# OFFICIAL ASSIGNEE, HIGH COURT, BOMBAY v. HARADAGIRI BASAV ANNA GOWD AND OTHERS

- **Citation:** [1963] Supp. 1 S.C.R. 809
- **Court:** Supreme Court of India
- **Decided:** 1963
- **Case number:** Civil Appeal No. 291 of 1960
- **Bench:** B. P. Sinha, P. B. Gajendragadkar, K. N. Wanchoo, K. C. D.As'Gui'Ta, ]. C. Shah
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/official-assignee-high-court-bombay-v-haradagiri-basav-anna-gowd-and-others-2748
- **Pages:** 15

## Headnote

809
lnsolvency-Adjudication-Oourts -of different juriscllictionsWhere property vests-Presidency Towns Insolvency Act, ss. 17
and 51-Pravinciallnsolvency Act, 1920'(5of1920), ss. 28, 77.
Pending adjudication proceedings instituted on 25-1-50 in
the District Court ofBellary, the respondent was permitted to
take possession of the goods which he claimed as belonging to
him and to dispose Of them on condition that if his claim was
disallowed, he should redeposit the· sale proceeds together· with
interest in the Court.
O~ the petition of other creditor~, the
Bombay High Court passed an adjudication order on April
17, 1950 as a result of which all the properties of the insolvent
vested in the Official Assignee Bombay. On December 13, 1950,
while passing the order of adjudication, on an .application of the
Official Assignee, the District Court of Bellary directed the
Official Receiver, Bellary, to move the Bombay Higl1 Court to
have the adjudication order made by it annulled. The respondent was a party to the Official {\ssignee's application. The
Official Receiver not having taken any steps, the Official
Assignee brought the matter to the notice of the Bcllary Court
and thereafter the Official Receiver moved the 1lombay llil'(h
Court which refused to annul the an judication order made by
it. The Bellary Court directed the Official Receiver .to transmi!
all the amounts lyinJ? in deposit in the B<;llary Court to Bombay
and directed the respondent to redeposit -the arrtounts so that it
could be transferred to Bombay. On appeal by the respondent
the High Court of ,\ndhra Pradesh held that the application of
the Official As;ignee was not in conformity with s. 77 of the
Provincial Insolvency Act and that it was more convenient that
the estate of the insolvent should be administer~d bv the
District Court at Kurnool Vl'hich was the successor of the DistriCt
Court at Bellafy consequent upon the re.!organlsatipn o{ the
States. On appeal by the Officie l -\ssignee,
'
·
I
1962
1962
Official Assignee,
-glz Court, Bombay
v .
.f{arodagiri Basa•
vanna Gowd
"Jajendragadkar, /,
810 SUPREME COURT REPORTS [1963) SUPP.
Held, that the combined operation of s. I? and s. 51 of
the Presidency Towns Insolvency Act was co vest the estate of
the insolvent in the Official Assignee and that such vesting did
not by reason· of s. 28(7) of the Provincial Insolvency Act
become divested by relating the vesting back to the date of presentation of the petition inthe Bellary Court.
The Official Assignee of Madras v. Tlte Official Assignee of
Rangoon by his Agent Subramania Aiyar, I. L. R. 42 Mad. 12l,
referred to.
-
JleW,, further, that the application made by the Official
Assignee to the Bellary Court could not be construed as an
application under s. 77 of the Provincial Insolvency Act.
Re : L. King & Ca. 38 Cal. 542, referred to.

## Text

1 S.C.R.
SUPREME COURT REPORTS
OFFICIAL ASSIGNEE, HIGH COURT,
BOMBAY
v.
HARADAGIRI BASAV ANNA GOWD
AND OTHERS
(B. P. SINHA, c. J., P. B. GAJENDRAGADKAR,
K. N. WANCHOO, K. C. D.AS'GUI'TA and
]. C. SHAH, JJ.)
