Judgment :- PALANISWAMY J. The only question that arises for determination in this appeal filed by defendants Nos. 2 to 13 is whether the sales of the suit properties by the first defendant, which is a public limited company, in favour of the second defendant-firm, of which the partners are defendants Nos. 3 to 13, were effected with intent to defeat or delay the Union of India and other creditors of the first defendant-company. The Union of India, represented by the Commissioner of Income-tax, Madras, laid the suit under section 53 of the Transfer of Property Act on its own behalf and on behalf of other creditors, if any, of the first defendant-company for a declaration that the sale deed, exhibit B-1, dated February 27, 1961, in respect of the plaint mentioned immovable properties and the sale of the movables by the first defendant-company in favour of the second defendant-firm were invalid and not operative and not binding on the plaintiff and other creditors of the first defendant-company as having been made to defeat the just claims of the plaintiff and other creditors. It was also prayed that the said transfers may be declared not binding upon the creditors of the first defendant-company and that the plaintiff was entitled to recover arrears of income-tax due from the first defendant-company from out of the plaint schedule properties. The suit has been decreed by the trial court is prayed for, and hence this appeal The first defendant-company was incorporated in the year 1946 with the object of carrying on the business of seed crushers, oil extractors, etc. The first defendant-company did not make any profit in the business. In the year 1952, the first defendant-company entered into a partnership with the second defendant-firm, called Rajeswari & Co., arinstarted a factory called Rajapalayam Cotton Pressing Factory, in which the first defendant company had 7 out of 16 shares. The partnership was re-constituted in the year 1954. Even as per the re-constituted firm, the first defendant-company continued to have 7 out of 16 shares. The first defendant-company, in its own activities, incurred loss, but the partnership earned profits, in which the first defendant-company got its share. The first defendant company claimed set-off of the profits so earned against the loss incurred in its own business. One Gnanaprakasam, an Income-tax Officer of Virudhunagar, who was on the eve of his retirement, allowed the set-off. The first defendant-company, in its own activities, incurred loss, but the partnership earned profits, in which the first defendant-company got its share. The first defendant company claimed set-off of the profits so earned against the loss incurred in its own business. One Gnanaprakasam, an Income-tax Officer of Virudhunagar, who was on the eve of his retirement, allowed the set-off. But his successor, Thirunavukarasu, who was examined as P.W.1 in this case, found that the set-off was improper and ought not to have been allowed, his view being that, on account of the loss incurred by the first defendant-company, it ceased to carry on its business, that the loss automatically lapsed and that, therefore, there was no scope for carrying forward the loss and setting off the loss against the profits earned by the first defendant-company in a different venture. On this basis the matter was reopened under section 34 of the Income-tax Act, and a sum ofRs. 28, 240.96 was levied as income-tax by order dated October 4, 1961, by reopening the assessments of the years 1956-57 to 1959-60. But even before this order was passed, the first defendant-company sold away all its immovable properties in favour of the second defendant under exhibit B-1 on February 27, 1961, for Rs. 1, 30, 000 and also sold all its movable properties and goodwill in favour of the second defendant-firm for Rs. 40, 000 on March 2, 1961. It is in these circumstances that this suit was instituted for the reliefs indicated above Though the suit is purported to be one under section 53 of the Transfer of Property Act and though the plaintiffs, Union of India, was given permission to sue on its behalf and on behalf of the creditors of the first defendant-company, the plaint allegations do not make out necessary averments to bring the case within the scope of section 53 of the Transfer of Property Act. In paragraph 10, it is alleged that the sale of the assets of the first defendant-company in favour of the second defendant-firm was made mainly with a view to defeat and delay the claims of the plaintiff and to place the properties beyond the reach of the just and lawful creditors of the first defendant-company. In paragraph 10, it is alleged that the sale of the assets of the first defendant-company in favour of the second defendant-firm was made mainly with a view to defeat and delay the claims of the plaintiff and to place the properties beyond the reach of the just and lawful creditors of the first defendant-company. In paragraph 12, which deals with the sale of movables, no doubt there are allegations to the effect that the sale was made with intent to defeat and delay the creditors of the first defendant-company and to place the movable properties beyond the reach of the creditors. In paragraph 16 it is alleged that the sales of movaable and immovable properties were sham and colourable transactions not intended to convey title to the second defendant-firm. It