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Panmall Jesraj Vs. Mr. J. Macleod - Court Judgment

LegalCrystal Citation
SubjectCivil
CourtKolkata
Decided On
Reported inAIR1935Cal190
AppellantPanmall Jesraj
RespondentMr. J. Macleod
Excerpt:
- .....who used to do business in the name of a firm styled mohan lal maganmal. another firm called panna chand jetmall, which is alleged to have been owned by daimull and panmull, used to do business as commission agents for maganmal. this firm existed down to 1930 when it was wound up. in 1928 daimull is said to have retired and panmull, who is the creditor no. 14 in the insolvency proceeding and now the appellant before us, started business under the name of panmull jesraj. this firm took up business as commission agents for maganmal in succession to the other firm of panna chand jetmull. maganmal used to take out insurance policy for about rs. 50,000 and by arrangement the creditor firm used to keep the policy and pay the premium: on 31st august 1931 the shop of maganmull at......
Judgment:

S.K. Ghose, J.

1. The question involved in this appeal has been already before this Court on two different occasions and it arises out of a proceeding in insolvency. The insolvent is one Maganmal who used to do business in the name of a firm styled Mohan Lal Maganmal. Another firm called Panna Chand Jetmall, which is alleged to have been owned by Daimull and Panmull, used to do business as commission agents for Maganmal. This firm existed down to 1930 when it was wound up. In 1928 Daimull is said to have retired and Panmull, who is the creditor No. 14 in the insolvency proceeding and now the appellant before us, started business under the name of Panmull Jesraj. This firm took up business as commission agents for Maganmal in succession to the other firm of Panna Chand Jetmull. Maganmal used to take out insurance policy for about Rs. 50,000 and by arrangement the creditor firm used to keep the policy and pay the premium: On 31st August 1931 the shop of Maganmull at. Chittagong was looted.

2. He made a claim on the Insurance Company who gave him a cheque for Rs. 49,638-10-0 and the latter endorsed it over to creditor No. 14. The latter got it caused on 2nd December 1931. On 7th January 1932 the debtor filed his petition for insolvency and therein he mentioned Panmal Jesraj as creditor No. 14 in respect of an amount of Rs. 42,000 and he also mentioned in the list of his own properties item 6. the amount of the aforesaid cheque with Panmal Jesraj. On the application of some of the other creditors the District Judge on 11th April 1932 ordered that creditor No. 14 should surrender the amount of the cheque or furnish security for the whole amount. Thereupon creditor No. 14 appealed to the High Court which by its order dated 8th July 1932 set aside the order of the District Judge as being premature. On 13th September 1932 Maganmal was adjudged to be insolvent and on the same date one Mr. Muir, Manager of the local branch of the National Bank (and after him his successor Mr. Macleod), was appointed receiver. It may be stated here that the creditor No. 14 was all along claiming the bulk of the amount of the cheque as bring due to his firm as arising out of the business transaction with the insolvent. His case was that the firm of Panmall Jesraj had taken over the dues of the older firm of Panmall Jetmal, that he was a secured creditor, and that on about 2nd December 1931 the dues of creditor No. 14 from the insolvent amounted to Rs. 44,539-12-3. The receiver made certain enquiries and on 20th October he submitted a report in the course of which he stated as follows:

From the evidence of the above witnesses I am satisfied that the claim of creditor No. 1 that he is a secured creditor, is not convincing. I therefore recommend that he should he directed to deposit the amount with me within a fortnight or he should be asked to furnish sufficient security to the satisfaction of the Court.

3. On 17th November 1932 the District Judge made an order to the effect that the creditor No. 14 should deposit the whole amount in Court or furnish sufficient security within a certain time, on failure of which the amount would be realised by distress. Thereupon the creditor No. 14 again appealed to the High Court and this was disposed of by Mitter and M.C. Ghose, J.J., by their order dated 26th January 1933, by which they set aside the order of the District Judge and directed him to proceed with the case in the light of the observations contained in the judgment. Thereupon the matter went back to the learned Judge and the proceedings continued. On 28th March 1933 the receiver reported that about Rs. 7,000 was due to creditor No. 14 and he recommended that the balance must be brought to Court and also that creditor No. 14 was not entitled to the dues of the firm of Panmall Jetmall. On 8th May 1933 a second report, practically to the same effect with certain variations, was received from the receiver. Before the District Judge evidence was gone into and on 14th November 1933 the learned Judge made the order against which creditor No. 14 has preferred this appeal.

4. It is contended by the learned Counsel for the appellant that, although the order of the learned Judge is in the nature of an order under Section 54, Provincial Insolvency Act, there is no foundation laid for it by a petition from the receiver as prescribed by Section 54(A) of the Act. It was open to creditor No. 14 to take this point in the appeal which was preferred against the order of the District Judge of date 17th November 1932 by which the creditor was directed to deposit the amount in Court or to furnish security. That order was the result of a report of the receiver containing a recommendation that the Creditor should be directed to deposit the amount. It was open to the appellant to take this objection in the previous appeal, but the real point urged in that appeal was that the order of the District Judge was not properly made after an enquiry in accordance with Sections 4 and 5 of the Act. The judgment of the High Court bearing date 26th January 1933 shows that it was held that a proper enquiry should be made and precise and full directions were given. The learned Judges said in the course of their judgment:

The learned Judge before he could ask creditor No. 14 to make necessary deposit or furnish security must be satisfied that there had been a prima facie case established as against the appellant which entitled him not to keep the sum on the insurance policy with him. We are not expressing any opinion on the merits of the case. We are of opinion that the learned Judge should examine, Maganmal, should examine the appellant and should receive such evidence as may be put forward on their behalf and then proceed to determine the question as to whether the appellant should bring the sum of money in to Court.

