K.S. Palaniswamy, J.
1. The two applicants, who are third parties to the insolvency proceedings, have taken out this Judge's Summons under Section 86 of the Presidency Towns Insolvency Act to set aside the sale of the insolvent's 1/8th share in the registered trade mark 'Maharaja Beedies' bearing Nos. 105149 and 105150 in favour of the 7th respondent at an auction held on 30th March, 1971, by the Official Assignee, Madras. One T.M. Hajee Abdul Rahim Sahib was the sole proprietor of the said trade marks. By a deed of assignment dated 7th April, 1960, he assigned the rights in the trade mark in favour of his sons and grandsons, namely: (1) Sathar, (2) Quiyum, (3) Shokoor, (4) Khaleel (Insolvent), (5) Jaleel, (6) Irshed, (7) Sajjad and (8) Dilshed. Nos. 1 and 2 shown above are the applicants in this application. In about October, 1960, a firm by name Messrs. T.M. Hajee Abdul Rahim Sahib & Sons, consisting of the said Hajee Abdul Rahim and his sons and grandsons, was started and the said firm was manufacturing beedies under the trade mark 'Maharaja Beedi'. After the death of Hajee Abdul Rahim Sahib misunderstandings arose between the partners. By mutual consent, the said firm was dissolved by an agreement dated 7th May, 1968 and thereafter two other firms Were started: (1) by the name of Turab Miyan Rahim Company with three partners (1) Sathar, (2) Quiyum and (3) Shokoor and another firm by name R.A. Jaleel and Brothers with three partners (1) Khaleel (insolvent), (2) Jaleel and (3) Irshed. Each of the firms was allotted specific areas for marketing their beedies under the said trade mark. It appears that these two firms were also dissolved shortly thereafter and two other firms came into, existence, (1) by name Rahimson and Company with partners (1) Khaleeli (insolvent) and (2) Irshed, and the other firm by name Rajarani Trading Company with partners (1) Shokoor, (2) Jaleel and three others. Both these firms were trading in the business of manufacturing and selling Maharaja Beedi under the trade mark 'Maharaja Beedi'. Khaleel was adjudged insolvent on 23rd December,, 1970 on a creditor's petition. At that time, the insolvent was carrying on business as a partner of Rahimson and Company. On the adjudication of Khaleel, the Official Assignee, who took over the administration of the estate of the insolvent, took steps to sell the i/8th share of the insolvent in the trade mark. He caused notices to be issued to the other shareholders of the trade mark to submit their offers, if any, for purchase of the insolvent's share. Such notices were sent to the two applicants herein also. But none made any offer. Nor did any of them object to the sale of the share of the insolvent. Thereafter, the Official Assignee caused advertisements to be made in newspapers, 'The Hindu' and 'Dhinathanthi' calling for offers for purchase of the insolvent's share in the trade mark. Certain persons made offers. The Official Assignee felt that an auction should be held among those who made offers and thereupon he issued notices to those who made offers fixing 30th March, 1971 for conducting the auction. At that auction, the seventh respondent happened to be the highest bidder for a sum of Rs. 37,500. The sale in his favour was confirmed and the sale certificate has been issued in his favour describing that what was conveyed was the insolvent's share in the trade mark.
2. The applicants, who own shares in the trade mark, attack the validity of the sale on several grounds. At the time of the hearing of the application, the applicants' Counsel Mr. Venugopal put forward the following contentions:
(i) The entire right in the trade mark had been attached by the Income-tax department under the provisions of the Income-tax Act, 1961, for recovery of arrears of income-tax. The auction conducted by the Official Assignee during the subsistence of the attachment is void;
(ii) The Official Assignee had no right to sell an indivisible share of one of the proprietors without obtaining the leave of the Registrar of Trade Marks;
(iii) There was no correct description of the insolvent's share in the sale certificate. Whereas the Official Assignee originally advertised the insolvent's share as 1/8th, the sale certificate did not define the share, but left it vague;
(iv) After having invited offers from the public, the Official Assignee should have accepted the highest offer. But he conducted an auction among the offerors without informing the persons who had shares in the trade mark and this has vitiated the auction; and
(v) Clause 12 of the Partnership Deed prohibits transfer of the share of the partners and on account of the prohibition, the sale by the Official Assignee who claims to represent the interest of the insolvent is void.
3. The seventh respondent, auction-purchaser, and the Official Assignee have filed counter-affidavits controverting the foregoing contentions. Their contention is that the sale is in no way vitiated and is not liable to be set aside.
