In Re: M. Mohanarangiah Chetty The Official Assignee, Madras

Venkataraman, J.—By this application, the Official Assignee seeks to recover back from the respondent Dharmasi Anandji, petitioning-creditor, a sum of Rs. 2,000, which was paid to the respondent by the insolvent on 22nd July, 1963, after a petition to adjudicate the insolvent was filed by the said creditor. The petition of the respondent to adjudicate the insolvent was filed on 8th February 1963 and the act of insolvency alleged was notice dated 7th February 1963 which the insolvent gave of suspension of payment of his debts. What happened was that the petition filed by the respondent was adjourned from time to time to enable a settlement being effected by the debtor so as to avert insolvency. In the course of such adjournments, the debtor paid a sum of Rs. 2,000, to the respondent. Subsequently in December 1963 another creditor was substituted in the place of Dharmasi Anandji and the order of adjudication was made in January 1964. The position regarding such payment is well settled. Under S. 17 of the Presidency Towns Insolvency Act, on the making of an order of adjudication, the property of the insolvent vests in the Official Assignee. Under the doctrine of relation back embodied in S. 51 of the Act, the insolvency of a debtor shall be deemed to have relation back to the time of the commission of the act of insolvency on which an order of adjudication is made against him, that is, in this case from 7th February 1963. So any payment after 7th February 1963 by the insolvent to the creditor must be re-paid, unless the creditor can claim protection under S. 57 of the Act which protects bona fide payments by the insolvent to any of the creditors. But there is a proviso to the section which reads:

Provided that any such transaction takes place before the date of the order of adjudication and that the person with whom such transaction takes place has not at the time of notice of the presentation of any insolvency petition by or against the debtor.

Now in this case the proviso hits the respondent directly, because it is he who filed the petition for adjudication of the debtor as insolvent. He is, therefore, liable to pay the amount paid by the debtor. It is needless to mention that paras 580 to 586 in Mullah''a Law of Insolvency are also in support of the conclusion which is inevitable on the facts of this case. What remains is the question of interest The Official Assignee wants the respondent to pay back the amount, with interest. No authority is cited to show that the respondent is liable to pay interest. So far as (sic) concerned, I direct the respondent to pay Rs. 2000 within a month. The amount will carry interest at 6 per cent., per annum from today.