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Kalianji Singji Bhai, Sole Partner of the Firm of Raysee Amerchund Vs. the Bank of Madras - Court Judgment

LegalCrystal Citation
SubjectCivil
CourtChennai
Decided On
Judge
Reported in31Ind.Cas.583
AppellantKalianji Singji Bhai, Sole Partner of the Firm of Raysee Amerchund
RespondentThe Bank of Madras
Cases ReferredCooke v. Charles A. Vogeler Co.
Excerpt:
provincial insolvency act (iii of 1907) sections 4, 12(3), 51 - insolvency proceeding--notice served upon agent, if effectual--agent appearing--waiver--agent, act of insolvency by, if act of principal--power of attorney--general authority--agency, termination of--rules framed under section 51, provincial insolvency act, rule 21, clause (3). - .....petition is by a creditor, shall be sent to the debtor, not less than 14 days before the date of hearing. notice was not sent to the debtor in this case by the court through registered post, although the bank's vakil attempted vainly, as already mentioned, to communicate a notice and a copy of the petition to the appellant in a registered letter. as we read the rules, however, the sending of a notice by registered post is chiefly intended to provide for the information to be given to creditors on a petition by a debtor and to particularize the words such other manner as may be prescribed' in section 12, clause (2). we are not aware of any practice of sending notices of the hearing to debtors through the post in the first instance upon creditors' petitions. notice to debtors is.....
Judgment:

1. The appellant is the sole partner of the firm of Rayasi Amerchand carrying on a money-lending business at Calicut with a head office at Bombay. On December 3rd, 1912, the agent of the Bank of Madras, the respondent in the case, presented a petition to the District Judge to adjudicate the appellant insolvent and to appoint an ad interim Receiver. On December 6th a notice signed by the sheristadar of the District Court (by order) went to the local agent to inform him that a petition to declare the appellant insolvent was posted for January 21st and that he might appear and show cause against it. The agent, Visram Sait, refused to receive the notice on the ground that his master should be made a party, and it was served on him by affixture. On December 7th a notice of the hearing together with a copy of the petition was sent by the respondent's Pleader through registered post to the appellant at Mandavi in Cutch, where he was thought to be residing, but it was returned to the sender as the addressee had Left, Particulars not known' At the hearing on January 21st notice was ordered by the Court to go to the principal debtor for March 11th, but admittedly no further attempt was made to serve a notice of the date of hearing on the debtor in person as it was found impossible to do so. On March 11th the notice given to the local agent was declared by the Court to be sufficient, and on the same date the said agent filed in Court a counter-petition on behalf of the appellant describing himself as his muktiar. The proceedings were fully contested and ended on December 19th, 1913, in an adjudication of the debtor under Section 16 of the Provincial Insolvency Act as insolvent.

2. A number of objections have been raised to the sufficiency of the service of the notice on the agent and our attention has been called to the fact that the agent did from the first object to receiving notice for his principal.

3. These objections may be briefly answered by a reference to the provisions of the Provincial Insolvency Act and the rules framed under the authority of Section 51. Section 12(3) provides that in cases where the petition is by the creditors, notice of the date for hearing shall after admission of the petition be served on the debtor in the manner provided for service of summons. Section 47 directs that Courts of Insolvency shall, subject to the provisions of this Act, follow the procedure followed in regard to original civil suits. Order V, Rule 12, of the Civil Procedure Code declares that wherever it is practicable, service shall be made on the defendant in person, unless he has an agent empowered to accept service, in which case service on such agent shall be sufficient. Rule 13 allows service to be made on any agent who at the time personally carries on business or work for a person who does not reside within the Court's jurisdiction, in any suit relating to business or work. Order III, Rule 3(i), makes service on a recognised agent as effectual as if it was on the party in person unless the Court directs otherwise. A recognised agent includes a person holding a power-of-attorney authorising him to make and do such appearances, applications and acts on behalf of such parties (Order III, Rule 2). Exhibit J, the power-of-attorney held by Visram Sait from the appellant, authorizes him to defend all suits, appeals and actions' in the Courts of this Presidency to which the appellant may be a party and generally to act for him and to do all things and acts that may be necessary and that the attorney may think fit for the complete discharge of his business effectually, completely and to his benefit'; thus there can be no question that there was a valid service under the Civil Procedure Code on the appellant's agent, and that the Court declared it to be sufficient.

