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Ramchandra Narayan Datar Vs. T.V. Nipunge - Court Judgment

LegalCrystal Citation
SubjectProperty
CourtMumbai
Decided On
Case NumberSecond Appeal No. 713 of 1921
Judge
Reported inAIR1924Bom49; (1923)25BOMLR499; 73Ind.Cas.379
AppellantRamchandra Narayan Datar
RespondentT.V. Nipunge
DispositionAppeal dismissed
Excerpt:
.....whether or not there is a surplus. - - anyhow it clearly shows that the insolvent has not paid his debts in full. the learned trial judge said :the applicant wants to agitate again the questions that had already been raised and decided on the insolvent's application made under section 36 of the provincial insolvent act v of 1920. in the judgment elaborately endorsed on that application this court held (1900) 1 ch. he as a trustee is in a better position than an ordinary trustee to the extent pointed out in ex parts sheffield, in re austin, and in re ledbetter, that is to say, the bankrupt has not the ordinary right of a cestrum quid trust to intervene until the surplus bas been ascertained to exist, and all the creditors and interest and coats have been paid. rego's judgment..........debts are not paid. the petitioner asks the court to receive a sum of rs. 1728 to pay these unpaid debts. that too under protest, and he does not admit a creditor's claim for rs. 1213 out of it the court has no business to accept the sum and to disburse it. there a no authority for it. anyhow it clearly shows that the insolvent has not paid his debts in full. to proceed with the petition, it says that a purchaser has been found to purchase the laud at bhamburda for rs. 38,999 out of which he has paid money or personal debts. but it does not say how much and to whom. it is silent as regards is mortgages. at the same time it says that the insolvent is going to save his house. 1b is not known whether the insolvent is going to pay mortgages or the purchaser whose name is kept in dark as.....
Judgment:

Norman Macleod, Kt., C.J.

1. One Balkrishna Vishnu Ghole was adjudged an insolvent on September 6, 1919, by the Joint First Class Subordinate Judge, Poona, in Insolvency Application No. 9 of 1917. On February 12, 1921, he presented an application to the First Class Subordinate Judge asking that the adjudication might be annulled. That application was dismissed on February 21, 1921. It was first claimed that the petitioner ought not to have been adjudicated an insolvent. But the Court, held that he had been rightly adjudicated. Then it was urged that it had been proved that the debts of the insolvent had been paid in full, but it was held that he was not entitled to an order of annulment on that ground. The Judge said:

There is no evidence on the point. Neither the petitioner nor the creditors appeared in the witness-box. The petition admits that the mortgage debts are not paid and that some personal debts are not paid. The petitioner asks the Court to receive a sum of Rs. 1728 to pay these unpaid debts. That too under protest, and he does not admit a creditor's claim for Rs. 1213 out of it The Court has no business to accept the sum and to disburse it. There a no authority for it. Anyhow it clearly shows that the insolvent has not paid his debts in full. To proceed with the petition, it says that a purchaser has been found to purchase the laud at Bhamburda for Rs. 38,999 out of which he has paid money or personal debts. But it does not say how much and to whom. It is silent as regards is mortgages. At the same time it says that the insolvent is going to save his house. 1b is not known whether the insolvent is going to pay mortgages or the purchaser whose name is kept in dark as also the identity which is transparent.

2. The Judge then after considering the general circumstances surrounding the petition said :

If the petition be carefully read, it is an attempt to deprive the Receiver of Ins fees about Rs 2400 and to give away in gift three acres of land worth Rs. 10,000 to Mr. Patwardhan and his friend and lastly to keep in tact the mortgages in order to deprive eventually the insolvent and bin sons of all proper by.

