# L.R. ETC. ETC v. SETH MANGHRAJ UDHA VDAS FIRM BY MANAGING PARTNER CHATHURBHUJ CHBABILDAS

- **Citation:** [1969] 3 S.C.R. 698
- **Court:** Supreme Court of India
- **Decided:** 1969-02-13
- **Case number:** Civil Appeals Nos. 845 and 846 of 1963
- **Bench:** S. M. Sikri, R. S. Bachawat, K. S. Hbgdb
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/l-r-etc-etc-v-seth-manghraj-udha-vdas-firm-by-managing-partner-chathurbhuj-4630
- **Pages:** 10

## Headnote

· ·Provincial Insolvency Act, 1920, •· 7S(l), first proviso-Power of High
Couri to sr4isfy itself that an appeal wa.r decided by tht Distrkt CollTt
"'according to iaw"-Scope of.
Tho petitioning creditor in an insolvency proceeding sought annullment
of two mortgages, one for Rs. 15,000/. in favour of the appellant in
C.A. 84S and another for Rs: 10,000/. in favour the appellant in C.A. 846.
The mortgages weno date(! November 4, 1950 and were registered on
November 6, 1950. Tho InsOlvency Court held that the mortgages were
not supported by consideration and were ~led with a view to screen·
ing some of the properties of the insolvents from their creditor.i. It therefore, annulled the mortgages under section S3 of tho Provincial InsOlvency
Act. The District Judge, in appeal, reversed the findings of the trial court
but the High Court, acting under the fir.it proviso of section 75(1) of the
Act, set aside the judgment of the District Judge and restored that of the
Insolvency Court.
In an appeal to this Court by special leave, it was contended on behalf
of the appellants (i) that the High Court while acting under the first proviso
of section 75(1) to satisfy itself "that an order made in any
appeal
decided by the District Court was according to law" had no power to disturb the findings of fact reached by the appellate court; the jurisdiction of
tho High Court is a very limited one and not more than that conferred on
it by su""ection 100(1) C.P.C.; and (ii) that the conclusions of the High
Court were unsustainable on the evidence on record.
HELD: (i) The legislature did not confer on the High Court. under
the first proviso to s. 75 (I) of the Act an appellate power nor did it confer on· it a jurisdiction to reappreciate the evidence on record. While
exercising that power the High Court is by and lar~ bound by the findings
of fact reached by the District Court If the legtslature intended to confer power on it to ~xamine both questions of law and fact it would have
conveyed its intention by appropriate words as has been done under
various other statutes. A wrong decision on facts by a competent court
is also a decision according to law. [701 DJ
A decision being "contrary to law" as provided in s. 100(1) (a) of the
Code of Civil Procedure is not the same thing as a decision being not
"according to law" as prescribed in the first proviso of s. 7S(D of the Act
The latter expression is wider in ambit than the former. It is neither desirable not possible to give an exhaustive definition of the expression
"according to law". The power given to the Hi$b Court . under the first
proviso to s. 75(1) of the Act is similar to that given to it under •· 2S of
the Provincial Small Cau•e• Court• Act. [701 Fl
BtU .l Co. Ltd. v. Waman H<mra;, (1938) 40, Bom. L.R. 125; Hari
Shankar v. Rao Girdhari Lal Chowdhury, [1962] 1, supp. S.C.R.
399;
c
D
E
F.
G
H
A
B
c
D
E
F
G
H
MALIN! AYYAPPA v. MANGHltAJ (Hegde, J.)
699
Official Receiver, Kanpur and Anr. v. Abdul Shakur [1965] I S.C.R. 254;
referred to and explained.
(ii) On the evidence, the findings of the District Court on. the payment of consideration were correct findings o'f fact and the High Court
could not have interferred with the same. However, one payment in respect of the mortgage in C.A. 845 was not proved and the mortgage was
therefore only valid to the extent of Rs. 10,500/-.

## Text

MALINI AYYAPPA NAICKER (NOW DEAD) THROUGH
A
L.R. ETC. ETC.
v.
