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1930 Supreme(SC) 82
PRIVY COUNCIL [ON APPEAL FROM THEEAST INDIES]
LORD ATKIN, LORD RUSSELL OF KILLOWEN, AND SIR JOHN WALLIS.
OFFICIAL RECEIVER - Appellant
Versus
P. L. K. M. R. M. CHETTYAR FIRM - Respondents
On Appeal from the High Court at Rangoon.
Decided On : Nov. 25. 1930.
Solicitors for appellant:Cutler, Allingham & Ford. Solicitors for respondents: Bramall & Bramall.
The burden of proof to annul a transfer under Section 53 of the Provincial Insolvency Act, 1920, lies with the Official Receiver to prove the transfer was not made in good faith and for valuable consideration. Registration is valid if the executant presents the document.
Headnote:(A) Provincial Insolvency Act, 1920 - Section 53 - Voidable transfers - Onus of proof - Any transfer of property made within two years before the transferor is adjudged insolvent is voidable as against the Receiver unless made in good faith and for valuable consideration - The burden of proving that a transfer was not made in good faith and for valuable consideration lies upon the Official Receiver and not upon the transferee.
(B) Registration Act - Section 32 - Presentation of documents - A document is duly presented for registration if presented by a person executing the same - An endorsement by the registering officer stating that the document was presented by the executant for another party does not invalidate the registration if the executant actually presented it - Such wording is mere surplusage and the real facts of presentation can be proved by evidence to override an inaccurate endorsement.
Facts of the case:
In insolvency proceedings of a husband and wife, the Official Receiver sought to annul a registered mortgage and challenge promissory notes, alleging they were fraudulent and without genuine consideration. The District Court disallowed the claims, finding the transactions suspicious. The High Court reversed this decision, holding the transactions were genuine. The matter was appealed to the Privy Council on the issues of the burden of proof and the validity of the mortgage registration.
Findings of Court:
The transaction was found to be a genuine mortgage for value, supported by the books of accounts of the mortgagee which showed the accumulation and advancement of funds. The registration was held to be valid as the document was presented by the executant, regardless of the specific wording in the sub-registrar's endorsement.
Issues: Whether the onus of proving that a transfer was not made in good faith and for valuable consideration under Section 53 of the Provincial Insolvency Act lies on the transferee or the Official Receiver; and whether a mortgage is invalidly registered if the endorsement indicates it was presented by the mortgagor for the mortgagee.
Ratio Decidendi: The court held that the burden of proof under Section 53 of the Provincial Insolvency Act rests with the Official Receiver to establish that the transfer was not bona fide. Regarding registration, Section 32 of the Registration Act is satisfied if the executant presents the document; an inaccurate endorsement by the sub-registrar does not invalidate the registration if the actual fact of presentation by the executant is proved.
Result: Appeal fails.
Legal Category Hierarchy
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insolvency law
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voidable transfers
- fraudulent transfers
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voidable transfers
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property law
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registration
- presentation of documents
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registration
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practice and procedure
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evidence
- burden of proof
- account books
-
evidence
Judgement
Appeal (No. 6 of 1930) from a decree of the High Court (April 11, 1929) reversing a decree of the District Judge at Hanthawaddy (September 17, 1928).
The appeal arose in proceedings under the Provincial Insolvency Act, 1920, in the insolvencies of Maung Ba Than and Ma Ngwe Tin, his wife.
The respondents were included in the schedule of debts framed under s. 33 of the Act in respect of debts for Rs.30,000 under a mortgage deed of July 7, 1927, Rs. 10,000 under a promissory note of the same date, and a further Rs. 10,000 upon a promissory note of October 16, 1927.
The Official Receiver applied to the District Court under s. 53 of the Act to annul the mortgage, alleging that it was without genuine consideration and fraudulently created.
The petitioning creditor also applied challenging all three debts upon the same ground, but the application as to the promissory note of October 16, 1927, was not proceeded with.
The facts appearing from the evidence, and the terms of s. 53 of the Act, are stated in the judgment.
The evidence was heard in the District Court at various dates between June 16 and September 12, 1928, partly by one District Judge and partly by his successor, who delivered judgment disallowing the claim to prove in respect of the Rs.30,000 debt on the mortgage and the Rs. 10,000 debt on the promissory note. On appeal the High Court (Heald and Mya Bu JJ.) reversed the decision. Both Courts had treated the onus of proof as being on the present respondent; and both had rejected a contention that the mortgage deed was not duly presented for registration and was therefore inadmissible in evidence.
1930. Nov. 24, 25. Hon. Geoffrey Lawrence K.C. and R. W. Leach for the appellant. The evidence called by the respondents contained so many inconsistencies that the District Judge, who saw all the witnesses though he did not hear the whole case, was justified in disbelieving the whole story as to the alleged transaction of July 7, 1927. The grounds upon which the High Court reversed his decision were inadequate. The respondents have throughout accepted the burden of proof and cannot now contend that it was not upon them. Further, the mortgage was not duly registered. The endorsement stated that it was presented by the mortgagor for the mortgagee. In the absence of a power-of-attorney authenticated under s. 33 of the Registration Act the registration was invalid Jambu Parshad v. Muhammad Aftab Ali Khan . (( 1914) L. R. 421. A. 22.)
Dunne K.C. and A. M. Talbot for the respondents. Upon the evidence, and apart from the question of the onus of proof, the decision of the High Court was right. The respondents agent swore to the advances and produced the books of the firm which were open to investigation for a period of over two months while he was still under cross-examination; but his evidence was unshaken and no error was shown in the books. No ground was suggested for suspecting collusion with the insolvents. But upon the true construction of s. 53 of the Provincial Insolvency Act, 1920, the onus of proving that the mortgage was not made in good faith and for valuable consideration was upon the Official Receiver ; it is not too late to rely upon that contention.
[Lord Taken referred to Official Assignee of Madras v. Sambanda Mudaliar . (( 1920) I. L. R. 43 M. 739.)]
Sect. 53 is in the same terms, so far as the material words are concerned, as s. 50 of the Bankruptcy Ordinance of the Straits Settlements, and in Official Assignee v. Khoo Saw Chow (Since reported [ 1931] A. C. 67.) the Board recently held, affirming the view in the Straits Settlements, that the onus was upon the Official Assignee.
The registration was valid. Sect. 58 of the Registration Act does not require that the endorsement shall state who presented the document; the words relied on were mere surplusage. Sect. 60 only makes the endorsement evidence of the facts stated in it, and the registering officer stated in his evidence in these proceedings that the
