Judgement Law. Rep. 70 Ind. App. 93 ( 1942- 1943) Mahomed Siddique Yousuf V. Official Assignee of C alcutta 31 Consolidated Appeals (No. 54 of 1942), by special leave, from a judgment and two orders of the High Court in its appellate insolvency jurisdiction (December 17, 1940), which had dismissed an appeal from the Judge in Insolvency (July 25, 1940). The following facts are taken substantially from the judgment of the Judicial Committee In 1938 one Ali Mohamed Hashim (hereafter called "the insolvent") had a claim for damages against a firm with whom he had dealings in shares, and by a written agreement of March 30, 1938, between the appellant and the insolvent the former agreed to advance money for the costs of the contemplated suit and to assist in the conduct of it, for which services he was to receive half the money recovered after deducting the advances. On April i, 1938, the suit was instituted, and on January 19, 1939, was decreed for Rs.6750 and interest. On January 20, 1939, by indenture of assignment, the insolvent assigned to the appellant the said decree in consideration (inter alia) of his discharge of all liabilities under the agreement of March 30, 1938, and Rs.iooo then paid to him in cash. Meantime, on November 8, 1938, one Hamid Haji Umer (the second respondent), hereinafter called "the "petitioning creditor," had filed a suit against the insolvent for money due from the insolvent in respect of share transactions in which the plaintiff had acted as his broker. On April 5, 1939, the suit was decreed for Rs.15,785-10. On April 19, 1939, the petitioning creditor filed a petition in the High Court for the adjudication of the insolvent as an insolvent. The petition alleged several acts of insolvency, one of which was that the insolvent on January 20, 1939, executed the deed of assignment to the present appellant of the decree of January 19, 1939, with the intention of preferring the present appellant over other creditors. On April 25, 1939, the petitioning creditor obtained ex parte the appointment of the official assignee (the first respondent) as interim receiver of the decree of January 19, 1939 ; correspondence with the appellant followed in which, on April 29, he was supplied with a copy of the petition for adjudication. On April 25, 1939, the petitioning creditor obtained ex parte the appointment of the official assignee (the first respondent) as interim receiver of the decree of January 19, 1939 ; correspondence with the appellant followed in which, on April 29, he was supplied with a copy of the petition for adjudication. In May the appellant instituted proceedings in execution of the decree, and an order was made that the judgment debtor pay the money into court, which he did, and that it should not be withdrawn except with the leave of the Insolvency Court. On June 13, 1939, an adjudication order was made against the insolvent. No one appeared except the petitioning creditor, and the order recited that the insolvent had committed each of the acts of insolvency alleged in the petition. In August the appellant applied in the Insolvency Court for leave to take out the decretal money then in court. Leave was given subject to leave being obtained in the suit. The appellant then applied for similar leave in the suit. That application was opposed by the official assignee, and on August 31, 1939, an order was made that the appellant was to be entitled to withdraw the amount on furnishing security. If the official assignee made any application on the first insolvency day after the reopening of the court, then the application was to abide the result thereof. If no application were made then the order was to be made as asked for. In pursuance of that order the official assignee, on November 23, 1939, gave notice of motion in the Insolvency Court for a declaration that the indenture of assignment dated January 20, 1939, should be declared void as against the official assignee and that the transfer should be set aside. That was the motion which was the subject-matter of the present proceedings. The Judge in Insolvency (Panckridge J.) held on the merits that " the insolvent deliberately elected to prefer the transferee "to the other creditors " ; he further held that s. 57 of the Presidency-towns Insolvency Act, 1909, expressly excluded from its protection any transactions void under s. 56 thereof, and he made an order declaring that the assignment was void and of no effect against the official assignee. An appeal to the High Court (Derbyshire C.J. and McNair J.) was dismissed. The court, holding Law. Rep. 70 Ind. App. An appeal to the High Court (Derbyshire