Posted On by &filed under Calcutta High Court, High Court.

Calcutta High Court
Fool Kumari Dasi vs Khirod Chandra Das Gupta on 17 January, 1927
Equivalent citations: AIR 1927 Cal 474


1. The appeal arises from and the Rule is directed against the appellate order of the Second Additional District Judge of 24-Pargannas, dated the 23rd December 1925.

2. One Dulal Chand Datt applied on the 15th June 1923 to be adjudicated an insolvent. The Subordinate Judge passed the order of adjudication. The creditors alleged that the insolvent was the owner of certain properties which stood in the name of his wife, having been transferred to her by a deed of gift dated 1907. The Receiver in insolvency made a report and thereafter advertised the properties to sale as the properties of the insolvent. The insolvent’s wife then applied to the Subordinate Judge claiming the properties as her own. The Subordinate Judge held an enquiry in which evidence was adduced on both sides. He held that the gift was bona fide and that the insolvent’s wife acquired a good title under it and was in possession of the properties since the transfer. The Receiver preferred an appeal to the District Judge which was heard by the Second Additional District Judge and he by an order dated the 23rd December 1925, reversed the decision of the Subordinate Judge holding that the gift was a benami transaction. This order is now before us on appeal and in revision at the instance of the insolvent’s wife. The value of the properties is said to be more than Rs. 10,000.

3. The question that we have to consider is whether the Subordinate Judge had jurisdiction to deal with the question of title that arose, and, if so, whether the appeal from his decision lay to the District Judge in view of the value of the properties involved.

4. The jurisdiction of Bankruptcy Courts under the English Bankruptcy Acts is a subject which presents a remarkable diversity of judicial opinion. Section 105 of the English Bankruptcy Act, 1914, is in the same words as Section 102 of the Act of 1883, and leaving aside the proviso to Sub-section (1) with which we need not be concerned, was also in the same words as Section 72 of the Act of 1869. In a series of cases, upon the contrast between Section 12 of the earlier Act of 1849 with Section 72 of the Act of 1869, it was held that whereas under the former section the Bankruptcy Court had only jurisdiction over parsons actually within the bankruptcy or coming or submitting to its jurisdiction, it had, under the latter section complete jurisdiction in all cases to decide everything that might be considered necessary to be decided for the distribution of the bankrupts estate e.g., Ex-parte Anderson [1870] 5 Ch. 473, Re Johnstone [1884] 1 Mor. 32, Smith v. Baker [1873] 8 C.P. 350, Halliday v. Harris [1874] 9 C.P. 668 and Morley v. White [1872] 8 Ch. 214. On the other hand, Lord Selborne, L.C, in Ellis v. Silber [1872] 8 Ch. 83 speaking of the jurisdiction of the Bankruptcy Courts observes thus:

That which is to be done in bankruptcy is the administration in bankruptcy, The debtor and the creditors as the parties to the administration in bankruptcy are subject to that jurisdiction. The trustees or assignees as the persons entrusted with that administration are subject to that jurisdiction. The assets which come to their hands and the mode of administering them are subject to that jurisdiction; and there may be and I believe are some special classes of transactions which under special clauses of the Acts of Parliament may be specially dealt with as regards third parties. But the general proposition that whenever the assignees or trustees in bankruptcy or the trustees under such deeds as these have a demand at law or in equity or against a Stranger to the bankruptcy, then that demand is to be prosecuted in the Court of Bankruptcy, appears to me to be a proposition without the warrant of anything in the Acts of Parliament and wholly unsupported by any trace or vestige whatever of authority.

5. The case was decided under the Act of 1869, but all that was necessary to be decided appears to have been whether the jurisdiction of the Court of Bankruptcy was not exclusive; and it was held that where a suit would, but for the fact of the bankruptcy, be fit to be entertained by the Court of Chancery, the jurisdiction was not taken away by the Bankruptcy Act, 1869, In Ex parte Dioken – In re Pollard (1878) 8 Ch.D. 377, which was a case of a money demand by the trustee of a bankrupt’s property against a third party, Jessel, M.R., observed thus:

The very serious question, therefore, arises whether the Court of Bankruptcy has any jurisdiction to make an order for the payment of such a demand. It appears to me, however, that it is not necessary for us to decide this question now for if the jurisdiction exists, there is the farther question whether it is expedient to exercise it in the present case.

6. He gave as one of his reasons for limiting the wide words of Section 72 of the Act of 1869 as being the absence of a right of appeal to the House of Lords except by leave. In the same case James, L.J., expressed himself thus:

The Court of appeal has given a very extended application to Section 72 of the Act, But it appears to me that the legislature introduced, into that section the words which the Court may think it expedient or necessary to decide because they thought they could trust the Court of Bankruptcy not to exercise the jurisdiction unless it really was expedient to withdraw the case from the ordinary tribunals. It is not expedient to do that in the case of a mere money demand.

7. A more guarded expression of opinion than that contained in Ellis v. Silber [1872] 8 Ch. 83 is to be, found in Maule v. Davis in re Motion [1873] 9 Ch. 192, the judgment in which case was also delivered by Lord Selborne. The jurisdiction of Bankruptcy Courts to adjudicate on the right of third parties is now fully recognized (see the authorities in Williams on Bankruptcy, 12th Edition, pp. 377 to 378; and Robson on Bankruptcy 7th Edition, p. 36, etc.), though it has also been laid down that there is a discretion in the Bankruptcy Courts to direct the trustee to institute or defend in the ordinary civil Courts suits concerning the rights of third parties.

