In Re: Mohanarangiah Chetty, An Insolvent, The Official Assignee

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, by which the insolvent gave notice 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. u/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 Section 51 of the Act, the insolvency

of and debtor shall be deemed to have relation back to the time of the commission of the not 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 u/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 or adjudication and that the person with whom such transaction takes

place has not at the tune 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 paragraphs 588 to 586 in the Mullah''s 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 this case is concerned, T direct the Respondent to pay Rs. 2,000 within a month,

The amount will carry interest at 6 per cent per annum from today.