Decided on April 06,1954

RAW COTTON CO. LTD. Respondents


Chagla, C.J. - (1.)The question that arises in this appeal is whether an equitable assignee of a decree passed against a debtor can maintain an insolvency notice against him.
(2.)The decree was passed in favour of Habib & Sons on 15-12-1949, and there was an assignment in favour of the respondents on 7-2-1949. The respondents have obtained leave under Order 21, Rule 16, as the assignee of the decree to execute the decree. Therefore, by reason of that leave they are in the same position as the decree-holders, viz.; Habib & Sons, and "after they had obtained leave the respondents took out an insolvency notice on 17-12-1953. The judgment-debtor, the appellant, took out a notice of motion to set aside the insolvency notice. Mr. Justice Coyajee dismissed that notice of motion and this appeal is against that order.
(3.)Now, what is urged by Mr. Banaji is that the creditor contemplated in Section 9 (1), Presidency-towns Insolvency Act, as amended by Bombay Act 15 of 1939 is only a decree-holder and not an assignee of a decree, whether the assignee is a legal or an equitable assignee. "Creditor" is de-fined in the Insolvency Act and the definition is an inclusive and not an exhaustive definition, and the definition is that a creditor includes a decree-holder, and Mr. Banaji has been at pains to emphasise the fact that the Legislature has not included an assignee of a decree-holder in the definition of "creditor". But as we just pointed out, the definition of a "creditor" is much wider than a mere decree-holder, and when we turn to Section 9 it is clear and it is not disputed that for the purposes of Section 9(a) to (h) the expression "creditor" used in that section is used in its wider connotation and would include not only a decree-holder but also an assignee of a decree-holder. The Indian Act only dealt with acts of Insolvency set out in Clauses (a) to (h) of Section 9. The Bombay Legislature then included a further act of insolvency in Section 9 and that was by Act 15 Of 1939. That Act was subsequently amended by Act 51 of 1948 and the act of insolvency was:
"(1) If, after a creditor has served an insolvency notice on him under this Act in respect of a decree or an order for the payment of any amount due to such creditor, the execution of which is not stayed, he does not, within the period specified in the notice which shall not be less than one month, either comply with the requirements of the notice or satisfy the Court that he has a counter claim or set off which equals or exceeds the decretal amount or the amount ordered to be paid by him and which he could not lawfully set up in the suit or proceedings in which the decree or order was made against him."
Now, there is no reason why in this new act of insolvency inserted in Section 9 by the Bombay Legislature, the expression "creditor" should not be used in the same sense as it is used in the rest of Section 9. It is significant that when the Bombay Legislature spoke of a decree or an order for payment, it did not qualify that by saying that the decree or order for payment must be in favour of the creditor. All that Section 9(i) requires is (1) that there must be a decree for payment, (2) that the decree or order for payment must be against the debtor, and (3) that an amount must be due to the person taking out the insolvency notice in respect of that decree or order for payment. It is not an essential condition for the maintenance of an insolvency notice that the decree or order for payment must be in favour of the person taking out the insolvency notice. If that was the intention of the Legislature, the Legislature could have clearly stated so. Apart from that, it seems to us that there is no principle which would justify a distinction being made between a decree-holder and the assignee of a decree with regard to the right to maintain an insolvency notice. Under the Civil Procedure Code, once leave is given under Order 21, Rule 16, the assignee steps into the shoes of the decree-holder and he can execute the decree in the like manner and to the same extent as the decree-holder himself. Mr. Banaji has failed to point out to us any reason why the assignee of the decree-holder should be put in a different position from the decree-holder as far as Section 9(i) is concerned and as far as his right to take out an insolvency notice is concerned.

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