GOVIND Vs. SONBA

JUDGEMENT

(1.) JACKSON , A.J.C. 1. In this case one Sonba sold his property on 31st January 1916 to Sheoram. On 1st May 1916 Narayan Baliram Ganorkar applied for adjudication of Sonba as an insolvent. He was adjudged insolvent on 1st December 1917 but prior to that, on 16th January 1917, Sheoram had mortgaged the property to one Baliram. On 6th December 1923 Baliram having foreclosed his mortgage obtained possession of the property. On 9th April 1925 Narayan applied to have the sale by Sonba to Sheoram annulled. Not only that, he also applied to have the mortgage to Sheoram and the foreclosure decree obtained by him annulled as well. His application has been rejected by both the lower Courts, and rightly, as far as the mortgage to Sheoram and the decree obtained by him are concerned.

(2.) OF the points arising in this appeal I shall first deal with one raised on behalf of the mortgagee, who argues that Sonba is no longer an insolvent. It appears that during the insolvency proceedings Sonba applied to the Court for permission to mortgage his property to the petitioning creditor in full satisfaction of the latter's claim and that the Court gave its consent. It is argued that there was thus a composition which terminated the insolvency proceedings, which can only be reopened if the Court re-adjudges Sonba to be an insolvent under Section 40 of the Act. I cannot, however hold that the insolvency proceedings terminated; Sonba was given permission to mortgage his property to the petitioning creditor and he did so, but thereafter none of the parties appeared before the Court on the next day fixed for hearing, 9th July 1921, on which the Court recorded the following order: Parties absent. It is said that the case is settled out of Court. Property be released. Proceedings filed.

(3.) BOTH the lower Courts have rightly held that Section 53, Provl. Insol. Act, applies only to the transfers by the insolvent and not to transfers by transferees of the insolvent. Having come to the conclusion that the mortgage by Sheoram to Baliram cannot be impeached in insolvency proceedings, the lower Courts have erroneously jumped to the conclusion that it cannot be impeached at all and that it would be futile to annul the sale by Sonba to Sheoram. In consequence, the validity of that sale has not been really enquired into and I cannot uphold the decision rejecting the application in respect of it. The orders of the lower Courts are set aside and the case must go back to the first Court for a fresh decision. Costs of this appeal will be costs in the proceedings. I fix Rs. 15 as pleader's fee.