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In Re: Dewcurn Jewraj and Heerjee Dewcurn - Court Judgment

LegalCrystal Citation
Decided On
Reported in(1888)ILR12Bom342
AppellantIn Re: Dewcurn Jewraj and Heerjee Dewcurn
insolvency - indian insolvent act (stat. 11 and 12 vic., c. 21)--expunging names of creditors from schedule--official assignee a trustee for creditors admitted in schedule. - .....with regard to their claims?11. there is no doubt that the courts in england have the power to expunge claims under certain circumstances. but this power has been expressly conferred upon them by statute: see statute 6 geo. iv, c. 16, section 60; stat. 12 and 13 vic., c. 106, section 183; stat. 24 and 25 vic., c. 134, section 155; stat. 46 and 47 vic., c. 52, section 39; and rules 23 and 24 of schedule 2. it thus appears that the courts have been authorized to exercise this power since the year 1825. prior to that year, however, the courts had no such power. in the case of ex parte graham1rose, p.456, which was decided by lord eldon in 1813, it was held that 'commissioners cannot expunge a proof. as long as it remains upon the proceedings it must be considered as a debt.' so archbold.....

Bayley, J.

1. In this case a rule was obtained, on the 1st October, 1887, by Kalooram Mahanandram, one of the creditors of the insolvents, calling upon the other creditors to appear and show cause why they should not come in and prove their claims against the insolvents, and in default of such appearance why the names of such creditors should not be expunged from the insolvents schedule.

2. The petition of the two insolvents was filed so long ago as February, 1868, and in July of that year they filed their schedule as required by the Statute. From the schedule it appears that the creditors are twenty-six in number, twenty of whom are residents in Karachi and six in Multan, and that the debts of the insolvents (all of which are admitted, but some of which are of very trifling sums), amount in the aggregate to Rs. 51,819-13, The insolvents obtained their personal discharge on the 15th March, 1869.

3. It appears that since the date of the insolvency only one dividend has been declared, viz., a dividend of four per cent, in the year 1870; but only one creditor for Rs. 1,500 applied for and received this dividend.

4. On the 15th July, 1886, the present applicant, who is the largest creditor on the insolvents' estate, for the first time applied for the payment of a dividend on his claim. With reference to this application the Official Assignee in his affidavit says:

That one Kalooram Mahanandram, who lately traded in the name of Dhuniram Bujaji, a creditor on the estate of the said insolvents, applied to me for the first time on the 15th day of July, 1886, for the payment of a dividend on his claim against the estate of the said insolvents, but he was unable after so long a time to adduce any proof in his own possession in support of his said claim. Some correspondence then passed between the attorneys of the said Kalooram Mahanandram on the one hand and myself on the other on the subject of the said proof, and ultimately I allowed the said Kalooram Mahanandram to prove his claim from the books of account of the said insolvents which are still in my possession.

5. Having thus proved his claim against the estate, the applicant, Kalooram Mahanandram, on the 5th October, 1887, took out the present rule, the substance of which I have already stated. When granting this rule I ordered that notice of it should be served on all the creditors. It appears, however, that only seven of them have acknowledged the receipt of the notice.

6. Rule 16 of the Insolvency Rules provides as follows:

Every person who shall make claim upon the estate of any insolvent shall file the same with the Clerk of the Court, and such claim shall be verified by affidavit or solemn affirmation, if the creditor be a person whose solemn affirmation may by law be received in lieu of an affidavit; and no creditor shall be heard in the matter of such insolvency until he shall have so filed such claim and affidavit, or solemn affirmation as aforesaid.

7. None of the creditors, except two, of whom one is the present applicant, have as yet complied with this rule; and the object of the present application is to compel them to do so, or in default to expunge their names from the list of creditors.

8. There are, then, two questions to be considered, viz., (1) whether this Court has power to make the order asked for, and (2) if it has the power, whether under the circumstances such an order ought to be made.

