JAGANNATHA AYYANGAR Vs. NARAYANA AYYANGAR

JUDGEMENT

(1.) An attempt has been made to support the lower Court s order without reference to its merits, on the ground that it should not have been passed and the proceedings should not have been regarded as validly instituted on the Official Receiver s report without any regular petition. This objection is justified by Rule 2 (7) of the rules passed by this Court for Official Receivers. But, it has, so far as appears, never been relied on either in the lower Court or when the case was heard here at an earlier stage We are not prepared in these circumstances to treat the proceedings as invalid in toto. They will be allowed to go on conditionally on the Official Receiver converting his report into a properly stamped petition in proper form.

(2.) On the merits we read the report as embodying a request to the Court to avoid the transfers evidenced by two documents, referred to by the Official Receiver as Exhibits III and IV. Exhibit III is a transfer by the debtor to one Thiruvengadatha Ayyangar and Exhibit IV by the latter to the present respondent. The lower Court has refused relief on the ground that Section 35, Provincial Insolvency Act, under which the application was made, authorises only the avoidance of transfers by the debtor, not by his transferees.

(3.) The first answer to this is that the Official Receiver s case in his report was that there was no real transfer by Exhibit III, but only a concealment of the insolvent s property in the name of another person and that, therefore, Exhibits III and IV should have been regarded altogether as a device for a transfer by the debtor to the respondent. The lower Court should have dealt with the case on this basis and must now do so. If this is established and there was no real transfer to any intermediate transferee, the respondent s objection to the evidence of Exhibit IV will be met.