Delhi District Court
Lt. Col. H.S. Subba Roa & Anr. vs Ms. Kamal Shamsher Singh & Ors. on 19 January, 2013
Lt. Col. H.S. Subba Roa & Anr. Vs Ms. Kamal Shamsher Singh & Ors.
IN THE COURT OF SH. VIRENDER KUMAR BANSAL:
ADDITIONAL DISTRICT JUDGE, CENTRAL8, DELHI.
M.C.A. No. 6/05
ID No. 02401C0582592005
Lt. Col. H.S. Subba Rao & Ors. ......Appellants.
VS.
1. Ms. Kamal Shamsher Singh
W/o Late Shamsehr Singh
Partner of Dr. Sahib Singh & Sons
Delhi, Bombay & Madra,
28, Friends Colony, New Delhi.
2. S. Dilsher Singh
Partner of Dr. Sahib Singh & Sons
Delhi, Bombay & Madra,
Flat no. B302,
6 Aurangzeb Road, New Delhi 03
3. Ms. Bela Shamsher Singh
D/o Late Shamsher Singh.
Dr. Sahib Singh & Sons
Delhi, Bombay & Madra,
28, Friends Colony, New
Delhi. .....Respondents.
ORDER ON THE APPEAL UNDER SECTION 18 OF THE PROVINCIAL INSOLVANCY ACT.
MCA No. 6/05 Page 1 of 6 Lt. Col. H.S. Subba Roa & Anr. Vs Ms. Kamal Shamsher Singh & Ors.
1. Present appeal has been preferred under Section 18 of the Provincial Insolvancy Act challenging the order dated 05.05.2005 passed by the Insolvency Judge dismissing the application of the appellant seeking the enhanced rate of interest.
2. The brief facts giving rise to the present appeal are that Sahib Singh & sons and its partners were adjudicated insolvents vide judgment dated 31.03.1981 by the then Insolvency Judge, Delhi. The estate of the insolvents was put in the hands of the official receiver who invited claims from the creditors. Thereafter, ld. Insolvency Judge in terms of Section 61 of the Provincial Insolvency Act directed payment of interest to the Creditors including appellant hererin @ 6% per annum. It is alleged that after making payment to the creditors there remained surplus and hence the applicants appellants are entitled to enhanced rate of interest i.e. 18% interest per annum as it was contractual rate of interest but the ld. Insolvency Judge dismissed the application.
3. Notice of appeal was sent to the respondent. Reply filed. Trial Court record was requisitioned.
4. I have heard ld. counsel for the appellant, ld. counsel for the MCA No. 6/05 Page 2 of 6 Lt. Col. H.S. Subba Roa & Anr. Vs Ms. Kamal Shamsher Singh & Ors. respondent and perused the record.
5. Ld. counsel for the appellant submitted that the Trial Court has not considered the entire facts. In this case, Trial Judge failed to appreciate that Act provides for 6% interest only to regularize the proceedings for the purpose of calculating dividends where the proved debts exceed the assets. As held by Madras High Court in case titled as (Penumetsa) China Venkataraju & another Vs Pulavarthi Lakshmanaswami and another, AIR 1931 MADRAS 729 that the creditors to whom money is due under a promissory note providing interest at a higher rate than 6% is entitled to be paid out of the surplus at that rate from the date of adjudication to the date of payment in the event sufficient surplus assets are available in the hands of the receiver after paying all debts. Ld. Insolvency Judge has not considered all these facts even SubSection 6 of Section 61 does not limit the right of the creditor to claim interest at the rate in excess of 6%. Ld. counsel submitted that even the Mysore High Court in the case titled as Jabdarchand and others Vs Mrs. C. Oliver and another, AIR 1965 Mysore 117 (V 52 C 34) held that payment in full as envisaged in Section 35 means payment of all contractual debts including payment of interest at the rate provided in the promissory note and payment of all debts, as if no order of adjudication has been made. Ld. MCA No. 6/05 Page 3 of 6 Lt. Col. H.S. Subba Roa & Anr. Vs Ms. Kamal Shamsher Singh & Ors. counsel submitted that keeping in view this law and the provisions of Provincial Insolvency Act, 1920, the court ought to have granted agreed rate i.e. 18% interest instead of dismissing the application. Ld. counsel submitted that the court has wrongly placed reliance upon the judgment cited as Ganga Sahai Vs Mukarram, AIR 1926 Allahabad 361 which judgment is not applicable in the present case. It is prayed that the order of the ld. Trial Court be set aside.
