Dulhin Radhika Kuer vs Sushil Chandra Mitra

Kulwant Sahay, J.—One Chowdhury Jogeshar Prasad Singh applied before the District Judge of Shahabad for being adjudged an insolvent and the Court made an order of adjudication on the 15th December, 1920. The application of Ohowdhury Jogeshar Prasad was opposed by one Sushil Chandra Mitra, a creditor who had obtaineda money decree against Ohowdhury Jogeshar Prasad on the 7th December, 1923, and in execution of which he had made an attempt to attach certain properties. During the course of his examination by the Court the insolvent stated that he had conveyed all his properties to his wife and that he had no property left to him. The learned District Judge by the order of the 15th December, 1926, called upon the wife to produce the deed of gift and to show cause why the property given to her in gift should not be sold for the benefit of the creditors in view of the provisions of Section 128 of the Transfer of Property Act. The wife, Dulhin Radhika Kuer, filed an application on the 2znd December, 1928, showing cause in which she stated that the properties given to her in gift were not the whole of the property of the insolvent and that he had other properties left to him. The case of the creditor before the District Judge was that this deed of gift was not a real transaction but was a mere paper transaction in order to defeat the claims of creditors. The learned District Judge heard the parties on the 22nd December, 1928, and he held that it was unnecessary to decide whether the transaction was genuine transaction or not, as he was of opinion that u/s 128 of the Transfer of Property Act a portion of the property given in gift to the wife could be sold for realisation of the debts due from the insolvent. He accordingly made an order that the properties mentioned in the deed of gift are liable to be sold for the benefit of the creditors and he directed that a sufficient portion of them should be sold to satisfy the debt. Against this order of the District Judge the wife Dulhin Radhika Kuer has come up in appeal to this Court.

It is contended on her behalf that the learned District Judge had no jurisdiction to make an order for sale of the properties covered by the deed of gift or any portion thereof under the provisions of Section 128 of the Transfer of Property Act. The learned Advocate for the respondent, namely, the creditor, relies on the provisions of Section 4 of the Provincial Insolvency Act and contends that the powers of the Court are wide enough to order the sale of properties under e. 128 of the Transfer of Proparty Act. Section 4 of the Provincial Insolvency Act provides that "subject to the provisions of this Act the Court shall have full power to decide all questions whether of title or priority, or of any nature whatsoever, and whether involving matters or of law or of fact, which may arise in any case of insolvency coming within the cognisance of the Court, or which the Court, may deem it expedient or necessary to decide for the purpose of doing complete justice or making a complete distribution of property in any jsuch case."

This provision of the Act must be read along with the provision of Section 28 under which on the making of an order of adjudication, the whole of the property of the insolvent shall vest in the Court or in a Receiver as provided in the Act and shall become divisible among the creditors. The Court, therefore, has jurisdiction only over properties of the insolvent which vest either in the Court or in the Receiver. It is a well-known principle of law that the property which is divisible among the bankrupt''s creditors is property which belongs to or is vested in the insolvent at the commencement of the bankruptcy proceedings, or which is acquired by or devolves on him before his discharge. It is clear, therefore, that provisions of Section 4 must be limited to the exercise of the jurisdiction of the Court over properties which vest in the Court or in the Receiver. According to the assumption made by the learned District Judge, the gift in favour of the wife was a valid gift and it is only on such assumption that the property in the hands of the donee can be proceeded with for the discharge of the donor''s debts, u/s 128. If the gift be considered to be a valid gift, then the property ceased to be the property of the insolvent the moment the gift was made. If it ceased to be the property of the insolvent, it could not vest in the Court or in the Receiver appointed by the Court. That being so, the Court had no jurisdiction to order the sale of any portion of the property covered by the gift. The order of the District Judge, therefore, directing the sale of the property on the assumption that the gift was a valid gift and that u/s 128 a portion of it could be sold in satisfaction of the debt of the insolvent must be set aside.

The case of the creditor, however, was that the gift was not a real gift but a benami transaction. The case, that if the gift be a valid gift, it was a universal gift and that u/s 128 a portion of it could be sold was a case made by the Court and it was not made by the creditior The case made by the creditor has not been decided by the learned District Judge as he thought that it was unnecessary to decide the question whether the deed of gift was a genuine gift or not. The creditor is certainly entitled to have that question decided. The case must, therefore, go back for a decision as to whether the gift in favour of the wife was a real gift or a mere benami transaction.

We are given to understand that a suit was instituted by the creditor against the wife for a declaration that the gift was a benami transaction. That suit has been decreed and an appeal against the decree is pending in the Court of the District Judge. It will be open to the District Judge to hear the appeal and this insolvency matter one after the other.

Costs are reserved and will be disposed of by the learned District Judge.

Das, J.

I agree.