UMAR SAIT Vs. UNION OF INDIA

JUDGEMENT

(1.) THE only point that arises for consideration in this appeal against the decree of the Subordinate Judge, Salem, in O. S. No. 21 of 1958 is, whether the deed of gift, Ex. A. 9 executed by the second respondent in favour of the appellants, his children by the second wife is one intended to defeat and delay creditors and as such voidable at the instance of his creditors.

(2.) THE facts which have given rise to this appeal are these. Abu Bucker Sait, the second respondent, is a resident of Yercaud in Salem Dt. He was running a business in cloth at Madurai since 20-6-1945, under the name of A. B. H. Hussain and Co. Besides that, he possessed about 290 acres of coffee plantation in Yercaud. On 9-8-1945, he purchased for a sum of Rs. 35,500 on extent of 9 acres of land in Kichilipalayam village, adjoining Salem town. Besides, he had substantial balances in his bank accounts during the period material to the present case. THEre was also a terraced house owned by him in Guthiana in the State of Kutch. Abu Bucker had two wives and children by them. THE senior wife was living at Guthiana, while the junior wife and children born of her were with him (the second respondent) at Yercaud. THE objects of his affection were only his wives and children, as is evident from the fact that under a registered will dated 29-11-1945, he disposed of his entire properties in their favour. It is claimed on behalf of the appellants that soon after the execution of the will, the second respondent realised that under the Mohammadan law its provisions could not stand to the extent of two-thirds of the properties disposed of and that, therefore, he wanted to execute a deed of gift in favour of his minor children by his second wife, namely, the appellants. In pursuance of that object he is said to have executed Ex. A. 9 settling the Grange coffee estate on the appellants. THE reason given for the execution of this gift deed dies not, however, appear to be correct. For, if that were so, one would have expected a similar document in favour of his first wife and the children born through her. But, no such document ever came into existence.

(3.) THE gift deed was undoubtedly a voluntary transaction. THE question that falls for consideration, is whether it was executed with the intent of defeating and delaying the creditors of the transferor. In ascertaining such an intention, it will be necessary for us to consider the circumstances surrounding the execution of the deed of gift. We have already indicated that the explanation given by the appellants that the gift deed was executed because the transfer or apprehended that his will would not be operative, is not a valid one. But, at the same time, it is a matter of admission in the present case, that apart form a notice of re-assessment issued under S. 34 of the Income-tax Act in respect of escaped assessment for the year 1944-45, the second respondent had no debts at the time when he executed the gift deed. On the other hand, he had then substantial interest in the Javuli business carried on at Madurai, a house in Guthiana and 9 acres of land in Kichilipalayam purchased for about Rupees 35,000. He had bank accounts with the Imperial Bank of India as well as the Central Bank of India. THE various orders of the Income-tax Officer show that more than a lakh of rupees must have been in deposit with those banks.