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Maya Ookeda Vs. Kuverji Kurpal - Court Judgment

LegalCrystal Citation
SubjectCommercial
CourtMumbai
Decided On
Case NumberO.C.J. Suit No. 1096 of 1930
Judge
Reported inAIR1932Bom338; (1932)34BOMLR649
AppellantMaya Ookeda
RespondentKuverji Kurpal
DispositionSuit dismissed
Excerpt:
.....(iii of 1909), section 17-insolvent-creditor of insolvent-suit by a creditor against an insolvent-leave of insolvency court to file suit.;a creditor of an insolvent; cannot bring a suit against the insolvent without first obtaining leave to sue from the insolvency court, under section 17 of the presidency-towns insolvency act, 1909.;in re dwarkadas tejbhandas (1915) i.l.r. 40 bom. 235 : s.c. 17 bom. l.r. 925 followed.;mahomed haji essack v. abdul rahiman (1916) i.l.r. 41 bom. 312 : s.c. 18 bom. l.r. 198 explained.;bheraji samrathji v. vasantrao (1928) 31 bom. l.r. 981 commented on. - - he has been good enough in this connection to draw my attention to rule 83 of the rangoon high court insolvency rules which is in these terms: that order in my opinion clearly operates as an order..........thereof were adjudged insolvents. it is further alleged that the plaintiffs have not obtained the leave of the insolvency court to institute this suit, and it issubmitted that the suit is, therefore, not maintainable and should be dismissed. other defences were raised in that written statement, but they have not been proceeded with, and no issues have been raised in reference thereto. defendant no. 4 in his written statement denies that he is the heir or legal representative of mulji tejsey who was a partner in the firm of kurpal doongerseyand co., and he submits that the suit against him should be dismissed. he also adopts in the alternative the written statement of defendants nos. 3 and 5. the issues in the case are as follows:-1. whether the firm of kurpal doongersey and co. was.....
Judgment:

Blackwell, J.

1. In this case the plaintiffs and defendant No. 11 formerly carried on business in Bombay in the firm name of Maya Ookedaand Co. On January 28, 1927, the firm of Kurpal Doongersey and Co. passed three hundis in favour of the firm of Maya Ookedaand Co., each for a sum of Rs 10,000 payable on May 28, 1927. Those hundis have been put in before me as Ex. B, and it has not been disputed that the firm of Kurpal Doongerseyand Co. passed those hundies for valuable consideration, and that they did not pay them on the due date or at all. The present suit is brought against the surviving partners of the firm of Kurpal Doongerseyand Co., and the heirs and legal representatives of persons who were partners at the time that the hundis were passed, but who are since deceased. Defendant No. 11 was joined as a defendant, because, although he was a member of the firm of Maya Ookedaand Co., he refused to join as a plaintiff in the suit No relief is claimed against him.

2. Defendants Nos. 3 and 5 have put in a joint written statement. Defendant No. 4 has put in a written statement. Mr. Amin appears for defendants Nos. 1 to 8, although some of those defendants have put in no written statement. DefendantsNos. 9, 10 and 11 are absent. Affidavits of service upon them were put in.

3. In the written statement of defendants Nos. 3 and 5 it is alleged that by an order made by the Rangoon High Court on or about January 25, 1928, the firm of Kurpal Doongerseyand Co. and the partners thereof were adjudged insolvents. It is further alleged that the plaintiffs have not obtained the leave of the Insolvency Court to institute this suit, and it issubmitted that the suit is, therefore, not maintainable and should be dismissed. Other defences were raised in that written statement, but they have not been proceeded with, and no issues have been raised in reference thereto. Defendant No. 4 in his written statement denies that he is the heir or legal representative of Mulji Tejsey who was a partner in the firm of Kurpal Doongerseyand Co., and he submits that the suit against him should be dismissed. He also adopts in the alternative the written statement of defendants Nos. 3 and 5. The issues in the case are as follows:-

