(1.) This is an appeal by Hari Chand Rai who holds a lease dated the 27 February 1922 and registered in June following from the insolvent Lachhman Das, who executed it for himself and as guardian of his minor nephew. So far as the interest of the minor is concerned that does not at all arise in these insolvency proceedings. We have to confine our attention to the interest of the insolvent in the property covered by the lease. Originally the receiver moved the Court under Section 53 of the Provincial Insolvency Act for the annulment of this lease. In the petition however he alleged that the insolvent, in order to defeat and delay his creditors, had executed a fictitious thekanama of a major portion of his property for a nominal sum in favour of his brother-in-law for a period of 20 years. He further alleged that this thekanama was only a paper transaction and was fraudulently executed. The original prayer asked for was its annulment. The lessee however objected that no such theka could be annulled under Section 53 of the Provincial Insolvency Act, inasmuch as it was executed more than two years prior to the application for adjudication. The receiver had taken up the position that the two years were to be counted from the date of its registration. This was not accepted by the learned Judge, and I have no doubt rightly so. He has held that the theka could not be annulled as a voidable document under Section 53 of the Provincial Insolvency Act. At the request of the receiver he treated the application as one under Section 50 of the Transfer of Property Act for avoiding a transfer, which had been effected with a view to defeat or delay creditors. He however went into the question of fact raised by the insolvent, viz., whether the document was really fictitious and a paper transaction and has recorded a finding that the transaction was a fictitious one. He further found that, although mutation of names had been effected in revenue papers in favour of Hari Chand Rai, this was a purely fictitious transaction and Lachhman Das himself continued to collect the rents as before.
(2.) Perhaps it would be convenient to mention a few facts in connexion with this lease. It is not disputed that two decrees for a sum aggregating to nearly Rs. 25,000 were in execution against the debtor Lachhman Das, and proceedings taken up to the High Court resulted adversely to Lachhman Das. This lease was executed soon after the termination of these proceedings, while the decrees for the above-mentioned amount were still in execution. The lease was in favour of his own brother-in-law and no premium whatsoever was paid. It does not appear what urgency or pressure there was for executing this document. The statements of the patwaris for the three-villages covered by the lease show that even subsequent to the execution of this document, Lachhman Das continued to realize the rents from tenants and was in effective possession. The gross profits of the property covered by this lease came to about Rs. 1,300; but the net rent reserved was only Rs. 900, out of which Rs. 270 had to be paid as Government revenue to the lambardar. Neither the lessee, Hari Chand, nor the debtor, Lachhman Das, has gone into the witness-box to explain under what circumstances this lease had been executed. No account-books have been produced by the lessee to indicate that he has been in effective possession of these properties. No doubt, one or two decrees for rent against tenants obtained through the revenue Court have been produced, but they by themselves would not be conclusive. Having considered the case on the merits, I am satisfied that there is no good reason for differing from the finding of the learned District Judge that this lease was in reality purely fictitious and a paper transaction and did not pass title to the lessee, Hari Chand Rai.
(3.) The learned advocate for the appellant contends before us that it was not open to the insolvency Court to go into this matter at all. If the petition of the receiver were to be construed strictly and he were pinned down to the section under which it was made, there may be something to be said in support of this contention; but there is no doubt that allegations made in the petition, although the wrong section was quoted, amounted to an assertion that the transaction was a wholly fictitious one and was in no way binding on the insolvent. In view of this circumstance, I am of opinion that the finding of fact arrived at by the District Judge was not improper.