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Re Albert Felix Seldana, Insolvent. Ex Parte Rai Sukhlal Karnani Bahadur Vs. This Official Assignee of Calcutta - Court Judgment

LegalCrystal Citation
CourtKolkata
Decided On
Judge
Reported in66Ind.Cas.715
AppellantRe Albert Felix Seldana, Insolvent. Ex Parte Rai Sukhlal Karnani Bahadur
RespondentThis Official Assignee of Calcutta
Excerpt:
presidency towns insolvency act (iii of 1909) section 36 (1) - application for examination of witness--procedure--person aggrieved, remedy of. - .....end 17th of december 1920 karnani appeared before the registrar in insolvency and was examined by learned counsel on behalf of the official assignee. it was alleged by the learned counsel appearing on behalf of the appellant that, although the learned counsel nominally appeared for the official assignee, he was really instructed by the insolvent seldana, who was represented by the attorney who was appearing for the official assignee: and, it was alleged, that the real object of the examination of karnani was to obtain information which might be useful to the prosecution instituted by the munitions board. karnani was represented by learned counsel who took objections to certain questions, and it is stated that the official assignee had alleged that the object of the examination was to.....
Judgment:

Sanderson, C.J.

1. This is an appeal from the judgment of my learned brother, Mr. Justice Greaves, whereby he refused an application made on behalf of one Rai Sukhlal Karnani Bahadur in the insolvency of one Albert Felix Seldana.

2. The application consisted of a prayer 36 Ind. Cas. 990 : 20 C. W. N. 1155 : 44 C. 286, for an order that the order of the 29th of November 1920, should be set aside, (2) alternatively, for an order that the proceedings thereunder should be set aside, (3) alternatively, for directions as to the scope of the enquiry before the Re gistrar.

3. The matter arose in this way; Seldana was adjudicated an insolvent on the 2nd of July 1920, and, on the 18th August 1920, a complaint against Seldana was filed by the Munitions Board, charging him with certain offences under certain sections of the Indian Penal Code which may be shortly described as cheating, conspiracy to client and forgery. On the 26th of August 1920, a complaint was made against Sukhlal Karnani, the appellant in this appeal, charging him with conspiracy to sheet. The Official Assignee made an application: before the Registrar in insolvency, in respect of which an order was made on the 29th of November 1920. In that application, after stating that Seldana had been ad-judicated insolvent on the 2nd of July 1920 the Official Assignee went on to allege that Sukblal Karnani was capable of giving in-formation regarding the dealings and prop, arties of the above named insolvent, and the Official Assignee applied that Karnani should be summoned and examined by the Court on a day and hour to be fixed there-for and to produce all books, papers, correspondence, accounts relative to trans actions had between him and the insolvent in connection with their partnership and dealings with the Munitions Board from tie 16th of March 1918. That application was made ex parte, and the order of the 29th of November was to this effect, viz. that 'Sukhlal Karnani being served with a sealed copy of the order should, on Wednesday, the 8th of December, at the hour of 11 o'clock in the forenoon, attend before the Registrar to be examined regarding the dealings and properties of the insolvent and that he should bring with him and produce at the time and place aforesaid all books, papers, correspondence, and accounts relating to transactions had between him and the said insolvent in connection with their partnership and dealings with the Munitions Board from the 16th of March 1918.' On the 15th end 17th of December 1920 Karnani appeared before the Registrar in Insolvency and was examined by learned Counsel on behalf of the Official Assignee. It was alleged by the learned Counsel appearing on behalf of the appellant that, although the learned Counsel nominally appeared for the Official Assignee, he was really instructed by the insolvent Seldana, who was represented by the Attorney who was appearing for the Official Assignee: and, it was alleged, that the real object of the examination of Karnani was to obtain information which might be useful to the prosecution instituted by the Munitions Board. Karnani was represented by learned Counsel who took objections to certain questions, and it is stated that the Official Assignee had alleged that the object of the examination was to ascertain whether or not Karnani was indebted to Seldana in a sum of Rs. 2,64,000. A petition was then presented by Karnani to the learned Judge, on the 4th of January 1921, applying for the reliefs to which I have already referred.

4. The main ground of the argument in this appeal was, that the further examination of Karnani ought to be stayed until after the criminal prosecution has been finished, for, it was alleged that, although the answers which might be given by Karnani in his examination might not be used against him, still it might be that those who were conducting the prosecution might obtain information from the answers which might be useful in the criminal proceedings.

6. The learned Judge stated in his judgment three grounds on which the matter was argued before him: First, it was said that under the Insolvency Rules of this Court such an application must be verified by affidavit and that the verification was insufficient as it only related to the information and belief of the Official Assignee.

