P S NARAYANA AYYAR Vs. OFFICIAL RECEIVER

JUDGEMENT

(1.) This appeal arises from one out of five petitions filed by the respondent, the Official Receiver of South Malabar, in the Insolvency of a firm of timber merchants to set aside under Secs.4, 53 and 54, Provincial Insolvency Act, five mortgages executed by the insolvents to various creditors before the Insolvency. Two of these petitions were settled in the first Court. Of the alienees in the other three petitions only two appealed to the District Judge who dismissed the appeals. Of these the present appeal concerns only the appellant's mortgage for Rs. 31,000 dated 13 March 1924, the subject matter of O.P. No. 16 of 1925. Prom Section 54 being one of those quoted in the petition and from the grounds stated and the principal prayer therein it would appear that the case against the appellant in both the lower Courts was that his mortgage is invalid as a fraudulent preference.

(2.) The first Court accepted this. But the learned District Judge held that the appellant's mortgage, which both Courts found was executed on 13 March 1924, though the respondent contended it was antedated, cannot be attacked on the ground of fraudulent preference as it was executed more than 3 months before the presentation of the Insolvency Petition on 16 June 1924, on the re-opening of the District Court after the summer vacation. The Subordinate Judge took the view that by virtue of Section 10, General Clauses Act of 1897, the 3 months mentioned in Section 54, Provincial Insolvency Act, must be understood as if it meant three months and where that period expires during a Court vacation, the further period which may intervene till the Court re-opens. According to the District Judge there is no warrant for such an extension of the 3 months period mentioned in Section 54, Provincial Insolvency Act, as it is not a period of limitation during which any act or proceeding is directed or allowed to be done or taken in any Court or office; but a period during which transfer by way of preference of creditors by insolvent persons is to be deemed fraudulent. Therefore though for the purpose of Section 9 (1)(c) the petition, if based on the appellant's mortgage as an act of insolvency, may be considered as presented in due time as it was presented on the date when the Court re-opened after the vacation which was in progress at the end of the third month from that date, yet that is not sufficient to extend the period described by the words in Section 54 "on a petition presented within three months after the date thereof." On this ground the District Judge held that the mortgage is not assailable under Section "54 but if at all only under Section 53. I had this point re-argued as it was not touched upon at the first hearing. I think the view of the Subordinate Judge is correct as that of the District Judge leads to inconsistencies and inconveniences which could not have been intended by the Legislature.

(3.) No decision English or Indian determining the point has been cited. In England, Section 145, Bankruptcy Act 1914 corresponding to Section 141 of the Act of 1883 deals with computation of time for doing and taking proceedings under the Act and provides inter alia that if the last day of the limited time falls on a day when the Court does not sit, the act or proceeding shall be considered as done or taken in due time if it is done on the; next day when the Court sits. On this section it is scarcely open to doubt that if three months given by Section 4(c) from, an act of bankruptcy for filing a petition is calculated according to the earlier part of the section by excluding the day on which the act occurred and the period terminates on a Sunday or other Court holiday, a petition presented on the next Court day would be in time by the latter part of Section 145. And if the petition is considered as filed within the 3 months for the purpose of the Act though in fact filed after an additional period when the Court was closed, it seems to follow that that is sufficient to satisfy, the words in Section 44 of the Act that if the particular act of bankruptcy was a transfer by way of fraudulent preference, the person making, taking, paying or suffering the same is adjudged bankrupt on a bankruptcy petition presented within three months after the date of making, taking, paying or suffering the same.