JUDGMENT Khare, J. - These are three connected Special Appeals arising out of two orders passed by a single Judge of this Court in a Company matter. Special Appeal No. 907 of 1962 is directed against the order dated 8th November, 1962, passed under section 440 of the Companies Act, while the other two connected appeals are against the order dated 26th March, 1963. 2. The facts leading to these Special Appeals, briefly stated, are that there was a family concern known as Mathura Das Channu Lai (Private) Ltd., which went into voluntary liquidation in pursuance of a resolution passed by the Company on 22nd April, 1956, and published in the U. P. Gazette on 26th May, 1956. Two liquidators, namely, Sri Sankaleshwar Tulsi Ram Nagar and Vishwanath Prasad, were appointed. However, in the year 1961, Sri S. T. R. Nagar, one of the liquidators had an attack of paralysis and he was discharged. By a resolution dated 7th June, 1961, Sri Vishwanath Prasad, who belonged to the family of the partners of the firm, was appointed the sole liquidator. There was no creditor of the Company at the time it went into voluntary liquidation. However, on 8th January, 1958 the liquidator purcha sedin Court sale certain premises in Hauz Katora mohalla (Varanasi) for Rs. 10,100 only. The property purchased by the liquidator on 8th January, 1958 in the Court sale had been the subject of an earlier mortgage executed by Kishori Lai, his wife and his minor son in favour of Indra Lochan Sharma on 5th October, 1949 for a consideration of Rs. 75,000. By the year 1962 the mortgage debts had swelled to Rs. 1,50,000 and odd. Since Mathura Das Channu Lal (Private) Ltd., in liquidation, was the subsequent transferee of the mortgaged property notices were sent by Indra Lochan Sharma, in the months of April and May, 1961, to the Company demanding payment. It came to the notice of Indra Sharma at that time that the Company had gone into voluntary liquidation. A notice of demand dated 4th March, 1962, was, therefore, sent by him to the liquidator, who in reply disputed the mortgage set up by Indra Lochan Sharma. It came to the notice of Indra Sharma at that time that the Company had gone into voluntary liquidation. A notice of demand dated 4th March, 1962, was, therefore, sent by him to the liquidator, who in reply disputed the mortgage set up by Indra Lochan Sharma. The debt having not been paid within the time prescribed under section 434 (1) (a) of the Companies Act, he presented a petition under section 440 of the Companies Act for converting the Company's voluntary liquidation to its winding up by the Court. The objections raised to the petition were that Indra Lochan Sharma was not a creditor of the Company, that in any case he was not a creditor of the Company on the date it went into voluntary liquidation, that the petition was mala fide inasmuch as the petitioner tried to avoid the institution of suit and payment of Court fees and that in any case the petition had become infructuous because the mortgaged property purchased by the liquidator on 8th January, 1958, had been transferred by him on 17th July, 1962. 3. The learned single Judge, before whom the petition under section 440 of the Companies Act was filed on 27th April, 1962, rejected all the objections raised by the liquidator and held that it was a fit case in which the petition should be allowed. Special Appeal No. 907 of 1962 filed by the Company, Mathura Prasad Channu Lal (Private) Ltd., in liquidation, is directed against that order. 4. After the petition under section 440 of the Companies Act had been allowed, another petition was filed by Sri Indra Lochan Sharma under sections 536, 537 and 441 of the Companies Act, 1956, and it was prayed that the sale deed dated 17th July, 1962, in respect of the mortgaged premises executed by the liquidator be set aside on the ground that it was fraudulent, and the distribution of moneys and funds of the Company made by the liquidator since 11th March, 1958, be declared null and void. The second petition was also granted by the order of the single Judge dated 26th March, 1963. The sale deed dated 17th July, 1962. executed by the liquidator was held to be fraudulent and was set aside. The second petition was also granted by the order of the single Judge dated 26th March, 1963. The sale deed dated 17th July, 1962. executed by the liquidator was held to be fraudulent and was set aside. It was further held that the disbursement made by the liquidator after the sale on 18th July, 1962, and 24th October, 1963, were also tainted with fraud and that the liquidator had no right to proceed with the distribution of the assets of the Company before satisfying the creditors' claim. The partners of the Company to whom payment had been made were directed to return to the liquidator immediately a sum of Rs. 20,000 out of which a sum of Rs. 15,000 was to be paid by the Official Liquidator to the vendees, being the consideration money received by him in pursuance of the sale deed dated 17th July, 1962. The learned single Judge did not disturb the distribution made by the liquidator prior to the date of the petition under section 440 of the Companies Act. Two Special Appeals, i.e., Nos. 199 and 293 of 1963, are directed against that order, Appeal No. 199 being by Vishwanath Prasad and Appeal No. 293 by Indra Lochan Sharma. Indra Lochan's appeal is confined only to the moneys distributed by the liquidator prior to the date of the petition. 