MUHAMMAD HABIB-ULLAH Vs. MUSHTAQ HUSAIN

JUDGEMENT

(1.) This appeal arises out of proceedings instituted under Act No. III of 1907. One Mushtaq Husain, who is a resident of mauza Kara in the district of Allahabad, used to carry on business as a contractor and dealer in timber. He entered into a contract for the supply of a certain number of sleepers to one Habib-ullah, a merchant of Agra. He was not able to perform his part of the contract, and Habib- ullah consequently brought a suit against him on the 15th April, 1913,, for the. recovery of a sum of Rs. 2,468 for the breach of the contract. The exact date on which the suit was filed is not noted on the copy of the plaint on the record, but the copy shows that it was verified by the plaintiff on the 15th of April, 1913, which we take to be the date of the institution of the suit. Soon after the institution of the suit the plaintiff Habib ullah applied for the attachment of a deposit held by a bank which is described as Jamal Ahmad Bank at Kara. The court granted the application on the 18th of April, 1913, and directed the issue of an injunction to Mushtaq Husain restraining him from drawing the deposit and also an order to the bank restraining it from paying it over to Mushtaq Husain. Both these orders were handed over in a cover to one Ali Muhammad, who was a servant of Habib-ullah, to expedite the delivery to the Civil Court at Allahabad for service on the persons concerned. It, however, appears that Mushtaq Husain was not found at his house in Kara and the injunction issued to him was affixed to his house and the bank returned an answer that it had paid away the money before services of the injunction. A decree for the amount claimed was passed by the Agra court in due course and transferred fair execution to Bilaspur in the Central Provinces where Mushtaq Husain had a stack of sleepers owned by him, The proceedings were taken to attach and bring to sale the sleepers at Bilaspur, Mushtaq Husain, thereupon, applied on the 23rd of December, 1914, to the District Judge of Allahabad to be adjudicated an insolvent under Act No. III of 1907. In the schedule of creditors attached to the application the name of Habib-ullah stands first as a creditor for Rs. 2,500 under a decree in suit No. 93 of 1913. This is the Agra suit to which reference has already been made. The next creditor set out is one Safdar Ali of Allahabad who had a decree for Rs. 450 of the Court of Small Causes at Allahabad. The third creditor is Ashiq Husain, son of the insolvent, but who is described as son of Nabir-un-nissa, the first wife of the insolvent. The amount of the debt is said to be Rs. 4,100 due on a ruqqa on account of dower debt which the insolvent had executed in the name of his son. The last creditor is one Saiyed-un-nissa, who is said to be, the wife of a brother of the insolvent or some other near relative. The amount of debt is Rs. 300 under a ruqqa. It may be noted that Ashiq Husain, the son of the insolvent, is quite a young man who has attained majority. The insolvent in this case has admitted that his son has taken the theka of a jungle in the Central Provinces, and that he, Mushtaq Ahmad, is working on his behalf under a power of attorney executed by his son. The creditor Habib-ullah complains that this is a mere blind to defraud the creditors, the real thekadar being Mushtaq Husain himself, who has used his son s name to protect the property. He also alleges that the debt alleged under the fourth item is also a bogus debt. In the schedule of property owned by the insolvent the stack of sleepers is mentioned, as also a few trumpery articles of very little value. No zamindari or house property which is said to belong to the debtor is set out. The learned Judge on the 6th of March, 1915, examined the insolvent. He was asked about the two transfers which he had made on the 23rd of May, 1913, and the 30th of May, 1913.

(2.) By the first of these transfers he had disposed of a valuable house and other property to his son Ashiq Husain, and two other minor children he had by his first wife, for a sum of Rs. 900. He also disposed of another item of property said to be worth Rs. 100 in favour of his second wife. This transfer is said to have been made to satisfy the claim for dower which the heirs of the first wife had against him as also the claim for the dower which the second wife had on the husband. The second document is for Rs. 400, which is said to be the balance of the dower debt due to the second wife. By these two documents he disposed of practically all his property, and if these documents are upheld the claims of the creditors will be defeated for all practical purposes. The learned Judge, therefore, in his order of the 6th of March, 1915, directed that the sum of Rs. 4,100 said to be due to the insolvent s son, Ashiq Husain, should not be entered in the schedule without his special order, and he also further directed as follows : April 16th will be fixed for the parties to adduce their evidence under Section 36 of the Act as to whether the transfers in favour of the applicant s sons and wife should be set aside, and in case these transfers are found to be fraudulent, to show cause why he should not be punished under Section 43 of the Act." It is under this order that the proceedings from which this appeal has arisen were initiated.

(3.) Notice of these proceedings does not seem to have been given to the transferees; but the matter is of no importance, as Babu Datti Lal appeared on their behalf on the 2nd of July, 1915, and he was also present (as would appear from the order sheet) on the 24th of July, 1915, the date on which the order appealed against was made. The learned Judge by his order of that date held that one of the transfers, namely that of the 30th of May, 1913, was fraudulent, and he set it aside. But he held that the other transfer of the 23rd of April, 1913, must be upheld Habib-ullah, the creditor, has appealed to this Court against so much of the order as dismisses the claim in respect of the earlier transfer of the 23rd of April, 1913. Dr. Tej Bahadur Sapru, on behalf of the transferees has preferred objections under Rule 22 of Order XLI against so much of the order of the court below as has set aside the second transfer of the 30th May, 1913. Dr. Sen on behalf of the appellant has urged that the transfer was bad under Section 53 of the Transfer of Property Act. The proceedings in the court below were taken under Section 36 of Act No. III of 1907. Dr. Tej Bahadur Sapru in reply has argued that the court below has no jurisdiction to entertain the proceedings for setting aside the transfers except on grounds mentioned in Sections 36 and 37 of the Act,