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Official Assignee Vs. Ramchandra Kashera - Court Judgment

LegalCrystal Citation
SubjectCivil
CourtKolkata
Decided On
Reported inAIR1934Cal54
AppellantOfficial Assignee
RespondentRamchandra Kashera
Cases ReferredOfficial Receiver v. Chettyar Firm
Excerpt:
- .....of proving that the transfer was not made in good faith or for valuable consideration, lay on the official assignee. the learned judge upon that came to the -conclusion that the petition of the official assignee failed, because he had not succeeded in discharging the onus that day upon him. it seems that the learned judge did not have his attention called to the fact that that case was decided on section 53, provincial insolvency act, and not on section 55, presidency towns insolvency act. it is to be observed that there is a slight difference in the language of those two sections. section 55, presidency towns insolvency act, says:any transfer of property, not being a transfer made before and in consideration of marriage, or made in favour of a purchaser or incumbran-cer in good faith.....
Judgment:

Costello, J.

1. This is an appeal from a judgment of Lort-Williams, J., dated 21st March 1933. That judgment was given in an insolvency proceeding in which the Official Assignee was asking that a certain transaction between the insolvents and a man named Ramchandra Kashera should be set aside as being fraudulent and void. The notice of the application is dated 10th March 1933, and the transaction in question was described thus:

The transfer of 35 bags of brass and bell-metal articles and ten bundles of brass and copper sheets by the insolvents in your favour be declared fraudulent and void as against the applicant.

2. Lort-Williams, J., took the view that he was bound by the decision in the case of Official Beceiver v. Chettyar Firm , which decided that the onus Under Section 55, Presidency Towns Insolvency Act, of proving that the transfer was not made in good faith or for valuable consideration, lay on the Official Assignee. The learned Judge upon that came to the -conclusion that the petition of the Official Assignee failed, because he had not succeeded in discharging the onus that day upon him. It seems that the learned Judge did not have his attention called to the fact that that case was decided on Section 53, Provincial Insolvency Act, and not on Section 55, Presidency Towns Insolvency Act. It is to be observed that there is a slight difference in the language of those two sections. Section 55, Presidency Towns Insolvency Act, says:

Any transfer of property, not being a transfer made before and in consideration of marriage, or made in favour of a purchaser or incumbran-cer in good faith and for valuable consideration, shall, if the transferor is adjudged insolvent within two years after the date of the transfer, be void against the Official Assignee.

3. Whereas, on the other hand, Section 53, Provincial Insolvency Act, says:

Any transfer of property not being a transfer made before and in consideration of marriage, or made in favour of a purchaser or incumbran-cer in good faith and for valuable consideration, shall, if the transferor is adjudged insolvent within two years after the date of the transfer, be voidable as against the receiver and may be annulled by the Court.

4. At first sight it might seem as if the difference in language between those two -sections might enable us to say that the judgment of the Privy Council in the case of Official Receiver v. Chettyar Firm was not necessarily applicable to proceedings Under Section 55, Presidency Towns Insolvency Act; but an examination of the judgment in that case reveals the 'fact that it wa3 based on a previous decision of the Judicial Committee of the Privy Council, in the case of Official Assignee v. Khoo Saw Cheow AIR 1930 PC 265, which was an appeal to the Judicial Committee of the Privy Council from a judgment of the Court of appeal of the Straits Settlements in an application Under Section 50, Sub-section (1) of the Bankruptcy Ordinance of the Straits Settlements. That section, so far as is material, runs thus:

Any settlement of property not being .... a settlement made in favour of a purchaser .... in good faith and for valuable consideration...... shall, if the settlor becomes bankrupt within two years after the date of this settlement, be absolutely void as against the Official-Assignee.

5. It appears therefore that the operative part of that Section 50 is similar to the operative part of Section 55, Presidency Towns Insolvency Act. It must therefore be taken. I think, that the decision in Official Receiver v. Chettyar Firm means that, even as regards proceedings Under Section 55, Presidency Towns Insolvency Act, the onus lies on the person who seeks to impugn the validity of the transfer, that is to say, in the majority of cases, upon the Official Assignee. The present proceedings were not in terms brought Under Section 55. The learned Advocate-General, who appears for the appellant in this case, has put the matter on the basis that the transaction which is challenged falls either within the mischief aimed at by Section 55 or within the provisions of Section 56, Presidency-towns Insolvency Act. He has invited us to take the view that, even upon the assumption that the onus was upon the Official Assignee, on the facts and circumstances of the present case, that onus has been discharged. It is necessary therefore that I should state the facts.

