(Prayer: Petition (disposed of on 27-11-1944) under S. 75(1) of Act V of 1920, praying the High Court to revise the decree of the District Court of Guntur in C.M.A. No. 109 of 1943 dated 26-1-1944 (I.A. No. 1970 of 1942 in I.P. No. 4 of 1941 Sub Court.))

This civil revision petition raises the question whether the recent decision of the Privy Council in Mohamed Siddique Yousuf v. Official Assignee of Calcutta (I.L.R. (1943) 2 Cal. 517 = 56 L.W. 423 (P.C.), applies to orders of adjudication under the Provincial Insolvency Act as well as to orders of adjudication under the Presidency Towns Insolvency Act.

To appreciate the full effect of the judgment in that case a short statement of the facts on which it is founded is necessary. One Ali Mahomed Hashim was adjudicated an insolvent by the High Court of Calcutta. It was alleged and found that he had committed several acts of insolvency. One of the acts alleged against him was the granting of a fraudulent preference to a creditor (the appellant in the Privy Council). To this creditor he had assigned within three months of the petition asking for his adjudication a decree which he had obtained for Rs. 6750 and interest. The assignee had not been given notice of the application for adjudication and had not been made a party to the insolvency proceedings. The date of the order of adjudication was the 13th June 1939. On the 5th April 1939 the petitioning creditor obtained a decree against the insolvent for Rs. 15789-10-0. In the month of May 1939 the appellant instituted proceedings in execution of the decree which had been assigned to him and an order was made that the judgment-debtor should pay the amount into Court; but the order further provided that the money was not to be withdrawn without the leave of the insolvency Court. In August the appellant applied for leave to take the decretal amount out of Court. Leave was given subject to leave being obtained in the suit. The appellant then applied in the suit for leave, but his application was opposed by the Official Assignee. On the 31st August 1939 the Court held that the appellant was entitled to withdraw the amount on furnishing security, but said that if the Official Assignee made any application on the first insolvency day after the reopening of the Court, which was then closed for the vacation, the appellants application was to abide the result; if no application was made by the Official Assignee, the order on the appellants application was to be granted as asked for.

On the 23rd November 1939 the Official Assignee moved the insolvency Court to declare the assignment to the appellant void and to pass an order setting it aside. The Official Assignee raised two contentions. The first was that the transfer having been found to be an act of insolvency in the order of adjudication, the transferee was no longer in a position to say that the transaction was valid. This argument was based on the judgment in Ex parte Learoyd (1878) 10 Ch. D.3). The second contention was that the evidence showed that there was in fact a fraudulent preference. The learned Judge hesitated to apply the principle laid down in Ex parte Learoyd (1878) 10 Ch. D.3), in view of the fact that the Madras High Court in Official Assignee of Madras v. O.R.M.O.R.S. Firm (50 Mad. 541 = 25 L.W. 434) had held that it did not apply in India, but he found that the intention to prefer had been proved. On appeal a Division Bench of the Calcutta High Court expressed the opinion that Ex parte Learoyd (1878) 10 Ch. D.3) did apply. The Privy Council agreed with the appellate Court and consequently their Lordships overruled Official Assignee of Madras v. O.R.M.S.O.R.S. Firm (50 Mad. 541 = 25 L.W. 434). They held, however, that the appellant was entitled to appeal against the adjudication order and indicated that the provisions of S. 5 of the Limitation Act could here be invoked.

In Ex parte Learoyd (1878) 10 Ch. D.3) the Court of Appeal held that by virtue of Ss. 10 and 11 of the Bankruptcy Act, 1869, an adjudication in bankruptcy was conclusive against a third party; but a third party whose title to property was affected by the adjudication order was a person aggrieved and therefore was entitled to appeal against the order of adjudication. S. 10 of the Bankruptcy Act, 1869, provided that an order of adjudication in bankruptcy should be published in the London Gazette and the production of a copy of the Gazette containing the order should be conclusive evidence in all proceedings of the debtor having been duly adjudged a bankrupt and of the date of adjudication. S. 11 stated that the bankruptcy of a debtor should be deemed to have relation back to and to commence at the time of the act of bankruptcy or if more acts than one had been committed to have relation back to and to commence at the time of the first of the acts proved to have been committed within twelve months of the order of adjudication. Similar provisions are to be found in the Presidency Towns Insolvency Act and this was the reason for the application in the Calcutta case of the principle settled by Ex parte Learoyd (1878) 10 Ch. D.3). S. 116 corresponds to S. 10 of the Bankruptcy Act, 1869, and S. 51 to S. 11.

