DASARI MURUGAPPA MUDALI Vs. OFFICIAL RECEIVER

JUDGEMENT

(1.) Six alienations were effected by one Nagappa for himself and as guardian of his minor son Subramaniam, his minor brother Srinivasa Mudali, his minor cousin Govindaswami Mudali and by his adult brother Elumalai (who were all members of a joint Hindu family) in August, 1932 (Ex. VIII and Ex. IX), in March, 1933 (Ex. VI) and in May/1933 (Ex. IV, Ex. V and Ex. VII). Out of these, the alienations covered by Ex. VIII and Ex. IX are substantial The consideration for the transaction embodied in Ex. VIII is stated to be . Rs. 22,500 and for the one contained in Ex. IX a sum of Rs. 6,000. Nagappa" was adjudicated insolvent on a creditor's petition presented on the 21 June 1933. Six applications were made by the Official Receiver, Chittoor to annul these alienations. He asked for these sale-deeds to be set aside both on the ground that they were nominal transactions, (not being transfers for consideration and in good faith) and on the ground that they fell, in any case, within the mischief of Section 54 of the Provincial Insolvency Act, as they were brought about with the object of giving fraudulent preference to the alienees who were closely related to the insolvent. These questions were considered in detail by the learned ? Subordinate Judge of Chittoor and as he was of opinion that the alienations were not. bona fide and the intention of the parties could not have been to convey any title in favour of the alienees, he allowed the Official Receiver's applications and annulled the alienations evidenced by Exs. IV to IX. The alienees appealed to the District Judge of Chittoor, but without success. Four of the alienees, i.e., those in whose favour Exs. VIII, IX, IV and VII were executed have come up in revision. The alienations covered by Exs. V and VI and said to have been effected for Rs. 1,700 and Rs. 3,000 respectively are thus no longer in issue.

(2.) It appears that Nagappa's family had been carrying on a yarn business in partnership with R. W. 7 in whose favour the sale-deed Ex. VIII was executed. As the learned District Judge was not satisfied that the obligations between R. W. 7 and Nagappa's family had been fully worked out at the time when Ex. VIII was executed and as he was of opinion that the transaction contained in that sale- deed was a nominal one, he granted leave to R. W. 7 "to prove before the Official Receiver by a full disclosure of all the accounts, of the capital advanced and of the debts due to the family, for any sum that may be found due to him on this family yarn business". Similarly, the transaction covered by Ex. IX was not upheld by the District Judge as he was of the view that R. W. 1 (the alienee under that sale-deed) was "acting only as the agent of the insolvent," did not intend "to take family property from the insolvent his cousin" and "there was no good faith in a transaction that had for its object the concealment of a large amount of property from the creditors out of all proportion to the debts intended to be discharged thereby." But as the learned Judge was not sure that R. W. 1 had not paid even a small fraction of consideration to Venkatasubbiah Chetti towards the discharge of Nagappa's debts, he permitted R.W. 1 to prove the payment made by him if the debt due by Venkatasubbiah Chetti were really true. In regard to the other alienations, the trial Court's order was not modified.

(3.) On the basis of these modifications by the learned District Judge, it is contended by Mr. Rajah Aiyar, learned Counsel for the petitioners, that the transactions could not have been set aside as sham or fictitious unless the learned District Judge was of opinion that they were brought about without any consideration at all. In fact, he urged that the findings of the learned District Judge were to a certain extent inconsistent. He argued that in any case it was incumbent upon the lower Courts to come to a definite finding whether any consideration had been due to or paid by the vendees when these sale-deeds were executed in their favour and not to annul them if they were of opinion that the sale-deeds were executed for genuine consideration. " I am not, however, impressed by that contention. The real question for the lower Courts to decide was whether the transactions were either wholly or at least to the extent of Nagappa's share or of what he could dispose of intended to be genuine, that is to say, whether the title to the properties had been to that extent intended to be conveyed to the alienees. If that was not the intention,, the mere fact that the alienee happened to be a creditor or that one of the alienees, had paid some money to one of the creditors of the insolvent under his direction would not be enough. In the first case, the alienee's debt would not be extinguished; in the other, if any money was advanced by the alienee, he would be entitled to be reimbursed by or on behalf of the insolvent. The question whether the transactions were of a genuine character or otherwise is a question of fact and once it has been determined by both the Courts on a full consideration of all the facts and circumstances it is not, in the absence of anything that would vitiate that finding, possible for me to interfere in revision.