GRANDHI GURVAMMA Vs. CHAINVADI GOPALAM AND OTHERS

JUDGEMENT

(1.) The revision petitioner is a creditor whose petition to declare the respondents insolvent was dismissed by the trial Court and the appellate Court.

(2.) The petitioner filed I. P. No. 23 of 1965 in the Court of the Subordinate Judge, Nellore, with the allegation that the petitioner obtained a decree in O.S. No. 73 of 1956 on the file of the District Munsif, Ongole, for Rs. 4,804-15-0 on 4-6-1956 against respondents 1 and 2 and their father. Proceedings in execution are pending and nothing has been realised till now in execution of that decree. Respondents 1 and 2 and their father the late Chaluvadi Venkatasubbaiah executed in favour of respondent No. 3 a divided son of Venkatasubbiah a mortgage by deposit of title deeds dated 1st April, 1953 covering all their immoveable properties to secure repayment of a sum of Rs. 7,925-7-2 due on an Anthakam executed by the assessees on 31st March, 1953. The mortgage was evidenced by a memorandum which was not, however, registered. According to the petitioner, the mortgage was a clandestine transaction by means of which the properties of respondents 1 and 2 were kept beyond the reach of the creditors and the Income-tax Department while making it appear to the outside world that the properties were still theirs.

(3.) The Government of India, therefore, filed O.S. No. 19 of 1957 in the Court of the Subordinate Judge, Nellore, against the mortgagors and the mortgagee for a declaration that the equitable mortgage on 1-4-1953 was sham, nominal and void and that the decree obtained thereon was fraudulent and collusive decree and could affect the priority of the Income-tax Department in respect of the income-tax arrears. The mortgagors remained ex parte and the suit was contested by the mortgagee alone. The learned Subordinate Judge held that there was no valid and operative mortgage and no mortgage decree. Aggrieved by that decree of the learned Subordinate Judge, the third respondent herein (mortgagee) appealed to the High Court in A.S. No. 188 of 1959. The High Court by its judgment dated 17-6-1965 reversed the findings of the trial Court and held that the equitable mortgage decree and the decree thereon was valid.