is further alleged that even if it is assumed that they are valid transfers, they have been brought about collusively and fraudulently with a view to deprive the plaintiff and other creditors, if any, and to benefit the individual director shareholders of the first defendant-company. It is in the light of these allegations that the trial judge has also recorded his finding. In paragraph 40 of his judgment, he has referred to several circumstances and observed that those circumstances "clearly lead anyone to an irresistible conclusion that these transfers of the assets of the first defendant-company in favour of the second defendant-firm were effected foreseeing and anticipating the additional levy of income-tax by the plaintiff and with a view to defeat the claims of the plaintiff ". Again, in the same paragraph, the trial judge has observed" Hence, the predominant intention in suddenly effecting a transfer in favour of the second defendant-firm was not to discharge the liabilities of the first defendant-company but only to keep the assets out of the reach of the plaintiff." * At the concluding portion of that paragraph it is further observed "So the plaintiff has proved by placing clear evidence and by indicating by clear circumstances that the prima facie intention of the first defendant was to defeat and delay the claim of the plaintiff in transferring the immovables under exhibit B-1 and the movables under exhibit B-3 in favour of the second defendant-firm." * Mr. Thiruvenkatachari, appearing for the appellants, contested the correctness of the above finding and urged that the sale was effected by the first defendant-company in favour of the second defendant-firm, as the second defendant-firm had a right of pre-emption in the immovable properties of the first defendant-company, that even before the income-tax department thought of reopening the matter with regard to the set-off, the board of directors had passed a special resolution to dispose of all the properties and that, therefore, no fraudulent intention could be attributed, to the first defendant-company in effecting the sales of its properties. Before adverting to this aspect, upon which the counsel placed reliance, we shall refer to the evidence on the basis of which the trial judge has come to the conclusion that the sales were effected fearing that the income-tax department was going to levy income-tax. In August, 1960, the first defendant-company preferred a revision to the income-tax department with regard to an order of assessment for the year 1959-60. Exhibit A-4 is the revision petition filed on behalf of the first defendant-company by its auditor, Sethuraman, D.W. 1. This auditor was a permanent representative of the first defendant-company as well as the second defendant-firm in all matters relating to income-tax. In connection with the said revision petition the Income-tax Officer, P.W. 1, had discussion with D.W. 1, the representative of the first defendant-company. The evidence of P.W. 1 is that on December 17, 1960, he discussed this matter with D.W. 1 and told him that he was going to reopen the matter and take action under section 34 of the Income-tax Act. On the side of the plaintiff, evidence has been let in to show that after such meeting, D.W. 1, along with the directors of the first defendant-company, who were also partners of the second defendant-firm, hatched up a conspiracy, by which the properties of the first defendant-company were placed in the name of the second defendant-firm so that in the event of an order of assessment being made, it may become fruitless and not realisable. D.W. 1 admits having me to P.W. 1 on December 17, 1960. But he denies that at that time P.W. 1 told him that action under section 34 of the Income-tax Act was going to be taken. D.W. 1 admits having me to P.W. 1 on December 17, 1960. But he denies that at that time P.W. 1 told him that action under section 34 of the Income-tax Act was going to be taken. On this aspect, the trial judge, who had occasion to see these witnesses, has chosen to place reliance upon the evidence of P.W. 1 and disbelieved D.W. 1. We have gone through the material evidence and we are satisfied that the conclusion of the trial judge is fully warranted. It is true that P.W. 1 did not record in writing anywhere that he had told D.W. 1 on December 17, 1960, that he was going to take action under section 34. But, soon after that meeting, P.W. 1 had to write to the Commissioner of Income-tax, Madras, in connection with the revision petition, exhibit A-4. Exhibit A-28 dated December 22, 1960, is the letter written in that connection. In that letter, P.W. 1 stated that he was enclosing the relevant file for perusal of the Commissioner and further stated that after receipt of the records back, action under section 34 would be taken. After he got back the relevant records, he put up the notes, exhibit A-55, on March 1, 1961, directing the office to issue notice under section 34 to the first defendant-company. In pursuance of that direction, the office put up the prescribed notices, exhibits A-6 to A-9, which P.W. 1 signed on March 7, 1961. It is contended on behalf of the appellants that neither in exhibit A-28 nor in exhibit A-55 nor in exhibits A-6 to A-9 there is an indication that P.W. 1 had already told D.W. 1 on December 17, 1960, that action under section 34 of the Income-tax Act would be