1. The appellant Garibia Bibi purchased certain properties from one Hanif Mian, who had in turn purchased them from one Oli Mahammad, who was adjudicated insolvent after the date of Hanif's purchase and before that of Garibia Bibi. On an application by a creditor, one Mathura Prosad Rajgharia, under Section 53 read with Section 54A. and also under Section 4, Provincial Insolvency Act, the learned District Judge of 24-Parganas has found that both the alleged transfers were fictitious and has ordered that Oli Mahammad had right, title and interest in the disputed property which on his adjudication vested in the Official Receiver. The appellant contests this decision. The creditor Mathura Prosad Rajgharia has appeared in the appeal through his advocate who states that he does not contest it. The appeal has been contested by the Official Receiver. For the appellant, it is contended first, that the findings 6f fact of the learned Judge are wrong; secondly, that in so far as the application is one under Section 4, Provincial Insolvency Act, it cannot be maintained at the instance of a creditor, and that hence the proceedings are without jurisdiction; and thirdly, that in any case the order is incorrect in so far as it deals with the position of the two minor sons of Oli Mahammad.
2. The material facts of the case are that the applicant creditor Mathura Prosad Rajgharia was landlord of Oli Mahammad in respect of land at 1 Bahir Sura Road, Belia-ghatta, on which were situated some 34 huts and had obtained rent decrees against him. In proceedings in execution, he obtained a writ of arrest against his debtor on 20th November 193G. The kobala to Hanif, which is challenged in these proceedings, was executed on the next day, 21st November, by Oli Mahammad for himself, and as guardian of his two minor sons for a consideration of Rs. 2000. Ex. c is the document. It is recited in the kobala that the huts on the land had been erected at the cost of Oli Mahammad with his own money, but both the huts and the right of tenancy were transferred. It should be noted that the lease for the premises was in favour of the minor sons along with the father. Oli Mahammad was brought up on arrest on 25th November, and made his application in insolvency on 14th December following. The total debts are recited at Rs. 34,244-5-9, out of which Rs. 1240 represents the landlord's dues, and Rs. 30,385 the dower dues of his two wives. Oli Mahammad was adjudicated insolvent on 22nd March 1937. Just prior to this, on 11th March, Hanif mortgaged the huts in question to one Nur Muhammad for Rs. 500 by the document, Ex. A, and subsequently, after the adjudication, on 17th July, he purported to transfer the properties to the appellant, Garibia Bibi by the document Ex. B, the consideration being stated to be Rs. 3000, made up of earnest money Rs. 500, of a sum of Rs. 460 retained by the vendee for paying off Nur Muhammad's mortgage, the balance being alleged to be paid in cash.
3. On 24th August, the creditor Mathura Prosad Rajgharia for himself and his sons filed a petition alleging that Hanif kobala was a fraudulent benami document of the most valuable property of the debtor consisting of 34 rooms, without any consideration and created for the purpose of defrauding creditors; that he had applied to the Official Receiver to start proceedings to annul the sale, but the Official Receiver had not submitted any report, and praying that the Court would 'give the start of the said proceedings to annul the sale ...' On 30th August, the Official Receiver submitted his report saying that he had asked the creditors to supply him with documents and evidence, and Rs. 300 to meet incidental expenses of the proceedings, but that as the creditors had not done so, he had advised them to take proceedings under Section 54A of the Act. He declined to take the responsibility of taking steps to annul the documents, and repeated that the creditors might take action under Section 54A of the Act on their own responsibility. The Official Receiver also referred to an application under Section 4 which had been made by the wives of the insolvent claiming the properties, and requested that the contesting creditors be directed to contest this application under Section 1 if they so liked, as he himself had no funds with which to fight. An order was passed granting permission to these creditors under Section 54A of the Act.
4. On 10th September Mathura Prosad and his sons accordingly moved the Court under Sections 53 and 54A of the Act for annulment of Hanif's kobala, alleging that the kobala was a benami document creating no title or interest in the property in favour of Hanif Mian who was said to be the father's brother's son of Oli Mahammad. Hanif then filed an objection on 8th November, denying the relationship stating that he understood that at the time of the transfer Oli Mahammad had no intention of applying to be adjudicated insolvent, and giving the facts as to the mortgage to Nur Muhammad, and the transfer to Garibia Bibi. On 29th November, Mathura Prosad applied by a petition purporting to be under Section 53 of the Act to have Garibia Bibi and Nur Muhammad added as parties to the proceedings, describing the documents in their favour as being bogus, and asking for annulment of the kobala in favour of Garibia Bibi. Garibia Bibi filed her answer on 17th January 1938, and then on 31st January Mathura Prosad filed a petition praying that the matter should be dealt with both under Section 53 and Section 4 of the Act.
