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Kashi Prosad Khaitan Vs. G.W. Burlow - Court Judgment

LegalCrystal Citation
SubjectCommercial
CourtKolkata High Court
Decided On
Case NumberA.F.A.O. No. 3 of 1956
Judge
Reported inAIR1959Cal160
ActsProvincial Insolvency Act, 1920 - Section 28, 28(2) and 28(4); ;Code of Civil Procedure (CPC) , 1908 - Section 47
AppellantKashi Prosad Khaitan
RespondentG.W. Burlow
Appellant AdvocatePraphulla Kumar Chatterjee (Sr.) and ;Radha Kissen Khaitan, Advs.
Respondent AdvocateAjoy Kumar Basu, Adv. for ;Amaresh Chandra Roy, Adv.
DispositionAppeal dismissed
Cases ReferredBanomali Dutta v. Lalit Mohan Ghosal
Excerpt:
- .....in this particular case consists of his salary. by operation of law the title of the court or the receiver in insolvency is absolute and the judgment-debtor is no longer the owner of his own salary. in these circumstances, although the insolvency court has chosen to realise only a small portion of the salary of the judgment-debtor, it is not open to the decree-holder to attach the remaining portion of the attachable part. mr. chatterjee submitted that the debt which his client advanced to the respondent came into existence after the date of the order of adjudication and so his client is not a person whose debt is provable under the provincial insolvency act. mr. chatterjee, therefore, submitted that the present case is outside the purview of sub-sections (2) and (4) of section 28 of the.....
Judgment:

Renupada Mukherjee, J.

1. The only substantial question of law which arises in this appeal is whether the creditor of an undischarged insolvent who became a creditor after the adjudication had been made is entitled to attach the salary of the judgment-debtor. It is necessary to state the following facts in brief in order to appreciate how this point of law has arisen in this appeal.

2. G.W. Burlow, who is respondent in this appeal is a Driver employed in the Eastern Railway. It is an admitted fact that at present he has been drawing a salary of Rs. 700/- per month. He borrowed a certain sum of money from the appellant on a promissory note and it is not disputed before us that the appellant has got a decree against the respondent on the basis of that handnote for a sum of Rs. 3,571/-and odd annas with interest running at six per cent per annum upon the decretal amount. This decree was obtained on 25-2-1955. The decree has been put to execution and the decree-holder has made a prayer for realising the decretal amount by attaching that portion of the salary of the judgment-debtor which is attachable under the law. The judgment-debtor raised an objection to the execution of the decree in this manner contending that he has been adjudged an insolvent on 5-5-4941 in Insolvency Case No. 3 of 1941! in the Court of the District Judge, Manbhum and Singhbhum and that he has not yet got his discharge. The judgment-debtor further submitted that under the order of the District Judge passed in the insolvency case, a sum of Rs. 60/- per month is being deducted from his salary and the application for execution having been made in contravention of the provisions of the Provincial Insolvency Act it is not legally maintainable. This objection of the judgment-debtor found favour with the executing Court which struck off the execution case as being not maintainable. That order was also affirmed in appeal and so the decree-holder has preferred this Second Appeal.

3. Mr. Chatterjee appearing on behalf of the decree-holder appellant contended before us that the Courts below were wrong in holding that no portion of the salary of the judgment-debtor is attachable. He drew our attention to the fact that the judgment-debtor is at present drawing a salary of Rs. 700/- permensem. Mr. Chatterjee submitted that out of this amount a sum of Rs. 100/- is not attachable and deducting that amount from the total salary the balance would be Rs. 600/-. Mr. Chatterjee contended that a moiety of this sum of Rs. 600/- is attachable and as the insolvency Court has attached only a sum of Rs. 60/- per month, the decree-holder appellant is entitled to attach the remaining portion of the moity, viz., Rs. 240/- per month. The lower appellate 'Court held that although in an ordinary case the decree-holder would have been entitled to attach this amount from out of the monthly salary of the judgment-debtor, it should be held, in view of the insolvency proceedings pending against the judgment-debtor that the entire salary of the insolvent has vested in the insolvency Court or the receiver as the case may be, and so no portion of the salary is available to the appellant for attachment under his decree. The lower appellate Court has relied on Sub-sections (2) and (4) of Section 28 of the Provincial Insolvency Act, 1920. Sub-sections (2) and (4) of Section 28 of the above Act run as follows :

'2, On the making of an order of adjudication, the whole of the property of the insolvent shall vest in the Court or in a receiver as hereinafter provided, and shall become divisible among the creditors, and thereafter, except as provided by this Act, no creditor to whom the insolvent is indebted in respect of any debt provable under this Act shall during the pendency of the insolvency proceedings have any remedy against the property or the insolvent in respect of the debt, or commence any suit or other legal proceeding, except with the leave of the Court on such terms as the Court may impose.'

'4. All property which is acquired by or devolves on the insolvent after the date of an order of adjudication and before his discharge shall forthwith vest in the Court or receiver, and the provisions of Sub-section (2) shall apply in respect thereof.'