SETH MANGHRAJ UDHA VDAS FIRM BY MANAGING
PARTNER
CHATHURBHUJ
CHBABILDAS
(DEAD)
THEREAFl'ER BY LRS. &: ORS.
a
February 13, 1969
[S. M. SIKRI, R. S. BACHAWAT AND K. S. HBGDB, JJ.]
· ·Provincial Insolvency Act, 1920, •· 7S(l), first proviso-Power of High
Couri to sr4isfy itself that an appeal wa.r decided by tht Distrkt CollTt
"'according to iaw"-Scope of.
Tho petitioning creditor in an insolvency proceeding sought annullment
of two mortgages, one for Rs. 15,000/. in favour of the appellant in
C.A. 84S and another for Rs: 10,000/. in favour the appellant in C.A. 846.
The mortgages weno date(! November 4, 1950 and were registered on
November 6, 1950. Tho InsOlvency Court held that the mortgages were
not supported by consideration and were ~led with a view to screen·
ing some of the properties of the insolvents from their creditor.i. It therefore, annulled the mortgages under section S3 of tho Provincial InsOlvency
Act. The District Judge, in appeal, reversed the findings of the trial court
but the High Court, acting under the fir.it proviso of section 75(1) of the
Act, set aside the judgment of the District Judge and restored that of the
Insolvency Court.
In an appeal to this Court by special leave, it was contended on behalf
of the appellants (i) that the High Court while acting under the first proviso
of section 75(1) to satisfy itself "that an order made in any
appeal
decided by the District Court was according to law" had no power to disturb the findings of fact reached by the appellate court; the jurisdiction of
tho High Court is a very limited one and not more than that conferred on
it by su""ection 100(1) C.P.C.; and (ii) that the conclusions of the High
Court were unsustainable on the evidence on record.
HELD: (i) The legislature did not confer on the High Court. under
the first proviso to s. 75 (I) of the Act an appellate power nor did it confer on· it a jurisdiction to reappreciate the evidence on record. While
exercising that power the High Court is by and lar~ bound by the findings
of fact reached by the District Court If the legtslature intended to confer power on it to ~xamine both questions of law and fact it would have
conveyed its intention by appropriate words as has been done under
various other statutes. A wrong decision on facts by a competent court
is also a decision according to law. [701 DJ
A decision being "contrary to law" as provided in s. 100(1) (a) of the
Code of Civil Procedure is not the same thing as a decision being not
"according to law" as prescribed in the first proviso of s. 7S(D of the Act
The latter expression is wider in ambit than the former. It is neither desirable not possible to give an exhaustive definition of the expression
"according to law". The power given to the Hi$b Court . under the first
proviso to s. 75(1) of the Act is similar to that given to it under •· 2S of
the Provincial Small Cau•e• Court• Act. [701 Fl
BtU .l Co. Ltd. v. Waman H<mra;, (1938) 40, Bom. L.R. 125; Hari
Shankar v. Rao Girdhari Lal Chowdhury, [1962] 1, supp. S.C.R.
399;
c
D
E
F.
G
H
A
B
c
D
E
F
G
H
MALIN! AYYAPPA v. MANGHltAJ (Hegde, J.)
699
Official Receiver, Kanpur and Anr. v. Abdul Shakur [1965] I S.C.R. 254;
referred to and explained.
(ii) On the evidence, the findings of the District Court on. the payment of consideration were correct findings o'f fact and the High Court
could not have interferred with the same. However, one payment in respect of the mortgage in C.A. 845 was not proved and the mortgage was
therefore only valid to the extent of Rs. 10,500/-.
CIVIL APPELLATE JURISDICTION : Civil Appeals Nos. 845 and
846 of 1963.
Appeals by special leave from the judgment and order dated
January 17, 1958 of the Madras High Court in Civil Revision
Petitions Nos. 981 and 982 of 1956.
S. V. Gupte and R. Thiagarajan, for the appellants (in both
the appeals).
Naunit Lal, for the respondents Nos. 1 (c) and 17 (in C.A.
