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(Konchada) Nilakanta Subudhi Vs. Sri Sri Sri Ramachandra Deo (Minor) - Court Judgment

LegalCrystal Citation
SubjectCivil
CourtChennai
Decided On
Reported inAIR1932Mad250
Appellant(Konchada) Nilakanta Subudhi
RespondentSri Sri Sri Ramachandra Deo (Minor)
Cases ReferredRatna Rai v. The Official Assignee of Madras
Excerpt:
- - 674 were made before the said order in good faith to the decree-holder and that even as to the 20 subsequent payments amounting in all to rs. but the learned judge made his meaning perfectly clear when he said that it may be presumed that the court of wards will not fail in its duty to the minor zamindar and that if any instalment of the allowance is paid to the insolvent instead of to the receiver or into court, the zamindar will not be discharged from his liability for it. 890. the matter is now governed in england by section 47(1), bankruptcy act, 1914. there is also a considerable body of judicial opinion, not without dissent, that the same extended doctrine holds good under the provincial insolvency act......whereby the decree-holder became entitled to a family allowance of rs. 173 per month from the zamindar. the decree-holder became heavily indebted to several persons of whom the appellant in a.a.o. no. 212 is one and the vuna family was a previous creditor. to pay off the appellant's debt he executed to the appellant on 22nd july 1920 a transfer of the arrears of the allowance till then due and also a power-of-attorney of even date empowering the appellant to execute the decree and retain one-half of the sums realized towards his debt and pay over the balance to the transferor. the vuna lender had obtained a somewhat similar right under an instrument of 1916. on a contest between the vuna lender and the present appellant it was held by the court in january 1924 in c.m.a. nos. 324 and.....
Judgment:

1. Appeal Against Order No. 212 of 1926 is from an order of the District Judge of Ganjam dismissing a petition, E.P. No. 16 of 1924, by the appellant as holder of a power-of-attorney from one Durga Mahadeva Deo to execute the decree in O.S. No. 7 of 1887 obtained by Durga Mahadeva Deo against the Zamindar of Bhodokimidi, the appellant in A.A.O. No. 374 of 1926, whereby the decree-holder became entitled to a family allowance of Rs. 173 per month from the zamindar. The decree-holder became heavily indebted to several persons of whom the appellant in A.A.O. No. 212 is one and the Vuna family was a previous creditor. To pay off the appellant's debt he executed to the appellant on 22nd July 1920 a transfer of the arrears of the allowance till then due and also a power-of-attorney of even date empowering the appellant to execute the decree and retain one-half of the sums realized towards his debt and pay over the balance to the transferor. The Vuna lender had obtained a somewhat similar right under an instrument of 1916. On a contest between the Vuna lender and the present appellant it was held by the Court in January 1924 in C.M.A. Nos. 324 and 325 of 1922 that the appellant is entitled to execute the decree; but it was left to the lower Court to decide what rights the former lender (Vuna) would be entitled to out of the sums realized. Durga Mahadeva Deo was adjudged insolvent on 19th August 1923 during the pendency of those appeals. When the appellant again applied in March 1924 to execute the decree and realize the allowance due till then, he was again met by the objection raised by the receiver and by the Court of Wards, representing the zamindar, that he is not entitled to execute the decree after the date of the insolvency of Durga Mahadeva Deo and by reason of it. The learned District Judge uphold this objection and dismissed the appellant's petition.

2. The matter in dispute in this appeal has been settled by arrangement. It is agreed that the appellant Konchada is entitled to execute the decree and realize the balance of the allowance due under the decree from 15th January 1918 to 15th March 1923, just before the insolvency. The mutual rights of the appellant and the Vuna lender who is not a party to these appeals to this sum must be determined by the lower Court after notice to him. The order of the lower Court dismissing the execution petition is therefore set aside and the lower Court will proceed with and dispose of it in accordance with the above direction. The question of set-off raised by the zamindar, but which has not been gone into will also be dealt with by that Court. There will be no other order as to costs except that the receiver will have his costs out of the estate.

3. The appeal, A.A.O. No. 374, is from an order of the District Judge allowing execution of the same decree by the receiver in E.P. No. 6 of 1996, in respect of sums which accrued due from 15th March 1923 to 15th February 1926 and disallowing the objection of the Court of Wards on behalf of the zamindar that he ought to get credit for certain payments made to Durga Mahadeva Deo from 14th April 1923 to 7th April 1925. The Court allowed only the two payments into Court, i.e., Rs. 166-12-0 on 16th January 1924, and Rs. 1,211 on 12th April 1926.

4. The ground on which the other payments which were made direct to the decree-holder were disallowed by the learned District Judge was that the Court of Wards was informed by the order of Mr. Reilly, then District Judge, dated 9th August 1923 that Durga Madhava Deo having been adjudged insolvent, he was not authorized to receive any payments under the decree and that the Court of Wards should not make such payments to him. It is argued for the appellant zamindar that four of the payments amounting in all to Rs. 674 were made before the said order in good faith to the decree-holder and that even as to the 20 subsequent payments amounting in all to Rs. 3,370 the appellant made them bona fide as the petition I.A. No. 204 of 1923 in which the above observations were made was formally dismissed on the ground that the Court of Wards was not a party in the insolvency proceedings. It is argued that the monthly allowance which accrued due after the insolvency is after-acquired property of the insolvent and that as to such property bona fide payments to the debtor made before the receiver intervenes are protected. A large number of decisions of the English and Indian Courts on this topic have been cited.