taken, and that, therefore, the evidence of P.W. 1 in this regard cannot be believed. We are unable to accept this argument. As already pointed out, even on December 22, 1960, P.W. 1 informed the Commissioner of Income-tax that action under section 34 would be taken. He could issue notice only after the records were received back from the Commissioner and it was not necessary on his part to state either in exhibit A-55 or exhibits A-6 to A-9 that he had already told D.W. 1 that action under section 34 of the Income-tax Act would be taken. He could issue notice only after the records were received back from the Commissioner and it was not necessary on his part to state either in exhibit A-55 or exhibits A-6 to A-9 that he had already told D.W. 1 that action under section 34 of the Income-tax Act would be taken. The question is one of inference to be drawn from the probabilities of the case. Inasmuch as D.W. 1 admittedly had a discussion with P.W. 1 on December 17, 1960, and as P.W. 1 had already noticed that the action of his predecessor in allowing set-off was improper and also as D.W. 1 was a permanent representative of the first defendant-company in all matters relating to income-tax, it is quite likely that P.W. 1 discussed this matter with D.W.1 and told him what he felt and what he was going to do with regard to the matterThe activities of the first defendant-company after December 17, 1960 are consistent with the case of the plaintiff that it was as a result of the discussion between P.W. 1 and D.W. 1 on December 17, 1960, that steps were taken to effect sales of all the properties of the first defendant-company. It is true that the second defendant-firm had a right of pre-emption in the immovable properties of the first defendant-company. But that right was not insisted upon when the company, by a resolution dated June 4, 1960, decided to sell the assets of the first defendant-company in public auction with minimum auction price of Rs. 1, 51, 009 (vide the resolution, exhibit B-51). D.W. 3 is one of the partners of the second defendant-firm and also one of the managing directors of the first defendant-company. It was at his instance that the second defendant-firm appears to have sent the letter, exhibit B-8, dated January 10, 1961, making a reference to the proposal of the first defendant-company to sell away the properties of the company in public auction and drawing attention to the right of pre-emption of the second defendant-firm in the properties. The first defendant-company was requested to consider that matter and arrange to sell the lands to the second defendant-firm. The first defendant-company was requested to consider that matter and arrange to sell the lands to the second defendant-firm. On receipt of this letter, the board of directors of the first defendant-company resolved on January 27, 1961, to cancel the earlier resolution passed on June 4, 1960, in and by which the properties were proposed to be sold in public auction with a minimum price of Rs. 1, 51, 000 and further resolved to sell the properties of the first defendant-company to the second defendant-firm at a reasonable market price to be fixed by an expert valuer and a qualified engineer. In pursuance of this resolution, the first defendant-company appointed one Jawahar, an engineer, to estimate thevalue of the properties of the first defendant-company. The said engineer gave his report, exhibit B-10, dated February 21, 1961, valuing the lands at Rs. 18, 775 and the buildings at Rs. 99, 636. Certain properties belong in common to the first defendant-company and the second defendant-firm. The engineer valued those properties at Rs. 39, 057. In post haste after receipt of this report, a general body meeting of the first defendant-company was held on February 24, 1961, resolving to sell the lands and buildings inclusive of the first defendant-company's share in Rajapalayam Cotton Pressing Factory to the second defendant-firm for Rs. 1, 30, 000. It was also resolved to dispose of the assets and share in the properties and goodwill in Rajapalayam Cotton Pressing Factory for a sum of Rs. 40, 000 in favour of the second defendant-firm. This resolution, as already noticed, was passed on February 24, 1961. The impugned sale was effected on February 27, 1961 (exhibit B-1) for Rs. 1, 30, 000 and the sale of the movables themselves appears to have been effected on that day, though the receipt, exhibit B-3, is dated March 2, 1961. These dates speak for them selves, and the only irresistible inference possible in the circumstances is that the matter was rushed through anticipating the reopening of the assessment orders under section 34. There was no pressure from any creditor for payment of his dues. The claim of the second defendant in regard to pre-emption appears to have been made use of as a cloak to push through the transaction. There was no pressure from any creditor for payment of his dues. The claim of the second defendant in regard to pre-emption appears to have been made use of as a cloak to push through the transaction. The admission of D.W. 1 is that he met D.W. No. 1 on December 28, 1960, and that at that time D.W. 3 told him about his meeting P.W. 1 on December 17, 1960, though he denies that at that time D.W. 1 told him about the possible action under section 34 of the Income-tax Act. The circumstances can lead to only one conclusion, namely, that