Appeals Nos 845 and 846 of 1963
Appeals by special leave from the judgment and order dated January 17 1958 of the Madras High Court in Civil Revision Petitions Nos 981 and 982 of 1956
section V Gupte and R Thiagarajan for the appellants in both the appeals
Naunit Lal for the respondents Nos 1c and 17 in CA No 845 of 1963 and respondents Nos 1 c and 16 in CA No 846 of 1963
The Judgment of the Court was delivered by Hegde J
These appeals arise from an insolvency proceeding wherein one Ponnayya Konar and his sons were adjudicated as insolvents
In the said proceeding the petitioning creditor sought to get annulled two mortgages one for Rs 15000 Exh
A 1 executed by the insolvents in favour of Ayyappa Naicker the appellant in Civil Appeal No 845 of 1963 and the other for Rs 10000 Exh
A 2 the subject matter of Civil Appeal No 846 of 1963 in favour of one Srinivasa Naicker the father in law of the aforementioned Ayyappa Naicker
The said Srinivasa Naicker is dead and the appeal is being prosecuted by his legal representatives
Both those mortgages are dated November 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 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 751 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
The learned Counsel for the appellants challenged the decision of the High Court primarily on two grounds
According to him 700 the High Court while acting under the 1st proviso to section 7 5 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 High Court are unsustainable on the evidence on record
The learned Counsel for the contesting respondents supported the decision of the High Court
The two principal questions that arise for decision in these appeals are 1 was the High Court within its jurisdiction in interfering with the findings of the learned District Judge that the impugned transactions are bona fide transactions and that they were supported by consideration and 2 are the conclusions reached by the High Court correct on the facts and circumstances of the case  It would be convenient to take up first the question as to the scope of the powers of the High Court under the 1st proviso to section 75 1 of the Act
That section reads  The debtor any creditor the receiver or any other person aggrieved by a decision come to or an order made in the exercise of insolvency jurisdiction by a Court subordinate to a District Court may appeal to the District Court and the order of the District Court upon such appeal shall be final  Provided that the High Court for the purpose of satisfying itself that an order made in any appeal decided by the District Court was according to law may call for the case and pass such order with respect thereto as it thinks fit  Provided further that any such person aggrieved by a decision of the District Court on appeal from a decision of a subordinate Court under section 4 may appeal to the High Court on any of the grounds mentioned in sub section 1 of section 100 of the Code of Civil Procedure 1908
 According to Shri section V Gupte learned Counsel for the appellants the jurisdiction of a High Court under the 1st proviso to section 751 is a very limited one the same being not more than that conferred on it by sub section
1 of section 100 of the Code of Civil Procedure
In support of his contention he invited our attention to the scheme of section 751 of the Act
He urged  that sub section
1 of section 75 prescribes that the decision of the District Court in appeal is final and the finality conferred on the decision of the District Court is subject to a very limited scrutiny by the High Court
We were further told that the power conferred on the High Court under the 1st proviso to section 751 is only a revisional power which power in its very nature is narrower in compass than an appellate pow
According to him the power conferred under the 1st proviso to section 751 of the Act is co extensive with that 701 given to the High Court under section 1001 a of the Code of Civil Procedure
On the other hand Mr Naunit Lal learned Counsel for the respondent urged that the High Court under the 1st proviso to section 751 of the Act has an extensive power and that power is very much wider than the power conferred on it under section 1001 a of the Code of Civil Procedure 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
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 jurisdiction to reappreciate the evidence on record
While exercising that power the High Court is by and large bound by the findings of fact reached by the District Court
If the legislature intended to confer power on it to reexamine both questions of law and fact it would have conveyed its intention by appropriate words as has been done under various other statutes
A wrong decision on facts by a competent court is also a decision according to law
For these reasons we cannot accept the contention of Mr Naunit Lai that the power conferred under the 1st proviso to section 75  1  of the Act enables it to de novo examine the findings of fact reached by the District Court
A decision being contrary to law as provided in section 1001 a of the Code of Civil Procedure is not the same thing as a decision being not according to law as prescribed in the 1st proviso of section 751 of the Act
