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(Maharaj) Kishore Khanna Vs. the Netherlands Trading Society and anr. - Court Judgment

LegalCrystal Citation
SubjectCivil
CourtKolkata
Decided On
Reported inAIR1930Cal555
Appellant(Maharaj) Kishore Khanna
RespondentThe Netherlands Trading Society and anr.
Cases ReferredProperty of Lord Hill v. Rowlands
Excerpt:
- .....within one month from 19fch july and the petition stated that this amounted to giving to all his creditors notice that ha had suspended payment. that certainly was not notice to the creditors who were not there and who were not interested or concerned in the matter. the affidavit of the debtor in reply appears to contain nothing except irrelevant matters. the learned judge has carefully considered this question from the point of view of principle and has dealt only in his judgment with the act of bankruptcy just referred to.2. the act of insolvency which concerns us is this:that on the said 19th july 1929, the said debtor declared in court that ha would file his petition of insolvency within one month from the date which amounted to giving notice to all his creditors that he had.....
Judgment:

Rankin, C.J.

1. In my opinion, this appeal fails except that it gives this Court an opportunity to amend a very badly drawn order of adjudication which I must regret to see under the seal of this Court. It appears that the debtor had been arrested at the suit of a particular creditor and he was brought before the Court under Section 55, Civil P.C., by way of execution for the enforcement of a money decree. On the day in question the facts are that he appeared by learned Counsel Mr. Moore. The other learned Counsel was Mr. Surita appearing for the decree-holder, one Annada Prasad Chatterjee, When the case was called on, it seems that the defendant being produced in the custody of the Sheriff's Officer, Mr. Moore, counsel, said that his client wished to apply for adjudication as an insolvent and asked for an order under Section 55, Sub-section (4), Civil P.C. The Court made an order that on his giving, security in Rs. 500 to the satisfaction of the Registrar for filing within one month his petition for adjudication and for his appearance when called on so to do, he would be released and, in default he would be committed to prison. It-would appear that he furnished security and was released. This having happened on 19th July 1929, on 14th September within three months of the date of the order, the present petition in insolvency was filed against him by another creditor. That petition was founded on several acts of insolvency; but only one act of insolvency is now relied upon. The petition set forth that the debtor declared in Court that he would file his petition within one month from 19fch July and the petition stated that this amounted to giving to all his creditors notice that ha had suspended payment. That certainly was not notice to the creditors who were not there and who were not interested or concerned in the matter. The affidavit of the debtor in reply appears to contain nothing except irrelevant matters. The learned Judge has carefully considered this question from the point of view of principle and has dealt only in his judgment with the act of bankruptcy just referred to.

2. The act of insolvency which concerns us is this:

That on the said 19th July 1929, the said debtor declared in Court that ha would file his petition of insolvency within one month from the date which amounted to giving notice to all his creditors that he had suspended payment.

3. Now, the first question is whether it, has been shown that, on 19th July the debtor committed an act of insolvency as defined in Section 9, Presidency Towns Insolvency Act in this way:

He gives notice to any of his creditors that he has suspended or that he is about to suspend payment of his debts.

4. In this case, the act of insolvency alleged is that on 19th July 1929 the debtor gave notice to Annada Prasad Chatterjee, a creditor that he was about to suspend payment, of his debts. If this petition is upheld, a proper finding to that effect as being the sole act of insolvency on which the petition is based will have to be substituted for the rigmarole which at present is contained in the order. On this question, Mr. S.M. Bose has contended before us that in the circumstances of this case the facts found and admitted do not amount to a notice of intention to suspend payment of debts. He has referred us not only to the general trend of decisions before and after the decision of the House of Lords in Crook v. Morley [1891] A.C. 316, but in particular, to three cases - Ex parte Oastler 13 Q.B.D. 471 (1884), Trustee of the Property of Lord Hill v. Rowlands [1896] 2 Q.B.D. 124 and In re Saott [1896] 1 Q.B.D. 619, Ha contends, first, that the statement made on the debtor's behalf in his presence before the Court dealing with the debtor under Section 55, Civil P.C., is not to, be regarded within the intention of the Insolvency Act as a statement made to the creditor Chatterjee at all, but is a statement made to the Court; and although Chatterjee may or may not have been present by himself and was represented by counsel, a statement made to the Court is a different thing for the present purpose from a statement made to the creditor. He further contends that, assuming that the statement was made to the creditor, it was not a statement which implied that the debtor was minded thereupon to suspend payment of his debts. We have to consider whether the learned Judge was right in rejecting these contentions.

