MALINI AYYAPPA NAICKER NOW DEAD Vs. SETH MANGHRAJ UDHAVADAS FIRM

JUDGEMENT

(1.) These appeals arise from on insolvency proceeding wherein one Ponnayya Konar and his sons were adjudicated as insolvents. In the said proceeding the petitioning creditor sought to get annulled two mortgages one for Rs. 15,000 (Exh. A-1) executed by the insolvents in favour of Ayyappa Naicker, the appellant in Civil Appeal No. 845 of 1963 and the other for Rs. 10,000 (Exh. A-2), the subject-matter of Civil Appeal No. 846 of 1963, in favour of one Srinivasa Naicker, the father-in-law of the aforementioned Ayappa Naicker. The said Shrinivasa Naicker is dead and the appeal is being prosecuted by his legal representatives. Both those mortgages are dated November 4, 1950 and they were remtered on November 6, 1950. The Insolvency Court held that those mortgages were not supported by consideration and that they were executed with a view to screen some of the properties of the insolvents from their creditors. It accordingly annulled those mortgages under Section 53 of the Provincial Insolvency Act (hereinafter referred to as the Act). In appeal the learned District Judge reversed the findings of the trial Court. He came to the conclusion that those mortgages were fully supported by consideration and that they were genuine transactions. The High Court acting under the 1st proviso to Section 75 (1) of the Act reversed the judgment of the learned District Judge and restored that of the Insolvency Court. These appeals have been brought against the decision of the High Court after obtaining special leave from the Court.

(2.) The learned Counsel for the appellants challenged the decision of the High Court primarily on two grounds. According to him the High Court while acting under the 1st proviso to Section 75 (1) of the Act had no power to disturb the findings of fact reached by the appellate Court. Next he contended that the conclusions of the High Court are unsustainable on the evidence on record. The learned Counsel for the contesting respondents supported the decision of the High Court.

(3.) The two principal questions that arise for decision in these appeals are (1) Was the High Court within its jurisdiction in interfering with the findings of the learned District Judge that the impugned transactions are bona fide transactions and that they were supported by consideration and (2) Are the conclusions reached by the High Court correct on the facts and circumstances of the case It would be convenient to take up first, the question as to the scope of the powers of the High Court under the lst proviso to Section 75 (1) of the Act. That section reads: