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indo Burmah Trader's Bank, Ltd. Vs. Barada Charan Dhar, on Death, Sm. Sita Sati Dhar and Ors. (07.07.1944 - CALHC) - Court Judgment

LegalCrystal Citation
SubjectCivil;Property
CourtKolkata
Decided On
Reported inAIR1944Cal370
Appellantindo Burmah Trader's Bank, Ltd.
RespondentBarada Charan Dhar, on Death, Sm. Sita Sati Dhar and Ors.
Cases ReferredNaresh Chandra v. Gireeshchandra Das
Excerpt:
- .....answered against the petitioning creditor, the evidence bearing upon the point as to whether the gift by barada to his wife was made with intent of defeating or delaying his creditors was not led. against the order of the learned district judge refusing to adjudicate barada as insolvent the bank has preferred this appeal. during its pendency barada died and his legal representatives have been brought on the record as respondents. three questions arise before us: i. whether the proceedings for adjudicating barada as insolvent can continue after his death. ii. whether the evidence is sufficient to uphold a finding that barada had given notice of suspension of payment to ms creditors. iii. whether for the purpose of section 9 sub-section (1) clause (c) the transfer can be taken to have.....
Judgment:

1. The appellant, hereafter called the Bank, recovered a decree for Rs. 2003-13-3 against Barada Charan Dhar on 11th September 1936 which is still outstanding. On 29th March 1939 the Bank presented art application to the learned District Judge, Chittagong, for adjudicating him an insolvent. Two acts of insolvency were alleged: (1) that, he had executed a deed of gift in favour of his wife with the intent of defeating and delaying his creditors, and (2) that he had suspended payment of his debts and had given notice thereof to his creditors. The date of the deed of gift was given as 21st February 1939. The learned District Judge refused to adjudicate him insolvent. He held that the evidence led by the petitioning creditor was not sufficient to establish the second act of insolvency alleged in the petition. Before him the parties admitted that Barada had executed the deed of gift in favour of his wife on 30th October 1938 and that deed had been registered on 2lst February 1939.On the admission that the deed had been executed on 30th October 1938 he took up the question of law as to whether the alleged first act of insolvency was available to the petitioning creditor in view of the provisions of Sub section (1) (c) of Section 9, Provincial Insolvency Act. He held that the transfer must be taken to have been made on 30th October 1938, when the deed was executed, and not on 21st February 1939 when it was registered. In that view he held that the said act of insolvency was not available to the petitioning creditor as he had presented his petition beyond three months from the date of the said alleged act of insolvency. As the point of law was taken up as a preliminary point and was answered against the petitioning creditor, the evidence bearing upon the point as to whether the gift by Barada to his wife was made with intent of defeating or delaying his creditors was not led. Against the Order of the learned District Judge refusing to adjudicate Barada as insolvent the Bank has preferred this appeal. During its pendency Barada died and his legal representatives have been brought on the record as respondents. Three questions arise before us: I. Whether the proceedings for adjudicating Barada as insolvent can continue after his death. II. Whether the evidence is sufficient to uphold a finding that Barada had given notice of suspension of payment to Ms creditors. III. Whether for the purpose of Section 9 Sub-section (1) Clause (c) the transfer can be taken to have been made on the date of the execution of the deed of gift and its acceptance, or on the date when it was registered.

2. I. The first point depends upon the effect of Section 17, Provincial Insolvency Act, which provides that notwithstanding the death of tho debtor the proceedings would go on, unless the Court otherwise orders so far as may be necessary for realisation and distribution of the property of the debtor. But the matter of realisation and distribution of the property of the debtor cannot be conducted unless there is a person in whom the property is vested, and the property of the debtor would vest in the receiver only on adjudication. Section 17 therefore by necessary implication authorises the Court to pass an adjudication Order even after the death of the debtor. The view we are taking is supported by the decisions in Ramathai Anni v, Kanniappa Mudaliar ('28) 15 A.I.R. 1928 Mad. 480 and Ramesh Chandra v. Charu Chandra : AIR1930Cal590 , The first point is accordingly answered in favour of the appellant.

3. II. The petitioning creditor examined two witnesses, Sukhendu Mohan Sen and Upen-dralal Dass. The first witness is a clerk of the petitioning creditor, and the second the law clerk of the Eastern Union Bank, another creditor of Barada. They say that in February and March 1939 respectively they went to Barada for tagid but Barada replied that he was not at the time able to pay them. This evidence in our judgment is not sufficient to bring the case within Clause (g) of Section 6, Provincial Insolvency Act. The notice of suspension must be for the whole of the indebtedness. It must amount to an expression of a general intention to stop payment to every creditor. If the petitioning creditor and the Eastern Union Bank were the only creditors of Barada the conclusion from that evidence may have been otherwise, but there is no evidence that they were the only creditors of Barada. The evidence does not disclose any circumstance which taken along with those statements of Barada would have reasonably created in the mind of a creditor that Barada was giving notice to all his creditors that he had suspended or was about to suspend payment of his debts. The second point is accordingly answered against the appellant.