No. 845 of 1963) ajlld respondents Nos. l (c) and 16 (in C.A.
No. 846 of 1963).
The Judgment of the Court was delivered by
Hegde, J. These appeals arise from an 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 fatherin-law of the
aforementioned Ayyappa Naicker.
The said
Srinivasa Naicker is dead and the appeal is being prosecuted by
his
legal
representatives.
Both those
mortgages are
dated
November 4, 1950 and they were registered 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 s. 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 t? the ~nclusion that those '!lortgages
were fully supported by cons1derat10n and that they were genuine
transactions.
The High Court acting under the I st proviso to
s. 75 (I) of the Act reversed the judgment of the learned District
Judge and restored that. of the Inso_l~ency Court. These appeals
have been. brought agamst the decmon of the High Court after
obtaining special leave from this Court.
The learned Coun~el for the appellants challenged the ·decision
of the Hip Court primarily on two &t'OUDds.
Accordinir; to him
•
700
SUP!UlME COURT REl'OR'fS
[1969] 3 S.C.R.
the High Court whi~ acting under the 1st proviso to s. 75(1) of
A
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.
The two principal questions that arise for decision in these
B
appeals are ( 1) was the High Court within its jurisdiction in
interfering with the findings of the learned District Judge that the
impug11ed 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 c
as to the scope of the powers of the High Court under the 1st
proviso to s. 75(1) of the Act. That section reads :
"The debtor, any creditor, the receiver or any
other person aggrieved by a decision cQllle to or an
order made in the exercise of insolvency jurisdiction by
a Court subordinate to a District Court may appeal to
o
the District Court, and the order of the District Court
upon such appeal shall be final :
Provided that the High Court, for the purpose of
satisfying itself that an order made in any appeal decided by the District Court was according to law, may call
for the case and pass such order with respect thereto as
E
it thinks fit :
Provided further, that any such person aggrieved by
a decision of the District Court on appeal from a decision of a subordinate Court under secuon 4 ma~ appeal
to the High Court on any of the grounds mentioned in
sub-section ( 1) of section 100 of the Code of Civil
F
, Procedure, 1908."
According to Shri S. V. Gupte, learned Counsel for the
appellants the jurisdiction of a High Court under the 1st proviso
to s. 75 ( 1) is a very limited one, the same being not more than
that conferred on it by sub-s. (1) of s. 100 of the Code of Civil
Procedure. In support of his contention he invited our attention
G
to the scheme of s. 75 (1) of the Act. He urged that sub-s. ( 1)
of s. 7 5 prescribes that the decision of the District Court in appeal
is final and the finality conferred on the decision of the District
Court is subject to a very limited scrutiny by the High Court. We
were further told that. the power conferred on the High Court
under the 1st proviso to s. 75 (1) is only a revisionM power,
H
which power in its very nature is narrower in compass than an
appellate power.
According to him the power conferred under
the !st proviso to s. 75(1) of the Act is co-extensive with that
A
B
c
D
E
F
G
H
MALINI AYYAPPA v. MANGHRAJ (Hegde, J.)
701
given to the High Court under s. 100( 1) (a) of the Code of
Civil Procedure.
On the other hand Mr. Naunit Lal, learned Counsel for the
respondent urged that the High Court under the 1st proviso to
s. 75(1) of the Act has an extensive power .and that power is
very much wider than the power conferred on 1t under~· 100(1)
(a) of the Code of Civil Procedure; the power of the High Coun
under the 1st proviso to s. 75 (1) of the Act to call for the case
to satisfy itself that the order made by the District Court was
according to law and pass such other order in respect thereto as it
thinks fit includes within itself the right to examine whether the
District Court had taken into consideration all the material evi·
dence and whether it had properly assessed that evidence.
We are of the opinion that the extreme contentions advanced
on either side cannot be accepted. Quite clearly the legislature
did .not confer on the High Court under the 1st proviso to s. 75 ( 1 J
of the Act an appellate power nor did it confer on it a jurisdictior.
to reappreciate the evidence on record.
