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1938 Supreme(Mad) 256

IN THE HIGH COURT OF MADRAS
Krishnaswami Aiyangar, J.
Minor Minakshi Aiyar by next friends
Versus
Noor Muhammad Rowther and Ors.
Decided On : 02.09.1938

The Court emphasized the duty to unravel the truth behind fraudulent transactions, interpreted legal provisions to determine the real ownership of the property, and upheld the rights of the creditor to obtain satisfaction out of the fund in Court.

Headnote:

fraudulent transactions - dispute over fund in Court - O.S. No. 33 of 1924 - Sections 47, Civil Procedure Code - benami transactions - unravelling the truth - fraudulent transactions to defeat creditors - real ownership of property - consideration for transactions - interpretation of Order 21, Rule 16, Civil Procedure Code

Fact of the Case:

Dispute over a fund in Court standing to the credit of O.S. No. 33 of 1924 relating to the share of one Adamsa Rowther in a rice mill. Appellant claimed attachment of the fund in execution of a decree obtained in O.S. No. 32 of 1925. The opposing claimants contended that the fund belonged to them and not to Adamsa's heirs.

Finding of the Court:

The Court found that the transactions transferring the property were fraudulent and benami, intended to help Adamsa's heirs retain the property and defeat the appellant's claim as a creditor. The Court held that the appellant was entitled to obtain satisfaction out of the fund in Court standing to the credit of O.S. No. 33 of 1924.

Issues: Dispute over the ownership of the fund in Court, consideration for the transactions, interpretation of Order 21, Rule 16, Civil Procedure Code.

Ratio Decidendi: The Court unraveled the truth behind the fraudulent transactions, interpreted the legal provisions to determine the real ownership of the property, and held that the appellant was entitled to satisfaction out of the fund in Court.

Final Decision: The Court accepted the appeals, allowed the execution petition, and dismissed the opposing claim, holding the appellant entitled to satisfaction out of the fund in Court standing to the credit of O.S. No. 33 of 1924.

JUDGMENT

Krishnaswami Aiyangar, J.

1. The disputes which have given rise to these appeals relate to a fund in Court standing to the credit of O.S. No. 33 of 1924 on the file of the Sub-Court, Kumbakonam. It is a sum of Rs. 2,983-2-6 representing the value of the share of one Adamsa Rowther in a rice mill situated in Pandaravadai village. Adamsa died in 1919 involved in debts, but he had left considerable properties in and round Pandaravadai. He appears to have carried on a business in Saramban in the F. M. S., which was after his death taken over by his son-in-law, Abdul Rahiman, and continued by him. Kadir Bacha was a brother of Adamsa who has figured prominently in the arrangements made by Adamsas heirs for the discharge of his debts. These heirs, were Noor Muhammad and Muhammad Ibrahim his sons, Mohideen Bivi a daughter, and Zuleka Bivi his second wife. A major portion of his properties was transferred by them to their uncle Kadir Bacha on 28th May, 1922, by a deed which shows that except for a comparatively small amount, the consideration of Rs. 35,000 was the undertaking by the transferee to pay and discharge the debts of the deceased. There were also certain other transfers by the heirs, but for the purpose of these appeals it will be sufficient if we refer in particular to the one on 5th August, 1923, of Adamsas interest in the rice mill to his son-in-law Abdul Rahim. It may at once be mentioned that this transfer is attacked by the appellant in C.M.A. No. 420 of 1935 as a nominal one, not intended to pass title to the property, but was brought about solely for the purpose of screening it from the creditors and for the secret benefit by the heirs.

2. At the time of this transfer there were admittedly disputes regarding the rice mill, Adamsas heirs claiming his half share, his partner Mandia Esumsa vigorously denying it. After his purchase, steps were apparently taken by Abdul Rahim to assert his rights against Esumsa, and they resulted in criminal proceedings between the parties which were finally settled by a reference to arbitration. An award was passed on 9th December, 1923, by which Esumsa and his son were directed to pay a sum of Rs. 3,000 and odd to Abdul Rahim. This amount was however not paid, and it therefore became necessary for Abdul Rahim to institute O.S. No. 33 of 1924 for the recovery of the money. While the suit was pending Mohideen Bivi his wife died and thereafter the feelings between him and her brothers became strained, so much so that Noor Muhammad felt it necessary to institute criminal proceedings against Abdul Rahim. These proceedings, it is clear from the complaint QQ, had reference to a claim against Abdul Rahim due to a withholding by him of certain valuable securities appertaining to Adamsas estate including a business letter relating to a rice mill in India which was obviously none other than the mill at Pandaravadai. A settlement was ultimately arrived at on 16th March, 1927, evidenced by a writing Ex. PP signed by Abdul Rahim, Noor Muhammad and Kadir Bacha. By it Abdul Rahim undertook to pay Rs. 1,000, and 50 to Noor Muhammad in full settlement of the pronote and dealings of Adamsa and to give a transfer of the rice mill in favour of Kadar Bacha, who was at this date on terms of cordiality with Noor Muhammad. In pursuance of this compromise, Abdul Rahim executed the transfer on 17th March, 1927, conveying his interest in the rice mill then under litigation in O.S. No. 33 of 1924, for an alleged consideration of Rs. 3,000. Thereupon, Kadir Bacha brought himself on the record in place of Abdul Rahim, and finally obtained a decree by consent for a sum of Rs. 2,900, against which a sum of Rs. 2,983-2-6 has been deposited into Court on 29th October, 1929, by the judgment-debtors but not before the issue of process in execution. As we have said the true ownership of this fund is the question that has to be decided in the appeals. Kadir Bacha having died on 29th November, 1929, his heirs claimed pay

















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