Gokuldoss Goverdhan Doss (dead) and Another vs Dwarakadoss Goverdhan Doss (dead) and Others

Spencer, J.—These are appeals against the order of Mr. Justice Waller adjudicating the firm of Muralidoss Ramdoss & Co., insolvent, and

finding that the two brothers Gokuldoss and Dwarakadoss were partners in it. The counter-petitioners 3 & 4, namely Govindoss Krishnadoss alias

Babu, who is the son of Krishnadoss Muralidoss, and Ramdoss, son of Dwarakadoss Goverdhan Doss, being minors, were excluded. O.S. A.

No. 86 is by the first counter-petitioner Gokuldoss and O.S. A. No. 87 is by the second counter-petitioner Dwarakadoss Goverdhan Doss. As he

died after filing the appeal his son Ramdoss is allowed to continue it. The facts which appear from the affidavits on either side are, that the first

counter-petitioner Gokuldoss''s deceased father Goverdhan Doss and his deceased uncle Muralidoss Ramdoss were carrying on business in

buying and selling houses and lands in Madras under the trade name of Ramdoss Muralidoss & Co., and after their deaths the first counter-

petitioner and Krishnadoss Muralidoss, now deceased, carried it on. Messrs. Parry & Co. obtained a decree in O.S. No. 1007 of 1922 on the

Original Side of this Court for Rs. 49,117 against this firm. Other creditors of the firm obtained a decree for Rs. 75,206 and attached the

properties belonging to the firm on the 9th September, 1924. The property remained attached for a period of 21 days and notice was given to

Gokuldoss of the intention of Messrs, Parry & Co, to file a petition, to declare the firm insolvent. Meanwhile Govindoss Krishnadoss, alias Babu,

instituted a Suit, O.S. No. 622 of 1923, first for partition and later upon amendment for a declaration that the family had become divided from

1890 and that the debts were incurred by him after his father''s death. In this suit a Receiver was appointed on 31st August, 1923.

It was contended before Mr. Justice Waller and again in appeal that as the business of the firm ceased in April, 1923, the Court had no

jurisdiction to make an order of adjudication in November, 1924. It is also contended that after the appointment of a Receiver any business carried

on by the Receiver will not amount to a carrying on the business by the firm, as the Receiver is not an agent of the parties but an officer of Court,

and that until he is discharged, no adjudication order can validly be made.

Section 11(d) of the Presidency Towns Insolvency Act declares : ""The Court shall not have jurisdiction to make an order of adjudication in the

case of a petition against a firm of debtors unless the firm has carried on business within a year before the date of the presentation of the insolvency

petition within those limits."" Whether a firm has carried on business or not within a year before the date of the filing of the insolvency petition is a

question of fact in each case. But it is necessary first to determine what is meant by ""carrying on business."" Is it the same as ""being a trader"" which

is the expression used in Section 87 of the English Bankruptcy Act of 1869 ? Mr. Ramachandra Aiyar quoted the case of Dawe v. Vergara

(1883) 11 Q.B. 241. That was a case where two persons, Ellery and Festing, traded together as wine merchants. Festing brought a suit for

dissolution and himself took service in another company as a book-keeper. A Receiver was appointed to carry on the business. It was held that,

after the appointment of the Receiver who took possession and carried on the business Festing was no longer a trader at the time when his goods

were taken in execution. Mr. Ramachandra Aiyar also relied on the case of Ex pane Blain, In re Sawers (1879) 12. Ch. D. 532. where it was held

that the act of bankruptcy could not be committed by an agent and therefore that two partners of an English firm who were residing permanently in

Chili could not be adjudicated bankrupts in an English Court of Bankruptcy. The explanation to Section 9 of the Presidency Towns Insolvency Act

declares that the act of an agent may be an act of the principal for the purpose of committing acts of insolvency even though the agent may have no

specific authority to commit it. It was pointed out by me in Kalianji Singhji Bhai v. The Bank of Madras (1915) 29 MLJ 788. that the law in

England was not the same as that in India in this respect.