7. Secondly, it was said that the application was insufficient, in that it only referred to information regarding the dealings and properties of the insolvent, that it contained no reference to any indebtedness of Sukhlal Karnani to the insolvent and that being so the insolvent bad wrongly been questioned with regard to his indebtedness, especially having regard to the terms of an agreement between the insolvent and Sukhlal Karnani dated the 22nd of August 1918; and lastly, it was said that with regard to the Police Court proceedings pending against the insolvent and against Karnani the examination was being used for an improper purpose and, amongst other things, to displace Clause 7 of the said agreement. The learned Judge declined to accept any of those arguments, and said that there was ample material before him to show that Sukhlal Karnani was in a position to give some information with regard to the dealings and property. He made an order that the examination should proceed. Then he added as follows: 'This being se, I think it is difficult to say that question were incompetent with regard to any question of the indebtedness of Sukhlal to Seldana, if they arose in the source of the examination, although I think that if it had been desired to establish this, the application should have so specifically stated but I am not prepared to interfere under the circumstances on the ground that snob, questions have been put. Then, lastly, with regard to the alleged improper purpose of the examination, it teems to me that it is for the witness to object to such questions as he considers are put for an improper purpose and, if necessary, I think ho would be justified en the advice of Counsel in refusing to answer such questions even if directed to do so. Under these circumstances, it would be for the Ragistrar in Insolvency, if he thought the refusal was ill-founded, to report to the Court the refusal, in order that the Court might consider the nature of the question and of the objection and I think that if this course, is followed the witness will be amply protected with regard to the putting of any question which may be improper; and I only desire to add that I think the Official Assignee in future, when he makes similar applications, should place the Court in possession of further materials for considering if any application under Section 36 is well-founded or not.'

8. The first two grounds which are referred to in the learned Judge's judgment were not seriously argued in this Court. But a new point was taken, namely, that the order of the Registrar was made without jurisdiction, or, at any rate, that it ought not to have been made ex parte.

9. The learned Counsel who appeared for the Official Assignee assured us that it is the practice of this Court that such applications as this by the Official Assignee are always made ex parte before the Registrar; and that practice was not disputed by the learned Counsel who appeared for the appellant. But the learned Counsel for the appellant urged that the practice was wrong and was not justified by the rules of this Court. Since the argument, of this case the officer of the Court has drawn my attention to a case, Kissory Mohan Roy Shaha, In re (1), in which the very point was decided by my learned brother, Mr. Justice Greaves. Neither of the learned Counsel drew our attention to it. It is a decision directly in point and authorizes the practice to which I have referred, the learned Judge based his judgment upon the grounds which were suggested by my learned brother, Mr. Justice Richardson, during the course of the argument, and I assume that since this judgment, which was in 1916, the practice has never been questioned until the hearing of this appeal, The application was made under Section 36 (1) of the Presidency Towns Insolvency Act, which runs as fellows: 'The Court may, on the application of the Official Assignee or of any creditor who has proved his debt, at any time after an order of adjudication has been made, summon before it in such manner as may be prescribed the insolvent or any person known or suspected to have in his possession any property belonging to the insolvent,...or any person whom the Court may deem capable of giving information respecting the insolvent, his dealings or property; and the Court may require any such person to produce any documents in his custody or power relating to the in-solvent, his dealings or property,' There is nothing in the section whish goes to show that notice of the application has to be served upon the person who it is desired should be examined. But it is said that the Insolvency Rules of this Court make it obligatory that notice of the application should be given: and reliance was placed upon rules 17 and 18 of the Insolvency Rules of 1914. Those rules are to be found in the portion of the rules which deals with 'Motions and Practice,' and there is another rule, No. 30, (which is under the heading 'Discovery of Debtor's Property') which is dearly applicable to an application under Section 36, and it is as follows; 'Every application to the Court under Section 86 of the Act shall be in writing and shall state shortly the grounds upon whish the application is made'. It appeared to us in the course of the argument that that rule showed that it was not intended that rules 17 and 18 should apply to an application under Section 36 by the Official Assignee for an order that a person should be examined, I now refer to the case whish was decided in 1916 by my learned brother Mr. Justice Greaves; The head note is, 'Applications under Section 36 (1) of the Presidency Towns Insolvency Act for examination of persons thereunder are intended to ha made ex parts under the rules framed by the Calcutta High Court under Section 112 of the Act, To such applications Rule 30 applies and not rules 17, 18 and 19, and this view is supported by the English Bankruptcy Act (1914), 4 and 5 George V, Ch. 59 and the rules thereunder'. The portion of the learned Judge's judgment which I desire to read is this; After referring to the Section (36) and rules 17 and 18, he goes on to say, If these rules govern applications under Section 36 of the Act, then the ex parte order was clearly wrong unless the Registrar thought that any delay would entail serious mischief. But I was referred to another rule by Counsel who opposed the application, that is to say, to Rule 30 which is as follows:' (then he reads the rule). 'This rule to my mind clearly contemplates a procedure other than that laid down under rules 18 and 19 and it contains no provision for service of the application upon the person sought to be examined such as is contained in Rule 19, Under these circumstances, the inference to my mind is irresistible, that applications under Section 36 are intended to be made ex parte and that this is the manner prescribed by the rules framed under Section 112 of the Act.' Speaking for myself, I entirely agree with the learned Judge. I only regret that the learned Counsel did not draw our attention to that ease, which would have saved considerable argument and time of the Court.