5. The subsequent proceedings before the District Judge appear to be in accordance with this direction of the High Court. Though there was no formal application under Section 54 all the parties have had notice, evidence was fully gone into, and there is no necessity to quash the present proceedings and start afresh by a proper application. On the merits certain questions of fact were raised before the District Judge and they have been raised again here. These questions are (1) that the firm of Mohan Lal Maganmal is not owned solely by him but is owned by him and his brothers; (2) that Panmal Jesraj is in the position of a secured creditor; (3) that the aforesaid cheque was not given to Panmal Jesraj solely for the purpose of encashment as alleged by the insolvent; (4) that there was no undue preference in favour of creditor No. 14 by this payment; (5) that creditor No. 14 was entitled to a transfer of the debit balance of Rs. 39,252 together with interest thereon amounting to Rs. 2,636 from the account of Panna Chand Jetmal. All these questions of fact had to be decided upon the evidence, and it, has been gone through in this Court. The judgment of the learned Judge shows that he has given due regard to the evidence both oral and documentary, as well as the probabilities, and he has considered that neither the insolvent nor creditor No. 14 is altogether reliable and that the account books of the firms cannot also be a safe guide. We may say shortly that we are not prepared to differ from the learned Judge in his estimate of the evidence. He has found that Maganmal is the sole proprietor of Mohan Lal Magan Mal, that Panmal Jesraj, creditor No. 14, is not a secured creditor, and that the cheque was made over to creditor No. 14 not merely for encashment, as alleged by the insolvent, but also in payment of the creditor's dues or rather for withdrawing the amount. We are of opinion that these findings must stand. Then, as to the question of undue preference, the learned Judge has taken the view that the receiver has failed to discharge the onus which was on him. The learned Judge however overlooked the very important circumstance that payment was made very shortly before the application for insolvency was filed and that this would show that undue preference was intended. On this finding the learned Judge could have made an order for the production of the entire amount of the cheque. He has however made an order which is more favourable to the appellant and it is to this effect:

Assessing Panmal Jesraj's dues from Mohan Lal Maganmall as likely, on the evidence, to be at most Rs. 10,000, I direct creditor No. 14 pending decision as to the exact amount to be refunded by him, to furnish sufficient security for the balance of cheque proceeds, namely for the sum of Rs. 39,638-10-0. If security is not furnished by 28th November 1933 the amount will be realised by distress.

6. In our judgment this order must also stand. The chief grievance of the appellant is with regard to his case of the alleged transfer of the debit balance from the account of Panna Chand Jetmull. The learned Judge has pointed out that this case of creditor No. 14 is not supported by any written adjustment and that the evidence as to the merging of the firm of Panna Chand Jetmall in the firm of Panmal Jesraj is most vague and unsatisfactory. There is no document in support of it and as to the allegation that the insolvent himself consented to the transfer there is no written record of it and he also denies it. No doubt the insolvent admits that he transferred his business from the old firm of Panna Chand Jet Mull to Panmal Jesraj, creditor No. 14, at the personal request of Jetmall; and Mr. H.D. Bose has laid emphasis on a passage in the examination-in-chief of the insolvent which is thus noted by the learned Judge: 'The witness also stated; 'e sab Panmull Jesraj Kembarate kardia.' This appears to be a subsequent statement on the part of the witness and we are not prepared to take it literally to mean that he was admitting that he consented to the transfer of his debt from the firm of Panna Chand Jetmal to that of creditor No. 14. Apparently no one in the lower Court took it in that light. There was no cross-examination on it and the learned Judge also does not refer to it. The learned Judge says that in the face of the insolvent's denial and in the absence of documentary evidence he is bound to hold that the onus had not been discharged and that the amount due from the firm of Panna Chand Jetmall should be excluded from computation. With regard to the item of Rs. 2,636 odd for interest the learned Judge has left it over for future settlement. Upon the evidence we must agree with the learned Judge and hold that the transfer of the dues of Panna Chand Jetmal to creditor No. 14 has not been proved. In any event it is not binding on the other creditors.

7. At the same time, we cannot overlook the admission of the insolvent that his debts to the firm of Panna Chand Ketmull are still outstanding. In the lower Court the receiver did not question the accuracy of the accounts kept by the firm of Panna Chand Jetmal and from time to time the insolvent or his brothers also acknowledged, the periodical adjustments of accounts as evidenced by Exs. B, C and D. With regard to this matter in the present proceedings it will be sufficient for us to say that it will be open to Panna Chand Jetmull or any of the partners acting under Section 263, Contract Act, to put in their claims and, if so put in, such claims will be investigated according to law. With this reservation we confirm the learned Judge's directions as to further investigation by the receiver. The appeal must be disposed of on these terms. As practically all the orders of the learned Judge have been upheld we make no order as to costs. The cross-objection is allowed. We make no order as to costs in the cross-objection. Let the record be sent down as early as possible.

Mukerji, Ag. C.J.

8. I agree.


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