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TMI Blog1962 (3) TMI 49X X X X Extracts X X X X X X X X Extracts X X X X ..... h Gill raised money from their respective friends and relations and contributed large sums of their own to set up the factory. In order to secure the plant and machinery the petitioner and S. Sewa Singh Gill approached various Bombay dealers including Messrs. Jayems Engineering Company (hereinafter to be called the "Engineering Company") who agreed to supply the necessary power plant and its accessories. On 26th November, 1946, the petitioner placed the order with the afore said company and paid a sum of Rs. 35,930 out of his promotion account as 20 per cent, advance under the terms of the agreement. In due course the machinery was delivered at Doraha. In the meantime on 27th May, 1947, a company had been incorporated called the Patiala Ban ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fs, which were later on taxed at Rs. 6,929 19nP. According to the petitioner, he informed the official liquidator that the sole liability for costs was that of the company and not of the petitioner and that he had been joined as a co-plaintiff merely to protect the interests of the company. The official liquidator denied the full responsibility of the company and obtained an ex parte order from this court admitting the company's liability to the extent of one half of the costs. On 25th September, 1957, the petitioner moved this court for directions to the official liquidator to pay the entire amount of costs. The official liquidator admitted the claim of entire costs. But the payment was to be made pari passu with other creditors. Later ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... respective rights of secured and unsecured creditors and to debts provable as are in force for the time being under the law of insolvency with respect to the estates of persons adjudged insolvent. Turning to insolvency law and in particular to section 28(5) of the Provincial Insolvency Act, there can be no doubt that property held by the insolvent on trust for others is not divisible among the creditors and, therefore, does not pass to the official assignee or the receiver. According to the Law of Insolvency by Mulla (second edition), pages 449 and 450, the rule that property held by the insolvent on trust for others does not pass to the official assignee or receiver applies not only to the property held by the insolvent as a trustee in th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ible among the general body of creditors. Gentle J. referred to section 229 of the Indian Companies Act, 1913, and to section 52(1) of the Presidency Towns Insolvency Act as also to section 94 of the Trusts Act. On the facts of that case it was found that the sum of Rs. 250 in the circumstances in which it came to be deposited with the company was not divisible under section 229 of the Companies Act among the general body of creditors. It is not possible to see how this authority can afford any assistance to Mr. Awasthy for the principle which he is seeking to press into service. The plain language of section 28 (5) of the Provincial Insolvency Act refers only to the property of an insolvent which can be made available for distribution amon ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oner can justly say that he could have been made to pay the amount in question to the engineering company in case there was any claim personally against him, but simply because he had the misfortune to be a co-plaintiff with the company in the Bombay suit, he should not be made to suffer the loss. It is however, not possible to see how the petition can be in a better position than the engineering company itself for it is common ground that the engineering company could not have claimed preferential treatment in the matter of satisfaction of its claim for costs under the decree and as a creditor the engineering company itself would have ranked as an ordinary creditor and not as a preferential one. Mr. Awasthy has not been able to satisfy me ..... X X X X Extracts X X X X X X X X Extracts X X X X
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