at the time of that meeting D.W. 1 apprised D.W. 3 of the impending danger with regard to levy of heavy amount of income-tax consequent on the reopening of the matter which P.W. 1 had contemplated. The trial judge, who had occasion to see P.W. 1 and D.W. 1 in the witness box, has characterised D.W. 1 as not willing to speak the truth unless his attention was drawn to documentary evidence. We also see no circumstance to doubt the veracity of P.W. 1 who has no axe to grind in this case. All the subsequent events clearly show that the matter was pushed through in indecent haste anticipating an order of assessment of income-taxIn the sale deed, exhibit B-1, all the immovable properties are described without giving separate value. But at the end of the document it is stated that the value of agricultural lands is Rs. 31, 000. The suggestion made on behalf of the plaintiff-Union is that this value was given as against the total sale consideration of Rs. 1, 30, 000 with a view to see that the value of the buildings was brought down below Rs. 1 lakh, so that the registration officer would not insist upon the production of a wealth-tax certificate with regard to the buildings. As against this, it is contended for the defendants that, with effect from the financial year commencing from April 1, 1960, no wealth-tax was chargeable in respect of the net wealth of a company and that, therefore, the motive attributed to the first defendant-company in mentioning the value of the lands as stated above is not warranted. We have already noticed that the engineer, Jawahar, assessed the value of the lands only at Rs. 18, 775. This value was made on February 21, 1961. We have already noticed that the engineer, Jawahar, assessed the value of the lands only at Rs. 18, 775. This value was made on February 21, 1961. It is not the case of the first defendant company that subsequent to that report any additional land was acquired. It is not also the case of the first defendant-company that the engineer under-estimated the value of the lands. Consciously or otherwise, the persons responsible for effecting the sale appear to have thought that, if the value as given by the architect as regards the lands was to be accepted, then the value of the buildings would exceed Rs. 1 lakh and that an occasion may arise for approaching P.W. 1 for issuing a certificate with regard to the buildings. It is with this consciousness that an artificial recital is made in the sale deed as regards the value of the agricultural properties which value is not warranted by the evidence on record. This again is a circumstance that goes to show that persons responsible for bringing about the sale wanted to keep P.W. 1 in darkness about the efforts that were being taken to sell away the propertiesMr. Thiruvenkatachari, appearing for the appellants, wanted us to draw the inference that the directors of the first defendant-company had no bad faith in executing the sales in question. In support of this argument he placed reliance upon the resolution of the board of directors passed on April 28, 1960, for selling the properties in public auction. That was followed by a special resolution of the general body on June 4, 1960, to the same effect. The argument was that this step had to be taken by the first defendant-company as it found that it could not wipe off its debts without selling its assets. The argument was that from this circumstance it is reasonable to infer that in effecting the sales in question no bad faith could be attributed. It is true that no circumstance of mala fide was present at the time when the directors passed the resolution on April 28, 1960, and when the general body passed the special resolution on June 4, 1960, for selling the assets of the company in public auction with a minimum auction price of Rs. 1, 51, 000. It is true that no circumstance of mala fide was present at the time when the directors passed the resolution on April 28, 1960, and when the general body passed the special resolution on June 4, 1960, for selling the assets of the company in public auction with a minimum auction price of Rs. 1, 51, 000. We have already noticed that the important partners of the second defendant-firm were also directors of the first defendant company and they were also parties to those resolutions. At that time, those persons did not think it worth while to put forward the claim for pre-emption which no doubt the second defendant-firm had in the immovable properties. Though the special resolution was passed in June, 1960, no action was taken to implement the resolution. D.W. 3, who was one of the directors of the company, when questioned about this matter, gave no explanation. The matter was allowed to lie over without any action being taken. That was presumably because no creditor made a demand for payment of his dues. Therefore, the mere fact that a special resolution had been passed even in June, 1960, for selling away the properties in public auction would not by itself take away the infirmities that are attached to the sales in questionThe contention urged on behalf of the plaintiff, Union of India, is that the properties of the first defendant-company were worth nearly about Rs. 3 1/2 lakhs and that the said properties have been sold away for inadequate consideration for Rs. 1, 30, 000. In support of this contention, reliance is placed upon exhibit A-59, which