While exercising that
power the High Court is by and large bound by the findings of
fact reached by the District Court. If the legislature intended
to confer power on it to re-examine both questions of Jaw and
fact it would have conveyed its intention by appropriate words
as has been done under various other statutes. A wrong decision
on facts by a competent court is also a decision according to law.
For these reasons we cannot accept the contention of Mr. Naunit
Lal that the power conferred under the 1st proviso to s. 75 ( 1) of
the Act enables it to de novo examine the findings of fact reached
by the District Court.
A decision being "contrary to law" as provided in s. 100 (I)
(a) of the Code of Civil Procedure is not the same thing as a
decision being not "according to law" as prescribed in the 1st
proviso. of s. 75(1) of the Act. The latter expression is wider
1~ ambit than ~e forme~._ It is neither desirable nor possible to
give;_ an exhaustive ~efimtion of ~e expression "according to
law . The power given to the High Court under the 1st proviso
to . s.
75(1)
of the Act js similar
to
that
given
to 1t ~der s. 25 of the Provincial Small Causes Courts Act.
Explaimng th7 scope of the latter provision Beaumont, C.1. (as
he then was) m Bell & Co., Ltd. v. Waman Hemraj(') observed:
"The object of s. 25 is to enable the High Court to
see tha~ !here has ?een no miscarriage of justice, that
the dccISJon was given according to law. Tiie section
does not enumerate the cases in which the Court may
(t) [1938]40Bom.L.R. 12S.
LIOSup.169-IO
702
SUPREME COURT REPORTS
[l 969] 3 S.C.R.
interfere in revision, as does s. 115 of the Code of
Civil Procedure, and 1 certainly do not propose to
attempt any exhaustive definition of the circumstances
which may
justify such
interference; but instances
which readily occur to the mind are cases in which the
Court which made the order had no jurisdiction or in
which the Court has based its decision on evidence
which should not have been admitted, or cases where
the unsuccessful party has not been given a proper
opportunity of being heard, or the burden of proof has
been placed on the wrong shoulders.
Wherever the
Court comes to the conclusion that the unsuccessful
party has not had a proper trial according to law, then
the Court can interfere. · But, in my opinion, the Court
ought not to interfere merely because it thinks that
possibly the Judge who heard the case may have arrived
at a conclusion which the High Court' would not have
arrived at."
The said statement of the law was accepted as correct by
this Court in Hari Sha11kar v. Rao Girdhari Lal Chowdhury(').
We think the sanre applies squarely to the 1st proviso to s. 75 (1)
of the Act.
In support of his contention Mr. Gupte placed considerable
reliance on the decision of this Court in Official Receiver, Kanpur·
and Anr. v. Abdul Shakur and Ors.(") wherein this Court held
that the High Court in exercise of its power under the 1st proviso
to s. 75 ( 1) of the Act is incompetent to disturb the findings of
fact reached by the
District Court and further the
question
whether a statutory presumption was rebutted by the rest of the
evidence on record was also a question of fact which again was
not open to be reviewed by the High Court.
Shah, J. who spoke
for the Court observed thus at p. 259.
"The District Court inferred from the facts found
that the statutory presumption under s.
118
of the
Negotiable Instruments Act had been weakened and
the burden which lay upon the insolvent was discharged
and it was. not open to the High Court exercising jurisdiction under s. 75(1} proviso 1, nor even
under
proviso 2 of the Provincial Insolvency Act to set aside
the judgment of the District Court, for it is well settled
that the question whether a statutory presumptiqn is
rebutted by the rest of the evidence is a question of
fact."
It may be remembered that Shah, J. was also a party to the
decision in Hari Shankar's case('). We see no conflict between
(!) [1962] I Supp. S.C.R. 933.
(2) [1965] I S.C.R. 254.
A
R
c
D
E
F
G
H
A
B
c
D
E
F
G
H
MALIN! AYYAPPA v. MANGHRAJ (Hegde, J.)
703
the two decisions.
