PETITIONER:
P. VEERASAMY.
Vs.
RESPONDENT:
THE OFFICIAL ASSIGNEE HIGH COURT, MADRAS.
DATE OF JUDGMENT: 12/01/1999
BENCH:
S.B. MAJMUDAR. & M JAGANNADHA RAO.
JUDGMENT
M. JAGANNADHA RAO,J Leave granted.
Lord Mansfield said, over two hundred years
ago, that you cannot ‘let out the bankrupt’. He is
not a slave of the Assignee. The point in this
appeal is as to what extent the insolvent can be
allowed to run his business to sustain himself and
his dependents and as to what rights the official
Assignee and creditors have, as against the
insolvent?
The modern concept appears to be
rehabilitation of an honest insolvent and a more
humane treatment to be meted out to the insolvent
and his family. At the same time, it must be seen
that a benevolent view towards the honest insolvent
is not abused by one who is dishonest.
"It has to be admitted that both in our past
and also in our present insolvency law, the
punitive and deterrent aspects of legal policy have
seemed hard to reconcile with the rehabilitative
philosophy with which they are supposed to co-
exist. It would certainly appear to be the case
that it is not very widely appreciated that
bankruptcy law is also designed in part to protect
the honest but unfortunate debtor, as well to
discipline and if necessary punish one who has been
incompetent or even dishonest." While those who are
not aware of the beneficial provisions of
insolvency law may suffer oppression at the hands
of creditors, conversely, "there are certain
opportunities for those who are closely familiar
with the insolvency law to exploit its provisions
to their advantage, and at the expense of their
less knowledgeable creditors. In this area of the
law, the aphorism that knowledge is power has an
especially truthful ring in it. (The Law of
Insolvency by Ian Fletcher, 1990, pp.33-34). The
law must, therefore, achieve a just balance.
This appeal is preferred against the Judgment
of the Madras High Court in O.S.A No. 17 of 1998
dated 18.02.98, rejecting the O.S.A. in limine.
By that Judgment, the Division Bench affirmed the
order of the learned Single Judge dated 4.8.1997 in
Application No. 89 of 1997 in Insolvency Petition
No. 33 of 1996. The result of the dismissal of
the interlocutory application was that the
appellant who was declared an insolvent on his own
petition on 25.4.96, was not permitted to conduct
his retail business of selling Kerosene under
Licence No. 173 of 1974 as an agent of the Civil
Supplies Department of the Tamil Nadu Government.
The following are the facts in brief: The
appellant filed a Petition I.P. No. 33 of 1996
for being adjudicated as an insolvent under
Sections 14 & 15 of the Presidency Town’s
Insolvency Act, 1909(Act 3 of 1909) (hereinafter
called the ‘Act’). The said application was
allowed on 25.4.96 by the learned Single Judge.
Thereafter, the appellant filed I.A. No. 89 of
1997 on 10.5.97 seeking permission to restart his
Kerosene business under Licence No. 173 of 1974 as
agent of the Tamil Nadu Civil Supplies Department
which, according to him, would fetch him Rs. 920/-
per month and out of which the appellant would be
willing to allocate Rs. 150/- p.m. towards his
liability to the general body of creditors. He
stated that he was earlier supplying 5000 litres
every month at the rate of 200 litres per day for
25 days in a month. He had to supply 10 litres to
each card holder per month. The licence was
renewable every two years. His first licence was
obtained in 1974 and the same was renewed upto
31.12.1998. The Insolvency Petition was filed as
he incurred loss in Cement business. Prior to the
filing of the Insolvency Petition, the supply was
temporarily suspended and 500 card holders were
allotted to another shop. The appellant stated
that due to unavoidable circumstances, he could not
reside in Madras and was forced to go back to his
native place. If he has to come back to Madras
city either for continuing the education of his
children or to attend at the office of the Official
Assignee, he must be allowed to do his Kerosene
business. The Official Assignee is now in charge
of his immovable properties. Unless the Court
gives the insolvent permission, the Civil Supply
Department will not allow him to receive Kerosene
supplies. He states that no capital is involved in
this business. Only a sum of Rs. 496/- is
required to be paid to the Civil Supplies
Department to start with, for the supply of 200
litres. He has rented a shop at No. 354, N.S.K.
Road, Madras -106, on a monthly rent of Rs. 150/-.