6. Ld. counsel for the respondent supported the judgment passed by the ld. Trial Court and submitted that according to Section 48 (2) of the Provincial Insolvency Act, 1920, it is clear that the court cannot grant interest exceeding interest 6% per annum out of the debtor assets. However, higher rate of interest may be granted only if the claims of the debtors are satisfied. Ld. counsel submitted that still 404 claims are required to be satisfied from the assets of the insolvent and therefore, the interest more than 6% cannot be granted as it is yet not decided as to whether there is any surplus in the hands of the receiver after adjusting all the claims. It is prayed that the appeal be dismissed.
7. After hearing arguments and going through the record, I found that according to the receiver record and as admitted by the ld. MCA No. 6/05 Page 4 of 6
Lt. Col. H.S. Subba Roa & Anr. Vs Ms. Kamal Shamsher Singh & Ors. counsel for the appellant and respondent, during the course of arguments that some claims are yet to be satisfied from the assets which are in the hands of the receiver. Therefore, in my opinion unless the entire claims are satisfied, it cannot be said that there are any surplus in the hands of the receiver.
8. Keeping in view this fact along with the provisions i.e. Section 42 SubSection 2 of Provincial Insolvency Act, 1920 which reads as under:
"(2). For the purposes of this section, the report of the receiver shall be deemed to be evidence; and the Court may presume the correctness of any statement contained therein."
9. It is clear that the court shall calculate the rate not exceeding 6% per annum for the purpose of dividend but if there is any surplus in the hands of the receiver then it can be higher then 6%. Even in the judgment relied upon by the ld. counsel for the appellant and also by the ld. Trial Court, the same preposition has been laid down that initially only 6% interest shall be granted for calculation of the dividend but in case after satisfying the claims of all the creditors there is surplus in the hands of the receiver then higher rate of interest can be given. In the prersent case as the claims of certain creditors are yet to be satisfied, therefore, it MCA No. 6/05 Page 5 of 6 Lt. Col. H.S. Subba Roa & Anr. Vs Ms. Kamal Shamsher Singh & Ors. cannot be said that there is any surplus amount in the hands of the receiver which can be considered for grant of enhanced interest to the present appellant.
10. In view of the above discussion, I do not find any reason to differ with the opinion of the ld. Trial Court. However, in my opinion, the application was premature for deciding the issue. Therefore, appellant is given liberty to move appropriate application but only after all the creditors are adjusted and there is any surplus in the hands of the receiver. The appeal is accordingly disposed of.
Copy of the order along with Trial Court record be sent back. File be consigned to record room.
Announced in open court 19.01.2013.
VIRENDER KUMAR BANSAL ADDL.DISTRICT JUDGE-08 CENTRAL, DELHI MCA No. 6/05 Page 6 of 6 Lt. Col. H.S. Subba Roa & Anr. Vs Ms. Kamal Shamsher Singh & Ors. 19.01.2013.
Present: Counsel for the parties.
Vide separate order the present appeal is dismissed. However, in my opinion, the application was premature for deciding the issue, therefore, appellant is given liberty to move appropriate application but only after all the creditors are adjusted and there is any surplus in the hands of the receiver.
Copy of the order along with Trial Court record be sent back.
File be consigned to record room.
VIRENDER KUMAR BANSAL ADDL.DISTRICT JUDGE-08 CENTRAL, DELHI MCA No. 6/05 Page 7 of 6