809
lnsolvency-Adjudication-Oourts -of different juriscllictionsWhere property vests-Presidency Towns Insolvency Act, ss. 17
and 51-Pravinciallnsolvency Act, 1920'(5of1920), ss. 28, 77.
Pending adjudication proceedings instituted on 25-1-50 in
the District Court ofBellary, the respondent was permitted to
take possession of the goods which he claimed as belonging to
him and to dispose Of them on condition that if his claim was
disallowed, he should redeposit the· sale proceeds together· with
interest in the Court.
O~ the petition of other creditor~, the
Bombay High Court passed an adjudication order on April
17, 1950 as a result of which all the properties of the insolvent
vested in the Official Assignee Bombay. On December 13, 1950,
while passing the order of adjudication, on an .application of the
Official Assignee, the District Court of Bellary directed the
Official Receiver, Bellary, to move the Bombay Higl1 Court to
have the adjudication order made by it annulled. The respondent was a party to the Official {\ssignee's application. The
Official Receiver not having taken any steps, the Official
Assignee brought the matter to the notice of the Bcllary Court
and thereafter the Official Receiver moved the 1lombay llil'(h
Court which refused to annul the an judication order made by
it. The Bellary Court directed the Official Receiver .to transmi!
all the amounts lyinJ? in deposit in the B<;llary Court to Bombay
and directed the respondent to redeposit -the arrtounts so that it
could be transferred to Bombay. On appeal by the respondent
the High Court of ,\ndhra Pradesh held that the application of
the Official As;ignee was not in conformity with s. 77 of the
Provincial Insolvency Act and that it was more convenient that
the estate of the insolvent should be administer~d bv the
District Court at Kurnool Vl'hich was the successor of the DistriCt
Court at Bellafy consequent upon the re.!organlsatipn o{ the
States. On appeal by the Officie l -\ssignee,
'
·
I
1962
1962
Official Assignee,
-glz Court, Bombay
v .
.f{arodagiri Basa•
vanna Gowd
"Jajendragadkar, /,
810 SUPREME COURT REPORTS [1963) SUPP.
Held, that the combined operation of s. I? and s. 51 of
the Presidency Towns Insolvency Act was co vest the estate of
the insolvent in the Official Assignee and that such vesting did
not by reason· of s. 28(7) of the Provincial Insolvency Act
become divested by relating the vesting back to the date of presentation of the petition inthe Bellary Court.
The Official Assignee of Madras v. Tlte Official Assignee of
Rangoon by his Agent Subramania Aiyar, I. L. R. 42 Mad. 12l,
referred to.
-
JleW,, further, that the application made by the Official
Assignee to the Bellary Court could not be construed as an
application under s. 77 of the Provincial Insolvency Act.
Re : L. King & Ca. 38 Cal. 542, referred to.
CIVIL APPELLATE JURISDICTION : Civil Appeal
No. 291 of 1960.
Appeal by special leave from the judgment and
decree dated October 21, 1955, of the Andhra High
Court at Guntur in Appeal against order No. 94 of
1952.
I. N. Shroff, for the appellant.
P. Rlim Reddy, for the respondents.
1962.
November 1. The Judgment of the
Court was delivered by
GAJENDRAOADKAR, J.-This appeal by special
leave arises out of insolvency proceedings taken against
the firm of T. A. Doshi, Bombay (hereinafter called
the firm) by its creditors on the original side of the
Bombay High Court, as well as in the District Court,
Bellary. The orders of adjudication passed against
the said firm by the two Courts have led to some
avoidable complications and delay, with the result
that the claim made by the respondents in respect of
a portion of the property of.the insol.vent before.the
District Court at Bellary still remams to be tried,
though the involvency orders were passed as early
as 1950.
1 S.C.R. SUPREME COURT REPORTS
811
It appears that on January 25, 1950, ~
application was presented (I. P. No. 2 of 1950) m
the District Court, Bellary, by some of the creditors
of the firm for adjudicating the firm as insolvent, and
on December 13, 1950, an order of adjudication
was passed.
