BHARGAVA, J. - (1.) THESE two appeals arise from a common judgment and are being disposed of by this judgment.
(2.) THE facts may be briefly stated thus. Johrilal filed a suit for recovery of Rs. 3660/- on the basis 1 of two promissory notes dated 21st December, 1948 and 22nd December 1948, for a sum of Rs. 1400/- and Rs. 1300/- respectively plus Rs. 600/- said to have been advanced by him on 13th January, 1949 to Gordhanlal. It was further alleged that Gordhan-Lal had made a gift of his house in favour of his wife Smt. Surajbai and three minor sons Gopal, Rambabu and Rammanohar on 12th November, 1948 in order to defraud his creditors. It was, therefore, prayed that the said gift deed may be declared void and ineffective against the rights of the plaintiff. The suit was contested by Gordhanlal as well as the other defendants. Gordhanlal denied the taking of loan on the dates alleged by the plaintiff and also the execution of the promissory note dated 21st and 22nd Dec. 1948. His case was that he had already paid off the debts due from him by the plaintiff. With regard the gift the defence of Gordhanlal and the other defendants was that it was a bonafide transfer and there was no intention to defeat or delay the creditors because there were no debts due on that date. The learned Civil Judge found that Rs. 308/10/-were due from Gordhanlal in respect of the old accounts and Rs. 1396/6/- were advanced to him on 21st December, 1948 and a pronote for Rs. 1700/- was executed by him on that date. Similarly, he found that on 22nd December, 1948, Rs. 1300/- were advanced to Gordhanlal and he had executed a promissory note in favour of the plaintiff for the same. He however, did not find that a sum of Rs. 500/- was advanced to the defendant on 13th January, 1949. He, therefore, passed a decree for a sum of Rs. 3000/- as principal and Rs. 140/- as interest against Gordhanlal. As for the gift he held that it was fraudulent and was, therefore, ineffective against the rights of the plaintiff. The learned Judge did not allow interest pendente lite and future to the plaintiff. Gopal and Rambaboo minor sons of Gordhanlal preferred an appeal against the judgment of the trial court and the plaintiff filed a cross-appeal for the refusal of his claim for pendente lite and future interest. The learned District Judge, Jaipur city rejected both the appeals. Now both the parties have come in second appeals. Mst. Surajbai wife of Gordhanlal died during the pendency of this case. In the appeal filed by Gopal and Rambaboo minors the main point urged is that the courts below were not right in holding that the gift of the house made by Gordhanlal in favour of his wife and minor sons on 12th November, 1948 was with intent to defraud the creditors. It is contended that the plaintiff in this case was a subsequent creditor and there was no satisfactory evidence either direct or circumstantial to show that the gift was made by Gordhanlal to defraud his creditors. It is also contended that the trial court did not give any reason whatsoever for coming to the conclusion that it was a fraudulent transfer. Similarly, no inference about the transfer being fraudulent could be drawn on the grounds mentioned by the learned District Judge. It is pointed out that before making the gift in favour of his wife and sons, Gordhanlal had paid off all the debts by selling the ornaments of his wife and had made the transfer in question to save the house for his wife and children. There were no debts due from him on the date the said gift was made and there is no evidence to show that he was contemplating to embark upon any hazardous business or to incur any debt in future. It is urged that merely because the transfer has been made in favour of the wife and children for love and affection, it cannot be presumed that it was with the intention of defrauding the subsequent creditors. Learned counsel for the respondents has urged that the debt in question was taken so soon after the gift by Gordhanlal that it should be presumed that he was contemplating to incur new debts when he gifted the house in favour of his wife and children. It is also pointed out that even on the date of the gift he owed Rs. 308/10/- to the plaintiff and a sum of Rs. 463/4/- to one Manakchand (P. W. 1 ). He has also invited my attention to the statement of the defendant wherein he has admitted that he had indulged in speculation which had resulted in his ruin and he wanted to protect the house and therefore, made gift in favour of his wife and children. Ordinarily, in second appeal a finding that the transfer was made with intention to defraud the creditors cannot be questioned, but unhappily the courts below have come to this conclusion in clear disregard of the facts established in the case. The trial court neither referred to any evidence nor to any circumstance in support of its finding that the transfer was fraudulent. The remark of the learned Judge that the defendant had admitted that he had gifted the property in order to protect it cannot be sufficient to hold that it was fraudulent. There is no admission of the defendant that he was indebted on the day he made a gift of the house. What he said was that he was indebted but had paid off the debts by selling the ornaments of his wife. The learned Judge has further discussed the question whether the plaintiff had knowledge of the gift or not, but that was irrelevant and had no bearing on the point at issue. The learned District Judge while deciding this question has referred to the following circumstances. (1) that a sum of Rs. 308/10/- was outstanding against defendant No. I on the date of the gift. (2) that Rs. 463/4/- were also due on that date to one Manakchand (P. W. 1 ). (3) that it was inconceivable that when the gift deed was executed intention to borrow money was not i!n the mind of the defendant because the object of incurring the debt in question was the redemption of the house. This is apparently due to some mistake because there is to evidence that the money was borrowed for the redemption of the house nor it could be so because the house had been gifted in favour of the wife and minor sons. (4) that the statement of the defendant that he wanted to protect the property, itself indicates that the transfer was made to defraud the creditors of the defendant. The courts below did not direct their attention to the defendant's evidence that before the gift in question