MA PWA MAY Vs. SRMMA CHETTYAR

JUDGEMENT

(1.) This is an appeal from a decree of the High Court of Judicature at Rangoon. The plaintiffs arc the mortgagees under a mortgage dated March 13, 1924, by which Maung Po Saving and his wife Ma Twe mortgaged to the plaintiffs for Rs. 20,000 four oil wells in the Yenangaung oil field. The consideration for the mortgage is alleged to be a sum of Rs. 1.3,764 the balance of principal and interest on three promissory notes dated June 25, 1921, November 25, 1921, and May 30, 1923, for the sums of Rs. 7,700, Rs. 1,700, and Rs. 2,600 respectively, and made by tile mortgagors in favour of the first named mortgagee and her husband. The second-named mortgagee is Ma Pwa May's son. His wife is the niece of Maung Po Saung, one of the mortgagors. The further consideration, making up the total sum of Rs. 20,000, is alleged to be a present advance of Rs. 6,236 in cash. The mortgage was registered on March 14, 1924-There is no doubt that at the date of this mortgage the mortgagors were heavily indebted. One of their creditors was the respondent firm, who on March 20, 1924, instituted a suit against them to recover Rs. 13,295, principal and interest, due on two promissory notes dated March 27, 1923. On May 13, 1924, the respondents obtained an order before decree for the attachment of the mortgagors property, including the four wells, the subject of the mortgage in question. On June 10 the appellants, the mortgagees, having demanded payment without success, brought the present suit against the mortgagors to enforce the mortgage. The respondent firm applied to be added as a party to the suit as a necessary party under Order XXXIV, Rule 1, an/1 on September 6, 1924, the District Judge made the order. A question was raised in the Courts below, but not before their Lordships, as to whether this order was correct. Their Lordships must not be taken as expressing an opinion upon this matter. The respondents thus added as defendants put in a written statement by which they alleged that the mortgage deed was executed without consideration and for the purpose of defrauding the respondents. They also pleaded that the document was improperly stamped, and that in consequence the registration was invalid and the document was also inadmissible in evidence. The issues fixed by the District Judge on the first plea were:- 1. Was the mortgage deed executed by the mortgagors and for valuable consideration ?

(2.) Was the mortgage deed executed in collusion with the plaintiffs for the purpose of defrauding the third defendant ? 2. The claim that the deed was void was based on Section 53 of the Transfer of Property Act, 1882, which provides that any transfer of immovable property made with intent to defeat and delay the creditors of the transferor is voidable at the option of any person so defeated or delayed. The learned District Judge, after hearing evidence, found that the deed was duly executed by the mortgagors, and the consideration was truly stated in the deed, i.e., that the promissory notes referred to were genuine notes on which the mortgagors wore indebted to the mortgagees in the sums mentioned, and that the cash advance was in fact made. There appears to be no finding to the contrary by the High Court, who nevertheless came to the conclusion that the mortgage was made with intent to defeat and delay the creditors. This finding appears to their Lordships to be inconsistent with what must be taken to be the fact that the mortgagees were actual creditors of the mortgagors. A debtor is entitled to prefer a creditor, unless the transaction can be challenged in bankruptcy, and such a preference cannot in itself be impeached as falling within Section 53 :- The transfer which defeats or delays creditors is not an instrument which prefers one creditor to another, bat an instrument which removes property from the creditors to the benefit of the debtor. The debtor must not retain a benefit for himself. He may pay one creditor and leave another unpaid (Mid-dtetonv. Polloeb, (1876), 2 Ch, D. at p. 108). So soon as it is" found that the transfer here impeached was made for adequate consideration in satisfaction of genuine debts, and without reservation of any benefit to the debtor, it follows that no ground for impeaching it lies in the fact that the plaintiff, who also was a creditor, was a loser by payment being made to the preferred creditor there being in the case no question of bankruptcy ... The concurrent finding that the consideration for the deed was real reduces the case to one in which the debtor has preferred one creditor to the detriment of another ; but this in itself is no ground for impeaching it under the section, even if the debtor was intending to defeat an anticipated execution by the plaintiff.

(3.) Their Lordships find it unnecessary to add anything to the above authoritative exposition of the law of Lord Wrenbury in giving the decision of the Board in Musahar Sahib V/s. Hakim Lal (1915) L.R. 43 I.A. 107. The plea of the respondents, therefore, on the merits failed.