Pending the adjudication proceedings,
the District Court appointed the Official Receiver as
interim Receiver at the instance of the petitioning
creditors. The Receiver was authorised to take
possession of certain goods alleged to belong to the
insolvent which were then in transit to Bombay.
Accordingly, the Receiver took possession of the said
goods and under the orders of the Court, disposed of
them. The sale-proceeds were then deposited in
court. Thereupon, the respondents moved the District
Court and claimed that they were entitled to a part
of the money deposited by the Official Receiver,
because the Railway Receipt in respect of the goods
which had been sold by the Receiver had been made
over to them by the insolvent for consideration.
On
this allegation, they prayed that as an interim measure,
the sale proceeds should be paid over to them, because
they had borrowed money from a bank on the security
of the Railway Receipt in question and since the
goods had been taken over by the Receiver, the bank
was demanding immediate repayment of the loss.
This application was allowed by the Court and the
respondents were permitted to withdraw the amount
on giving security and an undertaking to re-deposit
the amount in court with interest @ 6% per annum
when called upon to do so. In accordance with this
order, the respondents withdrew the money on
:\pri~ 6, 1950; The ~!aim mad~ by the respondents
in this way still remams to be tned though they withdrew the amount as far baLk as 6-4-50.
. . \'\'hilst the insolvency proceedings before the
D1stnct Court had proceeded in this manner, similar
proi;ecdings had already been. taken against the firm
b'.' some other creditors on the origi~al side of the
1962
Offeial &sign,.,
High Court, Bombay
v.
Haradagiri Baui~
vanna Gowd
Gajendragadkar, J.
1962
O.fficial A.Jsignt1,
High Court, Bombay
...
Haradagiri Basa ..
vannaGowd
Gaj1ndra1:adkar, J.
812 SUPREME COURT REPORTS [1963] SUPP.
Bombay High Court on April 14, 1950, (I. P.
No. 52 of 1950). On this application, an adjudica·
tion order was passed on April 17, J 950.
As a
result of this order of adjudication all the properties
of the insolvent vested in the Official Assignee of
Bombay. The Official Assignee then moved the
District Court at Bellary (I. A. No. 183 of 1950), and
prayed that insolvency proceedings pending against
the firm in that Court should be stayed and that all
the assets and books of account belonging to the
insolvent should be transferred to Bombay. To thiE
application, the respondents were made parties.
On
December
13, 1950,
whilst making
an order of adjudication, the District Court passed
an order on the application made before it by the
Official Assignee of Bombay. It directed its Official
Receiver to move. the Bombay High Court .to
annul the adjudication order
made
by it
<»1
April 17, 1950. It observed that when such an
application is made before the Bombay High Court,
the said Court wiil consider all the relevant facts and
circumstances and decide whether it would be convenient for all concerned to allow the assets and
effects of the insolvent to be administered at Bellary
01-at Bombay. Having made this order, the District
Court instructed the Official R'eceiver not to part with
any portion of the assets and effects of the insolvent
until he moved the Bombay High Court and final
orders were passed on his application. It, however,
added that if tqe High Court decides that the assets
and effects of the insolvent should be administered
from Bombay, all the assets, documents and account
books belonging to the insolvent will be handed over
to the Official Assignee at Bombay. Pending the
final decision of the application to be made by t!ie
Official Receiver, status quo was allowed to be mamtained. This order was not challenged by the respon.
dents by preferring an appeal against it.
1 S.C.R.
SUPREME COURT REPORTS 813
Though the District Court had directed the
Official Receiver to move Bombay High Court, no
action was taken by him for a long time; and so,
the Official Assignee had to file another application
before the Distt. Court (I. A. No. 171 of 1951) on
October 15, 1951. By this application, the Official
Assignee brought it to the notice of the Court that
the Official Receiver had taken no action in accorjance with the orders already passed by the Court
and so, it was necessary in the interests of justice that
the Court should direct the respondents to deposit all
the amounts drawn by them on furnishing security
and to transfer the said sums and other sums in deposit
in Court and all the assets, movables and the books
of account of the insolvent's firm together with the
file of the Insolvency Case No. I. P. 53/1950 to the
Bombay High Court. It was alleged that unless
these steps were taken, the estate would suffer irrepairable loss and injury.
