JOHRI LAL SONI Vs. BHANWARI BAI

JUDGEMENT

(1.) To what extent is S. 4 of the Provincial Insolvency Act. 1920 controlled by S. 53 of the said Act in the matter of determination of the question of title of a property transferred by the insolvent before he was declared insolvent is the serious question of law which is involved in this appeal by certificate. The insolvent Pyarelal Gupta appears to have executed a deed of gift in favour of his wife on November 7, 1961. About seven years later i. e. on April 1, 1968 an application under S. 10 of the Provincial Insolvency Act - hereinafter to be referred for short as "the Act" - was made for adjudging Pyarelal as insolvent. On April 5, 1968 the appellant Johri Lal Soni an Advocate was appointed receiver by the Court. On October 15, 1968 Pyarelal was on his own application adjudged as an insolvent by the Additional District Judge, Jodhpur. On January 4, 1969 the appellant who was the receiver moved the Court under S. 4 of the Act for declaring the deed of gift dated November 7, 1961 as void and inoperative inasmuch as it was a sham transaction. On March 3, 1972 the Insolvency Court of the Additional District Judge, Jodhpur, after making an inquiry, upheld the plea of the receiver appellant and declared the deed of gift dated November 7, 1961 as being void and inoperative. Thereafter the respondent Smt. Bhanwari Bai (donee) went up in appeal to the High Court assailing the judgment of the Insolvency Court on the ground that it was legally erroneous. The plea of the respondent Bhanwari Bai seems to have found favour with the High Court of Rajasthan which allowed the appeal and set aside the judgment of the Insolvency Court declaring the deed of gift as void by its judgment dated September, 26, 1973. The appellant thereafter applied for grant of certificate of fitness for leave to appeal to this Court which was granted by the High Court on October 27, 1975, and this is how the appeal has been brought to this Court.

(2.) The High Court was of the opinion that in view of the express provision of S. 53 of the Act, the Insolvency Court had no jurisdiction to determine the question of title, nor could it go into the question of the validity of a transfer which was made more than two years before the Insolvency proceedings had started. According to the High Court, while S. 4 of the Act undoubtedly conferred a power on the Insolvency Court to decide questions of title, but this power could not be exercised in respect of transfers made during a period beyond two years of the insolvency proceedings.

(3.) In support of the appeal, learned counsel for the appellant submitted that the High Court had taken an erroneous view of the law and had misconstrued the scope and ambit of S. 53 of the Act. Learned counsel for the respondent, however, supported the stand taken by the High Court and submitted that as the gift was made about 6 1/2 years before the proceedings began, the Insolvency Court could not examine the question of title. A number of authorities have been cited by counsel for the parties in support of their respective submissions, but we think question lies within a very narrow compass. It would appear that S. 4 of the Act was not there in the Insolvency Act of 1907, but was introduced for the first time by Act 5 of 1920. Before 1920, the Provincial Insolvency Act did not contain any such provision as a result of which there was a serious divergence of judicial opinion on the question as to whether or not an Insolvency Court could determine a question of title regarding a transfer made by the insolvent. Act 5 of 1920, however, set at rest this controversy and gave wide powers to the Insolvency Court to determine question of title.