1980 (2) TMI 287

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....nstituted O. S. No. 77 of 1977, Sub-Court, Kumbakonam, against respondents 2 to 4 for the recovery of amounts due under a promissory note executed by them in favour of the first respondent. Respondents 2 to 4 are Subject to the provisions of this partners in Sundaram Fire Works. During the pendency of the suit, in I. P. No. 68 of 1972, respondents 2 to 4 were adjudicated as insolvents and their properties also vested with the Official Assignee, Madras. Claiming that the Official Assignee is a necessary party to the suit the first respondent filed I. A. No. 259 of 1978 in O. S. No. 77 of 1977 praying for an order impleading the Official Assignee as 4th defendant in the suit. 2. That application was opposed by the Official Assignee on the ....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....o the suit as the claim does not relate to any "property" as such of respondents 2 to 4. It is not in dispute that in the present case, the adjudication was under the Provisions of the Presidency Towns Insolvency Act. Under S. 68 of that Act, provision has been made for enabling the Official Assignee to institute, defend or continue any suit or other legal proceedings. S. 68(1)(d) is the relevant section in this connection and it reads as under: "68 (1) Subject to the provisions of this Act, the Official Assign shall, with all convenient speed, realize the property of the insolvent, and for that purpose may - (a) (a) to (c) ................................................. (d) (d) institute, defe....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

.... present case, we are concerned with the second category referred to above. It is therefore obvious that unless the suit relates to the property of the insolvent, the Official Assignee or Receiver cannot be brought into or impleaded as a Party to the suit. The statutory provision in this regard has already been referred to. The question is what precisely is the meaning to be attributed to the words "relating to the property of the insolvent." Are the words to be construed to take in suits which directly or immediately affect the property of the insolvent or do they take in a legal proceeding which might eventually and ultimately result in affecting the property? Precisely this question came up for consideration in D. J. Subbarayar & Brother....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....the insolvent and thereby affect the property? The argument of Mr. Krishnaswami Iyer is that it should be such as directly and immediately affects the property and that we cannot hold "Relating to the Insolvent's property" to mean "affecting the property", because that construction would result in every cause of action which the insolvent had being continued or defended by the Official Receiver for the benefit of the insolvent, while the law clearly is that so far, as regards merely personal actions the Receiver cannot continue them, but he can continue actions which are not personal and he referred to some English cases on the point. We do not think there is very much use in referring to English Law on the subject, because the Provinci....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....passing of a decree without the Receiver being made a party, the Bench further stated thus: "Thus we find that where a decree is passed without the receiver being made a party, it is open to him to contest the validity of that decree in proper proceedings under the Insolvency Act. So far as the law in England is concerned, it is clear that the Bankruptcy Court is not bound by the decrees passed against the insolvent but can go into proof of the consideration and the amount which is due and validity of those decrees. We may refer to Williams on Bankruptcy (13th Edition, page 258). It is therefore not a case where the Official Receiver is without a remedy. We are of opinion that Section 59 does not authorize the Official Receiver to ....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

.... by S. 68 of the Presidency Towns Insolvency Act, 1909, to the Official Assignee and that therefore, the Official Assignee cannot maintain the appeal filed by debtor before insolvency for the benefit of the insolvent's creditors. It was also further observed that the official Assignee is not bound by the judgment appealed from and can in insolvency decline to admit the debt. Again in Govindji Mavji v. Jadavji Valji AIR 1953 Sau 82), the principles referred to above were applied and it was held that the words "might maintain" mean "has the power", or is entitled, to maintain and that under S. 59 of the Provincial Insolvency Act, a suit or appeal which the receiver is required to continue is one relating to the property of the insolvent a....