Meanwhile, the Official Receiver moved the
Bombay High Court for annulment of the adjudication order already passed by it. The High Court
declined to annul its adjudication order and directed
the continuance of the insolvency proceedings before
it because it took the view that the estate of the
insolvent could be administered more conveniently in
Bombay than in Bellary.
When tlie application made by the Official
Assignee (No. 171/1951) came to be heard by the
District Court, it was duly apprised of the order passed
by the Bombay High Court on the application made
by the Official Receiver.
Having regard to the fact
that the Bombay High Court had declined to annul
its adjudication order, the District Court took the
view that the application made by the Official
AssiP'!ee should be allowed. It, therefore, directed
the Official Receiver to transmit all the accounts and
deposits I ying in court and called upon the respondents
1962
Official AstignM,
High Court, Bomb<>
v.
Hardagiri Ba.sav•nna Gowd
Gajmdragadkar, J
1962
Official Auignee,
iigh Court, Bombay
v.
Haradagiri Basavanna Gowd
Gajendragadkar, J.
814 SUPREME COURT REPORTS [1963] SUPP.
to refund the amounts drawn by them on furnishing
security with interest @ 6% per annum, so that the
same could as well be transferred to Bombay.
This order was challenged by the respondents
by preferring an appeal before the High Court of
Andhra Pradesh. The High Court has allowed the
appeal. It has held that the application made by
the Official Assignee did not satisfy the requirements of section 77 of the Provincial Insolvency Act
and that, on the whole, it would be more convenient
that the estate of the insolvent should be administered by the District Court at Kurnool which had been
clothed with jurisdiction to try the said proceedings
as a result of the reorganisation of the States. It is
against this decision of the High Court that the
Official Assignee (hereinafter called the appellant)
has come to this Court.
The first question which calls for our decision
in this appeal is in whom does the property of the
insolvent vest ? For deciding this
question, the
relevant provisions of the Provincial Insolvency Act
and the Presidency Towns Insolvency Act have to be
considered. Sec. 17 of the Presidency Act provides,
inter alia, that 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.
Under
s. 51 of the said Act it is provided, inter alia, that
the insolvency of a debtor shall be deemed to have
relation back to, and to commence at,. (a) the time
of the commission of the act of insolvency on which
an order of ad j4dication 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 the insolvent within there months
next preceding the date of the presentation of the
insolvency petition. It is thus dear that when an
1 S.C.R. SUPREME COURT REPORTS
815
adjudication order is made under s.17, it relates
back to the date specified by s. 51.
As a result of
the combined operation of the said.two sections, the
insolvency under the Presidency Act commences on
the commission of the act of insolvency and it is on
that date that the property of the insolvent vests in
the Official Assignee. Sec. 51 clearly shows that
the insolvency is deemed to commence from the
moment when the debtor committed the earliest act
of insolvency which is proved to have been committed
within three months before the presentation of the
petition on which the order of adjudication is made.
This petition can be made either by the debtor himself or by any of his creditors. This position about
the effect of the doctrine of 'Relation back' is not in
dispute. Applying this principle, it would follow
that the adjudication order passed by the Bombay
High Court on April 17, 1950, on the insolvency
petition filed before it goes back not only to the date
on which
the said petition
was presented, viz,
April 14, 1950, but to the earliest act of insolvency
within three months prior to the said presentation
which is March 14, 1950. In other words, the adjudication order passed by the Bombay High Court relates
back to March 14 .. 1950.
Let us now examine the effect of the order of
adjudication passed by the District Court at Bellary.
Sec.
