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B. Chengalroya Chetty and W. Ragavulu Chetty Adjudicated Insolvents Yakalur Gopala Chetty Vs. the Official Assignee of Madras - Court Judgment

LegalCrystal Citation
SubjectProperty;Civil
CourtChennai
Decided On
Judge
Reported in5Ind.Cas.347
AppellantB. Chengalroya Chetty and W. Ragavulu Chetty Adjudicated Insolvents Yakalur Gopala Chetty
RespondentThe Official Assignee of Madras
Cases ReferredEuropean Bank v. Fox L.R.
Excerpt:
.....of moneys due to insolvent--subsequent vesting order in insolvency proceedings--title of official assignee to the money attached--notice to official assignee in execution proceedings in creditor's suit--consent by official assignee's solicitor to payment of attached money to creditor--whether such consent bars official assignee from claiming back money. - - 434, which is a decision under section 26, where it was held that property did include 'money'.although the section says 'property of the insolvent,'those words would cover cases like this where the claim is put forward not by the insolvent because he is an insolvent, but by the official assignee in whom the property is vested. however, we are satisfied that the official assignee acted in perfect good faith and, that being..........for 25th august 1908beforethe chief court.' then on the 25th, according to the note of the learned judge, mr. rangasawmy iyengar appeared for the plaintiff and mr. wilson appeared for the official assignee. the case of randall v. lithgow 12 q.b.d. 525 was cited by the vakil for the plaintiff. the application was adjourned, the order of the court being that the plaintiff's vakil should give notice of the adjournment to the garnishee. the matter came before the court of small causes again on the 28th and on that date, this is the note of the learned judge: 'wilson for official assignee withdraws his objection to payment out of court. order for payment to the plaintiff of the sum brought into court by the garnishee and satisfaction of the decree to be entered up in full'. in.....
Judgment:

Arnold White, C.J.

1. This is an appeal from an order by the Commissioner in Insolvency directing that a sum of Rs. 900 and odd, now in the hands of the appellant, be paid over to the Official Assignee of the Estate of the two insolvents. The facts are these: The judgment-creditor, for whom Mr. Napier appeared, obtained a decree in: the Presidency Small Cause Court against the insolvents and on the 4th June 1908, an interim order of attachment; was made with regard to certain monies which were owing by a Mr. Lewin, who carried oil business as the Madras Sales Agency Co., to the insolvents. On June 10th the vesting order was made. On June 25th, the order for attachment which had been obtained, by the judgment-creditor was made absolute. On June 30th, an order was made that the money owing by Mr. Lewin to the insolvents should be paid into Court. On the 8th August, there was an application for execution. There was a further order on an application made to the Chief Judge with reference to the payment out of this money. The order was in these terms: 'I think notice of this application must be given to the Official Assignee Notice to be given by plaintiff's Vakil to Official Assignee for 25th August 1908beforethe Chief Court.' Then on the 25th, according to the note of the learned Judge, Mr. Rangasawmy Iyengar appeared for the plaintiff and Mr. Wilson appeared for the Official Assignee. The case of Randall v. Lithgow 12 Q.B.D. 525 was cited by the Vakil for the plaintiff. The application was adjourned, the order of the Court being that the plaintiff's Vakil should give notice of the adjournment to the garnishee. The matter came before the Court of Small Causes again on the 28th and on that date, this is the note of the learned Judge: 'Wilson for Official Assignee withdraws his objection to payment out of Court. Order for payment to the plaintiff of the sum brought into Court by the garnishee and satisfaction of the decree to be entered up in full'. In pursuance of that order the money was paid out to the judgment-creditor, and he entered, up satisfaction in respect of the judgment-debt.

2. Now the question is, is the judgment-creditor, in the events which have happened, entitled to retain this sum as against the Official Assignee? As has been pointed out, the vesting order was on the 10th June, i.e., after the making of the interim order of attachment and before the interim order was made absolute. Now I do not think that Mr. Napier contended that apart from what took place on August 28th, the judgment-creditor has any title to this money as against the Official Assignee as representing the estate. I think it is now settled that, even if the order for attachment is made absolute before the vesting order, if a contest arises between the creditor who has obtained the order for attachment and the Official Assignee under a vesting order obtained subsequent to the order for attachment, the title of the Official Assignee must prevail. However, we have not to consider this question here, because the vesting order was made before the order for attachment was made absolute.

