1961 Supreme(AP) 39

Andhra Pradesh High Court
Judges : CHANDRASEKHARA SASTRI, P.CHENNAKESAVA REDDY
Nandigam Ramarao - Appellant
Versus
Burugupalli Srikrishnamurthi - Respondent
Decided On : 02-27-61

The date of transfer of property for the purpose of Section 53 or Section 54 of the Provincial Insolvency Act is the date on which the document purporting to transfer property is registered and not the date on which it was executed.

Headnote:

PROVINCIAL INSOLVENCY ACT, 1920 - SECTION 53 - RELINQUISHMENT DEED - AVOIDANCE - TRANSFER OF PROPERTY - DATE OF TRANSFER - REGISTRATION ACT, 1908 - SECTION 47 - SECTION 75(3) - SECTION 77(2) - INTERPRETATION.

Fact of the Case:

The plaintiffs filed a suit for a declaration that they are entitled to a sum of Rs. 3,089-9-6 being the value of the crops in the plaint schedule lands realised by the Receiver appointed in O. S. No. 432/53 on the file of the Additional District Munsif's court Eluru, and to issue a permanent injunction restraining the defendant from drawing the said amount from court or from the Receiver. The two other suits, i. e, O. S. No. 22/55 and O. S. No. 51/55 were filed by the plaintiffs to set aside the claim order passed in E. P. No. 558/54 on the file of the District munsif's court, Rajahmundry and the claim order in I. A. 1642/53 in E. P. NO 366/53 IN O. S. No. 478/52 on the file of the District Munsif's court Eluru disallowing their claim for the plaint schedule properties. I. A. 873/56 in I. P. 8/55 isthev application filed by the official Receiver, West Godavari for the annulment of the relinquishment deed dated 7-10-1952 which was registered on 1-12-1954 executed by the 2nd defendant in favour of the plaintiffs on the ground that it was brought into existence fraudulently with the object of delaying and defeating the rights of the general boby of the creditors of the 2nd defendant and to put the property of the insolvent beyond the reach of these creditors.

Finding of the Court:

The court held that the relinquishment deed, Ex. A-1 was executed on the basis that the sale deed, Ex. B-2 executed in favour of the 2nd defendant is a benami one and thata the real owners of the suit lands are the plaintiffs. The court found that the case of benami set up by the plaintiffs is not proved and that the 2nd defendant himself is the real purchaser under Ex. B-2 and had title to the suit properties. It must therefore necessarily follow that the recitals in Ex. A-1 are all false and were introduced in order to make it appear that the property belonged to the plaintiffs even from the date of Ex. B-2. The falsity of the recitals in this relinquishment deed it a large extent established that Ex. A-1 is a fraudulent one intended to defraud the creditor of the 2nd defendant. No consideration was paid by the plaintiffs under it. they only undertook to discharge a few debts contracted by the second defendant and even if they discharged any of the debts mentioned therein, the plaintiffs cannot be said to be the purchasers in good faith or for valuable consideration. The document itself does not purport to be for any valuable consideration. The court also held that the transfer evidenced by the relinquishment deed, Ex. A-1 was effected only on 1-12-54 when it was actually registered and that it could be avoided under Section 53 of the Provincial Insolvency Ac t as the Insolvency Petition was filed on 25-2-55 i. e. , within two years from the date of the transfer sought to be avoided.

Issues: 1. Whether the sale deed, dated 19-12-50 a certified copy of which is marked as Ex. B. 2 in these suits, is benami for the benefit of the plaintiffs and whether the plaintiffs have title to and possession of the suit property; and 2. Whether the relinquishment deed dated 7-1--52 (Ex. A. 1) is liable to be annulled under Section 53 or Section 54 of the Provincial Insolvency Act.

Ratio Decidendi: 1. The court held that the relinquishment deed, Ex. A-1 was executed on the basis that the sale deed, Ex. B-2 executed in favour of the 2nd defendant is a benami one and thata the real owners of the suit lands are the plaintiffs. The court found that the case of benami set up by the plaintiffs is not proved and that the 2nd defendant himself is the real purchaser under Ex. B-2 and had title to the suit properties. It must therefore necessarily follow that the recitals in Ex. A-1 are all false and were introduced in order to make it appear that the property belonged to the plaintiffs even from the date of Ex. B-2. The falsity of the recitals in this relinquishment deed it a large extent established that Ex. A-1 is a fraudulent one intended to defraud the creditor of the 2nd defendant. No consideration was paid by the plaintiffs under it. they only undertook to discharge a few debts contracted by the second defendant and even if they discharged any of the debts mentioned therein, the plaintiffs cannot be said to be the purchasers in good faith or for valuable consideration. The document itself does not purport to be for any valuable consideration. 2. The court also held that the transfer evidenced by the relinquishment deed, Ex. A-1 was effected only on 1-12-54 when it was actually registered and that it could be avoided under Section 53 of the Provincial Insolvency Ac t as the Insolvency Petition was filed on 25-2-55 i. e. , within two years from the date of the transfer sought to be avoided.

Final Decision: The appeals were dismissed with costs.