PREM CHAND MULLIK Vs. NILMONY DAS

JUDGEMENT

(1.) The petitioner has been convicted by the learned Chief Presidency Magistrate of Calcutta, Under Section 102, Presidency Towns Insolvency Act, for an offence of borrowing a sum of money from the complainant in the case, on the mortgage of some land with the knowledge that he, the accused person, was an undischarged insolvent and has been sentenced to undergo rigorous imprisonment for six months. It appears that the petitioner obtained an order of adjudication as an insolvent in an insolvency proceeding in this Court, declaring him an insolvent on 20 April 1921 and that since that order of adjudication was passed by this Court, the Official Assignee did not take possession of any asset of the petitioner. It further appears that on 23 November 1923, the petitioner purchased property from one Ratindra Lal Mitter for a sum of Rs. 6,000 and that on 7 June 1924, the petitioner executed a deed of mortgage in favour of the complainant Nilmony Das and obtained the loan hypothecating the property purchased by the petitioner on 23 November 1923, from Ratindra Lal Mitter. It is further to be mentioned in this connexion that according to the finding arrived at by the Chief Presidency Magistrate in this case, the petitioner did not bring to the knowledge of the complainant the fact that he was an undischarged insolvent when the mortgage was executed, on 7 June 1924. The learned Magistrate has in his judgment dealt with the facts of the case in detail, and has proceeded to observe as follows: It is unnecessary to decide whether accused had real title to the land he purported to mortgage. Credit is defined in Wharton's Law Lexicon (Edn. 11) as a transfer of goods on trust in confidence of future payment. It seems to me perfectly clear that the transaction in question is of that nature. The defence is that the accused who acquired this property two years after his adjudication, had every right to mortgage it. It is therefore urged that even if accused did not inform complainant of his insolvency, he committed no offence in mortgaging this property. Section 102 is clear. The accused undoubtedly obtained credit fraudulently. It is inconceivable that the complainant would lend Rs. 2250 to a stranger whom he knew to be an undischarged insolvent. The accused is found guilty Under Section 102, Presidency Towns Insolvency Act, and sentenced to six months rigorous imprisonment.

(2.) Two questions, in our judgment, arise for consideration in this case: Whether the property mortgaged being an after acquired property, an undischarged insolvent in possession of the property has the right to mortgage, and to deal with the property, and as such whether the provision of Section 102, Presidency Towns Insolvency Act, has any application to the present case. In the second place, whether the expression obtaining credit as used in Section l02 means and includes taking loan on mortgage of immoveable property. So far as the first question goes subject of the after-acquired property, as regards an uncertificated bankrupt has been considered in England from time to time, and the result is this, that subject to the right and claim of the Official Assignee, so long as the Official Assignee does not interfere, the uncertificated bankrupt has the power to buy and sell and give discharge, and do all other acts as he could have done and had done before the intervention of the Official Assignee. The law in England is summed up in Herbert V/s. Sayer (1880) 5 QB 965 and the Indian Insolvency Act, has in our judgment to be considered on the same principle. The view as taken above is in consonance with what has been laid down in Kristocomul Mitter V/s. Suresh Chunder Deb (1882) 8 Cal 556. In the present case, the petitioner, an undischarged insolvent, had by way of mortgage, dealt with the property acquired by him after the order of adjudication passed in the insolvency proceedings, and had the right to do so, according to the decisions in England and in this country.

(3.) In the second place, in view of the Magistrate's expression of opinion that the accused obtained credit fraudulently it is to be observed that the decision come to by the learned Chief Presidency Magistrate overlooks the fundamental difference as between the expression " obtaining credit " used with reference to undischarged insolvents in Section 102, Presidency Towns Insolvency Act, and the position which has been recognized in this country and in England, that an undischarged insolvent has the power to deal with the property acquired by him after the order of adjudication, in any manner whatsover, if the Official Assignee does not interfere with his dealings. The decision of the learned Magistrate is also not in consonance with the difference that must be recognized in law, between obtaining credit and a transaction represented by a mortgage. The mortgage of a property is to be viewed in two different aspects: regarded as a promise by the debtor to pay the loan, it is a personal obligation, but it is also a conveyance, because it passes to the creditor the real right to the property pledged to him (see in this connexion, Ghose on Mortgage, Edn. 4, Vol. 1, p. 66). In our: judgment it appears clear that the transfer of the property by way of mortgage in raising the loan on hypothecation of immoveable property, acquired by the insolvent after the adjudication order, does not stand on the same footing as obtaining credit merely, as mentioned in Section 102, Presidency Towns Insolvency Act. It may be observed in this connexion that the intention of the legislature in this behalf seems to us to have been made clear in the provisions that follow Section 102, relating to the penalties dealt with by the Statute in Part 8 of the Presidency Towns Insolvency Act. Examined in the light of the propositions stated above, the conviction of the petitioner cannot be maintained on the facts and the circumstances of the case before us. In the result, the rule is made absolute. The conviction of the petitioner, and the sentence passed on him by the learned Chief Presidency Magistrate are set aside, and the petitioner is acquitted. Let the petitioner be discharged from his bail bend.