The former decision enumerates
some of
the circumstances under which the High Court can interfere
while considering whether the decision under review was made
accordincr to law.
All that is laid down in Abdul Shakur's case(')
is that me High Court is not competent to disturb a finding of
fact reached by the District Court even if in reaching that find·
ing it was required to take into ·consideration a statutory presumption.
We shall now proceed to examine the facts of this case bearing in mind the principles set out above.
We shall first set out the undisputed facts.
The respondent
Ponnayya Konar was a well to do person.
He had one rice
mill at Kivalur and another at Sirkali. He also had landed pro·
perties in 'Sirkali and Tuticorin. He was having money dealings
with the family of Sreenivasa Naicker from about the year 1925
Under the original of Exh. B-1, a registered deed of Othi dated
28th September, 1925, he had borrowed a sum of Rs. 30,000
from Rangappa Naicker, the father of Srinivasa Naicker. On
October 5, 1930 the said deed was renewed by the execution of
a simple mortgage deed by Ponnayya Konar and his sons in
favour of Rangappa Naicker.
Under the registered mortgage
deed dated 13th January, 1942 (Exh. B-4 is its copy), the
insolvents had borrowed from Ayyappa Naicker Rs. 20,000
out of which he discharged some of the debts due to Rangappa
Naicker.
Ayyappa Naicker was himself a rich man.
Under
the partition deed entered into in his family on October 30, 1936
(Exh. B-3) he got a cash of Rs. 52,000 and lands measuring
250 acres.
The debt due to Ayyappa Naicker under the deed
dated 13th
January 1942 was
discharged by
payment of
Rs. 5,000 and interest on 3rd April, 1948 and Rs. 15 000 and
interest on the 28th March, 1949, as can be seen fr~m Exhs.
B-5 and B-6.
The case of the mortgagees is that when Exh. A-1 and A-2
were executed they were unaware of the fact that the insolvents
had got into financial difficulties by then. The learned District
Judge has accepted this plea and the learned Judge of the High
Court has not come to a contrary conclusion.
There was no relationship between the insolvents and the
!llortgagees.
In .fact they belong to different communities. The
msolv~nts are. Hindus and the mort~agees are Christians. They
a!so l~ve at different places. The msolvents were residing at
Srrk~1 and th<: mortgagees at Tuticorin, a place which is at a
considerable distance from Sirkali.
According to the mortgagees the circumstances under which
Exh. A-1 and A-2 came to be executed are as follows :-
704
SUPREME COURT REPORTS
(1969] 3 S.C.R.
In about the beginning of 1950 Ponnayya Konar approached
Srinivasa Naicker for a loan of Rs. 30,000. Srinivasa Naicker
told him that he and his son-in-law Ayyappa Naicker together
would lend him a sum of Rs. 25,000 on the mortgage of his
properties at Tuticorin.
But as they did not have the ·entire
sum of Rs. 25,000 in their hands at that time, a sum of
Rs. 10,000 was paid to Ponnayya Konar on April 28, 1950 and
a promissory note was taken for that amount. (Exh. A-11). In
the beginning of September, 1950 Ponnayya Konar sent his son
Arulappan with the letter (Exh. B-7) to get some more money.
Accordingly another sum of Rs. 5,000 was paid on September
8, 1950 and the pronote (Exh. A-12) was taken from Arulappan.
They agreed to pay the balance amount promised to be advanced
at the time of the execution of the mortgage deeds. The mortgage deeds were got written up and executed on 4th November
1950. Therein it was recited that they were executed for cash
consideration. It was thought that the mortgagees would be able
to pay the balance amount before the registtation of the documents on November 6, 1950. But by that time they were not
able to get together the entire amount that remained to be paid.
On the date of the registration Ayyappa Naicker paid to the
mortgagors only a sum of Rs. 4,500 another sum of Rs.
SOO
was adjusted towards the interest due on the sum of Rs. 15,000
previously advanced in. April and September.
