Mukund Lal Veer Kumar v. Tara Devi — 1961 DIGILAW 320 (ALL)

JUDGMENT Mithan Lal, J. - These three civil revisions, filed by firm Makund Lal Veer Kumar and Ram Surat Misra, arise out of the same order of adjudication passed by the Insolvency Judge, Varanasi, and confirmed in appeal by the learned Additional District Judge. Three petitions were filed, one by Purshottam opposite party on 28th April 1958 registered as case No. 9 of 1958, another by Smt. Tara Devi on 30th May 1958 registered as case No. 19 of 1958, and the third by Jivendra Mal on 20th January 1959 registered as case No. 2 of 1959, alleging that the firm and its partner Makund Lal had done certain acts of insolvency and so the firm and the partners be declared to be insolvents. It may be noted at the very outset that no act of insolvency was alleged in any of the petitions on the part of Ram Surat Misra personally. Several grounds covered by Section 6(b), (c), (d) and (g) were alleged in the petitions. The Insolvency Judge, however, found no other ground established except that covered by sub-Section (c), that is he found the gift deed executed by Makund Lal of his share in his personal property, (two houses), in favour of his son to be fraudulent. All the three petitioners were declared insolvent. On appeal the order was maintained by the Additional District Judge and so these three revisions have been filed. 3. Sri Raja Ram Agarwal, who has very ably argued the cases has raised three main contentions in these cases. The first is that no property of the firm was transferred and consequently there being no act of insolvency on the part of the firm the firm could not be declared to be insolvent. His second contention is that the act of insolvency, which has been upheld by the courts below, was an act prior to three months of the first petition of insolvency presented by Purshottam. While arguing the second point the learned counsel has further contended that the date of the presentation of the deed of gift executed by Makund Lal should be taken to be the date of registration because of the presumption of Section 47 of the Registration Act. While arguing the second point the learned counsel has further contended that the date of the presentation of the deed of gift executed by Makund Lal should be taken to be the date of registration because of the presumption of Section 47 of the Registration Act. It is also his contention that the registration of document being a composite act the date of presentation of the document and its acceptance by the registering officer, should be taken to be the date of registration. His last argument is that Ram Surat Misra has been wrongly declared to be insolvent because no act of insolvency is alleged against him and even if the firm is declared insolvent Ram Surat Misra personally cannot be adjudged as an insolvent. 4. The counsel for the opposite side, Sri Rajeshwari Prasad, has on the other hand contended that the question of transfer of property by the firm would have been material only in a case where the firm owned property. In the present case there being no property owned by the firm the act of insolvency on the part of any partner must be deemed to be an act of insolvency on the part of the firm itself. According to his submission a document can only be registered when an endorsement of a certificate of registration has been made by the Registrar on the back of the document and the mere presentation of the document does not have the effect of registration. This being within three months the courts below were right in declaring the petitioners as insolvents. 5. I have heard learned counsel for the parties. The document in dispute in this case is the deed of gift executed by Makund Lal in favour of his son, who has been found to be minor, on 31st October 1957. The same day when this document was presented for registration and was also admitted for that purpose the Sub-Registrar was doubtful about the stamp duty paid on the document, and so he made a reference to the Collector and thereafter the document was actually registered on 11th March 1958. On 12th March 1958 Vir Kumar executed a deed of gift in favour of his mother. It also appears that the firm owned no property and Makund Lal who owned half share in two houses disposed of the same to his son by means of a gift deed. On 12th March 1958 Vir Kumar executed a deed of gift in favour of his mother. It also appears that the firm owned no property and Makund Lal who owned half share in two houses disposed of the same to his son by means of a gift deed. The other partner Ram Surat Misra was not alleged to have transferred any property nor it was alleged that he personally committed any act of insolvency. The courts below have given no finding as to how Ram Surat Misra could be declared to be insolvent personally. The learned counsel for the other side has also not been able to satisfy me as to how the order declaring Ram Surat Misra as insolvent is justified. It could only be the firm or the pertner, who committed the act of insolvency, who could be adjudged as insolvents. This would mean that the order of the courts below declaring Ram Surat Misra as insolvent must be set aside. The firm, however, could be adjudged insolvent as a partner in the firm fraudulently transferred his property in order to defeat the claims of the creditors of the firm. This would amount to such an act as to declare the firm as insolvent. 