LICHIRAM MOTILAL Vs. RADHA CHARAN PODDAR

JUDGEMENT

(1.) The appeal arises out of a suit commenced by the appellants for declaration that two mortgages for Rs. 5,000 each taken by the first two defendants, Radha Cbaran Poddar and Radhabailav Poddar, one from Lalbihari Saha (now deceased) on the 30 January 1914, and the other from Sukh Lal Saha, Matial Saha and Nrityaial Saha on the 7 February 1914, had been made gratuitously with intent to defeat their creditors and were consequently voidable under Section 53 of the Transfer of Property Act. The plaintiffs are creditors of the Sahas end instituted this suit on the 9 Match 1918 on behalf of themselves and the other creditors whose names were set out in a schedule appended to the plaint, The mortgagors as also the mortgagees were made defendants; and as the Sanas bad been adjudicated insolvents on the 23 July 1914 by this Court in the exercise of its Insolvency Jurisdiction, the Official Assignee also was joined as a defendant. The suit was thus constituted .is a re-preservative suit of the type contemplated in the case of Hakim Lal V/s. Mooshahar Sahu 34 C. 869 : 11 C. W. N. 889 : 6 C. L. J. 410, which was affirmed by the Judicial Committee in Musdhar Sahu V/s. Rakim Lal 33 Ind. Cas. 343 : 90 M. L. J. 116 : 3 L. W. 207 : 20 C. W. N. 393 : 14 A. L. J. 118; (1916) 1 M. W. N. 198 : 19 M. L. T. 203 : 23 C. L. J. 406 : 18 Bom. L. E. 378 : 43 C. 521 : 48 I. A. 104 (P. C.). The case for the plaintiffs is that after the Sahas had been adjudicated insolvents, they proved their claim before the Official Assignee in due course. On the 4 April 1916 three of the insolvents, Krishnalal Saha, Matilal (sic)Daha and Narityalal Saha were publicly examined before the Registrar in Insolvency, in the course of such public examination it was elicited that they had executed the mortgages now in suit in favour of their relations. The plaintiffs intended to apply for an order under Section 55 of the Presidency Towns Insolvency Act for avoidance of the mortgages as against the Official Assignee. But before the termination of the insolvency proceedings, they discovered that the mortgagees had obtained decrees on the mortgages on the 15 March 1917, against the mortgagors an the Official Assignee. They have consequently been constrained to institute the present suit, as otherwise complications might result if the decrees should be executed and the hypothecated properties should on sale pass into the hands of strangers. The claim was resisted by the mortgagors and mortgagees- defendants, in other words, by the Sahas and the Poddars. The Official Assignee supported the plaintiffs and staled that he was not aware of the fraudulent character of the mortgages at the time when the mortgage decrees were made and he could not accordingly take steps to defend those suits. On these pleadings, the substantial question in controversy was formulated in the eighth issue in the following terms: Were the mortgages in question executed by the insolvents without consideration and were they executed mala fide and fraudulently as shields against their creditors as stated in the sixth and eighth paragraphs of the plaint?

(2.) The Subordinate Judge held on the evidence that the plaintiffs had failed to discharge the burden which lay upon them to prove that the mortgages were fraudulent; be further found that the defendants had established that the mortgages were for consideration. On the present appeal, the arguments have centred round the question whether the mortgages were gratuitous or for consideration.

