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Kandaswami Goundan and ors. Vs. Rangaswami Goundan and ors. - Court Judgment

LegalCrystal Citation
SubjectProperty
CourtChennai
Decided On
Reported inAIR1938Mad370
AppellantKandaswami Goundan and ors.
RespondentRangaswami Goundan and ors.
Cases ReferredPullayya v. Official Receiver of Kistna
Excerpt:
.....said :it follows that leave to appeal should also not be given to a creditor unless either the district judge or thin court is satisfied that the receiver had been requested and has refused to appeal. he has not apparently considered the very unconvincing reason given by respondent 2 for purchasing this property on this particular date, he being a resident. in another village five miles away, or the squally unconvincing evidence he has given regarding the use which ha made of this hand after his purchase. the appellant's evidence is that the debtor continued to be in possession of the land and to enjoy its produce. the district judge appears to have failed likewise to consider the inadequate explanation given by respondent 3, the debtor's brother, for his purchase from respondent 2..........the court under section 54. a to file a petition for that purpose. the petition was dismissed, the district judge holding that the appellant bad not sue. deeded in proving that the sale which he impeached was not a transfer in good faith and for valuable consideration. the appellant in pursuance of section 75(3) obtained leave of the high court to appeal against the decision of the district judge, a preliminary objection has been raised by mr. venkatachariar, who appears for the alienees, the respondents to this appeal, that [the appeal will not lie. his contention is that the appellant is not competent to appeal as a person aggrieved unless he had limit applied to the official receiver to appeal and the official receiver had refused. the learned advocate seeks to draw analogy from.....
Judgment:

Cornish, J.

1. The appellant is a creditor who upon the refusal of the Official Receiver to take steps to set aside a sale Under Section 53, Provincial Insolvency Act, obtained leave of the Court Under Section 54. A to file a petition for that purpose. The petition was dismissed, the District Judge holding that the appellant bad not sue. Deeded in proving that the sale which he impeached was not a transfer in good faith and for valuable consideration. The appellant in pursuance of Section 75(3) obtained leave of the High Court to appeal against the decision of the District Judge, A preliminary objection has been raised by Mr. Venkatachariar, who appears for the alienees, the respondents to this appeal, that [the appeal will not lie. His contention is that the appellant is not competent to appeal as a person aggrieved unless he had limit applied to the Official Receiver to appeal and the Official Receiver had refused. The learned advocate seeks to draw analogy from Section 54. A in support of his proposition. I think that the appellants' right of appeal depends entirely upon the terms of Section 75. Sub-section (1) enumerates the persons to whom a right of appeal is given; they are, 'the debtor, any creditor, the receiver or any other person aggrieved by a decision.' Under Sub-section 1, it is the decision of an Insolvency Court subordinate to the District Court which Is appealable, and an appeal is given from the decision of the Subordinate Court to the District Court. Sub-section 2 provides for an appeal by 'any such person aggrieved' which means any of the parsons named sub a 1-by a decision of a District Court on the matter specified in Schedule I of the Act. And Sub-section 3 gives a right of appeal by leave of the High Court to 'any such person aggrieved' by an order of the District Court made otherwise than in appeal from a Subordinate Court.

2. There is no doubt that a creditor is among the persons who may be aggrieved by an order of an Insolvency Court whether it be a subordinate Court, or a District Court to whom a right of appeal is given by Section 75. Mr. Venkatachari has relied upon a decision of Addison J. reported in Puran Chand v Ramchand Gupta (1931) 18 A.I.R. 651 In that case an objection was taken at the hearing of the appeal that an appeal would not lie because the leave of the Court had not bean obtained Under Section 75 (3). All that the learned Judge decided was that it was not a fit case to give leave to appeal, because the appellant had not requested the Official Receiver to appeal and the Official Receiver had refused. The learned Judge referring to Section 54.A - although it does not appear from the report that the creditor had originally taken stops to sat aside the sale Under that section said :

It follows that leave to appeal should also not be given to a creditor unless either the District Judge or thin Court is satisfied that the Receiver had been requested and has refused to appeal.

