SAKHAMURI PERAYA Vs. NIMMARAJU KONDAYYA

JUDGEMENT

(1.) On 10 August, 1931, the plaintiff in O.S. No. 69 of 1943, here-after referred to as the plaintiff, and the fifth defendant in O.S. No. 69 of 1943, hereafter referred to as the fifth defendant, executed a sale deed, Ex. D-3, for Rs. 8000 in favour of the first defendant (in O.S. No. 69 of 1943). Rs. 1100 were paid in cash, and the remaining Rs. 6,900 were to be paid before the Sub-Registrar at the time of the registration. As the plaintiff and the fifth defendant were not willing to have the document registered, the first defendant on 24 November, 1931, presented the document before the Sub-Registrar for compulsory registration. It was subsequently registered on 1 December, 1931. In the meanwhile, on 18th November, 1931, I.P. No. 119 of 1931, was filed by a creditor to adjudicate (the fifth defendant an insolvent. He was so adjudged on 3 September, 1932. Proceedings were then instituted by the Official Receiver to have the alienation evidenced by Ex. D-3 set aside. It was declared void against the Official Receiver under Section 53 of the Provincial Insolvency Act by the Subordinate Judge, but in appeal to the District Judge the sale was set aside under Section 4 of the Act, the order under Section 53 being cancelled. The matter was brought up to the High Court in C.R.P. No. 1664 of 1943; but when that petition came before King, J, the attention of the learned Judge was drawn to the circumstance that the fifth defendant had entered into an arrangement with his creditors and that the adjudi- cation had been annulled under Section 35, on 26 August, 1944. Without deciding the case on its merits, King, J., held that the petition was unnecessary and dismissed it. O.S. No. 69 of 1943 was filed by the plaintiff on 6 August, 1943 for the recovery of the unpaid purchase money. The first defendant prayed for a set-off of the amount due to him as mesne profits for the period he was kept out of possession. A few days later, on 10 August, 1943, the first defendant filed O.S. No. 73 of 1943 for possession and future mesne profits. O.S. No. 73 of 1943 was decreed in favour of the first defendant. O.S. No. 69 of 1943 was also decreed, the set-off being allowed to the extent of three years mesne profits, the remainder of the claim being held to be barred by limitation. The plaintiff and the 5 defendant have filed joint appeals against these decrees, and the first defendant has filed a Memorandum of Cross-Objections with regard to the dis- allowance of mesne profits beyond the three years immediately preceding the suit.

(2.) The first defendant's main arguement is that for the purpose of insolvency, proceedings the date of the sale must be deemed to be 1 December, 1931, the date of the compulsory registration and not 10 August, 1931, the date on which Ex. D-3 was executed. Then since the adjudication, dated back to 18 November, 1931, the date on which I.P. No. 119 of 1931 was presented, the alienation took place during the course of the insolvency proceedings and was therefore void; because under Section 28 of the Provincial Insolvency Act the property had vested in the Official Receiver.

(3.) The authority for the argument that in insolvency proceedings the date of the transaction must be deemed to be the date of the registration and not the date of sale, despite the provisions of Section 47 of the Registration Act, is based on the judgment in Venkadari Somappa V/s. Official Receiver of Bellary , of Madhavan Nair and Stodart, JJ., who had to consider a case where the registration had taken place within three months of the insolvency, but where the execution of the sale deed was said to have been more than three months before the date of insolvency petition. The question that fell for decision was whether a petition under Section 54 would lie. They held that the transfer was not complete until it was registered and relying on the wording of Section 54 of the Act that a transfer by way of mort- gage is deemed fraudulent and void if executed within three months from the date of execution, said: If he (the insolvent) does so (presents the instrument for registration) and the instrument & registered, he is doing something which is void if an insolvency petition is presented within three months.