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Venkatanarayana Chetty and anr. Vs. Vu. R.M.M.S.S. Sevugan Chetty and ors. - Court Judgment

LegalCrystal Citation
CourtChennai
Decided On
Reported inAIR1924Mad769
AppellantVenkatanarayana Chetty and anr.
RespondentVu. R.M.M.S.S. Sevugan Chetty and ors.
Excerpt:
- .....estate. his application was dismissed by the learned district judge, on the ground that the final dividend had been declared before his application was filed and that the distribution of the dividends so ordered could not be revised, so as to include his share, as he knew that such dividend was going to be declared and took no steps in time. the learned judge points out that he appeared in court in person, when it was claimed by the official receiver that a property transferred to him by the insolvent was not validly transferred: it was a a case of a fraudulent preference and the receiver applied to have the alienation set aside and it was set aside. the learned judge holds that he should have kept in touch with the proceedings in court; and as he had tendered no proof of his.....
Judgment:

Krishnan, J.

1. This is an appeal in an Insolvency proceeding, which began in 1912. The appeal is by one of the creditors. He claimed to be entitled to a dividend from the assets realised from the Insolvent's Estate. His application was dismissed by the learned District Judge, on the ground that the final dividend had been declared before his application was filed and that the distribution of the dividends so ordered could not be revised, so as to include his share, as he knew that such dividend was going to be declared and took no steps in time. The learned Judge points out that he appeared in Court in person, when it was claimed by the Official Receiver that a property transferred to him by the insolvent was not validly transferred: it was a a case of a fraudulent preference and the Receiver applied to have the alienation set aside and it was set aside. The learned Judge holds that he should have kept in touch with the proceedings in Court; and as he had tendered no proof of his claim in time, he was rightly refused his share in the dividend. Now the difficulty in adopting this view is that under Section 39, Clause 4(a), of the Provincial Insolvency Act of 1907, a particular form of notice to creditors, whose claims have been notified, but not proved is prescribed, whenever a final dividend is to be declared. It appears that in this case, such a notice had not been given to the creditor. Under Rule 21(b), of the Rules framed by this Court under the Insolvency Act, it is prescribed that the notice under Section 39(4) should be in the form of a separate registered letter addressed to each creditor. Section 39 (4) ways also that the creditor should have express notice that the Receiver is proceeding to make a final dividend and that he would do so, without regard to the claims of the creditor, if he does not take care to prove his debt in time. When a notice of that sort is prescribed, by the Rules made under the statute, a strict compliance with the Rule is necessary before the creditor s claim to share in the final dividend can be disallowed.

2. We have not been referred to anything to show that the appellant his proved his claim up to date or that his proof has been accepted. But as the Court did not send the necessary notice, as required by the section, we think that the creditor should be allowed to reopen the matter and that he should be given an opportunity of proving his debt, within a time to be fixed by the Lower Court. We are saying all this, on the footing that the final dividend has been declared in this case. The learned Judge says that there was only one dividend and that was the final dividend in the case. If, however, the dividend that has been declared is not the final dividend, of course the creditor will have no ground to share in it, for none of these remarks made above will apply to the case. That is a matter that should be considered and decided by the Lower Court; it must see whether the dividend was the final dividend, or whether any further assets are available for payment of another dividend The order of the Lower Court is set aside and the case will go back to the lower Court, for disposal in the light of the observations made by us. As regards the costs of this appeal, we think we would not be justified in giving any costs to the appellants, as all the delay and difficulty has arisen from the fact that he delayed the tendering of proof of his debt. We direct each party to bear its costs in this Appeal.

3. C.M.A. No 47 will follow C.M.A. No. 46 of 1921 and the same order will be passed in it.


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