Re: Hiralal Mondal: v. Exparte: Sm. Lilabati Dassee
1936-03-17
body1936
DigiLaw.ai
JUDGMENT Lort-Williams, J. - This is a petition by Sm. Lilabati Dassee, the adjudicating creditor in the insolvency of Hiralal Mondal, asking for an order that an assignment dated June 21st, 1932, executed by the insolvent in favour of his mother Sm. Nistarini Dassee, and an indenture of conveyance dated November 23rd, 1932, made between Hiralal Mondal and Sm. Nistarini Dassi, be declared void as against the Official Assignee on the ground that they were fraudulent transfers, that is to say, had; the effect of giving a fraudulent preference to Sm. Nistarini Dassi. Having regard to the circumstances of this insolvency this petition gives rise to suspicion. The application for adjudication was made by this Petitioner so far back as August 2nd, 1932, and an adjudication order was made on May 23rd, 1933. 2. On December 5th, 1933, on the application of the Official Assignee an order was made for summary administration of the estate of the insolvent. 3. More than fourteen months afterwards an application was made for an order setting aside the order of December 5th, 1933, and ordering public examination of the insolvent, and this was granted. The examination began on April 3rd, 1935, and was completed on August 16th, 1935. 4. Early in 1936 for the first time an application was made by the Petitioner to the Official Assignee to take proceedings to get the assignment and the conveyance set aside. So far as I can understand the letters written by the Acting Official Assignee, he refused to take any action but gave permission to the present Petitioner to apply herself at her own expense and risk. 5. Before dealing with the facts of this case I desire once again to draw the attention of members of the Bar, and attorneys, and the Official Assignee and others interested, to the remarks of the late Chief Justice Sir George Rankin in Umesh Chunder Seal v. G. M. Falkner 36 C.W.N. 337 at p. 338 (1932) in which the learned Chief Justice stated that: There was no such thing as a petition under the Insolvency Rules in connection with a notice of motion. 6.
6. He expressed surprise at the extraordinary ignorance of practice and the law of evidence which the petition in that case disclosed and said that:-- The thing was evidently intended to be an affidavit but was called a petition so that it might appear to combine the character of a true statement on oath with the advantages of a pleading. 7. The rules under the insolvency jurisdiction must be adhered to strictly, and in future costs incurred for proceedings which are irregular may be disallowed. 8. The first point taken on behalf of Sm. Nistarini Dassee on this petition is that the adjudicating creditor has no locus standi to make this application. There seems to be some difference of opinion upon this point, the practice being different in the various High Courts, but in this Court the practice is that such a creditor who has proved his debt and who satisfies the Court that the Official Assignee has refused to make the application may, with the leave of the Court, make it. [Re: Surajmull Mungalchand 26 C.W.N. 803 (1921)]. 9. In this case no application has been made for leave, and if leave is, as I believe it to be, necessary before the present application can proceed, I decline to grant it, in view of the delay in making the application and of certain facts to which I will refer. 10. Khitibash Mondal died in the year 1918, leaving considerable property. There survived him his widow Sm. Nistarini Dassee and his two sons Hiralal Mondal, the insolvent, and Chunilal Mondal since deceased, and the Petitioner who is the widow of Chunilal Mondal. 11. In 1921, there was a suit for partition, and I understand it was decreed that the estate should be divided in three parts, of which the two brothers received each a third, and the mother Nistarini another third for her life. 12. In 1921, Nistarini filed a suit against Hiralal and Chunilal to recover a sum of Rs. 82,000 advanced by her on account of the estate and on June 14th, 1928, that suit was decreed ex parte. 13. In 1930 the present applicant Lilabati obtained a consent decree against Hiralal for the sum of Rs. 2700. 14.
