1. This is an application under Section 36(5), Presidency Towns Insolvency Act, which provides that if on his examination under that Section any person admits that he has in his possession any property belonging to the insolvents, the Court may, on the application of the Official Assignee, order him to deliver it to the Official Assignee. It is to be observed that the powers of the Court under this sub-section depend upon the word 'admits'. Formerly, before the sub-section was amended it was provided that the Court had to be satisfied that such person had in his possession property belonging to the insolvent. Obviously this gave wider powers to the Court than the present sub-section, and the Court cannot now act unless there is a clear admission by the person examined.
2. In the present case the debtors were adjudicated insolvent on 12th January 1937. Prior thereto, on 6th November 1936 the insolvent executed a deed of composition of which Brij Mohan Serowgi, the person who was examined under Section 36 was one of the trustees. That deed provided, inter alia, that the debtors assigned to the trustees certain properties mentioned in the schedule which included certain piece goods lying with the Hongkong and Shanghai Banking Corporation.
3. It further provided that the trustees should be at liberty to raise or advance money from their own or anybody else's pocket in order to clear these goods lying in deposit with the Hongkong and Shanghai Banking Corporation, and to sell them and reimburse themselves. The goods had been pledged by the debtors with the Hongkong and Shanghai Banking Corporation.
4. Upon his examination under Section 86 Brij Mohan Serowgi said inter alia that in November 1936 the debtors owed him Rs. 10,000 with interest. There were many other creditors, and at a meeting of creditors it was found that Rs. 2,80,000 was owed by the insolvents. At that meeting a scheme was approved and a document was signed. Five trustees were appointed and he was one of them certain moneys were received by them from the insolvents. He went on to depose as follows:
I received some piecegoods from Hongkong Bank. They belonged to the insolvents who had pledged them with the bank. I paid to the bank whatever was due and took over the goods. I paid them about Rs. 35,000 personally. I sold the goods and there was a profit of Rs. 8469-15-6. From this is to be deducted Rs. 47-4-6 for interest on the money I advanced. I kept an account of my dealings with these goods in my books of account. I did not get anything else, nor did the trustees.
5. Further he said that he did not make over the money to the Official Assignee, first because he did not demand the money, and secondly because the insolvents were owing money to him. The money was lying with him. The hearing was adjourned from 8th June to 10th July when he said that the gross profit on the goods may have been Rs. 9000, but from that amount had to be paid interest. Also that he had paid godown rent but he did not mention the figure. The document executed by the insolvents was by way of composition. Then he continued as follows:
I was one of the trustees. Besides the properties mentioned by me I did not receive any other property from the insolvents. The goods were not' received by me as a trustee.
6. In my opinion that deposition contains a clear admission that Brij Mohan Serowgi had in his possession property belonging to the insolvents, namely the profit realized upon the sale of these goods less necessary expenses. As a result of the examination the Official Assignee called upon Brij Mohan Serowgi to pay to him all the money in his hands belonging to the estate of the insolvents.
7. It was not until 19th November 1937 that the attorney for Brij Mohan Serowgi set up for the first time, in a letter to the Official Assignee, the story upon which Brij Mohan Serowgi now seeks to rely, namely that the other proposed trustees having refused to advance any money for clearing the pledge on the goods the proposed composition did not materialize and the bank having refused to adjourn the sale of the pledged goods on 10th November 1936 he had agreed with the debtors to prevent the sale by paying the dues of the bank himself but on condition that the net profit arising out of the sale would in the first, instance be appropriated towards satisfaction of his old claim to which I have already referred. On this ground Brij Mohah Serowgi has refused to hand over-to the Official Assignee the amount realized : by the sale of these goods less expenses, which according to Brij Mohan Serowgi include also a sum of Rupees 200 which he had to pay to some attorney.
8. I do not believe this belated story and in the circumstances I have no hesitation in holding that the case comes within the provisions of Section 36(5) and Brij Mohan Serowgi must pay to the Official Assignee the sum of Rs. 8469-15-6 less two sums of Rs. 47-4-6 and Rs. 200, that is to say the sum of Rs. 8222.11-0 and the costs of this. application.