MT DEBI Vs. OFFICIAL ASSIGNEE

JUDGEMENT

(1.) This is an appeal from a decision of Gentle, J., sitting in the insolvency jurisdiction of this Court given on 20 January 1942, whereby on the application of the Official Assignee of Calcutta he made a declaration (a) that the indenture of sale dated 24 August 1938, and made between Ramsarup Bhatwal and Mussamat Debi, his mother, was void and had no effect against the Official Assignee; and (b) that the properties comprised in the indenture belonged to the official Assignee. He also made an order that the respondents in this matter should deliver up to the Official Assignee the properties in question with their title deeds. There was a firm carrying on business in Calcutta in 1938 of the name of Badridas Chunilal. Its partners were Ramsarup Bhatwal and Bhairolal Bhatwal. This firm was associated with another firm of Badridas Chunilal at Gorakhpur in the United Provinces. In the Gorakhpur firm there were three partners two of whom were Ramsarup and Bhairolal. On 26 September 1938, Messrs. Ram Chunder Hanumanbux, the creditors of the Calcutta firm, presented a petition in insolvency against the firm of Badridas Chunilal of Calcutta and on 17 January 1939, the partners of Badridas Chunilal were adjudicated insolvents. In August 1939 the two insolvents submitted, a scheme of composition by which the trustees were empowered to make a distribution of the property comprised in the scheme amongst the creditors. This scheme was approved by an order of this Court dated 14th. September 1939, and on that date the Court annulled the adjudication of insolvency. Nothing appears to have been done in connection with that scheme with the result that on 7 July 1941, an order was made under Section 31(1), Presidency Towns Insolvency Act, by this Court setting aside the approval of the scheme and readjudicating the debtors as insolvents. The Official Assignee applied for relief against the two insolvents which as I have mentioned above Gentle, J., granted. When the debtors were adjudicated insolvents originally the Court found that the following acts of insolvency had been committed by the debtors: (a) that with intent to defeat and delay the creditors of the debtors Jagannath Panday the munib gomastha of the debtors departed from the usual place of the debtors in Calcutta and absented himself therefrom from the evening of 26 August, 1938, until 5 September 1938; (b) that with the same intention the same gomastha secluded himself from 27 August, 1938 up to 5 September 1938 so as to deprive the creditors of the debtors of the means of communicating with him; (c) that on 27 August 1938 at the debtors place of business Monoharlal, the gomastha of the debtors gave notice to the gomastha of some of the creditors that the debtors had suspended payment of their debts; (d) that with a view to giving preference the debtors had transferred a portion of their goods and certain shares and debentures to some persons alleged to be their creditors with a view to giving them a fraudulent preference over the other creditors; and (e) that the debtors departed from their usual place of business on 19 September 1938 and were secluding themselves so as to deprive their creditors of the means of communication.

(2.) That order, as I have said, was made on 17 January 1939 on a petition dated 26th September 1938. On 24 August 1938, that is to say three days before the debtor's gomastha gave notice of the debtors suspending payment of their debts, one of the debtors, Ramsarup, executed a conveyance of three houses in Gorakhpur in favour of his mother the present appellant, Mussamat Debi who, lived in Gorakhpur. The conveyance is interesting. The operative part reads: My mother has the sum of Rs. 23,500 deposited in the firm of Badridas Chunilal of Golabazar Gorakhpur. And pressing demands for the same are being made on behalf of my mother Mussamat Debi and I the executant have no cash money just now so that I can relieve myself of the burden by paying up the amount in full. Therefore it is highly impossible for me to repay the amount now. Therefore in a sound state of body and mind in full possession of the five senses and intelligence of my own will and accord, without any force, compulsion or pressure from another having fully understood and realised the import have sold absolutely the houses and garden as per four boundaries below to my mother Mt. Debi for a consideration of the sum of Rs. 23,500 and I the executant hereof have continued to be in possession and occupation of the houses sold hereby as owner without any other cosharer or interference from another, that is to say, no person other than myself is a cosharer or partner therein. And the property sold hereby is free from and clear of all kinds of liabilities and charges. And have received payment of the full and entire amount of consideration for this deed. Not a bit remains outstanding from the purchaser to me the executant and I have withdrawn my possession and occupation from the houses and garden sold hereby and made over the possession and occupation of the property sold hereby to the purchaser. And I cease to have any connection or concern with the houses and garden from this date, that is to say, I shall have no further connexion or concern with the property sold. It is desired that the said purchaser be in possession and occupation of the houses and garden and take her ownership as perpetual. Therefore, this deed of absolute sale by these few words have been executed so that it may be of use in time of need.

(3.) That document was registered at the Sub-Registry of Basti, District Gorakhpur. The Official Assignee says that that transaction is void as being contrary to Secs.55 and 56, Presidency Towns Insolvency Act. The Official Assignee put in an affidavit by one of his gomasthas who stated that he was acquainted with the proceedings, and he set out the facts as derived from the books of the insolvent firm and from the file of the insolvency proceedings. The appellant Mt. Debi has put in an affidavit, Para. 8 of which says: I say that the transfer of the said properties in my favour was done in the following circumstances : A sum of about Rs. 25,000 belonging to me was kept with my son the insolvent in his business for investment. My son and the said firm of Badridaa Chunilal were really trustees in respect of the said sum of Rs. 25,000. The said sum was transferred to the account of Badridas Ramsarup of Basti, a firm which has not been adjudicated insolvent in this suit. The said firm held the money on trust for similar purpose. The insolvent was also a partner in the said firm of Badridas Ramsarup of Basti. I pressed for account of the said money. On 15 August, 1938, I pressed for repayment of the said money and threatened the partners with suit. The property which is the subject-matter of this application was conveyed to me in satisfaction pro tanto of my dues and I accepted the said transfer as such.