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Umesh Chunder Seal Vs. G.M. Falkner and ors. - Court Judgment

LegalCrystal Citation
Decided On
Reported inAIR1932Cal621
AppellantUmesh Chunder Seal
RespondentG.M. Falkner and ors.
Cases ReferredOfficial Receiver v. Chettyar Firm
- .....made for consideration or in good faith and the official assignee brought two motions before the learned judge exercising insolvency jurisdiction on the original side to have it declared that these transfers were void as against him and for the consequential direction that the properties be made over to him as part of the estates of the insolvents for the benefit of their creditors. the person who had in each instance taken the transfer from the insolvent was one gour chand mallik, and, so far as the appellant umesh chandra seal is concerned, he had taken a transfer from gour chand mallik on 17th march 1930, which was a substantial time after the adjudication order. girish chandra seal was adjudicated on 3rd august 1927 and manindra chandra seal was adjudicated on 13th july 1928. it.....

Rankin, C.J.

1. In these cases, it appears that two insolvents of the name of Girish Chandra Seal and Manindra Chandra Seal were alleged by the Official Assignee to have executed within two years of their insolvency certain transfers which were not made for consideration or in good faith and the Official Assignee brought two motions before the learned Judge exercising insolvency jurisdiction on the original side to have it declared that these transfers were void as against him and for the consequential direction that the properties be made over to him as part of the estates of the insolvents for the benefit of their creditors. The person who had in each instance taken the transfer from the insolvent was one Gour Chand Mallik, and, so far as the appellant Umesh Chandra Seal is concerned, he had taken a transfer from Gour Chand Mallik on 17th March 1930, which was a substantial time after the adjudication order. Girish Chandra Seal was adjudicated on 3rd August 1927 and Manindra Chandra Seal was adjudicated on 13th July 1928. It appears that under Section 36, Presidency Towns Insolvency Act, Gour Chand Mallik had been examined at some length and there was also a deposition of Umesh Chandra Seal under the same section.

2. Now, the notices of motion launched by the Official Assignee were not brought until 2nd July 1930 and he impleaded both Gour and Umesh and certain other persons. I very much regret to see that a part of the method by which he expected to succeed was this: He presented a fabulously long petition the main purpose of which was to include a large part of the answers given by Gour at his private examination under Section 36 of the Act. I do not like to blame either the Official Assignee or his attorney because I see from p. 28 of the paper book in Appeal No. 17 that the petition was drawn by learned Counsel; but I do protest against the extraordinary ignorance of practice and the law of evidence which the petition discloses. First of all, there is no such thing as petition so far as I (knew under the insolvency rules in connexion with a notice of motion.

3. The person who wants to bring a proceeding must first make up his mind whether he should bring it by a writ or by a notice of motion or by summons or by a petition, but why in the world instead of an affidavit in support of his motion he should produce something which he calls a petition under the insolvency jurisdiction I cannot understand. The thing was evidently intended to be an affidavit, but was called a petition, so that it might appear to combine the character of a true statement on oath with the advantages of a pleading, and all this matter which was entirely irrelevant and not evidence against anybody save Gour was introduced apparently because in that way it could get under the nose of the Court before the Court could very well help itself. I do most earnestly deplore that kind of practice. I think it is time that the elements of the practice in insolvency should be known to the members of the Bar, to the attorneys and, to the Official Assignee. On this point the proper practice can now be seen from the very first of forms provided at the end of. the Insolvency Rules (of p. 718-9. of Mr. Remfry's edition, 1930). However this matter came on before the learned Judge and a mass of evidence was introduced which was probably good enough evidence against Gour and not a word of which was evidence against the person really concerned, namely, Umesh, who by this time had taken a transfer from Gour. That was one trouble. The next trouble was this : Apart from what was not evidence against Umesh, there seems to have been almost literally not a scintilla of evidence at all. No witness was called and the position was that there was only an affidavit exhibiting 'what the soldier said' and very little else. The next thing that appears to have caused a certain amount of trouble is the fact that both sides at this time were not unnaturally under the impression that the Official Assignee had only to point to Section 55 and it would be the duty of the respondents to prove affirmatively that the transactions objected to between Gour and the insolvents were for consideration and in good faith. Indeed it seems to have been thought that they had to establish the adequacy of the consideration. We now know from the case of the Official Receiver v. Chettyar Firm which is a. decision on exactly the same words in the Provincial Insolvency Act (where the section is numbered 53) that that is not so. The Official Assignee in this case has to prove that the transactions were not made in good faith and for valuable consideration : both voluntariness and mala fides if relied on have to be proved by the Official Assignee. Before these properties can be taken away from Umesh and given to the Official Assignee these facts with reference to the ' transactions, between the insolvents and Gour must be proved by evidence which is good evidence against Umesh and it does not matter what admissions are made by persons whose word is not evidence against Umesh.

