Kunhitty Sahib v. Cheru — 1963 DIGILAW 375 (KER)

Judgment :- 1. These appeals arise from proceedings under S.15 of the Kerala Agriculturists Debt Relief Act, 31 of 1958. The 14th respondent in the court below, who is the debtor-petitioner's wife, is the appellant in C.M.A. No. 39 of 1961 and the 28th respondent in the court below is the appellant in A.S.No. 292 of 1961. Both appeals arise from the same order. 2. Cheru, the debtor-petitioner, filed a petition under S.15 of Act 31 of 1958 for discharge of his debts as provided in S.18. The 28th respondent, one of the creditors of the petitioner, filed objections stating that the debtor had fraudulently alienated a substantial part of his property to his wife, the 14th respondent in the court below, that these alienations were sham transactions, that the debtor was still in possession of such properties and that these also should be included among the assets of the debtor for the purpose of these proceedings. The properties thus sought to be included are described in schedules A to J in M.P. No. 1947 of 1959 filed by the 28th respondent. When he was examined he gave up the case regarding the items in schedules G, H, I and J. After taking evidence the court below held that items 1 and 3 in schedule A,1 and 4 in Schedule C,1 acre in schedule E and the jenmom right of the property in schedule F were really assets of the debtor. Some of the items had been alienated by the 14th respondent before the filing of the petition, and these were excluded as not belonging to the debtor. The appellant in the civil miscellaneous appeal questions the correctness of the order directing the inclusion of these items of property in these proceedings. The appellant in A.S. No. 292 of 1961 wants the properties in schedule D which were transferred by the debtor to his wife and by the latter to the 21st respondent in the court below to be treated as part of the assets of the debtor. 3. Two questions arise for decision, namely, (1) whether the non-inclusion of part of the assets of the debtor should entail dismissal of the petition under S.15 and (2) whether the court has jurisdiction under S.15 to 18 to question the validity of alienations made by the debtor. According to the appellant in CMA. 3. Two questions arise for decision, namely, (1) whether the non-inclusion of part of the assets of the debtor should entail dismissal of the petition under S.15 and (2) whether the court has jurisdiction under S.15 to 18 to question the validity of alienations made by the debtor. According to the appellant in CMA. No. 39 of 1961 the court is bound to dismiss a petition under S.15 if all the assets are not included in the petition, and this is the only consequence of the omission; while according to the appellant in A.S. No. 292 of 1961 the court can enquire into the nature of the alienations effected by the debtor before filing the petition under S.15. The two points are connected and can be considered together. 4. The appellant in the civil miscellaneous appeal relies on the decision of this court in Hameed Koya v. Arunachalam Nadar (1963 KLT. 653) in support of the argument that non-inclusion of part of the assets of the debtor in the petition under S.15 should entail the dismissal of the petition and only that. The case relied on was one in which a debtor sought relief under S.15. His deceased father had been adjudicated an insolvent and his properties had vested in the receiver. The question was whether the debtor-petitioner had an interest in the surplus assets of the insolvent and whether such interest had to be included among his assets. The trial court dismissed the petition on the ground that this also had to be included and that the petitioner had refused to surrender such right to the court. This court held that the right of the debtor-petitioner to a share in such surplus assets was property which should have been included among the assets. It was further held that the dismissal of the petition was proper as he refused to surrender such right to the court in spite of a chance given to him to amend the petition. It is clear from the judgment that the decision was based on the fact that the petitioner was not willing to comply with the provision in S.15(e) that he should unconditionally leave all his assets in the control of the court. It is clear from the judgment that the decision was based on the fact that the petitioner was not willing to comply with the provision in S.15(e) that he should unconditionally leave all his assets in the control of the court. In the concluding part of the judgment it was observed: "We really wanted to give an opportunity to the petitioner to amend his application by including this contingent right also, and to give an undertaking that that potential right, when realised; will be placed in the custody of the court for the purpose of distribution among his present creditors. The petitioner was not willing to amend the petition or to give the undertaking. We are therefore constrained to confirm the order of the court below." It was thus, as a result of the persistent refusal of the petitioner to leave such assets in the control of the court and not because of the mere non-inclusion of such assets, that the petition was dismissed. This decision cannot therefore be treated as an authority for the position contended for by the appellant in CMA. 39. 