JUDGMENT

Haveliwala, A J C - This application raises an interesting point of law and a point of some public importance. It appears that the firm of the insolvents Dhanrajmal Kishindas were entitled to certain moneys, viz. Rs. 6,500 from one Savalsing and Sadhusing, sons of Sobhasing and they mortgaged this claim along with their other properties by a deed dated 4th February 1929 to the applicants Messrs. Devishah Hukumchand. Dhanrajmal Kishindas filed a suit againsi Savalsing and Sadhusing for the recovery of Rs. 6,500, and during the pendency of of the suit they were on 6th June 1929 adjudicated insolvents. On the application of Savalsing and Sadhusing the Official Assignee was brought on record and eventually, on 19th November 1929, a decree for Rs. 5,750 and interest and costs was passed in favour of the Official Assignee. The applicants Devishah Hukumchand now claim this sum of Rs. 5,750 as mortgagees, whereas the Official Assignee resists the claim of the applicants under the doctrine of reputed ownership under Section 52, Presidency Towns Insolvency Act, and prays that the amount be made available for the general body of creditors.

2. It is contended by Mr. O'Sullivan on behalf of the Official Assignee that the applicants having failed to give notice of this claim of mortgage debt to Savalsing and having also failed to be subsituted in the suit as mortgagees, the debt was in possession, order or disposition of the insolvents in their trade and business within the meaning of Section 52(c), Presidency Towns Insolvency Act.

3. On the other hand, it is contended by Mr. Dipchand on behalf of the applicants that under Section 17 of the Act, the applicants being the mortgagees, the right of the mortgagee as secured creditor, will not be affected by the doctrine of reputed ownership, and the right of the applicants to realize or otherwise deal with their security should prevail as against the Official Assgnee. In this connexion reliance is placed on the following cases: Wyse v. Chowksey [1912] 6 S.L.R. 61 David Sassoon & Co. v. National Bank of India Ltd. [1913] 7 S.L.R. 61 In re Moolji Morarii A.I.R. 1929 Sind 144.

4. Now, a careful reading of these cases does not support the contention of Mr. Dipchand. Wyse v. Chowksey [1912] 6 S.L.R. 61 is a case under the Provincial Insolvency Act 3 of 1907 and a judgment of a single Judge. The mortgage there was in the form of an assignment of the goods and chattels then lying on the premises, and also of all outstanding debts due to the insolvent on condition that the assignment would become void on payment of the debt assured, i.e. Rs. 9,000 and interest. The grounds of the decision appear to be that the doctrine of reputed ownership is contained in Section 28(3), and the rights of secured creditors are contained in Clause 6, and the provision of Clause 6 govern those of Clause 3. But it seems to ma that under Section 28(2) the property of the insolvent passes to the receiver and under Clause 3 the goods in the possession of the insolvent as reputed owner also pass as property of the insolvent and there is a further proviso to Section 28(2) whereby, after an adjudication, no creditor during the pendency of the insolvency proceedings, can have any remedy against the property of the insolvent in respect of the debt or commence any suit or legal proceeding except with the leave of the Court. Section 28, Clause 6, says:

Nothing in Section 28 shall affect the power of a secured creditor to realize or otherwise deal with his security.

5. The word "realize" implies realization by sale, &c. In my opinion a possible interpretation can also be put upon this section and that is that Sub-sections 3 to 6, each one of them, qualify Sub-section 2 and the provisions of Clause 6 do not govern those of Sub-section 3. Therefore the doctrine of reputed ownership would apply in a case where a secured creditor, being entitled to possession, fails to take his security in his possession and allows the insolvent to con