Judgement

Appeal (No. 40 of 1943) from a judgment and decree of the High Court (November 9, 1938) which affirmed a judgment and decree of the Civil Judge of Aligarh (December 14, 1936).

The following facts are taken from the judgment of the Judicial Committee One Seth Kashi Nath obtained a decree (in suit No. 42 of 1930) against the present respondents Nos. 2, 3 and 6, and one Lala Sagarmal. Lala Sagarmal died, and his sons, the present respondents Nos. 4 and 5, were substituted for him on the record in the present suit. The respondent No. 6 had been declared insolvent and the Official Receiver, Aligarh, was also brought on the record in the present suit. (For convenience the original defendants to suit No. 42 of 1930 or those representing their interests from time to time will all be included in the words "the debtors".) Seth Kashi Nath having obtained his decree applied to attach certain immovable property as being the property of the debtors and liable to be sold in execution of the decree. He was met by an objection filed on behalf of the present appellants claiming the property as trustees under a deed of May 25, 1929. The objection was allowed. Thereupon Seth Kashi Nath commenced the suit in which this appeal arose, claiming a declaration that the property was liable to be attached and sold in satisfaction of his decree. To that suit he joined the present appellants as co-defendants with the debtors. By his plaint he alleged that the said deed was a collusive and fraudulent document. He also alleged that it had not been registered. By their written statement the appellants alleged that there was no necessity for the deed to be registered, and that the plaintiffs allegation as to want of registration had no effect.

The deed in question was a composition deed by which the debtors conveyed assigned and transferred to the appellants (therein called the trustees) (1.) the lands, hereditaments and premises described in the 1st Schedule thereto, (2.) the shares and other personal properties the particulars whereof were con tained in the 2nd Schedule thereto, and (3.) all other the property of the debtors and-each of them except the property described in the 3rd Schedule thereto, upon trust for sale and conversion, the proceeds to be divided among the “creditors" (as therein defined) of the debtors as therein provided, and the surplus (if any) to be paid to the debtors. The deed contained powers and provisions commonly found in a composition deed which creates a trust of property for the benefit of creditors.

The point at issue was whether by reason of s. 17 of the Registration Act, 1908, the deed of May 25, 1929 (hereinafter called the said deed), was exempt from any requirement to be registered, notwithstanding that s. 5 of the Trusts Act, 1882, enacts that no trust in relation to immovable property is valid unless registered.

The trial judge decreed the suit, holding that the said deed was a collusive document, and was not binding on Seth Kashi Nath. The appellants appealed to the High Court. Pending the hearing of the appeal Seth Kashi Nath died. His son (the present respondent No. 1) was substituted for his father on the record. The High Court (Allsop and Bajpai JJ.) held on September 26, 1935, that the said deed, not having been registered in accordance with s. 5 of the Trusts Act, 1882, was invalid. The appellants, however, had applied to be allowed to amend their written statement, and to plead that the defect due to non-registration had been cured by the registration of a document dated June 6, 1929, and the High Court made an order on September 26, 1935, (1.) setting aside the decree of the court below, and (2.) remanding the case to that court to dispose of it after hearing argument and any relevant evidence as to the effect of the registered document of June 6, 1929. The case was then heard before the Civil Judge, who held that the registered deed did not cure the defect. He accordingly, by decree dated December 14,