5. S.16 to 19 of the Travancore Agriculturists Debt Relief Act, II of 1116, contained provisions similar to S.15 to 18 of Act XXXI of 1958. The question whether the court had jurisdiction to enquire into the nature of alienations made by the debtor before he filed a petition under S.16 (which corresponds to S.15 of Act XXXI of 1958) came up for decision in Keralavarma Thampuran v. Krishnan Valiyathan (1945 TLR. 879). It was held that the court was bound to determine the available assets of the debtor. Under S.16(3)(c) of that Act the debtor was bound to furnish particulars of all his property, including claims due to him. The claims due to him were taken to include assets which nominally stood in the names of others but really belonged to the debtor. This decision was followed by the Travancore High Court in Mathew v. Sarah Oommen (1947 TLR. 515). It was urged by one of the creditors in that case that the debtor had concealed the major portion of his assets in the petition under S.16. This decision was followed by the Travancore High Court in Mathew v. Sarah Oommen (1947 TLR. 515). It was urged by one of the creditors in that case that the debtor had concealed the major portion of his assets in the petition under S.16. It was held that the proper procedure to be adopted in such a case was to conduct an enquiry as to whether more assets than were admitted by the debtor were available for distribution in a settlement under S.19. If as a result of such an enquiry it was found that properties had been so concealed, the court could treat the same as assets for the purpose of distribution under S.19. This view was followed by the Travancore-Cochin High Court in Itticheria v. Chacko Issac (ILR.1950 TC. 47). We are of the view that these decisions lay down the procedure in a case like this. 6. This conclusion is supported by the provisions of S.19 of Act XXXI of 1958, which is in these terms: "19(1) Every transfer of immovable property made by a debtor entitled to the benefits of this Act after 20th November 1957 and before the complete discharge of his debt shall, in any suit or other proceeding with respect to such transfer, be presumed, until the contrary is proved, to have been made with intent to defeat or delay the creditors of the transferor. (2) Where a debtor entitled to the benefits of this Act has in collusion with another allowed his immovable property to be sold after 20th November 1957 through Court or otherwise with a view to defeat or delay his creditors, the sale shall be voidable at the option of any creditor so defeated or delayed." It was contended on behalf of the debtor that the words "other proceeding" in S.19(1) of Act XXXI of 1958 indicated that the proceeding contemplated was other than that under S.15. We are unable to accept this restricted view. We hold that the court below was right in holding that the nature of the transfers made by the debtor could be enquired into in these proceedings. We shall now consider the oases on the merits. C.M.A. No. 39 of 1961: 7. In this appeal the point for decision is whether Exts. We are unable to accept this restricted view. We hold that the court below was right in holding that the nature of the transfers made by the debtor could be enquired into in these proceedings. We shall now consider the oases on the merits. C.M.A. No. 39 of 1961: 7. In this appeal the point for decision is whether Exts. D11, D19, D17 and D18 are sham documents and those properties dealt with thereunder, which still remain in the debtor's wifes' name, are assets of the debtor. Items 1 and 4 in schedule A were transferred to the appellant by the debtor under Ext. D11 dated 27-12-1949. The consideration purports to be Rs. 5,000/- stated to have been received in cash for discharging the decree-debt in O.S. No. 180 of 1124 of the Trichur District Court. Ext. P5 is copy of the plaint and Ext. P6 copy of the compromise petition in the case. These are not helpful in proving that the consideration actually proceeded from the wife to the husband. The appellant did not care to give evidence in the case. Ext. D19 is the sale deed dated 22-7-1952 executed by the debtor to the appellant. The consideration is stated to be a sum of Rs. 2,000/- directed to be paid to a mortgagee of the property and a sum of Rs. 500/- adjusted against her deposit in the bank of the debtor. Ext. D8 purports to be a certified copy of the appellant's deposit account in the debtor's bank. Ext. D9 series purport to be fixed deposit receipts in her name. The original account books have not been produced and no satisfactory evidence is given for the failure to do so. One acre in schedule E was conveyed under Ext. D17 dated 23-1-1125 for a consideration of Rs. 5,000/-. A draft for Rs. 5,000/- issued in favour of the appellant was produced to prove this payment. According to the debtor this sum was sent by the appellant's brother to her. Here again the best evidence that could have been given, namely, the evidence of the appellant, is not available. The jenmom right of the property in schedule F was conveyed under Ext. D18 dated 11-11-1950. Rs. 982-2-0 is adjusted towards the kanam amount & the balance against the deposit account of the appellant. Here again the best evidence that could have been given, namely, the evidence of the appellant, is not available. The jenmom right of the property in schedule F was conveyed under Ext. D18 dated 11-11-1950. Rs. 982-2-0 is adjusted towards the kanam amount & the balance against the deposit account of the appellant. Except the testimony of the debtor there is no evidence that the consideration proceeded from the appellant. 