V GOPAL NAIDU Vs. MOHANLAL KANYALAL

JUDGEMENT

(1.) This case raises a point of some interest. Two persons traded together in partnership. A man called Anantha Mudali, about whom no question arises in these proceedings, and the appellant, Gopal Naidu, had carried on a produce business in Madras and the facts seem to be that Anantha Mudali was managing the business in Madras, whereas Gopal Naidu resided ordinarily at Wallajabad, but the evidence which is given in the case and that is the evidence that was relied upon by the adjudicating creditors themselves establishes two things. The first is that when anybody, after the difficulties arose and in this concern they did arise wanted to see Gopal Naidu when he went to Wallajabad, he found Gopal Naidu without difficulty and was able to put whatever he wanted to put before him. The other fact that emerges is that, although Gopal Naidu ordinarily resided at Wallajabad, he did from time to time come to Madras and look into the accounts and see how the business was progressing. What is before us is an appeal by Gopal Naidu against his adjudication. The circumstances which led to it are these. The business got into difficulties when the debts due to the petitioning creditors amounted to something over Rs. 10,000 and the difficulties came to ahead, we will take it as proved, for it is not disputed when Anantha Mudali closed the business and went away in order to get out of the clutches of his creditors, thereby committing an act of insolvency, so far as he is concerned under Section 9(d)(iii) of the Presidency Towns Insolvency Act. That is a perfectly good foundation for the insolvency petition and the adjudication consequent upon it as against Anantha Mudali, but it has been sought in this case to use that act of Anantha Mudali in order to lay the foundation not merely of the petition against Anantha Mudali himself but of the petition against the appellant Gopal Naidu.

(2.) We had a very interesting argument practically giving us the whole of the history of the law on this matter both in England and in India. There is no doubt that the English cases of which I may take as an instance, Mills V/s. Bennett 2 M&S Reports 556. is one of the earlier and Ex parte Blain, In re Sawers LR (1879) 12 Ch. D 522 at 529 a d Cooke V/s. Charles A. Vogeler Company (1901) AC 102 are some of the later, clearly lay down the principle that, in order that a man may be made a bankrupt, the act of bankruptcy relied upon in English Law must be some act which can be definitely brought home to him, and the learned Judges point out that the act of an agent cannot ordinarily found a petition in bankruptcy. The chief pronouncement which has been approved of in many subsequent cases is contained in the judgment of Brett, L.J. in Ex parte Blain LR (1879) 12 Ch. D 522 at 529. He says: It was said that a person may commit an act of bankruptcy by his agent, and that the partner in England was the agent of these foreign partners, and therefore they committed an act of bankruptcy by their agent in England, that is, by allowing the execution to go without satisfying the judgment, and that, this having been done by their agent in England, they ought to be adjudged bankrupts. That assumes that a man can commit an act of bankruptcy by his agent, whether he has authorised the particular act or not, and that assumption seems to me to be equally wrong. I think that a man cannot commit an act of bankruptcy by a particular act of his agent which he has not authorised, and of which act he has had no cognizance.

(3.) That is what Brett, L.J. said in Ex parte, Blain LR (1879) 12 Ch. D 522 at 529, and, in my opinion that is good law today in England and with a certain modification is probably good law in India. Mean-while, the matter had arisen on several occasions in Calcutta as to whether a man could be adjudicated a bankrupt, because of the act of some person whom he left in charge of his business, namely, a munib gumastha or a quasi partner with the authority of an agent to act for his, fellow-partners ; and, so far as the High Court of Calcutta is concerned, the matter came to ahead in the case of In r,e Dhunput Singh (1893) ILR 20 C 771 which was decided in the year 1893. by a Bench consisting of Sir Comer Petheram, Chief Justice, Mr. Justice Prinsep and Mr. Justice Pigot. In that case there was a pronouncement of Mr. Justice Trevelyan, which lends colour to the suggestion that the act of all agent in departing with intent to defeat creditors was always, as a matter of course, to be treated as a departure by the principal on the ordinary principles of agency, and that view was definitely rejected by the Court very largely on the authority of the English cases. The learned Judge who deals most clearly with the matter is Mr. Justice Pigot. At page 795 of the Calcutta Reports, he says: I think the general proposition laid down by Lord Justice Brett in Ex parte Blain, In re Sawers LR (1879) 12 Ch. D 522 at 539 only affirms, and is intended to affirm, the rule stated before by Lord Tenterden. I think a man cannot commit an act of bankruptcy by a particular act of his agent which he has not authorised, and of which act he had no cognizance. This general rule is, I apprehend, applicable in cases outside those of the class with which we are here concerned and it seems to me absolutely to govern this case. There are, therefore, two reasons why the acts of Panna Lai in this case, assuming them to amount, so far as he personally was concerned to a departure, etc., with intent, etc., cannot be acts of insolvency committed by his master, Dhunput Singh. The first is that the nature of the acts themselves, as described in the section, is incompatible with the possibility of their being committed by any one but the debtor himself, the departure must be his departure and the intent proved must be his intent. The second is that a man cannot commit any act of bankruptcy by an act of his agent which he has not authorised, and of which act he had no cognizance.