OFFICIAL ASSIGNEE OF MADRAS Vs. GSAMBANDA MUDALIAR

JUDGEMENT

(1.) This is an appeal from the judgment of the Hon ble Mr. Justice Coutts Trotter dismissing an application of the Official Assignee to expunge the proof of one Sambanda Mudaliar as a secured creditor on a mortgage alleged to have been executed in June, 1916.

(2.) This case has brought to the notice of the Court not for the first time the existence in this city of dangerous gangs who take advantage of the fact that the Indian Majority Act enables young men to dispose of their property before they have sufficient sense to manage it and get them to execute conveyances for little or no consideration and thus strip them of their possessions. I am not unaware of the considerations which actuated the legislature in fixing the age of 18 as the age of majority but I hope that this matter may receive reconsideration in the near future with the object of stopping scandals such as have come to light in this Court in this case and in other recent cases.

(3.) In this case the insolvent who came of age in 1916 by August of that year had been stripped of all his property and found himself in the Insolvency Court, where his brother has preceded him, and in this case also we have had before us the case of another young man named Kuppuswami who in a brief career which came to an untimely end made away with the estate which his father had acquired in the well-known firm of Messrs. Thompson and Co., in this city. The learned Judge in another suit has already set aside two mortgages which were obtained by another gang from this insolvent and that decision has been confirmed on appeal; and the reason why a different fate attended the present application appears to be that, as stated by the learned Judge in his judgment, the proceedings before him were conducted upon the footing that the, onus was admittedly on the Official Assignee. I do not know how that view came to be taken. In law a mortgagee setting up a mortgage executed within two years of the insolvency has the onus cast on him under Section 55 of this Act, and Section 36 of the Provincial Insolvency Act to show that the transaction was one executed in good faith and for consideration. That has been repeatedly held as regards Section 36 and it has also been held as regards Section 55 the language of which is identical, by Sir Arnold White, C.J., in The Official Assignee v. Annapurnammal (1913) 20 I.C. 901 and in another Calcutta case. In this case the burden is, if anything, stronger because we have a mortgage at the usurious rate of 24 per cent. by a young man who has just came of age and who was squandering his property in dissolute courses. I do not know if it was supposed that the fact that the Official Assignee was moving to expunge a proof which he had admitted under Section 36 of the second schedule to the Act altered the onus of proof; but I think it is clear that it has no such effect. An admission of proof by the Official Assignee is in no sense an adjudication and it is open to him if he thinks that the proof was improperly admitted to have an adjudication by Court on notice. It is also open to other creditors, if they are not satisfied with the admission, similarly to obtain an adjudication and in that adjudication the matter has to be decided with reference to the ordinary legal presumptions which arise. Possibly the fact that the insolvent in his examination Ex. K 1, in April, 1917, told the Official Assignee "I got the money Rs. 4,000 and odd. It was in rupees and notes. I have spent it for drinking and women " may have influenced the view that the onus was on the Official Assignee. The difficulties of these oases are illustrated by the fact that the insolvent made that statement to the Official Assignee under what inducement, we know not, because his explanation that he was drunk when he made it is absurd. However it is nobody s case now that on the execution of this mortgage the insolvent was paid Rs. 4,000 in rupees and notes and that circumstance cannot affect the burden. I attach considerable importance to this question of burden of proof because from the learned Judge s judgment I think that, if the burden that was placed on the Official Assignee had not been placed on him, he would have arrived at exactly the same conclusion at which we have arrived. [The learned Chief Justice then considered the evidence in regard to the point whether the mortgage transaction in question was entered into in good faith and for consideration.]