1. Whether the firm of Kurpal Doongersey and Co. was adjudicated insolvent on January 25,1928 ?

2. Whether the suit is maintainable in view of no leave being obtained under Section 17 of the Insolvency Act ?

3. Whether defendant No. 4 is the heir and legal representative of Mulji Tejsey

4. The general issue.

4. It will, I think, facilitate the understanding of this judgment if I here mention which of the defendants was alive and still a partner at the date of the alleged adjudication order, and which of the partners had died before that adjudication order is alleged to have been made. Defendants Nos. 1, 2, 5, 7 and 8 were alive and were partners in the firm of Kurpal Doongerseyand Co. at the time at which the alleged adjudication order against that firm was passed. Defendant No. 3 is the same as defendant No. 5, but as defendant No. 3, he is sued along with defendant No. 4 in a representative capacity, namely, as being the heir and legal representative of Mulji Tejsey. The latter died on May 4, 1927, that is to say, after the hundis were passed, but before the date of the alleged adjudication order. Defendant No. 6 is the widow and heir and legal representative of Virji Monsey, who was a partner in the firm of Kurpal Doongerseyand Co. at the time the handis were passed. He died on February 24, 1928, after the alleged adjudication order was passed. Defendants Nos. 9 and 10 are sued as the heirs and legal representatives of Khimji Korsey, who died on March 19, 1927, after the hundis were passed, but before the date of the alleged adjudication order.

5. The contention put forward by Mr. Amin on behalf of defendants Nos. 1 to 8 is that the firm of Kurpal Doongerseyand Co. were adjudicated insolvents on January 25, 1928, and that as no leave of the Insolvency Court to institute this suit, which was filed on May 28, 1930, was obtained prior to its institution or at all, the suit is not maintainable.(His Lordship after dealing with other matter not material to this report proceeded:]

6. Section 17 of the Presidency-towns Insolvency Act provides that on the making of an order of adjudication, the property of the insolvent wherever situate shall vest in the Official Assignee, An order of adjudication, therefore, having been made by the High Court of Rangoon against the partners of the firm of Moolji Dharseeand Co., I hold that the property of the partners in that firm wherever situate thereby vested in the Official Assignee, Accordingly, it follows in my judgment that the property of the same partners, who carried on business in Bombay and elsewhere also under the name of Kurpal Doongerseyand Co., likewise vested in the Official Assignee of the Rangoon High Court. Mr. Mehta does not dispute that the effect of an adjudication order against a firm operates as an adjudication order against all the persons who were partners in the firm at the date of the order of adjudication. He has been good enough in this connection to draw my attention to Rule 83 of the Rangoon High Court Insolvency Rules which is in these terms:-

(1) An order of adjudication made against a firm shall operate as if it were an order of adjudication made against each of the persons who at the date of the order is a partner in that firm. (2) Subsequent proceedings shall continue in the name of the firm so far as is practicable, but applications for discharge must be made by the partners individually.

7. That rule corresponds word for word with Rule 154 of the Bombay High Court Insolvency Rules. It is to be observed that the order made by the learned Judge of the Rangoon High Court in Exhibit No. 2 is that the firm of Moolji Dharseeand Co., other than infant partners, if any, should be adjudicated insolvent. That order in my opinion clearly operates as an order adjudicating insolvent all the adult partners of that firm at the date of the order. Accordingly, 1 hold that the adjudication order operated to adjudicate as insolvent the partners carrying on business under the name of Kurpal Doongerseyand Co., who are in fact the same partners as were carrying on the business under the name of Moolji Dharseeand Co. Accordingly, I answer the first issue in the affirmative.

8. The next question arising is that as to the maintainability of the suit. Mr. Amin for defendants Nos. 1 to 8 has relied in this connection on the latter part of Section 17 of the Presidency-towns Insolvency Act which provides that after an order of adjudication-.except as directed by this Act, no creditor to whom the insolvent is indebted in respect of any debt provable in insolvency shall, during the pendency of the insolvency proceedings, have any remedyagainst the property of the insolvent in respect of the debt or shall commence any suit or other legalproceeding except with the leave of the Court and on such terms as the Court may impose.

9. Relying upon that section Mr. Amin submits that the suit is not maintainable against defendants Nos. 1 to 8. In support of his argument he has relied upon a decision of Mr. Justice Davar in In re DwarkadasTejbhandas I.L.R. (1915) Bom. 235 : 17 Bom. L.R. 925 In that case an application was made to the learned Judge for leave under Section 17 of the Act. The suits had been filed without leave before a Subordinate Judge, and he adjourned the hearing of those suits to enable the plaintiff to apply for leave under Section 17. The learned Judge said that the words of the section wereso clear and explicit that they left no room for any construction other than the construction he had put upon them, namely, that leave must be obtained before the suit was commenced as a condition precedent to its institution, Accordingly, he refused the leave in question. He was referred in the course of the argument to two English cases, In re Warner,Limited (1891) 1 Ch. 305 and Brownscombe v. Fair (1887) 58 L.T.N.S. 85 upon the analogy of which he was asked to give leave, but he expressed the opinion that they had no bearing on the question before him and he had to construe a section of an Indian Act which was so clear and emphatic that it could bear only one construction, and that cases decided under the provisions of other laws of another country were, therefore, of no assistance to him,

