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The Official Receiver Vs. Segiraju Subbayya and anr. - Court Judgment

LegalCrystal Citation
CourtChennai
Decided On
Judge
Reported in146Ind.Cas.530
AppellantThe Official Receiver
RespondentSegiraju Subbayya and anr.
Cases ReferredFool Kumari Das v. Khirod Chandra Das Gupta
Excerpt:
provincial insolvency act (v of 1920) sections 4, 53, 54 - transfer more than two years old--official receiver seeking to avoid transfer as fraudulent--jurisdiction of insolvency court to entertain application--sections 53, 54, whether exhaustive. - - their lordships say that the words of the statute seem to be perfectly plain, and where that is the case, it is not permissible to speculate......on the view taken by the learned subordinate judge that the official receiver only treats the deeds as voidable yet the insolvency court has jurisdiction. in the case quoted above, doonadula sriramula v. ponakavira reddi 72 ind. cas. 805 : 45 m.l.j. 105 : (1923) m.w.n. 306 : 18 l.w. 426 : a.i.r. 1923 mad.641, venkatasubba rao, j., said that on a review of the decisions it appeared that the preponderance of authority was in favour of holding that under act iii of 1907 the court in the exercise of its insolvency jurisdiction cannot decide questions relating to adverse claims by or against third parties. in that particular case, the learned judges held that the matter was cognisable because the third party was a creditor and that the court was entitled to go into the question as to.....
Judgment:

Pakenham Walsh, J.

1. This is an appeal from an appellate order dismissing an application by the Official Receiver in I.P. No. 145 of 1925 to have two gift deeds executed by the insolvent in favour of two counter-petitioners, declared fraudulent. The adjudication was on January 6, 1926, on a petition dated December 1, 1925. The two gift deeds are dated respectively September 8, 1922, and March 22, 1922. The donees are the two wives of the insolvent.Admittedly the deeds are dated more than two years before the date of adjudication. Consequently Section 53 of the Provincial Insolvency Act does not apply, and the question is whether the petition under Section 53 of the Transfer of Property Act is cognizable under Section 4 of the Provincial Insolvency Act. The learned District Munsif held that the petition was barred by Section 53 of the Provincial Insolvency Act. There is no discussion of the matter in his judgment, but the Principal Subordinate Judge has written a fairly long judgment agreeing with the view taken by the Court of First Instance. The main ground on which he decides the matter is, that while the petition might have been cognisable if the original transfer of the property was a nullity, the Insolvency Act does not apply when it is only voidable. I am unable in the light of the decisions of this Court to agree with his view.

2. The first case to be considered is Doonadula Sriramulu v. Panakavira Reddi 72 Ind. Cas. 805 : 45 M.L.J. 105 : (1923) M.W.N. 306 : 18 L.W. 426 : A.I.R. 1923 Mad.641. This was under Act III of 1907 which did not contain present Section 4. The alienations there were more than two years old and the question was whether they were within the cognizance of the Insolvency Court. It was there held that the allegations in the petition were sufficient to make the application one to set aside documents as void even though the word voidable was used. Applying this view as to void and voidable in the present case the allegations in the petition of the Official Receiver amount, I consider, to a statement that the deeds are void. He says in para.6:

In spite of the said gift deeds the insolvent continues to be in possession of the properties in the schedules.

He says in paras. 7 and 8 as follows:

The counter petitioners being the wives of the insolvent, and the gift deeds having been executed with the object of keeping back the properties from being available for creditors and thus defeating the claims of the creditors, the gifts are fraudulent and collusive and are, therefore, voidable as against the Official Receiver.

The said alienations though made more than two years before the date of the presentation of the insolvency petition, are not valid under Section 53, Transfer of Property Act, and can, therefore, be annulled by this Court, under Section 4, Provincial Insolvency Act.

