OFFICIAL ASSIGNEE OF BOMBAY Vs. BAGRI BROTHERS LTD

JUDGEMENT

(1.) This notice of motion to set aside a certain transfer of the property and assets of certain businesses including tenancy rights belonging to the debtor has been taken out by the Official Assignee. The notice of motion has been taken out under Section 55 of the Presidency -towns Insolvency Act, which says that

(2.) THE facts leading to this notice of motion are shortly as follows:

(3.) THE deed of assignment which was contemplated by this agreement was, however, not executed within two months as provided in that agreement, but it came to be executed as late as on June 16, 1954, and it was restricted only to the business which was being carried on by the vendor in Bombay. After describing the nature and the names of the business and the places at which that business was being carried on by the vendor in Bombay and after reciting the fact that an agreement dated December 2, 1952 wrongly described in the deed of assignment as dated November 3, 1952 was entered into between the debtor and the company and also reciting that in part performance of the said agreement the debtor had on or about November 17, 1952 put the assignee (the company) in possession of 'the said two businesses of 'Magnolia Restaurant' and 'Delicia Icecreams' together with all their stock -in -trade, plant, machinery, furniture, fixture, etc.' and further reciting that in pursuance and in performance of the said agreement the company had on or about November 3, 1952 allotted 2000 ordinary shares of the face value of Rs. 2,00,000 to the debtor and/or his nominee or nominees and that it had been agreed between the debtor and the assignee that the value of the said two businesses of the debtor in Bombay was Rs. 25,000 and that the assignee had called upon the debtor to assign in favour of the assignee the said two businesses carried on by the debtor in Bombay together with all their goodwill and the firm names of 'Magnolia Restaurant' and 'Delicia Icecreams' and also together with the benefit of the monthly tenancy rights of the said respective premises which were rented in the name of Bagri Bros, and that the debtor had agreed to execute a deed of assignment in respect of the said two Bombay businesses, the deed of assignment by Clause 1 thereof provides for the transfer by the vendor to the company of the said two businesses as going concerns together with their goodwill, interest and the connection of the vendor in and concerning the said businesses etc. but excluding, in reference to the business carried on in the name of 'Magnolia Restaurant', all book debts and other debts and liabilities of the assignor in respect of the said business of Bagri Bros, and/or 'Magnolia Restaurant' 'incurred prior to the execution of these presents' and also excluding, in reference to the business carried on in the name of 'Delicia Icecreams', all book debts and other debts and liabilities of the assignor in respect of the said business of Bagri Bros, and/or 'Delicia Icecreams' 'incurred prior to the execution of these presents'. Pausing here for a moment, it will appear that though by Clause 7 of the agreement dated December 2, 1952 the debtor was to be responsible for all his debts and liabilities in respect of the two businesses up to the date of that agreement, by this clause of the deed of assignment it was provided that the debtor had to be responsible for all the debts and liabilities in respect of the two businesses up to the date of the execution of the deed of assignment, i.e. June 16, 1954. From this provision in the deed of assignment, therefore, it seems to be clear that until the date of execution of the deed of assignment the two businesses in Bombay were being carried on by the debtor himself on his own account despite the earlier recital therein that the debtor had put the company in possession of the said two businesses as far back as on November 17, 1952. This position seems to have been made abundantly clear by the provisions made in the other clauses of this deed of assignment. Clause 3 of this deed sets out the covenants which the debtor as the assignor had made with the company as the assignee and Sub -clause (a) in terms provides that the debtor will be liable for and pay and discharge all debts and liabilities of the said two businesses incurred 'upto the date hereof' including the liability for income -tax, E.P. Tax, and sales tax etc. and he shall indemnify and keep indemnified the company from and against any proceedings, costs, claims, expenses and liabilities whatsoever of and in respect of the said two businesses 'incurred prior to the date and till the execution of these presents'. Sub -clause (b) of Clause 3 of the deed of assignment removes all possible doubts as to whether the company had at all taken over and carried on the said two businesses of the debtor on its own account as from November 17, 1952 up to the date of the execution of this deed of assignment, because in terms it says as follows: