1. This appeal arises out of an application, which was made to the District Judge before whom an insolvency matter was pending, to annul a deed of transfer made by the insolvent on the 11th of November 1914 in favour of Lachman Sonar. We may mention a few dates. There was a mortgage in favour of f***iaihman Sonar,' dated be 22nd of May 1912. On the 16th of January 1914, Bhawani Shanker (the insolvent) executed a promissory note in favour of Chunnoo Lai for Rs. 1,500. On the 9th of November 1914, Chunnoo Lal commenced a suit on foot of his pro-note. On the 11th of November 1914, Bhawani Shanker executed the sale-deed which is challenged in the present proceeding, the consideration purporting to be the discharge of the mortgage already mentioned; the property sold was part of the mortgaged property, that is to say, a fixed-rate tenancy, the house which belonged to the debtor being exempted. On the 14th of December 1914, Chunnoo Lal obtained adecree on foot of his pro-note and on the 22nd of March 1915 Bhawani Shanker was arrested in execution of the simple money-decree. On the same day he applied to be declared an insolvent and on the 15th of April 1915, Chunnoo Lal was appointed Receiver. On the 24th of September 1915, Bhawani Shanker was declared an insolvent. There were other transfers made by the insolvent in or about the same time, one on the 17th of November 1914 in favour of his own brother.
2. We are not in the present application called upon to express any opinion as to whether or not these transfers were valid, but the fact that another transfer was made about the same time in favour of the insolvent's own brother and others is not without some relevancy when we are considering the bona fides of the present transfer. Chunnoo Lai was examined as a witness in the present proceeding. He swore that he had been a friend of the insolvent and that the pro-note was given in consideration of money part of which was advanced for the very purpose of paying off the mortgage in favour of Lachman Sonar. He swears that the mortgage was paid off, that he and Manohar brought the money and that an endorsement of payment was made on the mortgage Manohar corroborates him. Chunnoo Lai was questioned by the Court as to the petition he had presented in the insolvency matter, wherein he asked that notice might be given to the insolvent to show cause why the sale-deed in favour of Lachman Sonar should not be set aside. This application dealt not only with the present transfer bat with certain other transfers also. It is a document contained in five paragraphs, some of which are of considerable length. Tb$ fourth paragraph was the paragraph which referred to the particular transfer in favour, of Lachman. The allegation in the paragraph was that a fictitious sale deed had been executed in favour of Lachman Sonar. The paragraph ended with a statement that the sale-deed and mortgage-deed were fictitious. The object of the District Judge's question to the witness was to get an explanation why it was that he said that the mortgage-deed (as well as the sale-deed) was fictitious. In his evidence he did not state that the mortgage was fictitious, on the contrary he said part of the money he. advanced in the pro-note went to discharge the mortgage. The witness explained that what he meant was that the mortgage was farzi, because it had been paid off. This petition was evidently prepared by a petition-writer, and no doubt it was a somewhat inaccurate statement, if it is to be read in conjunction with the evidence in the case. But we think that the explanation was by no means an unreasonable one, and if Chunnoo Lai had given a statement of his case to the petition-writer, the latter might very well have put the fourth paragraph in the form in which it appears. We think that the inconsistency between the fourth paragraph of the petition and the evidence of the witness was hardly a sufficient ground for absolutely disbelieving the evidence of Chunnoo Lal. There is one matter which certainly is deserving of some consideration although it is by no means conclusive, namely, why it was that Chunnoo Lal did not take up the mortgage-deed. Ha has given an explanation such as it is, and no one has been called to contradict him The learned Judge says that the mortgage in favour of Lachman was for a fixed period, but we find that if default was made in the payment of interest the mortgage could be at once sued on. The mortgage-deed comprised not only the fixed-rate tenancy but also the debtor's house, and it may well have been that his object in borrowing the money was to pay off the mortgage and so free his house. Chunnoo Lal says that the understanding between him and Bhawani Shanker was that the debt on the pro-note was to be paid off by degrees. The evidence of Chunnoo Lal is corroborated by the fact that the mortgage-deed undoubtedly had written at the back of it an endorsement of some kind. An examination of the document will show that considerable trouble has been taken to rub something out-daylight can be seen through at one place. The learned Judge has speculated that possibly there may have been an endorsement of payment of interest which was rubbed out; but this is a pure speculation. It is not the explanation given by Lachman Sonar, in whose custody the document ought to have always remained from the time it was executed up to the time he gave his evidence, if it bad not been paid off. He gave no explanation of any kind as to what endorsement had been rubbed out or why the rubbing had taken place. He seems to have evaded answering questions by stating that it had become dirty by being in his pocket. We now come to another matter which is always important in considering whether or not a transfer made under circumstances like the present is an honest and genuine transaction. Chunnoo Lal stated that up to the present Bhawani Shanktr has remained in possession of the property. The patwari says the same thing, and it is an admitted fact that Lachman Sonar has never had his name entered as the fixed-rate tenant. It must be remembered that if the sale was a genuine sale Lachman ought to have been in possession of the land (either cultivating himself or receiving all the rents) for about two years at the time when he was giving his evidence. Bhawani Shanker has not been called either to say that the mortgage was not paid off as sworn to by two witnesses or to Drove that possession was given to Lachman after the sale-deed. It seems to us that on the evidence on the record one must hold that possession was never given to Lachman Sonar. The result is that we find a man who owes money and against whom a suit has been brought shortly before he presents his petition for insolvency, making this transfer in favour of Lachman Sonar and another transfer in favour of his own brother. We have the sworn evidence of Chunnoo Lal and Manohar, which is uncontradicted by any one, except Lachman Sonar who has given what is obviously a false explanation of a very suspicious mutilation of the mortgage-deed, and we have the fact that possession has not changed with regard to the, property sold. We think taking all these facts into consideration we are bound to hold that the transfer was- not bona fide, that it was without consideration and, therefore, void having regard to the provisions of Section 36 of the Provincial Insolvency Act. We allow the appeal, set aside the order of the learned District Judge and declare that the sale-deed in favour of Lachman Sonar is not bona fide and was made without consideration. The Receiver will have his costs as part of the Receiver's costs in the insolvency matter. We would like to make a suggestion to learned Judges before whom a proceeding like the present may come in insolvency matters. We think that the Receiver should file a written statement (similar to a plaint in ordinary suits) setting forth the grounds on which the transfer is challenged, that the transferee should put in a written reply and that then the proceedings should continue very much as in a suit. The matters should not and cannot properly be disposed of in a summary manner.