He states that there is no need for him to borrow
any money for running this business. The Civil
Supplies Department has given him a commission of
0.32 paise per litre and in a month for 500 litres,
he will get a total commission of Rs. 1600/-. His
expenses for the cart - charges will be Rs. 680/-
p.m. for lifting the kerosene, Rs. 30/- for
electricity and Rs. 150/- for rent. Balance will
be Rs. 920/- p.m. He is willing to pay Rs. 150/-
to his creditors out of the said income. He is
prepared to abide by any other conditions that may
be imposed by the Court. This application is dated
10.3.97.
The Official Assignee submitted a report to
the Court on 17.4.97 stating that the appellant had
disclosed assets worth Rs. 34,000/- and liabilities
of Rs. 39.21 lakhs, Book liabilities were Rs.
12,02,660 but had not disclosed his Kerosene
business nor did he submit accounts regarding the
said business. The creditors complained that the
appellant had omitted to refer to the kerosene
business and that he had also suppressed
information regarding some other assets. If he
were to be allowed to do this business, he might
incur further debts. The application was,
therefore not bona fide and should be dismissed.
The learned Single Judge dismissed the
application by order dated 4.8.97, accepting the
contentions of the Official Assignee. On appeal,
the Division Bench dismissed the appeal stating
that in the light of what was stated in the report
of the Official Assignee, the discretion exercised
by the learned Single Judge was not liable to be
interfered with.
It is contended in this appeal that the Act in
sub-clause(1) of Section 75 gives a statutory right
to move the Official Assignee for permission to
manage his property or to carry on his trade for
the benefit of his creditors, subject to conditions
and that under sub-clause (2) of Section 75 the
Court may, from time to time, make such allowance
as it thinks just out of the property of the
insolvent, for the support of the insolvent and his
family or in consideration of his services. Such
an allowance can also be varied from time to time.
Learned counsel has also relied upon Article
19(1)(g) and Article 21 of the Constitution of
India. He has contended that inasmuch as the
appellant has stopped the kerosene business before
the filing the insolvency petition, the said
business was not disclosed. The books of account
in regard to this business were produced before the
Official Assignee at the time the inquiry of the
application seeking permission to renew the
business was taken up. The business does not
involve any capital. The appellant has two
children and they are presently admitted into an
orphanage. If the insolvent is allowed to continue
the kerosene business, he will be able to sustain
himself and his family members who are totally
dependent on him.
In spite of notice, the official Assignee has
not chosen to appear before us. We, therefore,
requested learned senior counsel, Shri Arun Jaitley
to help us in the matter and he has made his
submissions. We are grateful to him.
Learned counsel for the appellant Sri
P.B.Suresh relied upon Section 75 of the Act but,
in our view, three other sections, namely Sections
17, 52 and 60 are also relevant. As already
stated, learned counsel for the appellant had also
referred to Article 19(1)(g) and Article 21 of the
Constitution of India.
The appeal relates to release of income from
Kerosene business to the appellant for the purpose
of the survival of the appellant and his family
members. Such income will be ‘after acquired
property’. On that question, the points that arise
for consideration are as follows:
(1) In the context of section 17 and section
52(2) of the Presidency Towns Insolvency Act, 1909,
does the after-acquired property of the insolvent
automatically vest in the official Assignee?
(2) In the context of section 60(2) of the
Act, does ’salary or income’ of the insolvent
earned by him after adjudication automatically vest
in the official Assignee; and is the official
Assignee’s right to receive these monies, even to
the extent they would otherwise have been
attachable, subject to orders of the Court?
(3) Is the word ‘income’ in the expression
‘salary or income’ in section 60(2) to be construed
ejusdem generis like salary or can it be construed
so as to include other types of income such as
income from trade or business of the insolvent
conducted after adjudication?
(4) Are ‘personal earnings’ of the insolvent
earned after adjudication exempt from vesting under
the common law relating to insolvency?
(5) In what manner the provisions of section
75 of the Act are to be construed for allowing the
insolvent to run his business and for allowing him
an allowance out of the property, to support him
and his family?
(6) To what relief?
Point 1:
This point concerns the vesting of the ‘after
acquired’ property of the insolvent, and the
question is whether it vests automatically in the
insolvent under the Presidency Towns Insolvency
Act, 1909.
Under section 17 of the Act, on the making of
an order of adjudication, the ‘property’ of the
insolvent, wherever situate, shall vest in the
official Assignee and shall become divisible among
his creditors. Section 2(e) of the Act states that
‘property’ includes any property over which or the
profits of which any person has a disposing power
which he may exercise for his benefit. Obviously,
therefore, in the normal course, the ‘salary or
income’ accruing to the insolvent, after
adjudication, would vest in the Assignee unless
there is anything in the Act inconsistent with such
vesting. It is here that section 52(2)(a) and
section 60 gain importance. Under this point, we
shall refer to the effect of section 52(2)(a).
