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Sumermull Surena Vs. Bansilal Abirchand - Court Judgment

LegalCrystal Citation
Decided On
Reported inAIR1932Cal310,137Ind.Cas.299
AppellantSumermull Surena
RespondentBansilal Abirchand
Cases ReferredBritish India. In Ellis v. McHenry
- .....secured. it is there said that the firm of hajari mull hira lall was a secured creditor (upon bikanir property) for rs. 40,000 in respect of a debt contracted in 1930 for cash and that the estimated value of the security is rs. 40,000, there being no estimated surplus. we have been informed by learned counsel on both sides that a decree has now been obtained in the bikanir suit and that steps have been taken to attach the property in bikanir. the insolvent udai chand, by his affidavit, admits that a written statement was filed in the said suit and explains that;we had to do it with a view to avoid an ex parte decree until the composition was approved by this hon'ble court.6. in the affidavit on behalf of the respondents it was alleged that a commission had been taken at the instance.....

Rankin, C.J.

1. On 18th July 1930 an adjudication order was made in this Court against the firm of Sumermull Surena of which the partners are two persons, Sumermull Surena and Udai Chand Ram-pooria. The adjudication order was made on the debtor's own petition and it appears that at the time when the petition was presented both these individuals had gone to Bikanir. In the Rule obtained by them, and out of which the present appeal arises, they were described as both residing in Bikanir though Udai Chand has made an affidavit in which ho denies that their permanent residence is Bikanir saying that they generally and usually reside in Calcutta save and except for occasional visits to Bikanir. Shortly after the adjudication order, namely, on 15th August 1930, the insolvents submitted a scheme of composition which was accepted by the creditors on 1st September and approved by the Court by an order dated 10th September 1930. The scheme provided that the secured creditors would be paid in full from the securities and that the dividend of six annas in the rupee should be paid to the unsecured creditors out of the estate and effects to be made over to the trustees of the composition. It was further provided in the scheme that on the composition being approved by the Court all the estate of the insolvent would vest in the trustees who would have full power to sell and realize the same.

2. The respondents before us are a firm which styles itself Rai Bahadur Bansilal Abirchand. This firm was an unsecured creditor and was entered in the debtor's statement of affairs as having a debt of Rs. 9,948. The partners of this firm are, in my opinion, upon the evidence, shown to be domiciled in Bikanir and permanently resident in Bikanir. They carry on business however at various places in British India--Calcutta among others-- and the debt in question was admittedly a debt which, arose out of transactions entered into in Calcutta by their Calcutta branch. It now appears that on 17th July 1930, a day before the insolvent firm presented its petition the respondent firm brought a suit against it in the Court at Bikanir for the amount of their debt. They impleaded as defendants not only Sumermull Surena and Udai Chand Rampooria but certain other persons on the footing that the business carried on by their debtors in the name of Sumermull Surena was a joint family business. The form of the claim was that the firm of the defendants in Calcutta had borrowed money from the firm of the plaintiffs in Calcutta.

3. There is some dispute whether the respondent firm was served with notice of the application for composition; but in my judgment nothing turns upon this. The respondent firm never proved in the insolvency but has contented itself with prosecuting its suit against the insolvents at Bikanir.

4. On 22nd December 1930 the insolvents obtained a Rule from the learned Judge exorcising the insolvency jurisdiction calling upon the respondent firm to show cause why they should not be restrained from proceeding with the suit at Bikanir and from taking any proceedings other than those contemplated by the scheme of composition. The learned Judge on 27th January 1931, discharged this Rule and it is from this decision that the insolvents now appeal,

5. The case made was that the insolvents have a certain interest in some immovable properties in Bikanir; that the respondent firm by prosecuting its suit in Bikanir would enable itself to take proceedings to levy its debt out of those properties and that it ought to be restrained from taking such proceedings because those properties were a part of the assets distributable in the insolvency and that the trustees of the composition became entitled thereto for the benefit of the creditors. In the insolvents' statement of affairs, which I have examined, the only reference to Bikanir properties occurs in List B.--Creditors fully secured. It is there said that the firm of Hajari Mull Hira Lall was a secured creditor (upon Bikanir property) for Rs. 40,000 in respect of a debt contracted in 1930 for cash and that the estimated value of the security is Rs. 40,000, there being no estimated surplus. We have been informed by learned Counsel on both sides that a decree has now been obtained in the Bikanir suit and that steps have been taken to attach the property in Bikanir. The insolvent Udai Chand, by his affidavit, admits that a written statement was filed in the said suit and explains that;

we had to do it with a view to avoid an ex parte decree until the composition was approved by this Hon'ble Court.

