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TMI Blog1939 (8) TMI 26X X X X Extracts X X X X X X X X Extracts X X X X ..... s obligation to the company moneys owing to him from the company. The origin of the transactions is a liability which arose in connexion with a chit fund scheme conducted by the company. Every contributory to a chit fund scheme agrees that he will each month for a specified period pay to the company an agreed amount; each month an auction is held and the successful bidder, being one of the subscribers, is entitled to receive from the company the total amount of all his subscriptions to the fund upon furnishing security by means of a surety and also agreeing to continue to pay each month the amount of his monthly subscription. When a debtor is placed in a position to receive from the company the total amount of his subscriptions the company ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of such mutual dealings, and the sum due from the one party shall be set off against any sum due from the other party, and the balance of the accounts and no more shall be claimed or paid by either side respectively. The question is whether in respect of either the debtor or the surety in the matter before me, debts owing by the company to the debtor or surety are mutual dealings within the contemplation of Section 46 mentioned above. The provisions of Section 31, English Bankruptcy Act. although differently worded, it is conceded, do not have any different effect to those of Section 46, Provincial Insolvency Act. This matter has been before two other High Courts in this country: In Trimbak Gungadhar v. Ramachandra Trimbak, (45 Bom. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ankrupt, he is entitled before the trustee sues the principal to apply it in satisfaction of the debt". The trustee referred to is the trustee in bankruptcy whose position in England is analogous to that of the Official Assignee here. It is therefore to be noticed that so far as the textbooks are concerned the principle of set off is recognized when, at any rate, the debt is a joint and several debt. The question of set-off arose in Ex parle Stephens, (1805) 11 Ves Jun 24. In that case a lady had placed some money in the hands of a bankrupt firm for the purchase of stock. The bankrupts failed to make the purchase but by remitting what purported to be dividends upon the principal sum led the lady into the belief that her instructions had ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er sum, of the company must be content with a dividend dependent on the distribution which can be made from the assets. I have been referred to the provision of Order 8, Rule 6, Civil Procedure Code, which deals with the position of suits against joint debtors and the question of set-off, before any insolvency arises. The provisions of the above rule are in no way referable to matters arising in insolvency or liquidation and in my view no help is obtained from that rule. Firstly, I will consider the position of the debtor who wishes to set off. Is it to be said that a debtor who has a cross claim which he can set off against the company loses that right because the company has obtained a safeguard by a surety assuring to the company the amo ..... X X X X Extracts X X X X X X X X Extracts X X X X
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