LAKHMI CHAND Vs. KEDAR NATH

JUDGEMENT

(1.) This is an appeal against the order of the District Judge of Agra, setting aside the order of the Second Additional Subordinate Judge disallowing an objection of the judgment-debtor, named Kedar Nath, to the execution of a decree against him. The decree-holder in the present appellant. The circumstances of the case are briefly as follows:

(2.) The judgment-debtor, Kedar Nath, was declared an insolvent under the Insolvent Debtors Act, 1848, and has not been discharged. The decree-holder is applying to execute his decree by attaching the judgment-debtor's property acquired after the insolvency, but has not issued notice to the official assignee. The claim of the judgment-debtor in the first Court was that the decree could not be executed without making the official assignee a party to the proceedings. The first Court relying an a decision of this Court published in Chhote Lal V/s. Kedar Nath A.I.R. 1924 All. 703, allowed the objection. The learned District Judge decided that the first Court had been misled by that decision, and allowed the appeal; but at the same time directed that a copy of his order should be sent to the official assignee.

(3.) In view of the decisions quoted on either side, the legal position is at first sight somewhat difficult. Under Section 7, Indian Insolvency Act 1848, the Court of insolvency may order that all the estate and effects of the petitioner at the time of the petition and also all future estate, etc., shall vest in the official assignee and it has never been denied that such an order was made in the present case. A series of rulings have been quoted on behalf of the appellant in the present case to show that, in spite of this provision of the Act, the judgment-debtor does, nevertheless, retain an interest in his property. Thus, in Chhote Lal V/s. Kedar Nath A.I.R. 1924 All. 703 a Bench of this Court held that, in spite of the fact that the future property of an insolvent under this Act was to vest in the official assignee, the insolvent had power to dispose of any property that he might acquire after being declared an insolvent and also that parsons dealing with him bona fide and for a consideration were to be discharged from making a further payment to the official assignee, provided the transaction took place before the official assignee intervened and claimed the property on behalf of the insolvent's estate. That order was passed after a consideration of various rulings to the same effect, including Alimahmad Abdul Hussain V/s. Vadilal Devchand Parekh [1919] 43 Bom. 890 and Cohen V/s. Mitchell [1890] 25 Q.B.D. 262. These decisions show clearly that a bankrupt, who has not obtained his discharge, may enter into transactions in respect of properties acquired after the bankruptcy, and that until the trustee intervenes, all such transactions with any parson dealing with the bankrupt bona fide and for value and whether with or without knowledge of the bankruptcy are valid against the trustee.