6. There was a firm named Ramprasad Durgaprasad. That firm consisted of a man named Durgaprasad himself and his three sons, named respectively, Su-bhanlal, Mohanlal and Killiram. Those four persons carried on a Mitakshara joint family business under the name and style of Ramprasad Durgaprasad at premises situated at No. 161/1, Harrison Road, in this city, and apparently at various other places. That firm or rather the persons composing the firm were, on 12th April 1932, adjudicated insolvent. Some 10 days before, that is to say, on 4th April 1932, the Official Assignee had been appointed interim receiver, on the application of two creditors of the firm. The adjudication was based upon an act of insolvency, which was said to have occurred on 28th March 1932. On that date, Killiram one of the partners of the firm, gave notice to the creditors of the firm that they had suspended payment and were no longer able to pay their debts. The transaction impeached by the Official Assignee is said to have taken place two days before, that is to say, on 26th March 1932. In substance it amounted to this: that a man named Eamchandra Keshera had on that date received from the firm of Ramprasad Durgaprasad some 35 bags of brass and bell-metal utensils and had consigned those bags to his brother, but in his own name-the brother being at a place called Geonkhali. The allegation of the Official Assignee was that the transfer of those bags by the firm, which became insolvent so shorly afterwards, was either a transfer of property of the des cription referred to in Section 55 or of the description referred to in Section 56. In order to have that transaction set aside Under Section 55, the Official Assignee was in the position of having to prove in a sense a double negative, namely, that the trans fer was not made in good faith and/or that it was not made for valuable consideration.

7. On the other hand, in order to succeed Under Section 56, the Official Assignee had to prove that the transfer not only con stituted a preference given by the firm of Ramprasad Durgaprasad to one credi tor-to the man Ramchandra Kashera- over other creditors, but that, in addition, the transfer had been made with a view to giving such preference. Under the provisions of Section 56, it is not sufficient merely for the person impugning a transaction to show that in fact there was a preference; he has also to show that the transaction was made with a view to giving that preference. It thus appears that in all these classes of cases, a very serious and almost insurmountable task lies in the way of the Official Assignee, in seeking to challenge the transfer. The learned Advocate-General however contends that, in this particular case, the task of the Official Assignee, heavy as it was, has been adequately accomplished. The facts with regard to the 35 bags of brass and bell-metal articles, relied upon by the Official Assignee, was that there never was any genuine transaction between the man Ramchandra Kashera and the firm of Ramprasad Durgaprasad. The learned Advocate-General has said that the story set up by Kashera himself, namely, that there was an antecedent debt in respect of a loan of Rs. 1,100 and a debt of Rs. 950 made by him as late as 25th March 1932, is entirely untrue. Ramchandra Kashera's account of the matter comes to this: that some 12 months before, that is to say on 3rd May 1931, he had lent Rs. 1,100 to the firm of Ramprasad Durgaprasad, which had never been repaid. Then on 25th March 1932, according to his account of the matter, the partner Killiram came to him and asked for a loan of Rs. 950 for 12 hours-and no longer.

8. The story set up is that Killiram asked, for the second loan and it was made-solely upon the footing that it would be-promptly repaid, and, as the repayment-was not made, he (Kashera) took from-his debtor Ramprasad Durgaprasad; these bags of metal, which he was to receive in satisfaction of the debt due to him. It is to be observed that, on the footing that there was a loan of Rs. 1,100 in May 1931, and another of Rs. 950 in. March 1932, the matter might still fall within the ambit of Section 56, for it is beyond controversy that this firm became insolvent not only within three months of the second transaction, but actually within something like a fortnight of that transaction. It follows therefore that, as regards Section 56, if, in fact, Ram chandra Kashera was a creditor of the firm, all that the Official Assignee had to show was that the preference, which the transfer of the goods obviously con stituted, had in fact been made with a view of preferring this man Kashera to all the other creditors of the insolvent firm. As regards Section 55, it would be suffu cient for the Official Assignee to satisfy the Court that the whole transaction was mala fide and that the transfer of the substantial amount of metal said to be worth Rs. 1,925 was not a genuine one or was not a real discharge of a debt.