6. In the affidavit on behalf of the respondents it was alleged that a commission had been taken at the instance of the defendants in that suit; and this allegation is not denied.

7. The learned Judge was of opinion that he had jurisdiction to grant an injunction in the present case but he refused the injunction in the exercise of his discretion having regard to the merits of the matter. He pointed out that an adjudication order will not operate of itself to vest the insolvents' immovable property situated in a Foreign State in the Official Assignee -- immovable property being a matter which is governed by the law of the Foreign State in which it is situate. He came to the conclusion that the property at Bikanir, which is clearly an undivided share in immovable property subject to a mortgage, did not vest in the Official Assignee and is not vested in the trustees.

8. Now it must be recognized that the respondent's debt having been contracted in Calcutta is according to the view of International law adopted in these Courts a debt which may be altogether discharged by the law of British India. In Ellis v. McHenry [1871] 6 C.P. 228 (at 234), Bovill, C. J. says:

There is no doubt that the debt or liability arising in any country may be discharged by the laws of that country and that such a discharge, if it extinguishes the debt or liability, and does not merely interfere with the remedies or course of procedure to enforce it, will be an effectual answer to the claim not only in the Courts of that country but in every other country. That is the law of England and is the principle applied to international law adopted in other countries.

9. On the other hand, it is, so far as I can ascertain, true that the English Courts have never issued an injunction to restrain-a foreign creditor suing in a foreign Court in a case in which the creditor was neither personally within the jurisdiction nor had come in and proved in the bankruptcy.. In view of the fact that the respondent firm carries on business in Calcutta and that it may therefore be regarded as having in a commercial sense a domicile or residence within the jurisdiction, and in view of the fact that the injunction if granted could be made effective I should be very slow to differ from the opinion of the learned Judge upon the question of jurisdiction if it were necessary for the decision of this case to decide it.

10. Upon the question whether the insolvent's interest in the Bikanir property vested in the Official Assignee, while it is true that the law of British India does not govern immovable property in Foreign States, and that an adjudication order made here can only have such effect upon the property as the law of the Foreign State chooses to give it, nevertheless, as. between the insolvent and his creditors the property prima facie is available to the creditors unless the law of the Foreign State interferes with the operation of our own law. If it could be shown that the insolvents, by executing a transfer or by taking registration in Bikanir, could make this property available, for the benefit of their creditors, the insolvents, under our law,, could be required to do what was necessary to that end, of. Section 33 (2) (d), Presidency Town Insolvency Act 1909. I think however that the learned Judge if asked to restrain a resident in a Foreign State from continuing a suit brought before the adjudication against insolvents who were at that time resident in the Foreign State, might very reasonably insist, before exercising a somewhat delicate jurisdiction to interfere with the nationals of another power, upon definite evidence as to the law of the Foreign State. In such a case moreover I do not think it unreasonable for him to refuse an injunction when he finds not only that there is no evidence before him as to the foreign law, but also that the insolvents have never in fact executed any such transfer in favour, of the Official Assignee or of the trustees of the composition. It is to be remembered moreover that an undivided share of a member of a Mitakshara family is property of a very special character; and that the extent to which such interest can pass from one person to another is a matter upon which the law of the Foreign State may well contain special requirements. It is I think very noticeable in this case that the application was not made by the Official Assignee and it is not now made by the trustees of the composition, or by any creditor. In view of the fact that the insolvents on 15th September 1930, at the very moment they obtained the approval of the Court to the composition, were putting their oath to the schedule of affairs which represented the Bikanir property as being fully charged, there is need for all the greater caution. It is certain that they never invited the creditors to rely upon any equity in this property and, in my judgment, it is plain enough that they are fighting not in the interests of their creditors but solely in their own interests. It may very well be, in spite of their representations, that there is a valuable equity in the Bikanir property. As the respondent firm is taking proceedings against it and as the insolvents are anxious to stop such proceedings, this is only too probable. It is difficult to be sure that the insolvents' grievance is any more than this, that they are in danger of being deprived of the benefit of a device whereby the property was kept out of the reach of the unsecured creditors.

11. The learned Judge in the exercise of his discretion, has thought fit to refuse to interfere at the instance of the appellants; and upon the whole I am not satisfied that it would be right for us to take another view. The appeal will be dismissed with costs.

Pearson, J.

12. I agree.

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