The remaining
sum of
Rs. 5,000 was
paid in two
instalments, a
sum of
Rs. 1700 through Amirthan, the 3rd son of Ponnayya Konar
on January 7, 1951 and the remaining sum of Rs. 33,00 again
through Amirthan on February 10, 1951.
In the insolvency proceedings on the application of the petitioning creditor, a commissioner to search the house of the insolvents and seize their books of account and other relevant records
was appointed.
After search the Commissioner seized from the
house of the insolvents several account books (ledgers as well
as day books) as well as A-11 and A-12 whiFh were found punched and defaced.
Exhs. A-11, A-12 as well as several of the
entries in the ledger and day books were marked by consent in
the proceedings from which these appeals have arisen.
Hence
their genuineness is not open to question.
It is most unlikely that those documents were got up by the
insolvents and kept in their house, depending on the off chance
of a court commission,er searching their house and seizing them,
so that they may serve as corroborating evidence in support of
the impugned mortgages. If Exh. A-11 and A-12 as well as
the entries in the account hooks were intended to support the
clnim under Exhs. A-I und A-2, the most natural course would
have been to draw up the mortgage deeds in such a way as to
A
B
c
D
E
F
G
ll
A
B
c
D
E
F
G
H
MALIN! AYYAPPA v. MANGHRAJ (Hegde, /.)
705
take assistance from them.
Jn that case the mortgage deeds
would not have recited that they were executed for cash consideration. Further Exhs. A-11 and A-12 would have been left
in the possession of the mortgagees. We are convinced that. the
version put forward by the mortgagees is substantially true. The
original agreement between the parties was to take mortgagees
of the Tuticorin properties for cash consideration.
The intermediate steps taken were necessitated by the fact that mortgagees
were not able to Ret together in one lump the required am'ount.
The promissory notes Exhs. A·l I and A-12 were taken as stop
gap arrangements.
The recitals in the mortgage deeds accord
with the original agreement
between the parties.
That
was
likely to be the reason why the promissory notes Exh. A-11 and
A-12 were returned to the parties. The entries in the account
books of the insolvents reflect the transactions as they took place.
If they were bogus entries made to support Exhs. A-1 and A-2,
a receipt of Rs. 25,000 in cash on 4th November 1950 would
have been shown therein. The learned District Judge correctly
thought that the account entries in question had a great deal of
intrinsic value. On the other hand the insolvency court and the
High Court unnecessarily allowed themselves to be influenced by
the apparent contradiction appearing between the recitals in Exhs.
A·l and A-2 and those in Exhs. A-11, A-12 and the account
entri,~s.
One other circumstance which had weighed with the High
Court in holding that Exhs. A-1 and A-2 do not represent genuine
transactions is that in their pleadings the mortgagees have struck
to their case that cash consideration passed under Exh. A-1 and
A-2 and this the Court thought was a deliberately false plea. The
learned District Judge had carefully considered this circumstance
b~t was of opin.ion that the same was of no consequence. We
t~mk that the High Court had attached undue importance to that
c1rcu~stance. The issue before the parties at the time of the
pleadm~s wa~ whether the mortgages in question were supported
by cons1derahon or not and not the manner in which that considerati?n was paid.
In their plea the mortgagees were merely
adhenng !O t~e. t.~nor of the mortgage deeds.
From the facts
stated earh.er, 1t 1s clear that the mortgagees at all stages proceeded
on th.e basis that Exhs. A-1 and A:.2 were executed for cash consideration, the other steps taken by them being merely incidental.
The last and ~y far the most important circumstances that
appears to have mftuenced the High Court was the failure of the
mortgagees to pr<>?uce their account books.
This circumstance
was care~ully considered by the District Judge. He held that the
adverse mference that could be drawn from that circumstance
was rcbuht!ed by the other evidence available in the case
It was
Ppen to
1111 to do so. His finding on this point is also a finding
706
SUPREME COURT REPORTS
[1969] 3 S.C.R.
of fact and by no means a wholly unreasonable finding. The
High Court could not have interfered with the same.
