Nowroji Pudumjee Siradar v. Deccan Bank Ltd.

Macleod, C.J:— This is an appeal from order made on an application to the ??? First Class Subordinate Judge of Poona for attachment before judgment under Order 38, rule 5 of the CPC, in Suit No. 25 of 1919. The plaintiffs who were the voluntary liquidators of the Deccan Bank filed this suit against defendant No. 1 and other persons to recover from the defendants the losses incurred by the Bank owing to the alleged misconduct and negligence of the defendants. The Bank went into voluntary liquidation in 1916 and the suit was filed in January 1919. Before an order of attachment before judgment can be made, the Court must be satisfied by an affidavit or otherwise, that the defendant, with intent to obstruct or delay the execution of any decree that may be passed against him is about to dispose of the whole or any part of his property. It is not disputed that defendant No. 1 had agreed to sell two items of his immoveable property in the Poona District. But merely because he has attempted to sell some of his immoveable property while proceedings against him are pending, it does not follow that he is disposing of the property with intent to obstructor delay the execution of any decree that may be passed in the suit. The Judge in the Court below in his judgment after setting out the facts says:

“Having regard, then, to the position in life of defendant No. 1 as well as to the nature and value of the plaintiffs' claim, the two agreements to sell foe Rs. 29,300 do not appear to me to have been entered into by the defendant No. 1 bona fide but appear presumably to have been made with intent to defraud the plaintiffs.”

2. It may be quite possible that the defendant bad an intention to defraud the plaintiffs. But there is nothing in the mere agreement to sell this portion of the first defendant's property from which it can be presumed that he actually had that intention. A man is not debarred from dealing with his property because a suit has been filed against him. Otherwise, in every case in which a suit is brought against a man, if during the pendency of the proceedings he sells some of his property, that would be ab once a sufficient ground to satisfy the Court that he is disposing of his property with intent to defraud tbs plaintiff. Clearly there must be additional circumstances before the Court can be satisfied that such an intention exists.

3. The plaintiffs rely on certain sales effected by the first defendant in previous years to show that he had the intention to defraud when he entered into the present transaction. There are two previous ??? one so far back as 1898 and the other in 1916, three years before the institution of the suit.

4. The sale in 1916, as the defendant himself says, was effected in order to pay off certain creditors from whom he had contracted debts in order to help the Bank which is now in liquidation. Therefore, it cannot possibly be inferred that because in 1916 the first defendant sold some of his property in order to pay off certain debts which had been incurred, the present transaction was entered into with intent to defraud, and the fact that the plaintiffs relied on those previous dealings is a sign of the weakness of their case. There is absolutely no ground whatever upon which the Court could be satisfied that the first defendant had any fraudulent intention when he entered into the agreements in question. As a matter of fact, it is admitted that there has been a considerable rise in the value of immoveable property in and around Poona, and it might more reasonably be inferred that the first defendant was taking advantage of that rise in price to dispose of these two items of his immoveable property, which admittedly form a small proportion of his whole property. It seems to me that the order of the Court below is wrong and therefore must be set aside. The appellant to get his costs, in this Court, the costs incurred in the Court below will be costs in the cause.

Shah, J.:— I agree. I am satisfied that the evidence on the present record is insufficient to justify the inference that defendant No. 1 was about to dispose of a part of his property with intent to obstruct or delay the execution of any decree that may be passed in the suit against him. The value of the properties which are agreed to be sold after the filing of the suit bears a small proportion to the total value of his assets; and in dealing with the property in that manner it cannot be said that he intended to obstruct or delay the execution of the decree that may be passed against him. His dealing with the property in 1898 has practically no bearing upon the question at issue and the alienation in 1916 also has, if at all, a remote hearing upon it. I may, however, add that though the facts now proved are sufficient to justify an inference as to his ??? to defeat or delay the plaintiffs' aim, if he proposes hereafter to deal with any part of his property in such manner as would require the consideration of the question as to whether he does so with intent to obstruct or delay the execution of the decree that may be passed against him, these facts will not be excluded from consideration. All that we decide now is that the alienations so far as they have proceeded do not justify the inference as to the intention of defendant No. 1, which is necessary to invite the application of rule 5, Order 38 CPC.

5. Order set aside.