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Rajbari Bank Ltd. and anr. Vs. Rani Harshamukhi Sinha and ors. - Court Judgment

LegalCrystal Citation
SubjectProperty
CourtKolkata
Decided On
Reported inAIR1947Cal154
AppellantRajbari Bank Ltd. and anr.
RespondentRani Harshamukhi Sinha and ors.
Excerpt:
- .....their lordships concluded.] we accordingly hold that the conveyance of 20-9-1938, by kumar arun kumar sinha to rani harshamukhi represented a real transaction and the price of rs. 50,000 was actually paid to kumar arun chandra sinha.4. the only other question that remains for consideration is whether the sale to the rani can be avoided under the provisions of section 53, t.p. act. in order to succeed under section 53, two things will have to be established : (i) that the vendor or the transferor acted in the matter with the intent to delay or defeat his creditors. the intent must be an intent to defeat or delay his creditors generally, that is to say, all his creditors. if the transferor intends to prefer some creditors of his, that is to say, to pay out of the consideration money.....
Judgment:

1. Kumar Arun Chandra Sinha was the proprietor of 8 annas share of the Paikpara Raj Estate known as the Bhulua Estate. His properties consisted of revenue paying estates in the districts of Noakhali, Bakergunge, Faridpur and other districts. He mortgaged all his properties in favour of Raja Janaki Nath Roy and his co-sharers. Raja Janakinath Roy and his co sharers instituted a suit on the said mortgage in the Original Side of this Court in the year 1934 and recovered a preliminary decree for Rs. 25,00,000 and odd. By the decree Mr. Meyer was appointed a receiver with a direction to pay a sum of Rs. 750 month by month to Kumar Arun Chandra Sinha and to apply the balance in deduction of the mortgage dues. In pursuance of this decree, Mr. Meyer as Receiver took possession of the Bhulua Estate and at the material point of time, namely September 1938, Rs. 19,00,000 and odd was due to the mortgagees. Kumar Arun Chandra Sinha had other debts. He borrowed a sum of Rs. 45,000 on a promissory note from the Rajbari Bank Ltd., and another subs. tantial sum on another promissory note from the Faridpur Bank, Ltd. The Rajbari Bank Ltd., and the Faridpur Bank Ltd., are respectively, defendants 1 and 2 in the suit in which this appeal arises. In the year 1929, the former brought a suit in the Original Side of this Court on the said promissory note and recovered a decree for Rs. 53,000 and odd against the Kumar, The Faridpur Bank Ltd., also sued the Kumar and got a decree in the same year in the Original Side of this Court for a sum of Rs. 54,000. In 1938, the Rajbari Bank Ltd., got its decree transferred to Faridpur. After the decree had been transferred, it started execution in the Court of the Subordinate Judge, Faridpur, in August 1938. That execution case was numbered 118 of 1938. Nothing came out of this execution case. It was dismissed for default on 17-12-1938. On 20-12-1938, the Rajbari Bank Ltd., started execution again. This execution case was numbered 136 of 1938 and, in the course of that execution, touzi No. 3756 of the Faridpur Colloctorate which was one of the properties which had belonged to the Kumar was attached on 16 and 31-3-1939. On 30-8-1939, Rani Harshamukhi Sinha, the plaintiff in the suit and the respondent in the appeal before us, preferred a claim to the property attached, but that claim was summarily rejected on the next day on the ground that it had been filed too late. The property attached was sold on 10-4-1940, and was purchased for the sum of Rs. 1000 by the Rajbari Bank Ltd., and the Faridpur Bank Ltd.

2. In execution case 136 of 1938 the last mentioned Bank had applied for rateable distribution under Section 73, Civil P.C. Rani Harshamukhi filed this suit in which the appeal arises on 4-7-1940, under the provisions of Order 21, Rule 63, Civil P.C. Her case is that she is the owner of the said touzi as the Kumar had by a registered deed of conveyance dated 20-9-1938, conveyed the said property along with other properties of the Kumar for a consideration of Rs. 50,000. From the dates that we have given above, this conveyance was executed some time before the property in question was attached by the Rajbari Bank Ltd. The defendants to the suit are the Rajbari Bank Ltd., the Faridpur Bank Ltd., Kumar Arun Chandra Sinha and Mr. Meyer, the Receiver appointed in the mortgage suit of 1934. Neither the Receiver nor the Kumar entered appearance. The Rajbari Bank Ltd., and the Faridpur Bank Ltd. filed two separate written statements. They contend that the conveyance by the Kumar in favour of Rani Harshamukhi was a fictitious transaction, that is to say, without consideration, and secondly, even if consideration had passed, that conveyance was executed by the Kumar with the intent of defeating and delaying his unsecured creditors and Rani Harshamukhi did not act in good faith. The learned Subordinate Judge found that the conveyance represented a genuine transaction, the conside-ration having, in fact, been paid by Rani Harshamukhi to Kumar Arun Chandra Sinha and that the case made by the defendants under Section 53, T.P. Act, had not been established.

3. The Rajbari Bank Ltd, and the Faridpur Bank Ltd., have preferred this appeal. While the appeal was pending a scheme under Section 153, Companies Act, was framed in respect of the Faridpur Bank Ltd., and as a result of the sanctioned scheme the Calcutta Bank Ltd., took over the Faridpur Bank Ltd. The Calcutta Bank Ltd., has been added by an order of this Court as a party appellant and is separately represented. The appellants argued two points before us : (1) that the conveyance in favour of the respondent Rani Harshamukhi by the Kumar dated 20-9-1938, was without consideration and (2) that in any event the conveyance represented a fraudulent transaction which is of no effect against the creditors of the Kumar. We take up these points in the order stated above. [After considering the evidence on the first point, their Lordships concluded.] We accordingly hold that the conveyance of 20-9-1938, by Kumar Arun Kumar Sinha to Rani Harshamukhi represented a real transaction and the price of Rs. 50,000 was actually paid to Kumar Arun Chandra Sinha.