(3.) At an early stage of the arguments, it transpired that certified copies of the record of the public examinations of Matilal Saha, Nrityalal Saha and Krishnalal Saha were received in evidence by the Subordinate Judge. None of these persons had, however, been examined as witnesses in the lower Court, and consequently their previous statement could not be taken to have been utilised to contradict them. The question thus arose, whether the statements in the insolvency proceedings could have been received in evidence under either Section 32 or Section 33 of the Indian Evidence Act. Section 32 was of no avail, because, even if it were assumed that the requirements of the introductory clause were satisfied, the case could not be deemed covered by any of the eight clauses. The clause which looked most helpful was the third, but this, it was conceded, was useless, as the statements were not against the pecuniary or proprietary interest of the persons making them. Section 33 was equally of no assistance, because, even if it were assumed that the requirements of the introductory clause were fulfilled, none of the three conditions mentioned in the proviso could be held to have been realised. The insolvency proceeding could not be treated as a proceeding between the same parties as the parties to the present suit. Nor could it be said that the adverse party in the first proceeding bad the right and opportunity to cross-examine or that the questions in issue were substantially the tame in the first as in the second proceeding. the scope of the public examination of the insolvent, as indicated in Section 17 (1) of the Presidency Towns Insolvency Act, is to examine him as to his conduct, dealings and property. At that stage, the creditors who may have been notified are arrayed together ac question arises whether there is a conflict between secured and unsecured creditors, or whether the alleged claim of one or other of them is or is not fraudulent. They cannot at the time be treated us adverse parties, nor can the question in issue in this suit be deemed, by any stretch of language, to be substantially the sama as the question then in issue. There is the additional difficulty that the statement of one of the insolvents could not by any device be used as against another or the others. The admissions of an insolvent, if made after the act of insolvency, may be admissible against himself, but they cannot furnish evidence against another insolvent or as against the Official Assignee. Reference may in this connection be made to the decision in Board of Trade, Ex parte, Brunner, In re (1887) 19 Q. B. D. 572 : 56 L. J. Q. B. 606 : 57 L. T. 418 : 35 W. R. 719 : 4 Morrell 255, where it was ruled that the answers of a bankrupt on his public examination are not admissible in evidence even in proceedings in the came bankruptcy by the trustee against parties other than the bankrupt. There was thus no escape from the position that the statements made by Krishnalal Saha, Matilal Saha and Nrityalal Siha, in the course of their public examination under Section 27 (1) of the Presidency Towns Insolvency Act, were not admissible in evidence in this suit. When we indicated our view on this point, Mr. Mukerjee on behalf of the plaintiffs requested that steps might be taken to examine these three persons in this Court. We decided to accede to this request, although we were not unmindful of the observations made by the Judicial Committee as to the reception of additional evidence in appeal, in the case of Kessow i Issur V/s. G. I. P. Ry., Co. 31 B. 381 : 9 Bom. L. R. 671 : 11 C. W. N. 721 : 6 C.L.J. 5 : 4 A. L. J. 461 : 17 M. L. J. 347 : 2 M. L. T. 435 : 34, A. 115 (P. C.). We were, however, largely influenced in our decision by the circumstance that some endeavour had been made to examine the insolvents in the Court below, but the attempt proved infructuous as the witnesses could not be found and the warrants could not, consequently, be executed. No doubt, all the steps which might possibly have been taken to enforce attendance were not exhausted, but this might have been due to the fact that the previous statements were allowed to be received in evidence without objection. The erroneous omission to object to the reception of the evidence did not, as pointed out by the Judicial Committee in Miller V/s. Madho Das 19 A. 76 : 7 Sar, P. C. J. 73 : 9 Ind. Dec. (n. s.) 50 : 23 I. A. 106 P. C.), make it legally admissible in evidence; but as such omission might possibly have induced the plaintiff not to take recourse to the extreme measures provided for the enforcement of attendance of witnesses, we thought it right to summon them for examination in this Court, Two of them, Matilal Saha and Nirtyalal Saha, did attend in obedience to the sub poena issued by this Court; Krishnalal Saha did not attend and it was stated that his absence was due to illness; But when the witnesses appeared in Court, Mr. Mukerjee declined to examine them in chief, on the ground that as his clients were plaintiffs and the witnesses were mortgagors defendants, they ware bound to be hostile. He accordingly asked that they might be treated as witnesses called by the Court and that he might be premitted to cross examine them. In support of this position, he placed reliance upon the decision of the Judicial Committee in Radha Jeebun Moostutty V/s. Taramor(sic)ee Dossee 11 W. R. P. C. 31 : 2 B. L. R. P. C. 79 : 12 M. I. A. 380 : 2 Such P. C. (sic)214; Sar P. C. J. 45; 4 Mad. Jur. 175 : 1 Ind. Dec. (n. s.) 534 : 20 E. R. 35(sic), That decision is of no assistance to the appellant. There the witnesses) summoned for the plaintiff (except one) did not appear. The plaintiff there-upon Sled a petition praying that the case might be decided by his summoning the defendants in person and taking his deposition. The defendant was accordingly summoned and was asked by the Court whether the money claimed by the plaintiff was justly due from him or not. The defendant answered that he was not liable for the claim. The plaintiff then submitted that he had not intended to abide by the answer of the defendant a ad asked leave to cross examine him. The Trial Judge refused to put any further question to the defendant or to allow any to be put on behalf of the plaintiff and dismissed the suit. On appeal to this Courts, Morgan and Pandit, JJ., expressed their disapproval of the Course adopted by the Trial Judge, and, when the case went up to the Judicial Committee, their Lordships fully concurred in the propriety of that Bourse. This is clearly no authority for the proposition that if the plaintiff sails the defendant as a witness, he is entitled to cross-examine him as a matter of right; in the case before the Judicial Committee the defendant was treated as a witness called by the Court. Is the contention of the appellants were to prevail, it would involve in substance an approval of the procedure condemned in emphatic terms by the Judicial Committee in two resent cases. In Kishori Lal V/s. Chunni Lal 1 Ind. Cas. 128 : 31 A. 116 : 13 C. W. N. 370 : 9 C. L. J. 172 : 5 M. L. T. 58 : 11 Bom. L. R. 196 : 19 M. L. J. 186 : 36 I. A 9 P. C.), Lord Atkinson observed as follows: It would appear from the judgment of the High Court that in India in is one of the articles of a weak and somewhat paltry kind of advocacy for each litigant to sauce his opponent to be summoned as a witness, with the design that each party shall be forced to produce the opponent so summoned as witness, and thus give the Counsel for each litigant the opportunity of cross-examining his own client. It is a practice which their Lordships 3annot help thinking, all judicial Tribunals ought to set themselves to render as abortive as it is objectionable. It ought never to be permitted in the result to embarrass judicial investigation as it has done in this instance.