Prime Focus Ltd vs Afzal Khan
2023 Latest Caselaw 11600 Bom

                                             29. NMISL 27342-23 in INPT 14-17.doc


                 IN THE HIGH COURT OF JUDICATURE AT BOMBAY
                     ORDINARY ORIGINAL CIVIL JURISDICTION
                        IN ITS INSOLVENCY JURISDICTION

                        NOTICE OF (L) NO.27342 OF 2023
                                      IN
                      INSOLVENCY PETITION NO. 14 OF 2017

 Afzal Khan                              ...Applicant/Debtor/Insolvent
 And
 1. Prime Focus Ltd.                     ...Petitioning Creditor
 2.Official Assignee                     ...Respondent.

 Mr. Rohaan Cama with Mr. Jayant Gaikwad and Ms. Pushpa Prajapati
 for Petitioning Creditor.
 Mr. Amit Patil with Mr. Dev Bhankharia and Mr. Rishabh Jadhav i/b Mr.
 Parinam Law Associate for Insolvent.
 Ms. C. J. Bhatt, Official Assignee with Mr. Arun Kesarkar, Dy. Official
 Assignee and Mr. Subodh Patil, 1st Official Assignee present.
 Ms. M. R. Parkar, Insolvency Registrar present.

                               CORAM     :       ABHAY AHUJA, J.

                               DATE      :       9th NOVEMBER 2023
 P.C. :


 1.       This matter has been briefly argued.

2. Mr. Patil, learned Counsel for the interim Applicant, Insolvent,

submits that there are counter claims that the Insolvent has against the

Petitioning Creditor, which have been lodged before the Official

Assignee. Learned Counsel submits that if the counter claims are

pursued and realised, the Petitioning Creditor would have no claim

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29. NMISL 27342-23 in INPT 14-17.doc

against the Insolvent and until that is done, this Court defer the action

of taking formal possession of the Insolvent's property situate at 99A,

1st Floor, CST Road, Kalina Village, Santacruz (East), Mumbai-400 029.

(the "said premises"). Learned Counsel submits that the Insolvent's son

and his family are occupying the said premises.

3. Learned Counsel for the Insolvent would submit that the

Applicant was adjudicated Insolvent vide order dated 20 th February,

2018, which order was passed in Insolvency Petition No. 14 of 2017.

The Insolvency Petition was filed by an earlier Petitioning Creditor,

where the said order was passed after hearing the Insolvent, who was a

Judgment Debtor. Subsequently, the Insolvent settled the claim of the

earlier Petitioning Creditor. However, in the Notice of Motion filed by

the present Petitioning Creditor to be substituted as such, this Court by

order dated 17th February, 2023 substituted the present Petitioning

Creditor after hearing the Applicant.

4. Mr. Patil, learned Counsel for the Applicant/Insolvent submits

that they have not challenged the earlier order dated 17 th February,

2023. Learned Counsel categorically submits that he accepts the order

dated 17th February, 2023 and the claim of the Petitioning Creditor,

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29. NMISL 27342-23 in INPT 14-17.doc

however, in view of his counter claim lodged with the office of the

Official Assignee, learned Counsel submits that the action of taking of

formal possession in accordance with the order dated 13 th September,

2023 of the Deputy Official Assignee, be deferred until the counter

claim is adjudicated.

5. In support, learned Counsel draws the attention of this Court to

Section 47 of the Presidency Towns Insolvency Act, 1909 (the

"Insolvency Act"), with respect to mutual dealings and set off, which is

usefully quoted as under:-

"47. Mutual dealings and set-off - where there have been mutual dealings between an insolvent and a creditor proving or claiming to prove a debt under this Act, an account shall be taken of what is due from the one party to the other in respect of such mutual dealings, and the sum due from one party shall be set off against any sum due from the other party, and the balance of the account, and no more, shall be claimed or paid on either side respectively :

Provided that a person shall not be entitled under this section to claim the benefits of any set-off against the property of an insolvent in any case where he had at the time of giving credit to the insolvent notice of the presentation of any insolvency petition by or against him."

6. Learned Counsel for the Applicant also draws the attention of

this Court to the Section 68 of the Insolvency Act, with respect to the

duties and powers of the Official Assignee and submits that it is not

only the duty of the Official Assignee to sell the property of the

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29. NMISL 27342-23 in INPT 14-17.doc

Insolvent to realise the property of the Insolvent but also institute any

suit or other legal proceedings relating to the property of the Insolvent

including under the counter claim

7. On the other hand, Mr. Cama, learned Counsel for the Petitioning

Creditor raises a preliminary objection on the maintainability of the

Notice of Motion drawing the attention of this Court to Sections 17 and

33 of the Insolvency Act. Learned Counsel would submit that in

accordance with Section 17 of the Insolvency Act, on the making of an

order of adjudication, the property of the Insolvent wherever situate

shall vest in the Official Assignee and as a consequence thereof, the

Insolvent pursuant to the duties cast upon him under Section 33 of the

Insolvency Act, generally to do all such acts and things in relation to his

property as may be required by the Official Assignee. Learned Counsel

also draws the attention of this Court to sub-Section (3) of Section 33

to submit that the Insolvent shall aid, to the utmost of his power, in the

realization of his property and the distribution of the proceeds among

his creditors. Learned Counsel refers to sub-Section (4) of Section 33 to

submit that if the Insolvent willfully fails to perform the duties imposed

upon him under the said Section or to deliver up the possession to the

Official Assignee of any part of his property, which is divisible amongst

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his creditors under the Insolvency Act and which is for the time being

in his possession or under his control, he shall, in addition to any other

punishment to which he may be subject, be guilty of a contempt of

Court and may be punished accordingly. Learned Counsel submits that

in view of the clear provisions of the Insolvency Act the present

application is not maintainable and be dismissed in limine and the

Insolvent be directed to cooperate with the Official Assignee in taking

formal possession of the said premises.

8. Learned Counsel further submits that after the formal possession

is taken, which involves putting up of the board of the Official Assignee

on the said premises, the steps of valuation of the property and

thereafter publication of the notice of auction etc would follow, which

would take some time for the present occupants of the said premises to

remove themselves therefrom. Mr. Cama, would submit that therefore,

if the application is rejected, no serious prejudice would be caused.

9. Mr. Patil, learned Counsel for the Applicant/Insolvent seeks some

more time to rejoind to the submissions made by Mr. Cama and

requests that the matter be listed beyond vacation.

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10. I have heard the learned Counsel and also given consideration to

the submissions made. Mr. Patil, learned Counsel for the Applicant has

sought some time to rejoind to the submissions made by Mr. Cama. In

all fairness some time can be granted to him. However, on the basis of

submissions made no ad-interim relief in the matter at this stage.

11. List on 5th December, 2023. The Official Assignee is at liberty ,to

take steps in accordance with law after hearing the Applicant.

                                         (ABHAY AHUJA, J.)




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