28 (2) of the Provincial Insolvency Act provides, inter alia, that on the mdking of an order of
adjudication, the whole of the property of the
insolvent shall vest in the Court or in a Receiver as
hereinafter provided, a"d shall become divisible
among the creditors. This corresponds to s. 17 of
the Presidency Act.
Section 28(7) of the Provincial
Act which provides for relation back eif the adjudication order, lays down that an order of adjudication
shall relate back to, and take effect from, the date of
•he presentation of the petition on which it is made.
Unlike s.51 of the Presidency Act which relates back
1962
Official AJsignte,
High Court, Bumbo ..
v.
Haradagiri Basa·
vanna Gowd
Gojendragadkar, J.
816 SUPREME COURT REPORTS [1963] SUPP.
1962
Official Assignee,
1-ligh ~urt, Bombay
the adjudication order to the earliest act of insolvency
within three months .before the presentation of the
insolvency petition. s. 28(7) of the Provincial Act
relates back
the adjudication order to the date
when the petition was presented; and that means
that the order of adjudication passed by the District
Court on December 13, 1950,. will relate back to
.January 25, 1950 when the petition was presented in
the said Court. This position also is not in dispute.
v.
Haradattiri Basevan11a Gowd
liajendragadkar, J.
The question which then arises is in whom does
the insolvent's estate vest ? Does it vest in the
Official assignee by reason of the fact that the order
of adjudication was made by the Bombay High Court
before the District Court made a similar order, or
does it vest in the Official Receiver of the District
Court because the adjudication order passed by the
Distt. Court relates back to a date earlier than the
date to which the Bombay High Court's adjudication
order relates ? In our opinion, the property of the
insolvent vests in the Official Assignee by virtue of
the operation of s. 17 of the Presidency Act. Section
17 provides for the vesting of the property on the
making of the order of adjudication, and so, when
the District Court at Bellary passed an adjudication
order in the insolvency proceedings pending before
it, s. 28 (2) could not in law operate in respect of the
insolvent's property because the said property had by
virtue of the statutory provisions contained in s. 17 of
the Presidency Act already vested in the Official
Assignee. The doctrine of relating back on which
s. 28(7) of tl:ie Provincial Act and s. 51 of the Presidency Act are based, could have no application in the
present case because the vesting in the Official
Assignee is the result of a statutory provision; and so,
in the absence of '{my provision in the Provincial Act
for the divesting of the property which has already
vested in the Official Assignee, it cannot be said that
the doC;trine of relating back has that effect. The
object of providing for the vesting of the insolvent's
1 S.C.R.
SUPREME COURT REPORTS
817
property in the Court Officer obviously is to protect
the said property in the interests of the creditors of
the insolvent and to facilitate its fair and just administration. If for achieving that object by operation
of an adjudication order passed by the Bombay High
Court in exercise of its jurisdiction under s. 17 the
said property has vested in the Official Assignee, there
would be no purpose in providing that the said property should be divested from the Official Assignee
and vested in the Official Receiver of the District
Court. In a case where adjudication orders are made
by two different courts, the procedure to be followed
may depend upon considerations of convenience, fair
play and justice; but there is no justification for the
argument that because s. 28(7) takes the adjudication
order of the District Court to an earlier date, the
property which has vested in the Official
Assil.~nee
should be divested and should be deemed to be vested
in the Official Receiver. The reasonable way to
reconcile s. 28(2) read with s. 28(7) of the Provincial
Act with sections 1 7 and 51 of the Presidency Act is
to hold that the doctrine of relation back prescribed
by s. 28(7) has no application to cases where the
insolvents' property has already vested in the Official
Assignee.
Therefore, we must hold that the property
of the firm has validly vested in the Offidal Assignee.
A similar question fell to be considered by the
Madras High Court in The OjfioW.l Assignee of
Madras v.
