Skip to content


Official Trustee of Bengal (Estate Manik Lal Sil) Vs. Kissen Gopal Behami and ors. - Court Judgment

LegalCrystal Citation
SubjectCivil
CourtKolkata
Decided On
Reported inAIR1930Cal459
AppellantOfficial Trustee of Bengal (Estate Manik Lal Sil)
RespondentKissen Gopal Behami and ors.
Excerpt:
- .....in the schedule to the petition one of the creditors being creditor no. 17, was said to be the official trustee of bengal for the estate of manik lal sil, and rs. 900 was said to be due to him for rent of the shop and godowns occupied by the firm for three months up to july 1925 at the rate of rs. 300 a month. an interim receiver was appointed on 28th august 1925. on 9th december 1925 the official trustee put in a petition in which he amongst other things brought to the court's notice that rs. 900 was due to him for may to july 1925 and that since the appointment of the interim receiver rent at the rate of rs. 300 per month was accumulating and that for august to december 1925 rs. 1,200 had fallen due, which he asked might be paid to him and he further asked that the premises might.....
Judgment:

1. On 26th August 1925 Tulshi Charan Pal, alleging that he was the sole proprietor of the firm of Akhil Chandra Pal and Co., carrying on business in Chandney Chauk, Calcutta, applied that the said firm might be adjudged insolvent. In the schedule to the petition one of the creditors being creditor No. 17, was said to be the Official Trustee of Bengal for the Estate of Manik Lal Sil, and Rs. 900 was said to be due to him for rent of the shop and godowns occupied by the firm for three months up to July 1925 at the rate of Rs. 300 a month. An interim receiver was appointed on 28th August 1925. On 9th December 1925 the Official Trustee put in a petition in which he amongst other things brought to the Court's notice that Rs. 900 was due to him for May to July 1925 and that since the appointment of the interim receiver rent at the rate of Rs. 300 per month was accumulating and that for August to December 1925 Rs. 1,200 had fallen due, which he asked might be paid to him and he further asked that the premises might be vacated unless the Court thought it necessary to retain possession of them. On 16th April 1926 another petition was put in by the Official Trustee in which it was pointed out that up to March 1926 Rs. 2,400 had become due to him and more or less similar prayers were made as in the previous petition. On 9th July 1926 the Court made an order in these terms:

Creditor No. 17 must wait till the order of adjudication is passed for an order in regard to the rent of the shop in Dhurummtolla Street and godowns in Chandney Chauk.

2. On 17th August 1926 the adjudication order was passed and the interim receiver was appointed receiver after adjudication. On 12th March 1927 the Official Trustee again applied that his dues might be paid off and also prayed that if the receiver failed to do so, permission might be granted to him to sue the receiver. On 16th June 1927, there was a change in the personnel of the receiver. On 3rd September 1927 the Court ordered notice to be given to the Official Trustee that the premises would be vacated by the end of the month and the receiver should no longer be held responsible for the rent. A sum of Rs. 17,000 appears to have been realised from the sale of the insolvents' properties, and upon that the Official Trustee applied that his dues amounting to Rs. 7,800 might be paid to him first. The Court refused the prayer with the following order:

The rent claimed is mainly for continuation of the tenancy by the receiver and I cannot see how it can be described as expenditure for administration of the estate, la my opinion this claim ranks along with all other-creditors' claim for dividend and will be dealt with accordingly by the receiver.

3. This is the order from which the Official Trustee has appealed.

4. Arguments advanced on the strength of cases decided under the special provisions of the English bankruptcy laws or preferential payments in the Bankruptcy Act or arguments derived from the fact of the presence of Section 50, Presidency Towns Insolvency Act, or of the absence of an analogous provision in the Provincial Insolvency Act are of no assistance. The provisions of the last mentioned Act itself, if examined, throw a good deal of light on the matter.

5. In this case the interim receiver appointed by the Court was not directed to take possession as he might have been under Section 20. The proceedings show that his appointment was more or less for the purpose of doing certain preliminary investigations. On 17th August 1926 when the order of adjudication was made and the interim receiver was ordered to continue as receiver, the insolvents' property vested in him under Section 28(2) and from that date the receiver was in possession in the eye of law, whether he actually exercised any act of possession or not.

6. Now the scheme of the Provincial Insolvency Act is to vest the insolvents' property in the Court or the receiver upon the order of adjudication being made, and to make it divisible amongst the creditors : Section 28(1), The creditors are to tender proof of their respective debts provable under the Act on which a schedule is to be framed which, however, may be amended subsequently : Section 33. Section 34 is an important section. It states what debts are provable under the Act, Excluding those, which come under Sub-section (1) of that section, Sub-section (2) says that:

all debts and liabilities, present future, certain or contingent, to which the debtor is subject when he is adjudged an insolvent or to which he may become subject before his discharge by reason of any obligation incurred before the date of such adjudication, shall be deemed to be debts provable under the Act.

7. The debt to be provable therefore must accrue before adjudication, but if it accrues after adjudication and before discharge it is provable only if the (obligation giving rise to the debt was incurred before adjudication. In the present case there was no such antecedent obligation which accrued for the liability to pay rent for the period after the adjudication. Debt in respect of such rent is not a provable debt.

8. On the other hand, the receiver when the order of adjudication was made was vested with all rights in the insolvents' property. The several petitions of the Official Trustee asked the Court to order the receiver to vacate the premises as otherwise Rs. 300 was accruing due every month and such a prayer was made even before the order of adjudication was passed. Notwithstanding all this and with full knowledge that a liability to pay Rs. 300 a month was being incurred for the use and occupation of the premises the possession of the premises was retained by the receiver. Had this not been so, the landlord would have been entitled to only such rent from the receiver as was fair and equitable. The premises were occupied to keep the property for the purpose of administration and distribution. It is difficult to see when the rent that accrued should not be regarded as 'expenses of administration or otherwise' within the meaning of Section 61, Sub-section (3). It is said that for a part of the period the goods in the shop were under attachment in execution of a decree in favour of third party. We do not see how that makes a difference on the question of the receiver's liability.

9. The result is that, in our opinion, the view taken by the Court below is wrong. If the Court had only carefully considered the legal position and passed prompt and proper orders on the Official Trustee's petition of 9th August 1925 or 16th April 1926 or even on 17th August 1926 when the order for adjudication was made a large sum of money would probably have been available for distribution amongst the other creditors.

10. The appeal must be allowed. The order of the Court below is set aside and it is ordered that the amount of rent due to the appellant for the period from 17th August 1926 to 30th September 1927 will be treated as 'expenses of administration or otherwise' and will be given priority, while the rent due to him from 1st May 1925 to 16th August 1926 will rank as a debt provable under the law and in respect of which the appellant will rank pari passu with the other creditors who may have proved their debts.

11. The appellant will be entitled to his costs in this appeal. Hearing-fee, 5 gold mohurs from the insolvents' estate.


Save Judgments// Add Notes // Store Search Result sets // Organizer Client Files //