P. VEERASAMY versus OFFICIAL ASSIGNEE, HIGH COURT, MADRAS

Citation: [1999] 1 S.C.R. 37 · Decided: 12-01-1999 · Supreme Court of India · Bench: S.B. MAJMUDAR · Disposal: Appeal(s) allowed

Judgment (excerpt)

__, 
P. VEERASAMY 
A 
v. 
OFFICIAL ASSIGNEE, HIGH COURT, MADRAS 
JANUARY 12, 1999 
[S.B. MAJMUDAR AND M. JAGANNADHA RAO, JJ.] 
B 
Presidency Towns I11solve11cyAct, 1909: Sections 2(e), 17 and 52(2)(a). 
Insolvent-Property of-After adjudicatiort--As a11 insolvent-Cohen's 
case-Rule laid down fo-1'Under Englisli law the 'after-acquired property' of C 
insolvent does not automatically vest i11 trustee or assignee unless the trustee 
i11terve11es''-Applicability of the Rule in I11dia-Held, The Rule need 11ot be 
gone into as the prese11t case is 11ot co11cemed with immovable property but 
adjudication by the i11solvent from his busi11ess which is covered by S. 60(2 ). 
Section 52(2)(a) a11d 6(}-[11solve11f-'Salary or income'-Eamed D 
by-After adjudicatiort--Attacl1able or 11on- attachable-Held, it belongs to 
the insolvent and does not automatically vest in official assignee--Only such 
pan of the attachable 'salary or income' can be made over to the official 
assignee which the couTt finds as just-:To detennine the ponion of 'salary or 
income' to pass on to the official assignee, the cowt should have regard to 
what is reasonably necessary for the maintenance of the insolvent, his wife 
and f amity. 
Section 60(2)-1'/ncome''--Meaning of-Held, includes income from 
trade or business--'lncome' not to be co11strued ejusdem generis like salary. 
Section 52(2)(a)-lnsolvent-Perso11al eamings-Eamed from his per-
sonal labour-Vesti11g of-ln official assignee-Held, To the extellt 11ecessary 
for the suppon of the i11solvent a11d his f amity do 11ot vest i11 the official 
assignee. 
E 
F 
Sectio11 75--111solve11t-Allowance for-Suppon of himself a11d his G 
family-Coun's power to award-Held, Requirement of the domestic needs 
of insolvent a11d his f amity depends upon facts of each case-While the coun 
has to take humanistic view towards honest insolvents, the couTt must also 
guard against undue exploitation of the principles and provisions of law, by 
Ul!Scrupulous persons who get adjudicated as insolvents-ff over a period, out H 
37 
38 
SUPREME COURT REPORTS 
[1999) 1 S,C.R. 
A of the amounts allowed by the court for the support of the insolvent and his 
f amity, there is a surplus or excess, then the creditors or the assignee can apply 
to the cowt for a review of previous orders-This procedure will be consistent 
with Arts. 19(1)(g) and 21-Constitution of India, 1950, Arts. 19(1)(g) and 
21. 
B 
Words and Phrases : 
''lncome"-Meaning of-In the conte.tt of S.60(2) of the Presidency 
Towns Insolvency Act, 1909. 
The appellant filed a petition before the High Court for being 
C adjudicated as an insolvent under Sections 14 and 15 of the Presidency 
Towns Insolvency Act, 1909. The said application was allowed. Thereafter, 
the appellant filed an application before the High Court seeking permis· 
sion . to restart his kerosene business for the purpose of survival of the 
appellant and his family. The High Court dismissed the said application. 
D . Hence this appeal. 
Allowing the appeal, this Court 
HELD: 1. In the English law, according to the Rule in Cohen's case 
the 'after-acquired property' of the insolvent does not automatically vest 
E in the trustee or Assignee unless the trustee intervenes. This Rule need not 
be gone into as the present case is not concerned with immovable property 
but with 'income' that may be received after adjudication by the insolvent 
from his business • and that question is covered by Section 60(2) of the 
Presidency Towns Insolvency Act, 1909. [46-B] 
F 
G 
Cohen v. Mitchell, (1890] 25 QBD 262 and Hill v. Settle, (1917] 1 Ch. 
319; referred to~ 
Mulla (p.431, Tagore Law Lectures) Mulla's Law of Insolvency, 
(1977] 3rd Edn., referred to. 
2.1. It is clear from Section 60(2) of the Act that the after-acquired 
'salary or income' of the insolvent does not automatically vest in the 
Assignee as otherwise permitted by Section 17 of the Act but it continues 
to be the property vested in the insolvent and out of the said 'salary or 
income', whatever is not attachable if the same were to be proceeded against 
H in execution of a decree, that amount will not vest and cannot be directed, 
P, VEERASAMY v. OFFICIAL ASSIGNEE, H.C 
39 
"' 
even by the Court, to be made over to the Assignee. So far as the attachable A 
~ 
part of such 'salary or income'· is concerned, the same. too does not 
automatically vest in the Assignee because of Section 60(2) but only such 
part of it can be _made over to the Assigne

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