ABDUL SHUKOOR SAIT Vs. OFFICIAL ASSIGNEE OF MADRAS

JUDGEMENT

(1.) This is an appeal from the order of Clark, J., giving directions to the Official Assignee of Madras to execute a sale deed in favour of one Dr. M.A. Hussain of an extent of about 10 grounds comprised in a property known as " Rutland Gate." The property belonged to one P. Veeraperumal Pillai who had been adjudicated an insolvent in 1926. It was the subject of a mortgage and with the consent of the mortgagee there was an order by the insolvency Court to dispose of it in favour of the appellant for a sum of Rs. 1,60,000. The appellant paid an advance bf Rs. 10,000 but defaulted in payment of the balance of consideration. The Official Assignee thereupon applied to Court for an order cancelling the contract of sale in favour of the appellant. An order by consent was passed on this application by Mockett, J., on 14th September, 1938. The Court directed that in spite of the default, the property might be treated as sold to the appellant for a sum of Rs. 1,60,000; and that a part of the property should be sold by the Official Assignee to one S. S. Rajan for a sum of Rs. 61,000. Adjusting the original deposit of Rs. 10,000 already paid by the appellant and a further sum of Rs. 30,000 to be paid by him before the making of that order, the following provision was made for the payment of the balance, viz., Rs. 59,000 which, till payment, was to bear interest at 7 ? per cent. per annum. The appellant was to dispose of the property in lots or otherwise and on every sale had to make payments to the Official Assignee as against a conveyance by the Official Assignee of the property sold of Rs. 400 per ground for every ground sold and until the development of the property was completed a sum of Rs. 200 on every ground sold, which should be kept in a separate account and utilised for the development of the property. The order also provided for a commission of three quarter per cent to be paid to the Official Assignee oh the sales executed by him in consideration of the services rendered by him. One Zachariah Ismail Sait guaranteed the performance by the appellant of the conduct of sale and the conditions of the order made by Mockett, J. It is common ground that in pursuance of the order almost the whole of the property was disposed of in lots and the Official Assignee on payment as provided by the order, executed conveyances to the several purchasers found by the appellant.

(2.) On the 24 October, 1939, Zachariah Ismail Sait, the guarantor on behalf of the appellant, entered into an agreement with Dr. Hussain to convey an extent of about 10 grounds at Rs. 730 per ground. On the same day he passed on a cheque for Rs. 7,000 received from Dr. Hussain in part payment to the Official Assignee and requested him to send a stamped receipt direct to the party as ustial. The purchaser, after waiting for sometime called upon the Official Assignee to execute a conveyance and finally sent a cheque for Rs. 985 being the balance of the sale price. He complained in more than one letter of the delay in getting the conveyance. On 3 April, 1941, the Official. Assignee wrote to him saying that he was willing as a special case, that a conveyance should be executed in his favour on payment of the balance of the purchase price. It was in pursuance of this letter that the cheque for Rs. 985 above mentioned was sent. It appears from the correspondence that Dr. Hussain wanted the sale deed to be executed in favour of his nominee but this the Official Assignee was not willing to do without a specific order of Court. In his letter dated 26 May, 1941, the Official Assignee states as follows: Further, as intimated to you personally, my office account shows that the amount is credited only in your name. Unless the Court made an order that the sale deed could be executed in favour of anybody else, I am not prepared to execute the sale deed in favour of anybody else. In these circumstances, if you are not prepared to take the sale deed in your own name, it is up to you to move the Court. There is no dispute that after the disposal of practically the entire property, the excess amount remaining after taking into account all necessary disbursements both in favour of the Official Assignee and the Corporation was paid over to the appellant and of course the amount paid by Dr. Hussain was also included in arriving at the amount. After failing to obtain a conveyance from the Official Assignee in favour of his nominee, Dr. Hussain applied to the Official Assignee for a conveyance in his favour but the appellant was opposed to such a course. The Official Assignee was therefore compelled to approach the Court with an application for directions in the matter. The material facts are all set out in the report filed by the Official Assignee on the 19 July 1946 along with his application. Clark, J., overruled the objection raised by the appellant and has directed that the Official Assignee should execute the conveyance to Dr. Hussain. Hence the appeal.

(3.) The three objections raised before Clark, J., were again pressed before us. The first objection was that the application was not maintainable under Section 7 of the Presidency Towns Insolvency Act as the matter did not relate to insolvency proceedings and lay completely outside the province of insolvency jurisdiction. For this position, the learned advocate for the appellant relied upon a statement of the law in Mulla's Commentaries, page 53 and on the decision in Re Arnold: Exparte the Official Receiver (1891) 66 L.T. 121 In re Ignatius Rohdrick I.L.R (1939) 2 Cal. 434 Ex parte Lyons : In re Lyons (1872) L.R. 7 Ch. Ap. 494 and Palanivelu Odayar V/s. The Official Receiver, West Tanjore . There cannot be much dispute about the scope of Section 7 of the Act that it would not apply to matters totally unrelated to the administration of the estate of the insolvent and distribution of his assets among the creditors. It would certainly not relate to disputes arising between third parties simply because the disputes are in a remote way connected with insolvency proceedings. In our opinion the answer to the objection really is this : the Official Assignee in his application does not pray for any decision on a question of priority; nor does he want any adjudication of the rights of parties. To this extent it may be that Section 7 of the Act was not the appropriate provision for the application. The application would more appropriately fall under Section 85, Sub-section (3) of the Presidency Towns Insolvency Act which says that the Official Assignee may apply to the Court for directions in relation to any particular matter arising under the insolvency. In essence it is true that the sale of the insolvent's property subject to a mortgage free of that mortgage is really a sale outside the insolvency. Nevertheless an application was made in this case to the learned Judge sitting in insolvency and an order by consent was obtained from Mockett, J., sitting in insolvency on which order the appellant bases his claim. What the Official Assignee seeks in his application is only for direction from the Court which passed the order on 14 September, 1938. He prays for directions in pursuance of that order. We therefore did not think it necessary to refer in detail to the several decisions cited by the learned advocate for the appellant.