3. Therefore the petition was dismissed with costs.

4. An appeal was filed by the insolvent against the order of Mr. Rego, but it was eventually withdrawn. While it was pending an application was made by the present applicant that he should be made a party to the appeal, but that application was dismissed, and we think rightly. After the insolvent had withdrawn his appeal the applicant applied on his own account for an annulment of the adjudication order. The learned trial Judge said :

The applicant wants to agitate again the questions that had already been raised and decided on the insolvent's application made Under Section 36 of the Provincial Insolvent Act V of 1920. In the judgment elaborately endorsed on that application this Court held (1900) 1 Ch. 822 that the insolvent was rightly adjudicated insolvent and (1879) 10 Ch. D. 434 that he had not paid his debts in full. The applicant took the transfer long after the adjudication order was passed and the transfer primn facie appears to be illegal under Section 55 of the Insolvency Act. The proper time, therefore, to adjudicate whether the applicant bas acquired any rights under the transfer relied on by him would be after the sale proceeds came in Court for the benefit of the creditors.

5. Now it is possible for an involvent to assign to a purchaser the prospective surplus that may remain over after his estate has been administered in insolvency. In Bird v. Philpott (1900) 1 Ch. 822 Mr. Justice Farwell said (p. 828):

It has been said that Ex parte Sheffield, In re Austin (1879) 10 Ch. D 434 and In re Lead-bilter (1878) 10 Ch. D. 388, decided that a bankrupt cannot deal with the possibility of surplus until all the debts in the first bankruptcy have been paid and the surplus has been ascertained. I do not think that these decisions decided anything to that effect at all. If they did, they would have overruled prior decisions-of the Lord Chancellor amongst ethers-which were not referred to, and they would be, in my opinion, contrary to the whole spirit and principles on which the Bankruptcy Act is now built. As I read the Bankruptcy dot, the trustee takes all the bankrupt's property for au absolute estate in law, but for limited purposes, namely, for the payment of the creditors under that bankruptcy, and that bankruptcy only-payment of principal and interest, and all the costs of the bankruptcy. Subject to that, he is a trustee for the bankrupt of the surplus. He as a trustee is in a better position than an ordinary trustee to the extent pointed out in Ex parts Sheffield, In re Austin, and In re Ledbetter, that is to say, the bankrupt has not the ordinary right of a cestrum quid trust to intervene until the surplus bas been ascertained to exist, and all the creditors and interest and coats have been paid. He cannot trouble the trustee by taxing the bill of costs or interfere with the administration of the estate in any way, but, subject to that and subject to his non-interference with the administration and with the management of the trustee during the bankruptcy in the due course of the execution of his duty, he can, in my opinion, demand the surplus, and he has a right to the surplus-a right which he can dispose of by will or deed or otherwise during the pendency of the first bankruptcy, even before the surplus is ascertained, although such disposition will of courts be ineffectual unless in the event there prove ho be a surplus upon which it can operate.

6. It is quite clear, therefore, that oven if the insolvent in this case had purported to assign the surplus which might remain over when his estate had been fully administered in bankruptcy, his assignee could not interfere with the administration of the estate by virtue of such assignment. It would be an assignment of a contingent interest which could give no right to the assignee to intervene until it was ascertained whether or not there was a surplus. Whatever arrangement therefore was made between the insolvent and the applicant the sale of the Bhamburda property was absolutely void, Since after the property became vested in the Receiver the insolvent could not deal with it so as to give any title to a purchaser. It seems to UB that Mr. Rego's judgment dismissing the insolvent's application for the annulment of the adjudication order was perfectly correct. The insolvent having withdrawn his appeal the present applicant has attempted to obtain a review of Mr. Rego's decision by making a fresh application, but whether it was competent or not, he could not satisfy the Court that the insolvent's debts had been paid in full. In appeal he again failed and in view of the decisions of the lower Court it would be difficult for us to interfere in second appeal. In our opinion the whole of the record shows that the conduct of the insolvent and the applicant has not been beyond suspicion, and it in not an unfair inference that there has been an attempt made to defeat the provisions of the Insolvency Act, We think, therefore, that the appeal must be dismissed with costs.


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