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Bohisetti Mamayya Vs. the Official Receiver - Court Judgment

LegalCrystal Citation
CourtChennai
Decided On
Judge
Reported in92Ind.Cas.726
AppellantBohisetti Mamayya
RespondentThe Official Receiver
Excerpt:
provincial insolvency act (v of 1920), section 53 - fraudulent preference--intention of insolvent--creditor's motive, whether--material. - .....1918 under ex. i. mr. varadachariar, for the appellants, contends that the sale is a bona fide sale for adequate consideration. the learned judge has attached importance to the fact that the properties sold were undervalued. in a case of fraudulent preference it is not necessary for the official receiver to make but that the property alienated was undervalued. the gist of fraudulent preference lips in preferring one creditor to another when the insolvent is unable to meet his liabilities fully. in this case the creditor presented a petition to adjudicate the insolvent on the 19th december 1918 and on the 10th march 1919 the insolvent presented an application for being adjudicated, an insolvent. it is also in evidence that the insolvent alienated almost all the properties in his.....
Judgment:

1. This appeal is against the order of the District Judge of Guntur setting aside the alienation in favour of the appellant madeby the insolvent on 29th September 1918 under Ex. I. Mr. Varadachariar, for the appellants, contends that the sale is a bona fide sale for adequate consideration. The learned Judge has attached importance to the fact that the properties sold were undervalued. In a case of fraudulent preference it is not necessary for the Official Receiver to make but that the property alienated was undervalued. The gist of fraudulent preference lips in preferring one creditor to another when the insolvent is unable to meet his liabilities fully. In this case the creditor presented a petition to adjudicate the insolvent on the 19th December 1918 and on the 10th March 1919 the insolvent presented an application for being adjudicated, an insolvent. It is also in evidence that the insolvent alienated almost all the properties in his possession between the date of Ex. I and the date on which the petition for adjudication was filed by the creditor. The appellant is a relation of the insolvent, his wife being the niece of the insolvent's wife, and, as the learned Judge remarks, there was no pressure by the appellant on the insolvent for the payment of his debt. The consideration for Ex. I is partly a debt due to the appellant and partly, a debt due to the Bank which the appellant was asked to pay. As a considerable portion of the consideration was a debt due to the appellant, the sale to him of the insolvent's property was with a view to prefer him to other creditors. There is another circumstance which also goes to show that the sale was not a bona fide sale. The insolvent who sold his dwelling house to the appellant is now in possession of the same under a rental agreement, Ex. IX, taken in the name of his son. A person in embarrassed circumstances, who have a number of liabilities to meet does n6t~ think of selling his dwelling house first unless it be to put it out of the reach of his creditors. The insolvent sold not only the dwelling house, but also about 21 acres of land and bricks about 50,000 and the standing crops which the learned Judge values at Rs. 750. All these are circumstances going to show that the object of the insolvent was only to prefer the appellant to other creditors. In cases of fraudulent preferences the Official Receiver has only to make out the intention of the insolvent. The intention or motive of the appellant is immaterial. Even if the credit for takes a bona fide sale from the insolvent in discharge of a debt to him, that does not make the transaction a valid transaction if the intention or the view of the insolvent is to prefer that creditor to others. We agree with the learned Judge in holding that the transaction is void as being fraudulent and we dismiss the appeal with costs.


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