5. The points that arise in these appeals are- (1) Whether in the circumstances of the case Indra Lochan Sharma, the mortgagee can be regarded to be a' creditor' of the Company on 8th November, 1962, when the order under section 440 of the Companies Act was passed ; (2) Whether it was a fit case in which the petition for the Company being wound up by the Court, instead of being wound up voluntarily, should have been allowed ; (3) Whether the sale deed dated 17th July, 1962, could be set aside as fraudulent ; and (4) Whether the distribution of money made by the liquidator on different dates could be set aside, on the grounds alleged by the petitioner. 6. Section 439 (1) (b) of the Companies Act provides that an application to the Court for winding up of a Company by way of petition can be presented' ` by any creditor or creditors, including any contingent or prospective creditor or creditors ". 6. Section 439 (1) (b) of the Companies Act provides that an application to the Court for winding up of a Company by way of petition can be presented' ` by any creditor or creditors, including any contingent or prospective creditor or creditors ". The word ` creditor ' has nowhere been defined in the Act, and therefore it shall have to be interpreted taking its ordinary meaning into consideration. It is not disputed that there was no `creditor' of the Company in the year 1958 when it went into voluntary liquidation. The Company or the liquidator did not borrow any money from Indra Lochan Sharma. The later claims to be a creditor of the Company only because daring the course of the liquidation proceedings the liquidator purchased the equity of redemption of the property mortgaged to lndra Lochan Sharma for a consideration of Rs. 2,500. That purchase was made in the year 1958. From what has been stated above, it is clear that the liability of the Company, which was a subsequent transferee of the mortgaged property, could extend only to the extent of the mortgaged property purchased by it in the year 1958. The Company in liquidation could be said to be a debtor of the mortgagee only in that limited sense. That being the position, the Company could not be said to be a debtor of Indra Lochan Sharma, the mortgagee, after it had transferred that property to certain other persons. It is also abundantly clear that even in the case the transfer of the mortgaged property by the liquidator in favour of certain other persons on 17th July, 1962, was held to be fraudulent and void, the liability of the company for the mortgage debt could only be to the extent of the mortgaged property which had come into the hands of the Company and could not extend beyond it. 7. It is in the light of these facts and circumstances that it has to be considered, whether or not Indra Lochan Sharma, the mortgagee, was a 'creditor' of the Company on the date he presented the petition and also on 8th November, 1962, when the winding up order was passed by the learned single Judge. 8. 7. It is in the light of these facts and circumstances that it has to be considered, whether or not Indra Lochan Sharma, the mortgagee, was a 'creditor' of the Company on the date he presented the petition and also on 8th November, 1962, when the winding up order was passed by the learned single Judge. 8. In this connection it is significant to note that the mortgagee could very well remain out of liquidation proceedings and bring a suit for money on the basis of the mortgage, making all subsequent transferees as parties to the suit. In that case he could enforce the personal covenant as against the original mortgagor only but could get the mortgaged property sold as against all the defendants including the company in liquidation which had purchased the equity of redemption. That proposition is not disputed. It is, however, contended that in the circumstances of the case the mortgagee was not bound to institute a suit if a cheaper and a quicker remedy was available to him on the ground that he was a 'creditor' of the Company. The question, therefore, to be decided is whether Indra Lochan Sharma could be considered to be a `creditor' of the Company. 9. The Company never borrowed any money from the mortgagee. It could be regarded his debtor in the limited sense that one of the properties subsequently acquired by it during the course of litigation was subject to a prior mortgage. However by purchasing that property the Company did not become liable for the entire mortgage debt. If the same extended beyond the value of the mortgaged property its liability remained limited to the extent of the sale proceeds from the mortgaged property itself. Assuming that the property could be sold for Rs. 20,000 only, the rest of the claim which now amounts to about Rs. 2 lacs could not be realised from the Company. However, if the mortgagee is allowed to claim the debt from the Company in liquidation proceedings, he may give up the security and claim the entire mortgage debt from the Company itself. To allow that would be to permit something which is most inequitable. 