It follows that if the relevant provisions of the Provincial Insolvency Act are on all fours with those of the Presidency Towns Insolvency Act the principle of Ex parte Learoyd (1878) 10 Ch. D.3) must be applied to adjudications under the Provincial Insolvency Act, but not otherwise. An examination of the relevant sections shows that there are wide differences between the two Acts. S. 116 of the Presidency Towns Insolvency Act states that a copy of the official Gazette containing a notice inserted in pursuance of the Act shall be evidence of the facts stated in the notice. S. 51 says that the insolvency of a debtor shall be deemed to have relation back to and commence at (a) the time of the commission of the act of insolvency on which an order of adjudication is made against him, or (b) if the insolvent is proved to have committed more acts of insolvency than one, the time of the first of the acts of insolvency proved to have been committed by him within three months next preceding the date of the presentation of the insolvency petition.

The section dealing with the publication of the order of adjudication under the Provincial Insolvency Act is S. 30 which says that notice of an order of adjudication shall be published in the official Gazette , but it does not provide that publication of the notice shall be evidence of the facts stated therein, as is the case with S. 116 of the Presidency Towns Insolvency Act. The relation back section is also different. In the Provincial Insolvency Act it is S. 28(7), which says that an order of adjudication shall relate back to, and take effect from, the date of the presentation of the petition on which it is made.

There is a further difference between the two Acts. S. 54 of the Provincial Insolvency Act says that every transfer of property, every payment made, every obligation incurred, and every judicial proceeding taken or suffered by any person unable to pay his debts as they become due from his own money in favour of any creditor, with a view of giving that creditor a preference over the other creditors, shall, if such person is adjudged insolvent on a petition presented within three months after the date the reof, be deemed fraudulent and void as against the receiver, and shall be annulled by the Court. The words shall be annulled by the Court do not appear in the corresponding section of the Presidency Towns Insolvency Act, S. 56.

Therefore we have these differences between the two Acts:(1) Under the Provincial Insolvency Act the publication in the official Gazette of the order of adjudication is not evidence of the facts stated therein as is the case in the Presidency Towns Insolvency Act; (2) the order of adjudication under the Provincial Insolvency Act relates back only to the date of the petition asking for the adjudication, whereas in the Presidency Towns Insolvency Act it relates back to the very act of insolvency itself; and (3) the Provincial Insolvency Act requires a fraudulent transfer to be annulled by a direct order of the Court which is not the case under the Presidency Towns Insolvency Act. The first two are the most important of the differences.

The question whether Ex parte Learoyd (1878) 10 Ch. D.3) could be applied in the case of an adjudication under the Provincial Insolvency Act fell to be decided in 1936 by a Division Bench of the Rangoon High Court of which I was a member. The case was Ma H twe v. Maung Fu (14 Rang. 748). The Court held that Ex parte Learoyd (1878) 10 Ch. D.3) had no application because of the differences in the wording of the Bankruptcy Act, 1869, and the Provincial Insolvency Act. This decision was followed by this Court (Byers, J.) in the unreported case of K.V. Krishnamurthi Iyer v. K.S. Viswanatha Iyer (C.R.P. No. 1474 of 1943). The question has been fully argued before us and we consider that there is no room to doubt that Ex parte Learoyd (1878) 10 Ch. D.3), does not apply when the adjudication order has been passed under the Provincial Insolvency Act because that Act does not contain the provisions on which the decision in Ex parte Learoyd (1878) 10 Ch. D.3) was based. Under the Presidency Towns Insolvency Act as under the Bankruptcy Act, 1869, an order of adjudication operates to vest the property of the insolvent in the Official Assignee from the earliest proved act of insolvency and, therefore, any alienation by the insolvent from the commencement of the act of insolvency is entirely inoperative. Under the Provincial Insolvency Act the property does not vest in the Official Receiver until the date of the presentation of the petition which means that all unlawful transactions entered into prior to that date require to be set aside.

In the case now before us, the Subordinate Judge held that the decision of the Judicial Committee in Mahomed Siddique Yousuf v. Official Assignee of Calcutta (I.L.R. (1943) 2 Cal. 517 = 56 L.W. 423) applied; but this view was not shared by the District Judge on appeal. It follows from what we have said that we are in agreement with the opinion of the District Judge and consequently the petition must be dismissed with costs.