In Re: Dwarkanath Mitter <BR> S.M. Ratanmani Dasi and Another

Sir Barnes Peacock Kt., C.J.—It appears to me that there is no ground for interfering with this order. Putting out of consideration altogether the deposition of Anand Chandra Mitter, there is ample evidence in the testimony given by Ratanmani Dasi and Baddinath Mitter to show that the properties in dispute were held benami for the insolvent. The only question on which I had any doubt was the one which I suggested to Mr. Marindin at the close of his argument, as to whether section 26 of the 11th and 12th Vict., c. 21, authorized the Insolvent Court to make an order for the delivery of property, or for the payment of a debt alleged to be the property of the insolvent or to be due to him, when the title or debt was a matter in dispute. But looking to the words of the section, it appears to me that they are too strong to have any other interpretation put upon them than that the Insolvent Court has the power to order any person who has the possession of, or has under his power or control, any property of the insolvent to deliver over such property to the Assignee. The words, it shall be lawful for the said Court," do not appear to me to render it compulsory on the Court in all cases to try whether the disputed property belonged to the insolvent or not; but it is discretionary with the Court to enter upon the trial of such a question and to make an order. There are many cases of fraudulent transfers of moveable property on the eve of insolvency or after it, in which, unless the Insolvent Court had the power, the property might be made away with before an action could be brought and determined; and if the Court has the power, it appears to me that the present is one of those cases in which, in the exercise of its power, it ought to make an order. The case is one in which part of the property is claimed by the son of the insolvent, and part of it, viz., the company''s paper, is claimed by the wife. It is proved by the wife and by the son that the rents of the property are sometimes paid to the mother, and sometimes to the son, and that the father (the insolvent) sometimes receives them; that the mother and son and the father all live together; and that the rents of the property are disposed of for the benefit of the whole family.

There was a technical objection raised by Mr. Marindin, with regard, to the Government paper, that the rule nisi mentioned paper standing in the names of the mother and the son, or in the name of one of them; whereas the paper, some three or four days before the rule nisi was granted, had been made over to Abinas Chandra, the son of Baddinath, the insolvent''s son. Now, there seems to be no good reason why, just at that very moment, the Government notes should have been transferred to the son of Baddinath if the case were an honest one. It appears to me that the technical objection fails, and that the learned Judge who made the order was right in ordering that the Government note for rupees 3,000, which had not been bona fide disposed of, and which is described in the order, as the note realized as part of the proceeds of the Tallah property, should be transferred. But although the technical objection fails, it appears to me that the fact of that transfer tends very much to confirm me in my opinion that the Tallah property was held benami for the insolvent.

Then again, although the order is upon Baddinath to transfer the property, and upon Baddinath and the wife of the insolvent to transfer the note, the wife and the son join in one appeal against the whole of the order and allege as grounds of appeal, grounds which affect the order as to the land, as well as the order as regards the promissory note. It appears to me that that shows that the wife and the son had no very clear notion as to which of them the property belonged, and that the common object of the two was to protect the property for the benefit of the insolvent.

I think that the order of the Insolvent Court ought to be affirmed with the costs of this appeal.

Phear, J.

I agree with the Chief Justice that the 26th section of the Act gives power to the Insolvent Court in a certain case upon the application of the assignee or any creditor, after notice, to order a person who should be possessed of property belonging to or be indebted to the insolvent, to deliver over such property, or pay such debt to the assignee. Now the case is thus described:--"If any person shall, after any such insolvent shall have petitioned for his ''discharge, he possessed of or have under his power or control any property whatsoever of such insolvent, or to which such insolvent may be in any way entitled, &c." Certainly, before making an order, the Court must satisfy itself that such a case has occurred, and it can only do so by a process of judicial inquiry, and upon the hearing of evidence. In other words, the Insolvent Court must be competent for the purposes of section 26 to take evidence, and thereon to adjudicate whether or not a specified person is possessed of or has under his power or control any property of the insolvent, or is in any amount indebted to the insolvent. It is no doubt observable that there is not a corresponding enactment in any of the English Acts; but it seems to me that there is good reason why it should be specially introduced into an Act intended to be worked in this country. The prevalence of benami transactions, and of the enjoyment of property jointly in various shares by members of large families, renders it necessary that the Insolvent Court should have extraordinary powers for the purpose of enabling the Official Assignee, on behalf of the creditors, to secure the property of the insolvent, and to protect it from fraudulent transfers effected for the purpose of saving the property from distribution among his creditors.

I also think with the Chief Justice that the words, it shall be lawful for the said Court, do not render it compulsory on the Court to act in all cases in which an application should be made to it by the Official Assignee, or by a creditor. It appears to me further not difficult to say where the line should be drawn, separating cases in which the Insolvent Court should take action from those in which the Official Assignee should be referred to the Civil Court. The procedure of the Insolvent Court, and the mode prescribed for an application u/s 26, are not very appropriate to an inquiry, which mainly has regard to conflicting rights of property; but I see no reason at all why a determination, completely satisfactory should not be come to in proceedings of this kind, when the matter of inquiry is simply a matter of fact, such as those which I have just now referred to; an inquiry whether the property is held benami or not, or whether it is a portion of joint-family property. And again, there is a large class of simple debts, which may be very safely inquired into, and all the facts ascertained by merely bringing the parties face to face with each other through the machinery of a simple notice or order nisi, such as that prescribed by this section.

Moreover, I would add that it seems to me now too late to question the power of the Insolvent Court to make an order of this sort under the 26th section of the Act, considering that at this time the Act has been in operation for upwards of twenty years; and that it has been the constant practice of the Insolvent Court to make such orders during that period. At the same time, I believe, it has always been the practice of the Court, and I am sure it has been the practice during the period of my experience here, to abstain from making orders to deliver over goods, or to pay debts when it appears that there is really a conflict of right or equity between the insolvent and the person in whose possession the goods are, or from whom payment of the debt is sought to be obtained. As to the facts of this case, I also agree with the Chief Justice that even if the evidence of Anand Chandra is set on one side, there is amply sufficient in the testimony of the other witnesses to support the finding to which the learned Commissioner has arrived. I have no sort of doubt that these three properties were really held by Baddinath benami for the benefit of the insolvent, and the notes, as the learned Commissioner observed, stand exactly on the same footing.

1 11 and 12 Vict., cl. 21, section 26.--And be it enacted, that in case any person shall, after any such insolvent shall have petitioned for his discharge under this Act, of have been adjudged to have committed an act of insolvency, and before the said insolvent shall have obtained his discharge in the nature of a certificate as hereinafter mentioned, be possessed of or have under his power or control any property whatsoever of such insolvent, other than any such Government stock, funds, or annuities as aforesaid, or other than any of the stock or shares in any public Company either in England, Scotland, or Ireland, or within the limits aforesaid, or to which such insolvent may be in any way entitled, either under any trust, express or implied, or otherwise held for his use and benefit, or in case any such person shall be at any such period indebted to such insolvent, it shall be lawful for the said Court, upon the application of any assignee or any creditor of such insolvent whose debt or demand shall have been admitted or established in the matter of the said insolvency, to cause notice to be given to such person, directing him to hold and retain the said property till the said Court shall make further order concerning the same; and thereupon it shall be lawful for the said Court further to order such person to deliver over such property, and to pay such debts as aforesaid, or any part thereof, to the assignee or assignees of the estate and effects of such insolvent, for the general benefit of the creditors of such insolvent; and such delivery and payment shall be made accordingly in obedience to such order, and such person shall, by such payment and delivery, so made in pursuance of such order of the said Court, be discharged in respect of such property and debts against all persons whatsoever to all intents and purposes.