10. It could not have been the intention of the Legislature to include such mortgagees within the ambit of the term 'creditor' as used in section 439 (1) (b) of the Companies Act. 11. To allow that would be to permit something which is most inequitable. 10. It could not have been the intention of the Legislature to include such mortgagees within the ambit of the term 'creditor' as used in section 439 (1) (b) of the Companies Act. 11. It has, however, been contended by the learned Counsel appearing for the respondent that Indra Lochan Sharma, the mortgagee, should be held to be a 'creditor' of the Company, because (a) he could bring suit on the basis of the mortgage both against the original mortgagor and the Company in liquidation, which was a subsequent transferee ; and (b) under section 439 (1) (b) of the Companies Act contingent or prospective creditor or creditors are also included within the terms 'creditor' 12. Section 439 (1) (b) of the Companies Act reads as follows : "(1) An application to the Court for the winding up of a company shall be by petition presented, subject to the provisions of this section, (b) by any creditor or creditors, including any contingent or prospective creditor or creditors....." 13. It is true that contingent or prospective creditors are also included within the terms ` creditor' ; but that does not solve our problem. The question before us is whether the mortgagee in the circumstances of the case could at all be construed to be a 'creditor' of the Company. The fact that equity of redemption was purchased during the course of liquidation is therefore, not at all important. 14. Reliance was placed on the case of Re North Bucks Furniture Depositors Ltd., (1939) 2 All ER 549. In that case the company had not paid the rates due to a local authority. Upon the local authority presenting a petition for the winding up of the company, the question arose whether the local authority was a 'creditor' of the company. Under the English law the rates due to a local authority were not considered a common law liability . It was a liability created by statute and realisable only in the manner provided under the statute. It is significant to note that in the case referred to above it, could not have been disputed that the company and the company alone was liable for the entire local rates due. It was a liability created by statute and realisable only in the manner provided under the statute. It is significant to note that in the case referred to above it, could not have been disputed that the company and the company alone was liable for the entire local rates due. All that was held in that case was that it was immaterial whether the dues could have been realised by means of a suit or by a distress warrant as provided in the statute. The local authority was considered to be a 'creditor` of the company even though it could not file a suit against the company. This ruling will not apply to the facts of the present case because the company in liquidation, which was the purchaser of the equity of redemption, could not be considered to be. liable for the payment of the entire debt in case the same could not be fully satisfied from the proceeds of the sale of the mortgaged property. 15. Learned Counsel for the appellant has relied upon the following two English cases in support of his contention that Indra Lochan Sharma, the mortgagee, should not be regarded to be a 'creditor' of the company in liquidation : "(1) In re Combined Weighing and Advertising Machine Co., (1889) LR 43 Ch. D. 99 and (2) In re The Law Courts Chambers Co. Ltd., Law Times Report, Vol 41, N.S. September, 1889 to February, 1890 of cases decided in the House of Lords, the Privy Council and the Court of Appeal ; p. 669." 16. The first case mentioned above is an authority for the proposition that the holder of a garnishee order absolute directing a company to pay to him a debt due by them to a creditor of his against whom he had recovered judgement does not become a "creditor" of the company and is not, therefore, entitled to petition for the winding up of the Company on failure by them to obey the order. The reasoning on which the decision proceeded was that a garnishee order absolute does not operate to transfer the garnished debt to the garnished. 17. The case of Law Courts Chambers Co., Ltd. s, is however to the point. The reasoning on which the decision proceeded was that a garnishee order absolute does not operate to transfer the garnished debt to the garnished. 17. The case of Law Courts Chambers Co., Ltd. s, is however to the point. The petition for winding up of the Law Courts Chambers Co., Ltd., was presented by the executors of late F. Chifferiel who claimed to be creditors of the Company for certain sums in respect of the moneys paid by them under covenant of suretyship and indemnity, entered into by their testator, of debts incurred by the Public Chambers Co., Ltd.,. whose properties the Law Courts Chambers Co., had acquired as subsequent transferees. On 6th March, 1867, the Public Chambers Co., had mortgaged certain property to secure a certain advance made. To that document Chifferiel and certain other persons therein referred to as directors were parties. The directors had jointly and severally covenanted to the mortgagees that the company would pay the said sums: and other advances with interest thereon. The mortgage of 6th March,1867, was from time to time transferred and ultimately by an indenture of the 15th April, 1878, it was transferred to a trustee for the Prudential Assurance Co. Again by an indenture dated 25th March, 1880, the property comprised in the mortgages of the 6th March, 1867, and 20th July, 1877, was assigned to the Law Courts Chambers Co., Ltd. by the Public Chambers Co., subject to those two mortgages. In 1882 the Public Chambers Co. passed a resolution for voluntary winding up of the company, and an order for the company to be wound up under the supervision of the Court was passed. The heirs of F. Chifferiel after his death contended that they had paid the sums due under the mortgage dated 6th March, 1967, and further sums in respect of the interest under the mortgages of the 6th March, 1867, and 20th July, 1877 and cost. Their further contention was that they had made these payment on behalf of the Law Courts Chambers Co., and that upon such payment that Company became indebted to them in respect thereof. They, therefore, served upon the company a formal demand for the payment of such sums. The company did not comply with the demand; thereupon they presented a petition for winding up by the Court. They, therefore, served upon the company a formal demand for the payment of such sums. The company did not comply with the demand; thereupon they presented a petition for winding up by the Court. It was held by Stirling, J., that the position of the heirs of F. Chifferiel could be no better than that of the mortgagees. He further held that under the Companies Act, 1862, in order that a person may be entitled to present a petition he must be a' creditor' either in law or in equity. The heirs of Chifferiel could not be held to be creditors at law, and they could also not be held to be creditors in equity because there was no privity of contract between Chifferiel and the Public Chambers Co., His Lordships observed: "It seems precisely the point which I put to Mr. Graham Hastings in argument in a simple form : Supposing that a mortgage is made to A by B, and then B assigns and the equity of redemption to C. then according to what is laid down by Lord Eldon in the case of Waring v. Ward, (1802) 7 Ves. 332 the Court independent of any contract between B and C, raises upon the conscience of the transferee an obligation to indemnify the vendor of the equity of redemption against his personal obligation to pay the money due on the transaction. Therefore there is a relation of indemnity between the original mortgager and the assignee of the equity of redemption. But no one ever heard in this Court of the mortgagee bringing an action in equity (because it is properly a equitable action) to compel the transferee of the equity of redemption to pay the mertgagor's debt personally. Of course he can make him a defendant to an action for force closure, and enforce his rights against him. Also, if the mortgagee sued the original mortgagor on his convent, then the mortgagor would be entitled to enforce his right of indemnity against the transferee of the equity of redemption. That is a right which belongs to the original mortgagor, and does not give the mortgagee the right to sue the person who is substituted in his place. Also, if the mortgagee sued the original mortgagor on his convent, then the mortgagor would be entitled to enforce his right of indemnity against the transferee of the equity of redemption. That is a right which belongs to the original mortgagor, and does not give the mortgagee the right to sue the person who is substituted in his place. If that is the case of a mortgagee, I fail to see how sureties can stand in any higher or better position ; and, in truth, the relation of debtor and creditor does not seem to me to exist between the petitioner and the present company........." 18. No case on the point decided by the Supreme Court or any High Court in India has been cited before us. We respectfully agree with the principle enunciated in the case of In re Law Courts Chambers Co., Ltd., Law Times Report, Vol 41, N.S. September, 1889 to February, 1890. 19. Even if it could be assumed for the sake of arguments that Indra Lochan Sharma, the mortgagee, became a' creditor' of the company in a limited sense on 8th January, 1958, when the company purchased the equity of redemption in the mortgaged property in a Court auction he ceased to be such a creditor' of the company (in liquidation) when the latter transferred the entire mortgaged property to certain other per- sons on 17th July, 1962. The mortgagee as against the subsequent transferees could enforce his right only against the mortgaged property and the mortgaged property having gone out of the ownership of the company (in liquidation) the relation of debtor and creditor could not by any stretch of imagination be said to have continued in any shape or form between the mortgagee and the company (in liquidation) after 17th July, 1962 when the equity of redemption had been transferred to others. 