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Girikant Shivlal Pandya Vs. Vadilal Vrijlal Shah - Court Judgment

LegalCrystal Citation
SubjectCivil
CourtMumbai
Decided On
Case NumberSecond Appeal No. 741 of 1933
Judge
Reported inAIR1936Bom164; (1936)38BOMLR211
AppellantGirikant Shivlal Pandya
RespondentVadilal Vrijlal Shah
DispositionAppeal allowed
Excerpt:
provincial insolvency act (v of 1920), section 28 (2), (7), (4) - insolvent-after-acquired property-salary earned by insolvent-vesting of salary in receiver in insolvency-civil procedure code (act v of 1908), section 60 (i), prov. (i) (iii)-rule in cohen v. mitchell.;a petition in insolvency was presented and receivers were appointed, on june 23, 1931. the adjudication order was made on march 10, 1932. on april 19,1932, the receivers called upon the insolvent to pay to them rs. 1,600, the salary which he had earned at the rate of rs. 200 per month after the date of the petition. out of the amount, rs. 1,400 were earned before the date of the adjudication order, and rs. 200 were for a period subsequent to that date:-; (1) that rs. 1400 vested in the receivers, under section 28 (2) and (7)..........the question being whether what is known as the rule in cohen v. mitchell (1890) 25 q.b.d. 262 in english bankruptcy law applies to cases arising under the provincial insolvency act (v of 1920.)2. the relevant facts are that a petition in insolvency was presented on june 23, 1931, and receivers were appointed, the insolvent was adjudicated on march 10, 1932, and on april 19, 1932, the receivers gave a notice to the insolvent calling upon him to pay rs. 1,600 which he had earned as salary after the presentation of the insolvency petition. it appears from the judgment of the learned first class subordinate judge of ahmedabad, who heard the application in the first instance, that of the rs. 1,600, rs. 200 were earned after adjudication. the learned subordinate judge held that the whole of.....
Judgment:

John Beaumont, Kt., C.J.

1. This is a second appeal from the decision of the District Judge of Ahmedabad and it raises a point on which there has been a certain amount of difference of judicial opinion, the question being whether what is known as the rule in Cohen v. Mitchell (1890) 25 Q.B.D. 262 in English Bankruptcy Law applies to cases arising under the Provincial Insolvency Act (V of 1920.)

2. The relevant facts are that a petition in insolvency was presented on June 23, 1931, and receivers were appointed, the insolvent was adjudicated on March 10, 1932, and on April 19, 1932, the receivers gave a notice to the insolvent calling upon him to pay Rs. 1,600 which he had earned as salary after the presentation of the insolvency petition. It appears from the judgment of the learned First Class Subordinate Judge of Ahmedabad, who heard the application in the first instance, that of the Rs. 1,600, Rs. 200 were earned after adjudication. The learned Subordinate Judge held that the whole of the Rs. 1,600 were assets in the insolvency, but that the receivers were entitled to a half only of the earnings, having regard to the provisions of Section 60 of the Civil Procedure Code. In appeal the learned District Judge seems to have treated the whole of the Rs. 1,600 as after-acquired property falling within the provisions of Sub-section (4) of Section 28 of the Provincial Insolvency Act, 1920, and he was of opinion that the rule in Cohen v. Mitchell applied. Now that rule is that property acquired by the insolvent after adjudication does not vest in the trustee in bankruptcy unless and until the trustee intervenes, and the learned District Judge therefore referred the case back to the lower Court in order to determine whether any part of the Rs. 1,600 had been disposed of by the insolvent before the receivers intervened.

