NEELAKANTA IYER SUBRAMONIA IYER Vs. OFFICIAL RECEIVER QUILON

JUDGEMENT

(1.) THESE two appeals arise from an order passed by the District Judge, Quilon, in the exercise of the insolvency jurisdiction of the Court annulling certain transfers. In I.P. No. 3 of 1100, the legal heirs of one C.K. Koyakunju were adjudicated insolvents by the Quilon District Court on 13.1.1103. The order was passed at the instance of the creditors and though I.P. 3 was presented by a single creditor with it was afterwards consolidated as many as ten other petitions filed by different creditors. I.P. No. 3 was the earliest petition and it was filed on 4.2.1100. Koyakunju died on 2.6.1096. He appears to have been an affluent merchant at Quilon conducting trade in piece-goods, yarn, provisions etc. After his death, his eldest son carried on business on his own behalf and on behalf of the other heirs. He held a power of attorney from them. Koyakunju had left behind two sons, two daughters and a wife. They were counter-petitioners 1 to 5 in I.P. 3. After the death of the father new concerns such as a tile factory, an oil mill etc., were started. Apparently things did not go well with these new ventures or with the old ones and within two or three years of Koyakunju's death his legal heirs found themselves in rather embarrassed circumstances. On 3.1.1100 they executed a usufructuary mortgage deed for Rs. 75,000 in favour of the appellant in A.S. 288 charging the bulk of their immovable properties and under a lease-deed of even date the mortgaged properties were taken back on lease by them. The entire mortgage money is alleged to have been received in cash. THESE two documents were soon followed on 15.1.1100 by a hypothecation bond for Rs. 78859 - as 15 in favour of the appellants in A.S. 511 charging the equity of redemption over the properties comprised in them and also other items. The whole of the consideration money under this bond went in liquidation of the debt which the hypothecators owed to the hypothecatecs. The order appealed from is one passed by the Court on an application made by the Official Receiver to annul these documents, the first two under S. 35 of the Travancore Insolvency Act VIII of 1090 (S. 36 Provincial Insolvency Act, 1907 corresponding to S. 53 Provincial Insolvency Act, 1920) as fraudulent transfers and the last one as a fraudulent preference under S. 36 of the said Act (S.37 Provincial Insolvency Act, 1907 corresponding to S. 54 Provincial Insolvency Act, 1920). The Official Receiver filed his application on 15.8.1103, but it was not until 3.3.1120 that the petition was disposed of.

(2.) THE usufructuary mortgage and the lease-back are marked as Exts. I and II in this proceeding and the hypothecation bond as Ext. LXXV. THE learned Judge in the Court below found that Ext. I is unsupported by consideration except to the extent of Rs. 20,000 and that it is not a bona fide transfer. With respect to Ext. LXXV the finding is that it was executed by the insolvents under pressure and in pursuance of a prior agreement in Vrichigom 1099.

(3.) THE view the learned Judge in the Court below took upholding the preliminary objection was very seriously challenged before us both in A.S. 288 and in A.S. 511. It was argued that the Privy Council decision and the English case it followed Ex parte Learoyd (1878) 10 Ch. D. 3, turned on the language of the particular statues which governed the two cases viz., the Presidency Towns Insolvency Act and the Bankruptcy Act, 1869 respectively and that the Provincial Insolvency Act, on which was modelled the Travancore Insolvency Act VIII of 1090, did not contain the provisions on which those two cases were based. This argument was raised in the Court below, but the learned Judge repelled it with these words; "So long as the question is not covered by any ruling of the High Court (Travancore) and in the absence of any difference in the relevant provisions of the Presidency-Towns Insolvency Act and the Insolvency Act in Travancore I do not find my way to brush aside lightly the weight of the Privy Council ruling. We are afraid the learned Judge is in error on both these points.