Section 52(2)(a) deals with the ‘after-
acquired’ property of the insolvent which is
divisible among creditors. It reads as follows:
"Section 52(2)(a): Subject as aforesaid, the
property of the insolvent shall comprise the
following particulars, namely;
(a) all such property as may belong to or be
vested in the insolvent at the commencement of the
insolvency or maybe acquired by or declare on him
before his discharge."
This corresponds to section 38 of the English
Bankruptcy Act, 1914. The corresponding provision
in the Provincial Insolvency Act, 1920 which is
differently worded but which deals with ‘after
acquired property’ is section 28(4) and that
section uses the words ‘forthwith vest’ while such
words are absent in section 52(2)(a) of the Act.
That section 28(4) of the Provincial Insolvency
Act, 1920 reads as follows:
"Section 28(4): All property which is
acquired by or devolves on the insolvent after the
date of an order of adjudication and before his
discharge shall forthwith vest in the Court or
receive, and the provisions of subsection (2)
shall apply in respect thereof."
In the English law, according to the rule in
Cohen vs. Mitchell [(1890) 25 Q.B.O 262], the
after acquired property of the insolvent does not
automatically vest in the trustee or Assignee
unless the trustee intervenes. But once he
intervenes, the property vests in him absolutely as
stated in Hill vs. Settle [1917 (1) Ch 319]. As
to what is intervention by the Assignee in relation
to insolvent’s dealings with after-acquired
property, depends on the nature of the property, -
immovable, movable etc.
In India, the above principle in Cohen vs.
Mitchell has been followed by various High Courts
in regard to bonafide transactions entered into
with the insolvent by strangers without notice of
insolvency but as stated in Mulla (p.431, Tagore
Law Lectures) (Mulla Law of Insolvency, 1977, 3rd
Ed.), the Madras High Court alone has taken the
view that the rule in Cohen vs. Mitchell does not
apply to after-acquired immovable property.
As we are here not concerned with immovable
property but with ‘income’ that may be received
after adjudication by the insolvent from his
business - and that question is covered by a
specific provision in Section 60(2) of the Act
conferring certain powers on the Court, - we do not
think it necessary in the present case to go into
the question as to what extent the rule in Cohen
vs. Mitchell is applicable in India in relation to
intervention by the Assignee. We, therefore, do
not think it necessary to answer Point No.1.
However, we shall again refer to section 52(2)(a)
while dealing with ‘personal earnings’ of the
insolvent under Point 4.
Point 2:
As stated earlier, the question is whether
‘income’ that may be received by the insolvent
after adjudication from his business will vest
automatically in the Assignee or whether the Court
has power to pass orders in regard to the said
income. In this context, we have to refer to
section 60(2) of the Act. It reads as follows:
"Section 60(2): Where an insolvent is in the
receipt of a salary or income other than aforesaid,
the Court may, at any time after adjudication and
from time to time, make such orders as it thinks
just for the payment to the official assignee, for
distribution among the creditors of so much of such
salary or income as may be liable to attachment in
executing a decree or any portion thereof".
This Section corresponds to Section 51 of the
English Bankruptcy Act, 1914.
It will be noticed from section 60(2) that the
after-acquired ‘salary or income’ of the insolvent
does not automatically vest in the Assignee as
otherwise permitted by Section 17 of the Act but it
continues to be the property vested in the
insolvent and out of the said ‘salary or income’,
whatever is not attachable if the same were to be
proceeded against in execution of a decree, that
amount will not vest and cannot be directed, even
by the Court, to be made over to the Assignee. So
far as the attachable part of such ‘salary or
income’ is concerned, the same too does not
automatically vest in the Assignee because of
Section 60(2) but only such part of it can be made
over to the Assignee as the Court may think just
for payment to the assignee, for distribution among
creditors. In other words, the Court can allow the
insolvent to retain not only the non attachable
part of the ‘salary or income’ but also that part
of the attachable ‘salary or income’ to the extent
the Court thinks just.
A provision like Section 60 requiring the
Court to pass orders regarding after acquired
‘salary or income’ is not there in the Provincial
Insolvency Act, 1920. (See Mulla Tagore Law
Lectures, 1929 (Law of Insolvency, 1977 3rd
Ed.)(p.439) and sub-clauses (4) and (5) of Section
28 of that Act deal with automatic vesting of
after-acquired property under the Provincial
Insolvency Act, 1920.
