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TMI Blog1969 (2) TMI 194X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 Section 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 to the conclusion that those mortgages were fully supported by consideration and that they were genuine transactions. The High Court acting under the 1st proviso to Section 75(1) of the Act reversed the judgment of the learned District Judge and restored that of the Insolvency Court. These appeals have been brought against the decision of the High Court after obtaining special leave from this Court. 2. The learned Counsel for the appellants challenged the decision of the High Court primarily on two grounds. According to him the High Court while acting under the 1st proviso to Section 75(1) of the Act had no power to disturb the findings of fact reached by the appellate court. Next he contended that the conclusions of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on 75(1) of the Act is co-extensive with that given to the High Court Under Section 100(1)(a) of the CPC. 5. On the other hand Mr. Naunit Lal, learned Counsel for the respondent urged that the High Court under the 1st proviso to Section 75(1) of the Act has an extensive power and that power is very much wider than the power conferred on it Under Section 100(1)(a) of the CPC; the power of the High Court under the 1st proviso to Section 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 evidence and whether it had properly assessed that evidence. 6. 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 Section 75(1) 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 fac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s correct by this Court in Hari Shankar v. Rao Girdhari Lal Chowdhury [1962] 1 Supp.S.C.R.933 We think the same applies squarely to the 1st proviso to Section 75(1) of the Act. 9. 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. [1965]1SCR254 . wherein this Court held that the High Court in exercise of its power under the 1st proviso to Section 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 Section 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 Section 75(1) proviso 1, nor even under proviso 2 of the Provincial Insolvency Act to set aside the judgment of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rned Judge of the High Court has not come to a contrary conclusion. 14. There was no relationship between the insolvents and the mortgagees. In fact they belong to different communities. The insolvents are Hindus and the mortgagees are Christians. They also live at different places. The insolvents were residing at Sirkali and the mortgagees at Tuticorin, a place which is at a considerable distance from Sirkali. 15. According to the mortgagees the circumstances under which Exh. A-3 and A-2 came to be executed are as follows : 16. 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntially 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 get together in one lump the required amount. The promissory notes Exhs. A-11 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-1 and A-2 and those in Exhs. A-11, A-12 and the account entries. 19. One other circumstance which had weighed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oving that a document impeached Under Section 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 advantage of the admission made by the insolvent in the document in question. But in this case the mortgagees themselves do not stand 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. 23. 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 account books. The evidence of the mor ..... X X X X Extracts X X X X X X X X Extracts X X X X
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