5. Upon the first question, I think the learned Judge was right in holding this to be a statement made to the creditor. It is quite true that if one reads Section 55, Sub-section (3) and (4), Civil P.C., the statute puts a duty upon the Court to inform the debtor that he may apply to be declared an insolvent and that, if ha does, he may get his discharge. It goes on to provide that where a judgment debtor expresses his intention to apply to be declared an insolvent and furnishes security to the satisfaction of the Court that he will within one month so apply and certain other matters, the Court may release him from arrest. Now, in this case, the debtor was assisted by legal advice. It was not necessary for the Judge to inform him of what his learned Counsel was well able to advise and, when his learned counsel made the statement which he did, it must be understood as a statement of intention such as is a compliance with the conditions prescribed by Sub-section (4) Section 55. I have pointed out that the intention required is an intention to apply to be declared an insolvent. It is not an intention to be declared at the end of the month provided nothing does turn up. The month is introduced into the section by way of defining the obligations of the surety. What the judgment-debtor has to express is his intention to apply to be declared an insolvent. He is asking, for release from arrest. He is giving security in support of the bona fides of his intention and on the footing that he is a person who is expressing a definite intention to apply to be declared an insolvent.

6. Is that as an expression of intention upon which a judgment-creditor's execution against him personally is going to be brought to nothing, is that some-thing which the Code contemplates as said to the decree-holder? In my opinion it is. In the ordinary course of judicial proceedings, such an allegation made in that way is made in the presence of the parties. The decree-holder is a person who would be entitled to represent to the Court that, notwithstanding this expression of intention, the Court nevertheless should not release him from arrest. It is something which the creditor is entitled to be made aware of by a declaration which is made in trust. Not only the Court but the creditor has to act in some sense upon this intimation and, in my judgment, while it cannot be said that the intimation is to all creditors, the intimation is one made to the judgment-creditor in the case and it is in no way necessary that the judgment-creditor should be present in person. If a person is there to act for him, he is to act for him for all purposes of the section. I am not, therefore, prepared to hold that the act relied upon is not an act of insolvency because the notice is not a notice to the creditor.

7. Then we come to the question whether the notice is a notice which involves that in the meantime the debtor is not going on paying his creditors as he chooses but is assuming an obligation to maintain the status quo and preserve his assets for the benefit of the creditors generally so that they may be applied in due course of administration and not otherwise than the law provides to the payment of his debts. I am of opinion that it is a necessary part of the import of this declaration that he will not in the meantime continue staggering or paying one person and not paying another, giving some money on account, others in full, and so on, as a man who is the master of his own assets would be able to do. In my judgment the position of the debtor when he has to declare his intention to file his petition in order to get release from arrest is the position of a man who has finished with staggering on. He is a man who has to confess that he has been pulled up. He is not able to profess on the one hand, in order that he may be released, that he intends to file his petition and intends to give security in that behalf, and on the other hand to say at the same time that he will pay such creditors as he chooses and that other creditors will be allowed to go without payment in his own discretion.

8. The case of In re Scott [1896] 1 Q.B.D. 619, which Mr. S.M. Bose has cited to us is a somewhat strong authority against the contention which he has advanced. That was a case of a lady who had, it appears, several creditors. One creditor was making repeated requests for money. At the moment she had not the money to pay him and if she had merely said:

New I cannot pay you because I have not got the money,

that would have been no statement to the effect that she was about to suspend the payment of her debts generally. But in that case it was pointed out that what she said to the creditor in effect was:

I cannot pay you or anyone else. I have taken advice and I am advised that I must deal with my creditors collectively.

9. In my judgment, the statement under Section 55, Civil P.C., that the man intends to file his petition is a statement to the effect that he has decided that his affairs must be settled by dealing with his creditors generally and that ha must abandon the ordinary position of a solvent person who deals with each creditor as he pleases and is not concerned to ensure that all his creditors get exactly the same treatment.

10. In these reasons, I am of opinion that a good act of bankruptcy has been made out in this case. The whole of the acts of bankruptcy recited will be struck out of the order of adjudication and in place-thereof will be the following:

It appearing to the Court that the following act of insolvency has been committed by the debtor, namely, on 19th July 1929, the said debtor gave notice to one Aanada Prasad Chatterjee, a creditor, of his intention to suspend payment of his debts.

11. The order as to costs will be that the Official Assignee will take his costs of this appeal in the ordinary course of administration and the creditor will add his costs of this appeal to the costs of the petition which will be paid to him under the rules in the proper order of administration. These costs will be paid in the same order of priority as the costs of the petition.

Buckland, J.

12. I agree.


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