In this context, Mulla also says (p.438) that
under Section 60 of the Presidency Towns Insolvency
Act, 1909, the "official assignee cannot, without
an order of the Court, recover any portion of the
salary or income. Until the order is made, the
whole of the salary or income belongs to the
insolvent and he is entitled to vary agreements
entered into by him with the employers in respect
of his personal services. (Re Shine 1892 (1) Q.B.
522) In determining whether the whole of the
attachable salary or income is to pass to the
official Assignee or only a portion thereof, the
Court will have regard to what is reasonably
necessary for the maintenance of the insolvent, his
wife and family (Ex parte Official Receiver:
[1896(1) Q.B. 417]; Re Rogers 1894(1) Q.B.
425)".
We are of the new that the above statement of
law in Mulla represents the correct legal position.
Point 2 is decided accordingly.
Point 3:
Inasmuch as in the present case we are
concerned not with ‘salary’ but with the ‘income’
that may be derived by the insolvent from trade or
business, it becomes necessary to find out whether
the word ‘income’ in section 60(2) is restricted in
its meaning to income which is similar to ‘salary’
or can mean other income also, such as income from
trade or business. In case, income from business
or trade can be brought within Section 60(2), then
the advantage is that such income will not
automatically vest in the Assignee and even if it
is entirely attachable, no part of it can be
received by the Assignee except by an order of the
Court and until the Court has considered what
amount is to be treated just in the circumstances
of the case, to be distributed to the creditors.
Question is whether the income from ‘trade or
business’ can be brought within section 60(2).
The meaning of ‘salary or income’ has not been
defined in the Act but it has been held in England,
while dealing with the corresponding provision in
Section 51 of the English Act, 1914 that the word
‘income’ ‘is a larger word than salary’ (Per Lord
Hanworth in Re Landau 1934 Ch.549 (554, 556).
Earlier, Sir George Jessel, MR said in Ex parte
Huggins (1882) 21 Ch. 85 that the said word ‘is as
large a word as can be used’.
But even so, English Courts initially took the
view that the word ‘income’ was to be construed
‘ejusdem generis’ like salary. That was the view
of Lord Esher in Ex parte Benwell (1884) 14 Q.B. D
301 (307-308). That was also the view of the
Rangoon High Court in Official Assignee of Rangoon
vs. Maung Nyun Maung (AIR 1931 Rangoon 79). A
similar view was expressed by Mulla in his Tagore
Law Lectures of 1929 (see Mulla, Law of Insolvency,
3rd Ed., 1977 p.459) wherein he stated that
‘income’ means income in the nature of salary and
it has reference to a particular period such as a
year or some part of a year. Obviously, in 1929
that was the state of the law.
But, in later years, a more humanistic and
pragmatic view has been taken in England in regard
to ‘income’ which is not of the nature as ‘salary’
- for even if the insolvent is to earn income from
other sources such as from business, some amount
must be allowed to be retained by him for the
support of himself and his family. The insolvent
has to live. In Re Landau 1934 Ch.549 (560), Romer
LJ therefore held that the earlier view in
Benwell’s case that the word ‘income’ had to be
construed ‘ejusdem generis’ was not correct in as
much as it had not been stated there as to what
genus the salary payment belonged. In Landau’s
case, maintenance ordered to be paid by the Divorce
Division to a bankrupt-wife during the joint-lives
of herself and her former husband, was held to be
‘income’. That view was followed in Re Tennant’s
Application 1956(2) All E.R.753 (CA). In that
case, it was held monthly sums paid by a husband to
his wife (who was adjudicated bankrupt) - under a
covenant in a deed executed during the pendency of
the wife’s application for an order for maintenance
on dissolution of their marriage, constituted
‘income’ within Section 51(2) of the English
Bankruptcy Act, 1914.
