VASIREDDI RAJA LAKSHMAMMA Vs. GOPU RAGHAVAYYA

JUDGEMENT

(1.) The question in this appeal is whether a creditor can take action under Section 54-A of the Provincial Insolvency Act after the insolvent has been given an absolute discharge.

(2.) On the 3 January, 1929, one Pretumbaka Venkatappayya and his four sons applied to be adjudicated insolvents and on the 9 January, 1930, an order of adjudication was passed. On the 24 July, 1934, the insolvents applied for their discharge and on the 28 September, 1936, it was granted unconditionally. On the 27 July, 1926, by a registered instrument, Venkatappayya settled 5.10 acres of land on his two daughters as provisions for their marriages. The elder daughter had already been married and the younger daughter was about to be married. The Official Receiver was moved by the respondent to take action with a, view to obtaining from the Court an order setting this deed aside, but the Official Receiver refused to take action and intimated his refusal in an order dated the 13 December, 1932. On the 26 July, 1935, the respondent himself applied under Section 54-A of the Provincial Insolvency Act for permission to take action in respect of the deed of settlement. The section says that a petition for the annulment of a transfer under Section 53 or of a transfer, payment, obligation or judicial proceeding under Section 54, may be made by the receiver or, with the leave of the Court, by a creditor who has proved his debt and who satisfies the Court that the receiver has been requested and has refused to move the Court. On the nth August, 1936, the Court gave, the first respondent leave to take action under Section 53, but he did not in fact file the petition until the 19 January, 1937, that is until four months after the insolvents had been granted their discharge.

(3.) In his petition asking the Court to set aside the transaction the first respondent coupled Section 4 with Section 53. It is obvious why he did this. It was impossible for the Court to set aside the transaction under Section 53 because the deed of settlement had been executed more than two years before the presentation by the insolvents of the petition asking for their adjudication. The object was to get. the Court to hold under Section 4 that the transaction was a sham and therefore did not require to be set aside; in other words the deed was of no effect and the property automatically devolved upon the Official Receiver when the order of adjudication was passed. The Subordinate Judge dismissed the first respondent's petition on the ground that the transaction was genuine, but on appeal his order was reversed by the District Judge, who held that the transaction was fraudulent and consequently set it aside. This appeal is from the order of the District Judge.