The judgment establishes the limitation of the Insolvency Court's power in directing the return of pension papers in the context of insolvency proceedings, despite the transaction falling within the scope of the Pensions Act.

ORDER

Panckridge, J. - This application raises an important question with regard to the position of creditors of Government pensioners who have the misfortune to be adjudicated insolvents. The facts are that the insolvent was adjudicated on his own petition on 4th July 1938. He was formerly an employee of the Posts and Telegraph Department of the Government of India, and on his retirement he was granted a monthly pension of Rs. 308 net after deduction of income tax. Prior to his adjudication he had admittedly borrowed money from the opposite party, Jagannath Panday, in whose favour he had executed a promissory note for Rs. 5000. The insolvent states in his petition that he arranged with Jagannath Panday that he should pay a certain portion of his pension month by month in liquidation of the sum previously advanced, and should deposit with Jagannath his pension pay order and pension papers. Without these documents he is unable to draw his pension from Government.

2. It appears that after the adjudication order the insolvent obtained the pension papers from Jagannath, who brought criminal proceedings against him. The criminal proceedings were abortive as the Magistrate held that the matter was one which should be dealt with by a Civil Court, and the papers were returned to Jagannath in whose custody they now are. The insolvent now applies that this Court should direct Jagannath to make over the pension papers to him. The application is made on notice to the Official Assignee. The insolvent contends that the arrangement under which he made over the papers to Jagannath is invalid and illegal because it was in contravention of Section 12, Pensions Act, 1871. u/s 11 of that Act no pension granted by Government on account of past services, and no money due or to become due on account of any such pension or allowance, shall be liable to seizure, attachment, sequestration, by process of any Court in British India, at the instance of a creditor, for any demand against the pensioner, or in satisfaction of a decree or order of any such Court. u/s 12, all assignments, agreements, orders, sales, and securities of every kind made by a person entitled to any pension, mentioned in Section 11, in respect of any money not payable at or before the making thereof, on account of any such pension, or for giving any future interest therein; are null and void. The insolvent argues that the pension papers in the hands of Jagannath are a security within the meaning of Section 12, that by reason of that Section the deposit of them by way of security is null and void, and that he is entitled to the return of the papers.

3. On the other hand, Mr. S.C. Roy, who appears for Jagannath, draws a distinction between a security and a possessory lien, and argues that what he has obtained does not fall within the former category. I do not propose to decide this question, though my inclination would certainly be to agree with the view put forward by the insolvent. The language of the Pensions Act is very wide, and in my opinion the transaction with which I am dealing is clearly one of the class of transactions which Section 12 was enacted to prevent. The difficulty in making the order for which the insolvent asks is that I consider that it is beyond my power to make it in the exercise of the insolvency jurisdiction of the Court. u/s 7, Presidency Towns Insolvency Act, the Court has power to decide all questions of priorities, and all other questions whatsoever, whether of law or fact, which may arise in any case of insolvency coming within the cognizance of the Court, or which the Court may deem it expedient or necessary to decide for the purpose of doing complete justice or making a complete distribution of the property in any such case. In my opinion, although the jurisdiction given by Section 7 is extensive, only those orders can be made under the Section which are necessary for the purpose of the insolvency, that is to say, for facilitating the distribution of the