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In Re: Girish Chandra Seal. - Court Judgment

LegalCrystal Citation
Decided On
Reported inAIR1936Cal212
AppellantIn Re: Girish Chandra Seal.
Cases ReferredSatindra Nath v. Jatindra Nath
- .....the insolvents manindra chandra seal and girish chandra seal have parted with property, as the official assignee contends, in defraud of their creditors. the questions for .determination in each application are similar and it has been agreed that this judgment shall control the rights of the parties in both cases. the insolvents manindra and girish are two of the sons of durgadas seal who died in september 1925 leaving seven sons. by his will dated 28th april 1924, durgadas appointed his sons ashutosh and umesh as his executors. the only other son who is remotely concerned with these transactions is named jadab. durgadas died on 19th september 1925 having made a will dated 28th april 1924 under which each of the insolvents manindra and girish became entitled to a one-eighth share in.....

McNair, J.

1. Two applications have been made by the Official Assignee to set aside a series of transactions by which the insolvents Manindra Chandra Seal and Girish Chandra Seal have parted with property, as the Official Assignee contends, in defraud of their creditors. The questions for .determination in each application are similar and it has been agreed that this judgment shall control the rights of the parties in both cases. The insolvents Manindra and Girish are two of the sons of Durgadas Seal who died in September 1925 leaving seven sons. By his will dated 28th April 1924, Durgadas appointed his sons Ashutosh and Umesh as his executors. The only other son who is remotely concerned with these transactions is named Jadab. Durgadas died on 19th September 1925 having made a will dated 28th April 1924 under which each of the insolvents Manindra and Girish became entitled to a one-eighth share in the rest and residue of his father's estate. In order to appreciate the extent of their interest in that estate it is necessary to refer shortly to the earlier history of the family. In 1866 Madhub Chandra Seal died after dedicating by will his property in Madan Dutt Lane. In 1884 Madhub's nephew Kalidas dedicated properties numbered 100 to 105, Bowbazar Street, as an addition to the earlier bequest but confined the shebaitship of the endowment to his direct descendants. Litigation ensued between the rival branches of the family and it is contended that in the result the Bowbazar properties have been declared to be secular and each of the insolvents is entitled to a 1/16th share therein. The insolvent's father Durgadas was a son of Kalidas. The interests to which the insolvents become entitled under their father's will fall into three categories:

(1) Jewellery.

(2) A share in half the residue.

(3) A life estate in certain property.

2. Durgadas died in September 1932.

3. The insolvent Manindra, on 29th April 1927, assigned his right to the jewellery to Gour Chand Mullick for Rs. 1,800. The insolvent Girish, on 2nd May 1927, assigned his share in the jewellery to Gour Chand Mullick for Rs. 1,700. The Official Assignee contends that Gour was a person who made it his business to prey on the sons of wealthy parents, to lead them into a dissolute life, to advance them the money to indulge in dissipation and to induce them to part with their patrimony on ruinous terms in order to repay his advances. The acquisition of their interest in the jewellery to which they were entitled under their father's will was, so it is contended, the first step in the acquisition by Court of the insolvent's property. The value of the insolvent's interest in the jewellery is said to be largely in excess of the consideration which the insolvents are alleged to have received. On 4th May 1927, Manindra, and on 11th May 1927 Girish, assigned their respective interests in the rest and residue of their father's estate to Gour Chand Mullick for Rs. 1,000 each. The Official Assignee alleges that in each case the consideration was grossly inadequate even if it was in fact paid which he denies. Manindra, on 28th May 1927, mortgaged his life interest in his father's estate to Gour for Rs. 15,000. The payment of the alleged consideration is denied. Girish was adjudicated an insolvent on 3rd August 1927 and Manindra on 13th July 1928. By March 1930 Gour had obtained in all a 6 annas share in the estate of Durgadas, for he bought the two annas share of Jadub Chandra Seal through Phani Lal Mullick.

4. This 6 annas share Gour sold on 17th March 1930 to Umesh Chandra Seal for an alleged consideration of Rs. 10,000 in cash and Rs. 37,000 secured by a mortgage on the premises conveyed and on Umesh's 4 annas share in the residuary estate of Durgadas. On 29th March 1930 the Official Assignee advertised the sale of Manindra's interest in the Bowbazar Street property, whereupon Gour and Umesh both objected on the ground that the insolvent's interest in that property had ceased. Gour and Umesh were then examined under Section 36, Presidency Towns Insolvency Act, and the Official Assignee applied under Section 55 for the annulment of the transfers. On the hearing of that application before my learned brother Panckridge, J., Counsel for Gour stated that he was not in a position to establish full payment in cash of the consideration for the transfers and the transfers to Gour were accordingly set aside and declared void. Similarly counsel for Umesh declared his inability to prove that the consideration had in fact been paid, and with regard to the transfer on 17th March 1930 from Gour, he admitted that he had notice of the adjudication of Girish and Manindra. The learned Judge held on the authority of In Re Hart, Ex parte Green (1912) 3 K B 6, that the transfers to Gour being void they were void as from the date when his transferors were adjudged insolvent; and in the circumstances Umesh, his subsequent transferor, did not acquire a good title. On appeal from this decision it was held following the recent Privy Council decision in Official Receiver v. Chettyar Firm 1931 P C 75 that the onus lay on the Official Assignee to prove that the transactions were not made in good faith and for valuable consideration, and that as there was no evidence to support the decision of the trial Judge his order should be set aside and the matter should be retried in the insolvency jurisdiction. The appellate Court held however that the order of the trial Court setting aside, in the presence of Gour and his assignee Phani Lal Mullick, the mortgage of 28th May 1927 of Manindra's life estate under his father's should stand. The order of the appellate Court was made on 8th January 1932.