The
Official
Assignee of
Rangoon
by
his
Agent
Subramania
Aiyar ('). Wallis,
C. J., who delivered the judgment of the Court held
that where there are succ~sive adjudications in insolvency by two Courts, all the property of the insolvent
vests in the Official Assignee appointed by the Court
in which the prior adjudication was made and it will
not be divested from him by the subsequent adjudication of the other Court, even if the later adjudication be based on acts of insolvency committed earlier
in date than those upon which the prior adjudication
(1) I.L.R, 42 Mad. 121.
1962
Official Assi1 nee,
High Court, Bombay
v.
Haradagiri Basa~
vann• Gowd
Gajendragac/kar, J.
J9r,2
Official Assignee,
lligh Court, Bombav
v.
Haradagiri BaJavanna Gowd
Gajendragadkar, J.
818 SUPRE.ME COURT REPORTS [1963] SUPP.
was made. It is true that in that case both the
competing orders of adjudication had been passed
by the High Courts in proceedings which were governed by the provisions of the Presidency Act. But the
principle which was enunciated by Wallis, C. J., in
dealing with that case would apply as such to the
present case where the competing adjudication orders
have been passed under the provisions of the Presidency and the Provincial Act:s respectively. "The
provision ins. 17", observed Wallis, C. J., "that on
the making of an order of adjudication the prop-:rty
shall vest in the Official Assignee is express, and there
is no provision in the Act divesting the property so
vested in that Official Assignee and transferring it to
another Official Assignee under a later adjudication."
(p. 125). Sec. 51 likes. 28 (7) is really intended to
enable the Official Assignee or the Official Receiver
to recover property from third parties and it is with
that object that the said provisions prescribe the
doctrine of relation back. The said doctrine is not
intended to divest the property which has already
vested in the Official Assignee by virtue of an order
of adjudication and vesting it in another official
assignee or Official Receiver. As Dicey (1) has observed, the property to be vested in the Court Officer
under the Insolvency Law "must be in strictness property of the bankrupt. Property which once belonged
to the bankrupt, if it has before the commencement
of the bankruptcy become already vested in some
other person,. e. g., the trustee under a Scottish bankruptcy, is not the property of the bankrupt, and does
not vest in the trustee under the English bankruptcy."
Therefore, in dealing with the present dispute, we
must proceed on the basis that the property of the
firm has vested in the Official Assignee at Hombay
and the Bombay High Court is entitled to deal with
all matters arising in respect of the insolvency of the
firm.
The High Court of Andhra Pradesh has held
that the application made by the Official Assignee
(1) Dicey's Conflict of Laws. 7th Ed. P. 691.
l s.c.R.
SUPREME COURT REPORTS
819
does not meet the requirements of section 77 of the
Provincial Act; and so it has set aside the order
passed by the District Court directing the transfer of
the assets and account-books to Bombay. Section
77 of the said Act lays down that Courts should be
auxiliary to each other, and· it provides that all
Courts having jurisdiction
in insolvency and the
officers of such Courts respectively, shall severally act
in aid of and be auxiliary to each other in all matters
of insolvency; and it adds that an order of a Court
seeking aid with a request to another of the said
Courts shall be deemed sufficient to enable the latter
Court to exercise, in regard to the
matters
directed by the order, such jurisdiction as either of
such Courts could exercise in regard to similar
matters
within
t)J.eir
respective
jurisdictions.
Substantially, the same provision is contained in
sec. 126 of the Presidency Act.
According to the
High Court, an application made by the Official
Assignee cannot be said to be a request made by the
Bombay High Court to the District Court at Bellary,
and unless a request is made as required by s. 77 of
the Provincial Act, the Bellary Court should not
have acted upon the application made by the
Official Assignee.
In our opinion, this view is substantially correct in so far as the construction of
s. 77 is concerned. Section 77 lays down the procedure whereby one Court can make a request to
another Court, and in that behalf it provides that
considerations of decorum and courtesy require
that the request should be made by the Court itself
au.cl not by its officers. Therefore, if the Bombay
High Court had to make a request to the Court at
Bellary under s. 77, it would have been necessary
for the said High Court to make an order in that
behalf and follow it up by a letter of request addressed to the District Court at Bellary, vide in re.
