2003 (11) TMI 12

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....uctioned the properties of the insolvents. The sale proceeds thereof came in the hands of the official assignee. The Tax Recovery Officer No. 7, Bombay made a claim of Rs. 41,09,658 on January 12,1995, before the official assignee. Out of the said claim made by the Tax Recovery Officer the claim of Rs. 35,02,277 was rejected by the official assignee against the estate of insolvents. The reason for such rejection was that such claim was not provable under section 46(3) of the Presidency Towns Insolvency Act, as it was necessary that claim should pertain to the liability to which the debtor was subject when he was adjudged as insolvent or such claim to be pertaining to the obligation incurred by him before the date of adjudication. Aggrieved ....

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.... any time before his discharge by reason of any obligation incurred before the date of the adjudication. The debt or the liability would not be provable if the debtor becomes subject to it after his discharge, or if he becomes subject to it by reason of any obligation incurred after the date of the order of adjudication. In the present case, the order for costs was passed after the date of the adjudication, and the obligation to pay the debt was incurred at the time when the order for costs was passed. The liability therefore to pay the costs accrued on August 9, 1926, after the appellant was adjudged an insolvent on July 15,1924. Though the word 'debt' includes a judgment debt according to section 2(b) of the Act, the obligation to pay the....

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.... The case cited on behalf of the appellant in Buckwell v. Norman [1898] 1 QB 622 is distinguishable on the ground that the order for costs was passed before the receiving order was made and the debt was, therefore, provable in insolvency notwithstanding the personal disqualification for proving it. Under sub-section (2), section 46 the respondent having notice of the presentation of the insolvency petition would not be in a position to prove the debt or liability contracted by the debtor subsequent to the date of his so having notice. In the present case the debt is not provable as the liability was incurred after the date of adjudication and there is also the personal disqualification under sub-section (2), section 46 for proving it. We ....

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....did not constitute a debt provable in insolvency under the provisions of section 46(3). We are informed by the official assignee, who is present in court, that the judgment and order dated October 9, 1978, passed in Insolvency Petition No. 52 of 1969 has been upheld by the Division Bench in Insolvency Appeal No. 356 of 1979 in Insolvency Petition No. 70 of 1966, State of Maharashtra v. Official Assignee. The penalty proceedings under the Income-tax Act are not proceedings in continuation of proceedings relating to assessment. The liability to pay a penalty imposed under the provisions of the Act cannot be said to arise until the point of time the penalty is imposed that is what has been held by the apex court in the case of Jain Bros. v. U....