THE OFFICIAL RECEIVER Vs. NARRA GOPALAKRISHNIAH AND ORS.
HIGH COURT OF MADRAS
The Official Receiver
Narra Gopalakrishniah And Ors.
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(1.) THIS Civil Revision Petition raises the question whether the recent decision of the Privy Council in Mahomed Siddique Yousuf v. Official Assignee of Calcutta, (1878) 10 Ch. D. 3 applies to orders of adjudication under the Provincial Insolvency Act as well as to orders of adjudication under the Presidency Towns Insolvency Act.
(2.) TO appreciate the full effect of the judgment in that case a short statement of the facts, on which it is founded is necessary. One Ali Mahomed Hashi was adjudicated an insolvent by 'the High Court of Calcutta. It was alleged and found that he had committed several acts of insolvency. One of the acts alleged against him was the granting of a fraudulent preference to a creditor (the appellant in the Privy Council). To this creditor he had assigned within three months of the petition asking for his adjudication a decree which he had obtained for Rs. 6,750 and interest. The assignee had hot been given notice of the application for adjudication and had not been made a party to the insolvency proceedings. The date of the order of adjudication was the 13th June, 1939. On the 5th April, 1939, the petitioning creditor obtained a decree against the insolvent for Rs. 15,789 -10 -0. In the month of May, 1939, the appellant instituted proceedings in execution of the decree which had been assigned to him and an order was made that the judgment -debtor should pay the amount into Court; but the order further provided that the money was not to be withdrawn without the leave of the Insolvency Court. In August the appellant applied for leave to take the decretal amount out of Court. Leave was given subject to leave being obtained in the suit. The appellant then applied in the suit for leave, but his application was opposed by the Official Assignee. On the 31st August, 1939, the Court held that the appellant was entitled to withdraw the amount on furnishing security, but said that if the Official Assignee made any application on the first insolvency day after the reopening of the Court, which was then closed for the vacation, the appellant's application was to abide the result; if no application was made by the Official Assignee, the order of the appellant's application was to be granted as asked for.
(3.) ON the 23rd November, 1939, the Official Assignee moved the Insolvency Court to declare the assignment to the appellant void and to pass an order setting it aside. The Official Assignee raised two contentions. The first was that the transfer having been found to be an act of insolvency in the order of adjudication, the transferee was no longer in a position to say that the transaction was valid. This argument was based on the judgment in Ex parte Learqyd1. The second contention was that the evidence showed that there was in fact a fraudulent preference. The learned Judge hesitated to apply the principle laid down in Ex parte Learqyd1 in view of the fact that the Madras High Court in Official Assignee of Madras v. O.R.M.O.R.S. Firm, (1826) 52 M.L.J. 352 : , I.L.R. 50 Mad. 541 had held that it did not apply in India, but he found that the intention to prefer had been proved. On appeal a Division Bench of the Calcutta High Court expressed the opinion that Ex parte Learoyd1 did apply. The Privy Council agreed with the appellate Court and consequently their Lordships overruled Official Assignee of Madras v. O.R.M.O.R.S. Firm, (1826) 52 M.L.J. 352 : , I.L.R. 50 Mad. 541. They held, however, that the appellant was entitled to appeal against the adjudication order and indicated that the provisions of Section 5 of the Limitation Act could here be invoked.
In Ex parte Learqyd,1 the Court of Appeal held that by virtue of Sections 10 and 11 of the Bankruptcy Act, 1869, an adjudication in bankruptcy was conclusive against a third party; but a third party whose title to property was affected by the adjudication order was a person " aggrieved " and therefore was entitled to appeal against the order of adjudication. Section 10 of the Bankruptcy Act, 1869, provided that an order of adjudication in bankruptcy should be published in the London Gazette, and the production of a copy of the Gazette containing the order should be conclusive evidence in all proceedings of the debtor having been duly adjudged a bankrupt and of the date of adjudication. Section 11 stated that the bankruptcy of a debtor should be deemed to have relation back to and to commence at the time of the act of bankruptcy, or if more acts than one had been committed to have relation back and to commence at the time of the first of the acts proved to have been committed within twelve months of the order of adjudication. Similar provisions are to be found in the Presidency Towns Insolvency Act and this was the reason for the application in the Calcutta case of the principle settled by Ex parte Learqyd1. Section 116 corresponds to Section 10 of the Bankruptcy Act, 1869, and Section 51 to Section 11.;
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