5. We agree entirely with the finding of the learned District Judge that the alleged transfers by Oli Mahammad to Hanif by Ex. C, and by the latter in turn to Garibia Bibi by Ex. B, are fictitious transactions. The onus in this matter is doubtless on the applicant, but no question of onus really arises in this case; the learned Judge had the whole evidence of the parties before him, and took into consideration the whole circumstances of the transactions, and in our opinion, the conclusion at which he arrived was inevitable. The first transfer took place the day after the writ for arrest of Oli Mahammad was issued. The transferee Hanif has deposed and has shown that he is a man of no real substance and one who has no regard for truth. He and Oli Mahammad at one time worked in the same mill, and it appears that Oli Mahammad formerly lived in the same house as that occupied by Hanif in Chui Saheb's Bagan, Howrah. The learned Judge accepts the evidence that they are related, though it differs as to the precise nature of the relationship from the allegation in the petition of 10th September. Hanif purchased this property, which is some miles off from his residence and on the opposite side of the river Hooghly, without making any enquiries as to the vendor's title, or as to the landlord's name; he says he had no idea that Oli Maharnmad then was thinking of applying in insolvency, but he admits in cross-examination that he knew Oli Mahammad was heavily in debt at the time.
6. He does not attempt to show where he obtained the consideration money of Rs. 2000, but says that one reason for his selling the property to Garibia Bibi was that he got into debt over the repairs. He also says that he discovered that three landlords were claiming rent from him after his purchase, and in the recital of his deed in favour of Garibia Bibi, this is given as one of the reasons why he is transferring the property. But the same recital shows that though he was transferring the property on account of this alleged difficulty, never-theless he was asking for a profit of 50 per cent. on his purchase, his price on resale being Rs. 3000. Some of this might be debited to improvements, but no accounts of expenditure are forthcoming. His document to Garibia Bibi mentions that he had purchased the property for Rs. 2000, but does not mention the name of his vendor. His first statement in the witness-box was that he did not know Oli Mahammad at all, but later he admitted that he discussed the price of the property with Oli Mahammad. The learned Judge has pointed out how Hanif 'a written statement goes beyond the needs of his own case, and goes out of its way to support the ease of the insolvent. It was urged for the appellant that, in the lower Court, sufficient opportunity had not been given for the production of witnesses by the objectors, and that for this reason, among others, Nur Muhammad, the mortgagee in Ex. A, and Yusuf Ali, the scribe of Ex. B could not be examined. Garibia Bibi filed a hazira of witnesses on 12th December, and all the witnesses present that day were examined. The case was adjourned till 19th December, when she filed a hazira of three witnesses including Yusuf Ali and Nur Muhammad. Her prayer to examine them was rejected, and we think that this was a correct order in the circumstances.
7. In support of the document Ex. B by Hanif in favour of Garibia Bibi, an attesting witness Manmatha Nath Mitra, and one Rajadin, who says he looked after the purchase on her behalf, have been examined. The latter says he went with Garibia Bibi to look at the property, and arranged the purchase. He saw no document of title of Hanif, he did not ask who was the landlord, or if the rent was in arrear, he did not see the mortgage bond, and made no inquiries in the locality. Garibia Bibi lives in Chui Sahib's Bagan, Howrah, in the same locality as Hanif, though the latter denies this, while the property, as already noted, is in Beliaghata on the other side of the river. The evidence on behalf of the creditor is that Garibia Bibi is a co-wife of a relative of the insolvent Oli Mahammad, both of the women being wives of one Lal Muhammad. The evidence as to the precise relationship of this co-wife with Oli Mahammad is conflicting, but we see no reason to doubt that there is a relationship. Bach side has given some evidence of possession, consisting of evidence as to the recipients of the rents of the huts at the various stages of the transactions. Obviously in this matter the really interested party, and the original owner of the huts, namely, the insolvent, is in a stronger position. On the whole, the evidence as to possession on the side of the appellant is perhaps the stronger, but in the circumstances this sort of evidence can weigh little. Regarding the whole history of this matter from 20th November, the terms of the documents, and the very unsatisfactory evidence of the persons who claim to have been principally concerned, we think there can be only one conclusion, namely that arrived at by the learned District Judge to the effect that both the transactions in question, evidenced by the documents Exs. C and B are fictitious.