9. Now a point was raised during the argument in this matter as to the position of the Official Assignee. He is admittedly a trustee of the property in his hands, but it was contended on the one hand that he was a trustee only for such of the creditors as have proved their claims as required by the rules of this Court; and on the other that he is a trustee for all the creditors admitted on the insolvents schedule. I think the latter view is the correct one. In the case of In re General Roiling Stock Company L.R. 7 Ch. Ap.649 Mellish, L.J., says that in cases 'where the assets of a debtor are to be divided amongst his creditors, whether in bankruptcy or insolvency or under a trust for creditors, or under a decree of the Court of Chancery, in an administration suit, the rule is that every body who had a subsisting claim at the time of! the adjudication, the insolvency, or the administration decrees, as the case may be, is entitled to participate in the assets, and that the Statute of Limitations does not run against this claim, but, as long as assets remain unadministered he is at liberty to come in and prove his claim, not disturbing any former dividend.' It is clear, then, that in this case all the creditors in the schedule, are beneficially interested in the assets held by the Official Assignee, and that he holds as a trustee for them all. It is true that in two cases cited by Mr. Lang from the records of this Court I ordered certain claims to be struck out of the schedules filed by insolvents; but in those cases there were affidavits not contradicted, on which it was sworn that the claims in question were fraudulent; while in the present case the claims are admitted by the insolvents, and there is no suggestion by the applicant of fraud in connection with them, and we must, there fore, assume that they are just and valid claims against the estate. All Civil Courts have power to relieve, against fraud (Kerr on Fraud, pp. 3 and 4, 2nd ed.), but the question that arises here is as to the, power of the Court where there is no fraud, and it is clear that the cases which have been referred to are not in point.

10. The question, then, is, has this Court power to expunge the names of creditors from the schedule of an insolvent where no fraud is proved or even alleged with regard to their claims?

11. There is no doubt that the Courts in England have the power to expunge claims under certain circumstances. But this power has been expressly conferred upon them by statute: see Statute 6 Geo. IV, c. 16, Section 60; Stat. 12 and 13 Vic., c. 106, Section 183; Stat. 24 and 25 Vic., c. 134, Section 155; Stat. 46 and 47 Vic., c. 52, Section 39; and Rules 23 and 24 of Schedule 2. It thus appears that the Courts have been authorized to exercise this power since the year 1825. Prior to that year, however, the Courts had no such power. In the case of Ex parte Graham1Rose, P.456, which was decided by Lord Eldon in 1813, it was held that 'Commissioners cannot expunge a proof. As long as it remains upon the proceedings it must be considered as a debt.' So Archbold says: 'Before the 6th Geo. 4 c. 16 the Commissioners could not expunge a proof without the consent of the parties, the only remedy was by petition to the Lord Chancellor. Under this Clause (he is alluding to Section 183 of 12 and 13 Vic. c. 106,) the Court may expunge the petitioning creditor's debt, but the Court has authority by this section only where the objection is that the whole or part of the debt proved is not justly due from the bankrupt.' Archbold Bankruptcy (11th ed. ), p. 204

12. It may be said, however, that the debts of the creditors in the schedule in this case are at present merely claims. They have not as yet been proved. A claim is one thing, a proof is another, and all claims must be proved. From the case of Ex parte Dobson 1 Mon. & Ayr., 666 it would appear, however, that the Court in England had no power to expunge a claim. That case was decided in 1834, at which time Stat. 6 Geo. 4, c. 16was in force, which statute, as I have already said, expressly gave the Courts power to expunge in certain cases. Sir George Rose (at p. 668) is reported to have pointedly made the distinction between proof and claim. He said: 'The petitioner has not proved, only claimed. He has a right to prove;' and in his judgment (see p. 670) the Chief Judge said: 'Nor can the other part of the prayer as to expunging the claim be granted.' Sir John Cross (at p. 671) said: 'Then they ask that the claim may be expunged, to which the respondents object that the Court have no jurisdiction to expunge a claim. I am not prepared to go that length; but it is not necessary here to decide that point.' I notice that the marginal note on page 670 is to the effect that 'a mere claim cannot be expunged.'

13. The first Indian Insolvency Act was Stat. 9 Geo. IV, c. 73, which was passed in 1828. It is remarkable that this statute does not give the Indian Courts the power to expunge which, as I have pointed out, had been conferred upon the Courts in England only three years before by Stat. 6 Geo. 4 c, 16Section 60. The Insolvent Act now in force, (Stat. 11 and 12 Vic., c. 21,) passed in 1848, appears to have been based, to a great extent, upon the Stat. 9 Geo. 4, c. 73. Section 55 of the latter Act, I notice, is almost verbatim the same as Section 44 of our present Act. But there is not in our present Act, any more than in the former Act, any provision whatever authorising this Court to expunge a claim or a debt from a schedule. How, then, can I hold that this Court has power to do what it is asked to do in this case? Whether the omission to give this power to the Indian Courts was due to the existence of Act XXVII of 1841, is a point on which I offer no opinion. It has been suggested, I believe, that Act is no longer in force. It is clear that the Government of India is not of that opinion, for in the volume for 1887 of the 'Unrepealed Acts ', recently published, I find this Act included.

14. I hold that I have no power to expunge the names of any of the creditors in this schedule, and I discharge the rule.

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