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Narayan Das Vs. Chimman Lal and anr. - Court Judgment

LegalCrystal Citation
SubjectCivil
CourtAllahabad
Decided On
Reported inAIR1927All266
AppellantNarayan Das
RespondentChimman Lal and anr.
Excerpt:
- - insolvent gave security for the amount of these debts in this court, but everybody has a perfect right to dispute his liability for a debt at his own risk, and to say that because he refused to pay a debt, whether he owes it or he does not, he has suspended payment of his debts within the meaning of this provision is so novel and startling a proposition that we find it difficult to deal with it the logical result would be that a perfectly honest and respectable man, who refused to pay an extortionate claim against him, might on that account be made an insolvent......in the court below. we must, therefore, set aside the act of adjudication and discharge the official receiver, and direct him to return to the debtor such property as he holds and the proceeds of any property which he has legitimately realised in the exercise of his powers during his appointment. we agree with counsel for the appellant and for the receiver that any costs reasonably incurred in the discharge of his duty between the date of his appointment and to-day, the official receiver is entitled to recover from the petitioning creditor, on the ground that people who insist upon an absurd claim of this kind, and allow the judge to amend an application out of existence and pass an order without jurisdiction, do so at their own risk,3. there remains the question of a complaint.....
Judgment:

Walsh, Ag. C.J.

1. This appeal must be allowed so far as the order adjudicating the appellant an insolvent is concerned. The learned Judge has got himself into somewhat of a tangle in his endeavour to apply the provisions of Section 6. Only two alleged acts of insolvency are concerned. First, the third in Sub-section (d), where the insolvent with any intent to defeat or delay his creditors secludes himself so as to deprive his creditors of the means of communicating, with him. That was the only ground alleged in the original petition. That ground was found by the Judge in favour of the insolvent, and therefore no order could be* made on that. At the hearing the learned Judge framed an issue, which itself suggested the other ground mentioned in Sub-section (g), namely,

if the insolvent gives notice to any of the creditors that he has suspended payment of his debts.

2. It is difficult to recognize in the form of the issue any relation between it and the provisions of the Act which we have just quoted. Counsel for the petitioning creditors, who are respondents, says that the petition was either in fact or by implication amended so as to include this ground. He also contends that an oral notice under Sub-section (g) is sufficient. We do not say that it cannot be sufficient, but it must be a notice in an unambiguous, decisive form, made in a definite form, of words to a particular creditor at a definite time, that the debtor has suspended payment of, his debts. 'Suspended payment of his debts' in this connexion means entire suspension of his whole indebtedness, or as is colloquially said of a bank, notice to stop payment, which of course means notice of a general intention to stop payment to everybody. The learned Judge appears to have investigated under this issue, No. 4, an allegation that the insolvent was indebted in three hundis. Two of them are said not to have been due at this stage. We have not troubled to investigate that question. They are admittedly disputed. In order to show his bona fides, the; insolvent gave security for the amount of these debts in this Court, but everybody has a perfect right to dispute his liability for a debt at his own risk, and to say that because he refused to pay a debt, whether he owes it or he does not, he has suspended payment of his debts within the meaning of this provision is so novel and startling a proposition that we find it difficult to deal with it The logical result would be that a perfectly honest and respectable man, who refused to pay an extortionate claim against him, might on that account be made an insolvent. It seems clear that the learned Judge misunderstood the Act, and that the provision has no application to the facts as they have been dealt with in the proceedings in the Court below. We must, therefore, set aside the act of adjudication and discharge the Official Receiver, and direct him to return to the debtor such property as he holds and the proceeds of any property which he has legitimately realised in the exercise of his powers during his appointment. We agree with counsel for the appellant and for the Receiver that any costs reasonably incurred in the discharge of his duty between the date of his appointment and to-day, the Official Receiver is entitled to recover from the petitioning creditor, on the ground that people who insist upon an absurd claim of this kind, and allow the Judge to amend an application out of existence and pass an order without jurisdiction, do so at their own risk,

3. There remains the question of a complaint made by the appellant, or an application, it is difficult to describe it prescisely, to this Court that an enquiry be made into the conduct of the Official Receiver. This Court has no jurisdiction to do anything of the kind, though no doubt in an existing insolvency, it might as a special case tender advice or give directions to the Insolvency Judge; but now that the insolvency has come to an end, and the title of the Official Receiver is terminated, the insolvency Court has no jurisdiction which it can exercise in this insolvency at all. The Official Receiver from to-day becomes a private person. He will, of course, carry out the order of this Court as directed above, and if he fails to carry out the order, he will be liable no doubt to disciplinary measures by this Court, but so far as any alleged pecuniary loss suffered by the appellant is concerned, although we do not sit here to advise the parties, presumably the appellant must seek his ordinary remedy against the Official Receiver as a private individual in the ordinary way in which any other person can recover compensation for loss suffered as the result of a legal wrong.

4. As regards the costs of the Official Receiver appearing here to resist this application, we think that here the applicant has put himself wholly in the wrong, and although we have no jurisdiction to make such an order as he asks for, we direct him to pay the Official Receiver costs of resisting this application. Of course the appellant is entitled to the return of his security which he filed as a condition of being allowed to appeal. This order is without prejudice to any question as to whether he is liable or not on the alleged hundis. The hundis must be returned as soon as possible to the creditors. The appeal is allowed with costs.


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