P.A. RAMALINGAM CHETTIAR Vs. OFFICIAL ASSIGNEE

JUDGEMENT

(1.) These two applications by way of appeal are against the orders of the learned Master, dated 16th of April 1965 whereby he directed, in Application No. 414 of 1965, to implead the Official Assignee as a party -Respondent in Execution Petition No. 51 of 1963 and, in Application No. 415 of 1965, to raise the attachment of the decree in Original Suit No. 1260 of 1955 on the file of the City Civil Court to the extent of Rs. 3,750 ordered on July 11, 1963, in the above execution petition. Both the applications were allowed by the Master. Hence the appeals by the decree -holder in Civil Suit No. 574 of 1949. The facts are: The Applicant -Appellant had obtained a decree against Mani, the Defendant in Civil Suit No. 574 of 1949, it is said, for a sum of Rs. 12,679 with costs and interest. In execution of this decree the Appellant appears to have filed among others, Execution Petition No. 51 of 1963 to attach certain monies in the City Civil Court to the credit of the decree in Original Suit No. 1260 of 1955 obtained by Mani, the judgment -debtor there being among others one Subba Rao. On July 11, 1963, Mani and Subba Rao came to an agreement that the attachment of the decree in Original Suit No. 1260 of 1955 could be made absolute to the extent of Rs. 3,750 and that Subba Rao would pay the aforesaid amount in monthly instalments of Rs. 250 beginning from December 15, 1963. This agreement was made by an order of Court on July 11, 1963, wherein it was further provided that in default of payment of instalments for any three consecutive months, the entire amount would become payable.

(2.) Thereafter, on October 30, 1964, Mani was adjudged insolvent and consequently all his assets became vested in the Official Assignee. The latter, therefore, moved by the two applications under appeal to implead himself as a party to Civil Suit No. 574 of 1949 in the place of Mani and to get the attachment, effected by the Applicant, raised. The short question now is whether the orders passed by the learned Master in the circumstances are liable to be set aside.

(3.) There is no serious dispute that the Official Assignee, Respondent in the present applications is the only person competent to represent the insolvent or that he has been rightly impleaded as a party Defendant in Civil Suit No. 574 of 1949. The question mooted before me is that an agreement having already taken place between Mani and the Appellant with Subba Rao also as a party, the Official Assignee is not entitled to go behind the said agreement. I have already referred to the agreement in question. It is executory in nature, the undertaking by Subba Rao being to pay the amount of Rs. 3,750 in monthly instalments of Rs. 250 from December 12, 1963. The effect of insolvency on antecedent transactions has been set out in Ss. 53 to 57 of the Presidency Towns Insolvency Act. Sec. 53, which is important in the context, by sub -Section (1) lays down that where execution of a decree has issued against a debtor, no person shall be entitled to the benefit of the execution against the Official Assignee except in respect of assets realized in the course of the execution by sale or otherwise before the date of the admission of the insolvency petition (italics mine). Sub -sections (2) and (3) of this Sec. protect the rights of a secured creditor and the purchaser in good faith in execution. Sec. 54 prescribes the duties of the Court executing the decree where notice of adjudication is given. The Sec. provides that the Court shall on application direct' the property, if in the possession of the Court, to be delivered to the Official Assignee and Ss. 55 and 56 deal with avoidance of voluntary transfers and preferences and Sec. 57 deals with protection of bona fide transactions. It states that subject to the provisions with respect to the effect of insolvency on an execution and with respect to the avoidance of certain transfers and preferences, nothing in the Act shall invalidate any payment by the insolvent to any of the creditors or any payment or delivery to the insolvent or any transfer by the insolvent for valuable consideration or any contract or dealing by or with the insolvent for valuable consideration. This Sec. is also subject to a proviso that any such transaction takes place before the date of the order of adjudication and that the person with whom such transaction takes place has not at the time of the notice of the presentation of any insolvency petition by or against the debtor.