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Lakhmiram Kevalram Bhatt Vs. Punamchand Pitamber - Court Judgment

LegalCrystal Citation
SubjectProperty
CourtMumbai
Decided On
Case Number O.C.J. Appeal No. 1 of 1920
Judge
Reported inAIR1921Bom128; (1920)22BOMLR1173
AppellantLakhmiram Kevalram Bhatt
RespondentPunamchand Pitamber
DispositionAppeal dismissed
Excerpt:
insolvent - discharge-suit to recover debt from the insolvent's property in foreign territory-jurisdiction of the insolvency court to restrain proceedings in for sign state-order of discharge, not binding on foreign courts.;the insolvency court in bombay has no jurisdiction to restrain a decree-holder from filing a suit against an insolvent, who has obtained his discharge in the insolvency court, in a foreign state, within whose jurisdiction the insolvent bus property, for recovering a debt in respect of which the discharge has been obtained.;the order of discharge granted by the insolvency court in bombay would be recognised by all courts in the british empire, but there is no obligation on courts outside british india to recognise the order of discharge as a complete release from debts..........the schedule, the respondent in this case, has obtained a decree for rs. 2834-4-0 in the court of sirohi state, in respect of the debt for costs in bombay high court suit no. 58i of 1911. in the insolvency proceedings it had been alleged that the insolvent had succeeded as the heir of his brother to certain property in the sirohi state, but he was able to prove that he was separate from his brother and that his brother's widow had adopted the insolvent's sou. it would appear that the respondent still hopes to be able to attach that property. the appellant then took out a rule in this court calling upon the respondent to show cause why he should not be restrained from proceeding in the suit filed by him against the insolvent in sirohi state and from executing the decree passed in the.....
Judgment:

Norman Macleod, Kt., C.J.

1. The appellant in this appeal is an insolvent who has filed his petition under the Presidency Towns Insolvency Act, in Bombay on the 27th November 1914. As far as this Court is concerned, the insolvent proceedings came to an end on 'the 1st of October 1918, when the insolvent got his discharge. One of the opposing creditors mentioned in the schedule, the respondent in this case, has obtained a decree for Rs. 2834-4-0 in the Court of Sirohi State, in respect of the debt for costs in Bombay High Court Suit No. 58I of 1911. In the insolvency proceedings it had been alleged that the insolvent had succeeded as the heir of his brother to certain property in the Sirohi State, but he was able to prove that he was separate from his brother and that his brother's widow had adopted the insolvent's sou. It would appear that the respondent still hopes to be able to attach that property. The appellant then took out a rule in this Court calling upon the respondent to show cause why he should not be restrained from proceeding in the suit filed by him against the insolvent in Sirohi State and from executing the decree passed in the said suit.

2. The rule was discharged on the 7th of October 1919 by Mr. Justice Kajiji. The learned Judge in the course of his judgment says:-

It is contended on behalf of the insolvent that under Section 45 of the Presidency Towns Insolvency Act the discharge amounted to a release and therefore there was no debt and no cause of action for the suit in Sirohi State. In my opinion Section 45 of the Act only applies when a creditor seeks to recover property of the insolvent which is in British Territory or in Foreign country or State if such foreign Country or State will recognise the Official Assignee of Bombay and hand over the property belonging to the insolvent in order that it may be applied for the benefit of all the creditors and he may not be allowed to keep it. But in this case the Sirchi State has refused to recognise the Official Assignee and has refused to band over the property as appears from paragraph 6 of the opposing creditor's affidavit of 23rd September 1919. 1 therefore hold that there is nothing in the Insolvency Act under these circumstances to prevent a decree-holder from riling a suit in a foreign Court and recovering his money from the property of the insolvent.

3. The opposing creditor undertook not to arrest the insolvent personally and to give notice to the other creditors mentioned in the schedule of any property and money received in execution of the decree in order to enable them to claim rateable distribution. No doubt the point for argument before the learned Judge was whether the order of discharge is a complete release or not from the debts mentioned in the schedule. Such an order no doubt would be recognised by all Courts in the British Empire, but certainly there would be no obligation on Courts outside British India to recognise the order of discharge as a complete release from debts mentioned in the order. The real question is whether this Court has got jurisdiction to restrain a party from proceeding in an action in a foreign country and if it has, on what principle it will act in considering the question. This matter is discussed in Vanichand v. Lakhmichand : (1919)21BOMLR955 by Mr. Justice Pratt:-

There is no doubt as to the jurisdiction of this Court to restrain a party within its jurisdiction from prosecuting a suit in a foreign Court, The principle on which this jurisdiction is exercised is set forth in the judgment of Lord Cranworth in the case of Carron Iron Co. v. Muelaren. It is that 'the Court acts in personam and will not suffer any one within its reach to do what is contrary to its notions of equity, merely because the act to be done may be, in point of locality, beyond its jurisdiction.

4. Therefore if we think that the action of the opposing creditor in filing the suit in the Sirohi State on the judgment of the Bombay High Court is contrary to our notions of equity, we should certainly restrain him from proceeding with that action. Of course that will not prevent him from continuing the action in the Sirohi State; but if he came within the jurisdiction of this Court, proceedings might be taken against him for contempt. Now on the particular facts of this case, there is nothing as far as I can see which offends our notions of equity in the opposing creditor continuing his proceedings in the Sirohi State against the insolvent, who had filed his petition to get rid of the obligation to pay the costs decreed against him in the suit I have referred to. He had no assets to hand over to the Official Assignee and as far as his obligations in British India were concerned, the order of discharge freed him from the liability to pay those costs. But if he has assets in the Sirohi State, there is no reason why the opposing creditor should not be at liberty to take proceedings in that State in order that he may recover his debt from any property he may discover situate in that State. Generally speaking, it would certainly be contrary to all ideas of equity that a party trading and incurring debts in Bombay, and having property in foreign territory, which the Official Assignee could not get hold of, should be able to completely get rid of all his liabilities , as regards his creditors inside British India, and then proceed to enjoy his property outside British India, free from all those liabilities. This case, in my opinion, does not come within any of the three classes of cases which were referred to in Carron Iron & Go. v. Maclarenm in which it would be considered that a party Within the jurisdiction should be restrained from taking proceedings outside the jurisdiction of the Court. I, therefore, think the appeal fails and it will be dismissed with costs.


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