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Kullappa Reddiar and ors. Vs. Al. Vr. St. Veerappa Chettiar and ors. - Court Judgment

LegalCrystal Citation
SubjectCivil
CourtChennai
Decided On
Reported inAIR1938Mad285
AppellantKullappa Reddiar and ors.
RespondentAl. Vr. St. Veerappa Chettiar and ors.
Cases ReferredMadras v. Krishnaswaml Naidu
Excerpt:
.....to show that the promissory notes are not genuine. the mere relationship of the attestors and the alienees in the alienation deeds and the fact) that most of the alienees belong to the same village as the insolvent are not sufficient to show either that the alienees acted in bad faith or that the alienations were without consideration. in fact, once it is found that the promissory notes are genuine, there can really be no escape from the conclusion that the alienees must have also acted in good faith, for in. 4. this is clearly a decision which is based on mere suspicion. the suspicion is entirely due to the fact that the alienees have not given an absolutely satisfactory explanation of the transaction and of the previous transactions between them and the insolvent the evidence on the..........to show that the promissory notes are not genuine. the mere relationship of the attestors and the alienees in the alienation deeds and the fact) that most of the alienees belong to the same village as the insolvent are not sufficient to show either that the alienees acted in bad faith or that the alienations were without consideration. in fact, once it is found that the promissory notes are genuine, there can really be no escape from the conclusion that the alienees must have also acted in good faith, for in. stance, the trial court in dealing with the alienation ex. 1 merely observes that on account of certain suspicious circumstances and the absence of an explanation of the suspicious circumstance by the production of account books it is proved that the consideration for ex. 1 is not.....
Judgment:
ORDER

Pandrang Row, J.

1. These four revision petitions arise out of connected applications made by a creditor, Veerappa Chettiar, in I.P. No. 21 of 1927 on the file of the Subordinate Judge's Court of Coimbatore seeking to annul certain alienations made by the insolvent in October 1926. There were five alienations in, all executed in October 1926 and there were five applications for annulling them. The insolvent was adjudicated as such on petitions filed on 10th and 11th January 1927. In one case the alienation was sought to be set aside Under Section 54, Provincial Insolvency Act, as well as Under Section 53, the other four being only applications Under Section 53, The trial Court found that one of the alienations (Ex. 2) was valid and dismissed the application relating thereto, and the other four alienations were set aside. On appeal, the appeals by the unsuccessful alienees were dismissed by the Appellate Court and the appeal by the creditor in the single case in which the alienation was upheld was allowed. Five revision petitions were filed. One of them was not admitted and the other four have now to be decided.

2. Some argument was addressed to me on the impropriety of the joint trial and determination of all the applications together and reference was made to In re Binjraj Harnandral A.I.R. 1931 Cal 232 and Official Assignee, Madras v. Krishnaswaml Naidu : AIR1937Mad192 . It is not necessary to devote much attention to this aspect of the case because, as the learned advocate for the respondents has pointed out, the trial of these applications together was with the consent of the parties, and therefore it is not open to the petitioners in these petitioners to take objection to the joint trial. This however does not mean either that the evidence otherwise irrelevant becomes relevant because the applications were heard together, or that because some alienations are found to be fraudulent as being not in good faith the others must necessarily on that account partake of the same character. In other words, in spite of the joint trial of the applications, the case regard each alienation must be dealt with separately, and the evidence relating to it considered separately. There can be no doubt that the two Courts below have not made a real attempt to differentiate the evidence which relates to each alienation. The trial Court points out certain relationships between the parties to the alienations and the attestors thereto and these relationships were apparently allowed to lead to the conclusion that all the alienations were the result of a schema or plot to defraud creditors, There has also been a failure to observe the distinction between the fraudulent intention of the insolvent, the transferor, and the knowledge of such intention on the part of the transferee. There can be no doubt that so far as Section 53, Insolvency Act, is concerned, it is the absence of good faith on the part of the transferee that has to be proved and not the absence of good faith on the part of 'the transferor, the insolvent.

3. The judgments of the Courts below are open to the just criticism that the decisions therein are really founded on mere suspicion and speculation, and not on legal testimony, for, there can be no doubt that the legal testimony is utterly insufficient in law to support the inference that the alienees acted without good faith or that here was no valuable consideration for the alienations. The deeds of alienations themselves have been exhibited and the vouchers in support thereof also have been exhibited. In one of the cases the vouchers so exhibited were 17 in number namely Exs. 1-a to 1-r, the dates of which range from 1908 to 1924. There is no finding to the effect that all these promissory notes are forgeries or that any one of them is a forgery. Prima facie, the promissory notes which have been exhibited in evidence prove that the debts were real and the burden lies, apart from the general burden in cases coming Under Section 53, Insolvency Act, on the person who alleges that the promissory notes are forgeries. That burden has not been discharged and indeed there is nothing but mere suspicion, and that too not of a strong character, to show that the promissory notes are not genuine. The mere relationship of the attestors and the alienees in the alienation deeds and the fact) that most of the alienees belong to the same village as the insolvent are not sufficient to show either that the alienees acted in bad faith or that the alienations were without consideration. In fact, once it is found that the promissory notes are genuine, there can really be no escape from the conclusion that the alienees must have also acted in good faith, For in. stance, the trial Court in dealing with the alienation Ex. 1 merely observes that on account of certain suspicious circumstances and the absence of an explanation of the suspicious circumstance by the production of account books it is proved that the consideration for Ex. 1 is not real.

4. This is clearly a decision which is based on mere suspicion. The suspicion is entirely due to the fact that the alienees have not given an absolutely satisfactory explanation of the transaction and of the previous transactions between them and the insolvent the evidence on the side of the petitioning creditor is almost of no value, and if the question had to be decided on the strength of the evidence on the side of the petitioning creditor there can be no doubt that the petitioner had utterly failed to prove his case. The fact that the creditors have adduced certain evidence would not discharge the burden which lies on the petitioning creditor even though such evidence is not wholly acceptable. In this ease it is not as if the evidence itself has been characterized as false, but that there are certain circumstances appearing in the evidence on the side of the alienees which in the absence of an explanation would offer ground for suspicion. So far as the non-production of account books is concerned, it is not the case of the petitioning creditor that the accounts were summoned and that the alienees declined or omitted to produce accounts. It is possible that the accounts were not produced because the alienees were left under the impression that the burden was really, and not merely theoretically, on the petitioning creditor to prove his case.

5. In my opinion neither of the Courts below has correctly understood the nature of the burden which is thrown by law on the petitioning creditor in oases of this kind. The burden is not discharged by mere vague allegations of fraud as has been done in this case by one witness going into the witness box and saying that all the alienations are fraudulent. The burden can be discharged only if circumstances are established from which it can be reasonably inferred that the alienee acted in bad faith and that there was no valuable consideration for the alienation. Of such evidence there is none in these oases. The decisions rest on no evidence at all and must therefore be regarded as being insupportable in law. They are accordingly get aside and the applications in these four cases are dismissed with costs in this Court and in the Courts below.


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