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Munnoo Lal Vs. P.K. Banerji, Official Receiver - Court Judgment

LegalCrystal Citation
SubjectCivil
CourtAllahabad
Decided On
Reported inAIR1938All555
AppellantMunnoo Lal
RespondentP.K. Banerji, Official Receiver
Excerpt:
- - the letter of the registrar clearly shows that this court did not in any way direct the insolvency judge to act under section 36. the stay order was not for any particular period and the re-opening of it did not depend on the happening of any event. in my judgment the decision of the learned district judge on this point is perfectly correct......thereupon applied to the munsif for a final decree. during the pendency of the above mentioned suit, tulshi ram applied to the insolvency judge, cawnpore, to be adjudged an insolvent. the learned insolvency judge declared him an insolvent on 15th january 1932. an official receiver was appointed by the insolvency court and he made an objection to the application of munnu lal for the passing of the final decree on the ground that the transfer in favour of munnu lal was fraudulent and without consideration. the learned munsif framed several issues and ultimately dismissed the objection of the official receiver and passed a final decree as prayed by munnu lal. the official receiver on 23rd march 1934 applied to the insolvency court, cawnpore, under section 53, provincial insolvency act,.....
Judgment:

Mohammad Ismail, J.

1. This is a second appeal from order arising out of an insolvency matter. It appears that one Tulshi Ram had a mortgagee right in a mortgage. Tulshi Ram obtained a preliminary decree in the enforcement of the mortgage in his favour on 31st July 1931, from the Court of the learned Munsif of Hardoi. On 29th September 1931 Tulshi Ram transferred his rights under the decree in favour of the appellant Munnu Lal. The transferee thereupon applied to the Munsif for a final decree. During the pendency of the above mentioned suit, Tulshi Ram applied to the Insolvency Judge, Cawnpore, to be adjudged an insolvent. The learned Insolvency Judge declared him an insolvent on 15th January 1932. An Official Receiver was appointed by the Insolvency Court and he made an objection to the application of Munnu Lal for the passing of the final decree on the ground that the transfer in favour of Munnu Lal was fraudulent and without consideration. The learned Munsif framed several issues and ultimately dismissed the objection of the Official Receiver and passed a final decree as prayed by Munnu Lal. The Official Receiver on 23rd March 1934 applied to the Insolvency Court, Cawnpore, under Section 53, Provincial Insolvency Act, for a declaration that the sale deed dated 29th September 1931 was null and void against him. The appellant made an objection but the Court of first instance granted the declaration asked for and held that the transfer was fictitious and without consideration and was made with the object of defrauding the creditors. The learned District Judge on appeal affirmed the decision of the Court of first instance. Munnu Lal now comes to this Court in appeal.

2. Learned Counsel for the appellant has reiterated the objections taken by his client in the Court of first instance and decided against him by the learned District Judge. The first question that has been argued is that the order of the learned Munsif of Hardoi dated 6th March 1934 was res judicata and it was not open to the learned Insolvency Judge to allow the Official Receiver to reopen the same question. In my judgment the contention of learned Counsel for the appellant on this point is untenable. The main issue which the learned Munsif, Hardoi, was called upon to decide in the civil suit was whether the preliminary decree passed in favour of Tulshi Ram Could be made absolute. The Official Receiver was no party to the suit and the learned Munsif definitely held that he had no locus standi. On the objection of the Official Receiver the learned Munsif did frame certain issues and came to the conclusion that the transfar in favour of Munnu Lal was genuine and for consideration. But this question was not germane to the suit and incidentally arose because of the objection of the Official Receiver who intervened as a representative of the judgment-debtor. As the learned Munsif came to the conclusion that the Official Receiver had no authority to intervene, the matter ended there as far as the civil suit was concerned. Under Section 11, Civil P.C., no Court shall try any suit or issue in which the matter directly and substantially in issue has been directly and substantially in issue in a former suit between the same parties. As the genuineness of the transfer by Tulshi Ram in favour of Munnu Lal was not a question directly and substantially in issue in the suit on foot of the mortgage, the subsequent trial of this question by the Insolvency Judge is in no way barred. In my opinion the Court below has come to a right conclusion on this point.

3. The next question pressed in appeal is that the learned Insolvency Judge had no jurisdiction to proceed with the application of the Official Receiver in view of an order of stay passed by his predecessor. It appears that an application was made by certain creditors of Tulshi Ram for the declaration of the latter's insolvency in the Court of the Insolvency Judge, Hardoi. On 13th February 1933, the Hardoi Court adjudged Tulshi Ram an insolvent. Later, on 23rd August 1933 the same Court annulled the previous order of adjudication. The aggrieved party appealed from the order of annulment to the Chief Court of Oudh. The learned Judge of the Chief Court seized of the case gave a direction that the proceedings in insolvency Case No. 57 of 1931 (the present-proceedings) be stayed. This order of the Chief Court was communicated to the Registrar of this Court and the Deputy Registrar forwarded it to the Insolvency Judge, Cawnpore, saying that it was for the Insolvency Judge to decide whether he was bound by the order of the Chief Court or not. The Insolvency Judge at Cawnpore stayed the proceedings but on the application of the Official Receiver revived it, with the result stated above. On these facts it is argued that the Insolvency Judge having elected to stay the proceedings was not entitled to reopen it until the final decision of the insolvency appeal pending before the Chief Court. Learned Counsel for the appellant has referred me to Section 36, Provincial Insolvency Act. In my judgment this Section in no way helps the contention of learned Counsel. The Chief Court of Oudh could not pass an order of stay of a case pending in the Court of the Insolvency Judge, Cawnpore, unless the direction of the Chief Court was confirmed by this Court. The letter of the Registrar clearly shows that this Court did not in any way direct the Insolvency Judge to act under Section 36. The stay order was not for any particular period and the re-opening of it did not depend on the happening of any event. That being so, the Court that had jurisdiction to pass the order of stay was undoubtedly authorized to re-open the proceedings stayed by itself. In my judgment the decision of the learned District Judge on this point is perfectly correct.

4. The last point pressed by learned Counsel for the appellant relates to the merits of the case. It is urged that the Insolvency Judge had erred in throwing the onus of proof on the transferee. The learned District Judge has fully discussed this matter and I entirely agree with him that on merits the decision of the Court of first instance is correct. In view of the case in Official Receiver v. P.L.K.M.R.M. Chettyar Firm it must now be held that the onus of proof in proceedings under Section 53, Provincial Insolvency Act, is on the Receiver in the first instance. The Insolvency Judge was wrong in holding that the onus of proof was on the transferee but the learned District Judge has fully analyzed the evidence and has considered the circumstances of the case, and upon a consideration of the materials on the record, it has come to the conclusion that the transfer in favour of Munnu Lal, appellant, was not genuine. The vendor Tulshi Ram about the time of transfer was hard pressed for money. Apparently his creditors were clamouring for the repayment of the debts due to them. Within three months of the date of the transfer Tulshi Ram applied to the Insolvency Judge to be declared insolvent and some creditors about the same time moved the Insolvency Judge at Hardoi to the same effect. In the sale deed it is stated that the money was required to pay certain creditor. The creditor himself did not enter the witness-box but sent his son to prove a receipt purporting to have been given by him to Tulshi Ram in proof of the payment of the money due to him. But no books of the firm of the creditor were produced before the Court nor did Munnu Lal himself enter the witness-box. Having regard to all the circumstances there appears no doubt whatsoever that the transfer was not bona fide and was made with the intention of defrauding the creditors. In the result I dismiss the appeal with costs.


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