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In Re: William Hastie, an Insolvent - Court Judgment

LegalCrystal Citation
SubjectCivil
CourtKolkata
Decided On
Judge
Reported in(1885)ILR11Cal451
AppellantIn Re: William Hastie, an Insolvent
Cases ReferredSmith v. Boggs
Excerpt:
insolvent judgment-debtor - civil procedure code--act xiv of 1882, sections 336, 339, 344, 345, 349, 350, 351 and 359--arrest, imprisonment, meaning of--11 & 12 vic., c. 21, section 24--undue preference--procedure where two methods of protection are open to the debtor. - .....of the decree and the costs of the arrest, and directs that the court before whom the judgment-debtor is brought shall release him from arrest if he expresses his intention to apply under chapter xx to be declared an insolvent, and furnishes sufficient security to appear when called upon, and to make such application within one month.10. section 337 says: 'any warrant for the arrest of the judgment-debtor shall direct the officer entrusted with its execution to bring him before the court with all convenient speed.' in section 339 the distinction between arrest and imprisonment is very clearly recognized. it provides that 'no judgment-debtor shall be arrested in execution of a decree unless and until the decree-holder pays into court such a sum, as having regard to the scale so fixed,.....
Judgment:

Norris, J.

1. The facts of this case are as follows: On the 12th February 1885, the defendant was arrested under a warrant to satisfy the plaintiff in the sum of Rs. 3,000 as damages, and Rs. 12,000 costs under a decree dated 16th April 1884.

2. The defendant was brought before a Judge on his arrest when, in compliance with the provisions of Section 336 of the Code of Civil Procedure, he was informed that he might apply under Chapter XX of the Civil Procedure Code to be declared an insolvent; he did not express his intention so to do, and was, therefore, committed to prison.

3. On the 11th of March, the defendant, being still in prison, presented a petition to be declared an insolvent under Chapter XX. The petition complied with all the requirements of Sections 344, 345, and 346, and, at the conclusion thereof, the defendant prayed that, pending the hearing of the petition, he might be released from custody on his furnishing proper and sufficient security to the satisfaction of the Registrar to appear when called upon. Upon this petition an order was made for the defendant's release from custody upon his giving security, in a sum equal to the amount of the debt and costs payable under the decree, to the satisfaction of the Registrar for his appearance before the Judge presiding in the Insolvency Court on the 18th March, and on any other day when called upon. A rule was subsequently obtained, calling upon the defendant to show cause why the order of the 11th March, so far as it directed his release on his giving security to the satisfaction of the Registrar, should not be set aside.

4. The rule was argued on 25th March before Wilson, J., and myself, Mr. Hill showing cause, and Mr. Pugh supporting it; and at the conclusion of the arguments we took time to consider our judgment. Upon the best consideration I have been able to give to the case, I am of opinion that the rule should be discharged. The order of 11th March purported to be made under Section 349 of the Civil Procedure Code, which says: 'Where the judgment-debtor is under arrest, the Court may, pending the hearing under Section 350, order him to be immediately committed to jail, or leave him in the custody of the officer to whom the service of the warrant was entrusted, or release' him on his furnishing sufficient security that he will appear when called upon.'

5. The question to be determined is, was the defendant under arrest within the meaning of Section 349 when the order was made? I am of opinion that he was.

6. It is very difficult to define with any exactness the distinction between arrest and imprisonment.

7. Arrest is defined in Wharton's Law Lexicon as 'the restraining of the liberty of a man's person in order to compel obedience to the order of a Court of Justice, or to prevent the commission of a crime, or to ensure that a person charged or suspected of a crime, may be forthcoming to answer it.'

8. 'Imprisonment' is defined as 'the restraint of man's liberty under the custody of another.'

