Murali Doss Brijaratna Doss and Others vs The Official Assignee of Madras

Abdur Rahim, C.J.—I shall deal with the question of limitation first of all. It must be taken as settled law that until the Official Trustee intervenes, all transactions by a bankrupt after his bankruptcy with any person dealing with him bona fide and for value in respect of his after-acquired property, whether with or without knowledge of the bankruptcy, are valid against the trustee. This proposition was laid, down by Esher, M.R., in Cohen v. Mitchell (1890) 59 L.J.Q.B. 409 and has been accepted and followed in this country. See Sriramulu Naidu v. Andalammal 17 M.L.J 14. But, apart from such transactions, the law laid down in Herbert v. Sayer (844) 2 D. & L. 49, that the bankrupt acquires property and contracts for the Official Assignee''s benefit, holds good not only in England but in India. In fact whatever property an insolvent acquires before his final discharge is as an agent and for the benefit of the Official Assignee. That being the position, I agree with the learned Chief Justice who held in another ease arising out of the insolvency of the present defendants father that the possession of the undischarged insolvent cannot be adverse to the Official Assignee. See Official Assignee v. Mcorli Doss 22 Ind. Cas. 271 confirmed on appeal in Ratna Bai v. Official Assignee, Madras 29 Ind. Cas. 168. I am, therefore, unable with all respect to accept the dictum of Mr. Justice Wilson to the contrary in Kristocomul Mitter v. Suresh Chunder Deb 12 C.L.R. 253, which had been followed by the High Court in Suja Hossein v. Monohur Das 244 Ind. Dec. 828.

After setting out the facts as above and referring to the sale of the jewels by the defendants, His Lordship proceeded:

But if they sold these jewels they did so after the Official Assignee had intervened, of which fact they had notice. The proper order to make would be that they should account for these jewels to the Official Assignee and if they have paid off any portion of their father''s debt, they will be entitled to prove their claim to that extent against the estate of the insolvent. After they received notice of the claim of the Official Assignee they were in no way justified in paying the creditors of their father but should have referred them to the Official Assignee. * * * * * * * * * * *

The decree of the learned Trial Judge will, therefore, be modified in accordance with the above findings. Etch party will receive and pay costs in proportion in this Court and in the Court of first instance.

Philips, J.

I agree.