C.J. and McNair J.) was dismissed. The court, holding Law. Rep. 70 Ind. App. 93 ( 1942- 1943) Mahomed Siddique Yousuf V. Official Assignee of C alcutta 32 themselves bound by Ex parte Learoyd. In re Foulds (( 1878) 10 Ch. D. 3.), were of opinion that the order of adjudication was conclusive evidence against the appellant that the assignment was a fraudulent preference. They also refused to extend the appellants time for appealing against the order of adjudication. By the Presidency-towns Insolvency Act, 1909, s. 116 "(1.) A copy of the Official Gazette containing any notice " inserted in pursuance of this Act shall be evidence of the facts "stated in the notice. (2.) A copy of the Official Gazette "containing any notice of an order of adjudication shall be "conclusive evidence of the order having been duly made, and "of its date." "Sect. 57 .... nothing in this Act shall invalidate in the "case of an insolvency— . . . . (c) any transfer by the "insolvent for valuable consideration .... provided that "any such transaction takes place before the date of the order "of adjudication and that the person with whom such "transaction takes place has not at the time notice of the "presentation of any insolvency petition by or against the "debtor." 1943. Feb. 22, 23. Rewcastle K.C. and Bagram for the appellant. The High Court erred in holding that the adjudication order was conclusive evidence against the appellant of a fraudulent preference merely by reason of the publication of a notice of the order in the Official Gazette under s. 116, sub-s. 2, of the Presidency-towns Insolvency Act, 1909 ; they should have held that that section did not preclude the appellant from either (a) disputing the allegation that the transfer was a fraudulent preference, or (b) claiming that it was a protected transaction by virtue of s. 57 of the Act. The question is how far this case is governed by the . decision in Ex parte Learoyd. In re Foulds (10 Ch. D. 3.). It is submitted, first, that Ex parte Learoyd (10 Ch. D. 3.) did not hold that the prohibition against questioning the fact that an act of insolvency had been committed was an absolute prohibition and conclusive for all purposes. decision in Ex parte Learoyd. In re Foulds (10 Ch. D. 3.). It is submitted, first, that Ex parte Learoyd (10 Ch. D. 3.) did not hold that the prohibition against questioning the fact that an act of insolvency had been committed was an absolute prohibition and conclusive for all purposes. econdly, the present case can in any event be distinguished from Ex parte Learoyd (10 Ch. D. 3.) because there was there no question of the transaction being then dealt with coming within any protective section such as s. 57 of the Presidency-towns Insolvency Act. Reliance is placed on Official Assignee of Madras v. O.R.M.O.R.S. Firm (( 1926) I. L. R. 50 M. 541.) which, it is submitted, is good in law in India. Accordingly, where an application is made to set aside a transfer on the allegation that it is a fraudulent preference, the transferee is not precluded from contesting the allegation, and the High Court is not precluded from trying the question on its merits merely because of s. 116, sub-s. 2, of the Presidency-towns Insolvency Act. If, however, Ex parte Learoyd (10 Ch. D. 3.) cannot be distinguished, it is conceded that that point must fail, but with regard to extension of time for appealing against the adjudication order, it is contended that discretion ought to have been exercised in the appellants favour under s. 5 of the Indian Limitation Act, 1908, more particularly when there are Indian authorities on the basis of which it was possible to give him the advice that he was proceeding correctly. [Reference was also made to Ex parte Tucker. In re Tucker (( 1879) 12 Ch. D. 308.) on the extension of time point.] Bagram followed. Shears v. Goddard ([ 1896] 1 Q. B. 406.) is good law in India, and therefore it was open to the appellant to claim that the transfer was a protected transaction within the meaning of s. 57 of the Insolvency Act. The decision in Official Assignee of Rangoon v. A\ A. Thevar Bros. (I. L. R. [ 1937] R. 65.) has also held that it is open to a transferee to make such a claim. W. W. K. Page for the respondent, was required to deal only with the question of extension of time. This is a discretionary relief, and under s. 5 of the Limitation Act sufficient cause must be shown. (I. L. R. [ 1937] R. 65.) has also held that it is open to a transferee to make such a claim. W. W. K. Page for the respondent, was required to deal only with the question of extension of time. This is a discretionary relief, and