S R M C T S S P A CHETTYAR FIRM Vs. U ON MAUNG

JUDGEMENT

(1.) THE question raised by this appeal is whether a mortgage by deposit of deeds made in favour of the appellants within two years of an adjudication in insolvency under circumstances mentioned below was voidable against the respondent (the receiver of the insolvent's estate) under Section 53 of the Provincial Insolvency Act, 1920. THE District Court held that it was not voidable, and the appellate Court that it was THE material portion of Section 53 is as follows:- Any transfer of property not being a transfer made ... in favour of a purchaser or incumbrancer in good faith and for valuable consideration shall, if the transferor is adjudged insolvent on a petition presented within two years after the date of the "transfer, be voidable as against the receiver and may be annulled by the Court.

(2.) THE insolvent, L.M.R.S.M. Somasundaram Chettyar, carried on business as Chettyar at Kyaikto in the district of Thaton in Burma. In 1931, he left Burma for India. THE business was then carried on by his son-in-law Swami-nathan, under a power of attorney dated June 29, 1928 (exhibit 3a). In May, 1932, Swaminathan also went to India, leaving the business in charge of the insolvent's son Valliappa, who was then a minor under the age of eighteen years.

(3.) ON September 26, 1933, a petition for the adjudication of the insolvent was. 'presented by a creditor in the District Court of Thaton, and on August 14, 1934, an order of adjudication was made against the insolvent. In an inventory filed in the Court thereafter, the insolvent's properties were shown as of the total acreage of 739, and of the value of Rs. 1,06,078-3-0. The list of debts owed to him were of the total amount of Rs. 66,907-7-9. Thus his total assets were of the estimated value of Rs. 1,72,985. His total liabilities, on the other hand, were shown as of the value of Rs. 1,78,655. In the list of creditors the appellants' firm was shown as a creditor, claiming as security for the debt owing to it (Rs. 25,942-13-6) an equitable mortgage of the lands and mortgage bonds mentioned above.