is a report submitted by one Sankara Iyer, a retired engineer, on behalf of the South Indian Bank Ltd., the 14th defendant, to whom the second defendant-firm applied for a loan after getting a sale of the properties of the first defendant-company. In that report, Sankara Iyer estimated the value of the properties at Rs. 3, 48, 727. Sankara Iyer was not examined though he was available to give evidence. A clerk of the 14th defendant-bank gave evidence as P.W. 2. He proved the signature of Sankara Iyer in exhibit A-59 and stated that he accompanied the said engineer when the latter inspected the properties. But he admitted that he did not know on what particulars the engineer assessed the value. A clerk of the 14th defendant-bank gave evidence as P.W. 2. He proved the signature of Sankara Iyer in exhibit A-59 and stated that he accompanied the said engineer when the latter inspected the properties. But he admitted that he did not know on what particulars the engineer assessed the value. There is also nothing to show that he accompanied the engineer at the time of the inspection of the properties. As Sankara Iyer, though available, was not called, no weight could be attached to exhibit A-59 The defendants relied upon exhibit B-10, the report given by the engineer, Jawahar. Even that engineer was not called, though he was available to give evidence. D. W. 3 admits that at the time of the passing of the special resolution in June, 1960, the minimum auction price of Rs. 1, 51, 000 was fixed on the basis of the then prevailing market price of the properties. But still we find engineer, Jawahar, giving the value only at Rs. 1, 12, 461. We are aware that exhibit B-10, the report of Jawahar, was marked by consent. But by that consent it cannot be said that the contents were also accepted as true. D. W. 3 admits that the price of the lands and house has been going up. The properties, which were valued at Rs. 1, 51, 000 in June, 1960, had been sold away only for Rs. 1, 30, 000 in February, 1961. Though we are not in a position to state what would have been the probable market value at the time of the sales in question in February, 1961, we are definitely of the opinion that the properties have been sold for under-valueOut of the sale consideration of Rs. 1, 30, 000, the sale deed, exhibit B-1, recites that the second defendant-firm, the vendee, should pay Rs. 15, 191.65 to the 14th defendant in respect of a mortgage and that the balance, namely, Rs. 1, 14, 808.35, was already received in cash for discharging the other debts of the first defendant-company, thus in all making a sum of Rs. 1, 30, 000. After this sale, the first defendant-company has paid off its creditors as seen from the receipts, exhibits B-12 to B-48. These receipts cover a sum of Rs. 1, 63, 773.22. Exhibit B-1 is a receipt issued by the 14th defendant for Rs. 1, 30, 000. After this sale, the first defendant-company has paid off its creditors as seen from the receipts, exhibits B-12 to B-48. These receipts cover a sum of Rs. 1, 63, 773.22. Exhibit B-1 is a receipt issued by the 14th defendant for Rs. 15, 191.65, which is the amount undertaken by the second defendant-firm under exhibit B-1. Though the fact of the payment of several creditors is not disputed, the fact remains that not one of those creditors made a claim for payment of his dues by issuing the notice in writing. Most of the creditors were either relations or caste-men of the directors of the first defendant-company On the date of the sales in question, the second defendant-firm had not sufficient means to advance the cash of Rs. 1, 14, 808.35. The admission of D. W. 3 is that on February 24, 1961, there was no cash balance in the hands of the second defendant-firm. But he stated that the firm borrowed for the purpose of making up the consideration for exhibit B-1. His version is that he and his brothers paid Rs. 47, 000 to the second defendant-firm on February 25, 1961, and that D. W. 4 paid a sum of Rs. 30, 600, D. W. 4 also being one of the partners of the second defendant-firm. No doubt, there are entries in the accounts of the second defendant-firm (exhibits B-54 to B-57) in respect of the alleged payments. The suggestion made on behalf of the plaintiff-Union is that these are mere book entries without actual payment. But even on February 25, 1961, the second defendant-firm applied to the 14th defendant-bank for Rs. 1, 50, 000 and the same was sanctioned on February 26, 1961. It is, therefore, pertinently pointed out that if really D. Ws. 3 and 4 had given loans as they claimed to have given, it is unlikely that so soon thereafter the second defendant-firm would have been put to the necessity of applying for loan to the bank. 1, 50, 000 and the same was sanctioned on February 26, 1961. It is, therefore, pertinently pointed out that if really D. Ws. 3 and 4 had given loans as they claimed to have given, it is unlikely that so soon thereafter the second defendant-firm would have been put to the necessity of applying for loan to the bank. It is unnecessary to go further deep into this matter except to point out that, on the date of the sales in question, the second defendant-firm had no means to advance the large cashAs a part of the transaction relating to the sale of immovable properties of the first defendant-company, a sale of all the movables of the first defendant-company was also effected in favour