Judgement

Law. Rep. 70 Ind. App. 93 ( 1942- 1943) Mahomed Siddique Yousuf V. Official Assignee of C alcutta

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Consolidated Appeals (No. 54 of 1942), by special leave, from a judgment and two orders of the High Court in its appellate insolvency jurisdiction (December 17, 1940), which had dismissed an appeal from the Judge in Insolvency (July 25, 1940).

The following facts are taken substantially from the judgment of the Judicial Committee In 1938 one Ali Mohamed Hashim (hereafter called "the insolvent") had a claim for damages against a firm with whom he had dealings in shares, and by a written agreement of March 30, 1938, between the appellant and the insolvent the former agreed to advance money for the costs of the contemplated suit and to assist in the conduct of it, for which services he was to receive half the money recovered after deducting the advances. On April i, 1938, the suit was instituted, and on January 19, 1939, was decreed for Rs.6750 and interest. On January 20, 1939, by indenture of assignment, the insolvent assigned to the appellant the said decree in consideration (inter alia) of his discharge of all liabilities under the agreement of March 30, 1938, and Rs.iooo then paid to him in cash.

Meantime, on November 8, 1938, one Hamid Haji Umer (the second respondent), hereinafter called "the "petitioning creditor," had filed a suit against the insolvent for money due from the insolvent in respect of share transactions in which the plaintiff had acted as his broker. On April 5, 1939, the suit was decreed for Rs.15,785-10. On April 19, 1939, the petitioning creditor filed a petition in the High Court for the adjudication of the insolvent as an insolvent. The petition alleged several acts of insolvency, one of which was that the insolvent on January 20, 1939, executed the deed of assignment

to the present appellant of the decree of January 19, 1939, with the intention of preferring the present appellant over other creditors. On April 25, 1939, the petitioning creditor obtained ex parte the appointment of the official assignee (the first respondent) as interim receiver of the decree of January 19, 1939 ; correspondence with the appellant followed in which, on April 29, he was supplied with a copy of the petition for adjudication. In May the appellant instituted proceedings in execution of the decree, and an order was made that the judgment debtor pay the money into court, which he did, and that it should not be withdrawn except with the leave of the Insolvency Court. On June 13, 1939, an adjudication order was made against the insolvent. No one appeared except the petitioning creditor, and the order recited that the insolvent had committed each of the acts of insolvency alleged in the petition. In August the appellant applied in the Insolvency Court for leave to take out the decretal money then in court. Leave was given subject to leave being obtained in the suit. The appellant then applied for similar leave in the suit. That application was opposed by the official assignee, and on August 31, 1939, an order was made that the appellant was to be entitled to withdraw the amount on furnishing security. If the official assignee made any application on the first insolvency day after the reopening of the court, then the application was to abide the result thereof.

If no application were made then the order was to be made as asked for. In pursuance of that order the official assignee, on November 23, 1939, gave notice of motion in the Insolvency Court for a declaration that the indenture of assignment dated January 20, 1939, should be declared void as against the official assignee and that the transfer should be set aside. That was the motion which was the subject-matter of the present proceedings.

The Judge in Insolvency (Panckridge J.) held on the merits that " the insolvent deliberately elected to prefer the transferee "to the other creditors " ; he further held that s. 57 of the Presidency-towns Insolvency Act, 1909, ex