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

Calcutta High Court
Lachmi Chand Jhawar vs Bipin Behari Ghose on 3 January, 1928
Equivalent citations: AIR 1928 Cal 644
Author: Rankin


Rankin, C.J.

1. In this case a petition was filed on 27th April 1927 for the adjudication -in insolvency of one Bipin Behary Ghose. The act of insolvency alleged was that the debtor had allowed certain premises to be sold on 28th January 1927 in execution of a decree for the payment of money. It appears that the facts are that on 13th July 1926 the present creditor made an application for adjudication of the present debtor. That adjudication order was made on. 23rd July. But an application for review having been made and an appeal taken both from the adjudication order and from the order dismissing the application for review the whole matter was remanded in appeal. That ultimately came before Page, J. who in March 1927 held that no act of insolvency had been made out and rescinded the adjudication order. The act of insolvency now alleged is a sale on 28th January 1927. It was a sale in a proceeding in which the Official Assignee had been added as a party in view of the adjudication order that was then subsisting and the question, and the only question, is whether in a case like this with a subsisting adjudication order and the Official Assignee being added as a party the sale in a mortgage suit comes within Clause (e), Section 9, Act 3, 1919. Section 9 deals with acts of insolvency and it will be observed that everything in that section with the exception, which I am about to mention, refers to the acts of the man or his agent.

2. Nobody is to be adjudicated as insolvent unless there is something in his conduct or in his agent’s conduct imputed to him amounting to an act of insolvency so as to attract this form of jurisdiction, But there are in this Section 2, Clauses (e) and (h), which are intended to enable a creditor to procure an act of insolvency, in other words, to compel the debtor to commit an act of insolvency, in order that the creditor may get, if he wants them, the advantages of insolvency jurisdiction. One is Clause (e), namely, to have a man’s property attached for 21 days or sold in execution of a decree for the payment of a sum of money. Another way in which a man may be forced into an insolvency Court is under Clause (h) if he is imprisoned in execution of the decree of any Court for the payment of money. A debtor who is not willing to commit any of the other acts of insolvency mentioned in Section 9 may in either of these two ways be compelled to commit an act of insolvency. But Clause (e) does not in my opinion apply to a person against whom an adjudication order is taking operation. That is intended to apply to a person who is responsible for the payment of his own debts. It is he who may be compelled by the creditor to commit an act of insolvency. The clause has no application to a person who has been adjudicated and to the acts of the Official Assignee in the process of the insolvency administration. The argument on behalf of the appellant has dealt with a number of matters. It is pointed out that if one looks to the principle embodied in Section 23 of this Act of 1909 one finds that when an adjudication order is annulled it is as though it had never been made with certain execeptions. The act of the Official Assignee and of the Court if duly done are allowed to stand and subject to that the property vests in the bankrupt retrospectively that is to say, as it was at the time when the adjudication order was first made. That is perfectly true, but it is an entirely different thing to impute to a person an act of insolvency by means of this retrospective operation. It is quite right that a man should get his property back and get it as from the previous date. It is another thing to make him responsible for something that he could not possibly resist. In my opinion the learned Judge was perfectly right in refusing to hold that this was an act of insolvency.

3. In my opinion this appeal should be dismissed with costs.

C.C. Ghose, J.

4. I agree.

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