IN RE: P. SRINIVASA RAO Vs. STATE

JUDGEMENT

(1.) THIS case can be disposed of on two short grounds. The petitioner has been convicted under Section 103(b)(ii) of the Presidency Towns Insolvency Act and sentenced to simple imprisonment for two months. That section enacts, that any person adjudged insolvent who with fraudulent intent to diminish the sum to be divided amongst his creditors has concealed any part of his property of what kind soever shall be punishable with imprisonment for a term which may extend to two years. The petitioner was adjudged insolvent in 1932. He was then running a school called the Sri Ram Motor School. An allocation of Rs. 10 was fixed to be paid by him to the Official Assignee and it is admitted that he has been regularly paying the allocation. The Sri Ram Motor School was sold away with its good will by the petitioner and the proceeds of its sale were duly handed over by him to the Official Assignee. The petitioner appears to be a skilled technician. He seems to have devised a good gas plant and obtained a patent therefore .He handed over the patent also to the Official Assignee. He started a business of manufacturing producer gas plants in partnership with one Cowasji Patel. Subsequently that business was taken over by P.W. 3. P.W. 3 in his evidence admits that he was, and still continues to be, the proprietor of that business and the petitioner was only a servant under him. The basis upon which the learned Chief Presidency Magistrate has proceeded, namely, that he was a partner, is therefore incorrect. The terms of remuneration under the service contract were that the petitioner should be paid Rs. 150 per mensem and 50 per cent, of the net profits. It is not necessary to make a distinction between the two and call one salary and the other a partner's share in the profits as it is clear from the evidence of P.W. 3 that the entire amount payable to him was salary though the mode of payment was fixed in the shape of a monthly cash payment and a profit percentage. It would appear that during the material period large sums of money amounting to some Rs. 11,000 were paid to or drawn by the petitioner. The account Ex. E has been produced in proof of that statement. Mr. Kasturi tried to argue that the genuineness of Ex. E was not established; but that contentions not open to him in view of the testimony of D.W 2 who was put in by the petitioner himself. He has definitely proved Ex. E and the relevant entries on pages 401 to 404. But this does not help the prosecution very much. There are several entries there which show that the amounts were drawn for purposes connected with the business. Although a large number of entries are shown as paid in cash and they aggregate as pointed out by the learned Magistrate to about Rs. 7,000, it is not clear from the evidence as to how much of that actually represents payment made to the petitioner towards his remuneration and how much pf it was payment for the expenses of the business. The only inference in the circumstances can be one in favour of the petitioner, namely, that the petitioner did not draw anything over and above the sanctioned scale of remuneration. The question then is whether having drawn remuneration according to the contract scale it was the duty of the petitioner to bring to the notice of the Official Assignee the fact that he was getting under this contract from P.W. 3, the sum of Rs. 150 per mensem and the share in the profits of the business. I have been taken through the various provisions in the Presidency Towns Insolvency Act and looking at Sections 24 and 33 which lay down the duties that are attributed to an insolvent, it is nowhere laid down that the insolvent should in such circumstances report to the Official Assignee the remuneration that he was getting from his new employer. It was argued by the learned Crown Prosecutor adverting to Sections 17 and 52 of the Act that the after -acquired income over and above what is required for the maintenance of the insolvent and his family becomes property Within the meaning of those sections and that it vests in the Official Assignee. There is no dispute about that proposition. But the principle is well -settled that although property belonging to the insolvent at the commencement of the insolvency vests in the Official Assignee forthwith, after -acquired properties do not vest in him unless he chooses to intervene. When an allocation has been made it cannot be disputed that the excess over that allocation in the personal earnings of the insolvent belongs to him and he has an unfettered right of disposal over it unless it is a case where the Official Assignee considers that there is a considerably wide margin which can be taken over for distribution amongst the creditors, in which case he has to move the Insolvency Court and obtain its orders. Such a thing has not been done in this case.

(2.) THE petitioner has been convicted for having " concealed " part of his property with a fraudulent intention. As I have pointed out, there is no positive duty cast upon him under the statute to notify to the Official Assignee the fact of his having entered into this contract of service and the terms of remuneration. He was not called upon by the Official Assignee to furnish details or particulars as to the amounts that he received in connection with this business. To constitute concealment within the meaning of Section 103(b)(ii) there must be some act on the part of the petitioner whereby he can be shown to have wilfully kept some property away from the notice or view of the Official Assignee. If there was a duty on his part to disclose or if there was a call on him to disclose and he did not conform to it or gave incorrect particulars, that would be a case of concealment within the meaning of the rule. In the present case I find it difficult to hold that there has been any such concealment on the part of the petitioner and it is not therefore necessary to consider the further ingredients of the offence as to whether the requisite fraudulent intent was present. In this view the conviction of the petitioner cannot be upheld. The petition is allowed and the conviction is set aside.