CHUNNOO LAL Vs. LACHMAN SONAR AND BHAWANI SHANKAR

JUDGEMENT

(1.) This appeal arises out of an application which was made to the District Judge, before whom an insolvency matter was pending, to annul a deed of transfer made by the insolvent on the 11th of November, 1914, in favour of Lachman Sonar. We may mention a few dates. There was a mortgage in favour of Lachman Sonar, dated the 22nd of May, 1912. On the 16th of January, 1914, Bhawani Shankar, the insolvent, executed a promissory note in favour of Chunnoo Lal for Rs. 1,500. On the 9th of November, 1914, Chunnoo Lal commenced a suit on foot of his promisory note. On the 11th of November, 1914, Bhawani Shankar executed the sale-deed which is challenged in the present proceeding, the consideration purporting to be the discharge of the mortgage already mentioned; the property sold was part of the mortgaged property, that is to say, a fixed rate tenancy, the house which belonged to the debtor being exempted. On the 14th of December, 1914, Chunnoo Lal obtained a decree on foot of his promissory note, and on the 22nd of March, 1915, Bhawani Shankar was arrested in execution of the simple money decree. On the same day he applied to be declared an insolvent, and on the 15th of April, 1915, Chunnoo Lal was appointed receiver. On the 24th of September, 1915, Bhawani Shankar was declared an insolvent. There were other transfers made by the insolvent in or about the same time-one on the 17th of November, 1914, in favour of his own brother, We are not in the present application called upon to express any opinion as to whether or not these transfers were valid, but the fact that another transfer was made about the same time in favour of the insolvent s own brother and others is not without some relevancy when we are considering the bona fides of the present transfer. [After discussing the evidence their Lordships observed: ]

(2.) It seems to us that on the evidence on the record one must hold that possession was never given to Lachman Sonar. The result is that we find a man who owes money and against whom a suit has been brought shortly before he presents his petition for insolvency making this transfer in favour of Lachman Sonar and another transfer in favour of his brother, [After further discussing the evidence their Lordships observed:]

(3.) We think, taking all these facts into consideration, we are bound to hold that the transfer was not bond fide, that it was without consideration and therefore void having regard to the provisions of Section 36 of the Provincial Insolvency Act. We allow the appeal, Set aside the order of the learned District Judge, and declare that the sale-deed in favour of Lachman Sonar is not bond fide and was made without consideration. The receiver will have his costs as part of the receiver s cost in the insolvency matter.