OFFICIAL ASSIGNEE OF MADRAS; K BALKRISHNA NAIDU AND C ABDUL KHADER SAHIB Vs. VADAVALLI AMMAL AND CKESAVA PILLAI; THE OFFICIAL ASSIGNEE OF MADRAS

JUDGEMENT

(1.) Mr. Justice Bakewell sitting in the Insolvency Court has held that under the new Insolvency Act III of 1909, he has no jurisdiction to try the question whether certain property situate outside the local limits of the original civil jurisdiction of this Court belongs to the insolvent, it being alleged by the Official Assignee that the purchase in the name of the insolvent s wife, effected three or tour years before the petition in insolvency was filed, was merely benami for the insolvent himself. He was of opinion that though admittedly the old Act 11 and 12 Victoria, Chapter 21, gave a discretion to the Judge sitting in the Insolvency Court to exercise jurisdiction in such cases over third parties, the present Insolvency Act has made a change in the law and all questions arising between the Official Assignee and third parties must be dealt with by the ordinary Civil Court which has jurisdiction over the matter. With all respect to the learned Judge, it seems to me that Section 7 of the Act gives him the power to decide questions of title to land situate outside the limits of the original civil jurisdiction of the High Court. It says: "Subject to the provisions of this Act, the Court shall have full power to decide all questions of priorities, and all other questions whatsoever, whether of law or fact, which may arise in any case of insolvency coming within the cognizance of the Court, or which the Court may deem it expedient or necessary to decide for the purpose of doing complete justice or making a complete distribution of property in any such case". I do not think that because questions of priority are mentioned first, the very comprehensive words that follow must be narrowed down in their application. The section expressly enables the Court to decide all questions whatsoever which it may deem expedient to decide for the purpose of doing justice or making a complete distribution of the insolvent s property. I find nothing in these words which for a moment suggests that the jurisdiction which the Court had hitherto, has been in any way cut down. Reliance is, however, placed upon Section 36, Clause 5, which says that if on the examination of a person, summoned on the application of the Official Assignee or of any creditor and who has been in possession of the property belonging to the insolvent, the Court is satisfied that the allegation is true, it will order the person in possession to deliver the property to the Official Assignee. The argument is that this shows that the power of the Court to deal with property in possession of a person other than the insolvent is confined to cases where that person admits that the property belongs to the insolvent. But Section 35 only provides a summary procedure in cases where there is no dispute raised, but that does not necessarily exclude the jurisdiction of the Court to deal with cases of disputed title. Only in oases of the latter class the ordinary procedure has to be followed. Section 90 provides that in proceedings under this Act the Court shall have the like powers and follow the like procedure as it has and follows in the exercise of its ordinary original civil jurisdiction". An appeal lies from an order made in the exercise of the insolvency jurisdiction in the same way as from a judgment in a civil suit. It has been argued that where questions of title to property are concerned, the general policy of the Legislature is that they should be tried in the ordinary forum and difficult and complicated questions of title should not be decided in the insolvency proceedings, which are more or less of a summary nature. The answer to that is that the jurisdiction confirmed by Section 7 is of a discretionary character, and it is seldom that the Insolvency Court will deem it expedient to try difficult questions of title. The Judge in such cases would ordinarily ask the Official Assignee to establish his title by an ordinary civil suit and it is only cases which do not involve any prolonged enquiry that the Insolvency Court itself would undertake to decide. Reliance was placed on behalf of the respondent on a decision of Mr. Justice Chitty of the Calcutta High Court reported as Lucas, J.M., In re 28 Ind. Cas. 469 : 42 C. 109. That decision does not, however, in any way help the respondent. It lays down that Section 36, Clauses 4 and 5 of the Presidency Towns Insolvency Act, 1909, provides summary procedure in cases where there is no dispute; it is not intended for contentious matters or for following property the subject of fraudulent preference or dishonest concealment". But these observations have no force in cases where the ordinary procedure provided in the Civil Procedure Code is followed for the purpose of deciding whether the property in possession of a third person really belongs to the insolvent. It may be pointed out that Rule 13 of this Court and Rule 5 of the Calcutta High Court clearly recognise the distinction between cases in which the procedure under Section 36 or the ordinary procedure is to be fallowed. The English decisions on the subject which were also discussed at the Bar are, I think, perfectly relevant in this connection, inasmuch as Section 102 of the Bankruptcy Act of 1883, corresponding to Section 72 of the Bankruptcy Act of 1869, is identically in the same terms as Section 7 of the Indian Act. In Dicken, Ex parte, Pollard, In re (1878) 8 Ch.D. 377 : 38 L.T. 860 : 26 W.R. 713 and in Brown, Ex parte, Yates, In re (8879) 11 Ch.D. 148 : 40 L.T. 402 : 27 W.R. 651 : 48 L.J. Bk. 78, the jurisdiction of the Court of Bankruptcy in deciding upon the rights of third parties is fully recognised and though in Ellis v. Silber (1872) 8 Ch. App. 83 : 42 L.J. Ch. 666 : 28 L.T. 156 : 21 W.R. 346 there are some general remarks of Lord Selborne Vthich militate against that view, it cannot be said that the authority of Dicken, Ex parte. Pollard, In re (1878) 8 Ch.D. 377 : 38 L.T. 860 : 26 W.R. 713 and Brown, Ex parte, Yates, In re (8879) 11 Ch.D. 148 : 40 L.T. 402 : 27 W.R. 651 : 48 L.J. Bk. 78 has been shaken. The English Law on the subject is correctly stated in Williams on Bankruptcy, New Edition, pages 375-377, and in Robinson s Law of Bankruptcy, page 37, where they state the result of the English decisions as affirming the Insolvency Court s jurisdiction in adjudicating upon the rights of third parties.

(2.) Nor can it be rightly said that Section 12 of the Letters Patent decides the question for under Section 18, the Judge is to exercise such powers and authorities with respect to original and appellate jurisdiction and otherwise as are constituted by the laws relating to the insolvent debtors in India". As for the argument based on Section 90 of Act III of 1909 the proviso to it makes it clear that it was cot intended to curtail the jurisdiction of the Court.

(3.) The order of Mr. Justice Bakewell dismissing the application for garnishee summons taken out by the Official Assignee is set aside and the case will be remitted to the Insolvency Court for disposal according to law. The same order will govern Appeal No. 95. Costs will abide the result.