Attachment of trade mark for recovery of Income Tax arrears.

The two applicants, who are third parties to the insolvency proceedings, have taken out this Judge’s Summons under section 86 of the Presidency Towns Insolvency Act to set aside the sale of the insolvent’s 1/8th share in the registered trade mark “ Maharaja Beedies” bearing Nos. 105149 and 105150 in favour of the 7th respondent at an auction held on 30th March, 1971, by the Official Assignee, Madras. One T. M. Hajee Abdul Rahim Sahib was the sole proprietor of the said trade marks. By a deed of assignment dated 7th April, 1960, he assigned the rights in the trade mark in favour of his sons and grandsons, namely: (1) Sathar, (2) Quiyum,(3) Shokoor, (4) Khaleel (Insolvent), (5) Jaleel, (6) Irshed, (7) Sajjad and (8) Dilshed. Nos. 1 and 2 shown above are the applicants in this application. In about October, 1960, a firm by name Messrs. T.M. Hajee Abdul Rahim Sahib & Sons, consisting of the said Hajee Abdul Rahim and his sons and grandsons, was started and the said firm was manufacturing beedies under the trade mark “Maharaja Beedi”. After the death of Hajee Abdul Rahim Sahib misunderstandings arose between the partners. By mutual consent, the said firm was dissolved by an agreement dated 7th May, 1968 and thereafter two other firms were started: (1) by the name of Turab Miyan Rahim Company with three partners (1) Sathar, (2) Quiyum. and (3) Shokoor and another firm by name R.A. Jaleel and Brothers with three partners (1) Khaleel (insolvent), (2) Jaleel and (3) Irshed. Each of the firms was allotted specific areas for marketing their beedies under the said trade mark. It appears that these two firms were also dissolved shortly thereafter and two other firms came into existence, (1) by name Rahimson and Company with partners (1) Khaleel (insolvent) and (2) Irshed, and the other-firm by name Rajarani Trading Company with partners (1) Shokoor, (2) Jaleel and. three others. Both these firms were trading in the business of manufacturing and. selling Maharaja Beedi under the trade mark “Maharaja Beedi”. Khaleel was adjudged insolvent on 23rd December,. 1970 on a creditor’s petition. At that time, the insolvent was carrying on business as a partner of Rahimson and Company. On the adjudication of Khaleel, the Official Assignee, who took, over the administration of the estate of the insolvent, took steps to sell the 1/8th. share of the insolvent in the trade mark. He caused notices to be issued to the other shareholders of the trade mark to submit their offers, if any, for purchase of the insolvent’s share. Such notices were sent to the two applicants herein also. But none made any offer. Nor did any of them object to the sale of the share of the insolvent. Thereafter, the Official Assignee caused advertisements to be made in newspapers, “ The Hindu” and “ Dhinathanthi” calling for offers for purchase of the insolvent’s share in the trade mark. Certain persons made offers. The Official Assignee felt that an auction should be held among those who made offers and thereupon he issued notices to those who made offers fixing 30th March, 1971 for conducting the auction. At that auction, the seventh respondent happened to be the highest bidder for a sum of Rs. 37,500. The sale in his favour was confirmed and the sale certificate has been issued in his favour describing that what was conveyed was the insolvent’s share in the trade mark.

2. The applicants, who own shares in the trade mark, attack the validity of the sale on several grounds. At the time of the hearing of the application, the applicants’ Counsel Mr. Venugopal put forward the following contentions:-

(i) The entire right in the trade mark had been attached by the Income-tax department under the provisions of the Income-tax Act, 1961, for recovery of arrears of income-tax. The auction conducted by the Official Assignee during the subsistence of the attachment is void;

(ii) The Official Assignee had no right to sell an indivisible share of one of the proprietors without obtaining