MADHU SARDAR Vs. KHITISH CHANDRA BANERJEE

JUDGEMENT

(1.) This appeal is directed against an order made in the course of a proceeding under the Provincial Insolvency Act. On the 1st August 1912, the respondent, Khitish Chandra Banerjee, applied to he adjudicated an insolvent. The order was made on the 30th September 1912. Meanwhile on the 2nd September 1912, the District Judge had appointed an interim Receiver under Section 13, Clause (2), Notice was issued at the same time to the Examiner of the Eastern Bengal State Railway to pay into Court what was due from the Railway authorities to the insolvent. Before this intimation reached the Railway authorities, the sum in their hands, which had been attached in execution of a decree obtained by the appellant against the applicant in insolvency, was paid into the Court of the Munsif of Goalundo. The money has subsequently been transferred by the Goalundo Court to the Court of the District Judge of the 24-Perganas, and is now in the hands of the Receiver appointed after the adjudication order. The question in controversy is, whether the appellant, as a creditor who had attached this sum before the estate of the insolvent vested in the Receiver appointed after the adjudication order, is entitled to apply it exclusively in satisfaction of his islaim. The answer must depend upon the effect of the order for the appointment of an interim Receiver.

(2.) Section 13, Clause (2), of the Provincial Insolvency Act provides that the Court at the time when the insolvency petition is admitted or at any subsequent time before adjudication may, of its own motion or on the application of any creditor, make an order for the appointment of an interim Receiver of the property of the debtor or any part thereof. The object of the appointment is clear from the proviso to the section, in which it is stated that an order for the appointment of an interim Receiver shall not be made unless the Court is satisfied that the debtor, with intent to defeat or delay his creditors or to avoid any process of the Court, has absconded or has departed from the local limits of the jurisdiction of the Court or has failed to disclose or has concealed, destroyed, transferred, or removed from such limits any documents likely to be of any use to his creditors. It is plain that an order for the appointment of an interim Receiver of the property of the debtor is made for the protection of the estate of the debtor for the benefit of the entire body of creditors. At the stage when the ad interim Receiver is appointed, no question arises as to the distribution of the property of the debtor amongst the creditors or as to preference amongst them. This view is not opposed to the decision in lat parte Fox, In re Smith (1886) 17 Q.B.D. 4 : 55 L.J.Q.B. 288 : 54 L.T. 307 : 34 W.R. 535 : 3 Morrell, 63. It was there held, with reference to the terms of Section 40 of the Bankruptcy Act, 1883, (40 and 47 Vict. C. 52) that the period of four months before the receiving order, for which the wages or salary of any clerk or servant in respect of services rendered to the bankrupt is entitled to priority over all other debts, includes not merely the four months before the date of the receiving order but also the four months before the date of the order of appointment of an interim Receiver where such appointment has been made. It is plain from an examination of the judgment of Cave, J., that such construction was adopted with a view to afford protection to clerks and servants of the insolvent whom it was obviously the intention of the Bankruptcy Act to save. In our opinion, the money under attachment in execution of the decree obtained by the appellant against the applicant in insolvency is still available for the satisfaction of his claim. We may add that the appellant is also entitled to the benefit of Clause (1) of Section 34 of the Provincial Insolvency Act, which restricts the operation of Section 16, Clause (6), and is in the following terms: Where execution of a decide has issued against the property of a debtor, no person shall be entitled to the benefit of the execution against the Receiver except in respect of assets realised in the course of execution by sale or other wise before the date of the order of adjudication." In the present case, the sum in question had been realised before the date of the order of adjudication. It had in fact been transferred by the Railway authorities to the Goalundo Court where the execution proceedings initiated by the appellant were pending at the time. From this point of view, the appellant is exclusively entitled to the benefit of this money.

(3.) The result is that this appeal is allowed, and the order of the District Judge made on the 30th September 1912 set aside in so hr as it affects the appellant. The appellant will be entitled to take this money in satisfaction of his decree. The money will be returned to the Goalundo Court in order that it may be paid out to the appellant and satisfaction entered on his decree.