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Madan theatres Ltd. Vs. Babulal Chowkhani - Court Judgment

LegalCrystal Citation
SubjectCivil
CourtKolkata
Decided On
Reported inAIR1934Cal603
AppellantMadan theatres Ltd.
RespondentBabulal Chowkhani
Cases ReferredHoare and Co. v. Morshead
Excerpt:
- .....suburbs. the creditor now wishes to appeal against the registrar in insolvency's decision under rule 15, chapter 6, of the original side rules and orders. i need not in the circumstances discuss the grounds of appeal in detail. it is pointed out that the properties belong to a firm known as j.f. madan, in which the sureties along with certain other persons are partners. it is said that under the law a partner cannot pledge partnership property to secure the debt of a third party. objection is also taken to the title of some of the properties, and to their valuation. moreover it is submitted that the security is unsuitable, as the properties are already mortgaged to a bank, and this bank has instituted a mortgage suit, which is now pending and in which a receiver has been appointed......
Judgment:
ORDER

Panckridge, J.

1. I am of opinion that the preliminary objection taken by the company must prevail. The creditor presented a petition for compulsory winding up on 11th April 1933. The Court directed that the petition should be advertised as provided by the rules. The company moved the Court on 28th April 1933, to have the winding up petition taken off the file. Lort-Williams, J., directed that this should be done on the company furnishing security, to the satisfaction of the Registrar to the extent of Rs. 50,000 within a fortnight and that in default the application should stand dismissed with costs.

2. On appeal by the company the Court reduced the security from Rs. 50,000 to Rs. 30,000. On 7th June 1933, the Registrar in insolvency accepted five persons as sureties, the security being their interests in certain immovable properties in Calcutta and its suburbs. The creditor now wishes to appeal against the Registrar in Insolvency's decision under Rule 15, Chapter 6, of the Original Side Rules and Orders. I need not in the circumstances discuss the grounds of appeal in detail. It is pointed out that the properties belong to a firm known as J.F. Madan, in which the sureties along with certain other persons are partners. It is said that under the law a partner cannot pledge partnership property to secure the debt of a third party. Objection is also taken to the title of some of the properties, and to their valuation. Moreover it is submitted that the security is unsuitable, as the properties are already mortgaged to a bank, and this bank has instituted a mortgage suit, which is now pending and in which a receiver has been appointed. The company has supported the Registrar in Insolvency's decision on the merits, but has also maintained that I have no power to interfere with it. The appeal Court, so runs the argument, saw fit to impose the specific condition, on the fulfilment of which the winding up petition was to be taken off the file. That condition was fulfilled as soon as the Registrar in Insolvency, being satisfied with the security, accepted it, and I have no right to review his order, because to do so would be to substitute another condition, namely security to my own satisfaction for that imposed by the Court. I think the correctness of this view is supported by the authority of Hoare and Co. v. Morshead (1903) 2 KB 359.

3. There leave to defend Under Order 14, Rule 6 of the Rules and Orders of the Supreme Court was given, upon the defendant's furnishing security to the satisfaction of the Master. The Master refused to accept the security offered, and directed that the plaintiffs should be at liberty to sign final judgment. The defendant appealed to the Judge in chambers Under Order 46. Rule 21 which corresponds in all material particulars with our Chapter 6, Rule 15. The Court of appeal affirmed the decision of the Judge that no appeal lay to him. Mathew, L.J., observed that in the circumstances of the case the Master acted as a person designated by virtue of the power given to the Judge of imposing any terms on giving leave to defend. Cozens. Hardy, L.J., also indicated his opinion that the Master was acting, not in exercise of his jurisdiction as Master, but as a persona designata. I appreciate that in the case before me the Court was not exercising a statutory power to impose conditions, but the power of the Court to order the removal of the petition on terms is not and cannot be challenged before me. Had the Court intended that the Registrar's deoision should be 1. (1903) 2 KB 359 subject to appeal, it would have been quite simple to make this clear in the order.

4. I thought at one stage that difficulty might arise from the fact that it was the Registrar in Insolvency who accepted the security, although the order specified, or 'designated', the Registrar, by which must be meant the Registrar Original Side. The reason for this is an order made by Sir Lancelot Sanderson on 11th February 1924, whereby he directed that all references with regard to security should be transferred from the Registrar to the Registrar in insolvency. Though it is not so stated, I take it that the order was made Under Chapter 4, Rule 18. In my judgment the Court must be assumed to have had Sir Lancelot Sanderson's authorization in mind when the order for security was made, or in other words that the Registrar in Insolvency is as much a person designated, as if the order specially provided that the security was to be to his satisfaction.

5. Both parties appeared before him and no objection was raised to his dealing with the matter. Indeed the creditor has not taken this point before me. I am conscious that the Judge in chambers has hitherto entertained appeals as to the sufficiency of the security tendered, in cases where conditional leave to defend has been given Under Order 37 or Chapter 13-A. I do not think however that my natural reluctance to interfere with the established practice of the Court ought to deter me from construing the order for security in the manner in which I consider authority shows that it should be construed. The application is dismissed with costs. Certified for counsel.


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