KARUTHA SYED MUHAMMAD ROWTHAR Vs. OFFICIAL RECEIVER

JUDGEMENT

(1.) This is an appeal from the decree of the District Judge of Coimbatore dated 13 March 1935, reversing on appeal, the order of the Additional Subordinate Judge of Coimbatore, dated 28 April 1934, on an application made Under Secs.53 and 4, Provincial Insolvency Act, 5 of 1920. That application was made by the Official Receiver of Coimbatore in respect of the insolvency of E.M. Muhammad Ismail Saheb alias Mudali who was adjudicated an insolvent on 8 December 1927 on a petition for adjudication made by one of his creditors who was his own brother on 24 August 1927. The present application related to two transfers of immoveable property made by the insolvent on 17 July 1926: one was a sale deed for Rs. 22,000 and the other was a usufructuary mortgage for Rs. 4,000, in favour of one Karutha Syed Muhammad Rowther, the appellant in the present appeal, and who is the son-in-law's sister's husband of the insolvent. It was alleged that these transfers were without consideration and were made in bad faith with the object of cheating the creditors of the insolvent. It was also alleged that even otherwise the transfers did not take effect actually as the deeds of transfer had not been validly registered under the Registration Act, the Official Receiver accordingly prayed that the deeds in question should be declared void and annulled.

(2.) The Subordinate Judge after hearing the evidence came to the conclusion that the transfers had been made bona fide and for valuable consideration. As regards the other question of the validity of the registration of the deeds of transfer, he was of opinion that if the Insolvency Court could decide the question, then the registration was not invalid under the law relating to registration of documents. The application was accordingly dismissed with costs. The Official Receiver appealed to the District Judge and in appeal it would appear that the question whether the transfers were made for valuable consideration and in good faith was not actually argued and the only point argued before the District Judge was whether the learned Subordinate Judge's interpretation of the law regarding the jurisdiction of the Insolvency Court and the validity of the registration of the deeds in question was correct. On these points the learned District Judge differed from the Subordinate Judge and he was of the opinion that the Insolvency Court has jurisdiction to decide the matter and that under the latest decision of the Judicial Committee reported in Collector of Gorakhpur V/s. Ram Sundar Mal the registration must be held to be invalid as neither party intended that certain items included in the deeds of transfer should really pass from one to the other and the inclusion of those items was only to enable the documents to be registered by the Sub-Registrar of Aravakkurichi instead of by the Sub-Registrar at Erode who would otherwise have had the jurisdiction to register them.

(3.) In this appeal by the transferee, one main question has been argued and that is the question of jurisdiction. If as a matter of fact the Insolvency Court has jurisdiction to decide the validity or otherwise of the registration of these deeds, then it is not seriously attempted to be argued that the finding of the learned District Judge is not right, for apart from the decision of the Judicial Committee relied upon by the learned District Judge, there is a subsequent decision of the Judicial Committee reported in Venkatarama Rao V/s. Sobhanadri Appa Rao Bahadur , in which the previous decisions on the validity of registration have been reviewed and it has boon clearly laid down that where the vendor neither intends to sell nor the purchaser intends to buy any particular item of property included in the deed of transfer and the inclusion of such property in the deed of transfer is a mere device to evade the provisions of the Registration Act, there can be no effective registration of the deed of transfer at all. The question of jurisdiction mainly turns on the correct interpretation of Section 4, Provincial Insolvency Act. It is argued by the learned advocate for the appellant that the jurisdiction conferred by this section on the Insolvency Court so far as the annulling of deeds of transfer is concerned is limited to cases which are provided by Secs.53 and 54 of the Act, and that a general power of annulling transfers not falling within Secs.53 and 54 of the Act cannot be exercised by the Insolvency Court under Section 4 of the Act.