12. In 1921, Nistarini filed a suit against Hiralal and Chunilal to recover a sum of Rs. 82,000 advanced by her on account of the estate and on June 14th, 1928, that suit was decreed ex parte. 13. In 1930 the present applicant Lilabati obtained a consent decree against Hiralal for the sum of Rs. 2700. 14. On June 21st, 1932 Hiralal assigned to Nistarini certain charges created in his favour upon the share of Chunilal, and on November 23rd, 1932, Hiralal conveyed to Nistarini certain property which had been allotted to him as part of his share in the partition. The present applicant states broadly in her petition that the assignment was made at the instigation of and in collusion with the insolvent, and that the claim of Nistarini was false and fictitious, and that this assignment and the conveyance were made fraudulently, and with intent to defeat creditors, and in collusion between the insolvent and Nistarini. 15. There is not a shred of evidence in the petition or elsewhere in support of these allegations, though it is argued that the petition is really an affidavit because it has been solemnly affirmed. In answer to this so-called affidavit the law agent of Nistarini has made an affidavit stating that she had no notice of the insolvency proceedings at the time when the assignment and convenience were made. Further, he states that after the decree for Rs. 82,000 had been passed, Chunilal with a view to settle and pay off his share of the decretal amount, made an application to Court for stay of execution, which was settled by a consent order the terms of which stated that: Upon the Plaintiff undertaking not to proceed with the sale for one year the properties in snit which had been already attached in execution of the decree execution would be stayed 16. Further, he states that: Both the assignment and conveyance were made in good faith and for valuable consideration during a period when Nistarini had no notice of the insolvency proceedings. 17. The properties assigned to Nistarini were all attached by her in execution of the decree for Rs. 82,000 and were directed to be sold in the year 1928.
Further, he states that: Both the assignment and conveyance were made in good faith and for valuable consideration during a period when Nistarini had no notice of the insolvency proceedings. 17. The properties assigned to Nistarini were all attached by her in execution of the decree for Rs. 82,000 and were directed to be sold in the year 1928. This was not done at the request both of the insolvent and Chunilal, who promised to pay off the decretal amount within a certain time, and in default agreed to convey their property. 18. In answer to this all that the applicant Lilabati can produce is a quotation from an affidavit sworn by Nistarini on July 9th, 1928, in which she stated that: The estate of Khitibash was heavily involved and at prevent there were several attachments against the shares of Hiralal and Chunilal.. 19. Further, she stated that: she herself informed Nistarini about the insolvency proceedings. 20. I am not prepared to accept that statement made by Lilabati Dassee, and in view of the facts to which I have referred, and which are disclosed in the affidavits, I see no reason to disbelieve the statement of Nistarini that in November 1932 she was unaware of the proceedings initiated by the present applicant in the previous August. Further, in my opinion, there is no evidence whatever to show that either the assignment or the conveyance amounted to a fraudulent preference. Such a transfer, in order to be a fraudulent preference, must have been made with a view to giving a creditor a preference over other creditors, and it must be shown that at the time when the transfer was made the transferor was unable to pay his debts. 21. The adjudication order was not made until May 1933. It is true that the adjudication dates back to August 1932. Apart, however, from the fact that the adjudication order was made, there is no evidence before me to show that the debtor was unable to pay his debts either in June or November of 1932.
21. The adjudication order was not made until May 1933. It is true that the adjudication dates back to August 1932. Apart, however, from the fact that the adjudication order was made, there is no evidence before me to show that the debtor was unable to pay his debts either in June or November of 1932. In fact, there is no evidence to show that the debtor had any other creditors except his mother and Lilabati, and all the facts go to show that this is purely a family squabble, and that this application has been made largely out of spite and malice and perhaps, disappointment because Lilabati has not been paid the Rs. 2,700 which the debtor promised to pay her and with regard to which Nistarini begged her to stay her hand and wait for payment rather than institute insolvency proceedings. 22. It is obvious from the facts which I have related and others contained in the affidavits that these transfers were made under pressure. Properties had been attached, sale in execution was threatened, and the means to which I have referred were adopted for the purpose of putting off the evil day, and perhaps avoiding insolvency proceedings altogether. It was with the object of avoiding any such proceedings, and not with the object of giving any fraudulent preference to his mother that Hiralal assigned and conveyed these properties. In my opinion, such a transfer is protected under sec. 57 of the Presidency Towns Insolvency Act, and for this reason and the other reasons which I have given, and upon the technical ground that the present applicant has no locus standi, the petition is dismissed with costs. Having regard to the statements contained in the report of the Official Assignee, it appears to me that the insolvent cannot be held justly responsible for the fact that his assets were not of the value of four annas in the rupee, and in view of the other facts stated in the report showing that it is very unlikely that the insolvent personally got any benefit from the transactions which gave rise to the claims of the four unsecured creditors, his application for discharge is granted.