defraud prior and subsequent transferees for value, and also the creditors of Debi Sahai. The defendants to the suit were Jagannath Prasad and transferees from him. They resisted the suits mainly on the grounds that the sale in favour of the plaintiffs of each suit was fictitious and without consideration, and that the gift in favour of Jagannath Prasad was valid.

5. The suit brought by Mt. Ganga Dei and Mt. Sarup Dei was heard by the learned Munsif of Bareilly. He held that the sale in favour of Mt. Ganga Dei and Mt. Sarup Dei was valid, and so was the deed of gift in favour of Jagannath Prasad and on these findings he dismissed the suit.

6. The suit filed by Basdeo Sahai was transferred to the Court of the Subordinate Judge of Bareilly and was heard and decided by that Court. The learned Subordinate Judge held that the sale in favour of Basdeo Sahai was valid, but the gift in favour of Jagannath Prasad was fraudulent and was voidable, at the option of Basdeo Sahai, who was a bona fide purchaser for value, and accordingly he decreed Basdeo Sahai's suit. Two appeals were filed in the Court of the District Judge, one by Mt. Ganga Dei and Mt. Sarup Dei against the decree of the learned Munsif, and the other by some of the defendants to the suit brought by Basdeo Sahai. Both the appeals were heard and decided by one judgment by the learned District Judge. He held that Mt. Ganga Dei, Sarup Dei and Basdeo Sahai were bona fide transferees for value and the deed of gift in favour of Jagannath Prasad was fictitious and collusive, and accordingly he allowed the appeal of Mt. Ganga Dei and Mt. Sarup Dei and dismissed the appeal filed against the decree of the Subordinate Judge. The two appeals before me are against the two decrees of the learned District Judge mentioned above.

7. In appeal before me it is argued that the sale-deeds referred to above, having been executed after Debi Sahai had been declared an insolvent are void, and as such the two suits brought by the vendees under those sale-deeds were not maintainable. It is further argued that the deed of gift in favour of Jagannath Prasad was not fictitious and collusive and that Section 53, Transfer of Property Act had no application to the facts of the case. In my judgment, there is no substance in either of the pleas urged by the learned Counsel for the appellants.

8. The learned Counsel maintains that, in view of the provisions of S; 28, Provincial Insolvency Act, the entire property of Debi Sahai, on his being adjudged an insolvent, vested in the receiver, and, therefore, Debi Sahai had no transferable interest left in that property, and the sale by Debi Sahai in favour of the plaintiffs of the two suits was void. In support of this contention reliance is placed on the case of Sheo Nath Singh v. Munshi Ram [1920] 42 All. 433. That case, in my opinion, is distinguishable. In that case the transfer made by an insolvent was sought to be avoided by the receiver himself in whom the property of the insolvent had vested. In the present case neither the receiver nor the insolvency. Court ever challenged the validity of the sale-deeds executed by Debi Sahai, and indeed by the consideration of those sale-deeds the entire debts due from Debi have been paid off. In view of the decisions in Shaim Sarup v. Nand Ram A.I.R. 1921 All. 232 I must hold that it is not open to the defendant-appellants to challenge the validity of the sale-deeds dated 22nd May 1917, and 23rd May 1917.

9. The circumstances pointed out by the lower appellate Court in its judgment leave no room for doubt that the deed of gift in favour of Jagannath Prasad was fictitious and collusive, but it is argued that Section 53, Transfer of Property Act, has no application to the present case, inasmuch as the effect of the deed of gift was not to defraud any creditor of Debi Sahai. I am unable to agree with this contention. The sale-deeds referred to above included, the plots gifted to Jagannath Prasad. But for the inclusion of those plots in the sale-deeds, the vendees would never had paid the consideration that they did pay for the property purchased by them. It was the consideration for the entire 2 biswas share including the plots in dispute paid by the vendees that enabled Debi Sahai to clear off his debts. But for the inclusion of the plots in dispute in the sale-deeds the entire debt due from Debi Sahai would not have been paid off. It is, therefore, clear that the effect of the deed of gift was to defraud the creditors of Debi Sahai. Moreover if the deed of gift is allowed to stand, subsequent bona fide transferees for value would suffer. The effect of the transfer in favour of Jagannath Prasad being to defraud a subsequent bona fide transferee for value, and the transform his favour having been made gratuitously, the Courts below were right in presuming that the gift in favour of Jagannath Prasad was made with intent to defraud subsequent transferees. In my judgment the lower appellate Court in no way misdirected itself on any question of law in coming to the conclusion that the gift in favour of Jagannath Prasad was fictitious and collusive and could be avoided under Section 53, Transfer of Property Act.

10. For the reasons given above, I dismiss both the appeals (second appeals 1379 and 1380 of 1924) with costs.


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