JUDGMENT

1. This is a miscellaneous appeal under Section 202, Companies Act, against an order passed by the Hon'ble the Chief Judge rejecting an application under Section 171 of that Act. The application was made in the course of liquidation proceedings relating to a company which did banking business under the title of Dinshaw & Co. (Bankers) Ltd. (hereinafter referred to as the Bank). This Bank was started on 14th December 1929. It went into voluntary liquidation on 12th July 1935, and on 15th October 1935, on the application of certain creditors orders were passed for its compulsory winding up. On 21st July 1931, Madan Theatres of Calcutta executed a mortgage deed in favour of the Bank for Rs. 1,50,000. Of this amount Rs. 75,000 was repaid. On 13th November 1934, the Bank instituted a suit for the balance. A preliminary decree was passed in favour of the Bank for Rs. 83,359-6-11 with future interest at six per cent.

2. The original applicant under Section 171 was Mt. Basanti Devi, widow of one Murlidhar who had died in 1934. He had been the Bank's principal client. On the death of Mt. Basanti Devi, the present appellant Anand Behari Lal, took her place. He is sometimes referred to as their adopted son, but there was apparently no formal adoption. He had lived with them since his childhood, and his succeeded to the property. The case of the applicant under Section 171 was that there had been an assignment of the mortgage and preliminary decree obtained by the Bank against Madan Theatres, and leave of the Court was required under Section 171 to enable the assignee, Mt. Bansanti Devi, to continue the proceedings on the mortgage. It is not disputed by counsel in this appeal that such leave was necessary. The deed of assignment, Ex. 1, was executed on 23rd April 1935. It purports to be for a consideration of Rs. 80,000 made up as follows: Rs. 60,000 set off against the amount due from the Bank to Murlidhar and upon bis death to his widow. Rs. 20,000 paid by two cheques of Rs. 7000 and Rs. 13,000 respectively drawn by the widow Mt, Basanti Devi.

3. If this transaction was valid there was no reason why leave should be refused under Section 171, the Bank having no further interest in the mortgage, and Mt. Basanti Devi's claim upon the Bank being thus satisfied some time before the Bank went into liquidation. The application under Section 171 was made on 2nd January 1936. It shows that Mt. Basanti Devi had applied on 30th October 1935, to the Court of the Civil Judge, Lucknow, (where the proceedings on the preliminary mortgage decree were pending) for the substitution of her name as decree-holder in place of the Bank, but had withdrawn this application on the objection of the Official Liquidator that the leave of this Court was required. On 20th February 1936, the Official Liquidator filed objections to this application, alleging that the transaction by which the decree had been assigned was fraudulent and gave an undue preference to one creditor. It was denied that the deed of transfer had been executed by the Bank, the official (Balak Ram) who purported to have executed it not being authorised and competent to do so; and it was also denied that there was full consideration for the transfer. On 2nd November 1936, the following issues were framed:

1. Was the decree in case No. 47/83 of 1934 of the Court of Additional Subordinate Judge, Luck-now, assigned by Messrs. Dinshaw and Co. (Bankers) to the applicant on 23rd April 1935 for a consideration of Rs. 80,000?

2. If so, was the assignment a fraudulent preference of a creditor and as such void under Section 231, Companies Act read with Section 54, Provincial Insolvency Act ?

3. Is the alleged assignment voidable against the official liquidator and should therefore be annulled by the Court under Sections 229 and 231, Companies Act, read with Section 53, Provincial Insolvency Act?

4. Is the Official Liquidator entitled to raise the plea embodied in issue 3 in the present proceedings?

4.