3. I think I may say it is conceded that if it had not been for Mr. Wilson's consent to the money being paid out on the 28th August, there would have been no question as to the right of the Official Assignee to recover this money from the judgment-creditor for the benefit of the estate. The application is against the judgment-creditor and is made in the insolvency proceedings and it is made under the provisions of Section 26. Mr. Napier suggested that as the Official Assignee is seeking to recover money, the section did not apply since 'Property' does not include 'Money'. That contention did not commend itself to us at the time and Mr. Odgers this morning has called our attention to a decision in the matter of Umbica Nundun Biswas 3 C. 434, which is a decision under Section 26, where it was held that Property did include 'Money'. Although the section says 'Property of the insolvent,' those words would cover cases like this where the claim is put forward not by the insolvent because he is an insolvent, but by the Official Assignee in whom the property is vested.

4. Therefore, as I have said, the question is: whose title should prevail, having regard to what took place on the 28th August. The order of the learned Judge, no doubt, says,

'Mr. Wilson who appeared for the Official Assignee withdraws his objection to payment out of Court.' Are we bound to treat what was done by Mr. Wilson on that occasion as a consent or a waiver or a disclaimer, or whatever we choose to call it, which precludes the Official Assignee from afterwards seeking to establish his title to this property? The learned Commissioner was of opinion that the Court was not precluded from holding that the estate was entitled to the benefit of this amount. It would appear from the report of the Official Assignee, which is referred to by the learned Commissioner in his judgment on another petition in the same insolvency, that the representative of the Official Assignee was under a misapprehension as to the effect of the decision which was cited before the Chief Judge by the Vakil who appeared for the judgment-creditor. Now I think I may fairly treat the withdrawal of the objection as amounting to nothing more than this: A consent on the part of the Official Assignee that the money instead of remaining in Court, should be paid over to the judgment-creditor without prejudice to the right of the Official Assignee to establish by legal pr feedings, if necessary, his claim to the money in question. I think I am justified in treating his consent as amounting to nothing more than that and not amounting to a consent to an adjudication, against him which would preclude him from patting forward the claim of the estate on any future occasion. There is another point of view from which the case child be dealt with. It may be said that the Official Assignee was not a party to the proceedings. It is not quite clear how he came to receive the notice of the Court. But I prefer, so far as my own judgment is concerned, to rest it on the ground that the Official Assignee did not mean to prejudice his rights with regard to taking steps to recover the property.

5. We were pressed by Mr. Yaoier with the case of European Bank v. Fox L.R. 2 Q.B. 73. There I think the facts were quite different from those in the present case. There it appears that the plaintiffs obtained a garnishee order under the Common Law Procedure Act against a certain company. They got their order made absolute. After the making of the order absolute, the defendant was adjudged a bankrupt. Execution was issued against the garnishee and the garnishee applied to the fudge in Chambers to set aside the execution on the ground of the intervening bankruptcy. (In the case before us the garnishee made no application). Then the summons was adjourned to enable the creditors' assignee to appear in much the same way as the summons was adjourned in the case before us to enable the Official Assignee to appear. The creditors' assignee in the European Bunk v. Fox L.R. 2 Q.B. 73 afterwards appeared by his attorney and waived all claims to the debt against the plaintiffs and consented to the money being paid to them. On that being done, the Judge in Chambers stayed proceedings in order that the garnishees might have an opportunity of taking the opinion of the Court. Then a rule nisi was obtained on behalf of the garnishees to set aside the execution. The Court discharged the rule 'holding that, whatever the rights of the assignee might have been, the garnishees had no independent right to resist payment, and the assignee having waived his claim, there was no reason for depriving the judgment-creditors of the benefit of their execution'. It will be seen that in that case throughout the whole of the proceedings the creditors' assignee expressly disclaimed any interest in the money. In the case before us, all that happened was, on one day, apparently by a mistake, the Official Assignee's Solicitor withdrew his objection to the money being paid out. Then so far from continuing to adopt that attitude, he took the first opportunity to try and get it back. I think the case of European Bank v. Fox L.R. 2 Q.B. 73is distinguishable on the facts. For the reasons I have stated I think the conclusion arrived at by the learned Commissioner is right and I would dismiss this appeal.

