Skip to content


In Re: Rassual Haji Cassum - Court Judgment

LegalCrystal Citation
SubjectProperty
CourtMumbai
Decided On
Case NumberPetition No. 404 of 1910
Judge
Reported in(1911)13BOMLR13
AppellantIn Re: Rassual Haji Cassum
Excerpt:
practice--insolvent debtors. court--official assignee seizing property from third persons as insolvent's property--motion to relieve property--separate suit--procedure.;where the official assignee seizes and retains a property as the property of the insolvents, a third person who claims the property as his own and in whose possession, it was when seized, can move the insolvent debtors court to investigate the question of ownership and to order restitution thereof. it is not obligatory on the third party to file a civil suit against the official assignee for the purpose. - - 1. in this motion eight persons complain that the official assignee has seized and is retaining as the property of the insolvent certain buffaloes which, at the time the official assignee seized them were in the.....beaman, j. 1. in this motion eight persons complain that the official assignee has seized and is retaining as the property of the insolvent certain buffaloes which, at the time the official assignee seized them were in the possession of, and be. longed to, the said eight applicants.2. the motion was resisted by the official assignee, first, on the question of fact, he alleging that the property in dispute was at the time it was seized in the possession of and belonged to the insolvent. next, on the technical ground that the relief sought by the claimants cannot be obtained by a motion and that even were the court to find on the question of fact against the official assignee the proper course would be to refer the aggrieved parties to a civil suit against him.3. there is nothing in the.....
Judgment:

Beaman, J.

1. In this motion eight persons complain that the Official Assignee has seized and is retaining as the property of the Insolvent certain buffaloes which, at the time the Official Assignee seized them were in the possession of, and be. longed to, the said eight applicants.

2. The motion was resisted by the Official Assignee, first, on the question of fact, he alleging that the property in dispute was at the time it was seized in the possession of and belonged to the Insolvent. Next, on the technical ground that the relief sought by the claimants cannot be obtained by a motion and that even were the Court to find on the question of fact against the Official Assignee the proper course would be to refer the aggrieved parties to a civil suit against him.

3. There is nothing in the Insolvency Act which directly supports the applicants' contention that the right they seek to establish, and the relief they wish thereon consequently to obtain, are provided for by any section of that Act, for I agree with Mr. Raikes that rule 4, which appears to contemplate the decision of disputed questions in a matter of this kind, is sufficiently explained by reference to Section 36 of the Act, and the effect of reading the section with the rule is, I think, clear. What the Act had in view was action taken by the Official Assignee in the first place to clear his title and thereafter to obtain possession of the property which he alleged belong-ed to the Insolvent. Nowhere does it appear that the Act itself provides for the case of aggrieved persons from whose possession the Official Assignee has actually taken property in the belief that it was the property of an Insolvent. Yet s. 90 provides in general terms that the Commissioner in Insolvency shall have all the ordinary powers as to procedure etc., which he would have sitting as a Judge on the Original Side of the Court in the conduct of civil litigation under the general law of Civil Procedure. And it appears to me that he will, therefore, be empowered to apply to a motion of this kind the provisions of Order XXI, Rules 58, 59 and 60 of the Civil Procedure Code. For in all essential respects the case laid before me by this motion is in effect the same as the case of a party who seeks to have an attachment raised. In those circumstances the Court deals with the objection summarily and if as a result it is prima facie satisfied that the attached property was not at the time of the attachment in the possession of, and did not belong to, the judgment-debtor, it removes the attachment and leaves the creditor to establish his right, if any, by a regular suit. So here if the Court were summarily satisfied that the property now in dispute was when seized in the possession of and did belong to the claimants, it appears to me that it ought to order the Official Assignee to restore that property to them and if so advised to pursue it by means of a regular suit. I think there can be no doubt that motions of this kind have not infrequently been brought in the Insolvency Court although there is no recorded case to which my attention has been drawn and in which all the arguments for and against this procedure have been considered and adjudicated upon. A similar motion seems to have been brought before Mr. Justice Russell, sitting as Commissioner in Insolvency, some years ago. After carrying the inquiry some length Mr. Justice Russell referred the claimants to a regular suit, but the bare fact that the motion was heard and inquiry had upon it lends some colour at least to the contention that the present motion is not entirely novel and unknown to the practice of this Court, as also that the learned Commissioner who dealt with the other motion must have contemplated the possibility at least of giving his decision against the Official Assignee. What in the event of having done so he would have next directed can now only be a matter lot conjecture Against the analogy I have pointed out between a motion of this kind and an ordinary claim to raise an attachment, Mr. Raikes has very strenuously contended that there is a substantial distinction. An attachment imposed by a Court is a proceeding by the Court which until it has terminated in a sale the Court obviously has a complete power over either to confirm or annul. But it is said that that is not so where the Official Assignee, in whom all the property of the Insolvent had vested, has actually, whether rightly or wrongly matters not, seized and become possessed of property which he alleges to have been owned by the Insolvent. Being actually in possession of that property, it is urged that it cannot be taken from him except by process of law, which means to say that in any and every such case the party from whom it is taken could only regain possession of it by means of a regular suit. Were that, however, really so, it is difficult to understand with what object motions like this could be brought in the Insolvency Court. For it is conceded that while the leave of the Court is indispensable before bringing a suit against a Receiver, it is not required to bring a suit against the Official Assignee. So if this view were correct it would come to this that motions were frequently brought before this Court for no other purpose than obtaining an entirely superfluous direction referring the parties bringing them to a civil suit. Section 58, Clause (2), of the Insolvency Act provides that for the purpose of acquiring or retaining possession of the property of an Insolvent, the Official Assignee shall be in the position of a Receiver etc. Again, a distinction is strongly insisted upon, notwithstanding the terms of the section which I have just quoted, between the legal status of the Official Assignee and that of an ordinary Receiver. For it is said that while the whole of the property of the Insolvent vests in the former, the property of the person for whom a Receiver is appointed does not vest in the latter. That distinction, however, appears to me to be of no practical importance and has no direct bearing upon the question I am now considering. Reverting to the claims for raising attachments and the procedure to be followed when such claims are made, it seems to me that just as the attachment is an act of the Court, so since the Official Assignee is an officer of the Court what he does in that character is clothed with those special powers and is deliberately an act of the Court over which the Court has and ought to have power of control. Thus, if the Official Assignee is shown upon evidence to have acted in excess of his powers, as recovering property alleged to belong to the Insolvent which did not in fact belong to him and thus amounting to grave injustice, there must surely be inherent powers in the Court summarily to provide a remedy for a wrong ultimately referable to itself. Nor, apart from the distinction I have already adverted to and dismissed as practically irrelevant for my present purpose, can I see any difference between* the conduct of an Official Assignee clothed with the authority of the Court and that of a Receiver similarly so clothed and empowered. When a Receiver has actually obtained possession of property which he alleges to belong to the party for whom he is acting, he appears to me to stand exactly in the same position as the Official Assignee in this case. It is to be remembered that both the Official Assignee and the Receiver, as officers of the Court, have large facilities for seizing upon any property to which they bona fide believe themselves entitled ; while the public are intimidated and are under a great disadvantage in resisting them, however unjust and unwarrantable their acts may be.

