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Poonamchand Pratapji Vs. Motilal Kapurchand - Court Judgment

LegalCrystal Citation
SubjectCivil
CourtMumbai
Decided On
Case Number O.C.J. Suit No. 127 of 1930
Judge
Reported inAIR1935Bom378; (1935)37BOMLR576; 158Ind.Cas.542
AppellantPoonamchand Pratapji
RespondentMotilal Kapurchand
Excerpt:
presidency - towns insolvency act (iii of 1909), section 52--insolvent--after-acquired property--suit by insolvent for such property--intervention by official assignee--what amounts to intervention.;unless the official assignee intervenes so as to assert a right to divide the after-acquired property amongst the creditors of the insolvent under section 52 of the presidency-towns insolvency act, 1909, such property may be dealt with by the insolvent himself and third parties may acquire the property from the insolvent.;what constitutes intervention must take its colour from the nature of the property. when the property consists of a right of action and a suit is pending, the official assignee should intervene by applying to be made a plaintiff and take the conduct of the suit.;in a suit..........that on the making of an order of adjudication, the property of the insolvent shall vest in the official assignee. it is admitted that this section does not apply to property that might accrue to, or to which the insolvent might become entitled, after the date of the adjudication. but the property of the insolvent divisible amongst the creditors under sub-section (1) (a) of section 52 comprises all such property as may be acquired by or devolve on him before his discharge. thus the official assignee can. assert a right to property acquired by the insolvent after his adjudication and before his discharge.4. it has been held-and this was not questioned-that unless the official assignee intervenes, so as to assert under section 52 a right to divide amongst the creditors of the insolvent.....
Judgment:

Tyabji, J.

1. This is a suit arising out of a partnership. The plaintiff was -adjudicated an insolvent on March 18, 1924. After the suit was brought the adjudication order was-on June 16, 1931-annulled.

2. Several objections have been taken to the suit. I need only consider whether by reason of the insolvency of the plaintiff the suit is not maintainable at the instance of the plaintiff.

3. The Presidency-towns Insolvency Act, Section 17, provides that on the making of an order of adjudication, the property of the insolvent shall vest in the Official Assignee. It is admitted that this section does not apply to property that might accrue to, or to which the insolvent might become entitled, after the date of the adjudication. But the property of the insolvent divisible amongst the creditors under Sub-section (1) (a) of Section 52 comprises all such property as may be acquired by or devolve on him before his discharge. Thus the Official Assignee can. assert a right to property acquired by the insolvent after his adjudication and before his discharge.

4. It has been held-and this was not questioned-that unless the Official Assignee intervenes, so as to assert under Section 52 a right to divide amongst the creditors of the insolvent property which has been acquired by the insolvent after adjudication, such after-acquired property may be dealt with by the insolvent himself, and third parties may acquire it from the insolvent.

5. I have to decide, therefore, whether the Official Assignee has intervened with reference to the property in question,-the subject-matter of the suit.

6. It was argued for the defendant that he had. The intervention is alleged to-consist in that the Official Assignee appeared in the Court at the instance of Mr. Justice Kemp before whom the suit was pending, secondly, that Mr. Justice Kemp gave orders that the Official Assignee should have notice of the claim of a third party named Seshmal, and, thirdly, that the Official Assignee wrote requesting the solicitors of the defendant to consent to the Court Receiver giving over the assets to him. All this happened in 1930. The Official Assignee by his letter dated October 5, 1934, stated that as the adjudication order herein had been annulled-the annulment was on June 16, 1931-he claimed no interest in the subject-matter of the suit. The letters relied upon in this connection are in exhibits 3, 6 and 7.

7. In my opinion the acts and events relied upon did not constitute such intervention as to vest the subject-matter of the suit in the Official Assignee, and thus to include it in the property divisible among the creditors under Section 52. Such vesting would be necessary before the plaintiff could be prevented from maintaining the suit.

8. The authorities are clear that where the Official Assignee demands payment of a sum that is due to the insolvent, the demand is sufficient intervention to support a suit or other action by the Official Assignee : Macleod v. B. B. & C. I. Ry. Co (1905) 7 Bom. L.R. 618 and Emden v. Carte (1881) 17 Ch. D. 768. In Hill v. Settle [1917] 1 Ch. 319 it was held that if the Official Assignee has once intervened, the property is indefensibly vested in him and he cannot afterwards divest it from himself. But what is required for constituting intervention must naturally take its colour from the nature of the property. When the property consists of a right of action and there is already a suit pending, then the proper course appears from the decisions to be that the Official Assignee should apply to be made a plaintiff in the suit and to be given the conduct of the suit. The Official Assignee in the case before me did not do anything approaching this. In the case that was cited- Hill v. Settle -Lord Justice Warrington refers to the situation in these terms.. (p. 328)' ;-

The defendant alleges that the right of action is vested in the trustee in bankruptcy, and that he is therefore, to say the least of it, a necessary party to the action, and that the action ought to be stayed until he has been made a party.

This indicates the position where there is a pending suit and the Official Assignee is shown to have intervened. It refers to the necessary consequences of intervention, and in that manner furnishes an explanation of intervention.

9. Reliance was also placed upon the Civil Procedure Code, Order XXII, Rule 8. But the rule is that the suit shall not abate; though an exception is made where the Official Assignee or Receiver declines to continue the suit,-in which case the suit is to abate. The position here cannot be considered as one in which the Official Assignee declines to continue the suit. He took no steps to be brought in the suit or to have its conduct. Then, subsequently, when the adjudication order was annulled he said that he was not concerned with the suit. He could not in these circumstances be made a party to the suit. The case would have been different if he had been made a party to the suit, and had exercised his right of declining to proceed with the suit. Only in that case could the defendant have applied under Order XXII, Rule 8, sub-r. 2, and the Court might then have made an order dismissing the suit. Even in that case under Rule 9 the plaintiff could have applied to have the abatement or dismissal set aside, but at the same time on the adjudication being annulled, the Court would have had power to set aside the abatement : Kissen Gopal Karnani v. Suklal Karnani I.L.R(1926) Cal. 844. A reference to these provisions shows how inapplicable they are to the facts of the present case. There has been no abatement of this suit and no occasion for the plaintiff to apply that the abatement should be set aside. Even if I were to consider the case as in substance raising the question that would arise if the facts were taken in the form most favourable to the defendant for the purpose of relying upon 0. XXII, then I should certainly follow Kissen Gopal Karnani v. Suklal Karnani, and set aside the abatement. In fact in the able argument that Mr. Banaji addressed to me he had to admit that he was relying on a purely technical objection, and that he could only succeed on the ground that there was an intervention by the Official Assignee and that the very fact of intervention created a right in the defendant to object to any body but the Official Assignee proceeding with the suit.

10. In my opinion the argument of the defendant must fail. There has not been any action amounting in the circumstances to intervention. If there had been intervention, the suit might perhaps at the instance of the defendant have been declared to have abated ; but on the application of the plaintiff the abatement would in all likelihood have been set aside.

11. The suit will, in accordance with my order of February 20, 1935, be referred to the Commissioner for taking the accounts as from the date of the partnership established in 1925 having regard to the contentions of the parties.

12. Defendants must pay the costs of the issues 1 and 2 which were argued before me. Further costs and further directions reserved.


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