20. There is yet another reason why, in our opinion, the Special Appeal No. 907 of 1962 filed by Messrs. Mathura Das Channu Lal Private Ltd. (in liquidation) should be allowed. 20. There is yet another reason why, in our opinion, the Special Appeal No. 907 of 1962 filed by Messrs. Mathura Das Channu Lal Private Ltd. (in liquidation) should be allowed. The petition was presented under section 440 of the Companies Act which reads as follows : "(1) Where a company is being wound up voluntarily or subject to the supervision of the Court, a petition for its winding up by Court may be presented by- (a) any person authorised to do so under section 439, and subject to the provisions ; or (b) the Official Liquidator. (2) The Court shall not make a winding up order on a petition presented to it under sulr section (1), unless it is satisfied that the voluntary winding up or winding up subject to the supervision of the Court cannot be continued with due regard to the interests of the creditors or contribuories or both." 21. Sub-section (2) of section 440 clearly lays down that the voluntary winding up shall not be disturbed unless the Court comes to a finding that it cannot be continued with due regard to the interest of the creditors or contributors or both. The contributories had nothing to complain. In fact, more than Rs. 1,50,000 had already been collected and distributed to the partners of the firm. The company, in liquidation, had no creditor on the date it went into voluntary liquidation. Subsequently during the liquidation proceedings the equity of redemption in the property mortgaged to Indra Lochan Sharma was purchased by the Company in a Court sale. However, it was not retained by the company and was transferred to certain persons on 17th July, 1962. The company, in liquidation, therefore, was not even a subsequent transferee of the mortgaged property when the order dated 8th November, 1962, was passed. In the circumstances it could not be said that the voluntary winding up could not be continued with due regard to the interest of Indra Lochan Sharma even if it could be assumed that he was on the date of his petition a 'creditor' of the Company. 22. In the circumstances it could not be said that the voluntary winding up could not be continued with due regard to the interest of Indra Lochan Sharma even if it could be assumed that he was on the date of his petition a 'creditor' of the Company. 22. It was observed by the learned single Judge that the transfer made by the company, in liquidation, on 17th July, 1962, in favour of the close relations of the partners of the firm was fraudulent because the transaction was between near relations, for " inadequate consideration, executed, in haste, without proper advertisement, during the pendency of a winding up petition of which the voluntary liquidator had full knowledge." The equity of redemption was no doubt transferred to the near relations of the partners of the firm. The transfer made could not, however, be said to be for inadequate consideration because the property sold was subject to a very heavy mortgage debt, and the amount due under the mortgage was increasing from year to year. The property had been purchased in Court sales for Rs. 10,100 only. More than Rs. 1,50,000 was being claimed under the mortgage on the date the petition was filed and even if it be assumed that the property was worth Rs. 1,50,000 the equity of redemption could hardly have any value on 17th July, 1962. The sale of the property (including the right to recover the rent due) made for a consideration of Rs. 15,000 on 17th July, 1962, could not in the circumstances of the case be said to be for inadequate considerations. In the case of a voluntary liquidation the sole liquidator was under the provisions of section 512 of the Companies Act fully authorised to make the sale. He was not bound to retain the property because it was due to the purchase of that property that Indra Lochan Sharma, the mortgagee of the property, had claimed to be a ` creditor' of the company. He could very well think that the sooner he could get rid of the property the better it was both for the mortgagee and the company in liquidation. 23. The objection of India Locban Sharma, the mortgagee, having failed under section 440 of the Companies Act, his second objection under sections 536, 537 and 441 of the Companies Act, 1946, was not maintainable. 24. 23. The objection of India Locban Sharma, the mortgagee, having failed under section 440 of the Companies Act, his second objection under sections 536, 537 and 441 of the Companies Act, 1946, was not maintainable. 24. The result is that the orders passed by the learned single Judge on 8th November, 1962 and 26th March, 1963 are set aside and Special Appeals Nos. 907 of 1962 and 199 of 1963 are allowed, while Special Appeal No. 293 of 1963 filed by Indra Lochan Sharma is dismissed. In the circumstances of the case we direct the parties to bear their own costs throughout.