The latter expression is wider in ambit than the former
It is neither desirable nor possible to give an exhaustive definition of the expression according to law
The power given to the High Court under the 1st proviso to section 751 of the Act is similar to that given to it under section 25 of the Provincial Small Causes Courts Act
Explaining the scope of the latter provision Beaumont CJ as he then was in Bell  Co Ltd vs Waman Hemraj 1 observed The object of section 25 is to enable the High Court to see that there has been no miscarriage of justice that the decision was given according to law
The section does not enumerate the cases in which the Court may 1 193840 Bom
LR 125
L10Sup69 10 702 interfere in revision as does section 115 of the Code of Civil Procedure and I certainly do not propose to attempt any exhaustive definition of the circumstances which may justify such interference but instances which readily occur to the mind are cases in which the Court which made the order had no jurisdiction or in which the Court has based its decision on evidence which should not have been admitted or cases where the unsuccessful party has not been given a proper opportunity of being heard or the burden of proof has been placed on the wrong shoulders
Wherever the Court comes to the conclusion that the unsuccessful party has not had a proper trial according to law then the Court can interfere
But in my opinion the Court ought not to interfere merely because it thinks that possibly the Judge who heard the case may have arrived at a conclusion which the High Court would not have arrived at The said statement of the law was accepted as correct by this Court in Hari Shankar vs Rao Girdhari Lal Chowdhury1
We think the same applies squarely to the 1st proviso to section 7 5 1 of the Act
In support of his contention Mr Gupte placed considerable reliance on the decision of this Court in Official Receiver Kanpur and Anr
vs Abdul Shakur and Ors
2 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 751 proviso 1 nor even under proviso 2 of the to set aside the judgment of the District Court for it is well settled that the question whether a statutory presumption is rebutted by the rest of the evidence is a question of fact
 It may be remembered that Shah J was also a party to the decision in Hari Shankar s case2 We see no conflict between 1 1962 1 Supp
SCR 933
2  703 the two decisions
The former decision enumerates some of the circumstances under which the High Court can interfere while considering whether the decision under review was made according to law
All that is laid down in Abdul Shakur s case1 is that the High Court is not competent to disturb a finding of fact reached by the District Court even  if in reaching that finding it was required to take into consideration a statutory presumption
We shall now proceed to examine the facts of this case bear ing in mind the principles set out above
We shall first set out the undisputed facts
The respondent Ponnayya Konar was a well to do person
He had one rice mill at Kivalur and another at Sirkali
He also had landed properties in Sirkali and Tuticorin
He was having money dealings with the family of Sreenivasa Naicker from about the year 1925 Under the original of Exh
B 1 a registered deed of Othi dated 28th September 1925 he had borrowed a sum of Rs 30000 from Rangappa Naicker the father of Srinivasa Naicker
On October 5 1930 the said deed was renewed by the execution of a simple mortgage deed by Ponnayya Konar and his sons in favour of Rangappa Naicker
Under the registered mortgage deed dated 13th January 1942 Exh
B 4 is its copy tile insolvents had borrowed from Ayyappa Naicker Rs 20000 out of which he discharged some of the debts due to Rangappa Naicker
Ayyappa Naicker was himself a rich man
Under the partition deed entered into in his family on October 30 1936 Exh
B 3 he got a cash of Rs 52000 and lands measuring 250 acres
The debt due to Ayyappa Naicker under the deed dated 13th January 1942 was discharged by payment of Rs 5000 and interest on 3rd April 1948 and Rs 15000 and interest on the 28th March 1949 as can be seen from Exhs
B 5 and B 6
The case of the mortgagees is that when Exh
A 1 and A 2 were executed they were unaware of the fact that the insolvents had got into financial difficulties by then
The learned District Judge has accepted this plea and the learned Judge of the High Court has not come to a contrary conclusion
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
According to the mortgagees the circumstances under which Exh
A 1 and A 2 came to be executed are as follows 1  704 In about the beginning of 1950 Ponnayya Konar approached Srinivasa Naicker for a loan of Rs 30000
Srinivasa Naicker told him that he and his son in law Ayyappa Naicker together would lend him a sum of Rs 25000 on the mortgage of his properties at Tuticorin
But as they did not have the entire sum of Rs 25000 in their hands at that time a sum of Rs 10000 was paid to Ponnayya Konar on April 28 1950 and a promissory note was taken for that amount
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 5000 was paid on September 8 1950 and the pronote Exh
A 12 was taken from Arulappan
