MT. BASANTBAI Vs. RAMRAO KRISHNA RAO KOLHEKAR

JUDGEMENT

(1.) 1. In this appeal the issue-is raised as to whether the Insolvency Court had jurisdiction under Section 4, Prov. Insol. Act to set aside a transfer which took place more than two years before the adjudication in insolvency. The District Judge, Amraoti, who heard the appeal held following Anwar Khan v. Muhammad Khan AIR 1929 All 105 that the Insolvency Court has power to try the issue relating to the nature of the transfer made more than two years prior to the adjudication. It is urged for the appellant that the dissenting opinion of Sen, J., recorded in Anwar Khan v. Muhammad Khan AIR 1929 All 105 and followed in Amjad All v. Mr. Nand Lal AIR 1930 Oudh 311 should be given effect to as being a true construction of the terms of Section 4, Prov. Insol. Act. It appears to me that on the facts of this case, even the opinion of Sen, J., is adverse to the appellant's contention. At p. 570 of 51 All., Sen, J., concedes that if the transfer was intended to be inoperative from the beginning and the insolvent had remained in possession of the property, the receiver may apply for its annulment under Section 4.

(2.) EVEN the Chief Court of Oudh applied Section 4, Prov. Insol. Act. to a case of dispossession which was intended not to transfer any title from the very beginning but was only a nominal and colourable deed: see Abdul Hasan v. Rajbir Prasad (A.I.R. 1931 Oudh 124). In the present case the creditors have impeached the dispossession made by the insolvent as (pokal) inoperative from its inception and this case therefore must fall within the purview of Section 4, Prov. Insol. Act. Whatever disagreement there may be as to the power of the Insolvency Court under Section 4 to annul transfers which are intended to be operative but are otherwise calculated to defeat or delay the creditors, there is no division of opinion in regard to the application of Section 4 to transactions of a nominal and colourable nature, as that in the present case. The learned District Judge was therefore right in holding that the case was governed by Section 4 Prov. Insol. Act. It is pressed that Section 4 only gives discretion to the Insolvency Court and that it is not obligatory on it to try an issue between the receiver and the transferee, praticularly when the interests of the insolvent's co-owners are involved. I do not think that this circumstance, viz., the fact that the insolvent has a fractional interest in the property, makes any difference, since the Insolvency Court will be simply adjudging on such interest as an insolvent possesses in the property. As the Insolvency Court has to administer the estate of the insolvent to settle the claims of the creditors it is advisable that that Court itself should inquire into the issue. I therefore affirm the lower Court's order and dismiss this appeal with costs. Pleader's fees Rs. 10.