4. The only other question that remains for consideration is whether the sale to the Rani can be avoided under the provisions of Section 53, T.P. Act. In order to succeed under Section 53, two things will have to be established : (i) that the vendor or the transferor acted in the matter with the intent to delay or defeat his creditors. The intent must be an intent to defeat or delay his creditors generally, that is to say, all his creditors. If the transferor intends to prefer some creditors of his, that is to say, to pay out of the consideration money some of his creditors in preference to others and even with the firm intent of not paying at all those others, the case would not come within the section, Section 53, T.P. Act. That position is well settled in law and we need not burden our judgment by referring to the cases which have taken that view. The onus to prove the fraudulent intent, that is to say, the intent on the part of the transferor to defeat or delay his creditors generally, is on the persons who challenge the transaction under Section 68, T.P. Act. If they establish that that intent was present in the transferor, then the transferee will have to show, in a case where the transfer was for consideration, that he had acted in good faith. In the light of the observations which we have made above, it is now necessary to examine the facts of the case. We may at once say that the evidence on the record is insufficient and no inference can be made that in selling those properties to the Rani the Kumar had the fraudulent intent of defeating or delaying his creditors generally.

5. The facts on which reliance has been placed by the learned advocates appearing on behalf of the appellants for the purpose of establishing fraudulent intent on the part of the Kumar are these: (1) that the Kumar was heavily indebted; (2) that he sold all the properties which he had to his relation, the Rani; (3) that he sold them in a great hurry and (4) that he sold them at a price which was far less than the real value of the Malikana which he had in the properties. We have already stated that the mortgagee was in possession of all the immovable properties of the Kumar through a Receiver and the dues of the mortgagees at the date of the conveyance was nearly Rs. 20,00,000. In the course of 4 years from 1935 to 1938, the Receiver had paid to the mortgagees about Rs. 5,50,000. The house at No. 1 Harrington Street which belonged to Kumar Arun Chandra Sinha had been sold for Rs. 4,00,000 and that amount had been paid to the mortgagee. Out of the Rs. 5,50,000 that the mortgagee got from the date of the preliminary decree up to September 1938, Rs. 4,00,000 is accounted by the sale price of premises 1 Harrington Street, which was passed on to the mortgagees in part payment. In the course of 4 years, therefore, a sum of about Rs. 1,50,000 was the amount which could be paid by the Receiver to the mortgagees from out of the rents and profits of the mortgaged properties. It is quite clear that the reversion which was the subject matter of the sale would fall into possession and enjoyment after a considerable number of years from the date of the conveyance. There is also other evidence on the record which the learned Subordinate Judge has discussed in his judgment and we do not wish to repeat those facts again, that the value of what in effect was the reversion which Rani Harshamukhi purchased from the Kumar on 20-9-1938, could not be much more than Rs. 60,000.

6. No doubt, the Kumar was heavily involved in debts and it may be that Rani Harshamukhi or her officers were aware in a general way of the embarrassed condition of the Kumar, but the letters of the Kumar referred to in the earlier part of our judgment show that he was being pressed very hard by some of his creditors and he was under the apprehension that there would be a risk to his honour and prestige if he could not satisfy them or at least some of them by making payments. There is no evidence on the record which would even support a bare suggestion that the Kumar made a pretence to the Rani for obtaining Rs. 50,000 with the real intention of keeping it in his own pocket without making payments to any of his creditors. No doubt, the Rani was a relation of his, but the correspondence shows that the Rani was not out for accommodating him at any cost. In fact, the Rani having regard to the effect of the past financial relations with the Kumar, was not willing to advance the sum of Rs. 60,000 to the Kumar by way of loan and went so far as to give him a very curt reply to his request for the loan. It is only when she realised that the honour and prestige of the senior-most male member of the family would suffer if the latter could not make payments to his pressing creditors that she consented to take the said conveyance. The alleged haste in completing the transaction does not, in the circumstances of this case, create any suspicion when the facts of this case are looked to. It cannot be said that the transaction was completed with undue haste. There is, after all, a distinction between undue haste and promptness in completing a transaction. The Rani agreed to take the conveyance by the end of August. The conveyance was actually completed on 20-9-1938. There was thus a gap of about three weeks in between the two dates and searches and investigation in title was made. We do not wish to enter into the details as we have come to the conclusion that the evidence is not sufficient from which a reasonable inference can be made that in making the conveyance Kumar Arun Chandra Sinha was acting with the intent of delaying or defrauding his creditors. In this view of the matter, it is not necessary to consider in detail whether the transferee, namely, the Rani, acted in good faith. The mere fact of the general knowledge that Kumar Arun Chandra Sinha was in financial embarrassment would not, by itself, establish want of good faith on her part. Assuming that there was fraudulent intent on the part of the Kumar, it cannot be said that she was taking the conveyance mala fide, unless it is established that she knew of the fraudulent intent or was a party to the conspiracy for cheating the creditors. It may well be that she believed the Kumar when he stated in his letter that the creditors were pressing him hard and some payments at least were required to be made. If she took the conveyance in the belief that the price would be paid to the pressing creditors, there could be no mala fides on her part. For these reasons we affirm the decree of the learned Subordinate Judge and dismiss this appeal with costs.


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