From the above discussion it follows that generally speaking
-we shall come to the details of consideration presently-the
findings of the District Court as regards the payment of consideration under Exh. A-1 and A-2 are findings of facts and they were
not open to review by the High Court.
A
B
This takes us to the various items of consideration said to
have passed under Exhs. A-1 and A-2 and the proof thereof. The
District Court has held that the entire consideration mentioned in
those documents has passed.
We havs now to see whether its
finding in respect of the various items of consideration is . su11C
ported by legal evidence. The challenge to the payment of cons1-
'•
deration under Exhs. A-1 and A-2 made by the pet.itioning creditor
includes a challenge to the passing of the various items of consideration said to have passed. Ordinarily the burden of proving
that a document impe'ached under s. 53 of the Act is not supported
by consideration is on the party who challenges its validity. That
is so because the party who stands by the document can take
D
advantage of the admission made by the insolvent in the document
in question.
But in this case the mortgagees themselves do not
st\tnd by the recitals in the documents as regards the manner in
which consideration was paid. Therefore it is for them to prove
the passing of consideration.
Hence we have to see how far they
have succeeded in proving the same.
E
We shall first take up Exh. A-2, the mortgage deed executed
in favour of Srinivasa Naicker. It is said that the consideration
payable under that mortgage was paid in the following-manner :
Rs. 5,000 under promissory note Exh. A-11;
Rs. 1,700 paid in cash on 7-1-1951 and
Rs. 3,300 also paid in cash on 10-2-1951; The receipt of
the aforementioned sums is entered in the day book and ledger
of the insolvents.
The relevant entries amount to an admission
on the part of the insolvents of having received the
amounts
mentioned therein.
We have earlier considered the authenticity
of those accouQt · books.
The evidence of the mortgagees as
regards the payment of consideration is strongly corroborated by
the entries in the insolvents' account books. It was open to the
learned District Judge to rely on them. Hence his finding as
regards the validity of the mortgage under Exh. A-2 must be held
fo be final.
So far as the consideration for Exh. A-1 is concerned it is
said to have been made up of-
(i) a sum of Rs. 10,000 advanced under Exh. A-11;
F
G
ll
A
B
c
D
E
f
MALIN! AYYAPPA V. MANGHRAJ (Hegde, J.)
707
(ii) Rs. 500 the inte~est due under. Exh. A-11 and A-12;
and
(iii) Rs. 4,500 paid on 6-11-1950.
The receipts of the various sums mentioned above excepting
the sum of Rs. 4,500 said to have been paid on 6th November
1950, are entered in the day book and the ledger of the insolvents.
Hence to that extent the finding of the learned District
Judge is unassailable.
So far as the payment of Rs. 4,500 said
to have been made on November 6, 1950 is concerned no corresponding entry in the day book or the ledger had been proved.
This important circumstance was not noticed by the learned
District Judge.
He proceeded on the basis that the account
entries support the payment of that item as well. The evidence
of Ayyappa Naicker as regards that payment is necessarily interested. The only other evidence on that point is that of P.W. 2,
the Registrar who registered Exhs. A-1 and A-2. He is a relation
of the insolvents. He did not endorse that payment in Exh. A-1,
though he knew that he was required to do so under the rules.
We are also surprised how he could have rememliered that fact
after several years.
Had the learned District Judge's attention
been drawn to the fact that there is no documentary evidence. in
proof of the payment ofthat item it is highly doubtful whether
he would have hold in favour of the mortgagee as regards the
payment of that item. After going through the evidence bearing
on the point we are not satisfied that the payment of that amount
is satisfactorily proved.
In the result Civil Appeal No. 846 of 1963 is allowed and
the judgment and decree of the High Court is set aside and that
of the District Court restored. Civil Appeal No. 845 is allowed
i,n part i.e. the mortgage Exh. A-1 is neld to be valid to the
extent of Rs. 10,500 and interest thereon. In the circumstances
of the case we direct the parties. to bear their own costs in all the
courts.
R.K.P.S.
C.A. 845/63 al/owed in part.
C.A. 845/63 allowed in part: