GANDABHAI GULABCHAND Vs. BALKRISHNA VAMAN

JUDGEMENT

(1.) The question in this appeal is whether the payment of Rs. 7,125 made on July 15, 1923, to the appellant Gandabhai by Chhotalal, adjudged insolvent on a petition of October 1923 within three months of the payment, was a payment made by Chhotalal with a view to give to Gandabhai a preference over other creditors, and therefore to be deemed fraudulent and void as against the receiver respondent under Section 54 of the Provincial Insolvency Act, as the trial Court held.

(2.) The facts are sufficiently stated in the judgment appealed against. Chhotalal was a timber merchant living at Bulsar with dealings also at Dahanu and Savta and a contract to supply sleepers to the Bhavnagar State Railway. He became involved about 1922. Nine or ten creditors had obtained decrees against him. Some darkhasts were also pending. He asked one Rao Saheb Narottam to obtain the consent of the creditors at least outside Bulsar to compound on a payment of eight annas in the rupee. Rao Saheb Narottam tried to obtain their consent, according to him, between January, May a June, 1923. He failed to do so and informed Chhotalal accordingly. The appellant Gandabhai held a mortgage of certain property of Chhotalal and was also a creditor to the extent of Rs. 14,000. On July 15, 1923, the payment now in question was made.

(3.) The main facts on which the trial Court arrived at a conclusion in favour of the respondent were six:-Firstly, prior to July 15, 1923, Chhotalal knew that his position was hopeless. Secondly, he could not pay more than two annas in a rupee at the most. Thirdly, his creditors had already refused an offer of eight annas in a rupee. Fourthly, decrees and attachments existed against which no payments were made. Fifthly, Chhotalal did not produce his account books on the allegation that they had disappeared. Sixthly, the relations between Chhotalal and Gandabhai were intimate. Gandabhai was mortgagee, the shroff who cashed Chhotalal's hundis and also took over the Bhavnagar contract of supplying sleepers after Chhotalal.