4. It would appear from the judgment of the lower appellate Court that when the insolvency proceedings were initially started the judgment-debtor drew a salary of only Rs. 125/- per month. Gradually this has increased to Rs. 700/- per month. There can be no doubt that under Sub-section (4) of Section 28 of the Act mentioned above this increased salary has also vested in the insolvency Court or in the receiver as the case may be. It could not be controverted by Mr. Chatterjee that by reason of this vesting the judgment-debtor has become completely divested of any interest or title in the property which in this particular case consists of his salary. By operation of law the title of the Court or the receiver in insolvency is absolute and the judgment-debtor is no longer the owner of his own salary. In these circumstances, although the insolvency Court has chosen to realise only a small portion of the salary of the judgment-debtor, it is not open to the decree-holder to attach the remaining portion of the attachable part. Mr. Chatterjee submitted that the debt which his client advanced to the respondent came into existence after the date of the order of adjudication and so his client is not a person whose debt is provable under the Provincial Insolvency Act. Mr. Chatterjee, therefore, submitted that the present case is outside the purview of Sub-sections (2) and (4) of Section 28 of the Provincial Insolvency Act and the appellant is entitled to proceed against any property of the judgment-debtor in the ordinary Court because his claim is not provable before the insolvency Court. We are not prepared to accept this contention of Mr. Chatterjee as being sound or correct because the vesting which is mentioned in Sub-section (2) of Section 28 of the Provincial Insolvency Act is necessarily a vesting against the whole world and in the second part of that subsection a limited right is given to creditors whose debts are provable under the Act to pursue their remedy in the ordinary Court with the leave of the insolvency Court. No such exception has been made in favour of creditors whose debts are not provable before the insolvency Court. In our judgment such a creditor cannot pursue any remedy against an insolvent in the ordinary Court, because the vesting of the insolvent's property in the insolvency Court or in the receiver would stand as a stumbling block in the way of such a creditor. It is no doubt true that in some cases this should operate as a great hardship on the creditor. But a person who deals with an insolvent after the passing of an order of adjudication but before the final discharge of an insolvent must do so at his own risk.

5. In the above connection Mr. Chatterjee drew our attention to a certain Oudh case Kalu v. Agha Salim, reported in . There the creditor was allowed to pursue his ordinary remedy against an insolvent under Section 25 of the Provincial Small Cause Courts Act. The learned Judge who decided the case seems to have been influenced by the fact that the debtor was a dishonest man. It is difficult for us to agree with the principles underlying the above decision. The learned Judge who decided that case was aware of the fact that a difficulty was created by the fact that the property of the insolvent vests in the receiver or the Court. It is difficult for us to see how in spite of that observation the learned Judge could allow the creditor to have his remedy against the insolvent in the ordinary way. We respectfully differ from the decision mentioned above and hold that the property of the insolvent respondent having completely vested in the Court or in the receiver it is not open to the appellant to attach the salary of the judgment-debtor through the ordinary Civil Court. The first contention raised on behalf of the appellant, therefore, fails.

6. Mr. Chatterjee raised another contention before us, viz., that the respondent judgment-debtor has no locus stand to maintain the objection under Section 47 of the Code of Civil Procedure. He submitted that it having been held by us that the entire property of the judgment-debtor has vested in the Court or in the receiver it is not open to the judgment-debtor to raise any objection against the legality of the attachment and such an objection can be raised only by the Court or the receiver in whose hands the property of the judgment-debtor now lies. In support of this contention Mr. Chatterjee drew our attention to several cases one of which is reported in Hari Rao v. Official Assignee, High Court, Madras : AIR1926Mad556 . Another case cited by Mr. Chatterjee is reported in Phani Bhusan v. Shashi Bhusan : AIR1935Cal391 . The third case cited by Mr. Chatterjee is reported in Banomali Dutta v. Lalit Mohan Ghosal, 47 Ind Cas 152: (AIR 1919 Cal 1006) (D). From a perusal of these cases we find that the cases arose out of insolvency proceedings and the insolvent attempted to question the propriety of some orders passed in those proceedings. Of course where a property of an insolvent vests in the receiver in insolvency, an objection about the propriety of any order relating to the property of the insolvent, can be raised only by the receiver who is in the eye of law the legal owner of the property and not by the insolvent himself. In the present case the respondent was made a party in the execution case in his ordinary capacity and not as an insolvent. The respondent is not claiming any proprietary right in the property or rather in the salary which is now under the control of the insolvency Court by reason of the vesting of that property in that Court. The insolvent is simply pointing out to the Court that the property or rather the salary which is sought to be attached is no longer his own and is not liable to be attached through the ordinary Civil Court. Such an objection, in our opinion, is entertainable at the instance of the respondent although he happens to be an undischarged insolvent. The facts of the present case are, therefore, quite distinguishable from the facts of the cases cited by Mr. Chatterjee on behalf of the appellant. We are of opinion that the respondent have got the locus standi to raise the objection which was raised by him in the executing Court. That objection, has, in our judgment, been rightly upheld by the Courts below. Of course it will be open to the appellant decree-holder to start a fresh execution case against the judgment-debtor respondent after properly representing him, if the appellant is so advised.

7. In view of what has been stated above we dismiss this appeal.

8. Considering the circumstances of this case wedirect that parties will bear their own costs in thisappeal.

B.N. Banerjee, J.

9. I agree.


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