6. The material argument in the case is whether the deed of gift executed on 31st October 1957 and registered on 11th March 1958 could be treated to be an act of insolvency within three months of the presentation of the petition. As stated earlier the first petition was presented on 28th April 1958. This petition would be beyond three months from the date of the execution of the deed of gift, but would be within three months from the date of the actual registration. The learned counsel for the petitioners relying upon the decisions in the cases of T.V. Kalyanasundaram Pillai v. Karuppa Mooppaliar, A.I.R. 1927 PC 42 : 25 ALJ 113 and Venkat Subba Srinivas Hegde v. Subba Rama Hegde, A.I.R. 1928 PC 86 : 26 ALJ 598 has contended that where a donor of an immovable property has handed over possession of the property by means of a gift to the donee and the deed has been accepted, the gift cannot be revoked and consequently it must be deemed to operate from the date of its execution or the transfer of possession. On this basis he has drawn a distinction between the case of a deed of gift and a deed of sale. To me it seems that the distinction drawn by the learned counsel does not stand in view of the provisions of Section 123 of the Transfer of property Act which requires that for the purposes of making a gift of property, the transfer must be effected by a registered instrument. For the purposes of the act of insolvency under Section 6 (b) what is required is that the debtor makes a transfer of his property or any part thereof with intent to defeat the claims of the creditor. In this way there would be no distinction between a gift and a sale. A Divisional Bench of this Court in the case of , District Board Bijnor v. Mohd. Abdul Salam, 1947 ALJ 408 held that: - "The period of three months provided for by Section 9(1) (c) of the Provincial Insolvency Act should be counted from the date of the registration of the deed and not from the date of its execution." While laying down the above law the authorities of Lahore, Madras and Calcutta High Courts were relied upon. The case of U On Maung v. Maung Shive Hpaung, AIR 1937 Rangoon 446 relied upon by the learned counsel for the petitioners, was not followed and was not accepted as a good law. 7. The learned counsel further argued that under Section 47 of the Registration Act a registered document operates from the date of its execution even though it may require registration. Consequently, the registration of the document should be taken to date back to the date of execution by fiction of law. This argument is not justified because the fiction of law under Section 47 is that the document would operate as if no registration had been required by law and not that the registration would date back to the date of execution. Therefore, reading together the provisions of Section 123 of the Transfer of Property Act with Sec. 6(b) of the Provincial. Insolvency Act and Section 47 of the Registration Act the only conclusion which can be drawn is that the material date cannot be the date of execution for acts of insolvency but would be the date of registration. 8. Therefore, reading together the provisions of Section 123 of the Transfer of Property Act with Sec. 6(b) of the Provincial. Insolvency Act and Section 47 of the Registration Act the only conclusion which can be drawn is that the material date cannot be the date of execution for acts of insolvency but would be the date of registration. 8. Another important question which has been argued is that from which date a document must be deemed to be registered. According to the argument of the learned counsel the registration being a composite act of presentation of document, admission of document for registration, endorsement by the registering officer in respect of the admission of the document, copying of the document in the books of the registering office and the issue of a certificate of registration, the date of registration must be deemed to be the date on which the document has been admitted for the purposes of registration. This argument does not appear to be correct because when an act is completed by a series of acts the date of the performance of the act would be the date when the final act is performed and not the first act. A reference to Section 60 of the Registration Act may be made in this behalf. That section lays down as follows:- "60(1) After such of the provi sions of Secs. 34, 35, 58 and 59 as apply to any document presented for registration have been complied with, the registering officer shall endorse, thereon a certificate containing the word `registered,' together with the number and page of the book in which the document has been copied. (2) Such certificate shall be signed, sealed and dated by the registering officer, and shall then be admissible for the purpose of proving that the document has been duly registered in manner provided by this Act, and that the facts mentioned in the endorsements referred to in Section 59 have occurred as therein mentioned." 9. Sub-Sec. (1) will show that the document is registered when the endorsement containing the word `registered' is made on the document itself, while sub-sec. (2) lays down that it shall only be after the certificate is signed, sealed and dated that the document shall be admissible for the purposes of proving that the document has been duly registered. Sub-Sec. (1) will show that the document is registered when the endorsement containing the word `registered' is made on the document itself, while sub-sec. (2) lays down that it shall only be after the certificate is signed, sealed and dated that the document shall be admissible for the purposes of proving that the document has been duly registered. Even though a series of acts may have to be performed, yet the act of registration would mean the date when the certificate is actually made containing the word `registered' in the document. The date of admission of the document for the purposes of registration cannot, therefore, be taken to be the date of registration as was argued. 10. One other point, which may be mentioned just at the end, is that according to the finding Vir Kumar was minor on the date the gift was executed. There is no evidence on record to show that any authorised person accepted the gift on his behalf. This point argued here does not appear to have been argued in the court below, but all the same when a deed is executed in favour of a minor there must be an acceptance of the gift on behalf of the minor by an authorised person as required by Sec 123. This adds another reason to the acts of insolvency and justifies the judgment of the courts below adjudging the firm Makund Lal Vir Kumar and partner Makund Lal as insolvents. The revisions, therefore, fail except for Ram Surat Misra who should not have been adjudged as an insolvent. 11. All the three revisions are partly allowed only in this sense that the order adjudging Ram Surat Misra as insolvent is set aside while the rest of the order declaring the firm and Makund Lal as insolvent is confirmed. Parties shall bear their own costs. 12. Record of the case shall be sent back to the court below forthwith.