4. Alleging that the Income-tax Officer, Madras, had sent a certificate for recovery of the amount of Rs. 1.67,129.02 as arrears of income-tax, the Tahsildar, Wallajah, on 21st November, 1966, issued a notice to the holders of the trade mark demanding payment of the amount. In the same notice, it was also stated that it was not competent for anyone to mortgage, charge, lease or otherwise deal with the property except with the permission of the Tax Recovery Officer and that no civil Court can issue any process against such property in execution of a decree for the payment of money. It is not in dispute that at the time when the Official Assignee sold the insolvent's share, this demand was in force. It is on this account it is contended on behalf of the applicants that the sale is vitiated. Section 232 of the Income-tax Act, 1961, inter alia provides that when an assessee is in default, the Income-tax Officer may forward to the Tax Recovery Officer a certificate under his signature specifying the amount of arrears due from the assessee. The Tax Recovery Officer, on receipt of such certificate, shall proceed to recover from such assessee the amount specified by one or more of the modes mentioned in that section. One of the modes is by attachment and sale of the assessee's movable property. The Second Schedule to the Act prescribes the procedure for recovery of tax. Rule 2 provides for the issue of notice by the Tax Recovery Officer on receipt of the certificate from the Income-tax Officer for recovery of arrears. Rule 16, on which reliance was placed on behalf of the applicants, reads:
16(1). Where a notice has been served on a defaulter under Rule 2, the defaulter or his representative in interest shall not be competent to mortgage, charge, lease or otherwise deal With any property belonging to him except with the permission of the Tax Recovery Officer, nor shall any civil Court issue any process against such property in execution of a decree for the payment of money.
(2) Where an attachment has been made under this schedule, any private transfer or delivery of the property attached or of any interest therein and any payment to the defaulter of any debt, dividend or other monies contrary to such attachment shall be void as against all claims enforceable under the attachment.
Placing reliance upon the foregoing provision Mr. Venugopal, counsel for the applicants, contended that the sals by the Official Assignee is void as it had been effected during the subsistence of the attachment. This argument cannot be accepted. The transfer pending attachment is void only as against the claims enforceable tinder the attachment and it is not void for all purposes. That is clear from the expression 'shall be void as against all claims enforceable under the attachment' occurring in Sub-rule (2) of Rule 16. This provision is similar to Section 64 of the Civil Procedure Code, which provides that where an attachment has been made, any private transfer contrary to such attachment shall be void as against all claims enforceable under the attachment. This provision has been the subject-matter of a decision of a Full Bench in Nana Rao v. Arunachalam Chettiar : AIR1940Mad509 , in which the principle laid down is that the transfer is void only as against the claim enforceable under the attachment and only to the extent necessary to meet that claim. The attachment does not create a charge in favour of the decree-holder. The applicants cannot make use of the attachment effected by the Income-tax department for the purpose of declaring the sale void as the sale is void only as against the claims enforceable under the attachment. The sale is, therefore, not liable to be set aside at the instance of the applicants.
5. It is next contended on behalf of the applicants that the trade mark being an indivisible one the Official Assignee had no right to sell the share of the insolvent as if the insolvent had a definite share. This contention cannot be accepted. Patents and trade marks, which belong to an insolvent, pass to the Official Assignee or Receiver for the benefit of the insolvent's creditors (Vide Halsbury's Laws of England, Third edition, Volume 38, page 683 and the Law of Insolvency by Mulla, page 486, second edition). That the insolvent, in the instant case, had 1/8th share in the trade mark is not disputed. The Official Assignee, to whom the said right passed on the adjudication of the insolvent, was entitled to deal with that share. The question is whether he was bound to have obtained the prior permission of the Registrar under the Indian Trade and Merchandise Marks Act, 1958, before putting up that share in auction. Reliance was placed upon Section 40 of that Act on behalf of the applicants to show that the trade mark is not assignable or transmissible. That section does not impose a total ban on assignment or transmission of a trade mark. That section only prohibits assignment or transmission in a case in which as a result of the assignment or transmission, there would, in the circumstances subsist, whether under that Act or any other law, an exclusive right in one of the persons concerned to the use of the trade mark limited to use in relation to goods to be sold, or otherwise traded in, in any place in India and an exclusive right in another of these persons to the use of a trade mark nearly resembling the first mentioned trade mark or of an identical trade mark in relation to the same goods or description of goods limited to use in relation to goods to be sold, or otherwise traded in, in any other place in India. The auction sale by the Official Assignee is not 'assignment' with the meaning of Section 2(a) of that Act. 'Assignment' is defined as meaning an assignment in writing by act of the parties concerned. The Official Assignee cannot be said to be a 'party concerned' within the meaning of the above definition. 'Transmission' is defined in Section 2(w) as meaning transmission by operation of law, devolution on the personal representative of a deceased person and any other mode of transfer, not being assignment. The transfer by the Official Assignee would only be transmission and not assignment within the meaning of the above definition. The proviso to Section 40 of that Act, on which reliance was placed by the Counsel for the applicants, deals with a case of an application being made by the proprietor of a trade mark who may propose to assign it, or by a person who claims that a registered trade mark has been transmitted to him or to a predecessor in title of his. The Official Assignee is not a person claiming that the registered trade mark has been transmitted to him. Nor what he did was an assignment. Therefore, the said proviso is inapplicable to the instant case. There was no duty cast upon the Official Assignee to apply to the Registrar of Trade Marks for permission to effect the auction. I, therefore, do not find anything invalid in the auction by reason of Section 40 of that Act.
