M C Chagla, C J - (1.)One Keshavji Manekchand was adjudicated an insolvent on a petition presented by his creditors on August 24, 1940. Subsequently the Receiver in the insolvency filed three applications for setting aside three deeds of transfer dated January 25, 1935, January 80, 1935, a March, 30, 1932, These transfer deeds were: one in favour of his son Harkissondas Keshavji, the second for the education and marriages of his daughters and for the maintenance and residence of the insolvent himself and third again for the benefit of his son Harkissondas.
(2.)In the trial Court an issue was raised whether the Court had jurisdiction on its insolvency side to set aside these deeds of transfer. The learned Judge took the view that Section 53 of the Insolvency Act did not apply to the case as the deeds of transfer were made more than two years before the date of the insolvency petition, but he held that the Court had jurisdiction under Section 4 of the Act. An appeal was preferred to the District Court, and the learned Assistant Judge, Thana, dismissed the appeal. In second appeal on the arguments advanced before me I felt some doubt as to whether the view taken as to the powers of the insolvency Court by a division bench of this Court in Baoji Pandarkar V/s. Bawachekar was the correct view, and on that the matter was referred to a full Bench and it has now come before us.
(3.)Section 58 of the Insolvency Act enables the Receiver in insolvency to avoid voluntary transfers. If a transfer is made which is not in good faith and not for valuable consideration unless it is made before and in consideration of marriage and if it is made within two years of the presentation of the insolvency petition, then it can be avoided by the Receiver in insolvency. It is important to note that the transfers when they were made by the insolvent were valid transfers. Under ordinary law it is open to a person to make a voluntary transfer. He can make a gift or he can pass a valid title by executing a deed of transfer without taking any consideration for the transfer. But Section 53 provides that these transfers although valid can be challenged at the option of the Receiver in insolvency provided the conditions laid down in that section are satisfied, viz. that the transfer must be made within two years of the date of the presentation of the petition. If the transfer was made anterior to that date, then it is not subject to the challenge of the Receiver in insolvency.