10. Consequently, the first paint which was relied upon, namely, that this order should not have been made ex parte, is without any foundation.

11. The other ground, namely, that the examination has been used for an improper purpose, in my judgment, equally fails. I am not satisfied that this examination was used for any ulterior purpose. The learned Counsel for the appellant did not draw our attention to any passages in the evidence or any questions which were put during the examination to justify this allegation. On the other hand, the learned Counsel for the Official Assignee drew our attention to some of the questions and some of the answers which were given by the witness, and such answers led me to think that they were by no means satisfactory and that the attitude of the witness was obstructive. Farther, this was a matter for the discretion of the learned Judge, and I am not prepared to interfere with that discretion, especially having regard to the fast that in the order which I have read, in my judgment, the learned Judge has provided a safeguard which will protest the witness from improper questions being put to him during the course of his examination.

12. For these reasons in my judgment the appeal fails.

13. There is one other matter to which I must refer. The learned Counsel for the Official Assignee took the point that the application before Mr. Justice Greaves was in fact an appeal from the order of the Registrar in Insolvency, and if it were an appeal he argued that it was out of time.

14. In my judgment this was not an appeal, it was, as I have already said, a petition to set aside the order of the Registrar in Insolvency, and it thin proceeded to ask in the alternative for a stay of the examination of the appellant or for direction as to the scope of the examination and, in my judement, in a case of this kind where an ex parte order is made for the examination of a witness by the Registrar in Insolvency, if there are any grounds justifying an application to the Court, the proper course is to move the Court to set aside the order which has been made by the Registrar in Insolvents and that is what was done in this case, In my judgment it was not an appeal, and, consequently there is nothing in the point, which the learned Counsel for the Official Assignee raised with regard to the so sailed appeal being out of time.

15. The learned Counsel for the Official Assignee raised a farther point that there was no appeal to this Court from the judgment of my learned brother, Mr. Justice Greaves. Having regard to the fact that I have come to the conclusion that this appeal should be dismissed, it is really not necessary to decide that point but, as at present advised, I am inclined to the opinion that the order of Mr. Justice Greaves was an appealable order, because it involved not only a decision that there should be no stay of the examination but also a refusal of the application of the appellant that the order of the 29th November 1920 should be set aside.

16. For the foregoing reasons, the appeal is dismissed with costs.

Richardson, J.

17. I agree, The preliminary question whether this appeal is corn patent involves two points. The first is, whether the application to Mr. Justice Greaves to set aside the order made under Section 36 to examine the appellant was an appeal under Clause (2) of Section 8 or an application under Clause (1). If it was an appeal it was out of time under Section 101 and the appeal before us ought to be dismissed in limine on that ground. But I think it should be regarded, for reasons which have just bean stated by my Lord, as an application under the first clause for the review of an ex parte order. The second paint is, whether the order of Mr. Justice Greaves from which this appeal has been taken, is a 'judgment' within the meaning of Clause 16 of the Latters Patent. I should be disposed to say, if it Were necessary to decide this question, which it is not, that the order is a judgment,' because it assumes, if it does not decide, that the Registrar had jurisdiction to make the order, and because, at any rate, it decides that on the merits the appellant had shown no cause sufficient to justify the order being set aside, that is to say, it rejects the claim made on the appellant's behalf that no order for his examination should ever have been made and that the whole proceedings should be quashed.

18. The next question relates to the juriedic-of the Registrar. I agree that the Registrar had power under Section 6 (d) and (e) to deal with an application made ex parts on behalf of the Official Assignee that the appellant should be examined under Section 36, and, further, that under Section 35 and Rule 30 of the Rules of the High Court, the Registrar had also power to make the order for the appellants' examination ex parte, without notice to the appellant. On this part of the case I have nothing to add to what my Lord has said.

19. Lastly, on the merits, I can see no reason why we should disturb the order made by Mr. Justice Greaves. The appellant is entitled to the protection afforded by Section 132 of the Evidence Act. Mr. Justice Greaves had been careful to couple his order with a safeguard against improper questions being put to the appellant. The appellant undoubtedly comas within the description of a person capable of giving information regarding the insolvent, his dealings, or property. In the interest of the general body of the creditors the Official Assignee is entitled to have him examined and I feel confident in my own mind that if the appellant is an honest man he will lose nothing by being frank. I hesitate to suggest any other hypothesis, but, if any other hypothesis be suggested, I can see no reason why we should be further than Mr. Justice Greaves has already done to relieve the appellant from the situation in which he finds himself.

20. For these reasons, I agree with my Lard that this appeal should be dismissed.


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