L. King & Go.(').
{I} so Oil. 542.
1962
Official Assignte,
High Court, Bomba
v.
Haradagiri Basa ..
uanna Gowd
Gaj'endrogadkar, J.
1962
Official Assignee,
High Court, Bombap
v.
Haradagiri BasG~
vanna Gowd
-Gajendragadkar, J.
820 SUPREME COURT REF'ORTS [1963] SUPP.
The difficulty in accepting the conclusion of
the High Court that the District Court at Bcllary
should not
have allowed the official Assignee's
.application however arises from the fact that the
said application does not purport to have been made
and is, in fact, and, in law, not mad-. .mder s. 77.
It will be recalled that the order passed by the
District Court at Bellary on December 15, 1950
calling upon the Official Receiver to move the
Bombay High Court for annulment of its adjudication
order had not been complied with by the said
Receiver, and so, the principal object of the Official
Assignee in making the subsequent application was
to invite the attention of the Court to the failure of
its officer to comply with the order already passed
and to request the Court to transfer the assets and
books of account of the firm to Bombay.
The
Official Assignee, in substance, contended that since
the earlier order of the Court had not been complied
with, the last operative portion of the order should
be enforced and transfer made as requested by him.
We have alreadv noticed that meanwhile the
Official Receiver moved the Bombay High Court
without success, and before the District Court finally
dealt with the Official Assignee's application, the
said earlier order became fully operative. Therefore,
the order passed by the District Court directing the
transfer of the assets and account-books of the firm
to Bombay, was, in a sense, a corollary to the earlier
order passed by it on December 13, 1950. That
being the nature of the proceedings taken by the
Official Assignee before the District Court, it is inappropriate to hold that s. 77 of the Provincial Act
came into play and it had not been complied with.
Dealing with this aspect of the matter, the
High Court was inclined to take the view that the
earlier order was not a final order and did not amount
to res judicaf,a between the parties. In "our opinion,
this view is erroneous. The said order was passed;in
1 s.c.R.
SUPREME COURT REPORTS
821
proceedings to which the respondents were parties,
and so far as the District Court was concerned, it
dealt with the whole of the dispute then pending
between the Official- Assignee and the respondents.
In terms, the order had provided that if the Bombay
High Court decided that the assets and effects of the
insolvent should be administered from Bombay, the
said assets and account books should be handed over
to the Official Assignee at Bombay, and so, there can
be no doubt that the said order was complete and
final. In view of the subsequent events, the said
order became effective and the Official Assignee was
entitled to request the District Court to act upon it
and send the assets and account books and documents
to Bombay. We must accordingly hold that the
High Court was in error in reversing the order of the
District Court and directing instead that the insolvency proceedings in so far as they related to the
dispute between the Official Assignee and the respondents should be tried at KurnooL It would be
noticed that when the Official Assignee moved the
District Court by his second application, he was really
claiming that the assets of the insolvent should be
transferred to him because they had vested in him
already, and he wanted that the claim made by the
respondents has to be tried between him and them
and that can be done by the Bombay High Court
which had passed an adjudication order under s. 17
of the Presidency Act. This aspect of the matter
does not appear to have been proper! y placed before
the High Court.
Mr. Ram Reddy for the respondents, however,
contends that though the Bombay High Court may
be the principal Court entitled to deal with the insolvency proceedings against the firm, the subsidiary
question raised by the respondent can nevertheless
be tried by the District Court
at
Bellary.
This argument is based mainly on grounds of convenience of parties. We do not propose to express any
1962
0 ffeial A.ssig,.,.,
High Court, Bomba.1
v.
Haradagiri Basa·
wnna Gowd
Gi.Zj1ndragadkar, J.
