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1949 DIGILAW 203 (CAL)

Lachmi Narayan Marwari v. Amulyadhan Auddy

1949-04-28

body1949
JUDGMENT Sen, J. - This Rule has been obtained by the Defendant. No. 2, Lachmi Narayan Maxwari, against a decree passed in a suit for rent. It will not be necessary to state all the facts of this case. The salient facts, which are necessary to be stated for the purpose of this Rule, are as follows : The Defendant No. 2, Lachmi Narayan Marwari, was a tenant under the opposite parties (1 to 4) of a shop room. On May 7, 1943, Defendant No. 2 was adjudicated an insolvent. On June 14, 1945, the opposite parties brought a suit for rent for the period June 16, 1942, to May 14, 1945. While the suit was pending, the Defendant No. 2 was discharged on December 10, 1946. On June 30, 1947, the suit was decreed in part. The Plaintiffs had been given a decree for rent due for the period after the adjudication of the Defendant No. 2 and the suit has been dismissed with respect to the claim for rent for the period prior to adjudication. Against his decree, the Defendant No. 2 has obtained this Rule and his intention is that the suit should have been dismissed in toto, having regard to the provisions of Sections 34 and 44 of the provincial Insolvency Act. 2. In my opinion, the contention urged on behalf of the Defendant No. 2 should prevail. Section 44(2) of the Provincial insolvency Act says that an order of discharge shall release the insolvent from all debts provable under this Act. Now, the question which arises is whether the rent payable for the, period subsequent to the order of adjudication comes within the purview if the phrase "debts provable under the Act". This takes us a the definition of "provable debts", which is contained in Section 34 if the Act. The section consists of two parts. We are not concerned with the first part. Sub-section (2) of Section 34 of the Provincial Insolvency Act is in the following terms: Save as provided by Sub-section (1), all debts and liabilities, present or future, certain or contingent, to which the debtor is subject when he is adjudged an insolvent, or 10 which he may become subject before his discharge by reason of any obligation incurred before the date of such adjudication, shall be deemed to be debts provable under this Act. 3. 3. It is conceded on all sides that the first part of Sub-section (2) does not relate to the question under discussion. This part of the sub-section relates to debts to which the Petitioner was subject when he was adjudicated an insolvent. The question which has been argued in this Court is whether rent which had accrued due after the adjudication would amount to a debt to which the Petitioner has "become subject before "his discharge "by reason of any obligation incurred before the date of such "adjudication". If it is, it shall be deemed to be a debt provable under the Act. If it is not, it is not provable under the Act. Learned advocate for the opposite parties contends that the tenancy was a monthly tenancy and that it was terminable on fifteen days' notice being given on either side. He argues that the liability to pay rent arose after the expiry of each month. Therefore, the liability to pay rent for the month after the order of adjudication would be a debt which is payable by reason of an obligation incurred after the adjudication and would not amount to a debt to which the Defendant No. 2 was subject by reason of any obligation incurred before the date of adjudication. In support of his argument he relies upon the case of Kuer Behari Lal v. Kalka (1921) 67 Ind. Cas. 549. It is a decision of the Judicial Commissioner's Court at Oudh. I must say with great respect that I think that this contention is not sound and that the argument of learned advocate and the decision referred to above are based on a certain misconception. A debt may become payable on a certain date but the obligation by reason of which the debt becomes payable may arise on quite a different date. In the case cited above by learned advocate for the opposite parties, the date on which a debt accrues due is taken to I identical with the date of the obligation which creates the deb. This is the confusion which has led, in my opinion, to the erroneous decision. It is quite true that in this case the tenant was not liable to pay the rent until the expiry of the month Thus, for the months subsequent to the adjudication, he was no liable to pay the rent until the expiry of those months. This is the confusion which has led, in my opinion, to the erroneous decision. It is quite true that in this case the tenant was not liable to pay the rent until the expiry of the month Thus, for the months subsequent to the adjudication, he was no liable to pay the rent until the expiry of those months. But hoi did the liability to pay these debts arise? That is the question which has to be decided. The liability to pay these debts arcs, out of an obligation and that obligation was entered into created or incurred before the adjudication. That obligation agreement between the parties by which this monthly tenancy was created. In this connection would point out that monthly tenancy does not come to an end on the termination every month. The nature of such a tenancy has been full discussed in the judgment of Sir John Beaumont, Chief Justice of the Bombay High Court, in the case of Utility Articles Manufacturing Company v. Raja Bahadur Motilal Bombay Mills Ltd. ILR (1943) Bom. 553, 563, where His Lordship refers to the English decision of Queen's Club Gardens Estate, Limited v. Bignell (1924) 1 K.B. 117. In that case it was pointed out that-- A characteristic of a periodical tenancy is that as each period commences, it is not a new tenancy, it is really an accretion to the old tenancy. A monthly tenancy, that is a tenancy subject to a month's notice (in this country to fifteen days notice) creates in the first instance a tenancy for two months certain. But as soon as the third month commences, that is not a new tenancy; it turns the original tenancy into a three months' tenancy and when the fourth month begins, the tenancy becomes a four months' tenancy and so on. 4. It is clear from this exposition of the nature of a monthly tenancy that the rent payable at the end of each month does not constitute a debt which arises by reason of an obligation which is incurred at the beginning of each month. The true position is that the rent is payable by reason of an obligation which arose on the date on which the monthly tenancy was created, a date which in this case is long prior to the order of adjudication. 5. The true position is that the rent is payable by reason of an obligation which arose on the date on which the monthly tenancy was created, a date which in this case is long prior to the order of adjudication. 5. In these circumstances, I must hold that the learned Judge was wrong in passing a decree against the Defendant No. 2 for rent for the period subsequent to the adjudication. The rent payable for that period constitutes a debt provable under the Act. That being so, the order of discharge released the insolvent from the debt. 6. In these circumstances, I set aside the decree passed by the court below and dismiss the Plaintiffs' suit in toto. 7. Having regard to the peculiar circumstances of this case, I decide that each party shall bear his own costs throughout. 8. The Rule is made absolute.