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S.M.R. Shanmugham Chettiar (died) & another v/s The Official Receiver, West Tanjore

Company & Directors' Information:- SMR INDIA PRIVATE LIMITED [Active] CIN = U17290DL2012PTC237165

    S.A. No. 613 of 1933

    Decided On, 30 November 1937

    At, High Court of Judicature at Madras


    For the Appearing Parties: ----

Judgment Text

King, J

[1] On the 31st of October, 1922, one Swaminatha Chettiar was adjudicated an insolvent on a petition presented by a creditor of his on the preceding 24th April. On the 31st March, 1922, the insolvent had assigned a number of decrees to the appellant in this case. The Official Receiver filed an application to have this assignment set aside and on the 22nd of November, 1924, the assignment was duly annulled by the Insolvency Court. Subsequently in March, 1930, after an appeal against the annulment to the High Court had been dismissed, the Official Receiver filed a suit to recover from the appellant whatever money he had actually collected in execution of the decrees which had been assigned to him. The only question at issue in this appeal is one of limitation. Both the Courts below have held that a distinction should be drawn between the two periods (1) that between the assignment and the date of the order annulling the assignment and (2) the period, subsequent to that order. With regard to the first period they held that the suit was governed by Article 120 and with regard to the second period that it was governed by Article 62. It is argued for the assignee in second appeal that Article 62 ought to be applied to both periods.

[2] Article 62 runs as follows:

For money payable by the defendant to the plaintiff for money received by the defendant for the plaintiff s use.

and time begins to run from the date when the money is received and the period of limitation is three years. It is argued for the respondent (the Official Receiver) who accepts the point of view which commended itself to the Courts below, that if a man receives money which at the time he receives it he is legally entitled to receive, he cannot be said to be receiving it for the use of some one else who may subsequently be declared to be entitled to the money by some judicial decision, and therefore that any money which in this case was. received between the date of the assignment and the date of the order annulling the assignment could not be said to have been received by the appellant for the use of the Official Receiver. This argument is not without some force and not without its practical convenience, and it has been supported by certain authorities derived from the High Courts of Calcutta and Allahabad, upon which the District Judge also relied. But the trend of authority in this Court is distinctly against it. The cases cited by the appellant, Baijnath Lala v. Ramdoss , Municipal Council, Dindigul v. Bombay Co., Ltd. (1928) 56 M.L.J. 525 : I.L.R. 52 Mad. 207 and Sivaramaraju v. Secretary of State for India in Council (1934) 68 M.L.J. 630 are all cases in which the defendant at the time of receipt of the money had a legal right to receive it, and, in spite of that fact, it was held by this Court in all those cases that Article 62 applied to the suits. Baijnath Lala v. Ramdoss , and Municipal Council, Dindigul v. Bombay Co., Ltd. (1928) 56 M.L.J. 525 : I.L.R. 52 Mad. 207, are Bench decisions which are binding upon me in the hearing of this appeal. The learned advocate for the respondent has been unable to show me any subsequent decision of this High Court in which any doubt has been thrown upon any of the three decisions already referred to. That being so, I must hold that the learned District Judge was wrong in making the distinction which he made between the two periods concerned in this case and decide that Article 62 applies to the suit as a whole and therefore that any money collected by the defend

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ant-appellant at any date more than three years before the filing of the suit cannot be recovered in this suit. [3] The decree of the lower appellate Court will be modified accordingly. Costs of this appeal and of the appeal before the District Judge must be paid by the respondent here out of the estate of the insolvent in his hands. [4] Leave to appeal is refused.