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Narayan Singh Sundar Singh Vs. Attar Singh Moal Singh - Court Judgment

LegalCrystal Citation
SubjectCivil
CourtKolkata
Decided On
AppellantNarayan Singh Sundar Singh
RespondentAttar Singh Moal Singh
Excerpt:
- .....before us is that this insolvency has been annulled before any inquiry whatever has been made by public examination into the debtors' conduct and affairs. i would like to say that, although there may be power under the act, to dispense with the public examination of a debtor, in a case where a composition is being proposed, it is a very strong thing to dispense with the public examination. the rules of this court anticipate that public examination should be held in all these cases. in my judgment a composition in the absence of public examination, in a case where the debts are large, is not consistent with an efficient administration of the act. in the present cases the scheme is extremely informal, hazy and unsatisfactory, and, apart from that, there has been no investigation such as.....
Judgment:

Rankin, C.J.

1. In this case it appears that three persons presented their own petition in insolvency on 1st August 1930. They did not even file their schedule of affairs till 31st March 1931. On the same day they filed a proposal of composition. That proposal is said to mean a good many things which are not properly stated. In itself it contains no information whatever except that there is a hope that the creditors will be paid five annas in the rupee. From what fund they will be paid there is nothing in it to tell us. There is a statement that certain people are very respectable and are prepared to act as trustees and are also prepared to furnish security to the satisfaction of the Court. The composition is not a scheme at all and ought not to be regarded as a scheme. Further details, however are to be obtained from other documents. It seems from the Official Assignee's report that these insolvents have incurred debt at least to the extent of Rs. 1,50,000. There are certain new creditors, who have come in but who are not included in the schedule. The probable assets set out in the schedule of affairs amount to Rs. 17,000 of good outstandings and Rs. 14,000 is described as bad outstandings. Apparently a sum of Rs. 15,000 has been collected by the Official Assignee and it appears that the money required in order to pay five annas in the rupee is Rs. 57,759-12-2. The creditors for some reason or other appear to have accepted the scheme; but what they thought they accepted I do not know.

2. The main objection on the part of the appellant before us is that this insolvency has been annulled before any inquiry whatever has been made by public examination into the debtors' conduct and affairs. I would like to say that, although there may be power under the Act, to dispense with the public examination of a debtor, in a case where a composition is being proposed, it is a very strong thing to dispense with the public examination. The rules of this Court anticipate that public examination should be held in all these cases. In my judgment a composition in the absence of public examination, in a case where the debts are large, is not consistent with an efficient administration of the Act. In the present cases the scheme is extremely informal, hazy and unsatisfactory, and, apart from that, there has been no investigation such as could possibly show what the real assets of these debtors were. It is alleged that they are keeping back certain properties. There may be something in it or there may not be; but there has been no investigation into the matter; and until there has been an investigation no creditor can know whether it is his interest to accept the scheme of composition. The duty of the Official Assignee and of the Court is to see that these adjudications are not annulled unless the conduct of the debtors has been such as to entitle them to such a course, and the Court is satisfied that it knows what the assets and liabilities really are.

3. In my judgment the appeal must succeed and the order complained of must be set aside. As the debtors desire it, we make an order to the effect that the public examination of the debtors is to be held as soon as may be convenient to the Registrar in Insolvency. The next time the debtors apply for composition, they must take a great deal more care in setting out in the scheme itself what their assets are and what their scheme of composition is; and if the assets are to be vested in a trustee or trustees there must be a statement to that effect and, if the trustee or trustees are to guarantee so much money to the creditors, there must be a proper statement to that effect also. In my judgment the present appeal must be allowed and the creditor will have leave to add his costs of this appeal to his proof of debt.

Costello, J.

4. I agree.


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