he had paid off the debts due from him by selling his wife's ornaments. There are two documents on record Exs. DW1/1 and DW/2 which are admitted by the plaintiff show that he had paid Rs. 1600/- to the plaintiff on Jeth Badi 11 Smt. 2004 corresponding to 3rd June, 1946 and Rs. 800 in respect of the other pronote marked Ex. D1w1/2 on the same date and Rs. 200/- on Jeth Badi 15 Smt. 2005. These payments corroborated statements of the defendants' witnesses Bhurimal (D. W. 1) and Damodarlal (D. W. 2) that Gordhanlal had sold the ornaments of his wife for Rs. 2000/- and Rs. 600/-to them. It therefore, appears from this evidence that Gordhanlal had paid off the debts due from him before the date of the gift. No evidence was led by the plaintiff to show that any other debts were due from him on the date of the gift. Although it was alleged in the plaint that he owed money to one Gulabchand Fatehpuria yet no evidence was produced in support of this allegation. As for the money due to Manakchand which has been referred to by the learned District Judge in his judgment it may be remarked that his evidence shows that the money was due for the price of cloth and other articles supplied to him. It also appears that Rs. 178/8/- were repaid to Manakchand by Gordhanlal on 20th September. 1948 and Rs. 100/- on 24th December, 1948. It is also admitted by Manakchand that he had received back the whole amount due from Gordhanlal. The only money which ha; been shown due on the date of the gift is a sum of Rs. 308/10/- which was the balance due from old accounts. It is not clear since how long the amount was outstanding and it is quite strange that it remained unpaid while Rs. 2600/- were paid to the plaintiff as evidenced by the endorsement on the back of DW1/1 and DW/2. Now it cannot be said that for this small sum of Rs. 308/10/-he had made a fraudulent transfer of his house in favour of his wife and minor children. There is hardly any evidence on record to indicate the circumstances which led him to make gift of the house in favour off his wife and minor sons. It appears from the defendant's statement that he had indulged into speculative transactions and got indebted. He sold the ornaments of his wife in order to pay off those debts and in order to mend his ways and to save the house for his wife and children he bonafide made the gift in question. He did not owe any debts on the said date except the above mentioned item of Rs. 308/10/ -. Nor there is any evidence to show that he was contemplating to borrow any money in future. The only circumstance against him is that the transfer is in favour of his wife and children. But merely because it is in favour of his wife and children and was likely to prejudice his subsequent creditors it cannot be held that it was with intent to delay] or defeat his creditors. A gratuitous transfer cannot be said to be ipso facto a frundulent transfer particularly when he had practically no debts on the date of transfer. It is true that it is very seldom that direct evidence of fraud may be available and it is to be decided on the facts and circumstances of the case but on the facts of this case no such inference can be drawn. The circumstance that money was borrowed about a month after the said gift also does not lead to this inference that at the time of gift he was contemplating to incur these debts. In my opinion the gift in question does not appear to be mala-fide for the purpose of defrauding the creditors. The circumstances speak in favour of bonafides. In this connection I may refer to the following observations in Sadashiv Vaman Dhamanker Vs. Trimbak Divakar Karandikar (1); "the release was only intended to protect Vaman's one-half share: against the consequences of his own improvidence. When all existing debts were paid off and settled, Vaman's right to make a voluntary conveyance of the same in his minor son's interest cannot be questioned. Such conveyances are well known in English law, and there have been cases in India also where Courts have given effect to such voluntary conveyances or gifts by a father to his son-Ganga Sahai Vs. Hirasingh (1880) 2 All. , 809 at p. 811 ). Such transactions do not become colourable merely because, in their ultimate consequences, they may have the effect of protecting the family property against the prospective extravagance of the settlers, or because no adequate consideration is shown to have been paid by the party benefited. The consideration in such a case need not be valuable. It is enough if it is what the law regards as good, i. e. , natural affection for wife and children. There is nothing illegal in such a conveyance if it is made bonafide, and is not intended to defraud creditors. When the father is involved in debts and makes a settlement mala tides is presumed. But when there is no, such indebtedness, no mala fides can be presumed merely from the possibility that the settlement might prejudice the claims of subsequent creditors. The lower court appears to have lost sight of this distinction, which the law makes between the claims of existing and subsequent creditors when it presumed against the bonafides of the release chiefly on the ground of its being prejudicial to the interests of Vaman's subse quent creditors. " and Ebrahimbhai Rahimbhai Vs. Fulbai and Karamalli (2) ; "there having been no indebtedness at the time of its execution, all existing debts having been paid off before its execution, and the consideration for the conveyance being natural love and affection, which the law regards as good, the case falls within the principle laid down by Ranade, J. , in Sadashiv Vs. Trimbak (1898) 23 Bom, 146 at p. 157 ). No mala fides can be presumed merely from the possibility that the settlement might prejudice the claims of subsequent creditors. " As for the appeal filed by the plaintiff the court below in the exercise of their discretion have not awarded interest pendente lite and future and I do not see any reason to interfere in their discretion. The result therefore, is that appeal filed by Gopal and Rambaboo is allowed, judgment and decree of the courts below in so far as they have declared that the gift dated 12th November, 1948 is void and ineffective against the rights of the plaintiff is set aside. The appeal filed by Johrilal is disallowed. Gopal and Rambaboo will get costs of all the courts from the respondent. In Johrilal's appeal parties shall bear their own costs. . ;