6. While issuing circulars to the persons having shares in the trade mark on 27th February, 1971, the Official Assignee stated that the insolvent had 1/8th share in the trade mark. He called upon the co-sharers to say whether they were interested in purchasing that 1/8th share. As already pointed out, none of them responded to that notice. Thereupon, the Official Assignee caused advertisements to be made in 'The Hindu' and 'Dhinathanthi' inviting offers for the purchase of 1/8th share in the trade mark. It was that share that was sold and purchased by the seventh respondent. But while issuing the sale certificate, the Official Assignee did not indicate the quantum of the share, but merely stated that what was conveyed was the interest of the insolvent in the trade mark. Ms. Venugopal, appearing for the applicants, took objection to this statement regarding the undefined share and contended that after having specified the share of the insolvent in calling for offers and after having sold that 1/8th share the Official Assignee should have specified the quantum of the share in the sale certificate also I do not think that this in any way vitiates the sale or sale certificate. Though the Official Assignee had specified the share while inviting offers, nothing precluded him from leaving the quantum of share unspecified while issuing the sale certificate. After all, it is the look out of the purchaser to know to what share he is entitled. He has accepted the sale certificate when does not define the quantum of share. The applicants can have no cause for complaint on that account and the sale is not vitiated on this account.
7. As already pointed out, none of the shareholders in the trade mark responded to the communication sent by the Official Assignee inviting them to purchase the share of the insolvent. Therefore, it became necessary for him to cause advertisements to be made in newspapers. In response to this advertisement certain third parties made offers. The Official Assignee felt that even the highest offer was not adequate. Therefore, he sent communications to those persons who made offers fixing a date on which he proposed to hold an auction. In response to this, those offerers turned up and took part in the auction, and it was in that auction that the seventh respondent happened to be the highest bidder, the bid amount being Rs. 37,000. The contention of Mr. Venugopal is that the Official Assignee should have issued notices to the shareholders in the trade mark also once he decided to conduct an auction and that inasmuch as such a notice was not given to the shareholders, the applicants were prejudiced. There is no merit in this contention. Mi. Venugopal was frank enough to say that if the Official Assignee had accepted the highest offer made by one of the third parties, the applicants will have no cause for complaint. But I am unable to see how the applicants can be considered to have been prejudiced in any way merely because the sale has fetched a larger amount by holding an auction among those who made the offers. There was no duty cast upon the Official Assignee to keep the shareholders informed of the action taken by him, once he found that the shareholders made no response at all to the invitation which he sent to them to start with. Therefore the fact that the matter was ultimately concluded in an auction among the offerors themselves in no way vitiates the auction.
8. The last contention urged by Mr. Venugopal on behalf of the applicants is that under the terms of the partnership deed, the share of any partner is not liable to be sold and that the auction held by the Official Assignee violates the terms of the partnership. Reliance was placed upon paragraph 12 of the partnership deed dated 15th October, 1960. It inter alia says that it was agreed that in the case of retirement of any one or more of the partners, the goodwill of the partnership shall belong to the continuing partners Continuing the business exepting the third partner mentioned therein. Such retiring partner or partners shall, at the time of retirement, execute all such instruments and sign all applications and letters as may be necessary to more fully confirm the title of the other concerned partners in the goodwill as well as in the registered trade marks mentioned. On the basis of this provision it was contended that the partnership deed contemplates only retirement leaving the other partners to continue the business by taking over the entire rights in the registered trade mark and that a third party cannot be inducted into the business. I am unable to accept this argument. Paragraph 12 of the partnership deed referred to above contemplates only voluntary retirement of one or more of the partners. It does not take into account insolvency of any of the partners. As a result of the insolvency the share of the insolvent passes on, by operation of law, to the Official Assignee, and the Official Assignee is entitled to deal with that share of the insolvent partner in the registered trade mark. I, therefore, do not find anything in the partnership deed to invalidate the auction conducted by the Official Assignee.
9. Mr. Venugopal contended that after the 7th respondent became the auction purchaser, he has been causing' advertisements to be made stating that he had acquired rights in the registered trade mark without any reference to the area over which the insolvent was entitled to carry on his business in terms of the deed of partnership, that the seventh respondent has started doing business in areas over which the insolvent has no right and that on account of this the other shareholders of the trade mark including the applicants are seriously prejudiced. I do not wish to say anything on this aspect, for, that is not a matter with which this Court is concerned in this proceeding. If so advised, the applicants are at liberty to take appropriate action, under the Trade and Merchandise Marks Act. If their only object is to restrict the 7th respondent to confine his area of operation of sale in terms of the partnership deed, this application, praying for setting aside the sale, is clearly misconceived, as they have got other remedies open.
10. In the result, the application fails and is dismissed with costs of the 7th respondent. Advocate's fee Rs. 100.