9. No doubt the words 'arrest' and 'imprisonment' are not used as interchangeable in the Code. Chapter XIX is headed 'of the execution of decrees,' and consists of eight parts or divisions, the last of which is (I) and is headed 'of arrest and imprisonment.' Section 336 says: 'A judgment-debtor may be arrested in execution of a decree at any hour and upon any day, and shall, as soon as practicable, be brought before the Court, and his imprisonment,' which I take to mean is imprisonment under Section 342, 'may be,' in a certain jail. Sub-section (a) of Section 336 lays certain limitations on the officer making the 'arrest.' Sub-section (b) directs the officer making the 'arrest' to release the judgment-debtor if he pays the amount of the decree and the costs of the arrest, and directs that the Court before whom the judgment-debtor is brought shall release him from arrest if he expresses his intention to apply under chapter XX to be declared an insolvent, and furnishes sufficient security to appear when called upon, and to make such application within one month.

10. Section 337 says: 'Any warrant for the arrest of the judgment-debtor shall direct the officer entrusted with its execution to bring him before the Court with all convenient speed.' In Section 339 the distinction between arrest and imprisonment is very clearly recognized. It provides that 'no judgment-debtor shall be arrested in execution of a decree unless and until the decree-holder pays into Court such a sum, as having regard to the scale so fixed, the Judge thinks sufficient for the subsistence of the judgment-debtor from his arrest until he can be brought before the Court; when a judgment-debtor is committed to jail in execution of a decree, the Court shall fix for his subsistence such monthly allowance as he may be entitled to.' In these sections the arrest is treated as preliminary to the imprisonment, the imprisonment as the result of the arrest.

11. I do not think, however, that we ought to place so limited a construction upon the word 'arrest' in Section 349. I think the words 'under arrest' should be read as meaning 'under detention,' or 'detained in custody.'

12. The consequences of not so reading them would be most extraordinary. It would follow that, whilst a judgment-debtor who, upon being brought before a Judge, expresses his intention to apply to be declared an insolvent under Chapter XX, and furnishes the necessary security, shall be entitled to his release as a matter of right under Section 336; and, whilst a judgment-debtor who, in the interval between his arrest and his being brought before the Court, has prepared an application as provided by Sections 344, 345 and 346, may be released upon his furnishing sufficient security to appear when called upon, a judgment-debtor once committed to prison must remain there until discharged upon the happening of one of the cases provided for under Section 341. I cannot believe that it was the intention of the Legislature to say to a judgment-debtor: 'If you do not express your intention to apply to be made an insolvent under Chapter XX when you are first brought up, or if you do not make your application in the prescribed manner when you are so brought up, and if you afterwards change your mind, and are desirous of taking the benefit of the Act, you shall pay as penalty for your obstinacy a residence in jail until you are declared an insolvent.'

Wilson, J.

13. I am of the same opinion, and I have very little to add.

14. The question is as to the meaning of the words 'under arrest' in Section 349.

15. Undoubtedly, in this part of the Code the words arrest and imprisonment are used several times to express different things, though, in itself, the word arrest is quite wide enough to cover all that imprisonment covers. Again, of the three alternatives mentioned in Section 349, some at least are only applicable to the case of a man not yet committed, though effect may perhaps be given to the whole of the section by holding that such of those alternatives as may be applicable under the circumstances of each case should be adopted.

16. These are the considerations in favour of the narrower construction of the words under arrest; but there are many considerations in favour of the wider construction.

17. In the first place, according to the narrower construction, the section can apply at one stage only, when a man has been arrested and is brought up for committal, but has not yet been committed. Such was held to be the construction of the former Act in the case of Smith v. Boggs 5 B.L.R. App. 21. But that decision was under an Act, which in plain terms declared the law to be as there laid down. In the present Act, that plain language has been abandoned, and only the words 'under arrest' substituted.

18. In the second place, if the narrower construction be adopted, and the section expresses only the power of the Court before which a prisoner is brought up to be committed, then the provision is out of place, it ought to occur in the previous chapter of the Code.

19. Thirdly, according to this construction, the subject has already been dealt with, and completely dealt with in Section 336.

20. In the fourth place, if the provision in question applies only where a prisoner has been brought up, but is not yet committed, it can obviously be exercised only by the committing Court.

