KRISHNA DAS Vs. RAJA RAM BHATT LELE

JUDGEMENT

(1.) This is an appeal by a creditor whose application for an order of adjudication of the opposite party as insolvent has been dismissed by the District Judge of Benares. The opposite party are a joint Hindu family consisting of three members Raja Ram Bhatt Lele, Govind Shastri and Gaja Nand Rao. The application was made mainly on the ground that an act of insolvency had occurred by the execution by the opposite party of a fictitious deed of mortgage in favour of a third party Rai Krishnaji for Rs. 35.000 nominally, on 31 August 1927. Within three months of that date this application was made on 28 November 1927. Therefore it would be open to the applicant to have the benefit of Section 54, Provl. Ins. Act, which applies to a transfer of property in favour of any creditor with a view to giving that creditor a preference over the other creditors.

(2.) The case for the applicant is that this mortgage comes under Section 6(b) or (c) as a transfer of property or part of a property with intent to defeat or delay the creditors or which would provide as a fraudulent preference if he were adjudged an insolvent. The opposite party filed a written statement stating that the mortgage deeds executed in favour of Rai Krishnaji were in good faith and for consideration of his just dues, that Rai Krishnaji had now taken over the concern and invested further sums in it to carry it on with a provision to allow a share of the profits of the opposite party in order to enable the opposite party to pay up the creditors as well. Further, the written statement alleged that the opposite party was prepared to pay the amount due by monthly instalments and that at present the firm owned properties worth more than Rs. 80,000.

(3.) The applicant gave his evidence in support of his application and he also tendered a certified copy of a deposition by one of the opposite party in suit No. 92 of 1927(Krishen Das V/s. Kamala Kalabattu Karyalaya.) The opposite party made a statement through their vakil that they did not desire to tender any evidence. The evidence therefore in the case is complete. The District Judge did not come to any clear finding as to whether an act of insolvency had been committed or not. But he dismissed the application on the ground that he had little doubt that the third party Rai Krishnaji would see to it that the decree was liquidated by payments in instalments, as in the ease of other creditors. We consider that the District Judge was wrong in not coming to a definite finding as to whether an act of insolvency had been committed. We also consider that he was wrong in finding that Rai Krishnaji would make payment of this debt when there was no evidence before him of Rai Krishnaji to that effect.