1. This appeal and the connected appeals Nos. 323 and 325 of 1914 are appeals against the orders of the District Judge of South Malabar, dismissing petitions under Section 36 of the Provincial Insolvency Act, presented by the Receiver asking the Court to annul certain mortgages which were executed any one Abdul Kadir Sahib in favour of the respondent. The facts are somewhat complicated. Abdul Kadir Sahib who was a trader in Calicut was adjudged an insolvent by the District Court of South Malabar on 17th August 1910 on an application made by his creditors. On 13th July 1910 the insolvent had executed a simple mortgage, Ex. C, for Rs. 6,119-3-0 in favour of the respondent Oomer Sahib in respect of certain properties in Calicut. Oomer Sahib's brother had married the insolvent's sister. The document recites that it was executed in pursuance of the award made by two arbitrators in June 1910. Mr. Rosario contends that the learned District Judge ought to have held that under Section 36 of the Provincial Insolvency Act, the onus of proving that a mortgage executed by an insolvent within two years of his being adjudged as such was made in good faith and for valuable consideration and was, therefore, binding on the Receiver, 5 was on the mortgagee. We think this contention is correct: see Nilmoni Chowdhuri v. Basanta Kumar Banerjee(1) and Civil Miscellaneous Appeal No. 209 of 1914. However this may be, all the evidence being before the Court, the question of burden of proof is not of great importance. The respondent's account of the circumstances under which the mortgage Ex. C, came to be executed is shortly as follows:
Abdul Kadir, the respondent and the latter's brother Kojappa, who has married Abdul Kadir's daughter and had by her two daughters, were trading together in Madras, Colombo and Bunder. The partnership was dissolved on the death of Kojappa which took place apparently sometime in 1907. A document of dissolution of partnership, Ex. 1, was executed on 21st May 1910. On 23rd April and 21st May 1910 two muchilikas, Exs. 6 and 7, were executed by Adbul Kadir, the respondent and the heirs of Kojappa in favour of two persons named Syed Mahomed and Ahmed Mohideen, examined as respondent's 2 witness, who were appointed arbitrators to settle the accounts of partnership. Ex. 6 was signed by Abdul Kadir, the respondent and the father of Kojappa as his heir; Ex. 7 by a vakil named Ismail as agent of Kojappa's widow and one Ummar Sahib as agent of Kojappa's mother. The execution of muchilika 2 was, it is said, rendered necessary by the fact that Kojappa's widow and mother had not joined in executing Ex. 6. It is alleged that an award was passed on 1st July 1910.
2. According to respondent's evidence the accounts were examined by the arbitrators, who found that the assets of the firm amounted to Rs. 1,30,000 odd.
3. This was put up to auction among the parties and purchased by Abdul Kadir for Rs. 1,12,500. The substance of the award was that Abdul. Kadir was to take all the assets of the firm and pay the respondent Rs. 10,276 odd and the heirs of Kojappa Rs. 17,696 odd after making certain deductions. Abdul Kadir was to execute a mortgage for Rs. 6,119-3-0 over his properties in Calicut in favour of the respondent, the amount being payable by Abdul Kadir in eight annual instalments. In satisfaction of the amount due to the heirs of Kojappa, Abdul Kadir was to execute two mortgages for Rs. 12,353 and Rs. 10,000 pectively is favour of the daughters of Kojappa, his grandchildren and hia daughter, Kojappa's widow. It appears from the evidence of Mr. Shatna Row, the respondent's witness 3, a High Court vakil practising in Madras, who acted for the respondent, that owing to disputes between the latter and Abdul Kadir he advised them to dissolve the partnership and a deed of dissolution was drawn up.
4. The respondent appears to have been dissatisfied with the award, his chief objection being that the amount of rupees 6,000 odd due to him was made payable in right instalments: (see Ex. C.) Mr. Sharma Row sent a notice, Ex. 2, to the arbitrators impugning the validity of the award and also notices Ex. 3 to the debtors of the firm not to pay the amounts to Abdul Kadir. The differences between the parties were, however amicably settled, and on 17th September 1910 Abdul Kadir and the respondent entered into a fresh partnership deed, which provided that in addition to the mortgage Ex. C certain houses belonging to Abdul Kadir should be transferred to the respondent in order to satisfy fully his claims to his share in the partnership. Ex. 5, an unsigned typed document, is said to be a copy of an English translation of the ward which was drawn up in Tamil. Ex. 5 was produced by the respondent. According to the arbitrator the vakil Ismail made an English translation of the award and was asked to send a copy to each of the parties. The witness says that the original of Ex. 5 was prepared on the same day as Ex. 1 which is dated 21st May 1901 and was delivered the same day to Mr. Ismail. The original award is not produced and it is, we think, very doubtful whether Ex. 5 is really a true translation of the award and whether certain portions are not subsequent interpolations. It is unlikely that the parties would have wanted an English translation of the award.
