1. One Maradugual Venkataratnam applied to be declared insolvent on the 24th of March 1910 and be was adjudicated an insolvent on the 31st August 1912... within Jthjee' souths; of the petition in insolvency, the house which is the subject of, this appeal, was nominally transferred for Rs. 4,000 on the 4th of January 1910 to One Perrazu, who is the second respondent. Admittedly, the consideration for this sale rem lined unpaid. On the 22nd of August, 1912, the same property was sold to the appellant, for the same price of Rs. 4,000 by the second respondent. There was a composition of the claims of the creditors, approved by the District Court upon which the D strict Court annulled the adjudication, on the 19th December 1912. There wis an appeal to the High Court, the result of which wis that the adjudication was restored on the 24th of March 1914
2. The lower Court has found that the transaction, by which the appellant purchased the house in question, was voidable, under Section 53 of Act V of 1920, as being a transfer of property, not made in good faith and for valuable consideration, within two years of the transferor being declared insolvent.
3. The important facts in the case are that the first sale was without consideration that the appellant is the nephew and son-in-law of the fisrt insolvent, and that he admitted in his evidence that he was aware of the presentation of a petition by his father in-law, to be adjudicated insolvent soon after that petition was filed. One Asuram had a mortgage decree against the insolvent in Original Suit No. 10 of 1909 and one of the terms of Exhibit 1(a) was that the sale amount should be paid towards the mortgagee decree-holder's decree. The appellant paid Rs. 4,700 to Asuram, on the 12th of February 1914, and it is now argued that payment was bona fide, because it was made according to the terms of the transfer deed, in favour of the appellant's vendor; but the appellant must have been aware at the time that an appeal was pending from the District Court's order annulling the adjudication, and therefore, if he paid any part of the consideration for his transfer, during the pendency of that appeal to a stranger, he did so at his own risk. He was not personally bound by the covenant in Exhibit. A, which was executed before the insolvent had applied for adjudication, as regards the promise to pay the mortgagee Rs. 4,000 of the purchase-money. Any such covenant that was contained in the document was subject to the result of the property passing away out of the insolvent's control and becoming vested in an Official Receiver. The appellant, in ignoring the fact that an appeal was pending against the annulment of adjudication and in paying the unpaid purchase-money to a stranger, in order to benefit his own father-in-law, evidently acted without good faith and at his own risk.
4. We, therefore, agree with the lower Court that the transaction was voidable under Section 53, corresponding to Section 36 of the Old Insolvency Act and dismiss the appeal with costs.