1929 (7) TMI 8 - HC - Indian Laws

Summary

Issues:
1. Validity of mortgage deed execution and consideration
2. Allegation of mortgage deed executed to defraud creditors
3. Stamp duty and registration validity of the mortgage deed

Analysis:

Issue 1: Validity of mortgage deed execution and consideration
The case involved a mortgage dated 13th March 1924, where the plaintiffs claimed to be mortgagees under the deed. The consideration for the mortgage was a sum of &8377; 13,764, which included the balance of principal and interest on three promissory notes and a cash advance. The respondents alleged that the mortgage deed was executed without consideration and to defraud them. The District Judge found that the deed was duly executed with genuine consideration, despite the respondents' claims. The court emphasized that a debtor can prefer a creditor unless the transaction can be challenged in bankruptcy, and a mere preference of one creditor over another does not necessarily constitute fraud under Section 53 of the Transfer of Property Act, 1882.

Issue 2: Allegation of mortgage deed executed to defraud creditors
The respondents contended that the mortgage deed was made with the intent to defeat and delay creditors, making it voidable under Section 53 of the Transfer of Property Act. However, the court found that since the consideration for the deed was real and there was no reservation of benefit for the debtors, the deed could not be impeached solely on the grounds of preferring one creditor over another. The court cited previous legal precedents to support this interpretation of the law.

Issue 3: Stamp duty and registration validity of the mortgage deed
The respondents raised an objection regarding the stamp duty on the mortgage deed, claiming it was not duly stamped as per the Stamp Act, 1899. However, both lower courts rejected this contention. The plaintiffs rectified the stamp issue by applying to the Collector for correction before the document was forwarded for registration. The court held that once the document was certified as duly stamped, its admission could not be challenged at any stage of the suit based on a stamp objection. Additionally, the court examined the provisions of the Registration Act, emphasizing that defects in the registrar's procedure do not invalidate registration if the registrar had jurisdiction and made a mistake in the exercise of it.

In conclusion, the Privy Council allowed the appeal, setting aside the High Court's decree and restoring the District Judge's decree in favor of the appellants. The court held that the mortgage deed was valid, the consideration was genuine, and the stamp duty and registration issues did not affect the validity of the deed. The respondents were ordered to pay the costs of the appellants in both the High Court and the Privy Council.