RAJE KHANDERAO GOVIND RAO Vs. UDHAO GANESH

JUDGEMENT

(1.) THE facts of the case are that one Nimbaji sued one Mt. Bhiki for pos-session of Survey No. 82 in 1926. This litigation was decided in favour of Mt. Bhiki in the trial Court. Udhao Ganesh who now figures as a creditor was the agent of Mt. Bhiki in the said litigation and he obtained a sale deed of one fourth share on 25th November 1929 for a consideration of Rs. 1000 after the trial Court's decree. Nimbaji, however, filed an appeal against the decree and won the case with the result that Udhao Ganesh was dispossessed on 12th January 1931. Nimbaji had to recover his costs under the decree for possession and also mesne profits for which also he obtained a decree against Mt. Bhiki. These decrees were assigned by Nimbaji in favour of Raje Khanderao son of Govindrao Jagirdar on 22nd July 1934 and in satisfaction thereof Mt. Bhiki transferred her entire property by a sale deed, dated 29th September 1934. Udhao Ganesh filed an application for adjudging Mt. Bhiki as an insolvent soon after this transfer claiming himself to be a creditor on the ground that he had paid consideration for the sale deed in his favour but as he was dispossessed he became entitled to refund of the consideration for a debt which was provable against Mt. Bhiki. Mt. Bhiki was adjudged an insolvent and thereafter Udhao Ganesh filed an application under Sections 53 and 54, Insolvency Act, for annulling the transfer in favour of Raje Khanderao dated 29th September 1934. Raje Khanderao claimed to be bona fide transferee for consideration. The trial Court held that the transfer was void under Section 54, Insolvency Act. Against this decision Raje Khanderao filed an appeal before the lower Appellate Court (Miscellaneous Appeal No. 61 of 1937). The lower Appellate Court held that the transfer was not void under Section 54, Insolvency Act, bat was void under Section 53, Insolvency Act, and dismissed the appeal. It is against this decision that the present application for revision under Section 75, Insolvency Act, is filed in this Court.

(2.) ONE of the contentions raised by the applicant before the trial Court was that Udhao Ganesh was not really a creditor of Mt. Bhiki and not being a creditor he was not entitled to apply for adjudication of Mt. Bhiki as an insolvent. The plea practically amounted to urging that the order for adjudication at the instance of Udhao Ganesh who was not a creditor was a nullity, and as there was no insolvency proceedings there could be no application for setting aside the transfer either under Section 53 or under Section 54. The trial Court gave a finding against Raje Khanderao on this point. This finding was attacked before the lower Appellate Court. The lower Appellate Court however was of the opinion that it was not open to Raje Khanderao the transferee to challenge the applicant as a creditor in proceedings under Sections 53 and 54, Insolvency Act. It therefore declined to decide the question as to whether Udhao Ganesh was a genuine creditor or not. This finding of the lower Appellate Court is disputed before me. The lower Appellate Court in para. 6 of its judgment admitted that there was no authority on the point, but a plain reading of Section 54A showed to him that a creditor in such a case merely performs the function of a receiver and it was doubtful whether the nature of the debt could be questioned by the transferee. The lower Appellate Court felt considerable doubt in coming to the conclusion one way or the other and eventually decided not to enter into that question on the ground that it was not open to the transferee to challenge the genuineness or otherwise of the claim of Udhao Ganesh to be a creditor. The view taken by the lower Appellate Court does not appear sound. The lower Appellate Court failed to see that the circumstances of this case were very peculiar. This was a case in which Udhao Ganesh claimed to be the sole creditor of Mt. Bhiki. It is this Udhao Ganesh who got Mt. Bhiki adjudged insolvent and he is the only creditor who is mentioned in the schedule. The present applicant Raje Khanderao was not a party to the proceedings initiated by Udhao Ganesh to get Mt. Bhiki adjudged an insolvent. Proceedings were started against the present applicant only when an application was filed by Udhao Ganesh under Sections 53 and 54 and he was served with a notice thereunder. With a view to show that the transfer in his favour was bona fide and that there was no act of insolvency committed by his transferor he had necessarily to challenge the debt said to be due to Udhao Ganesh at whose in-stance the insolvency proceedings were started.

(3.) MY attention was invited to Section 33, Insolvency Act, which lays down as to how a schedule of creditors is to be framed. I was then referred to Section 50 of the Act, and it was argued that reading Sections 33 and 50 together it would appear that the schedule prepared under Section 33 could be amended only in the manner provided for in Section 50 of the Act, and inasmuch as the name of Udhao Ganesh appeared in that schedule which was so prepared under Section 33 and was not amended in the manner laid down in Section 50 the entry of his name in' the schedule became unchallengeable. I do not think that this is a sound argument. Section 33 only indicates the manner in which the schedule is framed and Section 50 only speaks of a receiver applying to the Court for changing the entries in the schedule if he thinks it necessary to do so. It also enables a creditor to apply for amendment of the schedule if the receiver declines to interfere in the matter. The transferee such as Raje Khanderao in the present case is, is not a person who can come under Section 50 and apply for amendment of the schedule. He is neither a receiver nor a creditor. There is nothing in these two Sections which will lead me to hold that a transferee is not entitled to challenge the genuineness of the debt of the sole creditor in the case in which his transfer is challenged by such a creditor. No authority has been cited before me, nor has any provision of law been brought to my notice under which such a plea could not be raised. The plea has also a direct bearing on the proceedings under Section 53, Insolvency Act. That is also one of the reasons why this defence should have been gone into by the lower Appellate Court.