4. Turning to the rules framed by the High Court under Section 51 of the Insolvency Act, we find that Clause 3 of Rule 21 provides that notice of the date of hearing of an insolvency petition shall, if the petition is by the debtor, be sent by the Court by registered post to all creditors and if the petition is by a creditor, shall be sent to the debtor, not less than 14 days before the date of hearing. Notice was not sent to the debtor in this case by the Court through registered post, although the Bank's Vakil attempted vainly, as already mentioned, to communicate a notice and a copy of the petition to the appellant in a registered letter. As we read the rules, however, the sending of a notice by registered post is chiefly intended to provide for the information to be given to Creditors on a petition by a debtor and to particularize the words such other manner as may be prescribed' in Section 12, Clause (2). We are not aware of any practice of sending notices of the hearing to debtors through the post in the first instance upon creditors' petitions. Notice to debtors is otherwise provided for by Rule 5, Clause (2), and by the rules under the Civil Procedure Code. If a debtor gets notice of the hearing served on his authorized agent like a summons, he cannot reasonably complain that he did not also receive a similar notice from the Court through the post, and his abjection might be answered by a reference to Section 99, Civil Procedure Code. Rule 5, Clause 2, of these rules directs that a copy of an insolvency petition presented by a creditor shall be served together with the notice of the date for hearing on the debtor or upon the person upon whom the Court orders notice to be served.' It is not required that such an order should be in writing. In this case the notice was addressed to the agent and was signed by the District Court Sheristadar (by order). It was served under Order V, Rule 17, Civil Procedure Code, more than 14 days before the hearing on January 21st. Presumably this was a good notice to the agent, and as the agent appeared and filed a counter-petition on March 11th in which he did not raise any objection to the manner or time of service, he must be deemed to have waived any objection that he might have had to any supposed irregularities in the giving of notice.

5. So much for the question of notice. More substantial objections have been raised to the capacity in law of an agent to represent a debtor in insolvency proceedings, and to the capacity of a debtor to be adjudicated insolvent upon an act of insolvency committed by his agent. It is argued that as orders of adjudication relate back to and take effect from the date of the presentation of the petition on which they are made [vide Section 16, Clause (6)], and as the agency of Visram Sait terminated under Section 201 of the Contract Act by his principal being adjudicated an insolvent, therefore, the agency must be taken to have ceased on the presentation of the petition; and that by the appointment on December 3rd of a Receiver, to whom the property of the debtor vested, the business of the firm could no longer be carried on by the agent and ipso facto his power-of-attorney became void But it is evident from a reading of the whole of this section from Clauses 2 to 6 that they all deal with the property of the insolvent. This was made clear in the case of Minor, Ex parte, Pollitt In re (1893) 1 Q.B. 455 : 10 Morrell 35, where in, treating of the corresponding section of the English Bankruptcy Act, Lord Esher observed: 'The result of the relation back is, that all the subsequent dealings with the debtor's property must be treated as if the bankruptcy had taken place at the moment when the act of bankruptcy was committed.' The agent's power-of-attorney in this case empowered him to do other acts besides carrying on the trade and dealing with his property and one of those acts must be taken to be to stave off bankruptcy orders against the firm.

6. As regards the jurisdiction of the Courts to adjudicate persons insolvent upon acts of insolvency committed by their agents, there appears to be a difference in the law as it stands in England and in India.

7. In Blain Ex parte, Sawera, In re (1879) 12 Ch. D. 522 : 28 W.R. 334 it was held that an act of bankruptcy must be a personal act or default and could not be committed through an agent. This principle was followed in Cooke v. Charles A. Vogeler Co. (1901) A.C. 102 : 70 L.J.Q.B. 181 : 84 L.T. 10, another case of a foreigner domiciled and resident abroad having business in England, but in both of these decisions it was conceded that if the law had been different the Courts would have had to take a different view.

8. In India it has been expressly enacted as an explanation to Section 4 of the Provincial Insolvency Act that for the purposes of that section which deals with acts of insolvency committed by a debtor, the act of an agent may be the act of the principal. It was accordingly held in In the matter of Brijmohun Dobay 2 C.W.N. 306 that the departure of an agent from the place of business did constitute an act of insolvency on the part of the principal.

9. In this case if the fact that the firm at Bombay of which appellant was partner had suspended payment, of which Mr. Lamb states that the agent gave him notice, be taken as the act of insolvency giving rise to these proceedings, there is no need to consider the effect of the agent's act as agent, as the suspension of payment at Bombay was the act of the principal, but if the suspension of payment by the branch at Calicut and the inability of the agent there to meet his bills in Calicut, to which Mr. Deane has testified, be taken into account, then we have no hesitation in applying Section 4 of the Act and in holding that the order of adjudication base of on such an act of insolvency was a perfectly valid order. We agree in holding that an act of insolvency has been proved. We dismiss the appeal with costs.


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