under s. 5 of the Limitation Act sufficient cause must be shown. In the circumstances this case should not be sent back to enable the appellant to appeal against the adjudication order ; he was fully cognizant of the insolvency proceedings, and that his right was challenged. The appellate court rightly refused to grant him leave to file an appeal against Law. Rep. 70 Ind. App. 93 ( 1942- 1943) Mahomed Siddique Yousuf V. Official Assignee of C alcutta 33 the order of adjudication and to extend the time therefor. No reply was required. Mar. 24. The judgment of their Lordships was delivered by LORD ATKIN. This is a consolidated appeal from two orders of the High Court at Calcutta, one dismissing an appeal from the Judge in Insolvency and the other refusing to extend the time for appealing against an adjudication order made against one Ali Mohamed Hashim, who will hereafter be called " the insolvent.1 As a result of their Lordships decision in this case the facts may have to be considered afresh in the Indian Courts, and it is desirable therefore to state the details as summarily as possible so far as they are relevant at the present time. [Having stated the facts above set out, his Lordship continued. The learned Judge in Insolvency dealt with two points taken by the official assignee. In the first place, it was said that the transfer having been found to be an act of insolvency in the order of adjudication could no longer be alleged by the transferee not to be void on that ground. In the second place, it was said that apart from the effect of the adjudication order the evidence showed that in fact it was a fraudulent preference. The learned judge inclined to accept the first contention, which was based on the well-known case of Ex parte Learoyd (10 Ch. In the second place, it was said that apart from the effect of the adjudication order the evidence showed that in fact it was a fraudulent preference. The learned judge inclined to accept the first contention, which was based on the well-known case of Ex parte Learoyd (10 Ch. D. 3.), but appreciating that there was authority to the contrary in India in the decision of the Madras High Court in Official Assignee of Madras v. O.R.M.O.R.S. Firm (( 1926) I.L. R. 50 M. 541.), would not express a final opinion on the point. On the facts, however, in evidence before him he found the intent to prefer proved. In the appellate court the case took a different turn. Both judges expressed some doubt whether the intent to prefer was in fact proved; but they were both of opinion (following Ex parte Learoyd (10 Ch. D. 3.) that the order of adjudication was conclusive and could not be disputed. Their Lordships entertain no doubt that this decision was correct. Ex parte Learoyd (10 Ch. D. 3.) is well established in England; it was decided on the language of the Bankruptcy Act, 1869 both the relevant sections have been repeated in the Acts of 1883 and 1914, and the decision has taken its place as a leading case on this part of the law. The provisions of the Presidency-towns Insolvency Act, 1909, are also in similar terms, and their Lordships feel no doubt that the principles of the English decision are as valid in India as in England. No doubt it is anomalous that a decision affecting the right of a third party should be conclusively determined against him in his absence, and even without notice to him; but the words of the section and the importance of maintaining the status of the debtor as determined by an order of adjudication, and the necessity of securing the stability of the administration of the debtors estate once his status has been fixed, have been justly held to outweigh the consideration of hardship to the private citizen. Their Lordships are of opinion, therefore, that the decision of the Madras High Court in Official Assignee of Madras v. O.R.M.O.R.S. Firm (I. L. R. 50 M. 541.) was incorrect and must be taken to be overruled. But the third party who is placed in this anomalous position is not without redress. Their Lordships are of opinion, therefore, that the decision of the Madras High Court in Official Assignee of Madras v. O.R.M.O.R.S. Firm (I. L. R. 50 M. 541.) was incorrect and must be taken to be overruled. But the third party who is placed in this anomalous position is not without redress. His remedy is to appeal as a person aggrieved against the adjudication order which has so far determined his rights. This, being the sole remedy, is one which justice demands that the courts should carefully protect, and if an extension of time for appealing is reasonably required such extension should be granted ex debito justitiae, to