4. Now, there can be no question, looking to cases decided in the English Courts, Expert Cochrane, In re Mead(1) Searle v. Ckoat(1), that where the Receiver has actually obtained possession of property to which an outsider sets up a paramount title the Courts will inquire summarily and upon motion into the respective rights brought into controversy; and if the Receiver is found to have snatched from, and be retaining against, the rightful owner any property which he bona fide believed 'himself entitled to, the Courts have ordered him to relax his hold and make restitution. Common sense points the same way as the law, for surely what an officer of the Court has done wrongly, however bona fide, ought to be remediable summarily by the Court under whose authority he has acted, and it would be no adequate reparation if in every such case the party aggrieved were to be kept out of his property until he had recourse to the tardy and expensive remedy of a regular civil suit.

5. Counsel for the opponent, the Official Assignee, has strenuously contended that it would be highly inexpedient and contrary to good policy to give effect to a motion of this kind and thereby encourage every member of the public consistently to resist the Official Assignee when he sought to obtain possession of the assets of an Insolvent. But there isat least as much to be said on the Other side of this question . 10 On the face of it, it. appears monstrous and contrary to all principles of justice that any officer of the Court, whether an Official Assignee or a Receiver, should have practically unlimited powers to seize any property. whether rightly or wrongly, and having done so to be entitled to hold it until the party from whom he had taken it could establish his rights by a civil suit. Where the question is a bona fide question of paramount title into which the Official Assignee is certainly not competent to have gone fully before acting the proper remedy appears to me to be indisputably an inquiry by motion, following the procedure laid down in order XXI, Rules 58, 59 and 60, in order summarily to answer that question. If it is answered against the Official Assignee then it appears to me competent for the Court to order him to return the property he had wrongly taken to the person justly entitled to it. Although as all such inquiries ought to be summary, arriving at no more than a prime facie conclusion, it would still be open to the Official Assignee if so advised to file a regular suit in order to have the question more fully investigated and determined. But I cannot accede to Mr. Raikes' contention that this way of agitating it in the first instance is either against law or general expedient It has been said that even if the Court at the close of such a summary inquiry were to hold that the claimants had prima facie established their case and direct restitution of the property to them, the Official Assignee would not be bound to obey' he Court's order. The same, I apprehend, might be said in the case of a Receiver; yet I am not aware that that argument was ever advanced in the English Courts or that any Receiver so ordered by the Court had ever ventured to disobey the order. Nor do I apprehend that the Official Assignee would take up a contumacious attitude or refrain from loyally obeying any order given to him by the Court.

6. For these reasons I think that the motion is in good enough form and ought to be proceeded with. As, however the question of fact to be answered must necessarily depend upon hearing 9 certain amount of oral evidence, I agree with both the learned counsel concerned that it cannot be satisfactorily disposed of merely upon affidavits. I have, therefore framed an issue of fact. Whether the buffaloes at the time that the Official Assignee obtained possession of them were in the possession of, and belonged to, the eight claimants or any of them or the Insolvent. And I direct that the heaving be postponed till the next sitting of this Court.

7. [The learned Commissioner heard the petition on the 16th and the 23rd November 1910, and ultimately passed the following order. ]

8. Prima facie case made out for the claimants on the mortgage. The mortgagee's evidence supported by entries in the stable keeper's books, which seem on the face fair enough. It is quite likely that these books and papers have been made in fraud of the Official Assignee's impending claims. But I can hardly go into that in a merely summary enquiry. As the case is presented, it seems to me that the Official Assignee ought to bring a suit if so advised to prove that the mortgage and the subsequent alleged transactions were void for fraud ; in the meanwhile to restore the property attached to the ownership of whomever's it was when the seizure was made. Motion allowed with costs.


Save Judgments// Add Notes // Store Search Result sets // Organizer Client Files //