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Alliance Bank of Simla Vs. R. Joshua and ors. - Court Judgment

LegalCrystal Citation
SubjectProperty
CourtKolkata
Decided On
Judge
Reported in(1895)ILR22Cal185
AppellantAlliance Bank of Simla
RespondentR. Joshua and ors.
Excerpt:
transfer of property act (iv of 1882), section 53 - statutes 13 eliz., c. 5, and 27 eliz., c. 4--voluntary transfers as against creditors or subsequent transferees for consideration--notice--registration--duty of mortgagee in searching for prior incumbrances--post-nuptial settlement with power of appointment to wife--deed of appointment in favour of children--secrecy as evidence of fraud--subsequent mortgage by wife and trustee of settlement without mention of deed of appointment. - .....the trust, and conveyed his interest to the remaining trustee mr. gubboy, and mrs. joshua made a deed of appointment in favour of her children. the deed of appointment, which was registered after the release of mr. elias from his trust and witnessed by him only, was not referred to in the document of title in the hands of the remaining trustee. at the time of the execution of this deed mrs. joshua is represented to have told mr. gregory, her solicitor, that her husband was a trader, and apparently led him to imagine that she wanted to make a deed of appointment to prevent any pressure from him. at the same time there is nothing on the record of this case which would lead us to believe that her husband was ever in needy circumstances, ever pressed her, or died without leaving.....
Judgment:

W. Comer Petheram, C.J., Norris and O'Kinealy, JJ.

1. The appellants in this case are the sons of Mr. Joshua against whom a decree was given in the Court below which is now in appeal.

2. Mrs. Joshua was married in May 1870, and in the following year she received certain Municipal debentures belonging to her father standing in the name of her brother. She then settled this property and appointed Mr. B.S. Gubboy and. her brother trustees to hold it for herself for life without anticipation, and afterwards for such persons as she should appoint by deed or will. The debentures were soon after sold, and their proceeds, together with Rs. 7,000 which were borrowed in 1872 from the brother of one of her trustees, Mr. Gubboy, were invested in house property in Calcutta. In 1878 Mrs. Joshua desired to release her brother Mr. Elias from his trust, and apparently was anxious to make an appointment in favour of her children, and the way she carried out this arrangement was the only way consistent with keeping the fact of the appointment as much a secret as possible. On the 17th December 1878 two documents were executed. Mr. Elias retired from the trust, and conveyed his interest to the remaining trustee Mr. Gubboy, and Mrs. Joshua made a deed of appointment in favour of her children. The deed of appointment, which was registered after the release of Mr. Elias from his trust and witnessed by him only, was not referred to in the document of title in the hands of the remaining trustee. At the time of the execution of this deed Mrs. Joshua is represented to have told Mr. Gregory, her solicitor, that her husband was a trader, and apparently led him to imagine that she wanted to make a deed of appointment to prevent any pressure from him. At the same time there is nothing on the record of this case which would lead us to believe that her husband was ever in needy circumstances, ever pressed her, or died without leaving property.

3. Matters remained in this position till the year 1884. In March of that year Mr. Elias became sole trustee in place of Mr. Gubboy, and then he, with the consent and agreement of Mrs. Joshua, borrowed, under a deed of mortgage, the sum of Rs. 6,500 from Mr. Gubboy, her former trustee. This document was signed by Mrs. Joshua and Mr, Elias, and it contains no mention at all of the deed of appointment of 1878, thus plainly indicating that up to that time no change in the title had been made by Mrs. Joshua. Mrs. Joshua's husband died in October 1884, and no* follows a period in which, if, as Mrs. Joshua said, she executed the appointment only as a protection from her husband, she should in honesty have made known to her trustee that the time for concealment had passed, and that she had made the appointment. The debt under the mortgage of 1884 remained unpaid until the year 1888, when Mr. Gubboy, at the request of Mr. Elias, the trustee, made an assignment of the mortgage in favour of Sarah Emma Sim and others who, in consideration of such assignment, paid to Mr. Gubboy Rs. 6,500 and to Mr. Elias, the trustee, Rs. 6,500, making a total sum of Rs. 13,000, and on the 25th July the said Sarah Emma Sim and others made a further advance to Mr. Elias of Rs. 12,000. In all Rs. 25,000 were raised on the mortgaged premises. In this transaction, just as in the transaction of 1884, no mention was made of the exercise of the power of appointment, and the title of the property was the same as the title shown in 1884. The mortgage debt of 1888 remaining unpaid, the trustee attempted to raise money from the plaintiffs in this case, and he and Mrs. Joshua on the 16th October 1890, mortgaged the premises for the sum of Rs. 42,000. In this mortgage deed Mrs. Joshua stated that she had not made any irrevocable appointment in respect of the premises, and, revoking all appointments, if any, heretofore made by her, she exercised the appointment in favour of the Bank.

4. There can be no doubt that Mrs. Joshua knew the contents of all the documents of 1884, 1888 and 1890, and that she behaved in a very improper mariner.

5. Under Section 53 of the Transfer of Property Act, where a transfer is made gratuitously for a grossly inadequate consideration, the transfer may be presumed to have been made to defraud or defeat creditors. But in addition to that presumption the transaction of 1878 was carried out in a most unusual way, and in the only way in which secrecy could be maintained. The deed of appointment was not given to the trustee, and no notice of it appeared in the title. On the contrary it was kept by the lady herself who was one of the cestui qua trusts. By this unusual procedure the settlor and the trustee were enabled to raise from time to time large sums of money by inducing the persons who advanced the money to them to believe that the whole title lay in the lady and the trustee. It seems to us, therefore, a fair inference that this unusual procedure was adopted by the lady in 1878 with the intention of enabling herself and the trustee to obtain money by showing a complete title in themselves and yet to prevent the lenders from realizing their money.

6. We think, therefore, that the decree of the Court below is correct, and this appeal must be dismissed.


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