8. The second contention on behalf of the appellant is that the proceedings are without jurisdiction, since in effect the decision of the learned Judge is one made in exercise of the jurisdiction conferred by Section 4 of the Act, and he can only exercise such jurisdiction in proceedings conducted by the Receiver. For this proposition reliance is placed on the case in Ram Sundar Ram v. Ram Charit Bhakat : AIR1924Cal827 . Mr. Guha appearing for the Official Receiver contends that under the terms of Sub-section (2) of Section 28 of the Act a creditor can conduct such proceedings, if he has the permission of the Court, which he urges was in effect given in this case. He cites the cases in Narayanamma v. Venkatasomayajulu : AIR1935Mad46 and Vasudeva Sastri v. Annapurnamma Garu ('35) 22 AIR 1935 Mad 809 in support of this view. The effect of Sub-section (2) of Section 28 was not considered in the Calcutta case cited, and it is also pointed out by Mr. Guha that the decision was made in 1924 before the amendment of the Provincial Insolvency Act by the introduction of Section 54A, which gave explicit statutory sanction to the conduct by a creditor of proceedings under S.53 of that Act for the annulment of a certain class of real transfers.
9. The decision in relied on a previous decision of this Court in Joy Chandra Das v. Mahomed Amir ('18) 5 AIR 1918 Cal 147, in which the course to be taken in eases of this type under the Provincial Insolvency Act of 1907 is clearly described. The learned District Judge in that case, while pointing out that the Court could not at the instance of a creditor hold a summary inquiry into the question whether the insolvent had concealed certain properties by having them vested in the name of his wife, had expressed the view that the creditor could bring a suit in the appropriate Court to establish this fact. Fletcher J. pointed out that . the course indicated was wrong, and that the creditor would not be able to maintain such a suit. His remedy was to move the Insolvency Court in order to obtain a direction from it on the Official Receiver to institute and continue a suit against the wife for recovery of the property, making it a condition precedent that the creditor would put the Official Receiver in funds and indemnify him against costs. As pointed out in Ram Sundar Ram v. Ram Charit Bhakat : AIR1924Cal827 , the introduction of the provisions of Section 4 in the new Provincial Insolvency Act of 1920 made no difference to the correctness of the procedure to be followed in such cases as laid down above. That section gives jurisdiction to the Insolvency Court to deal with matters which were not previously within its jurisdiction, but a creditor who under the old law could not have filed a suit to establish a right could not be given by its terms any right to move the insolvency Court.
10. In the present case before us, the creditor Mathura Prosad Rajgharia could not maintain a suit to establish the right of the Official Receiver to the property on the ground that the transfers to Hanif and to Garibia Bibi were fictitious. That being so, we do not think that the provisions of Sub-section (2) of Section 28 of the Act can affect the matter. The provisions of this sub-section do not create any right of suit which does not otherwise exist; they operate as a bar on the rights of creditors in respect of remedies, suits and proceedings otherwise existing. That bar is in itself subject to an exception, namely that permission of the Court may remove it. But permission of the Court operating as an exception to the bar created by the sub-section certainly cannot give the creditor any right which he has not apart from this sub-section. This aspect of the matter does not appear to have been considered in the Madras eases cited; in those cases it was apparently assumed that the creditor had the right of suit, and the question considered was whether he required the permission of the insolvency Court to exercise it. The discussion was as to whether the terms of the sub-section are wide enough to include proceedings before the insolvency Court itself, so that the creditor would require such permission to conduct proceedings under section 4 before it. No doubt if the creditor has a right of suit subject to the permission of the insolvency Court, he may also move the insolvency Court itself with such permission to exercise its jurisdiction under Section 4 of the Act, but the real test of the matter is not to be found within the terms of Sub-section (2) of Section 28 at all. The right of suit to establish a claim to property as part of the insolvent's estate lies in the receiver in exercise of his powers under item (d) of Section 59 of the Act, and this is true whether the right is exercised in the insolvency Court itself by virtue of the jurisdiction conferred on it by Section 4, or by way of separate suit in the appropriate Court. We hold therefore that where the Court is called upon to exercise jurisdiction under Section 4 for declaring a transaction as fictitious, it should be for the receiver to move the Court in this behalf, and that even with the permission of the Court, a creditor should not he allowed to do so in his own name.