8. There are circumstances to show that the impugned alienations are not genuine transactions. The petitioner was doing banking business and had a bank known as the Central Bank. It was admitted that by the end of 1124 the position of the bank became critical. Exts. D11, D17, D18 and D19 were all executed after the bank's business practically came to a stand still. According to the debtor, his wife had brought as streedhanom Rs. 4,000/- which was mentioned in the will Ext. D1 executed by the father, that in lieu of this sum properties were transferred to her long ago and that the income of such properties were saved by her. Some weight could have been attached to this case if only the appellant had cared to depose in the case. She declined to do so and there is only the interested testimony of her husband in support of the case that the various alienations in her favour were supported by consideration. Another source of money is the bank draft, Ext. D30, for Rs. 5,000/-. The appellant or her brother who is alleged to have sent this amount could have given useful evidence, but no attempt was made in that direction. As regards the income of the properties alleged to have been transferred in lieu of streedhanom, the debtor admitted that the same was not deposited in any bank. Some of these documents appear to have been registered in distant Sub-Registrar's offices. The bulk of the properties were within the jurisdiction of the Kunnamkulam Sub-Registar's office. Ext. D19 was registered at Wadakkancheri and a plot of 4 cents within the jurisdiction of that office is included in Ext. D19. Ext. D11 was also registered at Wadakkancheri and a plot of 5 cents within Wadakkancheri Sub-Registrar's jurisdiction is included in the deed along with extensive properties at Kunnamkulam. Ext. D17 was registered at Erumapetty Sub-Registrar's office although the properties were those within the jurisdiction of the Kunnamkulam Sub-Registrar's Office. Ext. D19. Ext. D11 was also registered at Wadakkancheri and a plot of 5 cents within Wadakkancheri Sub-Registrar's jurisdiction is included in the deed along with extensive properties at Kunnamkulam. Ext. D17 was registered at Erumapetty Sub-Registrar's office although the properties were those within the jurisdiction of the Kunnamkulam Sub-Registrar's Office. Ext. D18 was registered at Kunnamkulam itself but the property covered by that deed is only a jenmom right which is insignificant in value when compared to the other properties. It was admitted by the debtor that his wife subsequently sold several items to strangers and the sale proceeds were utilised for liquidating his debts. It is also seen that some of the transfers to the wife wore for very low amounts. Thus D schedule property was sold by the debtor to his wife for Rs. 3,000/-. She sold this two years later for Rs. 10,000/-. This shows that the transfers to the appellant were nothing but a devise to keep the properties from the reach of creditors. These were sold as and when the debtor required money. There were several matters, such as the source of the funds, the possession of the properties, etc., on which the appellant could have given evidence; but she did not care to do so. 9. It was urged on behalf of the appellant that the debtor had made nearly 200 alienations to his creditors after 1124 and that the properties conveyed to his wife formed only a part of his assets. We are not called upon to adjudicate on the validity of the transfers in favour of creditors as the same has not been questioned in these proceedings. Only those in favour of the appellant are challenged, and in the circumstances referred to above, we are unable to treat these as bona fide transfers. We therefore accept the finding of the court below that the transactions by which those items held to be part of the debtor's assets were transferred are sham and that neither title nor possession passed to the appellant. C.M.A. No. 39 of 1961 must therefore be dismissed. A.S. No. 292 of 1961: 10. The only point raised in this appeal is whether the properties in schedule D can be treated as assets of the debtor. These were transferred by the debtor to his wife under Ext. D21 dated 1-10-1122. C.M.A. No. 39 of 1961 must therefore be dismissed. A.S. No. 292 of 1961: 10. The only point raised in this appeal is whether the properties in schedule D can be treated as assets of the debtor. These were transferred by the debtor to his wife under Ext. D21 dated 1-10-1122. She sold the same to the 21st respondent in the court below under Ext. D31 dated 14-12-1124. There is no evidence to suggest that the 21st respondent who is the third respondent in A.S. 292, is not a bona fide purchaser for value. It is also significant to note that of all the properties alienated by the wife and in respect of which relief was refused to the appellant in this case, this is the only item which is still pursued. We are unable to notice any peculiar feature about this transaction to treat it on a different basis. We therefore confirm the finding of the court below in respect of D schedule property. 11. In the result, C.M.A. No. 39 of 1961 is dismissed with costs to the contesting respondents here. A.S. No. 292 of 1931 is also dismissed with costs to the third respondent. Dismissed.