Skip to content


Debi Prasad Vs. Allen Grant - Court Judgment

LegalCrystal Citation
CourtAllahabad
Decided On
Judge
Reported inAIR1917All485; 39Ind.Cas.916
AppellantDebi Prasad
RespondentAllen Grant
Excerpt:
.....the salary of hamely as well as from that of mr. 1,664 out of hamley's salary towards the satisfaction of the debt incurred under this bond of 1903. it seems to us on a review of the entire circumstances that debi prasad has not done badly, and that the case was one in which the district court was justified in exercising considerable leniency towards the insolvent. debi prasad had been realising money from the estate of both the insolvents towards the satisfaction of the debt created by single bond of 1903, and the result is that he has on the whole done better than any of the other creditors of mr. in this case the learned judge seems to have held that the expression 'assests' in section 43 (3) (a) was not applicable at all, except to a case of commercial failure......of discharge and by the order now under appeal, which is dated the 2nd of may 1916, the district judge granted his discharge subjeet to conditions. in the first place, operation of the order of discharge has been suspended for seme months, that is to say, up to the 17th of september 1916, and in the second place the order has been made subject to the continuance of the attachment for the benefit of the creditors of one half of mr. grant's salary until the termination of the period fixed. we may say at once, with reference to a point of law which has been discussed before us, that the order above referred to is clearly an order passed under clauses (b) and (c) of sub-section (1) of section 44 of the provincial insolvency act (iii of 1907), and is not an absolute order of discharge.....
Judgment:

Piggott, J.

1. This is an appeal in an insolvency matter arising out of the following facts. The respondent, Mr. Allen Grant, was adjudicated an insolvent on the 21st of August 1916 on a petition presented by him on the 11th of March previous. In his schedule he showed liabilities amounting to Rs. 18,288 and assets of Rs. 191. Debts were eventually proved to the amount of Rs. 19,307, of which roughly speaking, one-half was due to the appellant Debi Prasad on a decree of the 20th of November 1910. Arrangements were made in the insolvency for one half of Mr. Grant's salary, he is a public servant employed in the Financial Department of the Secretariat of this province to be attached for the benefit of the creditors, and this has been going on ever since, except for a period of fourteen months during which the insolvent was on furlough on half pay. On the 17th of March 1916 the insolvent applied for an order of discharge and by the order now under appeal, which is dated the 2nd of May 1916, the District Judge granted his discharge subjeet to conditions. In the first place, operation of the order of discharge has been suspended for seme months, that is to say, up to the 17th of September 1916, and in the second place the order has been made subject to the continuance of the attachment for the benefit of the creditors of one half of Mr. Grant's salary until the termination of the period fixed. We may say at once, with reference to a point of law which has been discussed before us, that the order above referred to is clearly an order passed under Clauses (b) and (c) of Sub-Section (1) of Section 44 of the Provincial Insolvency Act (III of 1907), and is not an absolute order of discharge within the meaning of Section 44 (2) (a). According to Sub-Section 5 of the same section the power of suspending and of attaching conditions to an insolvent's discharge may be exercised concurrently. This is what the District Judge has done in the present case, there can be no doubt that the order is one which it was competent for the Court below to pass, independently of any question as to whether or not the insolvent was entitled to an absolute order of discharge under the provisions of Sub-section (3) of the same section. The determination of this point goes a long way towards disposing of the appeal now before us. The order passed by the District Judge has been acquiesced in by the main body of creditors, but it is contested by Lala Debi Prasad. The memorandum of appeal as drafted seems to be based largely on a misapprehension of the point of law, which we have already decided. The appellant draws the attention of the Court to a variety of circumstances, as to which it is contended that they bring the case of the respondent under the operation of Sub-section (3) of Section 44 of the Act, that is to say, our attention is drawn to various circumstances the effect of which, it is contended is to disentitle the respondent to an absolute order of discharge. The discretion of a Bankruptcy Court with regard to the period of suspensions under Section 44 (2) (b), or the conditions to be laid down with respect to any earnings or income, which may afterwards be due to the insolvent, cannot be fettered by the provisions of the subsequent Sub-section (3). It is a discretion which it is incumbent upon a Bankruptcy Court to exercises carefully and judiciously, with reference to the facts of each particular case. It is no doubt advisable that this Court, in an appeal from such an order, should take into consideration the question whether the discretion of the Court below has been properly exercised, but we should require to be fully satisfied that there had been a wrong exercise of that discretion in order to warrant our interference. We may, note at this point that one of the grievances pressed upon us in the memorandum of appeal is that the appellant was prevented by the course which the proceedings took in the Court below from laying certain evidence before that Court which he was anxious to produce. This is a plea to which we should ordinarily be disposed to attach considerable weight; but under the circumstances of this particular case we do not think that the point is of substantial weight. There seems to be some question as to whether the appellant did not as a matter of fact abandon his right to produce evidence in the Court below; but in any case the record before us shows that he has no substantial grievance. His position in the Court below was that his desire to bring to the notice of the Court facts which would disentitle the insolvent to an absolute order of discharge.