In fact, a wide definition appears to have now
been incorporated statutorily in Section 310 of the
British Insolvency Act, 1986 which Act is the
result of the Cork Report. Section 310 of that Act
deals with ‘Income payment orders’ and sub-clause
(7) thereof which defines ‘income’ reads as
follows:
"Section 310 (7): For the purpose of this
Section, the income of the bankrupt comprises every
payment in the nature of income which is from time
to time made to him or to which he, from time to
time becomes entitled, including any payment in
respect of the carrying on of any business or in
respect of any office or employment"
In Halsbury’s Law of England (Vol.3(2),
Bankruptcy & Insolvency) (4th Ed., para 437 f.n 2)
it is stated as follows, in regard to the
definition of ‘income’ in the English statute of
1986 in section 310(7). "This definition of
‘income suggests an intention of the legislature to
enact a wider definition of income than that which
the Courts developed under the Bankruptcy Act, 1914
Section 51 (repealed). In Section 51(2)
(repealed), ‘salary or income’ was used and income
was construed ejusdem generis: Ex P. Benwell
(1884) 14 Q.B.D.301 (CA); Re Cohen 1961 Ch. 246
(CA), but see Re Tenants Application 1956 (2) All
E.R. 753 (CA); Re Landau, 1934 Ch.549".
We are of the view that though our legislature
has not defined ‘income’ as widely as in Section
310(7) of the English Act, 1986, the word ‘income’
is not to be construed ejusdem generis and that it
includes income from business or trade conducted by
the insolvent after his adjudication.
So construed, the said business income would
then fall under Section 60(2) of the Act and would
not become receivable by the Assignee automatically
but only upon an order to be passed by the Court,
to the extent the Court would deem it just for
payment to the official Assignee, for distribution
among creditors. Till such an order is passed by
the Court, the business income will continue to
vest in the insolvent, even if the whole of it
would otherwise have been attachable in execution
of a decree. We hold accordingly under Point 3.
Point 4:
This point deals with the common law principle
applicable to the ‘personal earnings’ of the
insolvent earned by his personal labour, to be
allowed to be retained by him to the extent
necessary for his support and support of his
family.
According to Williams and Muir Hunter on
Bankruptcy (19th Ed.) (1979) (p.290), one of the
categories of property excluded from vesting in the
assignee is the amount covered by the ‘personal
earnings’ of the insolvent. This principle , the
author says, is based on the ‘common law of
Bankruptcy’.
Section 38 of the 1914 English Act is similar
to Section 52 of the Presidency Towns Insolvency
Act, 1909 and deals with distribution of the
property of the insolvent. In the context of
Section 38 as to whether ‘personal earnings’ will
be distributable among creditors, the above authors
say as follows:
"By virtue of this Section, the personal
earnings of a bankrupt pass like any other property
to the trustee, except such part of them as is
necessary for the maintenance of the bankrupt and
his family. In Re Roberts (1900) (1) Q.B. 122
(CA). The Court of Appeal, after reviewing
previous decisions, which had suggested that
personal earnings did not vest in the trustee at
all, stated that there is ‘no authority for the
proposition that property of a bankrupt acquired by
his personal exertions since his bankruptcy, and
not wanted for his present support, does not belong
to his trustee. No such doctrine can be maintained
in the face of Section 44 "(now Section 38)." After
bankruptcy and before his discharge, whatever
property a bankrupt acquires belongs to his
trustee, save only what is necessary for his
support. He may sue for his earnings if his
trustee does not interfere (As he did in Affleck
vs. Hammond 1912 (3) K.B.162". But, "the language
of (that Section)... must not be taken too
literally as to deprive those fruits of his
personal exertions which are necessary to enable
him to live. On the other hand, the necessity is
the limit of the exception."
As mentioned earlier, Lord Mansfield stated in
Chippendale vs. Tomlinson (1785) Doug 318 = 99
E.R.318) that ‘the assignee cannot let out the
bankrupt, they cannot contract for his labour’.
But according to the notes of Mr.Douglas in that
case Butler,J. and Mansfield,J. both said that
the bankrupt had an undoubted right to sue for such
profits of his labour but supposing a person in his
situation should have a large sum of money or
considerable effects, then such money and effects
would undoubtedly be liable to be made over to his
assignee. In Re Jones (1891) 2 Q.B. 213, it has
been stated that an insolvent cannot be compelled
to work and earn for his creditor. Lord Denman CJ
in Williams vs. Chambers (1847) 10 Q.B. 337 and
Lush LJ in Eaden vs. Carte (1881) 17 Ch. D 768
stated that the earnings beyond what is needed for
the support of the insolvent and his family, are to
be made over to the assignee. These principles
were laid down under the common law.
In our view, the above common law principles
relating to earnings from personal labour of the
insolvent are equally applicable in our country and
in spite of Section 52(2)(a), the said earnings of
the insolvent from his labour to the extent
necessary for the support of the insolvent and his
family, do not vest in the assignee. There is a
further rider to be added to the common law
principles namely that the balance of the personal
earnings, - after deducting what is necessary for
the support of the insolvent and his family, does
not automatically vest in the assignee but is
subject to the orders that may be passed by the
Court under Section 60(2). Point 4 is decided
accordingly.
