LexJOHRILAL SONI versus SMT. BHANWARI BAI
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-- ./ JOHRILAL SONI v. SMT. BHANWARI BAI August 1, 1977 (N. L. UNTWALIA AND S. MURTAZA FAZAL ALI, JJ.] 231 Provincial lnsofl·ency Act 1920-Section 453-Wltether transfers cfj'cctt'd 1nore than 2 years prior to conunencen1e11t of insolvency proceedings can be declared void and inoperatii·e by insolrency court-Differen'ce between raid and 1·oidable transfers. i Pyare Laf Gupta, an insolvent, executed a deed of gift in favour of his wife It about 7 years before an application under s. 10 of the Provincial Insolvency Act c· 1920 was .made for adjudging him as an insolvent. The appellant was appointed as a Receive\- by the Court. He made an application under s. 4 of the Act for decklrihg the deed of gift as void and inoperative on the ground that it was a sham transaction~ The Insolvency Court ·upheld the plea of the appellant and declared the deed of gift as being void and inoperative. The respondent donee filed an appeal to the High Court challenging the judgment of the Insolvency Court on the ground that s. 53 of the Act does not authorise an Insolvency Court to decide questions about title or Talidity in respect of transfers made during a period beyond hvo years of the commence- - ment of the Insolvency proceedings. The High Court upheld the contention of the respondent. In an appeal by certificate the appellant contended that the High Court had taken an erroneous view of s. 53 of the Act. Section 53 merely deals with voidable transfer and not void transfer. The respondent contended that since the gift was made about 6-i years before the insolvency proceedings began, the R Insolvency Court could not examine the question of title. Allowing the appeal, ·HELD : Section 4 of the Act empowers the Insolvency Court to decide all questions whether of title or of priority or of any nature whatsoever which may arise in any case of insolvency. The said provision is, however, subject to the other provisions of the Act. Under s. 53 any transfer of Property not being made before and in consideration of marriage -or made· in favour of a purchaser F or encumbrancer in good faith and for valuable consideration shall if the trans· feror is adjudged insolvent on a petition presented. within two years after the date of the transfer, is voidable, against the Receiver and may be annulled by the court. Section 53 only deals with transfers which are voidable. There is a \Veil known distinction between a void and a voidable transfer. Void transfer is no transfer at all and is completely destitute of any legal effect. It is a nuJlity and does not pass any title at aII, where a transfer is nominal, sham or fictitious, the title remains with the transferor and so does the possession and nothing passes to the transferee. Such a transfer clearly falls outside the purview of G s. 53. The limitation of two years imposed by s. 53 applies only to voidable transfers. [233H. 234A-E] Haji Anwar Khan v. Mo!tanunad Khan & Ors. AIR [1929} All. 105, referred to. _"4fadan Kr1111ar dnd Anr. v. Mis. Han 1 'T\'arain AJ?rawal .& Ors. A.T.R. [19771 AU. 141; Padan1si Pren1chand and Ors. v. Laxn1a11 Vishnu Deshpande and Ors. H AIR fl.949] Born. 129; Radha Krishna Thakur and Anr. v. Official Receiver AIR [1932] Cal. 642; Biseswar Chaudhuri v. Ka11/1Gi SillRh AIR [1932] Pat. 129: G. N. Godho/e v. Mt. Nani Bai AIR [1938] Nag. 546 and Bud/IG Mal'" Offic;az Receiver AlR [1930] Lah. 122, approved. 232 SUPREME COURT REPORTS [1978] I S.C.R. A A1njad Ali and Ors. v. /\land Lal Tandon and Ors. A1R [1930] Oudh. 314, over-ruled. CIVIL APPELLATE JURISDICTION : Civil Appeal No. 149 of J 976 . • From the Judgment and Order dated 26-9-1973 of the Rajasthan High Court in D. B. Civil Insolvency Appeal No. 50 of 1972. ~ Badri Das Shanna and S. R. Srivastava for the Appellant. 0. P. Verma for the Respondent. ·,o The Judgment of the Court was delivered by FAZAL Au, J.-To what extent is s. 4 of the Provincial Insol- vency Act, 1920 controlled by s. 53 of the said Act in the matter of determination of the question of title of a property transferred by the insolvent before he was declared insolvent is the serious question of law which is involved in this appeal by certificate. The insolvent Pyarelal. Gupta appears to have executed a deed of gift in favour of his wife on November 7, 1961. About seven years later i.e. on April 1, 1968 an application under s. 10 of the Provincial Insolvency Act herein
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