of the second defendant-firm for Rs. 40, 000 as, evidenced by exhibit B-3. It is pointed out on behalf of the plaintiff-Union that as part of the scheme hatched upon by those in charge of the affairs of the company and the firm, they tried to see that the claim of the Union of India arising out of assessment of income-tax, which those persons had reason to expect to be passed, was defeated It appears that the book values of the lands, buildings and machinery of the first defendant-company were not properly evaluated and the company, on the advice of its auditors, appears to have revalued and made entries according to the revaluation. The Registrar of Companies drew the attention of the first defendant-company by his letter, exhibit B-5, dated February 6, 1969, and asked the company to state on what basis the machinery was revalued and how the appreciation in the value of lands and buildings was arrived at and why the said assets were not shown at the real value. In reply thereto, the company wrote exhibit B-7, on April 18, 1959, stating, inter alia, that the existing lands and buildings were revalued by a qualified engineer and that the values were arrived at by taking into consideration all the circumstances with regard to the then market value. It was further stated in that letter that a number of industries had since been started and the value of the buildings and lands had gone up very much and that still the appreciation was not shown at the real value as the same has been treated as the secret reserve of the company. It was further stated in that letter that a number of industries had since been started and the value of the buildings and lands had gone up very much and that still the appreciation was not shown at the real value as the same has been treated as the secret reserve of the company. The trial judge has adverted to this aspect and commented that the transactions which are impugned were affected by this secret reserve. D. W. 2 was questioned about this in a casual way in cross-examination when he referred to the letter, exhibit B-7, in which reference as to the treatment of the real value as secret reserve was made. The question was not pursued further and it was not elicited how the secret reserve was dealt with at the time of the sales in question. Therefore, we are unable to draw any adverse inference against the first defendant-company or the transferee, the second defendant-firm, merely from the reference to the secret reserve in exhibit B-7. The position comes to this, namely, that it is not proved that under the transactions in question, the transferor, the first defendant-company, retained any benefit for itself, though it may be that some of the directors of the first defendant-company may stand to be benefited inasmuch as they also happen to be partners of the second defendant-firm. But that by itself is not sufficient to hold that the transferor, the first defendant-company, has retained any benefit for itself under the transactions in questionWe have already adverted to the recital in the sale deed, exhibit B-1, that out of the sale consideration of Rs. 1, 30, 000, the vendor, the first defendant-company, had already received a sum of Rs. 1, 14, 808.35 for the purpose of discharging other debts of the first defendant-company. By the sale of the movables and goodwill, the first defendant-company got Rs. 40, 000. The evidence establishes that all the creditors of the first defendant-company were paid off. That fact is borne out by the receipts, exhibits B-11 to B-48, to which we have already made reference. The evidence of D. W. 3 shows that all the creditors of the first defendant-company were paid off. It was not suggested to him in cross-examination that any creditor remained to be paid In the above circumstances, what is the inference to be drawn as regards the impugned transactions ? The evidence of D. W. 3 shows that all the creditors of the first defendant-company were paid off. It was not suggested to him in cross-examination that any creditor remained to be paid In the above circumstances, what is the inference to be drawn as regards the impugned transactions ? We have no doubt whatsoever that the impugned sales were effected in a hurried manner anticipating an order of assessment of income-tax, which, in the circumstances, was likely to be in the region of several thousands. It was with the intention of defeating the possible claim that the transactions in question were concluded. We have no doubt in our mind that the transferee, the second defendant-firm, was also fully aware of the circumstances. But all the creditors of the first defendant-company were paid off, and as a matter of fact one of the main objects of the sales was to pay off those debts. On the evidence, we come to the conclusion that the sales in question were effected to defeat the possible claim of the Union of India, while at the same time the debtor, the first defendant-company, has paid off its other debts and did not reserve any benefit for itself. In these circumstances, the question is whether the Union of India is entitled to have the alienations impugned under section 53 of the Transfer of Property ActThe relevant portion of sub-section (1) of section 53 reads "53. (1) Every transfer of immovable property made with intent to defeat or delay the creditors of the transferor shall be voidable at the option of any