6. Then there remains the question of costs. My learned brother and I both think that in a case of this sort where a judgment-creditor was misled by what was done by the Official Assignee, the judgment-creditor ought not to be called upon to pay the costs of the Official Assignee. Therefore, we dismiss the appeal, but we dismiss it without costs. We also vary the order of the learned Commissioner as to costs by directing that there be no order as to costs on the application to him.

7. We have considered whether, in the circumstances of this case, as between the estate and the Official Assignee, the estate ought to be saddled with the payment of any costs at all. However, we are satisfied that the Official Assignee acted in perfect good faith and, that being so, we do not feel called upon to make any order that he should pay the costs personally. His costs, here and before the Commissioner may be paid out of the estate.

Krishtnswami Aiyar, J.

8. I agree in the conclusion that has been arrived at by the learned Chief Justice. I have had some difficulty in making up my mind. The difficulty has arisen from the conduct of the Official Assignee before the Presidency Small Cause Judge. If by the conduct of the Official Assignee, he allowed the learned Judge of the Small Cause Court to make the order which he made, then I should feel very considerable difficulty in holding that so long as that order stands, which directed payment to be made to the judgment-creditor, the Official Assignee is at liberty to apply to the Commissioner in Insolvency for an order directing the judgment-creditor to pay back the money, which was paid to him under order of Court. But having considered the matter repeatedly as regards what interpretation the conduct of the Official Assignee in the case bears, I have come to the conclusion that it cannot be said that he misled the Small Cause Court Judge to make the order which he made. All that he can be said to have done is to have stated to the Court that he left the matter in the hands of the Court. The question arises whether the appearance of the Official Assignee before the Small Cause Court Judge was in order. The Official Assignee is not the representative of the judgment-debtor. It is possible for the Official Assignee to make a claim to property attached under Rule 233 of the rules applicable to the Presidency Small Cause Court which corresponds to Section 278 of the Code of Civil Procedure (Act XIV of 1882), But Rule 234 proceeds to say that a claim or objection under Rule 233 in respect of any property attached or in respect of the proceeds or value thereof must be preferred within five days from the date of the attachment or seizure. Again Rule 235 of the Small Cause Court rules provides that the application of the claimant should be in writing unless the Court otherwise directs. In this case there was no application by the Official Assignee under Rule 231. Certainly there was none in writing. Nor could the objections which the Official Assignee is supposed to have made be treated as objections within the meaning of Rule 233 for they were not made within the five days provided by the rule. I take it, therefore, that the Official Assignee when he stated to the Small Cause Court his objections, whatever they were, did not take those objections under Rule 233. Having regard to this fact, it seems to me that without any violence to the language employed, it is not difficult to come to the conclusion that all that the Official Assignee stated to the Small Cause Court Judge was that he was not prepared to take any further action in the matter. Such a statement as that does not amount to conduct which misled the Small Cause Court Judge into passing the order which he did. If the Official Assignee was not regularly before the Court, as I conceive he was not, then the order made by the Small Cause Court Judge can only be treated as an order made behind his back.

9. It is not pretended that if the Official Assignee was given no notice in this case and he made no appearance, an order made by the Small Cause Court Judge would preclude the Official Assignee from making an application to the Commissioner in Insolvency for a direction to the judgment-creditor to pay the money that he had received. If that is true, it seems to me that, notwithstanding his appearance on notice given to him and his subsequent withdrawal of the objections which he is supposed to have made, it is competent to us to treat the order as having been passed behind his back. In that view, therefore, I agree in the order proposed viz., to confirm the order of the Commissioner in Insolvency, I agree also in the order as to costs.


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