OFFICIAL ASSIGNEE OF MADRAS Vs. EVD SILVA

JUDGEMENT

(1.) Section 60, Sub-section (1) of the Presidency Towns Insolvency Act, states that, where an insolvent is an officer of the Army or Navy or of the Royal Indian Navy or a person in the Civil Service of the Crown, the Official Assignee shall receive for distribution amongst the creditors so much of the insolvent's pay or salary liable to attachment in execution of a decree as the Court may direct. Section 60 of the Civil P. C. provides inter alia that the salary of a public officer shall not be attachable to the extent of the first Rs. 100 and one half the remainder of his salary. It has for many years been the practice of the Official Assignee of Madras in all the cases where the assets are insufficient to meet the debts due to the creditors to ask the Court to order an insolvent who is a public servant to pay over to him part of his salary for the benefit of the creditors. The applications and the orders passed thereon have not been limited to public servants in enjoyment of salaries in excess of Rs. 100 per mensem and many orders have been passed by consent when the salary has been far below this figure. The Official Assignee applied to the Master for an order against the respondent (who was adjudicated insolvent on the 23 November, 1939) directing him to pay out of his monthly salary of Rs. 60 the sum of Rs. 6 for distribution to his creditors. The respondent who is a clerk in the Public Works Department objected to the proposed order, but, notwithstanding his objection, the Master directed that he should out of his salary pay to the Official Assignee monthly a sum of Rs. 5. The respondent appealed from the order of the learned Master to the learned Judge sitting in Insolvency (Krishnaswami Aiyangar, J.) who held that the objection was well founded and set aside the Master's order. This appeal is from the order of the learned Judge.

(2.) By virtue of Section 17 of the Presidency Towns Insolvency Act, on adjudication an insolvent's property vests in the Official Assignee. Section 52 provides that the property owned by an insolvent at the time of his adjudication and property which he has acquired subsequently, but before his discharge, shall be divisible among his creditors. It is common ground that apart from Section 60 there is no statutory provision which enables an Official Assignee to acquire a right in an insolvent's future earnings by way of salary. Of course once his salary has been paid over to him the money comes within the category of after acquired property. There is, however, no obligation on the part of an insolvent to deliver to the Official Assignee property acquired by him after his adjudication, unless called upon by the Official Assignee to do so.

(3.) Section 60 has been inserted to enable the Official Assignee to obtain what is known as a prospective order , but he cannot obtain such an order when the salary of the insolvent falls below Rs. 100 per mensem. The section is clearly a bar in such a case. In answer to a question put by the Court, Mr. K. V. Ramachandra Aiyar on behalf of the Official Assignee stated that the order which was passed by the learned Master against the insolvent must be deemed to have been passed under Section 60, because there is no other section under which such an order could have been passed. Therefore it was passed contrary to the provisions of the Act and rightly set aside by Krishnaswami Aiyangar, J. Of course, where an insolvent consents to an order of this nature being passed against him there is no reason why the Court should not accede to his wishes. He is merely showing that he is an honest debtor. But when he does not consent it is an entirely different matter.