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Chimniram Bakla Vs. Shibendra Kumar Chowdhury and ors. - Court Judgment

LegalCrystal Citation
SubjectCivil
CourtKolkata
Decided On
Judge
Reported in14Ind.Cas.519
AppellantChimniram Bakla
RespondentShibendra Kumar Chowdhury and ors.
Cases ReferredIn Jaffer Meher Ali v. Budge Budge Jute Mills Co.
Excerpt:
insolvency - iransfer of hatchitta in favour of insolvent, to plaintiff--discharge of insolvency proceedings--suit upon hatchitta executed by insolvent's debtor to plaintiff--consideration, whether illegal and for illegal purpose--contract act (ix of 1872), section 23--transfer of property act (iv of 1882), section 6(h). - .....and 4 in the ordinary-course of business and on the 14fch april 1904 executed a hatchitta in their favour. defendants nos. 3 and 4 became insolvent and were adjudicated as such under the indian insolvency act of 1843, 11 & 12 vict., c. 21, on a creditor's petition, the vesting order being made on the 23rd september 1908. in spite of this order, the hatchitta in favour of the insolvents was assigned to the plaintiff on the 17th november 1904, with the consent of the defendants nos. 1 and 2. at the same time, defendants nos. 1 and 2 executed the hatchitta now sued on in favour of the plaintiff. there was no consideration for the transfer by defendants n'os. 3 and 4 to the plaintiff, which was made in order to prevent the debt due to defendants nos. 3 and 4 being realised by the official.....
Judgment:

1. The appellant in this case was the plaintiff in the Court below which dismissed his suit. The appeal has, with one important exception, been argued on the findings of fact arrived at by the lower Court: and the facts before as are as follows: Defendants Nos. 1 and 2 became indebted to defendants Nos. 3 and 4 in the ordinary-course of business and on the 14fch April 1904 executed a hatchitta in their favour. Defendants Nos. 3 and 4 became insolvent and were adjudicated as such under the Indian Insolvency Act of 1843, 11 & 12 Vict., C. 21, on a creditor's petition, the vesting order being made on the 23rd September 1908. In spite of this order, the hatchitta in favour of the insolvents was assigned to the plaintiff on the 17th November 1904, with the consent of the defendants Nos. 1 and 2. At the same time, defendants Nos. 1 and 2 executed the hatchitta now sued on in favour of the plaintiff. There was no consideration for the transfer by defendants N'os. 3 and 4 to the plaintiff, which was made in order to prevent the debt due to defendants Nos. 3 and 4 being realised by the Official Assignee in favour of the creditors. Defendants Nos. 3 and 4 in fact got the hatchitta in suit executed, and kept it themselves, in the hope that the plaintiff who was their relative might realise it for their benefit. There seems to be no reason for saying that defendants Nos. 1 and 2 knew of this fraud: but the plaintiff must have been party to it. So far we follow the findings of the lower Court. It now appears that the adjudication and vesting order were discharged on the 13th January 1905, on conditions that were fulfilled on the 10th March 1905. There was evidence to this effect in the Court below, but the orders of the 13bh January and 10th March were not produced, and as the evidence was most suspicious, the Court very properly disbelieved it. The orders have, however, been produced before us and as the matter was thus placed beyond all doubt, we have, after hearing arguments against following such a course, admitted them, It is argued on behalf of the appellant that the effect of this discharge is to validate the transfer by defendants Nos. 3 and 4 to the plaintiff of the debt due to them from defendants Nos. 1 and 2, which seems to have been a nullity when it was made as the insolvents had then nothing to transfer. The authority relied on to' support this contention is Ramasami Kottadiar v. Murugesa Mudali 20 M. 452 where it was held that the discharge of a vesting order validated an attachment made after the vesting order, but before its disebarge. The same principle was followed in Kothandaram Ravuth v. Murugesa Mudaliar 27 M. 7.

2. We need not, however, decide this point in view of the course that has been followed in the case. The cause of action is the hatchitta executed by defendants Nos. 1 and 2 in favour of the plaintiffs. The cansideration for the execution of this hatchitta was that defendants Nos. 1 and 2 were released from a debt that they believed they owed to defendants Nos. 3 and 4, which, apart from the insolvency, was the case, as defendants Nos. 3 and 4 had plainly put it out of their power to sue on a debt which they professed to have transferred to the plaintiff. This consideration was, to follow the terms of Section 23 of the Contract Act, of such a nature that, if permitted, it would have defeated the provisions of the Insolvency Act: consequently under Section 23 the consideration was unlawful and the contract was void. If the hatchiita was void under the contract, it seems impossible that any proceeding under the Insolvency Act should make it valid. The discharge under the Insolvency Act may remove any bar on the disposition of property by the man who would be able to dispose of it apart from the Act, but that seems to be the limit of its operation and we cannot consider that it can give effect to a contract which was void from the beginning on the ground that its object was essentially fraudulent and unlawful.

3. The result is that the suit as framed, that is, as a suit on the hatchiita executed by defendants Nos. 1 and 2 in favour of the plaintiff, in which a remedy is sought against defendants Nos. 1 and 2 only, must fail. The case, however, was apparently argued in the Court below and was argued before us, partly as though the claim of the plaintiff was based on the assignment to the plaintiff of the debt of defendants Nos. 1 and 2 to defendants Nos. 3 and 4. We see no reason for allowing the plaintiff to depart from the strict form of his pleading in this case. But his case is in fact weaker if based on the assignment than if based on the hatchitta; for if the consideration for the hatchitta was tainted with fraud, the assignment was still more so tainted: which is probably the reason why the execution of the hatchitta was procured. The assignment was obviously of such a nature that, if permitted, it would defeat the provisions of the Insolvency Act under Section 23 of the Contract Act: it was also made for an illegal purpose under Section 6(h) of the Transfer of Property Act: and, as we have said, there is nothing in the authorities referred to show that a defect so caused can be cured by the setting aside of the insolvency proceedings. In Jaffer Meher Ali v. Budge Budge Jute Mills Co. 34 C. 289 : 11 C.W.N. 566 it was held that an assignment made within thirteen days of the insolvency of the assignor was fraudulent and void. Much more so will this be the case when it is made after the vesting order.

4. Under these circumstances, the appeal must fail and it is dismissed with costs. The result is that a debtor is relieved from paying a debt that he admittedly contracted, but it does not follow that either the plaintiff or defendants Nos. 3 and 4 lose anything that they deserve to have.


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