8. Section 7 of the Presidency Towns Insolvency Act of 1909 is in exactly the same words as paragraph 1 of Section 105 of the English Bankruptcy Act of 1924. The words are these:

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.

9. Under this section also there was at one time a conflict of judicial opinion as to whether the legislature intended that the insolvency Court should have jurisdiction to decide questions of title, as between an Official Assignee and a stranger with reference to property which is claimed by the Official Assignee as the insolvent’s and which on the other is claimed by the stranger as his : see Naginlal Chunilal v. Official Assignee [1911] 35 Bom. 473 and In re Rassul Haji Cassum (1910) 13 Bom.L.R. 13. The jurisdiction of insolvency Courts under the Presidency Towns Insolvency Act, 1909, to deal with and decide questions of title in such cases appears now to be well recognized, though the insolvency Court in the exercise of its discretion may in any case decline to deal with the matter and relegate the parties to a regular suit: Official Receiver, Tinnevelly v. Sankarlinga Mudaliar A.I.R. 1921 Mad. 204, Abdul Khader v. The Official Assignee of Madras [1917] 40 Mad. 810, In re Seehase (1917) 22 C.W.N. 335 and Rash Behari Ghose v. The Official Assignee of Calcutta A.I.R. 1921 Cal. 95.

10. Under the Provincial Insolvency Act, 1907, there was a diversity of judicial opinion on the question as to the jurisdiction of the insolvency Court in this respect into the details of which it will, serve no useful purpose to enter. The words of Section & of the Provincial Insolvency Act, 1920, are, if anything, clear and more comprehensive than those of Section 7 of the Presidency Towns Insolvency Act of 1909 and Section 105, Sub-section (1) of the English Bankruptcy Act of 1914, and appear to have been carefully chosen in view of the conflict that at one time existed with regard to the meaning of Section 7 of the Presidency Towns Insolvency Act of 1909, The interpretation of that section by the Bombay High Court in Naginlal v. The Official Assignee [1911] 35 Bom. 473 proceeded upon the ejusdem generis maxim, and so to do away with all such objections the word “title” was introduced in Sub-section (1), and Sub-section (2) appears to have been enacted to remove all possible disputes as to the nature of the claim that may or may not be investigated. The words of the statute seem to be perfectly plain, and where that is the case, it is not permissible to speculate.

11. To this interpretation several objections have been urged and the consequent difficulties that will arise have been pointed out. To these I now propose to refer.

12. It is said that if it was intended that all questions of title may be gone into by the Insolvency Court, then Section 53 of the Act would be redundant, as Section 53 of the Transfer of Property Act, which lays down the general law, would be sufficient. But, as has been explained in Muhammad Habib-ullah v. Mushtaq Husain [1917] 39 All. 95 this section is in one sense wider in its scope than Section 53 of the Transfer of Property Act, because under this section all that is necessary to show is that the transfer was made within two years of the adjudication, unless it is a transfer made before or in consideration of marriage and further that under this section it is not necessary to show that the transfer was made with intent to delay or defeat a creditor.

13. It is also said that whereas if the matter had been tried by the Subordinate Judge in a regular suit, an appeal to this Court would lie in view of the amount or value of the subject-matter, the matter having been dealt with by the same officer as a Judge of the insolvency Court, the appeal in the present case lay to the District Judge by reason of the provisions of Section 75 of the Act, and that again is in conflict with Section 5, Sub-section (2); in other words, it is urged that if under Section 5, Sub-section (2) the High Court has the same power in this matter as it has in regard to civil suits, then it has direct appellate powers over the Subordinate Judge, whereas under Section 75 only a second appeal is competent. The reservation in Sub-section (2) of Section 5, however, is expressly made subject to the provisions of the Act, and though by reason of the provision contained in Section 4, Sub-section (1) the final and binding-character of the decision of the Second Additional District Judge is clear, and for that the appellant may justly complain, her right of a first appeal having been taken away, the matter really is not for us but for the legislature. Where the legislature has expressed itself in such clear and unambiguous terms, the consequence of the enactment, ignorance of which cannot be attributed to it, and any consideration of hardship or supposed hardship can scarcely affect the interpretation. It may, however, be pointed out that in the present case it was the appellant herself who submitted to the jurisdiction of the Insolvency Court by applying to that Court under Section 68 of the Act, which she necessarily need not have done, but having elected to come in in that way, she must take the consequences of the course she elected to adopt.

14. A number of authorities have been cited on behalf of the respondent showing that other Courts have also held that Section 4 of the Provincial Insolvency Act, 1920, enables the Insolvency Court to decide questions of title affecting third parties. The appellant has argued the matter as res integra and her contention is that these cases were wrongly decided.

15. It is, therefore, not necessary to refer to those authorities here.

16. The contentions urged on behalf of the appellant must therefore fail, and as the appeal is concluded by findings of fact, it is dismissed with costs – 2 gold mohurs.

17. The Rule is also discharged.

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