2. In this he has succeeded, for the order of the Court below is in his favour to this extent. The only possible question therefore, is whether the appellant was prevented from bringing to the notice of the Court circumstances which would haver influenced that Court, in the exercise of its discretion, to impose condition on the insolvent, more burdensome to him and more favourable to his creditors, than those actually imposed. What was really wanted from the appellant was a plain statement of the financial results to himselfe of his dealing with the insolvent, taking into account all moneys advanced by the appellant and any cost incurred by him in the subsequent litigation. Such statements of the appellant had every opportunity of laying before the Court below and of attesting it by his own sworn testimony. A statement of the position from the point of view of the appellant has been laid before us in the course of the hearing of this appeal and we have taken it into account. The claim of the appellant against Mr. Allen Grant goes back to a bond for Rs. 2,ooo of the year 1903. The terms of this bond as to interest were certainly onerous. It is an admitted fact that payments aggregating Rs. 1,500 had been made on account of interest when the suit was brought on the bond in the year 1910. The claim on that date was for Rs. 29,500 but the plaintiff accepted a consents decree for Rs. 8,560 with future interest at 6 per cent. per annum. It is admitted that he has received, since the insolvency Rs: 4,779 at his rateable share of the money realised by attachment of Mr. Grant's salary. It is also admitted that a sum of Rs. 606 has been paid in interest between the date of the decree and the date of the order of adjudication. Moreover, the bond for Rs. 2,000 already referred to was executed jointly by Mr. Allen Grant and by a relative of his of the name of Hamley. The latter has also gone into the Bankruptcy Court, mainly in consequence of this transaction and realisation for the benefit of the creditors, and principally for the benefit of Debi Prasad, having been going on from the salary of Hamely as well as from that of Mr. Grant. In this manner Debi Prasad has received a further sum of Rs. 1,664 out of Hamley's salary towards the satisfaction of the debt incurred under this bond of 1903. It seems to us on a review of the entire circumstances that Debi Prasad has not done badly, and that the case was one in which the District Court was justified in exercising considerable leniency towards the insolvent. It has been made a matter of complaint before us that the learned District Judge has expressed himself somewhat strongly with regard to the appellant's conduct in his dealings towards the two insolvents. We think it fair to note on this point that there seems something to be said on both sides. When a young man, starting in life in a comparatively low position in the service of the Government, sees fit to indulge the sanguine temper of youth and discount his future expectations by raising a loan for an amount which certainly a large one in proportion to his existing means, he can scarcely make it matter for complaint if the lender imposes rigorous terms in the matter of interest. From the point of view of the lender it is a speculation of a doubtful nature and there are many and obvious motives to induce him to insist upon rigorous terms in the matter of interest, if he can persuade the debtor who is after all under no compulsion to accept them. It is to be noted in Debi Prasad's favour that he did consent to a decree which abandoned a very substantial position of the enormous claim for interest which he was entitled to put forward on the latter of his bond; and it may further be said that our attention has been called to certain matters in the conduct of the insolvent, such as the lapsing of his life insurance policy and the circumstances under which furlough on half pay was taken by him after adjudication, which, although, no doubt, capable of explanation from the insolvent's point of view, were calculated to annoy his creditor and to account for the attitude taken up by the latter in the course of the present proceedings. Having said this much, however, we must return to the opinion which we have already expressed, and that is in the main that the order passed by the Court below seems to us a fair and reasonable exercise of the discretion conferred on the Bankruptcy Court by the section under consideration. Debi Prasad had been realising money from the estate of both the insolvents towards the satisfaction of the debt created by single bond of 1903, and the result is that he has on the whole done better than any of the other creditors of Mr. Allen Grant, who have acquiesced in the order which has virtually secured them about one-half of their claims. For these reasons we think that this appeal ought not to succeed, and we dismiss it accordingly with costs including fees on the higher scale.

Walsh, J.

3. I entirely agree, and with one exception. I agree with every word in the District Judge's judgment. According to my way of thinking, the only question before the Court in a matter of this kind is one of public policy or rather of the policy of the insolvency law which enables a man who has got into deep water to liquidate his liabilities subject to certain conditions. From the moment a man's affair gets into the Insolvency Court, it ceases to be a personal struggle between debtor and the creditor, who up to that moment conducted one with another. The misfortune of the debtor and the creditor are mutual in insolvency, moreover you are no more compelled to lend money than you are to borrow. Equitable distribution is the guiding principle subject to punitive measures to be applied in the discretion, of the Court to such conduct of the insolvent as the law discontenances. I think all these considerations were carefully taken into account by the learned Judge and I see no cause for interference.

4. The one exception to which I think it worthwhile to draw attention is with reference to the case of Hamley. In this case the learned Judge seems to have held that the expression 'assests' in Section 43 (3) (a) was not applicable at all, except to a case of commercial failure. It is impossible to take that view, although it does not affect our decision in this particular case. But 'assets' means realisable property which the insolvent possesses at the material moment. It is quite true to say that if a man has not a brass farthing except future earnings and they are unsaleable he has no 'assets.' But it is not true to say that on that account the section does not apply. The legal conclusion is that if he has no assets, his assets are not of the Value of eight annas in the rupee. In this respect the learned Judge misdirected himself. It is impossible to say that Sub-section (a) is applicable to one class of insolvency and not to others. The question is whether the realisable assets are equal to eight annas in the rupee.


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