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Jadu Nath Haldar and ors. Vs. Manindra Nath Chandra and ors. - Court Judgment

LegalCrystal Citation
CourtKolkata
Decided On
Judge
Reported inAIR1923Cal689,80Ind.Cas.323
AppellantJadu Nath Haldar and ors.
RespondentManindra Nath Chandra and ors.
Excerpt:
provincial insolvency act, (iii of 1907), section 37 - 'creditor' meaning of. - .....father. thereafter, two of the mortgagors presented petitions to the district judge for being adjudged insolvents in july 1917 and an adjudication order was made and a receiver was appointed of the properties of the insolvents. then, the receiver applied to the district judge for avoiding the sale to the extent of the shares of the two insolvents in the properties included in the deed of sale dated the 23rd may 1917, and an order was made setting aside the sale with regard to those shares. that order, however, was sot aside by this court on appeal by the purchasers in december 1919 and both the cases were sent back for retrial. the cases were hoard again and, on the 12th june 1920, the district judge has made an order in each case avoiding the sale of the interests of the two.....
Judgment:

B.B. Ghose, J.

1. These two appeals are from orders made by the District Judge in insolvency proceedings arising out of applications made for adjudication as insolvents by two persons who are brothers. The appellants were the creditors of the two insolvents by two separate mortgage-bonds. The mortgage-bonds are dated 1893 and 1907 respectively. The mortgagors were the two insolvents and also two other brothers of those insolvents. It appears that one of the mortgage-bonds was sued on and a decree was obtained for Rs. 630. The amount alleged to have been due on the other bond from the mortgagors was Rs. 1,300 odd. Taken together, about Rs. 2,000 was due for those debts in May 1917. Then all the four brothers executed a deed of conveyance with regard to some of the mortgaged properties which included a house in Sonamukhi and some jote lands. The deed of sale is dated the 23rd May 1917 and the properties were sold for Rs. 2,000 to the appellant's father. Thereafter, two of the mortgagors presented petitions to the District Judge for being adjudged insolvents in July 1917 and an adjudication order was made and a Receiver was appointed of the properties of the insolvents. Then, the Receiver applied to the District Judge for avoiding the sale to the extent of the shares of the two insolvents in the properties included in the deed of sale dated the 23rd May 1917, and an order was made setting aside the sale with regard to those shares. That order, however, was sot aside by this Court on appeal by the purchasers in December 1919 and both the cases were sent back for retrial. The cases were hoard again and, on the 12th June 1920, the District Judge has made an order in each case avoiding the sale of the interests of the two insolvents. These appeals are preferred by the purchasers against those orders.

2. In those cases, the only evidence adduced was adduced by the purchasers. The sale was sought to be avoided under Section 37 of Act III of 1907, which governs these cases, as having been in favour of creditors. The question in these cases is whether the sale was to a 'creditor with a view of giving that creditor a preference over the other creditors.' It is contended on behalf of the appellants that there is no evidence that this was so. The answer to the question depends upon whether Section 37 applies to those cases. The purchasers were secured creditors and they wore entitled to be paid to the full extent of their debts so secured in preference over other creditors.

3. There is distinction in the Act between a creditor and a secured creditor and the purchasers in this case do not come within the expression 'creditor' as contemplated in Section 37. In my judgment Section 37 does not apply to these purchasers. The learned Judge has, however, found that the properties were worth Rs. 4,000 and it was not necessary to sell them for Rs. 2,000 and he observes: 'Such being the case, I declare that the sale set up was not a bona fide but a fraudulent one intended to defeat or delay creditors.' He, therefore, annuled the sales to the extent of the insolvents' share. There is no direct evidence as to the value of the properties, and it should be borne in mind that these two properties along with others were subject to the mortgages which were satisfied by the sale, and the other properties were released. The brothers of the insolvents, who had no object in making a fraudulent conveyance, joined in the sale by which they also lost their title to the properties. Then, the evidence shows that the purchasers were not aware at the time of the sale that the insolvents were heavily indebted, and there was nothing to show they were not acting bona fide. The sale, therefore, cannot be said to be fraudulent. The learned Judge further holds that the bari was not sold and was not intended to be sold. As a matter of fact, the bari was included in the deed of sale for which there was consideration, and the title of all the vendors passed to the purchasers in both the properties by the transaction. Whether the purchasers allowed any of the vendors to live in the house after the sale seems to me immaterial. No question has been raised as to the genuineness of the mortgage transactions. It is difficult to see how this sale can be impeached on the ground that it was either colourable or without consideration because this bari itself was the subject of the mortgages in satisfaction of which it was sold. I am, therefore, of opinion that the sale cannot be impeached as a mere colourable transaction. On these grounds, the judgment and orders of the learned Judge avoiding the sale to the extent of the interests of the two insolvents in the properties should be set aside. The appellants are entitled to recover their costs in these appeals from the estate of the insolvents. In appeal No. 305, the hearing fee is assessed at four gold mohurs and, in Appeal No. 306, no hearing fee is allowed but the appellants will be entitled to recover the other costs incurred.

Walmsley, J.

4. I agree.


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