Inadequacy of consideration.

This is a petition by the Official Receiver, Salem, to revise and set aside the order of the District Judge, Salem, in C.M.A. No. 32 of 1954, setting aside the order of the Subordinate Judge, Salem, allowing the petitioner’s petition under sections 4 and 53 of the Provincial Insolvency Act and setting aside the alienation by the insolvent in favour of the first respondent, Chinna Gounden, for Rs. 200. I have perused the entire records and heard the learned counsel on all sides. The facts are briefly these. The insolvent had a right, under an agreement dated 9th February, 1949, to purchase certain properties, mentioned in Exhibit A-6, within two years from that date, and, of course, the consequent right to enforce the agreement within three years from 9th February, 1951, the expiry date. He conveyed his rights under the agreement to the first respondent for Rs. 200 on 15th November, 1950. The Official Receiver filed a petition under sections 4 and 53 of the Provincial Insolvency Act on 13th March, 1953, to set aside that alienation. The learned Subordinate Judge overruled the contention urged by the first respondent that the petition was barred by limitation, and quite rightly. The point has not been canvassed again before me. He found that the properties covered by the agreement would be worth Rs. 1,200 and that the assignment in the agreement in favour of the first respondent was in fraud of the creditors. He further held that the Rs. 200 payable under the assignment, though recited as received in cash on the date of the assignment, had not been paid at all, and that the assignment was therefore fraudulent and without consideration. So, he allowed the petition with costs.

The first respondent took the matter in appeal. The learned District Judge, Salem, who heard the appeal, held that though the consideration of Rs.200 recited as received in cash, was, as a matter of fact not paid at all, still the assignment itself was for valuable consideration namely, conditional on the payment of Rs. 200, and that the consideration had merely failed to be paid. So, he directed the Rs. 200, covered by the assignment, to be paid to the Official Receiver, Salem, within a month from the date of his order, namely, 11th October, 1954, and directed that, on such payment, the appeal should be allowed and the learned Subordinate Judge’s order setting aside the assignment under sections 4 and 53 of the Provincial Insolvency Act, set aside, and that if the amount was not paid, the appeal would stand dismissed with costs. It is submitted by Mr. N. S. Raghavan, on behalf of the first respondent, that the Rs. 200 has been deposited before the Official Receiver, Salem, within the time prescribed. It is also admitted by him that the first respondent is enjoying the properties covered by the agreement and assignment, and taking the income thereof.

Mr. C. S. Swaminathan, the learned counsel for the petitioner, Official Receiver, raised three main contentions. The first was that the learned District Judge erred in setting aside the finding of the learned Subordinate Judge that there was no consideration at all for the assignment, and that it was merely a fraudulent recital to cover a gratuitous assignment intended to defraud the creditors. I cannot agree. It is well settled, that, in such revision petitions, the findings of fact cannot be canvassed or set aside unless they are proved to be perverse or based on no evidence. That is not the case here. Secondly, Mr. C. S. Swaminathan urged that it is enough to prove that the consideration recited in a document as having been received is not, as a matter of fact, received to show that the document was a fraudulent one and that it was intended to be executed gratuitously and for no consideration. I am afraid I cannot agree. Many a sale-deed is executed with a recital that a consideration is received that day ; but when the vendor denies it, he is allowed to show that the consideration has not been received