4. III. The third point raises a question of considerable importance. There is no direct authority of this Court on the point, which relates to the construction of Section 6 Clause (b) taken with Section 9, Sub-section (1), Clause (c), Provincial Insolvency Act. Broadly speaking the point is whether the starting point of limitation would be the date of the execution of the deed of transfer or the date of its registration, where the law requires a registered instrument. In the case of a gift, the competition would be between the date of acceptance by the donee and the date of registration of the deed of gift. The point has been considered by the Madras, Lahore and Nagpur High Courts. The cases are Iswarayya v. K. Subbanna : AIR1934Mad637 ,Ratan Chand v. Smail ('33) 20 A.I.R. 1933 Lah. 821, Devi Das v. Moti Ram ('35) 16 Lah. 739ft, Lakhmi Chand v. Kesho Ram ('35) 22 A.I.R. 1935 Lah. 565, and Kanhaiyalal v. Sadasiv Rao Ganpat Rao , In all these cases, except Ratan Chand v. Smail ('33) 20 A.I.R. 1933 Lah. 821, the view was expressed that the date of. the registration is the material date. Ratan Chand v. Smail ('33) 20 A.I.R. 1933 Lah. 821, was expressly overruled by the Full Bench of the Lahore High Court. An analogous question which arose in connexion with Section 54, Provincial Insolvency Act, has been considered in this Court and in the Madras and Rangoon High Courts. The Madras High Court has held in Muthiah Chettiar v. Official Receiver of Tinnevelly District ('33) 20 A.I.R. 1933 Mad. 185, that the date of registration is the material date. That view was adopted by a Division Bench of the Rangoon High Court in U Ba Sein v. Maung San. ('34) 21 A.I.R. 1934 Rang. 216, but a Pull Bench of that Court has overruled that decision and has held that the date of the execution is the material date: U On Maung v. Maung Shwe ('37) 24 A.I.R. 1937 Rang. 446 (F. B), In U On Maung v, Maung Shwe ('37) 24 A.I.R. 1937 Rang. 446 (F. B), one of the Judges, however, remarked that different considerations may arise in considering limitation with regard to Section 9 (1) (c), Provincial Insolvency Act. A Division Bench of this Court has taken the view that for the purpose of Section 54 the date of the execution of the deed and not the date of its registration is the material date: Rama Nanda Pal v, Pankaj Kumar : AIR1938Cal417 , As the last mentioned case concerned Section 54, Provincial Insolvency Act, it is not necessary for us formally to dissent from it and refer the question before us which concerns Sections 6 (b) and 9 (1) (e) to a Full Bench. We do not, however, express our concurrence with the reasons given therein, though we agree that some distinction may be made between the considerations material to questions falling for decision under Section 6 (b) read with Section 9 (1) (c) and under Section 54, Provincial Insolvency Act.

5. The Registration Act affects documents and not transactions. When a transfer deed coming within Section 17 of that Act is executed, it has to be registered and if not registered the written instrument would be affected by Section 49 of the Act. If an oral transfer is permitted by law, and property is transferred without a document the transfer would be perfectly valid and would operate from the date when the transfer is effected, which in the case of gift generally would be the date of acceptance by the donee, except in those cases in which the personal law of the donee requires a further act on the part of donor, as for instance delivery of possession in the case of Hindus and Mahomedans. Thus, where a Mahomedan makes an oral gift of immovable property the gift would be operative not from the date when the declaration of gift is made by the donor, nor when the gift is accepted by the donee but from the date when possession is delivered to the donee. In that case the date on which possession was delivered would be the material date for tha purpose of Section 9 (1), Clause (c), Provincial Insolvency Act, when that gift is alleged to be the act of insolvency of the donor. Oral evidence of the factum of gift can be given and that evidence would not be excluded by Section 91, Evidence Act. Sections 17 and 49, Eegistration Act, would not also come into the picture as there would be no written instrument and no instrument would be required by reason of the saving contained in Section 129, T. P. Act.

6. In eases of sales and mortgages of immov-. able property (other than mortgages by deposit of title deeds in those places where such mortgages are allowed), where the considera. tion is rupees one hundred or upwards, and in eases of gifts of immovable property of whatever value (except in the cases of Mahomedans) the Transfer of Property Act requires a written instrument and further requires that written instrument to be registered in accord, ance with the provisions of the Registration Act. Three conclusions follow: (1) that the title would not pass from one to the other if the instrument is not registered and title would not pass till the instrument is registered; (2) that oral evidence to prove the factum of the transfer is not admissible (Section 91, Evidence Act); and (3) the unregistered in. strument cannot be taken in for proving the transfer (Section 49, Registration Act). If Section 47, Registration Act had not been in the statute book the result would have been that the transfers in the case of sales and mortgages of immovable property when the consideration was rupees one hundred and upwards and in the case of gifts of immovable properties of any value the material date for the pur. pose of Section 9 (1) Clause (e), Provincial Insolvency Act, would have been the date of registration, the date when the Registrar or Sub-Registrar of assurances endorsed on the instrument the certificate of registration. The divergence of judicial opinion in cases on Section 6 read with Section 9 (1) (c) as well as on Section 54, Provincial Insolvency Act, which we have noted above, rests upon the effect of Section 47, Registration Act. That section enacts that when the instrument has been registered it would have operation not from the date of its registration but from the date on which it would have commenced to operate if no registration thereof had been required. That date would generally be in the case of sales and mortgages when the instrument was executed and in the case of gifts the date of acceptance by the donee.

