Kalianji Singji Bhai (Sole Partner of the Firm of Raysee Amarchand) vs The Bank of Madras

Spencer, J.—The appellant is the sole partner of the firm of Raysee Amarchand carrying on a money lending business at Calicut with a head

office at Bombay. On December 3rd, 1912 the-Agent of the Bank of Madras, the respondent in the case, presented a petition to the District

Judge to adjudicate the appellant insolvent and to appoint an ad interim receiver. On December 6 a notice signed by the Sarishtadar of the District

Court (by order) went to the local agent to inform him that a. petition to declare the appellant insolvent was posted for January 21 and that he

might appear and show cause against it. The agent, Visram Sait, refused to receive the notice on the ground that his master should be made a

party, and it was served on him by affixture. On December 7, a notice of the hearing together with a copy of the petition was sent by the

respondent''s pleader through registered post to the appellant at Mandavi in Cutch where he was thought to be residing, but it was returned to the

sender as the addressee had"" Left, Particulars not known.'''' At the hearing on January 21, notice was ordered by the Court to go to the principal

debtor for March 11, but admittedly ho further attempt was made to serve a notice of the date of hearing on the debtor in person as it was found

impossible to do so. On March 11, the notice given to the local agent was declared by the Court to be sufficient, and on the same date the said

agent filed in Court a counter-petition on behalf of the appellant describing himself as his muktiar. The proceedings were fully contested and ended

on December 19, 1913, in an adjudication of the debtor u/s 16 of the Provincial Insolvency Act as insolvent.

A number of objections have been raised to the sufficiency of the service pf the notice on the agent and our attention has been called to the fact

that the agent did from the first object to receiving notice for his principal.

These objections may be briefly answered by a reference be the provisions of the Provincial Insolvency Act and the rules framed under the

authority of Section 51. Section 12(3) provides that in cases where the petition is by the creditors notice of the date of hearing shall after admission

of the petition be served on the debtor in the manner provided for service of summons, Section 47 directs that Courts of Insolvency shall subject to

the provisions of this Act follow the procedure followed in regard to original civil suits. Order V, Rule 12 of the Civil Procedure Code, declares

that wherever it is practicable, service shall be made on the defendant in person, unless he has an agent empowered to accept service, in which

case service on such agent shall be sufficient. Rule 13 allows service to be made on any agent who at the time personally carries on business or

work for a person, who does not reside within the Court''s jurisdiction, in any suit relating to business or work. Order III, Rule 3(i), makes service

on a recognised agent as effectual as if it was on the party in person unless the Court directs otherwise. A recognized agent- includes a person

holding a power of attorney authorizing him to make and do such appearances, applications and acts on behalf of such parties (Order III, Rule 2).

Exhibit J, the power of attorney held by Visram Sait from the appellant, authorizes him ""to defend all suits, appeals and actions"" in the Courts of

this Presidency to which the appellant may be a party and "" generally to act for him and to do all. things and acts that may be necessary and that

the attorney may think fit for the complete discharge of his business effectually, completely and to his benefit""; thus there can be no question that

there was a valid service under the CPC on the appellant''s agent, and that the Court declared it to be sufficient.

Turning to the rules framed by the High Court u/s 51 of the Insolvency Act, we find that Clause 3 of rule XXI provides that notice of the date of

hearing of an insolvency petition, shall, if the petition is by the debtor, be sent by the Court by registered post to all creditors and if the petition is by

a creditor, shall be sent to the debtor, not less than fourteen days before the date of bearing. Notice was not sent to the debtor in this case by the

Court through registered post, although the Bank''s Vakil attempted vainly, as already mentioned, to communicate a notice and a copy of the

petition to the appellant in a registered letter. As we read the rules, however, the sending of a notice by registered post is chiefly intended to

provide for the information to be given to creditors on a petition by a debtor and to particularize the words "" such other manner as may be

prescribed "" in Section 12, Clause (2), We are not aware of any practice of sending notices of the hearing to debtors through the post in the first

instance upon creditors'' petitions. Notice to debtors is otherwise provided for by rule V, Clause (2), and by the rules under the Civil Procedure

Code. If a debtor gets notice of the hearing served on his authorized agent like a summons, he cannot reasonably complain that he did not also

receive a similar notice from the Court through the post, and his objection might be answered by a reference to Section 99, Civil Procedure Code.

