A family arrangement transferring ancestral property to a grandson with the father's consent and valuable consideration is not a fraud on creditors. Furthermore, a gift to a class including unborn persons does not invalidate the gift to a designated person capable of receiving it.

Judgement

APPEAL from a decree of the High Court (March 11, 1880) reversing a decree of the Subordinate Judge of Benares (June 28, 1879).

The suit was instituted on the 17th of February, 1879. Its nature, and the circumstances out of which it arose, appear in the judgment of their Lordships.

The material part of the judgment of the lower Court is as follows— "It is an admitted fact that the immoveable property in suit was the ancestral estate of Mata Dyed Singh. By the law of the Mitakshara, the Defendant Udey Narain Singh, his son, had his right in it from his very birth, and was the person who, after the death of his father, Mata Dyal Singh, would have had the sole proprietary right to it. Even while the latter was alive Udey Narain Singh had, under certain conditions, the right to have the property partitioned with him. Under the same law, Mata Dyal Singh had no right to transfer such ancestral property without the consent of his son, the Defendant Udey Narain Singh. The object of the gift made by Mata Dyal Singh to his minor grand son, Satrujit Narain Singh, the son of the Defendant Udey Narain Singh, is avowed in its deed to be to protect the estate from the consequences of the extravagance of Udey Narain Singh. This, in other words, is to save the estate from the demands of his creditors. This the Court holds to have been bad faith in the transfer made by gift. Mata Dyal Singh had no right to make the transfer without the consent of Udey Narain Singh. It is said the latter gave his consent to it. But such giving of consent while there was bad faith in the transfer, i.e., to injure the creditors of Udey Narain Singh, had not the effect of rendering valid the gift. It is further said that in giving the consent Udey Narain Singh took Rs. 5000 from his father and gave up all his rights in the estate, and then paid up some of his creditors with the said sum. But this payment of Rs. 5000 to Udey Narain Singh does not save the gift from the taint of fraud. The debts, for which the Plaintiff obtained his aforesaid decree, dated the 26th of April, 1877, against the Defendant Udey .Narain Singh, had been incurred in 1874, i.e., before the execution of the disputed deed of gift. It is, the Court holds, a fraud against the Plaintiff that the Defendant Udey Narain Singh gave his consent, without which the transfer by gift could not have been effected, and gave up all his rights in the estate without discharging the whole debt due to the Plaintiff. It is admitted by the latter that in 1931 and 1932 Sambat he received Rs. 900 from Udey Narain Singh, in payment of debt due to himself. It is alleged on the part of the lady Defendant that this sum was a part of the Rs. 5000 received by Udey Narain Singh on the occasion of the execution of the deed of gift from his father, and it is accordingly pleaded that the act of the Plaintiff in taking the said sum of Rs. 900 amounted to his accepting the validity of the said gift.

But, as has been above observed, there is no reliable proof of the Plaintiff having had knowledge of the particulars of the gilt before the year 1878. And if he received the said Rs. 900 without such knowledge, that does not go to shew that he accepted the validity of the gift. There being, therefore, fraud in the gift, inasmuch as it was effected with the bad motive of preventing the creditors of Udey Narain Singh from realizing their demands from the estate in dispute, the Court holds the gift made to Satrujit Narain Singh to be invalid; and as a consequence, the right the Defendant Mussumat Asmaida Koer claims to the estate as the heiress of Satrujit Narain Singh, deceased, to be equally invalid. There are papers produced in this case to shew that, subsequently to the gift, affairs connected with the estate were carried on in the name of Mussumat Asmaida Koer, as guardian of the minor donee, Satrujit Narain Singh, and after the death of the latter in her name, as being the proprietor of the estate by right of inheritanc