use the words of James L.J. in Ex parte Tucker (12. Ch. D. 308.). The time for appealing from an adjudication order under the Indian Limitation Act is twenty days ; but a general power of extension of time is given by s. 5 of the Act. At a late stage of the hearing in the appellate court the appellant, no doubt finding that the court was disposed to decide the case on the more technical ground which the judge in the Insolvency Court had not thought fit to accept, applied for leave to extend the time for appealing, but the application was rejected as belated. In the opinion of their Lordships this application should have been granted. It may be that the appellant had notice of the terms of the petition, and subsequently of the acts of bankruptcy established in the adjudication order. But at that time, as is plain from Panckridge J.s judgment, there was room for doubt in Law. Rep. 70 Ind. App. 93 ( 1942- 1943) Mahomed Siddique Yousuf V. Official Assignee of C alcutta 34 India whether the doctrine of Ex parte Learoyd (i) applied, and the appellant and his legal advisers cannot be said to have acted unreasonably in challenging the issue, as they promptly did, by applying to execute the decree. It would appear to have been a complete answer to have said that the appellants title was conclusively avoided ty the adjudication order. It is from this point of view that the order of the court of August 31, 1939, becomes important. The appellant was given leave to withdraw the decretal amount then in court unless the official assignee filed an application on the next insolvency day. It is from this point of view that the order of the court of August 31, 1939, becomes important. The appellant was given leave to withdraw the decretal amount then in court unless the official assignee filed an application on the next insolvency day. This must mean, or would reasonably be understood to mean, an independent application to have it established that the transfer was void as a fraudulent preference ; and this is the application that was made and is now before the Board. The learned judge in the Insolvency Court put on one side the Ex parte Learoyd (10 Ch. D. 3.) point and dealt with the case on the merits. It seems to their Lordships impossible to say that the appellant was acting unreasonably in assuming throughout the course of the present proceedings right up to the court of appeal that though the Ex parte Learoyd (10 Ch. D. 3.) point had been takeii he was really concerned to defend the assignment on the facts then disclosed in evidence. If this be so, it does not appear that he should be deprived of a right, which he could originally claim ex debito justitiae, to have the time for appealing extended so as to get rid, if possible, of a decision made in a proceeding to which he was not a party. Their Lordships think, therefore, that the appeal should succeed. It is plain that an appeal against the adjudication order would be useless while the orders stand in this independent proceeding declaring the transfer void because of the adjudication order itself. On the other hand, the decision of the High Court avoiding the transfer is plainly right while the adjudication order stands, and the appellant as a condition of the extension of time must pay, as he has offered to do, the costs thrown away. It may be that if the appellant takes advantage of the extension of time and appeals, the High Court may adopt the procedure in Ex parte Tucker (12 Ch. D. 308.) and content themselves with striking out the act of bankruptcy complained of, and leaving the official assignee to make a fresh application without themselves determining the facts. This, however, is a matter entirely for them. The appeal must be allowed, and the orders of the Judge in Insolvency and the Appellate Bench must be set aside. D. 308.) and content themselves with striking out the act of bankruptcy complained of, and leaving the official assignee to make a fresh application without themselves determining the facts. This, however, is a matter entirely for them. The appeal must be allowed, and the orders of the Judge in Insolvency and the Appellate Bench must be set aside. The appellant must, in accordance with his offer, pay the costs of the present application in both courts. On payment of the costs his time for appealing will be extended for two months from the arrival of the order of the Privy Council in the High Court. The order is without prejudice to the right of the official assignee, if he is so advised, to make a further application to have the transfer declared void. The respondents must pay the costs of this appeal.