They agreed to pay the balance amount promised to be advanced at the time of the execution of the mortgage deeds
The mortgage deeds were got written up and executed on 4th November 1950
Therein it was recited that they were executed for cash consideration
It was thought that the mortgagees would be able to pay the balance amount before the registration of the documents on November 6 1950
But by that time they were not able to get together the entire amount that remained to be paid
On the date of the registration Ayyappa Naicker paid to the mortgagors only a sum of Rs 4500 another sum of Rs 500 was adjusted towards the interest due on the sum of Rs 15000 previously advanced in April and September
The remaining sum of Rs 5000 was paid in two instalments a sum of Rs 1700 through Amirthan the 3rd son of Ponnayya Konar on January 7 1951 and the remaining sum of Rs 3300 again through Amirthan on February 10 1951
In the insolvency proceedings on the application of the petitioning creditor a commissioner to search the house of the insolvents and seize their books of account and other relevant records was appointed
After search the Commissioner seized from the house of the insolvents several account books ledgers as well as day books as well as A 1 1 and A 1 2 which were found punched and defaced
A 11 A 12 as well as several of the entries in the ledger and day books were marked by consent in the proceedings from which these appeals have arisen
Hence their genuineness is not open to question
It is most unlikely that those documents were got up by the insolvents and kept in their house depending on the off chance of a court commissioner searching their house and seizing them so that they may serve as corroborating evidence in support of the impugned mortgages
If Exh
A 11 and A 12 as well as the entries in the account books were intended to support the claim tinder Exhs
A 1 and A 2 the most natural course would have been to draw up the mortgage deeds in such a way as to 705 take assistance from them
In that case the mortgage deeds would not have recited that they were executed for cash consideration
Further Exhs
A 11 and A 12 would have been left in the possession of the mortgagees
We are convinced that the version put forward by the mortgagees is substantially true
The original agreement between the parties was to take mortgages 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 25000 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
One other circumstance which had weighed with the High Court in holding that Exhs
A 1 and A 2 do not represent genuine transactions is that in their pleadings the mortgagees have struck to their case that cash consideration passed under Exh
A 1 and A 2 and this the Court thought was a deliberately false plea
The learned District Judge had carefully considered this circumstance but was of opinion that the same was of no consequence
We think that the High Court had attached undue importance to that circumstance
The issue before the parties at the time of the pleadings was whether the mortgages in question were supported by consideration or not and not the manner in which that consi deration was paid
In their plea the mortgagees were merely adhering to the tenor of the mortgage deeds
From the facts stated earlier it is clear that the mortgagees at all stages proceeded on the basis that Exhs
A 1 and A 2 were executed for cash consideration the other steps taken by them being merely incidental
The last and by far the most important circumstances that appears to have influenced the High Court was the failure of the mortgagees to produce their account books
This circumstance was carefully considered by the District Judge
He held that the adverse inference that could be drawn from that circumstance was rebutted by the other evidence available in the case
It was open to him to do so
His finding on this point is also a finding 706 of fact and by no means a wholly unreasonable finding
The High Court could not have interfered with the same
From the above discussion it follows that generally speaking we shall come to the details of consideration presently the findings of the District Court as regards the payment of consideration under Exh
A 1 and A 2 are findings of facts and they were not open to review by the High Court
This takes us to the various items of consideration said to have passed under Exhs
A 1 and A 2 and the proof thereof
The District Court has held that the entire consideration mentioned in those documents has passed
We have now to see whether its finding in respect of the various items of consideration is supported by legal evidence
The challenge to the payment of consideration under Exhs
A 1 and A 2 made by the petitioning creditor includes a challenge to the passing of the various items of consideration said to have passed
Ordinarily the burden of proving 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
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 5000 under promissory note Exh
A 11 Rs 1700 paid in cash on 7 1 1951 and Rs 3300 also paid in cash on 10 2 1951 The receipt of the aforementioned sums is entered in the day book and edger 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 mortgagees as regards the payment of consideration is strongly corroborated by the entries in the insolvents  account books