1962
Official Assignel!,
High Court, Bombay
v.
liaradagiri Basavanna Gowd
Gajendragadkar, J,
822 SUPREME COURT REPORTS [1963] SUPP.
opinion on this point in the present appeal. We are
satisfied that the assets which have been ordered by
the District Court to be transferred to Bombay include
the amounts allowed to be withdrawn by the respondents on conditions imposed by the District Court in
that behalf. If the respondents desire that their
claim to the said amount should be tried by the
Bellary Court on grounds of convenience, it is open to
them to make an application to the Bombay High
Court in that behalf. The entire insolvency proceedings against the firm must be tried by the Bombay
High Court.
It would, however, be open to the
Bombay High Court to allow the dispute between the
respondents and the Official Assignee to be tried by
the Bellary Court if it came to the conclusion that it
would be convenient, fair and just to adopt such a
course.
Therefore, we will not direct the respondents to re-deposit the amount in the Bellary Court
with interest accrued due because we propose to allow
the respondents liberty to make an aJ?plication in that
behalf to the Bombay High Court within two months
from today. If the Bombay High Court accepts
their plea and orders that the dispute between the
respondents and the Official A~signee should be tried
at Bellary, the said High Court may also decide
whether the amount already withdrawn by the respondents should be redeposited before the said dispute
is disposed of, or only after it is decided against
them. That is a matter which would be in the discretion of the Bombay High Court. If, however,
the respondents do not make an application to the
Bombay High Court within two months, they will
have to redeposit the entire amount in Bellary Court
and the said Court will thereupon transfer the said
amount to the Bombay High Court to be dealt with
in accordance with the provisions of the Insolvency
Law. We ought to add that Mr. Ram Reddy has
conceded, and we think, rightly, that if the Bombay
High Court allows the matter in dispute between the
respondents and the Official Assignee to be tried in
1 S.C.R. SUPREME COURT REPORTS
823
1962
the District Co.irt, it should be so tried not in the
District Court of Kurnool but in the District Court of
Bellary.
Official Assignee,
High Co:irt, Bomha
In the result, the appeal is allowed, the order
passed by the High Court is set aside and that of the
District Court restored with the modification iu respect of the amount withdrawn by the respond en ts, as
indicated above. The appellant will be entitled to
his costs from the respondents throughout.
Appenl' allowed .
•
THE KARIMTHARUVI TEA EST ATES LTD.,
KOTTAYAM & ANR.
v.
STATE OF KERALA & ORS.
(S. K. DAS, ]. L. KAPUR, A. K.
SARKAR,
M. HIDAYATULLAH and RAGUUBAR DAYAL, JJ.)
Agricultural Inconie 'l'a:r-7
1ea l'lantations-Computatinn
of agricultural income-Dui'uctions-State h'trztute
disoJ{o1"inr1
exptnditure
on
-im.mature
plnnfs-Jlalidity
uf-.·l11ricultural
Income-7'ax (Ammdrncnt) Acl, l!IG/ (Ker./.\ of
1961), s. 2-lndian Income-tax Act, 1922 (11 of
111:'.~.!,
s. 2(1)-lwlian
Incorne-t.n.x
Rulr>~'I,
19:?2.
IT. 2.'J,
24Gonstitution of Ind·ia, L1rt. 3GG, Seventh Schrr{uJe, List If /tern
i\
10. 46.
Entrv 46, List II of the Seventh Schedule to the Constitution e1nPowers the State to ~rgislatc \\·ith respect to taxes on
agricultural inrome. Article 366( l) provides th:1t the cxpressir'n "agricultural income" in the f.!onstilution Uicans ar:rirultural incon1e as defined in the Indian Tncome-tax /\ct.
Under
the Agricultural Income-tax Act, 1950, agricultur,ql income fron1
tea plantations was to be computed in the same m;·,nncr as it
was done under the Indian Income-tax Act,
I 922
read ,vi th
tr. ~3 and 24 of the Indian Income-tax Rules. Section 5 of the
v.
Ha1ad.~gi1i Basa·
vanna G(,wd
G11jendra_!!,adk11r, l
1962
November, L