9. Now, Ramchandra Kashera was exa mined under the provisions of Section 36, Presidency Towns Insolvency Act, and, in the course of that examination, he admitted that he took delivery of the goods and that that delivery was on 26th March 1932. He said that he took delivery of the goods from Ramprasad Durgaprasad on his own behalf and that he had paid them a sum of Rs. 1,900. He admitted however that the goods had been sent away by him. He further stated that he had no account books ; that there was nothing from which he could show that he had paid that amount of Rs. 1,900 and that there was no record, as far as he was concerned, of the alleged antecedent loan. He further said that he was not trading in this class of goods and he set up the story which I have already outlined that he was taking, payment in kind for the two loans which he had previously made to the firm of Ramprasad Durgaprasad. He admitted that the.making of these two loans, (if they were made) were the only transactions he had with that firm. It seems quite clear that this man Ramohandra Kashera was in no sense a dealer at that time. He was in fact, as is stated in the beginning of his evidence, an employee in a firm named Tarachand Ghan-shyamdas in Calcutta. It transpired in the course of the evidence that Ram-chandra Kashera came from the same village as the insolvents and that he lived in the same house, 161/1, Harrison Eoad. It also seems tolerably clear from the evidence, that he was on intimate terms with the insolvents and must have known a great deal about their doings and their financial position.

10. The Official Assignee in support of the case he was making relied upon the petition presented by him and the facts therein stated and the evidence given by Ramchandra Kashera himself in his examination Under Section 36. Ramohandra Kashera put in an affidavit in answer to the petition presented by the Official Assignee, in which he referred to the fact that he alone with Killiram had been proceeded against in the Police Court in Calcutta at the instance of a person named Panchkarhi Nath. In those proceedings it was alleged that Ramchandra Kashera and Killiram had obtained a quantity of metal from Panch-koshi Nath by cheating, in that they had gone to the place of business of Panchkarhi Nath and there ordered the goods, declaring that they would be paid for on the same night or the next morning, whereas, although the goods were delivered on 26th March, on the faith of the promise to pay in cash, they were not paid for either the same night or on the next morning when bills were presented. On that morning, i.e., on 27th March, it was found that the gadi occupied by Ramprasad Durgaprasad was closed and no one was to be found there. For some reason or other, the proceedings instituted by Panchkarhi Nath were rather abruptly terminated and Ramchandra Kashera was discharged Under Section 253, Criminal P. C, for want of pro-seoution. The Additional Chief Presidency Magistrate made an order with regard to the goods in question. It appears, that of the 35 bags 18 had already been taken delivery of by Ramchandra Kashera, when they reached the end of the journey on which they had been sent, but the remaining 17 bags were stopped at Geonkhali in pursuance of the Magistrate's order.

11. Later on, they were delivered to Ramchandra Kashera on his executing a bond for Rs. 1,200. On 6th August 1922 the learned Additional Chief Presidency Magistrate made an order directing these 17 bags to be handed over to the Official Assignee. Some revisional proceedings were taken in this Court, as the result of which that order was set aside upon Ramchandra Kashera giving an undertaking not to dispose of or otherwise deal with the said goods. At the same time, an order was made giving the-Official Assignee liberty to institute such proceedings as he thought fit and it was as the outcome of that order that the present proceedings were started.

12. We have carefully considered the evidence given in these proceedings and we take the view, looking at the matter broadly, that on all the facts and circumstances of the case the matter was one beyond the region of mere suspicion and that we ought to hold that the Official Assignee sufficiently discharged the onus which appears to lie upon him. Taking all the facts into consideration, and bearing in mind the points urged before us by the learned advocates, we come to the conclusion that we ought to: allow this appeal upon the facts of the case and to hold that the matter certainly falls within the purview of Section 56, if not within Section 55. It seems sufficiently clear that the transaction between Ramchandra Kashera and the insolvent firm was not a bona fide one. For the reasons-which I have already given it does not really matter whether or not there was any antecedent debt as alleged by Kashera. If there was no debt, that means that the whole transaction was-fraudulent from start to finish; but even upon the assumption that there was a debt some 12 months before, we still take the view that the handing over of these goods was not done with a bona fide intention of discharging this debt but with a view of preferring Ramchandra Kashera (who was obviously a friend of the insolvents) as against the other creditors. It may well be that the idea was to put these goods beyond the reach of the creditors with the object of Spreserving them for the benefit of the in-solvents themselves.

13. The appeal is, therefore, allowed with costs. The respondent must forthwith pay the sum of Rs. 2,258 representing the value of the goods. The Official Assignee is allowed to retain his costs out of the funds in his hands.

C.C. Ghose, Ag. C.J.

14. I agree.


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