21. But the power given by the section is part of the insolvency jurisdiction conferred only upon High Courts and District Courts. The section, therefore, applies only in cases of committals by one or other of these latter Courts, so that in the large majority of cases it is inoperative. This is plain, because in every case of a person brought up before any Court other than those mentioned, that Court must either commit him or release him; so that he can never afterwards before the Insolvency Court be under arrest in the narrower sense of the term.

22. Lastly, no possible reason has been suggested which could have led the Legislature intentionally to limit the scope of the section in the way contended for.

23. The result is, that in my judgment the construction of the section is at least doubtful; and that the arguments in favour of the wider construction are as strong as those in favour of the narrower. That being so, and the section being found in a chapter for the relief of insolvent debtors, I think it clear, in accordance with the settled rules of construction, that we are bound to adopt that interpretation which is in most favour of liberty.

24. On these grounds I agree in discharging the rule.

25. There remains the principal matter to be dealt with. This is an application under Chapter XX of the Civil Procedure Code by Mr. Hastie, in which he asks to be declared an insolvent. His petition has complied with all the requirements of the Act, and only one ground has been suggested upon which we could be asked to deny him the privilege he claims.

26. One of the circumstances mentioned in Section 351* about which the Court must be satisfied, is this: that the debtor has not given unfair preference to any of his creditors. The applicant in his petition shows that during last summer, when in Scotland, he paid certain sums of money, not very considerable in amount, to certain members of his family, who, he states, were his creditors.

27. It is suggested that that was an unfair preference within the meaning of Section 351. In deciding whether or not it was an unfair preference for the purposes of the present application, we may fairly refer to the provisions of the Insolvent Act, as affording some guide in the present Code. That Act treats a transaction as an undue preference only when it has occurred within a limited time before the insolvency proceedings. The payment in question was made before the time limited by the Insolvent Act, so that there has been no undue preference if we are to follow the Insolvent Act.

28. Then, is there any reason why this transaction should be impeached as an unfair preference, apart from the provisions of the insolvent Act? I think not.

29. Looking at the place where the insolvent was at the time, and the circumstances of the case, I think it would be straining matters very much to say that, at the time Mr. Hastie made these payments, he contemplated insolvency.

30. Therefore, I do not think there is in this circumstance any reason why we should deny him the benefit of the insolvency provisions of the Act.

31. Then it is said that, even if his case were such as to entitle him prima facie to the benefit of those provisions, we should stay our hand and deny him that benefit, because one of his creditors has applied to the Insolvent Court, and obtained an order of adjudication. I do not think that is so.

32. If the Legislature has provided two methods by which the debtor can obtain protection from arrest and other serious consequences; and if one of those methods, in any particular case, turns out to be more favourable to the debtor than the other, we have no right to deprive him of that advantage, I think, therefore, that Mr. Hastie is entitled to be declared an insolvent under the provisions of Chapter XX of the Civil Procedure Code, and we accordingly declare him an insolvent and appoint the Official Assignee, the Receiver of his estate. The security given for Mr. Hastie's appearance will, of course, remain in force till the matter is disposed.

Norris, J.

33. I am of the same opinion. I think that if the payments to the ladies really amount to unfair preference, the Official Assignee may bring an action, if so advised, for the 300.

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Page No. 461 Foot Note

* [Declaration of insolvency and appointment of receiver.

Section 351: If the Court is satisfied-(a) that the statements in the application are substantially true;

(b) that the judgment-debtor has not, with intent to defraud his creditors, concealed, transferred or removed any part of his property since the institution of the suit in which was passed the decree in execution of which he was arrested or imprisoned, or the order of attachment was made, or at any subsequent time;

(c) that he has not, knowing himself to be unable to pay his debts in full, recklessly contracted debts or given an unfair preference to any of his reditors by any payment or disposition of his property;

(d) that he has not committed any other act of bad faith regarding the matter of the application, the Court may declare him to be an insolvent, and may also, if it thinks fit, make an order appointing a receiver of his property, or if it does not appoint such receiver, may discharge the insolvent.

If the Court is not so satisfied, it shall make an order rejecting the application.]


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