In Goswami Shri Girdhariji v. Shri Govardhan Lalji ILR (1893) B 294. the Privy Council had to consider the meaning of the phrase ""carry on

business"" and they observed that the phrase was an elastic one and almost incapable of definition. It was intended in the Letters Patent, where the

phrase was used, to refer to business in which a man might contract debts and become liable to be sued by persons who had business relations

with him. I am of opinion that the expression ""carry on business"" in the Presidency Towns Insolvency Act cannot be interpreted in the light of the

Letters Patent or of the wording of the old English Bankruptcy Law with reference to traders, so that cases like Dawe v. Vergara (1883) 11 QB

Ex parte Schomberg (1874) 10 Ch. A 172 and Ex parte Salaman, In re Taylor (1882) 21 Ch. D. 394. do not help us to decide the meaning

of the phrase ""carry on business"" in cases of insolvency. Under the old Bankruptcy Act of 1869 a firm could not be adjudicated insolvent in

England, but this was made possible by the Bankruptcy Act of 1893 in which the expression ""being a trader"" was dropped and the expression

carrying on business"" was substituted. As a married woman could not be made bankrupt unless she was carrying on a trade or business after her

marriage the question has come up in. connection with the Married Women''s Property Act as to what is the meaning of ""carrying on business

under the Bankruptcy Act. In In re Dagnall, Ex parte Soan and Morley (1896) 2 Q B 407. Vaughan Williams, J. observed that trading was not

completed until all the obligations that the fact of trading imposed upon the trader were performed. The learned Judges declined to be bound by

the earlier decisions such as Ex parte Schomberg (1874) 10 Ch. A 172. as to the meaning of the words in the Bankruptcy Act of 1888 ""being a

trader"". Then in In re Worsley (1901) 1 Q B 309. Lord Alverstone, C.J. held that a woman who was carrying on business separately from her

husband and sold that business must be deemed to be still carrying on the business so long as the debts she had incurred in the business remained

unpaid. Reference is made by the learned Chief judge to the case of Ex parte Bamford 15 Ves. Rep. 449. where the Lord Chancellor laid down

that so long as a trader did not pay the debts he had contracted while engaged in the trade he was to be regarded as still engaged in the trade. In In

re Clark: Ex parte Pope Owles (1514) 3 KB 1005. a similar meaning was given by the three learned judges of the Court of Appeal to the words

carrying on business ""; and in this Court in Petition No. 150 of 1916 our learned Chief Justice took the view that the meaning of ""carrying on

business"" as understood by the Court of Appeal in England was the same in this country and that the language used by the English Court of Appeal

was expressed in terms so general as to mean that, so long as there are debts of the business being discharged and assets being got in, a business

must be regarded as still being carried on.

As regards the argument that the appointment of a Receiver prevented the order of adjudication being made, Mr. Justice Pollock in Dawe v.

Vergara (1883) 11 QB 241. implied that if Festing intendeci to reconstitute the business or carried it on after the Receiver was discharged, he

would be a trader. It seems to me that the Legislature could not have intended that an insolvent firm should be allowed to evade its responsibilities

and obligations by the device of one member of the firm bringing a suit against another member and applying to the Court to appoint a Receiver. It

was also argued that Mr. Justice Waller''s order declaring the firm insolvent was contrary to Rule 47 of the Insolvency Rules which says that an

order of adjudication shall be made against partners individually. I do not understand this rule as meaning that an order of adjudication shall not

also be made against the firm. But if it has that meaning, it is at variance with the provisions of Section 99 of the Act, which speaks of adjudication

orders being made against firms, and it may be ultra vires, as suggested by Mr. Grant. In In re Wenham, Ex parte Battams (1900) 2 Q.B. 695.

Lord Alverstone observed that the rule of the Supreme Court in England under which a creditor was enabled to get a separate receiving order

against each individual partner could not be held to cut down the rights and liabilities created by the sections of the Bankruptcy Act. In the present

case there is no question that at the date of the petition the insolvent firm had business debts undischarged.

The objections taken to the order of Mr. Justice Waller thus fail, and the appeals of the two members of the firm must be dismissed with costs.

The respondents will get their costs out of the estate.

This order will have the effect of dissolving our order, dated 18th December, 1924, as to payment of Rs. 500 per mensem for the maintenance

of the insolvents, and they may apply for what is necessary to the Official Assignee or to the Judge sitting in insolvency.

Ramesam, J.

I agree.