5. On 18th January 1932 Gour assigned to his father Bolai Chand Mullick the mortgage of 17th March 1930 by Umesh in favour of Gour to secure the sum of Rs. 37,000 and on 19th July 1932 Gour was adjudicated insolvent. In accordance with the directions of the Court of appeal the matter has come before me in the insolvency jurisdiction and the procedure directed by that Court has been followed. The first question for decision is whether the Official Assignee has discharged the onus which lies upon him of proving that the transfers by the insolvents were not made in good faith and for valuable consideration. ( After examining the evidence, his Lordship proceeded.) The result is that the Official Assignee has to rely entirely on the admissions of Gour and the evidence of his accomplice to prove his case. As I have already pointed out, they are both witnesses whose past record alone makes their testimony unworthy of belief. I am unable to say, in these circumstances, that the Official Assignee has discharged the onus which lay upon him and I am unable to declare as prayed that the assignment of 29th April 1927, 4th May 1927 and 17th June 1927 between Gour and Manindra, and the assignments of 2nd May 1927, 11th May 1927 and 21st June 1927 by Girish, are void. The question of registration which was raised before my brother Panckridge was argued before me at some length namely that the assignments by the insolvents of their residuary shares in their father's estate would not operate as a transfer of any immoveable property inasmuch as they were registered in Book IV and not in Book I.

6. This question was not decided at the previous hearing, but in view of my decision that the lack of consideration has not been proved, it now becomes of importance. There can be little doubt that the registration in Book IV was bona fide, for prior to the decision of the Appeal Court in Ashutosh Seal v. Benode Behary 1930 Cal 495, the parties were unaware that the residuary estate would include immoveable property. In those circumstances the recent decision of the Privy Council, reported in Satindra Nath v. Jatindra Nath 1935 P C 165, seems to me to establish quite clearly that such an error in registration would not invalidate the transfer. On my finding that the transfers in favour of Gour were valid it follows that the title of Gour's transferees is good and the other questions which have been argued do not arise, but as this matter may go further, I will deal with the arguments which have been raised on the assumption that the transfers to Gour are void. Dealing first with the transfer in favour of Umesh of 17th March 1930. This transfer was made after the adjudication of the insolvents, and with notice of that adjudication and on the English cases to which I have been referred, viz. (1912) 3 K B 6 In Re Hart, Ex parte Green (1912) 3 K B 6 and (1920) 2 K B 426 In Re: Gunsburg (1920) 2 K B 426, I am of opinion that the title of the Official Assignee accrued on the dates in 1927 and 1928 when Girish and Manindra were adjudicated insolvent respectively and that on 17th March 1930 Gour had no title to the property which he purported to transfer to Umesh. Even if it is conceded that Umesh was a bona fide purchaser for consideration he could acquire no title from Gour if the transfers in favour of Gour were infact inoperative. The same considerations would be applicable to the assignment of 18th January 1932 by Gour in favour of his father Balai of the mortgage received by Gour from Umesh as part of the consideration in the transaction of 17th March 1930.

7. Finally it is argued on behalf of Umesh and Bolai, the transferees from Gour, that the Official Assignee is estopped from challenging the validity of the transfers owing to his failure to challenge them in earlier litigation. The earlier litigation to which reference is made is an administration suit brought by Gour on 14th June 1927 against Umesh and Ashutosh Seal as executors of Durgadas's estate. In that suit there was a decree in favour of Gour on 12th July 1929 and an order that the executors should hand over the shares of Manindra and Girish to the plaintiff. The Official Assignee was not a party to that suit, but it is contended that he was the successor in interest to persons who were parties and that so long as the decree remains it is not competent for the Official Assignee to obtain an order under Section 55, Presidency Towns Insolvency Act, which would in effect set aside that decree. In my opinion this decree which was obtained after Manindra and Girish were adjudicated insolvent to the knowledge of the plaintiff cannot operate as res judicata against the Official Assignee who was never made a party. The other proceeding on which reliance is placed is an orginating summons brought on 1st February 1928 by Ashutosh and Umesh as executors of Durgadas. To this summons the Official Assignee was a party and inasmuch as he failed to challenge the transfer by the insolvents it is contended that he is estopped from challenging them now. It is not apparent from the record what order if any, was made on this summons, but the Official Assignee entered appearance, and in my opinion there is considerable force in the argument that his failure to raise any objection to the transfer justified Umesh, one.of the plaintiffs, in assuming that the transfers were good. In this connexion it is worthy of note that the Official Assignee must have had notice in 1928 of the transfers and his statements in para. 13 of his affidavit in the matter of Manindra and para. 14 of his affidavit in the matter of Girish are evidently untrue. It is urged with some justification that this Court is a Court of equity and that the Official Assignee who seeks to set aside transfers on the ground that they are not bona fide, should be scrupulously accurate in the statements by which he hopes to establish his title. In view of my finding, that the Official Assignee has failed to establish the invalidity of the transfers of which he complains, the aplications must be dismissed with costs including costs of the previous hearing before Panckridge, J. The costs will be as of a hearing of a defended suit. The hearing occupied five days. In the matter of Girish there will be costs as of a motion. Gour Chand Mullick will bear his own costs.

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