11. It will be observed however that in Ram Sundar Ram v. Ram Charit Bhakat : AIR1924Cal827 the Court expressed no opinion that the proceedings there impugned were without jurisdiction, and it laid emphasis on the fact that objection to proceedings had been taken, though obscurely, in the lower Court. In the present ease no such objection was taken in the lower Court, and we have further to consider how far the introduction of the provisions of Section 54A into the Act affects the question. Mr. Chakravarty for the appellant laid stress on the difference between the transfer to Hanif by the insolvent, on the one hand, and that by Hanif to Garibia Bibi, on the other. If the former were a real transaction, it might be subject to annulment under Section 53, or, if found fictitious, this fact might be declared by the Court under Section 4. But the transfer by Hanif to Garibia Bibi, it was contended, could, in no circumstances, be annulled under Section 53, which does not apply to a second transfer by a transferee from the insolvent. The answer is that if the transfer to Hanif is held to be fictitious, then Hanif's transfer to Garibia Bibi, if real and for consideration, being made after the date of the adjudication, will be governed by the principles discussed in Gobardhan Seal v. Rai Kisori Dassi ('16) 3 AIR 1916 Cal 331 and will be invalid against the receiver as being made after the property had vested in him, and the Court could so declare under Section 4. If on the other hand, the second transfer is fictitious (as has in fact been found in this case), then a declaration to that effect can also be similarly made under that section.
12. The true position seems to us to be this: the remedy in respect of the transfer to Hanif might be asked for in the alternative, either under Section 53, if the facts were so found, or under Section 4, if the transaction were proved to be fictitious; but the remedy in respect of the transfer by Hanif to Garibia Bibi could only be obtained from the insolvency Court in exercise of its jurisdiction under Section 4. Where a creditor exercising his rights conferred by Section 54A of the Act moves the Court to annul a transfer under Section 53, it would be anomalous to hold that he should be deprived of his right, because he happened to succeed in, as it were, proving a stronger case, by establishing that the transfer was wholly fictitious, on the ground that a declaration could not be given to the latter effect except on the application of the receiver. If the objection were taken in the trial Court, clearly the Court could direct the receiver formally to file the necessary application. We think that where the objection is not taken, the appellate Court should treat the proceedings as merely defective in form for the absence of such application. We think also that in the very special circumstances of this case this Court should similarly treat the proceedings in respect of the second transfer by Hanif to Garibia Bibi. It is clear that the Official Receiver never declined to act in this case on the merits; his objections were merely to ensure that he should not be responsible for costs in the event of failure; the Court could and would have directed him to make the necessary application had the objection been taken. The second objection of the appellant is therefore overruled.
13. The third objection relates to the learned District Judge's method of dealing with the question of the absence of the two minor sons of the insolvent Oli Mahammad from the proceedings. It is conceded that the learned Judge's reasoning on this issue (4) cannot be sustained. We consider that the appellant's objection will be sufficiently met if we make it clear that the decision in this case in no way affects the question as to whether the minor sons of Oli Mahammad had any rights in the properties, which are the subject-matter of these proceedings, and that it will be open to the appellant to establish that right if she can. She will not be met by the objection that so far as she is concerned it has been held in the absence of the minors that the transfer by the minors of their interest to her is fictitious, and so she can have no interest in the property, whatever interest the minors may have. The present decision can and does only cover so much of the properties of Oli Mahammad in suit as may be found to have been his on the date of the fictitious transfer to Hanif. We, therefore, modify the order of the learned District Judge to run that 'The right, title and interest which Oli Mahammad had in the disputed property on 21st November 1936, vested on his adjudication in the Official Receiver, and the rights of the Official Receiver are unaffected by the documents, Ex. A, B and C.' Each party will bear its own costs in this appeal; the order for costs in the lower Court will stand.