Point 5:
We finally come to Section 75 of the Act which
is the statutory provision dealing with the
Assignee granting permission to the insolvent to
carry on trade. That Section also deals with the
Court allowing the insolvent an allowance for the
support of himself and his family or in
consideration of his services, if he is engaged in
winding up his estate. Section 75 reads as
follows:
"Section 75(1) & (2):(1) Subject to such
conditions and limitations as may be prescribed,
the official assignee may appoint the insolvent
himself to superintend the management of the
property of the insolvent or of any part thereof,
or to carry on trade (if any) of the insolvent for
the benefit of his creditors, and in any other
respect to aid in administering the property in
such manner and on such terms as the official
assignee may direct.
(2) Subject as aforesaid, the Court may, from
time to time, make such allowance as it thinks just
to the insolvent out of his property, for the
support of the insolvent and his family, or in
consideration of his services, if he is engaged in
winding up his estate, but any such allowance may
at any time be varied or determined by the Court."
In our view, the above provision in Section 75
is based on a humane consideration of the condition
of the insolvent and his family. In the book, The
Law of Insolvency by Ian Fletcher (1990), referred
to earlier, it is stated in the introductory
chapter, (at p.3) that
"After a time, a position is reached in which
some effort is made to treat individual cases on
their merits and to explore the possibilities for
rehabilitation of the debtor under a controlled and
more humane legal process".
After referring to the Cork Report which led
to the passing of the English Act, 1986, the author
says (p.188) that the principle of releasing monies
for the support of the insolvent and his family is
based on a policy
"both as an aspect of the device to preserve
the dignity and self-respect of the bankrupt and
his dependents, and in the interests of avoiding
the creation of a further burden on the resources
of the State if the bankrupt’s family are rendered
destitute. A rule has therefore been adopted
whereby the bankrupt is allowed to retain a
proportion of his income to the extent deemed
necessary to maintain him and his family in
reasonable circumstances".
As to what is a reasonable provision for
support of the insolvent and his family, the author
says (p.190) : "It will be a question of fact in
each case to establish what are to be considered as
the reasonable domestic needs of the bankrupt and
his family and what proportion of his income he
should be allowed to meet them". After the Cork
Report and Section 310 of the English Act, 1986,
"the Court would be acting within a spirit
expressed in the Cork Report in advocating the
adoption of a more humane and realistic attitude
towards the position of the debtor and his family,
and the more imaginative utilisation of the
bankrupt’s surplus future income" (Comnd & 558,
paras 591-598, 1158- 1163). "In respect of that
portion of his earnings or income which he is
allowed to retain in consequence of an order under
Section 310, the bankrupt enjoys full freedom and
disposition." We may add that if over a period, out
of the amounts allowed by the Court for the support
of the insolvent and his family, there is a surplus
or excess, then the creditors or the Assignee can
apply to the Court for a review of previous orders.
The above procedure will, in our opinion, be
clearly consistent with Article 19(1)(g) and
Article 21 of the Constitution of India.
Before parting with this aspect of the matter,
we might add that while the Court has to take a
humanistic view towards honest insolvents, the
Court must also guard against undue exploitation of
the above principles and provisions of law, by
unscrupulous persons who get adjudicated as
insolvents. Point 5 is decided accordingly.
Point 6:
In the present case, the application filed by
the appellant has been dismissed by the learned
Single Judge and by the Division Bench without
noticing the above provisions of law. We have
already set out the plea of the insolvent in his
application and also his version of facts and that
his two children have been put in an orphanage.
In the light of the legal principles stated by
us and the facts as may be proved, it will be
necessary for the Court to decide the application
of the insolvent afresh and determine whether the
insolvent can be permitted to do business and if
so, subject to what conditions. The Court will
also then have to determine the extent of income he
is likely to derive and the part he should be
allowed to retain for the support of himself, his
wife and family and then as to what amount, if any,
could be made over to the Assignee.
As none of these aspects have been gone into,
we set aside the judgments passed by the Division
Bench and the learned Single Judge. We remit the
matter to the learned Single Judge for disposal in
accordance with law, after hearing the official
Assignee or any other aggrieved person, and
considering such evidence as the parties may
adduce. It is requested that the application may
be disposed of within a period of 2 months from the
receipt of this order. The appeal is accordingly
allowed and matter is remitted to the learned
Single Judge of the High Court. There will be no
order as to costs.