10. Mr. Mehta relied, in answer to this argument put forward by Mr. Amin based on the decision to which I have referred, on the case of Mahomed Haji Essack v. AbdulRahiman I.L.R. (1916) Bom. 312 : 18 Bom. L.R. 198 In that case the plaintiff had filed a suit on a promissory note against two defendants on May 28, 1915. TheFirst defendant had been adjudged insolvent on October 27, 1913, and the second defendant firm was adjudged insolvent on November 1, 1913. On November 8, 1915, a petition by the first defendant for discharge had been refused but he had been granted a protection order for one year on April 16,1915. Leave to file the suit was applied for after its institution and was in fact obtained under Section 17 of the Presidency-towns Insolvency Act on June 2, 1915. The suit came on for hearing on July 6, 1915. Counsel for defendant No. 1 appeared and stated that the claim was admitted and that the sole object in filing the suit was to strengthen the plaintiff's position as an appellant against the order made on the application for the insolvent's discharge. Mr. Justice Macleod thereupon stayed the proceedings in the suit, Later, Mr. Justice Macleod refused to remove the stay order and the plaintiff appealed, It will, therefore, be observed that the question before the appeal Court was not whether leave should be granted under Section 17 of the Presidency-towns Insolvency Act after the institution of a suit or not, but whether the stay order under Section 18(3) of the Presidency-towns Insolvency Act had been properly made or not. In the course of the judgment of the Court, Chief Justice Scott stated that there were two questions in the case, the first being whether the learned Judge in making the stay order under appeal acted without jurisdiction. He referred to the fact that it had been contended that Section 18(3) was the only section which could apply, and that that only applied where a suit had been instituted before the adjudication order was made. The learned Chief Justice then stated that the Court had been referred to the observations of the Divisional Court in England in Brownacombe v.Fair (1887) 58 L.T.N.S. 85 the case to which Mr. Justice Davar had also been referred, and without expressing any opinion upon that decision apparently the learned Chief Justice was content to follow it. It is plain, however, that there was no argument on the question whether leave could be obtained under Section 17 of the Presidency-towns Insolvency Act after the institution of a suit, and that question was not decided by the appeal Court in this case. Consequently, in my view, Mr Justice Davar's decision has not been overruled either expressly or impliedly. I may say with respect that I entirely agree with the decision arrived at by Mr. Justice Davar, Whether I agree with it or not, it is in my judgment binding upon me and I follow it.

11. Mr. Mehta also referred me to a decision of Mr. Justice Fawcett in Bheraji Samrathji v. Vasantrao (1928) 31 Bom. L.R. 981 where that learned Judge with some hesitation held that a suit filed against an insolvent after the date of the adjudication order need not be dismissed as barred under Section 17, but may be stayed under Section 18(3) of the Presidency-towns Insolvency Act, 1909. In my opinion, the doubt expressed by that learned Judge was well-founded. He appeared to take the view that the appeal Court decision, to which I have referred, compelled him to come to the conclusion at which he arrived. With great respect to him, I do not think it compelled him to come to any such conclusion. As I have already said, in my opinion, Mr. Justice Davar's decision is still a binding decision on the point, and as I do not agree with the view taken by Mr. JusticeFawcett of the appeal Court decision, I still follow the decision of Mr. Justice Davar.

12. Accordingly, I hold that this suit is not maintainable against those partners of the firm, who were partners at the date of the order of adjudication, that is, defendants Nos. 1, 2, 5, 7 and 8. I also hold that it is not maintainable against defendant No. 6 who is the widow of Virji Monsey, inasmuch as he was apartner in the firm of Kurpal Doongersey and Co., and was alive at the date of the adjudication order against that firm, and was, therefore, himself adjudicated insolvent at that date.(The rest of the judgment is not material to this report.)

13. I also dismiss the suit with costs against defendants Nos. 1, 2, 5, 6, 7 and 8.


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