5. All these payments made to the decree-holder on behalf of the zamindar-judg-ment-dobtor are payments in satisfaction of the decree which were not as far as the records show certified to the Court executing the decree as they should have been Under Order 21, Rule 2. The consequence of this is that they cannot be recognized by the Court executing the decree: Order 21, Rule 2(3). The decree having become vested in the receiver as from the date of adjudication, 19th March 1923, and all the payments now relied on being on and after l4th April 1923 none of them can be recognized as against the receiver if for no other reason than that none of them was certified to the Court. As this point though lost sight of in the argument, is conclusive of the appeal, if correct, the question whether the payments can be supported as bona fide dealings by the insolvent with his after-acquired property before the intervention of the receiver does not arise.

6. Another point is that sums periodically falling due under a right already acquired such as an annuity or allowance, or instalments due on an instalment bond or decree can hardly be treated as after-acquired property in respect of instalments falling due after the insolvency. The correct view appears to us to be that the right under which the payments are claimed was acquired before the insolvency though some of the instalments fall due after it. If it were otherwise, every insolvent would be able to collect and appropriate all his debts that had not fallen due before the insolvency.

7. But as the question has been strenuously argued, we must point out that 20 out of the 24 payments, i.e., those made after Mr. Reilly's order cannot in any view claim any protection as in the circumstances they cannot bo said to have been made bona fide. That order was made on a petition by the appellant in A.A.O. No. 212, one of the creditors in the insolvency who had in addition by reason of the power of attorney a direct interest in the proceeds of the decree, praying for an order against the zamindar represented by the Court of Wards directing him not to pay the allowance to the insolvent. The reason why the petition was dismissed was a formal one, i.e., that the zamindar was not a party to the insolvency proceedings. He was only a judgment-debtor of the insolvent. But the learned Judge made his meaning perfectly clear when he said that it may be presumed that the Court of Wards will not fail in its duty to the minor zamindar and that if any instalment of the allowance is paid to the insolvent instead of to the receiver or into Court, the zamindar will not be discharged from his liability for it. He added that the insolvent will make himself liable to punishment under the Provincial Insolvency Act if he collects and appropriates any instalment of the allowance. It is idle to contend that after this clear intimation by the Court, anyone could have thought that he could validly pay the allowance to the insolvent and if such payment was made, it certainly cannot claim to have been made bona fide. This applies as already stated to 20 payments aggregating to Rs. 3370. It is only with regard to the first four payments made between 14th April 1923 and 3rd July 1923 that any question of bona fide can arise. Even these payments were made during the pendency of C. M. A. Nos. 324 and 325 of 1922 in which the two creditors of the insolvent were contending for the right to execute the decree and to which the zamindar through the Court of Wards was a party. It is difficult to resist the inference that payments made after the insolvency in the above circumstances were made to defeat the creditors.

8. There are serveral decisions under the Insolvency Act, 1848, which apply to Section 7 of the Act the doctrine enunciated in Herbert v. Sayer [1843] 5 Q.B.965 and Cohen v. Mitchell [1890]25 Q.B.D.262, Kerakoose v. Brooks [1859] 8 M.I.A.339, Alimahamed Abdul Hussein v. Vadilal Devchand [1919]43 Bom.890, Dasarathy Sinha v. Mahamulya Ash [1920] 47 Cal. 961, Chhote Lal v. Kedar Nath A.I.R.1924 All.703 and extend it to immovable property Krishtocomul Mitter v. Suresh Chunder Deb [1882] 8 Cal. 556, Sriramulu Naidu v. Andalammal [1907]30 Mad.145, Alimahamed Abdul Hussein v. Vadilal Devchand [1919]43 Bom.890. The matter is now governed in England by Section 47(1), Bankruptcy Act, 1914. There is also a considerable body of judicial opinion, not without dissent, that the same extended doctrine holds good under the Provincial Insolvency Act. Both under the old Act of 1907 and under the present Act of 1920, Section 28(4) after-acquired property of an insolvent vests 'forthwith' in the Court or receiver. There is no similar expression in the corresponding Sections 17 and 52(2)(a), Presidency Towns Insolvency Act 1909, which deals with the vesting of after-acquired property.

9. In neither Indian Act is there anything corresponding to Section 47, English Act 1914. Several decisions have however held the doctrine of Cohen v. Mitchell [1890] 25 Q.B.D.262, applicable under the Provincial Insolvency Act also: Nagindas Bhukandas v. Ghelabhai Gulabdas A.I.R.1920 Bom.58, Jagadish Narain Singh v. Ramsakal Kuar A.I.R. 1929 Pat. 97 : Ramanadha Iyer v. Nagendra Ayer A.I.R.1924 Mad 223. The Rangoon High Court takes a contrary view. Ma Phaw v. Maung Ba Thaw A.I.R.1926 Rang.179. In this Court there appears to be some difference of opinion Rowlandson v. Champion [1894] 17 Mad. 21. Abdul Kareem Sahib v. The Official Assignee of Madras [1905] 28 Mad. 168. Ratna Rai v. The Official Assignee of Madras [1915] 29 I.C. 168. Were it necessary to decide the question, we would have preferred to send the matter to a Full Bench. But we do not think it necessary to pronounce any opinion on the question argued. It is agreed that in addition to the sums allowed by the lower Court, this appellant should have credit for Rs. 135 being the income-tax paid by him to Government. With the above modification A.A.O. No. 374 of 1926, must be dismissed with costs.


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