3. He does not lay down that the High Court can only give leave to a creditor to appeal upon these conditions. In my judgment the language of Section 75 gives no warrant for attaching any such condition to the power vested in the High Court by Sub-section 3. The preliminary objection therefore fails. I now come to the merits of the appeal. The appellant filed a suit on a promissory note against the debtor on 22nd December 1925 on that same day the debtor executed a registered sale deed, Ex. 1, to respondent 2, his cousin, of land for a sum of Rs. 1500. The appellant obtained a decree in his suit on 15th February 1926 He petitioned to have the debtor adjudicated on 22nd March 1926, the alleged act of insolvency being the transfer made by Ex. 1. The debtor was adjudicated on 9th August 1926. The appellant is the sole creditor. On 1st November 1928, respondent 2 executed Ex. 2, a sale dead of the same property, to respondent 3, a brother of the debtor, for Rs. 1500, and one of the attestors of that: sale deed is the debtor. Now undoubtedly the appellant had to establish that these were not bona fide transactions. Ha had to produce evidence either in chief or by means of cross-examination of the respondents' witnesses, to show that the circumstances of these sales were such that the reasonable inference was that they were simply a device to screen the property from the creditor. It is not enough, as the learned District Judge seems to have done, to pick out a few circumstances and to find explanations for them, and then to deduce there from that the appellant has not discharged his burden of proof. The Judicial Committee has pointed out that it is essentially necessary that the facts should be considered in relation to each other and weighed as a whole: Seth Ghunsham Das v. Uma Pershad A.I.R. (1919) P.C. 6.

4. The District Judge has first of all referred to soma evidence that the debtor had other immovable property at date of Ex. 1. the evidence is that of respondent 3 who giving evidence in 1934, says that the debtor sold a land 'two or three years ago' and another land one and half years ago'. But the debtor had been adjudicated in 1926 and is still un-discharged, and it seems most improbable that he would have been disposing of property which had vested in Official Receiver, If on the other hand the witness was deposing to alienations made by the debtor prior to the insolvency, the evidence would be quite immaterial to the question whether the sale by Ex. 1 was not bona fide and for valuable consideration. The District Judge then refers to the registration of Ex, 1, and appears to think that the circumstances that this document was 'publicly registered' and that pattas were transferred to respondent 2 show the bona fides of the parties. But obviously, the least the arties to the transaction could be expected to do if it was a sham would be to give it the appearance of reality. The District Judge admits that there may be some suspicions attaching to Ex. 1 owing to the relationship of the parties, but he finds himself unable to hold that appellant had discharged the burden of proving that the sale was not bona fide and without consideration. He does not so much as allude to the co-incidence of the filing of the appellant's suit with the execution and registration of the sale deed on the same day; nor to the hurry, (evidenced by the writing, execution and registration of Ex. 1 in Sub-Registrar's Office), to get Ex, 1 completed on this same day. He has not apparently considered the very unconvincing reason given by respondent 2 for purchasing this property on this particular date, he being a resident. In another village five miles away, or the squally unconvincing evidence he has given regarding the use which ha made of this Hand after his purchase. He says he let it on varam to an uncle. The appellant's evidence is that the debtor continued to be in possession of the land and to enjoy its produce. There is no evidence as to who paid the kist. The village munsif cannot say; respondent 2 says he paid kist, but he did not produce any kist receipt. He admitted that he had no rental agreement In respect of the land. The District Judge appears to have failed likewise to consider the inadequate explanation given by respondent 3, the debtor's brother, for his purchase from respondent 2 under Ex. 2. This is what respondent 3 says in cross-examination:

Respondent 2 lives in Alavoypatti village, five smiles off my village. He never lived in my tillage. Respondent 2 is my maternal uncle's son. He was in possession for two or three years. Then he sold to me, I do not know why he purchased this land in my village. Nor why he sold it.

5. I think upon the evidence that it is not possible to hold that Ex. 1 was a bona fide sale. With regard to the question whether consideration was given for the sale, there are three attesting witnesses who say that consideration passed. But the only one of these witnesses who can be regarded as independent, after first of all stating in examination-in-chief that Rs. 1500 was paid in cash, said in cross-examination that he did not see the passing of consideration. The evidence of consideration is worthless. In my judgment the only reasonable inference upon the evidence is that Ex. 1 was a sham transaction. It must be set aside; and Ex. 2 being merely another stage in this sham falls with it: see Pullayya v. Official Receiver of Kistna : AIR1933Mad271 . The appeal therefore succeeds and is allowed with costs throughout' against respondents 2 and 3. Rs. 50 advocate's fee.


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