4. Mr. S.M. Bose argued that because the transfer to Umesh was after the adjudication order these facts could be proved by any evidence which was admissible against Gour, but this in my judgment is quite untenable and contrary to principle. In these circumstances, the learned Advocate-General appearing for Umesh is in a very strong position in maintaining that there is really no evidence to support the order that the learned Judge has made in this matter. It seems to me that the matter has been tried in a way which is not satisfactory not that it was the fault of the learned Judge but in circumstances in which it is impossible to say that the rights of the parties have been properly considered. The learned Advocate-General presses upon us that in a case of this kind it would be more proper that the Judge in insolvency should decline to exercise his jurisdiction on a motion and should refer the Official Assignee to a suit I want to make it clear that I think this matter must be tried over again. I also want to make it clear that I think that it can quite conveniently and properly be tried in the insolvency jurisdiction. In my opinion, the orders made by the learned Judge should save as hereafter mentioned be set aside and the matters should be sent back to be tried by the learned Judge exercising jurisdiction in insolvency whoever he may be at the time. Bach party will be entitled to apply for discovery in the ordinary way and have a reasonable opportunity for discovery before the motions are called on, Moreover, any party will be entitled at. the hearing of the motions to call oral evidence. Another direction which in my judgment should be given is that in no event are any costs of these petitions to be awarded against any of the respondents to these motions whatever the result of the motions be. The petitions do not seem to be petitions for which anybody should be made to pay except the people who are responsible for thorn. On the ultimate decision of the learned Judge, the learned Judge will have discretion to deal with the costs before Panckridge, J.

5. There is one exception however which in my judgment, should be made and it is this : It appears that on 28th May 1927 there was a mortgage by the insolvent Manindra to Gour for Rupees 15,000 of some properties which Manindra had a life interest in under his father's will. These properties have been described to us as the Canning Street and other properties, and one of the respondents before the learned Judge whose name is Phani apparently took an assignment of this mortgage from Gour on 12th October following. The assignee, we are informed and Mr. Banerji for Gour confirms this, has taken steps and has got a decree against Gour on the footing of the invalidity of this mortgage. In these circumstances, Mr. Banerji does not think fit to object, and I think it is our duty to say that the order in so far as it sets aside in the presence of Goar and Phani this mortgage of 28th May 1927, is to stand. However there will be no costs given to the Official Assignee against either Phani or Gour in respect of that matter.

6. It is only reasonable to say, as the matter has to be tried again and as these petitions are objectionable, that the Official Assignee before any further steps are taken is to file at any rate one proper affidavit confined to matters of fact within the knowledge of the deponent in the ordinary way. If he wants to use against Gour the deposition of Gour he can go-through the common form and in his notice of motion give notice to Gour that this will be used in evidence against him and take other steps which will be common form in the insolvency jurisdiction. But there must be a proper affidavit which will give the parties such as Umesh knowledge of the case which the Official Assignee is going to make against Umesh, and it is only after the affidavit has been filed that it will be necessary for Umesh to claim his right of discovery because he will then know more or less what the case against him is.

7. Another matter is that, as both parties have the right to call oral evidence it will be in the discretion of the Judge to make an order if he wants so that they will give each other the names of the witnesses within a short time before the actual hearing. . The appellant is entitled to his costs in both these appeals against the Official Assignee.

C.C. Ghose, J.

8. I agree.

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