OFFICIAL ASSIGNEE OF MADRAS Vs. SMSHEIK MOIDEEN ROWTHER

JUDGEMENT

(1.) S.M.K. Mohamad Rowmer was adjudicated insolvent on 31 March, 1924, on a petition filed on 17 March, 1924, by a creditor Chengalvaraya Chettiar. The Official Assignee of Madras applied to have a sale deed, dated 27 October, 1923, and a deed of transfer of mortgage, dated 11 November, 1923, executed by the insolvent in favour of the garnishee (S. M. Sheik Moideen Rowther) declared void under Section 55, or in the alternative under Section 56, of the Presidency Towns Insolvency Act. The learned judge having dismissed the application, the Official Assignee has preferred this appeal.

(2.) The insolvent was carrying on business as a commission agent at Madras. He had a branch shop in Tinnevelly. In 1923 the insolvent was largely indebted. He was indebted to the garnishee to the extent of about Rs. 20,000 in May 1923, and he had executed in favour of Chengalvaraya Chettiar a promissory note on 1 October, 1923, for Rs. 30,000, the amount having been advanced to the insolvent between 25 June and 30 September, 1923. The garnishee is the paternal uncle of the insolvent and the sale deed, Ex. IV, executed by the insolvent in favour of the garnishee comprised all the immoveable properties of the insolvent. It was also alleged that the properties comprised in the sale deed were worth very much more than Rs. 10,000, the consideration mentioned in the sale deed. Under Ex. V, dated 11th November, 1923, the insolvent transferred for Rs. 775 to the garnishee the mortgage rights of the insolvent in certain immoveable properties in Tinnevelly, the principal amount of the mortgage being Rs. 500. It was also alleged that Ex. IV was not executed on the date it bears (27 October, 1923), but that it was executed only about the 20 December, 1923, the date of registration; finally it was alleged that the garnishee was aware of the insolvent's indebtedness to Chengalvaraya Chettiar and others and that Ex. IV was taken with full knowledge of the fact that it comprised all the properties of the insolvent and that the same was a fraudulent transaction and void as against the Official Assignee. The learned Judge in dismissing the application concluded his judgment as follows: The Official Assignee has not in my view discharged the burden on him of showing that the sale was not bona fide; it clearly was in my view for valuable consideration and the only way in which the bona fide of the transaction might have been impeached was by showing that for some reason or other the execution of the sale deed was not on the date it bears. That as I have said the Official Assignee has failed to prove. The official Assignee having failed to show that the sale was not for valuable consideration and that it was not bona fide, this application must be dismissed with costs.

(3.) On behalf of the appellants the following main contentions were raised by his learned Counsel. 1. That the deed of sale was not executed at Pettai a suburb of Tinnevelly on 27th October, 1923, the date mentioned in the document, but that it was antedated and executed only about the time of its registration at Tinnevelly on 20 December, 1923. 2. The consideration mentioned in the document Rs. 10,000 is grossly inadequate, the properties being really worth about Rs. 20,000. 3. The amount due to the garnishee at the time was only about Rs. 7,000 and the recital in the document that more than Rs. 10,000 was due to the garnishee from the insolvent at the time is false and fraudulent.