It was open to the learned District Judge to rely on them
Hence his finding as regards the validity of the mortgage under Exh
A 2 must be held to be final
So far as the consideration for Exh
A 1 is concerned it is said to have been made up of i a sum of Rs 10000 advanced under Exh
A 11 707 ii Rs 500 the interest due under Exh
A 11 and A 12 and iii Rs 4500 paid on 6 11 1950
The receipts of the various sums mentioned above excepting the sum of Rs 4500 said to have been paid on 6th November 1950 are entered in the day book and the ledger of the insolvents
Hence to that extent the finding of the learned District Judge is unassailable
So far as the payment of Rs 4500 said to have been made on November 6 1950 is concerned no corresponding entry in the day book or the ledger had been proved
This important circumstance was not noticed by the learned District Judge
He proceeded on the basis that the account entries support the payment of that item as well
The evidence of Ayyappa Naicker as regards that payment is necessarily interested
The only other evidence on that point is that of PW 2 the Registrar who registered Exhs
A 1 and A 2
He is a relation of the insolvents
He did not endorse that payment in Exh
A 1 though he knew that he was required to do so under the rules
We are also surprised how he could have remembered that fact after several years
Had the learned District Judge s attention been drawn to the fact that there is no documentary evidence in proof of the payment of that item it is highly doubtful whether he would have held in favour of the mortgagee as regards the payment of that item
After going through the evidence bearing on the point we are not satisfied that the payment of that amount is satisfactorily proved
In the result Civil Appeal No 846 of 1963 is allowed and the judgment and decree of the High Court is set aside and that of the District Court restored
Civil Appeal No 845 is allowed in part ie the mortgage Exh
A 1 is held to be valid to the extent of Rs 10500 and interest thereon
In the circumstances of the case we direct the parties to bear their own costs in all the courts
RKPS CA 84563 allowed in part
CA 84563 allowed in part


Summary:
The petitioning creditor in an insolvency proceeding sought annullment of two mortgages one for Rs 15000 in favour of the appellant in CA 845 and another for Rs 10000 in favour the appellant in CA 846
The mortgages were dated November 4 1950 and were registered on November 6 1950
The insolvency Court held that the mortgages were not supported by consideration and were executed with a view to screening some of the properties of the insolvents from their creditors
It therefore annulled the mortgages under section 53 of the 
The District Judge in appeal reversed the findings of the trial court but the High Court acting under the first proviso of section 751 of the Act set aside the judgment of the District Judge and restored that of the Insolvency Court
in an appeal to this Court by special leave it was contended on behalf of the appellants i that the High Court while acting under the first proviso of section 751 to satisfy itself that an order made in any appeal decided by the District Court was according to law had no power to disturb the findings of fact reached by the appellate court the jurisdiction of the High Court is a very limited one and not more than that conferred on it by sub section 1001 CPC and ii that the conclusions of the High Court were unsustainable on the evidence on record
HELD i The legislature did not confer on the High Court under the first proviso to section 751 of the Act an appellate power nor did it confer on if a jurisdiction to reappreciate the evidence on record
While exercising that power the High Court is by and large bound by the findings of fact reached by the District Court
If the legislature intended to confer power on it to reexamine both questions of law and fact it would have conveyed its intention by appropriate words as has been done under various other statutes
A wrong decision on facts by a competent court is also a decision according to law
701 D A decision being contrary to law as provided in section 1001a of the Code of Civil Procedure is not the same thing as a decision being not according to law as prescribed in the first proviso of section 751 of the Act
The latter expression is wider in ambit than the former
It is neither desirable not possible to give an exhaustive definition of the expression according to law
The power given to the High Court under the first proviso to section 751 of the Act is similar to that given to it under section 25 of the Provincial Small Causes Courts Act
701 F Bell  Co Ltd vs Waman Hemraj  Hari Shankar vs Rao Girdhari Lai Chowdhury 1962 1 supp
SCR 399 699 Official Receiver Kanpur and Anr
vs Abdul Shakur   referred to and explained
ii On the evidence the findings of the District Court on the payment of consideration were correct findings of fact and the High Court could not have interfered with the same
However one payment in respect of the mortgage in CA 845 was not proved and the mortgage was therefore only valid to the extent of Rs 105001