In spite of the use of the word voidable he has really said everything that can be saifl which would show that the deeds were sham and void. If that, view is correct, all the authorities are agreed that the court could take cognizance of the matter. The question has been, however, argued on the ground that, on the view taken by the learned Subordinate Judge that the Official Receiver only treats the deeds as voidable yet the Insolvency Court has jurisdiction. In the case quoted above, Doonadula Sriramula v. Ponakavira Reddi 72 Ind. Cas. 805 : 45 M.L.J. 105 : (1923) M.W.N. 306 : 18 L.W. 426 : A.I.R. 1923 Mad.641, Venkatasubba Rao, J., said that on a review of the decisions it appeared that the preponderance of authority was in favour of holding that under Act III of 1907 the Court in the exercise of its insolvency jurisdiction cannot decide questions relating to adverse claims by or against third parties. In that particular case, the learned Judges held that the matter was cognisable because the third party was a creditor and that the court was entitled to go into the question as to whether his debt was a genuine one under Section 24 of the Act. There are, however, in that case certain remarks about Sections 53 and 54 which are of great importance in settling the matter now in issue seeing that we have now Section 4 of the Act which did not then exist. The learned Judges there state that Sections 53 and 54 only lay down rules of evidence and are not exhaustive.

3. The learned Subordinate Judge relies on a decision in Pirthiraj Singh v. Rukmin Kurwar : AIR1926All415 , but there has been a more important Full Bench decision of the same court subsequently, Anwar Khan v. Muhamad Khan : AIR1929All105 , where by a majority of two to one, the Full Bench held that the Insolvency Court has power to go into the question whether a transfer is voidable under Section 53 of the Transfer of Property Act. They approve of the opinion expressed in Doonadula Sriramulu v. Ponakavira Reddi y that Sections 53 and 54 of the Insolvency Act are only rules of evidence. With regard to the dissenting judgment in that case, which practically contains the arguments addressed to me on behalf of the respondents, I may note that Seen, J., refused to follow the dictum of this Court approved of by the other Judges with regard to Sections 53 and 54. Since the reasoning of the majority of the Full Bench in Anwar Khan v. Muhammad Khan : AIR1929All105 , follows the view taken by this Court as regards the scope of Sections 53 and 54, while the dissenting judgment refuses to follow it, there is no reason for my preferring the dissenting judgment. The view that Sections 36 and 37, now Sections 53 and 54, merely deal with evidence had already been taken by this Court in Kochu Muhamad Asan Tharagan v. Sankaralinga Mudaliar 62 Ind. Cas. 495 : 44 M. 524 : 40 M.L.J. 219 : (1921) M.W.N. 226 : 14 L.W. 505. Then we have another Madras case Chittammal v. Ponnuasami Naicker 92Ind. Cas. 573 : 49 M. 762 : 23 L.W. 94 : (1921) M.W.N. 121 : 50 M.L.J. 180: A.I.R. 1927 Mad 363, in which it was held that acting under Section 56 of the Provincial Insolvency Act, the Court cannot direct any person to deliver up any property in his possession to the Official Receiver, unless the Insolvent is entitled, on the date of the application under the section, to the immediate possession of the property: if a title, however flimsy, is set up by the person in possession, the court cannot act under Section 56. But it is open to the Court, on a proper application being made under Section 4 of the Act, to try the issue whether the insolvent is entitled to the property or not. That case is an authority for the appellant's contention. So also is Fool Kumari Das v. Khirod Chandra Das Gupta 102 Ind. Cas. 115 : A.I.R. 1927 Cal. 475 : 31 C.W.N. 502, where it was held that the Insolvency Court has jurisdiction to decide questions of title, as between an Official Assignee as the insolvent's and which on the other hand is claimed by the Official Assignee as the insolvent's and which en the other hand is claimed by the stranger as his. Their Lordships say that the words of the Statute seem to be perfectly plain, and where that is the case, it is not permissible to speculate. I would, therefore, hold that even if the transaction is only regarded as voidable, the Insolvency Court has jurisdiction to entertain the application. The appeal must, therefore, be allowed with costs and the petition restored for disposal according to law.


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