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4. The learned Subordinate Judge framed three issues which were: (1) whether the composition deed, dated 25th May 1929, was fictitious and was executed fraudulently to defeat the creditors or it was executed honestly and for the benefit of all the creditors. (2) Is the plaintiff also bound by the terms of the composition deed in dispute? If so, is he entitled to obtain the declaration claimed? (3) Is the plaintiff entitled to the relief sought? It would thus appear that no issue was struck on the question whether the composition deed required registration or not and no finding was given by the learned Subordinate Judge on the point. He came to the conclusion that the deed was executed in collusion with the trustees and that it was a colourable transaction. As regards "The legal position of the composition deed," he was of the opinion that the authorities cited by the defendants, being of a time when there was no insolvency codified law," were not applicable to the facts of the case, and that the defendants could have proceeded either by way of a contract, if they had obtained the signatures of the plaintiff also on the composition deed, or could have proceeded under the insolvency law in force in these Provinces, but that they had taken neither of those courses. He further observed that as the document effected a sort of adjustment between the plaintiff decree-holder and the defendants second party the latter could have proceeded under the Code of Civil Procedure under Order 17.

7. We might mention at the very outset that the case was not properly handled in the Court below by the parties and that the learned Subordinate Judge himself did not examine the case from all points of view and has done very scant justice to the complicated questions of law and fact that arose in the case. The contention of the appellants is that the composition deed, dated 25th May 1929, was executed honestly for the benefit of all the creditors, that the finding of the learned Subordinate Judge to the contrary was wrong and that the property was not liable to attachment and sale at the instance of the plaintiff in execution of his decree against the defendants' second party. Upon the judgment of the Court below the very first question that we have got to decide is whether the composition deed was a paper transaction or whether it had the effect of vesting the property of the debtor firm in the trustees. No plea connected with the Registration Act was taken in the grounds of appeal, but in the course of arguments that point assumed importance and we shall have to discuss it at length at a later stage. It was not said that it was not open to a debtor to arrive at a composition with his creditors, but it was contended strenuously on behalf of the respondents that a composition deed properly so called was an offspring of contract and did not contemplate the intervention of trustees. In support of this contention our attention was drawn to the definition of a 'Composition' given in Wharton's Law Lexicon, Edn. 13, at p. 197 as an agreement made between an insolvent debtor and his creditors by which the latter accept a part of their debts in satisfaction of the whole, but the learned writer after giving this definition makes a reference to 'arrangements' which are described at p. 69 and the discussion contained there under the heading of "Arrangements between debtors and creditors" refers to the various enactments in England, especially the Deeds of Arrangement Act, 1914, and there cannot be the slightest doubt that the machinery of trust is recognised there. In Bouvier's Law Dictionary a 'composition' is defined as an agreement made upon a sufficient consideration, by which the creditor accepts part of the debt due to him in satisfaction of the whole, but this does not show if the agreement provides for the intervention of the trustees that it will not be a composition. In the same book a deed of arrangement' is denned as "a term used in England to express an assignment for the benefit of creditors," and in England, as we have said before, the Deeds of Arrangement Act provides for the creation of trusts. The expression "Composition deed" has not been defined or described in any Indian statute except in Article 22, Schedule 1, Stamp Act, (Act 2 of 1899) where, in the term "Composition deed," are included instruments executed by a debtor (1) whereby he conveys his property for the benefit of his creditors, (2) whereby payment of a composition or dividend on their debts is secured to the creditors and, (3) whereby provision is made for the convenience of the debtor's business under the supervision of Inspectors or under letters of licence for the benefit of his creditors. We shall presently show that arrangements by which a debtor bona fide assigns his entire property to trustees for the benefit of his creditors are well known in England as well as in India and have the effect of divesting the debtor of any interest in the property so assigned, so that the property cannot be the subject of attachment issued subsequently at the instance of a creditor who has obtained a decree upon his debt. Lewin on Trusts, Edn. 13, p. 542, says:

There is nothing whatever in the language of the deed to show that there was any composition, any settlement with the creditors that the debtor should pay less than he owed to them and that they agreed to accept that compositions; the essential test of a composition deed is that there ought to be a compounding of debts due; of that there is no trace whatever so far as the language of this document is concerned.

15. On this reasoning the document was held not to be a composition deed. The Courts' opinion, however, appears to have been based upon the case of The Queen v. Cooban (1886) 18 QBD 269, where the question was whether a cessio bonorum for the benefit of creditors by a document which incorporated a release by the creditors was a composition deed. Curiously enough the same deed was again interpreted in the Bombay High Court by Scott, C.J., and Batchelor, J., in Chandra Shanker v. Bai Magan 1914 38 Bom 576, where the terms of the deed are given at length. It appears that the debtor executed a deed making over all specified assets to certain nominated trustees with the consent of creditors to the extent of one lakh twenty-two thousand rupees out of the total number of creditors claiming one lakh sixty thousand eight hundred rupees and the document was held to be a composition deed and to have the effect of vesting the property in the trustees.

33. The reasons given in Malukchand v. Manilal (1904) 28 Bom 364 are that if there is an element of trust in a composition deed, that element enters into it as a mere accident and it is not the essence of it. With great respect we are unable to agree with this. It is true that in a composition deed the essence is undoubtedly the compounding of debts, but where it lays down the machinery of a trust, the trust is an integral part of it and the trust contained therein cannot be said to be accidental or incidental. Another reason given by Chandavarkar, J., is that in a composition deed the property of the debtor vests in the trustee only for the purpose of giving effect to the terms of the composition and "the ownership of the property is transferred to the trustee for the benefit of the creditors." This reasoning cannot now be supported in view of the dictum of the Privy Council in Bank of Upper India, Ltd. v. Kaniz Abid 1935 ALJ 785, where their Lordships say that when once a deed of trust is executed and property conveyed to the trustee for the benefit of the creditors of the author of the trust and for other purposes recited in the deed, the author of the trust ceases to have any interest in the property conveyed by the deed of trust. For the reasons given above we find ourselves unable to agree with the view of law taken by their Lordships of the Bombay High Court on the question of registration and we are of the opinion that so far as the composition deed is a trust, deed, it is not valid because of the fact that it is not registered.