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Jugalkishore Saraf Vs. Raw Cotton Co. Ltd. - Court Judgment

LegalCrystal Citation
SubjectCriminal
CourtMumbai High Court
Decided On
Case NumberO.C.J. Appeal No. 34 of 1954
Judge
Reported inAIR1955Bom77; (1954)56BOMLR905; ILR1954Bom1004
ActsPresidency Towns Insolvency Act, 1909; Bombay Presidency Towns Insolvency (Amendment) Act, 1939; ;Bombay Presidency Towns Insolvency Act, 1948 - Sections 2 and 9; Code of Civil Procedure (CPC), 1908 - Order 21, Rule 16; Bankruptcy Act, 1883
AppellantJugalkishore Saraf
RespondentRaw Cotton Co. Ltd.
Appellant AdvocateH.D. Banaji and ;R. Iyer, Advs.
Respondent AdvocateK.T. Desai, Adv.
Excerpt:
.....maintain insolvency notice against debtor--'creditor' in section 9(i) whether includes assignee of decree-holder. ; in section 9(i) of the presidency-towns insolvency act, 1909, the expression 'creditor' means not only a decree-holder but also an assignee of a decree-holder. therefore, an equitable, assignee of a decree passed against a debtor can maintain an insolvency notice against him. - - if that was the intention of the legislature, the legislature could have clearly stated so. 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. banaji has failed to point out to us any reason why the assignee of the..........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.....
Judgment:

Chagla, C.J.

1. The question that arises in this appeal is whetheran 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 proceedingsin 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.

4. Mr. Banaji has drawn our attention to the position under the English law, and it seems to us that that position, far from helping him, is against him and further emphasises the fact that the only construction that can be put upon Section 9(i) is the construction suggested by Mr. K. T. Desai on behalf of the respondents. Now, the position in England was this.

Under the Bankruptcy Act of 1883 it was provided that only the creditor who obtained the judgment or his legal representative could issue a bankruptcy notice. Then the Bankruptcy Act was amended by the Act of 1890 and that Act provided that a creditor who had obtained a final judgment or a final order could take out a bankruptcy notice, but the Act provided that a creditor who had obtained a final judgment or a final order meant any person who was for the time being entitled to enforce a final judgment or a final order.

Therefore, when the Bombay Legislature put the amendment of the Insolvency Act on the statute book, it knew what the position in England was by reason of the Act of 1890. We may say that the same position obtains in the latest English Bankruptcy Act which is the Act of 1914. Therefore, the Bombay Legislature knew that under the English law an assignee, whether legal or equitable of a decree-holder could take out an insolvency notice.

The question is whether the Bombay Legislature wanted the law here to be the same as in England or it wanted the law to be different. If the Bombay Legislature wanted the law to be different, there was nothing to prevent it from using the language which would have made it clear that the intention of the Bombay Legislature was that only a creditor who had obtained a final judgment or a final order should be allowed to take out an insolvency notice. In Section 9(i) the Bombay Legislature could have qualified the expression 'creditor' by adding 'who has obtained a final judgment or a final order.' The Legislature did not do so.

Mr. Banaji says that the Legislature could have made it clear by saying that not only a decree-holder but also an assignee of a decree-holder could take out an insolvency notice. In our opinion it was unnecessary for the Bombay Legislature to make that position clear because it was using the same expression 'creditor' as was used in Section 9, and as that expression meant not only decree-holders but also all other creditors including assignees of decree-holders, it was unnecessary for the Legislature to specify what 'creditor' meant in its context in Section 9(1).

Therefore, whether we look at it from the point of view of pure textual construction or whether we look at it from the point of view of principle or whether we look at it from the point of view of English precedents, it is clear that in Section 9(i) the expression 'creditor' means not only a decree-holder but also an assignee of a decree-holder.

5. In our opinion, therefore, Mr. Justice Coya-Jee was right. The appeal fails and must be dismissed with costs. Liberty to the respondents'attorneys to withdraw the sum of Rs. 500 deposited for security of costs.

6. Appeal dismissed.


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