7. Transfer is an event-the performance of a juristic act. A juristic act may be unilateral or bilateral. It is only by a juristic act that title or rights in property pass from one per-son to another. A mere act or action on the part of a person or persons is not a juristic act. A juristic act is an act in a form prescribed by rules of law. Though the rigid formalities of ancient times-the days of the aes et libra-are gone, still in modern law every act of a person is not a juristic act and formalities imposed by law are of the essence of it. The act of signing a will by the testator is the same, whether the will is attested or unattested, but it is only the attestation which makes the act of the testator a juristic act. So in the case of mortgages and gifts of immovable property. The document though signed by the mortgagor or donor and registered would have no effect on the property unless it is attested by two witnesses. It is only when the formalities which must accompany an act, where formalities are required by law, are complied with that the act becomes a juristic act. This is one legal concept. Ordinarily a transfer of rights takes place as soon as the juristic act is performed, and at the moment it is performed. But the Legislature can give retrospective operation to the effect of a juristic act just as it can give retrospective operation to any provision of a statute which affects vested rights. This is another and a different legal concept. Confusion must not be made between the operation of a document and the event. We think that there may have been some confusion of these two ideas in those decisions which relied on Section 47, Registration Act, for holding that the date of execution of the document is the material date. We recognise of course that there is some difference between cases under Section 9 (1) (c) read with Section 6 (b) and under Section 54, Provincial Insolvency Act, and that whereas in matters relating to the former sections the material consideration is the act of insolvency, with which the question of operation of the document will not arise, different considerations may present themselves when considering the date of the transfer for the purpose of avoidance under Section 54 of preferential transfers after adjudication.

8. The fact that registration can be effected within a longer period than the period mentioned either in Section 9 or Section 54, Insolvency Act, may not be a sound consideration for holding that the starting point of time should be taken to be the date of registration and not the date of the execution of the instrument for the purpose of those sections. As has been pointed out by Roberts C. J. in U On Maung v, Maung Shwe ('37) 24 A.I.R. 1937 Rang. 446 (F. B), secrecy may still be maintained for a time in spite of registration but we do not see any good reason for substituting for the date of the transfer the date from which the transfer is to come into operation. The reason given by the Pull Bench of the Eangoon High Court that if the date of registration of the instrument of transfer be taken to be the material date, it would not be possible to avoid a transfer under Section 54, Provincial Insolvency Act, where the deed has been' executed before the date of the presentation of application for adjudication but registered after that date, does not appeal to us. Keeping in view the distinction between the date of transfer and the date from which the transfer becomes operative-its retrospective operation, if the date of the transfer, i. e., of the completion of the juristic act, be taken to be date of the registration, such a transfer would not require avoidance but would be void on the ground that the insolvent would not be deemed to have the power of completing the juristic act, by the presentation of the document for registration after the presentation of the application for adjudication, for, on adjudication, his property would vest in the receiver as from the date of the presen-tation of the application for adjudication. (Section 28, Sub-section (7)). Nor do we consider that the decision of the Judicial Committee in Kalyanasundaram Pillai v. Karuppa Mooppanor , on which the Pull Bench of the Rangoon High Court placed reliance, relevant to the question before us, or relevant to the question which was before that Pull Bench. The precise effect of that decision of the Judicial Committee of the Privy Council has been explained by a Division Bench of this Court in Naresh Chandra v. Gireeshchandra Das : AIR1936Cal17 , of which one of us was a party. Its effect is that the vendor or the donor has no locus pmniten-tics to resile after execution of the deed of sale or after acceptance of the gift by the donee, though the title there is incomplete by reason of the non-registration of the instrument. We accordingly hold that for the purpose of Section 9, Sub-section (1), Clause (c), Provincial Insolvency Act, time is to be reckoned from the date of the registration of the transfer deed, where the Transfer of Property Act requires a registered instrument for the transfer which is alleged to constitute the act of insolvency. As no evidence has been led on the point as to whether Barada had made the gift to his wife with the intent of defeating or delaying his creditors, we remand the case to the lower Court so that parties may have an opportunity to lead evidence on the point. If the Court finds that the gift was made with that intent it would pass an Order adjudicating Barada as insolvent. The result is that this appeal is allowed. The Order of the learned District Judge dated 17th May 1941 is set aside and the case is remanded to that Court. The parties would bear their respective costs in this Court.


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