NAGINDAS BHUKHANDAS Vs. GHELABHAI GULABDAS

JUDGEMENT

(1.) The appellant in this case appeals against an order of the District Judge of Surat sentencing him to three months simple imprisonment under Section 43 of the Provincial Insolvency Act (III of 1907).

(2.) The facts are shortly as follows: The appellant Nagindas was in the employ of the B. B. & C.1: Railway Company. On November 3, 1909, he was adjudged an insolvent under Section 16 of the Act, and a Receiver was appointed. In January 1918, he resigned his-appointment with the Railway Company and drew from them a Sum of Rs. 2,000 odd which stood to his credit in the books of the Railway Provident Fund. This money was not paid over to the Receiver and in the lowers, Court it was alleged that Rs. 1,600 out of this sum had been paid by the insolvent to his wife. It is with reference to this transaction that the learned District Judge has held him guilty of a fraudulent act within the meaning of Section 43 (2) of the Act.

(3.) The reasoning of the learned District Judge may be summarized as follows : The protection afforded to the monies in the Provident Fund by Section 16 (2) (a) of this Act ceased as soon as these monies came into the hands of the insolvent, and they forthwith vested in the Receiver and became divisible among the creditors as provided by Section 16(4). But in accordance with the doctrine, in Cohen v. Mitchell (1890) 25 Q.B.D. 262 the insolvent was entitled to retain the money received from the Provident Fund unless and until the Receiver intervened, and had he merely retained them he would not have been guilty of any fraud. But he had advanced a false story to prove that the money had been paid to his wife in satisfaction of a legal claim. This allegation amounted to a fraudulent transfer. punishable under Section 43.