5. There seems to be, however no doubt from Mr. Shama Row's evidence that an award was made and that Ex. C was executed in pursuance of the terms of the award. Mr. Rosario has drawn our attention to certain suspicious circumstances in connection with the award. He suggests that the whole proceedings were a farce, and that Abdul Kadir, knowing that he was on the brink of insolvency, in collusion with the respondent arranged to transfer all the immovable properties in Madras and Calicut to the respondent, his daughter and grandchildren. Some of the provisions in the award are certainly curious. One would have expected the partners to divide the properties, outstanding etc., equally instead of which Abdul Kadir took over the whole of the outstanding consisting principally of book debts. Respondent 2's witness admits that the only immovable properties which Abdul Kadir had in Madras were a house in Saidapet and a mortgage of Rs. 1,450 over another house and that these were set apart for the respondent's share, and that respondent and his father insisted on Abdul Kadir paying cash or giving security on immovable property as he had no properties anywhere except in Calicut.
6. On the other hand, there is nothing to show what the value of the book debts and outstanding of the firm was at the time; nor is there any evidence that the respondent knew that Abdul Kadir was in involved circumstances at that time. The respondent apparently insisted on getting a share of the partnership assets of the firm. The respondent and Abdul Kadir were not on good terms at the time is borne out by the fact that in July 1912 Abdul Kadir made a complaint, Ex. 12, against the respondent to the Commissioner of Police, as well as by the recitals in Ex. 4. If the intention of the parties had been to defeat the claims of the other creditors by executing documents in favour of the respondent and the insolvent's daughter and grandchildren, it is difficult to understand why they should have gone through the elaborate farca of making reference to arbitrators, consulting vakils and bringing into existence a bogus award. There is one other circumstance on which Mr. Rosario relies and it is this: The respondent states that he looked into the original title deeds when the mortgage was executed, and that the documents were with him at the time. In order to contradict this evidence, the cashier of the Bank of Madras, Calicut, was examined to prove that the four title-deeds for the properties in Calicut were deposited by Abdul Kadir with the Bank on 25th October 1909, and that the latter did not take them back till 1st August 1910, that is subsequent to the execution of Ex. C. The respondent's statement that the title-deeds were referred to must therefore be false. The District Judge observed that it is not proved that the documents referred to by the cashier relate to the lands mortgaged, as the witness cannot give particulars of the document.
7. The District Judge has, however overlooked the fact that the Bank took an extract, Ex. D, from the title-deeds, one of which relates to the plaint property, when they were returned to Abdul Kadir. The point is, however of no great importance, as Abdul Kadir may well have kept copies of the title-deeds. It is pointed out that the respondent did not in his evidence state whether he aocepted the mortgage, Ex. C, and if so, when. The witness ought, undoubtedly to have been questioned on this point but there is no reason, we think, to suppose that he did not accept the transfer. The insolvent whose evidence would have thrown light on the case could not, it appears, be examined, as it was not found possible to secure his attendance but no inference adverse to the respondent can, we think, be drawn from the circumstance. There are certainly suspicious features in the case, but on the whole we see no reason to differ from the conclusion arrived at by the District Judge that the mortgage was taken bona fide and that there was valuable consideration for the document, which was executed in satisfaction of the amount due to the respondent out of the assets of the partnership. Mr. Rosario contends that Ex. C having been attested by only one witness is invalid under Section 59 of the Transfer of Property Act, and cannot operate as a charge.
8. We are unable to agree with the District Judge that the balance of authority is in favour of holding that a document such as Ex. C may operate as a charge, even if it be technically invalid as a mortgage. The District Judge has apparently overlooked the fact that the decision in Neelakantam Iyer v. Madasami Tevan(2), to which he refers, was not followed in Samoo Patter v. Abdul Sammad Saheb(3), where it was held that an instrument which is invalid under Section 59 of the Transfer of Property Act, as a mortgage cannot operate to create a charge under Section 100 of the Transfer of Property Act: see also Royzuddi Sheik v. Kali Nath Mookerjee(4). The question whether a mortgage such as Ex. C is invalid as a mortgage is not, however one which it is necessary for the Court to consider in deciding whether a transfer is void under Section 36 of the Provincial Insolvency Act. The appeal is dismissed with costs out of the insolvent's estate.
S.N/R.K
9. Appeal dismissed.