creditor so defeated or delayed." * This part of the sub-section was introduced by the Amending Act of 1929 and prior to that Act, the relevant portion of section 53 read as follows "Every transfer of immovable property made with intent to defraud prior or subsequent transferees thereof for consideration or co-owners or other persons having an interest in such property or to defeat or delay the creditors of the transferor, is voidable at the option of any person so defrauded or delayed." * Thus, it would be seen that the first paragraph of the old section referred both to transfers which were in fraud of other transferees and to transfers made with intent to defeat and delay creditors. These two cases have now been separated, sub-section (1) referring to creditors and sub-section (2) to other transferees. What we are concerned with in the instant case is whether the impugned transfers fall within the scope of sub-section (1) of section 53. As we have already pointed out, both on the basis of the allegations in the plaint and the evidence, the conclusion to which the trial judge has rightly come, is that the sales were effected with a view to defeat the anticipated claim of the Union by way of income-tax. But the debtor, the first defendant-company, has satisfied the claims of the other creditors, by parting away with all its properties leaving nothing for the Union to recover the tax which would be subsequently assessed. In other words the debtor has preferred to pay off all other creditors with the intention of defeating an anticipated claim of the Union. The question is, can such a transaction be said to be one made with intent to defeat or delay the creditors of the transferor ? The answer could only be obviously in the negative. Dealing with the case of preference of a creditor by a debtor with intent to defeat another creditor, the judicial Committee in Nusahar Sahu v. Hakim Lal, observed at page 106 "As matter of law their Lordships take it to be clear that in a case in which no consideration of the law of bankruptcy or insolvency applies, there is nothing to prevent a debtor paying one creditor in full and leaving others unpaid although the result may be that the rest of his assets will be insufficient to provide for the payment of the rest of his debts. The law is, in their Lordships' opinion, rightly stated by Palles C.B. in In re Moroney, where he says ' The right of creditors, taken as a whole, is that all the property of the debtor should be applied in payment of demands of them or some of them, without any portion of it being parted with without consideration or reserved or retained by the debtor to their prejudice. It follows from this that security given by a debtor to one creditor upon a portion of or upon all his property, although the effect of it, or even the interest of the debtor in making it, may be to defeat an expected execution of another creditor, is not a fraud within the statute because notwithstanding such an act, the entire property remains available for the creditors or some or one of them, and as the statute gives no right to rateable distribution, the right of the creditors by such act is not invaded or affected.' " Again at page 107, it is observed " The transfer which defeats or delays creditors is not an instrument which prefers one creditor to another, but an instrument which removes property from the creditors to the benefit of the debtor. The debtor must, not retain a benefit for himself. He may pay one creditor and leave another unpaid (Middleton v. Pollock.) So soon as it is found that the transfer here impeached was made for adequate consideration in satisfaction of genuine debts, and without reservation of any benefit to the debtor, it follows that no ground for impeaching it lies in the fact that the plaintiff who also was a creditor was a loser by payment being made to this preferred creditor there being in the case no question of bankruptcy." * In Ma Pwa May v. S. R. M. M. A. Chettiar Firm, the validity of a transfer by way of mortgage in favour of a creditor arose for consideration with reference to the provisions of section 53 of the Transfer of Property Act. It is pointed out that the mortgage having been executed for adequate consideration, being partly in discharging of a genuine debt, no benefit being retained by the mortgagor, was not invalid under section 53 of the Transfer of Property Act, as being made to defeat or delay creditors, even though the mortgagor, who was heavily indebted, thereby preferred the mortgagee over other creditors In Mina Kumari Bibi v. Bijoy Singh Dudhuria, the debtor effected sale of his property a day prior to the attachment in execution of a money decree. The decree-holder hereof became the purchaser in execution. The prior purchaser at private sale sued for possession. The decree-holder hereof became the purchaser in execution. The prior purchaser at private sale sued for possession. The decree-holder, purchaser, resisted the suit contending that the private sale was invalid under section 53 of the Transfer of Property Act. Sir Lawrence Jenkins, delivering the judgment of the Board, observed "A debtor, for all that is contained in section 53 of the Transfer of Property Act, may pay his debts in any order he pleases and perfer any creditor he chooses In Thaher Unnisa Begum v. Sherfunnissa Begum, Panchapakesa Ayyar J. had to consider the effect of section 53 in an execution proceeding filed by a decree-holder in the course of which a claim was put in on the ground of an alleged transfer. The learned judge pointed out that section 53 would come into operation only when a suit is instituted by a creditor for avoiding a transfer by the debtor. In the course of the discussion, he observed" * Section 53 will apply only when the transfer is made with intent to defeat and delay the creditors of the transferor, and not one single known creditor and that one the executing decree-holder." In Mohideen Tharagan v. Muhammad Mustappa Rowther, Ananthakrishna Ayyar J. has elaborately dealt with the principles applicable to a case arising under section 53. The learned judge has pointed out that if the transfer is for valuable consideration and is made with the full intention that the title in the property should pass to the transferee, and if no benefit be intended to be retained by the transferor, the transfer would be valid as against an attaching creditor even though the object of the transfer might have been to defeat an impending execution. If the transfer is for cash and is made to a stranger who had knowledge of the intention of the transferor to convert the immovable property into money and to defeat the creditors of the transferor, then the transfer would be invalid. If the transfer is for cash and is made to a stranger who had knowledge of the intention of the transferor to convert the immovable property into money and to defeat the creditors of the transferor, then the transfer would be invalid. If the transfer is in favour of an existing creditor, to whom the transferor already owed money, then even though the transferee had notice that the effect of the transfer would be to remove the property from the reach of the other creditors, the transfer would nevertheless be valid and not open to objection under section 53, since it is open to every creditor to try his best to realise his debt from the common debtor. Ordinarily, in the race between the creditors he who lags behind could not complain of him who proceeded fast and succeeded in getting at the property of the debtor. In this case, the transferee, namely, the second defendant-firm, was not a creditor of the first defendant-company. But that does not make any difference, because the sale was effected among other things, for the purpose of discharging all other debts payable by the first defendantcompany. Though it is not a case of alienation in favour of an existing creditor, still in principle it does not make any difference so far as the paintiff-Union is concerned, as the sale was effected for the purpose of discharing other debts and with the deliberate motive of defeating the claim of the Union that may arise as a result of the reopening of the assessment proceedings. Sub-section (1) of section 53 expressly saves the application of the law of insolvency. The object of the law of insolvency is to provide for an equal distribution of assets among the creditors, and the provisions are, therefore, more stringent. A preference to one creditor which would be valid under section 53 of the Transfer of Property Act would, if the debtor were adjudged insolvent within three months, be deemed fraudulent under section 56 of the Presidency Towns Insolvency Act or section 54 of the Provincial Insolvency Act. Similarly, a voluntary transfer may be set aside under those Acts if the transferor is adjudged insolvent within two years, although it may not offend against section 53 of the Transfer of Property Act. Similarly, a voluntary transfer may be set aside under those Acts if the transferor is adjudged insolvent within two years, although it may not offend against section 53 of the Transfer of Property Act. A transfer by a debtor of all his property to a particular creditor is not necessarily voidable under section 53, even though under the insolvency law it may operate as a fraudulent transfer or a fraudulent preference. The cases of fraudulent preference falling under the insolvency Acts must be distingunished from those falling under section 53 of the Transfer of Property ActFor the foregoing reasons, we are of the opinion that the Union of India, the plaintiff in this case, is not entitled to any relief under section 53 of the Transfer of Property Act. In the result, the decree of the trial court is set aside and the suit shall stand dismissed. In the circumstances of this case, we direct the parties to bear their respective costs in both the courts This appeal was admitted subject to the determination of the question, as to the correct amount of court-fee payable. In the trial court, the plaintiff valued the suit under section 40 of the Madras Court-fees and Suits Valuation Act, 1955, and paid court-fee accordinly as if this is a suit for cancellation of the sale deeds in question. But, subsequently the provision of law was changed as section 25(d) but the amount of court-fee was not changed. In appeal, the appeal memorandum has been under section 50, which deals with payment of court-fee in suits not otherwise provided for. That such a suit falls under section 50 decided by this court in Union of India v. Arunachalam. We hold that the court-fee paid on the appeal memorandum is correct. But this does not, however, affect our direction already given above, namely, that the parties shall bear their own costs in both the courts.