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Muhammad Habibullah Vs. Mushtaq HusaIn and ors. - Court Judgment

LegalCrystal Citation
CourtAllahabad
Decided On
Judge
Reported inAIR1917All32; 37Ind.Cas.684
AppellantMuhammad Habibullah
RespondentMushtaq HusaIn and ors.
Excerpt:
.....proceedings under - transfer by insolvent, questions for determination in--burden of proof--dower debt, transfer in discharge of, whether made 'before and in consideration of marriage'--transfer of property act (iv of 1882), section 53. - - a decree for the amount claimed was passed by the agra court in due course and transferred for execution to bilaspur in the central provinces, where mushtaq ahmad bad a stack of sleepers owned by him. 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. sen on behalf of the appellant has urged that the transfer was bad under section 53 of the transfer of property act. in our opinion section 36 of act iii of 1907 is wider in its..........900. he also disposed of another item of property said to be worth rs 100 in favour of his second wife. the 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 6th 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,.....
Judgment:

1. This appeal arises out of proceedings instituted under Act III of 1907. One Mushtaq Ahmad, 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 certain number of sleepers to one Habibullah, a merchant of Agra. He was not able to perform his part of the contract and Habibullah consequently brought a suit against him on the 15th of 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 Habibullah 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 16th of April 1913, and directed the issue of an injunction to Mushtaq Ahmad restraining him from drawing the deposit as also an order to the Bank restraining it from paying it off to Mushtaq Ahmad. Both these orders were handed over in a cover to one Ali Muhammad, who was a servant of Habibullah, to expedite the delivery to the Civil Court at Allahabad for service on the persons concerned. It, however, appears that Mushtaq Ahmad was not found at hid 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 service of the injunction. A decree for the amount claimed was passed by the Agra Court in due course and transferred for execution to Bilaspur in the Central Provinces, where Mushtaq Ahmad bad a stack of sleepers owned by him. The proceedings were taken to attach and bring to sale the sleepers at Bilaspur. Mushtsq Ahmad thereupon applied on 23rd December 1914 to the District Judge of Allahabad to be adjudicated an insolvent under Act III of 1907. In the schedule of creditors attached to the application the name of Habibullah 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 Habibullah complains that, this is a mere blind to defraud the creditors, the real thekadar being Mushtaq Ahmad 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. The 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 6th 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. Habibullah, 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 III of 1907. Dr. Tej Bahadur Sapru in reply has argued that the Court, below had 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 in 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, the Transfer of Property Act.

(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 enquiries made under the Act are conducted rather summarily in the Courts below. It is scarcely necessary to say that enquiries under this Section are no less important that enquiries 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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