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Report No. 26

Clause 71

This corresponds to section 37 of the Presidency Act. There is no such provision in the Provincial Act.

Clause 72

General.-This follows section 61 of the Provincial Act (which corresponds to section 49 of the Presidency Act).

Small creditors.-It has been considered unnecessary to give any priority to small creditors as it would not be easy to draw a line1.

Workmen's Compensation, etc.-It is unnecessary to add a provision for priority to payments due under Workmen's Compensation Act, etc., as in section 530, Companies Act.

Sub-clause (1).-The language of paragraph (b) follows that of section 49(1)(b), Presidency Act, and the pecuniary limit is also what is laid down therein. Paragraph (c) has also been taken from the Presidency Act. There is no corresponding provision in the Provincial Act regarding rent. But it has been adopted as a useful provision.

Sub-clauses (2) and (3).-No special comments are needed.

Sub-clauses (4) and (5).-Need no special comments.

Explanation.-The Explanation is new, and has been introduced in view of the decision in Narain Das v. Sahu Mihin La1, (1934) ILR 56 All 1041. In England, it has been held that when a creditor of a firm chooses to obtain a decree against a partner thereof, and not against the firm or all the partners, that must be dealt with, for the purpose of this rule, as a separate debt of the partner, and not as a joint debt of the firm. Vide ex parte Ackerman, (1808) 14 Ves 604: 33 ER 653; ex parte Brown, (1812) 1 Rose 432. It was, however, held in Narain Das v. Sahu Mihin La1, 1934 ILR 56 All 1041: AIR 1934 All 521 that this exception cannot be engrafted on the language of section 61(4), Provincial Act, and the rule of English law embodied in the above decisions cannot be applied to cases arising under that section.

Once the principle is accepted that partnership property and partnership debts should be treated as distinct from the separate property and separate debts of a partner, it should logically follow that a creditor who obtains a decree against an individual partner (when he could have obtained one against the firm) and follows it up by obtaining an order adjudicating that partner, must be held to have elected to treat his debt as a separate debt of the partner and not as a partnership debt. The reason for adopting such a rule is all the greater, as the doctrine of election has been accepted as part of the insolvency law in this country, with reference to distinct as distinguished from joint contracts2. The Explanation is intended to give effect to this view3.

Sub-clauses (5) and (6).-The words "entered in the schedule" have been replaced by "proved in insolvency" (on the lines of the Presidency Act), as more appropriate4.

1. See also body of the Report, para. 30.

2. Jethalal v. Lallubhai, AIR 1930 Born 380.

3. It will remove doubts on the subject. Cf. Mulla, (1958), pp. 443-444, para. 480.

4. Cf. clause 77 (2).

Clause 73

This corresponds td section 50 of the Presidency Act. There is no such provision in the Provincial Act.

Clause 74

This does not occur in the Provincial Act, but has been taken from section 70, Presidency Act, as a useful provision1.

1. Generally as to partners, see Mulla, (1958), p. 443, and also pp. 94, 142, 155, 213, 476, 483, 562, 679, 692.

Clause 75

This is based on section 62 of the Provincial Act (which corresponds to section 71 of the Presidency Act).

In sub-clause (1), the words "in his hands" have been replaced by "under his control", which are wider and more appropriate. Consequently, in sub-clause (2), the words "realised by the 'Official Assignee" have been used1-2-3.

1. Cf the Madras amendment to section 71, Presidency Act.

2. Cf also clause 76.

3. Cf section 122, PTA.



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