Rule V, Clause 2 of these rules, directs that a copy of an insolvency petition presented by a creditor shall be served together with the notice of the

date of hearing ""on the debtor or the person on whom the Court orders notice to be served."" It is not required that such an order should be in

writing. In this case the notice was addressed to the agent and was signed by the District Court Sheristadar (by order). It was served under Order

V, Rule 17, Civil Procedure Code, more than 14 days before the hearing on January 21. Presumably this was a good notice to the agent, and as

the agent appeared and filed a counter-petition on March 11 in which he did not raise any objection to the manner or time of service, he must be

deemed to have waived any objection that he might have had to any supposed irregularities in the giving of notice.

So much for the question of notice. More substantial objections have been raised to the capacity in law of an agent to represent a debtor in

insolvency proceedings, and to the capacity of a debtor to be adjudicated insolvent upon an act of insolvency committed by his agent. It is argued

that as orders of adjudication relate back to and take effect from the date of the presentation of the petition on which they are made [vide Section

16, Clause (6)1, and as the agency of Visram Sait terminated u/s 201 of the Contract Act by his principal being adjudicated an insolvent, therefore

the agency must be taken to have ceased on the presentation of the petition.; and that by. the appointment on December 3 of a Receiver, in whom

the property of the debtor vested, the business of the linn could no longer be carried on by the agent and ipso facto his power of attorney became

void. But it is evident from a reading of the whole of this section from Clauses 2 to 6 tha; they all deal with the property of the insolvent. This was

made clear in In re Pollitt (1893) 1 Q.B. 455 where in treating of the corresponding section of the English Bankruptcy Act, Lord Esher observed:

The result of the relation back is that all subsequent dealings with debtor''s property must be treated as if the bankruptcy had taken place at the

moment when the act of bankruptcy was committed,"" The agent''s power of attorney in this case empowered him to do other acts besides carrying

on the trade and dealing with his property and one of those acts must be taken to be to stave off bankruptcy orders against the firm.

As regards the jurisdiction of the Courts to adjudicate persons insolvent upon acts of insolvency committed by their agents there appears to be a

difference in the law as it stands in England and in India.

In Ex parte Blain (1879) 12 Ch.D. 522 it was hold that an act of bankruptcy must be a personal act or default and could not be committed

through an agent. This principle was followed in Cooke v. Vogeler (1901) A.C. 102, another case of a foreigner domiciled and resident abroad

having business in England, but in both of these decisions it was conceded that if the law had been different the Courts would have had to take a

different view.

In India it has been expressly enacted as an explanation to Section 4 of the Provincial Insolvency Act that for the purposes of that section which

deals with acts of insolvency committed by a debtor the act of an agent may be the act of the principal. It was accordingly held in In the matter of

Brijmohun Dobay (1897) 2 C.W.N.306 that the departure of, an agent from the place of business did constitute an act of insolvency on the part of

the principal.

In this case if the. fact that the firm, at Bombay of which appellant was partner had suspended payment, of -which Mr.. Lamb states that the

agent gave him notice, be taken as the act of insolvency giving rise to these proceedings, there is no need to consider the effect of the agent''s act

as agent, as the suspension of payment at Bombay was the act of the principal, but if the suspension of payment by the branch at Calicut and the

inability of the agent there to meet his bills in Calicut, to which Mr. Deane has testifield, be taken into account then we have no hesitation in

applying Section 4 of the Act and in holding that the order of adjudication based on such an act of insolvency was a perfectly valid order. We

agree in holding that an act of insolvency has been proved. We dismiss the appeal with coats.