1958 (2) TMI 42 - SC - Indian Laws

Summary

Issues Involved:
1. Validity of the deed of gift under Section 55 of the Presidency Towns Insolvency Act.
2. Admissibility of oral evidence under Sections 91 and 92 of the Indian Evidence Act.
3. Whether the official assignee represents the insolvent or the creditors in proceedings under Section 55 of the Presidency Towns Insolvency Act.

Issue-wise Detailed Analysis:

1. Validity of the deed of gift under Section 55 of the Presidency Towns Insolvency Act:
The appeal arises from a notice of motion taken out by the respondent official assignee under Section 55 of the Presidency Towns Insolvency Act against the appellants for a declaration that a deed of gift executed by the insolvent on May 22, 1950, in favor of the appellants was void. The High Court of Judicature at Bombay adjudged Daulatram insolvent on August 21, 1951. Subsequently, the respondent took out the notice of motion on September 26, 1951. The deed of gift was executed in favor of the insolvent's wife and three sons. The appellants contended that the deed, though labeled as a gift, was actually supported by valuable consideration and thus did not fall within the mischief of Section 55 of the Act. The trial court, however, granted the declaration claimed by the respondent, declaring the deed void under Section 55.

2. Admissibility of oral evidence under Sections 91 and 92 of the Indian Evidence Act:
The principal point in the appeal was whether the appellants were entitled to lead oral evidence to show the real nature of the impugned transaction. Section 91 of the Evidence Act deals with the exclusion of oral by documentary evidence, stating that no evidence shall be given in proof of the terms of a contract, grant, or other disposition of property except the document itself. Section 92 excludes the evidence of oral agreements to contradict, vary, add to, or subtract from the terms of the document proved under Section 91. The appellants sought to lead oral evidence to prove that the transaction was supported by valuable consideration. The trial court allowed the evidence, but the appellate court held that such evidence was inadmissible under Section 92. The Supreme Court, however, found that Sections 91 and 92 did not apply to the present proceedings between the official assignee and the appellants, as the official assignee does not represent the insolvent but acts in the interest of the creditors.

3. Whether the official assignee represents the insolvent or the creditors in proceedings under Section 55 of the Presidency Towns Insolvency Act:
The Supreme Court examined whether Section 92 applied to the proceedings between the official assignee and the appellants. It was held that the official assignee, when acting under Section 55, does so for the benefit of the creditors and not as a representative of the insolvent. The property in question had already left the insolvent's estate, and the official assignee's role was to bring it back for the creditors. The court noted that the official assignee has a higher title than the insolvent and acts in the interest of the whole body of creditors. The court also pointed out that a creditor can file a petition under Section 55 if the official assignee refuses to act, further supporting the conclusion that the official assignee does not represent the insolvent. Consequently, Section 92 did not apply, and the appellants were entitled to lead oral evidence.

Conclusion:
The Supreme Court set aside the decree passed by the High Court at Bombay and remanded the case for disposal on the merits in accordance with the law. The court held that the appellants were entitled to lead evidence in support of their plea, as Section 92 of the Evidence Act was inapplicable to the proceedings. The costs of the appeal were to abide by the final result in the appeal before the High Court at Bombay.

Appeal allowed. Case remanded.