JUDGMENT

Beckett, J. - The respondent applied to have the petitioner declared an insolvent, on the ground that the latter had committed an act of insolvency by mortgaging a house with intent to delay and defeat his creditors. The Insolvency Court held that the mortgage had not been effected with any such intent and dismissed the application. On appeal, the District Judge agreed that no such primary intention had been proved. He held, however, that the effect of creating such a charge must necessarily be to defeat ordinarily the petitioner's creditors. Following Bhagwan Das v. Mahomed Nawaz Shah. AIR 1939 Lah 349 he held that this was sufficient to constitute an act of insolvency under Section 6(b), Provincial Insolvency Act, 1920, and proceeded to declare the petitioner an insolvent. I am afraid that the learned District Judge has misunderstood the ruling mentioned. It cannot be read as intending to lay down that any transfer of an interest in an immovable property by a debtor must itself be regarded as an act of insolvency. In that particular case, the transferor assisted a third party by means of the transfer in question and this had the effect of reducing his own assets by a substantial amount. In the present instance the petitioner raised money for the purposes of his own business. The transaction did not in the least degree diminish the value of his assets but merely transformed them partly into a more liquid form. It appears that he subsequently lost the money which he had thus raised; but such a subsequent loss cannot have the retrospective effect of converting the transaction into an act of insolvency, if it was not an act of insolvency at the time when it took place. Even, now, there does not appear to be any evidence on the record to show whether the petitioner owns any other property or not.

2. In these circumstances there are no legal grounds on which it can be held that the petitioner has committed an act of insolvency. The petition is accepted and the order declaring the petitioner to be an insolvent is set aside. For the reasons given by the Insolvency Court, the parties are left to bear their own costs throughout.