G V MUTHUSAMI CHETTY Vs. OFFICIAL ASSIGNEE OF MADRAS AS THE ASSIGNEE OF THE ESTATE AND EFFECTS OF SAANANTHANARAYANA CHETTY

JUDGEMENT

(1.) Part of the property of one S.A. Ananthanaryana Chetty consisted of two stables in Madura. These stables were usufructuarily mortgaged by him to his son-in-law on 11 April, 1923. On 11 February, 1925, S.A. Ananthanarayana Chetti was adjudicated insolvent. In March, 1931, the Official Assignee applied under Section 55 of the Presidency Towns Insolvency Act to have the mortgage deed set aside and an order was duly passed in his favour in February, 1932. Having thus had the mortgage deed annulled the Official Assignee made a further application under Secs.7 and 36 of the Act in December, 1934, to call upon the mortgagee to account for the rents and profits which he had received from the mortgaged property. Our learned brother Mockett, J., who heard this application has held under Section 7 that the mortgagee is liable to account for the whole of the rents and profits which he has received since the mortgage was effected. Against this order the mortgagee appeals, contending in his memorandum of appeal that he is not liable to account at all.

(2.) At the hearing of the appeal this extreme contention was abandoned, and the only argument advanced was that the appellant was liable for mesne profits only for the period of three years immediately preceding the Official Assignee's application i.e., from December, 1931. This argument we think, is a sound one and must prevail.

(3.) The authority upon which this argument was based is an English decision. Re Mansell ex parte Norton (1892) 66 L.T. 245 In that case a trustee in bankruptcy applied under Section 72 of the Bankruptcy Act of 1869 to recover certain rents from one Norton more than six years after Norton should have paid them. Norton pleaded the statute of limitation and it was held by all three learned Judges (Lord Esher, M.R. Fry, L.J., and Lopes, L.J,) that this plea was a good one, the reason being that the application was equivalent to an action. The exact words of Lord Esher M.R. are A motion in Bankruptcy such as this is equivalent to an action, and what Fry, L.J., says is this: It is plain that when the legislature by Section 72 of the Bankruptcy Act gave power to the Court of Bankruptcy to decide all questions, whether of law or of fact, arising in any case of bankruptcy, that transference of jurisdiction was not intended to alter the liabilities and rights of persons proceeding in the Court of bankruptcy. This case therefore is just the same as if the trustee were suing in an ordinary Court of law.