ABDUL RAHMAN Vs. NIHAL CHAND

JUDGEMENT

(1.) This is a defendant's appeal arising out of a suit brought by the plaintiff for recovery of Rs. 2,000 lent by him to the defendant on 19 February 1927, together with interest at Rs. 1-4-0 per cent per mensem. The defence inter alia was that the plaintiff was an undischarged insolvent, and was not entitled to sue. The Courts below have overruled the objection and decreed the claim. In second appeal the Division Bench before which the case came up for disposal referred the following question to a Full Bench: Whether the plaintiff, in view of the fact that he is an undischarged insolvent, is entitled to maintain the present suit.

(2.) As in several rulings, the rule of law prevailing in England has been frequently invoked, it may be convenient to point out at the outset that in England some distinction has undoubtedly been drawn between property which was owned by the insolvent at the time of his adjudication and property which is acquired by him afterwards. Following certain previous rulings it was laid down in the case of Mitchel V/s. Kohen (1890) 25 Q.B.D. 262, which was a suit for wrongful conversion of certain machinery that as regards after acquired property, a transaction by a bankrupt if entered into before the trustee had intervened, would not, be Invalid if the person dealing with him acted bona fide and for value. At the same time it was pointed out on p. 266 that if a trustee had interfered before the money was paid over, he would have been entitled to demand, that it should be paid to him. In England this view of the law has been accepted and we now find in Section 47, Bankruptcy Act of 1914, 4 and 5 Geo 5), that a special provision is made in respect of property acquired by an undischarged bankrupt subsequently in which case he is allowed to deal with it before any intervention by the trustee. Section 45 of the Act also gives protection to certain bona fide transactions without notice.

(3.) But in India neither the Provincial Insolvency Act, 1907, nor the Act of 1920 draws any such distinction. Section 28(2) makes the whole of the property of the insolvent vest in the Court or the receiver on the making of the order of adjudication, and Sub-section (4) provides that all property which is acquired by or devolves on the insolvent after the date of the order of adjudication and before his discharge shall forthwith vest in the Court or the receiver and the provisions of Sub-section (2) shall apply in respect thereof. It is therefore perfectly clear that property existing at the time of the adjudication as well as property acquired by or devolved on the insolvent after adjudication stands on the same footing, and both vest forthwith in the Court or the receiver as the case may be. No distinction appears to have been drawn by the legislature in respect of these two classes of property. It would amount to legislating if any such distinction were to be imported into the section on account of certain rules of law which prevail in England. The Insolvency Act in India is not in every, respect identical with the Bankruptcy Act in England, and there is accordingly no justification for deciding cases under the Indian Act, in the light of cases decided in England.