D D ITALIA Vs. OFFICIAL ASSIGNEE OF MADRAS

JUDGEMENT

(1.) This appeal raises two questions of law with regard to the administration in insolvency of the estate of a deceased person. On the 15 July, 1938, one S.V. Kannabhiran Pillai died, and by an order of the Original Side of this Court passed on the 18 April, 1939, it was directed that his estate should be administered in insolvency under the provisions of Section 108 of the Presidency Towns Insolvency Act. The appellants are creditors. On the 9 August, 1938, they obtained a decree against the deceased's estate in C.S. No. 154 of 1938. In execution proceedings filed on the 26 January, 1939, they attached the deceased's interests in certain immovable property, which was the subject-matter of another suit, C.S. No. 189 of 1938 and in movable properties, which were in dispute in a third suit, C.S. No. 198 of 1939. The movable properties included a sum of Rs. 483-7-10 which was standing to the credit of the deceased in the books of the Egmore Benefit Society. A garnishee order was issued by the Court in respect of this sum on the 13th February, 1939 and the money was paid into Court on the 27 March, 1939.

(2.) The first question which arises is whether the, order of this Court directing theestate to be administered in insolvency puts an end to the execution proceedings and relegates the appellants, to the position of ordinary creditors. The second question is whether the appellants claim to the sum of Rs. 483-7-10 paid Into Court by, the Egmore Benefit Society stands on a different footing from their claims in respect of the other attached properties. 2. Section 108(1) of the Presidency Towns Insolvency Act provides that a creditor of a deceased debtor, whose debt would have been sufficient to support an insolvency petition had the debtor been alive, may present a petition to the Court praying for an order for the administration of the estate of the deceased under the Presidency Towns Insolvency Act. Sub- section (2) states that, on the prescribed notice being given to the legal representative of the deceased debtor, the Court may, upon proof of the debt, unless it is satisfied that there is a reasonable probability that the estate will be sufficient for the payment of the debts owing by the deceased, make, an order for the administration in insolvency of the estate. Sub-section (3) says that a petition of this nature shall not be presented after proceedings have been commenced for the administration of the deceased debtor's estate, but in that event, on proof that the estate is insufficient to pay its debts, the Court may transfer the proceedings to the Court exercising jurisdiction in insolvency under the Act.

(3.) Section 109(1) provides that, upon an order being made for the administration of a deceased debtor's estate under Section 108, the property of the debtor shall vest in the Official Assignee, who shall forthwith proceed to realise, and distribute the assets in accordance with the provisions of the Act. Sub- section (2) of this section says that with the modifications thereinafter mentioned, all the provisions of Part III of the Act, shall, so far as they are applicable, apply to the case of an administration order in like manner as to an order of adjudication under the Act. The only modification is in Sub-clause (3) which makes the proper funeral and testamentary expenses incurred by the legal representative of the deceased debtor a preferential claim payable in full in priority to all other debts. Part III of the Act contains the provisions with regard to the administration of the property of an insolvent and included in this part is Section 53, t he first sub- Section of which reads as follows: Where execution of a decree has issued against the property of a e 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 order of adjudication, and before he had notice of the presentation of any insolvency petition by or against the debtor.