Back
2025 Supreme(Online)(MAD) 3965
HIGH COURT OF MADRAS
P.B.Balaji, J
K.Madasamy – Appellant
Versus
Narendra – Respondent
A.Nos.190 & 191 of 2022 in IP.17 of 2019
For Applicants/Debtors:Mr.P.Jesus Moris Ravi; For Respondent/Petitioning Creditor: Mr.T.Srikanth; Official Assignee: Mrs.C.B.Meena
The Official Assignee cannot claim commission when creditors are settled directly without intervention, but can recover actual expenses incurred.
Headnote:(A) Insolvency Rules, 1958 - Order XVII Rule 10(i) - Applications for stay of proceedings and setting aside ex-parte order - Applicants settled all claims with creditors directly, leading to a dispute over the Official Assignee's commission - Court found that since claims were settled without the Official Assignee's intervention, the commission was not applicable. (Paras 9, 10, 11)
(B) Official Assignee's Expenses - The Official Assignee is entitled to recover expenses incurred for property valuation but not the commission when creditors are settled privately. (Paras 10, 11)
Facts of the case:
The Applicants filed for a stay of proceedings and to set aside an ex-parte order, claiming all creditors had been settled directly, and contesting the Official Assignee's claim for expenses and commission.
Findings of Court:
The court ruled that all claims against the Insolvents are discharged, the ex-parte order is set aside, and the Official Assignee must refund excess amounts after deducting valuation and advertisement expenses.
Issues: The main issue was whether the Applicants are liable to pay the Official Assignee's commission and expenses after settling claims directly with creditors.
Ratio Decidendi: The court held that when creditors are settled without the Official Assignee's involvement, the commission under Order XVII Rule 10(i) is not applicable, affirming the principle that the Official Assignee can recover only actual expenses incurred.
Result: Applications allowed; order set aside and insolvency petition closed.
| Table of Content |
|---|
| 1. counsel for applicants contends (Para 3) |
| 2. counsel for petitioning creditor submits (Para 4) |
| 3. official assignee's submission (Para 5) |
| 4. counsel for applicants meets submissions (Para 6) |
| 5. court considers submissions (Para 7) |
| 6. issue of liability for payment (Para 8 , 9 , 10 , 11) |
| 7. court's final orders (Para 12) |
COMMON ORDER
The Applications (IP) Nos.190 & 191 of 2022, have been filed for stay of the further proceedings in I.P. No. 17 of 2019 pursuant to the order of this Court dated 08.08.2022 and for setting aside the ex-parte order dated 08.08.2022 in I.P. No.17 of 2019.
2. I have heard Mr.Jesus Morris Ravi, learned counsel for the Applicants and Mr.T.Srikanth, learned counsel for the Petitioning Creditor and Mrs.C.B.Meena, the learned Official Assignee. I have also gone through the records.
3. The learned counsel for the Applicants would invite my attention to the various orders passed and contend that the order of adjudication was passed ex-parte and despite the said order of adjudication, pending the above proceedings the Applicants had settled all the Creditors. In fact, as seen from the earlier adjudications in these proceedings, the Applicants have been taking time for settling the claims of the creditors and were also making part payments. On 16.12.2024, a Demand Draft to the tune of Rs.30,58,872/- was handed over to the learned counsel for the Petitioning Creditors. Thereafter, the matter has been posted for reporting settlement and on 20.01.2025.
4. The learned counsel for the Petitioning Creditor, Mr.T.Srikanth would submit that all the claims of the Petitioning Creditors had been settled in full and he has no objections for the claims being discharged.
5. The learned Official Assignee would submit that, pursuant to the adjudication, the Official Assignee has taken steps to value the property by engaging a Chartered Engineer and in that connection substantial amounts to a tune of Rs.1,22,720/- has been spent. She would also submit that in terms of Order XVII Rule 10 (i) of the Insolvency Rules , the Official Assignee is entitled to charge Commission at the rate of 7% on the Principal amount or value of assets collected by him in each state and on the amounts paid to the creditors in pursuance of composition or scheme of arrangement. The learned Official Assignee would therefore submit that after adjusting the amounts paid to the Valuer and 7% Commission, the Applicants are still due and payable, a sum of Rs.1,57,000/- to the Official Assignee. The learned Official Assignee would also fairly submit that Rs.5,42,200/- deposited by the Insolvent (Rs.5,30,000/- in a Fixed Deposit) has grown by Rs.43,328/- on account of interest being accrued to the Principal amount. The learned Official Assignee would therefore seek for directions to be issued to the Applicants to pay the said sum of Rs.1,57,000/- to the Official Assignee.
6. Meeting the said submissions of the learned Official Assignee, the learned counsel for the Applicants would submit that the order of adjudicating the Applicants as Insolvent was passed ex parte and further all the claims were settled directly with the Petitioning Creditors and therefore, the Applicants should not be mulcted with expenses incurred by the Official Assignee and also the Government Commission which is payable under Order XVII, Rule 10(i) of the Insolvency Rules , 1958.
7. I have carefully considered the submissions advanced by the learned counsel for the parties and the learned Official Assignee.
8. With regard to the 23 claims against the insolvent, there is no difficulty as the learned counsel for the Petitioning Creditor has reported full satisfaction of all the claims and he has no objection for the claims to be discharged. The only issue that has to be decided is in respect of whether the Applicants are liable to pay a further sum of Rs.1,57,000/- as arrived at the by the Official Assignee, after factoring the initial amount deposited by the Insolvents, towards expens