3. I am rather disposed to think that the Rs. 1,400 which were earned before the adjudication would vest in the trustee under Sub-section (2) read with Sub-section (?) of Section 28 of the Provincial Insolvency Act; but at any rate the question as to whether after-acquired property vests on its acquisition or on the intervention of a trustee, arises in the case of Rs. 200. Sub-section (4) of Section 28 provides that all property which is acquired by or devolves on the insolvent after the date of an order of adjudication and before his discharge, shall forthwith vest in the Court or receiver. As was pointed out by their Lordships of the Privy Council in Kala Chand Banerjee v. Jagannath Marwari , the provision clearly means that the moment property is acquired by or devolves upon the insolvent after the date of adjudication and before his discharge, it vests eo instanti in the Court or receiver. But it is argued that we ought not to give effect to the plain meaning of the language because of the English decisions culminating in Cohen v. Mitchell. Cohen v. Mitchell and the cases on which it was founded seem to approach very near to judicial legislation. The language of Section 44 of the English Bankruptcy Act of 1883 was not identical by any means with the language of Section 28 of the Provincial Insolvency Act of 1920; at the same time, taken by itself, the language appears to be clear. Under the English Act property of the bankrupt which vested in the trustee included all such property as might belong to or be vested in the bankrupt at the commencement of the bankruptcy, or might be acquired by or devolve on him before his discharge. The decision of the Court that property acquired after the date of the bankruptcy did not vest until the trustee intervened, was frankly based on considerations of inconvenience and hardship which would follow on a strict interpretation of the Statute. The rule established by the Courts has now received legislative recognition in Section 47 of the English Bankruptcy Act of 1914. It is, in my opinion, very difficult for this Court, construing an Act of 1920 which does not contain a provision similar to Section 47 of the English Bankruptcy Act of 1914, to depart from the plain meaning of the words used in order to bring Indian law into conformity with the English law. The Indian Act provides that all property which is acquired by or devolves upon the insolvent shall forthwith vest in the Court or receiver, and plainly, unless, we disregard altogether the word ' forthwith ', we cannot say that the property did not vest until the receivers intervened. The view that after-acquired property vests at once in the Court or receiver has been adopted by the High Court of Rangoon in Ma Phaw v. Maung Ba Thaw (1926) I.L.R. 4 Ran. 125, a decision with which I entirely agree. It was also the view of the Lahore High Court in Diwan Chand v. Manak Chand AIR [1934] Lah. 809 although a contrary view was taken by the Patna High Court in Jagdish Narain Singh v. Mussammat Ramsakal Kuer I.L.R. (1928) Pat. 478.

4. The learned District Judge considered himself bound by the decision of this Court in Nagindas Bhukhandas v. Ghelabhai Gulabdas I.L.R. (1919) 44 Bom. 673 : 22 Bom. L.R. 322. No doubt in that case the Court did express the view that the rule in Cohen v. Mitchell applied to a case arising under the Provincial Insolvency Act of 1907, Section 16 (4) of which was worded similarly to Section 28 (4) of the later Act of 1920. It is, I think, more difficult to adopt that construction in the case of the later Act, owing to the passing since the earlier Act, of Section 47 of the English Bankruptcy Act of 1914. But however that may be, the decision of the Court in Nagindas Bhukhandas v. Ghelabhai Gulabdas, is not a direct decision in point, because the question in that case was as to the liability of the insolvent to be prosecuted for having made away with after-acquired property, and the decision turned in part on the absence of mens rea, and in part also on the Provident Funds Act, 1897. Cases arising under the Presidency-towns Insolvency Act are not really in point, be-cause that Act followed the phraseology of the English Bankruptcy Act of 1883, and there is more scope, therefore, for adopting a construction corresponding with the construction placed upon the English Bankruptcy Act in Cohen v. Mitchell. In my opinion the view taken by the trial Court was right and this appeal must be allowed and the order of the trial Court restored. Costs throughout of both parties to come out of the estate.

N.J. Wadia, J.

5. The learned District Judge has held on the authority of the ruling in Nagindas Bhukhandas v. Ghelabhai Gulabdas I.L.R. (1919) 44 Bom. 673 : 22 Bom. L.R. 322 that the rule in Cohen v. Mitchell (1890) 25 Q.B.D. 262 applies, and that in spite of the plain meaning of the words used in Section 28 (4) of the Provincial Insolvency Act of 1920, the property acquired by the insolvent after the date of the order of adjudication vests in the receiver only when the receiver intervenes. The case in Nagindas Bhukhandas v. Ghelabhai Gulabdas was decided in 1919. Subsequent to that decision the legislature enacted Section 28 (4) of the Provincial Insolvency Act of 1920 in exactly the same words as Section 16 (4) of the Provincial Insolvency Act of 1907, in spite of the attempts which the Court had made to get away from the plain meaning of the words of Section 16 (4) of the Act of 1907, by interpreting it in the light of the rule in Cohen v. Mitchell. In my opinion the only inference which can be drawn from this is the one drawn in Ma Phaw v. Maung Ba Thaw I.L.R. (1926) Ran. 125 viz., that the insertion of the word 'forthwith' by the legislature in Section 28 (4) was to sweep away the Court's attempts to postpone the vesting. This view is confirmed by the decision of the Privy Council in Kala Chand Banerjee v. Jagannath Marwari in which it was held that the meaning of Section 16, Sub-section (4), of the Provincial Insolvency Act of 1907 was perfectly clear, and that the moment the inheritance devolved on an insolvent who was still undischarged, it vested in the receiver. The view taken by the learned District Judge appears to me to be wrong, and I agree that the order should be reversed.


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