TaxTMI 
TaxTMI 
1965 (9) TMI 83
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....25,000. Before the applicant was adjudicated insolvent, on October 4, 1958, a petition for winding up of the Model Mills was filed. On July 7, 1959, the Government appointed the Authorised Controller by a notification and on July 28, 1962, the Company Court sanctioned a Scheme framed by him. This Scheme was supported by the Bank. The Bank it seems agreed to accept the debt due to it after deducting the value of the debentures which it held, that is Rs. 38,31,000, to be paid by 25 per cent, in cash and the balance of 75 per cent, in five yearly installments secured by fresh debentures. On March 27, 1962, the bank filed proof of the present claim and desired that the same should be admitted by the Official Assignee, so that its claim against the insolvent may not be barred by time. The Insolvency Court permitted the same, and an appeal against its judgment has failed. Consequent upon this order, the Official Assignee started investigation of the claim. For this purpose, he examined Kidar Nath Suri, Manager of the Bank, after issuing a notice to the insolvent. After the proceedings had gone on for some time, a preliminary objection was raised on behalf of the insolvent that the Offici....
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.... him to declare and distribute dividends amongst creditors who have proved their debts with all convenient speed. Section 48 provides that the method of proving debts would be as laid down in the Second Schedule. The Second Schedule consists of 27 Rules. The usual mode of proof of debt is by lodging with the Official Assignee an affidavit verifying the debt. Rule 4 enables the Official Assignee at any time to call for production of vouchers, and Rule 25 requires him to examine every proof and grounds of the debt and in writing admit or reject in whole or in part or require further evidence in support of it. If he rejects a proof, he is required to state in writing the grounds for his rejection. Section 78 of the Act provides that the Official Assignee may, for the purpose of affidavits, verifying proofs, petition or other proceedings under this Act, administer oaths. Presumably, the practice of investigating the claims of creditors, by even requiring them in some cases to take oath and subject themselves to cross-examination and produce witnesses is based on the wording of Rule 25 of the Second Schedule and Section 78. 6. In Van Laun Inre. Chatterton, Ex parte [1907] 2 K.B. 23, ....
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....t merely because he performs, in some measure, administrative functions, it would not be proper to say that he is not entitled to hold an inquiry. It is true that when the Insolvency Act speaks of proving and proof of debts under Section 48, the words are not used as they are understood in the law of evidence. They have a technical meaning, as held in Govind Prasad v. Pawankumar (1943) 46 Bom. L.R. 306. which was a case under the Provincial Insolvency Act. The creditor is said to have proved his debt when he lodges a proof as prescribed by the Act. Whether to accept the same or not is for the Official Assignee to consider, and for that purpose he must make a proper inquiry. 11. Another ground urged is that under Rule 25 of the Second Schedule, the Official Assignee is not required to give reasons if he accepts the proof of the debt but has to do so only if he rejects it. This can hardly be regarded as an indication of the fact that he is not entitled to make a proper inquiry into the debt, if necessary even by examining witnesses. His position is peculiar. He represents the estate of the insolvent who is expected to assist him in the realisation of the property. Where he accepts....
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....nge the same. Similarly, the debtor may help the Official Assignee by placing relevant matters before him to enable him to ask relevant questions to the proving creditor and decide whether he should accept or reject the proof, In the appeal, the Court would consider all the circumstances of the case and may or may not permit evidence to be taken before it. It must be remembered that, (by the Act itself, no specific procedure has been laid down for determining an appeal under Section 86 of the Act, and the Judge will have, therefore, fullest jurisdiction to consider whether or not the party in default before the Official Assignee should be allowed to produce further evidence before him. 13. Another ground urged is that Rule 116 framed under Section 112 of the Act prescribes a form of proof of debts. Under Rule 119, the Official Assignee is required, within seventy days after receiving a proof in writing of the debt, either to admit or reject it wholly or in part or require further evidence in support thereof. No doubt, the whole procedure prescribed by the Insolvency Act and the Rules has the laudable purpose of administering the estate as quickly and effectively as possible. But....
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.... 52 of the Act and (2) as if it were one of proof of debts under Rule 25 of the Schedule. We are not concerned with the first aspect of the matter. Referring to the second aspect, Sir George Rankin says (p. 1238): ...Even if the matter could be regarded as, a mere question of admitting or rejecting a proof, when the Official Assignee acts under Rule 25 of the second schedule, it seems more reasonable and more in accordance with a sound interpretation of Section 86 and with English practice under statutory provisions couched in the same terms that the 'appeal' from the ' act or decision ' -of the Official Assignee to the Judge should be by motion and that the oral evidence necessary could be taken before the Insolvency Judge himself. Strong reliance has been placed by Mr. Nariman on this passage in support of his contention. It is wrong, however, to, read the passage as laying down that the Official Assignee is not entitled to make such inquiry which he deems necessary for discharging his duty and that for that purpose he is not entitled to take evidence. The objection is to his determining the matter as if he were a tribunal. If their Lordships had inten....